EUROPE AND THE USA - WHAT LIES AHEAD

This is a discussion on Crypto Rich's (CR) platform, mostly involving Alex Mercouris (AM) and Tom Luongo (TL). What follows is part transcript, part summary, and a little bit of my own comments. I found the whole discussion quite provocative and timely, which is why I spent so much of the day on it.

The first 12 minutes or so are on Youtube:

EUROPE AND THE USA - WHAT LIES AHEAD - WITH TOM LUONGO, ALEXANDER MERCOURIS - PART 1 OF 2

The session starts with a discussion of the Jackson Hole meeting, where Jay Powell told the world that they'd just have to live with higher US interest rates. TL, of course, takes full credit for having been right on this issue all along, which he was (also KD). TL also points out the prodigious amount of hopium that was generated by the financial community, who have been totally invested in a Powell pivot for months.

At 8:26 AM takes the floor on the same issue:

AM: What I wanted to say is simply this. We have already seen a significant tightening in monetary policy--that's how I would describe it. People need to understand that this has already been going on for some time. We're going to see a much further tightening of monetary policy, and this is going to happen in the United State simultaneously with a supply side crisis which is primarily affecting Europe. America has its ability to produce oil, its ability to produce gas, its food. Maybe not to the extent that it wants to, but it can. Europe can't. It simply can't.

Now, I don't know where this leads us in Europe, but people in Europe need to understand that the Americans are NOT going to come to the rescue. This is exactly the sort of legend, when we started off on this economic war of attrition that we were embarked on. We were going to get Liquified Natural Gas from the United States. We're not. That is going to shrink from now. The US needs to replenish its own reserves. They've been running down their reserves because the administration has been encouraging exports to Europe, there's been the attraction of the high oil prices the Europeans have been paying--that [US exports] is going to end.

…

AM: So, we're gonna have a MAJOR supply crisis in Europe at the same time that there's a major tightening of monetary policy in the United States. The US? Big country, huge assets, enormous resources--they still have all of those things. Maybe not to the extent that they had in 50s and 60s, but they've still got them. They'll come through. What happens with us [Europeans] I have absolutely no idea. I think in Europe we're looking at the most appalling situation we have had since, well, at least the Great Depression. I mean, you have to go back to at least the economic crisis in Germany in the early 1930s to see anything comparable to what is coming, because we're gonna have massive spikes. We're gonna have shortages! Of energy, of food. I guess the largest producer of fertilizer in Europe, a Norwegian company, has just said that they're gonna hafta cut production because they can't meet costs. So we're gonna have this whole thing working its way through the system, and I don't see any sign that the European political class, the European business class, the European bureaucratic class, has any idea what to do in response to it.

11:29

TL: No, they don't. The only thing I can think of at this point is, it's what they want.

At this point the discussion shifts to CR's Odysee platform.

WHAT LIES AHEAD FOR EUROPE AND THE USA - WITH TOM LUONGO, ALEXANDER MERCOURIS - PART 2 OF 2

Incompetence covers a certain level of this, but a certain level of this is willful. When you see at this late date, when you see people like Josef Borrell saying we all have to tighten our belts to stop The Evil Putin, when you see Macron echo the same sentiment at this moment in time, when we see these people say the same thing, and they're focused on THAT and they're not focused on the crisis in front of them--the real, honest to God crisis in front of them--all I can think is, 'They must hate their own people.'

AM: Well, I think they do.

AM goes on to say that there's more than a whiff of panic in the air. He's never known the political class to be so scared of what's coming.

TL responds by making his point that this crisis is sadly necessary, because the only way forward is to destroy the people who brought us to this point--the usual suspects in the politico-financial ruling class. Only by bankrupting them--which he maintains the Fed is doing--can ordinary people be helped. He adds that he believes Putin understands this, too. Putin, he says, didn't have to shut down the flow of gas, but he did. He knows who his enemies are. Putin's aim is not to hurt ordinary Europeans but they will be the collateral damage. Putin is definitely playing politics with energy, because that's his only weapon. Invading Western Europe isn't a realistic option.

TL goes on to say that the enemy is the "old money"--English, Dutch, German, Spanish. He says this old money class has been responsible for the deaths ("has killed") of "hundreds of millions of people." It has to stop.

AM explains why he thinks the ruling classes are starting to panic. They're starting to realize, slowly, that America won't bail them out this time.

The discussion moves on to Italian politics, leading up to the election. The consensus is that the Brothers of Italy will be big winners, but their recent statement about remaining in the EU causes some puzzlement--with no real conclusion.

The next issue is Germany, starting at about 24:00. AM leads off by saying it's impossible not to be deeply pessimistic about the direction Germany is headed in--”putting it mildly.” What makes this especially concerning is that Germany is at the heart of a Pan European crisis, and Germany is headed into a major economic crisis. And there's no way out--it's a ship headed for an iceberg, the captain is saying, ‘Full speed ahead,’ and the crew is obeying.

TL describes the ueber woke internal politics of the Greens in Germany as "one step away from Kristallnacht"—offering as an example the extreme demonization of the unvaxxed, especially conservatives. He maintains that the Germans are "reverting to type." And now they're rearming. AM points out that continuing in that direction will undermine and totally restructure the German economy in an unstable direction. TL interjects, recommending a note by Zoltan Pozsar regarding "The Reindustrialization of War." The Ukraine conflict has revealed that the West is no longer able to fight an industrial war--but Russia can. Then ...

TL: I do fundamentally believe that Putin is targeting German with every [?] of his foreign policy at this point. This is about trying to break the Germans. Because what Pozsar is talking about is, the reason Germany today is Germany today is because of the immense leverage they got in terms of buying unbelievable cheap Russia gas, and then levering it up into 100-1 in terms of GDP and exports, which they then used the internal mercantilism of the European Union to create that current accounts surplus which created the German Europe. All those dynamics are now reversing--completely--and it's being done as a matter of policy BY THE UNITED STATES AND THE RUSSIANS.

AM: This is exactly true. Absolutely, exactly true. And you have to understand that one of the great paradoxes of this--and this is where the provincialism of German politicians comes into play--that they didn't understand the cause of their own economic strength. They never really understood WHY Germany had become as strong as it did. ...

Let's go back to the 1930s. ... Germany turned inward, it sacrificed its exports. There was a major reduction in exports, Germany was in structural deficits, they were short of raw materials, they were doing things like coming up with artificial ways to make oil out of coal. There was a consistent decline in the quality of German consumer goods, because of the structural economic problems. Economic historians who have looked at that period have come to the view that there was a burgeoning inflation crisis just under the surface because of the way the economic system was being managed. It would have come to the surface more quickly if the political system hadn't been so intensely repressive and bottled up demand. During the war they tried to plunder resources and raw materials from other countries. But in the end it created a very unstable economic system which would have collapsed anyway at some point. The economic system went together with the military and geopolitical ramifications we all know so well, to a degree that is only gradually being understood. ...

I'm not saying things will be taken to that extreme today, but you can see patterns of decisions repeating themselves. If you start converting Mercedes plants into tank factories and you continue to pursue the kinds of policies we're seeing at the moment, you're going to start repeating many of the same problems that you saw in the 1930s. ...

TL points out that the first thing the Greens did was to force out the hawk at the central bank and put a guy in who would do whatever Davos wants. What Davos is going to do this time with the European Union is set up the exact same system [as in the 1930s] and impose it on all of Europe instead of just Germany. They're hoping the Americans can tie the Russians up long enough in Ukraine so they can pull this off in the next 2-3 years. But the Russians aren't that stupid. And this is the reason for the Fed policy on the other side--being incredibly hawkish. The Fed could easily have gone more slowly in raising rates. If the Fed had gone slow, it would have been interpreted as buying time for the Europeans to get themselves together and form a united front against the Russians and Chinese. That is NOT what's going on here. The Fed policy is completely at odds with that. If Powell and Lagarde are adversaries then Powell has her boxed in.

At 39:30 they shift to US politics and the student loan deal. The consensus view is that it's just a political bribe that doesn't even make a lot of sense because it bribes people who vote Dem anyway. I would add that the reason for the bribe may be a sense of desperation—the fear that those people won't bother voting if they aren't bribed.

The last topic, starting around 44:00, is the MAL Raid. They all agree that this is a chilling, disturbing development, with the potential to turn US politics into something resembling Pakistan, with a weaponized security state apparatus to repress dissent. AM is "horrified" that this is happening in the United States. The FBI, he says, looks like a "political police" force. TL says this just shows the mindset of a class of people who care for nothing but arrogating power to themselves. Which leads to …

TL: The Eurodollar future system is nothing but a money laundering operation for old European money to try and recolonize the world. The Chinese closed their capital accounts to this, the Russians have said, No, and the only one left is the United States. I still firmly believe that, while the Fed is working to reestablish its own credibility and "fight inflation", they're not really fighting inflation, because this is an inflation of a type that they can't control--cost-push inflation. But they CAN control loss of institutional support style inflation which is a type that leads to hyper-inflation ...

What Davos is trying to do to us politically is remove us from being at the core of the global financial market, and then we can be destroyed. That's their thinking. They want to move that core to Europe. Well, No! Everyone is saying, No, and Davos has boxed itself in. The Chinese with the industry, Russia with the commodities, and the United States with the financial and capital liquidity and capital efficiency. Europe is left a smoking ruin. That's how I see the rest of the decade.

What TL is referring to, in my understanding is the scheme to make the IMF into a global central bank, under the control of the WEF. If that happened, the big US commercial banks would become subservient to Davos at best, but possibly even superfluous.

AM returns to the MAL Raid. He stresses the dishonesty of the AG, the WH, and the FBI being used for political purposes. AM thinks this is worse than the Russia Hoax because it's "more naked". He ties this in to the Zuckerberg revelations about the FBI and Facebook--again the FBI serving as a political police.

TL then addresses "the Zuckerberg thing". He finds the timing interesting, the timing of Zuck throwing the FBI under the bus.

This timing tells TL that something has fundamentally changed. Facebook was created by the big banks that took it public--Morgan Stanley, Goldman Sachs. Did those banks tell Zuck, 'Mark, you don't run this company. You only think you do. We run this company, and you're gonna throw the FBI under the bus, cuz this [the MAL Raid] is unacceptable.' To have Zuckerberg come out in public two weeks after the MAL Raid and throw the FBI under the bus in this way "screams" that there is a big shift deep in the bowels of the US political oligarchy, the people who stand behind our Congressmen and Senators. That's where the money is. They're like, 'This is unacceptable. You USED to work for Soros, and you USED to take his money, but you don't work for him any more--you work for us, cuz we don't work with THEM any more.' Whatever's going on here, something has shifted. Soros just lost Facebook and he lost Twitter this week with the whistleblower.

This makes sense to me. That somebody like Zuckerberg, who was so deeply complicit in the Big Steal of 2020, should throw the FBI under the bank for being involved in the same things Zuckerberg was doing is, indeed, passing strange. Why in the world would Zuckerberg do that, if not under pressure from sources with far more power than most of us can imagine?

AM agrees that there are clearly "countervailing" forces, but he stresses "we must not lose sight of “how very sinister this is--the MAL Raid is just a horror." "The danger is that Pakistan is the future of the United States."

TL concludes with his theory that the US is very possibly heading for a split. Davos, he says, will do whatever it takes to prevent the US from remaining a 50 state union, because forcing a split in the US is the only way left to prevent Europe from becoming a smoking ruin. They can't destroy China, they've failed with Russia, so now the US is in their sights. AM doesn't seem convinced, but his facials are hard to read.

My view is unchanged. The Big Split theory seems doubtful to me. It’s easy to look at a state map of presidential electoral results and say, oh, NY and CA are “blue”. The reality is, however, that the blue vote is concentrated in major metro areas and I simply don’t believe that Blue America is a viable political entity. Nor do I think the major metros could dominate the hinterland—they might not even be able to dominate the suburbs if it came to that.

Crypto Rich finishes up by saying he's going to have to start watching more Martin Scorsese gangster movies so he can understand what's going on.