Category Archives: Netherlands

this is the EU — so take it or leave it… #7. Ukraine and Euromaidan

A fortnight after the violent overthrow of Viktor Yanukovych, Europe Editor for Channel 4 news, Matt Frei, interviewed Dmytro Yarosh, the leader of Ukraine’s Pravy Sektor [Right Sector] militia, who Frei introduces as “the hard men of the barricades, the masters of the Molotov cocktails, and now they’ve earned their place at the table of power” [1:45 mins]:

Behind closed curtains and surrounded by armed guards, Frei timidly asks whether it is right to “describ[e] people like you as neo-Nazis, as fascists, as anti-semites” adding “this is the pretext that [Russia] are using to occupy your country.” [from 2:10 mins]

Now you would be hard-pressed to think up a more softball question; “pretext” after all implies, by definition, that such allegations are evidently false and unfounded. Whereas these allegations are very evidently the case. Because Yarosh isn’t just any old fascist; he is the founder and leader of an undisguised and boastful neo-Nazi organisation. And Matt Frei and Channel 4 news know all this, but play dumb.

They gloss over the ugly truth because, after all, the official story is about a Euromaidan – “a revolution” inspired by dreams of EU membership that will bring “democracy and freedom” to Ukraine. A story built around obfuscation, denial and outright lies… 1

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On the very same day as Matt Frei’s interview, March 5th 2014, a phone call between the EU Foreign Affairs Chief, Catherine Ashton, and Estonian Foreign Minister, Urmas Paet, was leaked:

In the call, Paet, having just returned from a trip to Kiev, tells Ashton [from 8:20 mins in]:

“And what was quite disturbing, this same Olga [Bogomolets, the main doctor of the Maidan mobile clinic] told as well that all the evidence shows that the people who were killed by snipers from both sides, among policemen and then people from the streets, that they were the same snipers killing people from both sides”

Ashton replies: “Well, yeah…that’s, that’s terrible.”

Paet then continues:

“So that she then also showed me some photos she said that as a medical doctor, she can say that it is the same handwriting, the same type of bullets, and it’s really disturbing that now the new coalition, that they don’t want to investigate what exactly happened. So that there is now a stronger and stronger understanding that behind the snipers, it was not Yanukovych, but it was somebody from the new coalition.

Ashton’s response to this revelation is muted and muffled. She begins: “I think they do want to investigate” But then hesitates and finishes: “I mean I didn’t pick that up… Gosh.”

Paet then repeats the opinion that the incident is “disturbing” and concludes that “it already discredits from the very beginning this new coalition”.

However, Ashton and Brussels were not about to be sidetracked in their determination to press ahead with negotiating an EU-Ukraine Association Agreement with the new powers in Kiev. Although, unsubstantiated rumours that Yanukovich was behind the massacre were the strong grounds to run him out of the country, these alternative if better substantiated allegations that “it was somebody from the new coalition” were less welcome. For Brussels, it was a lot more convenient simply to ignore them.

Indeed, on this very same day, March 5th 2014, the European Commission released a memo in support of the new Ukrainian government in which it offered financial assistance to the tune of “at least €11 billion over the coming years from the EU budget and EU based international financial institutions (IFIs) in addition to the significant funding being provided by the IMF and World Bank.” 2

The memo continues:

“All these measures should be seen as the Commission’s contribution to a European and international effort at providing a sustainable way out of Ukraine’s difficult economic situation and to support its economic and political transition.”

Then, only a few weeks later on March 26th, the European Council issued a press release following the EU-US Summit in Brussels which begins:

Recent events in Ukraine have confirmed that strong cooperation between the European Union and the United States on peace and security is of critical importance.

Under the heading “Economy and global challenges” the press release then continues as follows:

Reinforcing economic growth and job creation remains central on both sides of the Atlantic. The EU and the United States have taken important steps to stabilise financial conditions and overcome the crisis. The EU remains committed to building a deep and genuine economic and monetary union, including a banking union. […]

The EU and US leaders renewed their commitment to a strong Transatlantic Trade and Investment Partnership (TTIP). this should go beyond a free trade agreement and reaffirm Europe and the United States’ shared values of democracy, individual freedom, the rule of law and human rights, and a common commitment to open societies and economies.

[Bold highlights maintained from original source]

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In fact, Kiev began negotiating an agreement to extend Europe’s free trade zone in early 2012, although there never was an invitation for Ukraine to join as a member state. Full integration has probably never been on the table, although to encourage those gathered in the so-called Euromaidan protests, there was certainly a deliberate misrepresentation of this key fact.

On March 3rd of this year, President of the European Commission, Jean Claude Juncker, in a (failed) effort to urge the Dutch to vote ‘yes’ in their recent referendum on the Association Agreement with Ukraine (the Netherlands remains the only EU state still to ratify), made the situation quite plain:

I have not come to the Netherlands to say: listen here; you should do this and that. This is not how things are done, most certainly not in the Netherlands.

It is no laughing matter, however. If the Dutch vote ‘no’, Europe will have a problem. That problem is destabilisation. We need to bear this in mind, because Ukraine expects Europe to stick to what was agreed. We should not fall into the trap of thinking that this is about Ukraine joining the EU. Many Dutch people I talk to in Brussels – ordinary people, not Commission officials – make that mistake. In reality, it is about trade and trade agreements. I can hardly imagine an old, successful trading nation like the Netherlands rejecting a trade agreement with a country, like Ukraine, that is so important for European stability. So let me repeat: we need to explain to people that it is not about EU accession. Ukraine will not join the EU during my term of office. In any case, I have said – rather bluntly – that there will be no new members over the next five years, because I do not believe any of the countries in waiting will fulfil the conditions in that time frame.

Then reiterating and upping the ante, presumably to assuage any lingering doubts:

We have rushed things in the past when it comes to enlargement. I am also guilty, because I thought it was an historic event and that we had to reunite European history and geography. Hence the accession of the ‘new’ Member States (in 2004). In some cases, though, we jumped the gun, and we will not make the same mistake again. Ukraine will certainly not join the EU in the next 20 to 25 years. Nor will it join NATO, Secretary-General. I actually wanted to talk about the Dutch referendum, not lecture the Ukrainians, but I know many Dutch people are very worried that this will be the first step to Ukraine joining the EU. But we can definitely say that is not the case. [bold highlights added] 3

Note: you can read more about the Netherland’s April 6th referendum in the addendum.

In other words, the EU doesn’t want Ukraine to join our club – not now and not in the foreseeable future. What it unquestionably does want, however, is to secure access to its plentiful energy resources and to the richest agricultural land anywhere on earth. And the signing of TTIP alone will open the way for major western corporations to profit from unfettered access to both. However, in light of the Dutch vote on April 6th, it is a deal that remains on hold. Perhaps the Ukrainians might consider themselves lucky (at least in this).

Click here to read more about how US corporations and the European Union are hoping to exploit Ukrainian resources in an earlier post entitled “never let a good Ukrainian crisis go to waste”.

Two years after the Euromaidan, the government in power is no more popular or less corrupt than the one it replaced. Still on the brink of outright economic ruin, today’s Ukraine is a country fractured by civil war, where human rights abuses are an everyday reality and where the extreme right is stronger than ever before. But you won’t see very many reports about this on Channel 4 news or elsewhere in the western media, because (as detailed here) today’s Ukraine is too much of a political embarrassment.

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Addendum: Dutch vote on Ukraine, April 6th

Dutch voters forced a referendum on the ratification of the Association Agreement between the EU and Ukraine after a successful campaign led by GeenPeil, which managed to collect more than 425,000 signatures demanding a vote. The treaty was rejected by 61% to 38%.

In the run up to the vote, unsubstantiated claims were made that Russia was funding the ‘no’ campaign. On the other hand, George Soros’ Open Society Foundations, had announced to the Nederlandse Omroep Stichting, NOS [trans: Dutch Broadcast Foundation] that it would spend €200,000 on the ‘yes’ campaign:

A Russia banned non-profit organization of billionaire George Soros is co-sponsor of the Dutch campaign for a ‘yes’ in the referendum Ukraine in April. The Stem voor Nederland [trans: Vote for the Netherlands] campaign will receive 200,000 euros from the Open Society Foundations. […]

On April 6, the Dutch population must decide in a referendum on the Dutch support an EU association treaty with Ukraine. Russia is fiercely opposed to the treaty. “Russia will see this as confirmation of what it believes anyway: that George Soros has political motives in this referendum,” said David Jan Godfroid, NOS correspondent in Russia.

The same article published by NOS continues:

A British newspaper recently reported that Russia may have interfered with the referendum. GeenPeil, the driving force behind the referendum, denies this. “If only it were so!” says Thierry Baudet of Forum voor Democratie [trans: Forum for Democracy], one of the initiators, smiling. “We have never seen a penny,” he says. “This nonsense is coming out of thin air,” says Bart Nijman of GeenPeil. “I have no idea where this came from.”

Incidentally Baudet wonders how serious it would be if other countries money was funding the campaign. “It is absolutely normal practice for countries such as Israel, the United States and Germany to provide funds,” said Baudet. “Very strange that there is so much attention to the fictional Russian support.”

The EU Citizens’ Committee is another group campaigning for a ‘no’. We “have not received a ruble” from Russia, says Pepin van Houwelingen. “That’s a real fantasy story. We rely on donations,” he says. 4

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1 Nor is it the case that Matt Frei was simply too afraid to confront Yarosh squarely – although given the extreme circumstances of the interview, he had every reason to fearful. However, the tone of the whole piece is the giveaway. Skilfully contrived to distract the viewer from the truth, he goes out of the way to divert attention from the glaring fact that the Maidan had been spearheaded by fascist brigades. Channel 4 news and the rest of the corporate media simply chose to look away. You can find the same video unloaded on the Channel 4 news website:

http://www.channel4.com/news/pravy-sektor-far-right-in-new-ukraine-government-video

2 http://europa.eu/rapid/press-release_MEMO-14-159_en.htm

3 From the official transcript of the 14th Norbert Schmelzer lecture entitled “The European Union – a source of stability in a time of crisis” delivered by Jean-Claude Juncker at The Hague, Netherlands on March 3, 2016. http://europa.eu/rapid/press-release_SPEECH-16-583_en.htm

4 From a translation of an article published by Nederlandse Omroep Stichting, NOS [trans: Dutch Broadcast Foundation] on January 22, 2016. http://nos.nl/artikel/2082091-amerikaanse-miljardair-sponsort-ja-campagne-oekraine-referendum.html

The original article reads:

Een in Rusland verboden non-profit-organisatie van miljardair George Soros is medefinancier van de Nederlandse campagne voor een ‘ja’ bij het Oekraïne-referendum in april. Stem voor Nederland krijgt voor die campagne 200.000 euro van de Open Society Foundations. Dat bevestigt de organisatie aan de NOS. Wie in Rusland zaken doet met OSF kan zes jaar celstraf krijgen.

Op 6 april moet de Nederlandse bevolking zich in een referendum uitspreken over de Nederlandse steun aan een Europees associatieverdrag met Oekraïne. Rusland is fel tegenstander van dat verdrag. “Rusland zal dit zien als bevestiging van wat het toch al denkt: dat George Soros politieke motieven heeft bij dit referendum”, zegt David Jan Godfroid, NOS-correspondent in Rusland. […]

Russische bemoeienis

Onlangs meldde een Britse krant dat Rusland zich mogelijk heeft bemoeid met het referendum. GeenPeil, de drijvende kracht achter het referendum, ontkent dat. “Was het maar zo!”, zegt Thierry Baudet van Forum voor Democratie, een van de initiatiefnemers, lachend. “We hebben nooit een cent gezien”, stelt hij. “Uit de lucht gegrepen onzin”, zegt ook Bart Nijman van GeenPeil. “Geen idee waar dit vandaan komt.”

Overigens vraagt Baudet zich af hoe ernstig het zou zijn als andere landen geld steken in een campagne. “Het is volstrekt normale praktijk dat landen als Israël, de Verenigde Staten en Duitsland fondsen aanbieden”, aldus Baudet. “Heel vreemd dat er nu zo veel aandacht is voor de verzonnen Russische steun.”

Ook het Burgercomité EU, dat campagne gaat voeren voor een ‘nee’, heeft “geen roebel” gehad uit Rusland, zegt Pepijn van Houwelingen. “Dat is echt een fantasieverhaal. We leunen op donaties”, zegt hij. Volgens de tegenstanders van het verdrag is het een eerste stap naar toetreding van Oekraïne tot de Europese Unie, en leidt het tot miljarden aan subsidies voor dat land.

Zowel GeenPeil, Forum voor Democratie, Stem voor Nederland als het Burgercomité heeft 50.000 euro subsidie aangevraagd bij de Nederlandse overheid om een campagne te kunnen voeren.

http://nos.nl/artikel/2082091-amerikaanse-miljardair-sponsort-ja-campagne-oekraine-referendum.html

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Dutch scientists to resume weaponising bird flu — but why?

Little more than a year ago I posted an article entitled “Dutch scientists have weaponised bird flu — but why?

And then, one week later, the research project was abruptly halted:

Scientists who created a potentially more deadly bird flu strain have temporarily stopped their research amid fears it could be used by terrorists.

In a letter published in Science and Nature, the teams call for an “international forum” to debate the risks and value of the studies.1

One of the concerns then being highlighted was the intention of the Erasmus Medical Center, the group behind the research, to make their findings public:

The National Science Advisory Board for Biosecurity (NSABB) recommended key details be omitted from publication of the research, which sparked international furore.

“I would have preferred if this hadn’t caused so much controversy, but it has happened and we can’t change that,” Ron Fouchier, a researcher from Erasmus Medical Center in Rotterdam, told Science Insider.

“So I think it’s the right step to make.”

So now apparently we had two controversies. A more academic one concerning the rights and wrongs of censoring scientific publications, and the other one about whether creating “a potentially more deadly bird flu strain” is a good idea in the first instance. In any case, concerns about the research had effectively forced a voluntary 60-day moratorium:

But some said the 60-day pause on research was not enough.

One critic of the studies, Richard Ebright, a biologist at Rutgers University, told Science Insider that the letter “includes flatly false statements” making assurances about the safety of H1N1 research labs.

Reports say that a meeting debating the research and steps forward could come during a World Health Organization meeting in February.

Click here to read the full article on the BBC news website.

With research on hold, “publication was [also] delayed for several months after a US agency expressed concern that it might be useful to bioterrorists”. That delay lasted until May:

[Eventually] the US government and the journals Science and Nature agreed that the papers from teams in Rotterdam and Wisconsin [the other institute involved] should be published in full.

And so they were:

Last month Nature published its H5N1 research and now that’s been followed by a series of papers in the journal Science.

Together they set out the potential threat of an H5N1 pandemic and how to prepare for it.

My colleague Pallab Ghosh has a summary of the Science research which you can read here.2

[In fact, you probably can’t read that particular summary because the link seems to have failed.]

These extracts are taken from a BBC news report by Fergus Walsh, someone who seems intent on playing down the worries about the research itself and keener to emphasise the likely prospects of a future flu pandemic:

The potential for a pandemic of avian flu is considered by the World Health Organisation as one of the greatest potential threats to global health.

So is the world a safer or a more dangerous place now that these papers have been published?

The journals involved argue this data will allow scientists to monitor the threat from avian flu and work on preparations for a potential pandemic. That view is widely shared among scientists.

And on the same day, BBC science correspondent Pallab Ghosh wrote a companion piece also highlighting dangers of a bird flu pandemic:

The H5N1 bird flu virus could change into a form able to spread rapidly between humans, scientists have warned.

Researchers have identified five genetic changes that could allow the virus to start a deadly pandemic.

Writing in the journal Science, they say it would be theoretically possible for these changes to occur in nature.3

Which has always remained the justification given by those scientists undertaking the research: that the study will help them and others to “learn which viruses can cause pandemics and by knowing that we might be able to prevent them by enforcing strict eradication programmes”. But should we not be concerned that as a direct consequence of their research such a strain has now been artificially mutated and so presumably already exists.

In the next part of Pallab Ghosh’s article, we come to what many (myself included) see as the most troubling part of the whole exercise – it appears as a bold subheading that instantly puts the research back into more chilling context:

Bioweapon

It is the first time it has been shown that it is possible for bird flu to become airborne, but the research team was unable to determine precisely how likely this was to happen.

Prof Derek Smith, who led the analysis, said more information was needed.

He said researchers required a better understanding of how flu viruses were transmitted between people in order to develop a clearer idea of the likelihood of the emergence of an airborne strain of bird flu.

“These are difficult things to find out,” Prof Smith told BBC News.

“What this work enables us to do is to prioritise particular experiments to obtain this information”.

And yet the very next statement in the same article then immediately raises more questions about the supposed value of the research whilst simultaneously coming as a great relief:

It is clear though that the emergence of an airborne mutation of H5N1 is unlikely. Were it not it would have emerged already.

I have highlighted this in bold because, to my admittedly untrained eye, it already contains a rather significant answer to the question they are supposed to be trying to answer — that any naturally occurring variant is unlikely to be a highly dangerous “airborne mutation”. So what is the point of the research, again…? Back to Ghosh’s article:

But researchers want to be able to calculate the risk of such a virus emerging more precisely in order to help public health officials in their contingency planning.

Is this really a good enough reason?

Click here to read the full article by Pallab Ghosh.

All of which brings me to the latest BBC news report, which was published yesterday [Jan 23rd] and entitled “Controversial bird flu work resumes”. Apparently, the moratorium, which had initially been set at 60-days, and then was later extended to a year, is finally over:

Controversial research into making bird flu easier to spread in people is to resume after a year-long pause.

Some argue the research is essential for understanding how viruses spread and could be used to prevent deadly pandemics killing millions of people.

Research was stopped amid fierce debate including concerns about modified viruses escaping the laboratory or being used for terrorism.

The moratorium gave authorities time to fully assess the safety of the studies.4

Click here to read the full BBC news report.

So is it regarded as safe to continue the research then? What do most experts think now, and following a year’s consideration? Back to the article:

[Other] scientists said the risk of the virus spreading was too great for such research to take place and described it as a folly.

That sounds like the same opinion as before – yet surely if the research is about to be resumed there must now be a consensus in favour…?

“This research is urgent, while we are having this pause bird flu virus continues to evolve in nature and we need to continue this research.

“We cannot wait for another year or two years.”

And who says so?

“One of the leading proponents of the research Prof Ron Fouchier, from the Erasmus Medical Centre”

But do other leading experts, and in light of whatever debate has taken place during the year long moratorium, now concur with the assessment of Professor Fouchier?

Prof Robert May, from the University of Oxford and a former president of The Royal Society, said: “These are not bad people, they are good people with good intentions, but they look through rose-coloured glasses at the security of the laboratories.”

He said past history suggests “it will get out” as there had been more than a thousand cases of people being infected in labs with the highest standards and the 1977 outbreak of flu may have been connected to a Russian facility.

“That’s why I feel the world is a safer place if we maintain this moratorium.”

So no then…

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1 From an article entitled “Bioterror fears halt research on mutant bird flu” published by BBC news on January 20, 2012. http://www.bbc.co.uk/news/world-us-canada-16662346

2 From an article entitled “Five genetic changes that could allow bird flu pandemic” written by Fergus Walsh, published by BBC news on June 21, 2012. http://www.bbc.co.uk/news/18541433

3 From an article entitled “Bird flu ‘could mutate to cause deadly human pandemic’” written by Pallab Ghosh, published by BBC news on June 21, 2012. http://www.bbc.co.uk/news/science-environment-18534676

4 From an article entitled “Controversial bird flu work resumes” written by James Gallagher, published by BBC news on January 23, 2013. http://www.bbc.co.uk/news/health-21165288

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Gold Diggers of 2013

We are now in the midst of what can only be described as a gold rush. Of course some countries, China being the shining example, have been rapidly expanding their gold reserves for many years – the full amount of Chinese gold being a closely guarded secret although most analysts anticipate a full disclosure of Chinese gold reserves in the relatively near future, and based on an accumulation rate of slightly less than 1,000 tons per year, it is widely believed that China may already be the second largest holder in the world, which, as zerohedge noted back in November, means “surpassing Germany’s 3,395 tons and [becoming] second only to the US.”

Meanwhile, other countries are suddenly asking for the repossession of their own physical reserves that have been stored in vaults around the world during many decades. About a year ago I reported on Hugo Chavez’s retrieval of Venezuela’s physical gold reserves, and more recently we hear how, for instance, the Dutch and German governments are increasingly eager to get their hands on their own gold. Here is part of a report from Dutch News published in late November:

Questions have been asked in parliament about the location and value of the country’s gold reserves, most of which is said to be in foreign vaults, news agency ANP reports on Wednesday [Nov 28th].

The Netherlands is said to have 612 tonnes of gold, with a value of some €24bn. Just 10% of it is held at the central bank headquarters in Amsterdam. The rest is in bank vaults in the US, Canada and Britain.

Socialist and Christian Democrat MPs are now asking if it is sensible to keep the gold abroad and want to know how pure the gold bars actually are. 1

Anyone would think they don’t trust us or something – although when I mean us, I actually mean our central bankers obviously, and frankly who does trust them? Indeed, it turns out that the Germans had started repatriating their own reserves shortly after the launch of the euro and around the time of Brown’s Bottom, which was more then a decade ago:

The report [I’ll come back to this in a moment] claimed that the Bundesbank had slashed its holdings in London from 1,440 tons to 500 tons in 2000 and 2001, allegedly because storage costs were too high. The metal was flown to Frankfurt by air freight.

The revelation has baffled gold veterans. The shift came as the euro was at its weakest, slumping to $0.84 against the dollar. But it also came as the Bank of England was selling off most of Britain’s gold reserves – at market lows – on orders from Gordon Brown. 2

Click here to read the full article in the Telegraph.

The report in question, which had been produced by the German court of auditors (Bundesrechnungshof), is now demanding a complete audit of the nation’s gold reserves:

Germany’s gold bars, stored in the United States, Britain and France “have never been physically checked by the Bundesbank itself, or other independent auditors, regarding their authenticity or weight,” reveals a report prepared by the Federal Auditors’ Office. Instead, the Bundesbank relies on a “written confirmation by the storage sites.” […]

Concerns about Germany’s gold reserves arose this year after a group of German federal lawmakers wanted to check gold bars stored at the Banque de France in Paris. But they were turned away by local officials who said there were no facilities to visit the vaults, Deutsche Welle reported. […]

The Bundesbank has reportedly decided to ship 150 tons of gold from the New York Federal Reserve to Germany, according to German daily Bild. After returning to Germany the gold will be melted down to test the overall purity of each consignment before being re-cast into standard gold bars. 3

Click here to read the full report published by Russia Today in late October.

So why this accelerating rush to acquire gold, as in the case of China, or, as in the cases of Germany and Holland, to repatriate their gold reserves? What can it all portend…?

An article simply entitled “Are Fiat Currencies Headed for a Collapse?” published by CNBC back in July 2012 offers a concise assessment of the situation:

A fiat currency derives its worth from the issuing government – it is not fixed in value to any objective standard. That means central banks can print as much money as they want. If an economy is struggling, injecting more notes into the system juices activity but lowers the value of the currency in question.

With major central banks all desperate to stimulate their economies, some say currencies have entered a dangerous new phase often described as a race to the bottom.

Mark Mobius, Executive Chairman of Templeton Emerging Markets Group, says investors will soon start to demand fiat currencies be backed by gold or other hard assets.

“It’s already happening, you’re beginning to see that trend with central banks stocking up on gold. The estimate is that at least half of the buying is central bank buying. They are looking to the day when they can say okay, our currency is backed by gold and therefore we’re a strong country,” Mobius told CNBC Asia. 4

Of course, such rumours of widespread currency collapse have been with us ever since the financial panic of 2007/8 – rumours that were quickly given extra legs thanks to the enormous bank bailouts and the multiple rounds of quantitative easing (QE) both in the US and in Europe – all this money printing being the immediate way that the derivatives Ponzi scheme, the original cause and the deep root of the crisis, could be propped up. Yet, in spite of such vast injections of new money, the more serious catastrophe predicted by many has not (as yet) come about. So does this mean, as our governments wish to persuade us, that the crisis has been brought under control, or does it simply mean that they’ve managed to kick the can just a little further down the road than most of the economic pessimists could have imagined?

Undoubtedly such rampant money printing without anything like commensurate economic growth does mean, and however cunningly it may be have been disguised, that the money we hold has undergone and continues to undergo a rapid devaluation. So prices in the longer term must be expected to rise since inflation is already baked into the quantitatively-eased cake: the only legitimate questions being not if, but when, and importantly, how sharp the eventual decline in our purchasing power turns out to be.

In Britain, for instance, prices of goods and services are certainly rising quickly, and well above the skillfully massaged Consumer Price Index (CPI) figure of less than 3%, whilst at the same time wages remain flat (falling in real terms and thereby magnifying the impact of inflation for most people), but, on the face of it at least, there is little indication of any kind of hyperinflationary collapse coming around the corner. However, there is one outstanding factor to be considered here: that the newly printed money has largely been hoarded by the banks that received it, and for so long as the banks are reluctant to lend, little to none of this issuance flows back out into the money supply. For this reason, most of the coming inflation remains as yet in the pipeline.

So are we about to see a protracted devaluation of our currencies involving many decades of relatively low inflation at survivable rates (although perhaps as high as ten or twenty percent), or ought we to expect a sudden leap to genuine hyperinflationary levels? Put differently, are the western economies going to continue to more slowly but inexorably sink or, alternatively, is the genuine ‘fiscal cliff’ of a currency collapse nearing? The simple answer is that I don’t know – I’m not an economist and I don’t pretend to understand the deeper complexity here; and when it comes to economics, pretending to understand and then making lousy predictions is far better left to the professionals! What is clear is that so long as the imposed ‘solution’ to this still deepening financial crisis relies upon the deadly cocktail of “austerity measures” mixed with money printing, the prospect of eventual hyperinflation looms not merely as a worst-case scenario, but a worst-case that appears increasingly likely.

Why do I say this? Well, because at the same time as “austerity” is destroying growth, the endless rounds of QE are effectively reducing the value of our money by repeatedly diluting it. So maintaining this combination of imposed “austerity” and sustained money printing is just about the most perfect recipe for creating not mere inflation, but stagflation – which is precisely what we are already seeing.

But then outright hyperinflation is always a result of political choices, rather than simply an outcome of economic failures. It happens whenever a government decides (or, very often, feels coerced) to flood the economy with currency in an increasingly desperate attempt to keep up with repayments on unsustainable debts and so to survive. And for dramatic effects, this tail-chasing exercise has to go on and on and on…

So here’s what I think we can most certainly expect in the immediate future – even given a best-case scenario. Undoubtedly our economies will continue to shrivel away under the imposed “austerity measures”, bringing mass unemployment in the wake of economic decline, and that rise in joblessness, in turn, generating a frenzied competition for the remaining jobs, and forcing down ordinary wages still further (when wages have already, certainly in real terms, substantially fallen since the crisis began).

In the meantime, attacks of QE are continually eating into our earnings and savings, and in terms of devaluation, it hardly matters whether one decides to stuff their money under the mattress or deposit it in a savings scheme, given the poor rates of return on offer. But let’s also keep in mind that all of this is being done merely to serve and protect the interests of the major banks: the ones long-since deemed “too big too fail”. Institutions not only operating outside of the law, but tacitly encouraged to carry on doing so (as the lack of prosecutions following the fixing of Libor and the more extraordinary scandal involving HSBC goes to show).

And now the increasing desire shown by governments and central banks (not to mention many of the richest individuals) to suddenly acquire gold and, perhaps even more importantly, to hold on to it, offers clues beyond the competing economic theories as to what the “money masters” themselves are actually anticipating. Needless to say, it does not bode well for the majority of us.

The steadily rising price of gold is at the same time, of course, a key indicator (alongside the rising price of other commodities like silver and copper) of how much our currencies have already been debased. During the past five years, both gold and silver have approximately doubled in their value, equivalent to an annual inflation rate of slightly less than 15% (which is obviously far higher than the CPI’s paltry 3%) – I offer a more detailed analysis of these trends as a footnote.5 And these rises have happened in spite of the fact that the price of gold and silver, like everything else in our supposedly ‘free market’ system, is subject to manipulation by the major financial players, who, having “invested” so heavily in varieties of paper, have a clear interest in keeping the value of precious metals down – and the Ponzi scheme up and running.

Meanwhile, the continued appliance of tough “austerity measures” in spite of so much damning evidence of ineffectiveness in rescuing any ailing economies, anywhere, ever (either during this crisis – to judge by the effects on Greece, Spain and elsewhere – or earlier ‘interventions’ in Latin America, Africa and in the aftermath of the break-up of the Soviet Union) proves only that there is still very much a political will to enforce such neo-liberal “shock therapy”.

“Austerity” kills the poor and the weak and is already doing precisely this in places like Greece. It cannot provide any cure for what is an intrinsically systemic failure. Instead, such tight restrictions on government investment in welfare and infrastructure during a depression is like telling a starving person that it might help if they were to eat their own stomach. A brutal approach that is nothing short of criminal lunacy. And the same goes for the bailouts – the banks are fundamentally broken, indeed the entire financial system is in a state of ruin, and repeatedly bailing them out means simply throwing good money after bad… ad infinitum.

During the depression years of 1930s, there was another famous rush for gold. It eventually led to US President Franklin Roosevelt signing the notorious Executive Order 6102 in April 1933, “forbidding the hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States”. An order that was supposed to apply to every individual, partnership, association and corporation, and making possession “of gold or silver coin or bullion or currency” a criminal offence. It was the same year that Warner Bros. released the first of a string of popular musicals: Gold Diggers of 1933; quickly followed up with Gold Diggers of 1935 and … of 1937. These sugary confections, mostly remembered now for their lavish and dreamy choreographed sequences put together by the great Busby Berkeley, are ‘rags to riches’ tales with guaranteed happy endings that had helped to keep the public’s pecker up.

This time around we are perhaps still a long way off any equivalent to FDR’s Executive Order, though it is always wise to keep history in mind. Back on the entertainment front, and with the depression looking set to move up through the gears once more, we are offered the rather grittier and altogether more worthy distraction of a big screen release for Victor Hugo’s grand epic turned Broadway musical, Les Misérables – Surely the producers aren’t trying to plant the seeds for revolution?!!!

I can think of no better way to finish such a gloomy article than with a song. And what better than Noël Coward’s wonderfully sardonic ditty “There Are Bad Times Just Around The Corner” (albeit written during the rather more solvent 1950s). Here’s a chorus:

There are bad times just around the corner
The horizon is gloomy as can be
There are black birds over
The greyish cliffs of Dover
And the rats are preparing to leave the BBC
We’re an unhappy breed and very bored indeed
When reminded of something that Nelson said
And while the press and the politicians nag, nag, nag
We’ll wait until we drop down dead

You can enjoy a complete performance embedded below – Is there any better national anthem for these turbulent times?

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Update:

It seems that the story had already moved forward before I released the post – so here’s the part I missed: “Germany bring home gold stored in US, France,” released by Associated Press (published by The Wall Street Journal on Wednesday Jan 16th):

In what sounds like the setup for a stylish Hollywood heist movie, Germany is transferring nearly 700 tons of gold bars worth $36 billion from Paris and New York to its vaults in Frankfurt.

The move is part of an effort by Germany’s central bank to bring much of its gold home after keeping big reserves outside the country for safekeeping during the Cold War.

Click here to read the full story.

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1 From an article entitled “Are the Netherlands’ gold reserves real? MPs want answers” published by Dutch News on November 28, 2012. http://www.dutchnews.nl/news/archives/2012/11/are_the_netherlands_gold_reser.php

2 From an article entitled “Bundesbank slashed London gold holdings in mystery move” written by Ambrose Evans-Pritchard, International business editor, published by the Telegraph on October 24, 2012. http://www.telegraph.co.uk/finance/financialcrisis/9631962/Bundesbank-slashed-London-gold-holdings-in-mystery-move.html

3 From an article entitled “Germany orders a check on its gold reserves” published by Russia Today on October 29, 2012. http://rt.com/business/news/germany-gold-reserves-check-472/

4 From an article entitled “Are Fiat Currencies Headed for a Collapse?” written by Lisa Oake, published by CNBC on July 27, 2012. http://www.cnbc.com/id/48349503/Are_Fiat_Currencies_Headed_for_a_Collapse

5 As I write, the price of gold is $1687 per oz and silver stands at $31.7 per oz. Over the last five years this compares to lows and highs of $709 and $1900 for gold and ranging between $8.92 and $48.5 for silver. In other words, the current values are still below the high peaks that were reached in 2011. However, if you judge from the trend rather than from spot values then both graphs are very clearly climbing throughout the 5 years – and in that period (a period which approximately coincides with the length of the current crisis) gold has almost doubled in value (being around $900 in January 2008) and silver likewise (from just over $15 in January 2008). A doubling of prices over five years would equate to an inflation rate of very slightly under 15%. Click on the links to see price charts over 5 years for gold and silver.

Copper is a little different. The price of copper as I write is $3.6 per pound. If you study the price over the last 5 years then there has been a more modest rise compared to gold and silver (beginning with a price already a little over $3 in January 2008, before sharply falling by December 2008 and then recovering again in late 2010). But the trend for copper is very much more interesting when considered over ten years. Back in 2003, silver was still in a dip at around $0.7 but in early 2004 it sudden began to rise spectacularly, reaching $3.5 by mid 2006 – an incredible five-fold increase. It has more or less maintained this high price ever since, flattening off in recent years, although as the chart below shows, the overall trend remains modestly upward:

Historical Copper Prices - Copper Price History Chart

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Filed under analysis & opinion, austerity measures, China, Germany, Netherlands, Venezuela

Dutch scientists have weaponised bird flu — but why?

Scientists have long worried that an influenza virus that has ravaged poultry and wild birds in Asia might evolve to pose a threat to humans. Now scientists financed by the National Institutes of Health have shown in a laboratory how that could happen. In the process they created a virus that could kill tens or hundreds of millions of people if it escaped confinement or was stolen by terrorists.

So begins a disturbing editorial entitled “An Engineered Doomsday” published in Monday’s edition [Jan 8th] of the New York Times1. It continues:

The most frightening research was done by scientists at the Erasmus Medical Center in Rotterdam, who sought to discover how likely it is that the “bird flu” virus, designated A(H5N1), might mutate from a form that seldom infects or spreads among humans into a form highly transmissible by coughing or sneezing. Thus far the virus has infected close to 600 humans and killed more than half of them, a fatality rate that far exceeds the 2 percent rate in the 1918 influenza pandemic that killed as many as 100 million people.

Unless the scientific community and health officials can provide more persuasive justifications than they have so far, the new virus, which is in the Netherlands, ought to be destroyed.

Yes, kill it – and quickly!

Barring that, it should be put in a few government-controlled laboratories with the highest containment rating, known as biosafety level 4. That is how the United States and Russia contain samples of smallpox, which poses nowhere near the same danger of global devastation.

Put it in storage, why? What possible use can it have? In fact, what was the point of making it in the first place?

We [the New York Times] cannot say there would be no benefits at all from studying the virus. We respect the researchers’ desire to protect public health [an earlier NYT article offers further ‘reasons’ for the research]. But the consequences, should the virus escape, are too devastating to risk.

To make matters worse (perhaps) the research is also about to be published. Click here to read a report [from Dec 20th 2011] from Erasmus Medical Centre.

1 From an article entitled “An Engineered Doomsday” published by the New York Times on January 8, 2012. http://www.nytimes.com/2012/01/08/opinion/sunday/an-engineered-doomsday.html

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Filed under Europe, Netherlands, Uncategorized