Ideological
motivations do not explain Nazi privatization.
On the contrary, political motivations were important. The Nazi government may have used privatization as a tool to
improve its relationship with big industrialists and to increase their support for Nazi policies.
We are told that the government bailout (when we use the word bailout we include the governments persuasion and assistance of major banks to take over troubled banks with government guarantees) major banks and AIG are necessary to avert a worldwide economic crash. And that may in fact be true.
How does that explain however the 25 billion dollar bailout of the American Auto Industry that they have snuck in. The failure of Ford or Feneral Motors would not cause a depression. It would be the natural consequence of a company failing to adapt to and provide the marketplace with product more efficiently than the competition. That my friends is capitalism. Were Ford or General Motors convinced that they would not be able to rely on a government bailout as Chysler did (prededence) they may have spent more time innovating and less time schmoozing and buying off poilticians.
It doesn't. In fact, no economicaly sound reason can be given for this bail out. A political reason may be theorized in that Michigan will be a swing state in the presidential elections. No party wants to be the one to tell the voters of Michigan, we can not bail you out because of the ineptitude of your multi-million dollar executives.
Privatization
(read that the doing away with public ownership via stocks, bonds, etc.) was also likely used to
enhance more general political support to Nazi party. Finally, financial motivations did play a central role in Nazi privatization. The proceeds from privatization in 1934-37 had relevant fiscal significance: Not less than 1.37 per cent of total fiscal revenues were obtained from selling shares in public firms. Moreover, the government avoided including a huge expenditure in the budget by using outside-of-the-budget tools to finance the public services franchised to Nazi organizations.
Nazi economic policy in the middle thirties was against the mainstream in several dimensions.
The huge increase in public expenditure programs was unique,
Has anyone yet seen the cutting of giveaway programs yet as a way to to help relieve the debt? Not likely in a Presidential election year.
as was the
increase in the armament programs, and together they heavily constrained the budget.
So add to our reluctance to cut back on give away programs the drain on the economy from fighting a two front war.
To finance this exceptional expenditure, exceptional policies were put in place.
Does anyone other than myself consider a 700 billion dollar bailout exceptional. Consider also the word bailout. This is not a bailout. This is a "Buy out". The government is receiving assests and a voice in company business.
Privatization was just one among them. It was systematically implemented in a period in which no other country did so, and this drove Nazi policy against the mainstream, which flowed against privatization of state ownership or public services until the last quarter of the twentieth century.
There has been discussion this a.m. that we are going to have to embrace the proposed bail out/buy out despite it's potential inflationary risks. One of the problems so we are told is that there is not a currency problem but a liquidity problem. Entities sitting on large piles of American cash are hoarding it. This includes China, The middle Eastern and other countries.
If we have a liqidity problem and mountains of cash are being hoarded across the world the Feds only solution to relieving the liquidity crunch is to add cash to the system. Meaning you got it, PRINT MORE MONEY? Remember, most cash assets are insured to a certain amount and in a presidential election year the the government is not going to allow Americans to lose their cash. So if inflation can not be avoided and massive amounts of cash are injected into the system and Some not so friendly countries decide to dump their cash on the markets at the same time what can we expect?
During and after
World War I, Germans discovered that poverty doesn't end when poor people have handfuls of
money stashed under the bed.
Inflation takes care of that.
It all began at the dawn of
World War I with the
German Government's management of the
war chest. The Reichsbank, the Central Bank of Germany, was allowed to "suspend the rights of an individual to convert banknotes to gold, and ... use government and commercial paper as part of the reserves it was required to hold against newly issued notes."
(usagold.com). This was, in effect, spitting in the eye of the
gold standard.
This is important. It means that when the mark falters, the Government has nothing to support it with.
At the conclusion of World War I,
Germany slid into an era of turmoil. The German
economy was in tatters after years of warfare and economic sanctions. When war broke out in
1914, the German
mark was valued at US$1 to 4 marks. By the end of the war, the ratio was US 1:18 marks and sliding. For those with a less
economic bent, let us use the Loaf of Bread Index, where at the current time, one loaf of bread was worth 0.63 German marks:
1918
Loaf of Bread Index: 0.63 marks.
The Weimar Government was conceived in
1918, and the
Allies forced it to to concede to the crippling
Treaty of Versailles. Among the clauses of the treaty was a demand for
reparations to the victors;
Britain and
France wanted to rebuild their nations and needed to repay their loans to the
USA. The total figure was not determined at the time that the Weimar Government was forced to sign the treaty; instead, a
committee was created to determine the amount.
January 1921
Loaf of Bread Index: 10 marks.
The reparations figure arrived in May 1921: £6,600,000,000 or 132,000,000,000* German marks. Germany was to pay reparations until
1987. For awhile there, it looked as though she was going to make it. In
1921, Germany almost managed to pay her entire first installment of £2 billion. Almost; and for a time, that was enough.
January 1922
Loaf of Bread Index: 163 marks.
Afraid of a backlash at the polling booth, taxes were never raised, and never exceeded 35% of
expenditure. But spending was never cut, because reducing services would anger the voters. So the Government's income remained at the bare necessary minimum. There wasn't a mark to spare.
February 1922
Loaf of Bread Index: 250 marks.
Consumers began to realise that something was amiss and tried to withdraw their banknotes as gold, only to realise that they weren't allowed. Everything that had hitherto happened continued to happen, only a lot more prominently.
July 1922
Loaf of Bread Index: 3,465 marks.
By December 1922, Germany could not afford the crippling reparations repayments; she was due to pay coal and timber to
France that she simply didn't have. When you default on a car payment, you risk getting your car repossessed; when you default on a reparations payment, your country gets repossessed.
France, supported by
Belgium and
Italy, used Germany's non-compliance as an excuse to occupy the German territory of the
Ruhr.
The
Ruhr, to the west of the
Rhine, was Germany's industrial centre. Metal
factories (mainly iron and steel), coal mines and railways were all maintained in the area. When France occupied the
Ruhr, Germany lost its ability to manufacture anything: its factories came under French control. Without factories, Germany lost its primary source of
trade and
income. Residents of the Rhine were forced out of their homes or imprisoned. Thousands of workers became unemployed and homeless.
Meanwhile, the mark slid to $US1 to 8,000 marks.
Germany reacted to the occupation of the
Ruhr with indignation, and called for
passive resistance against France. Workers in the industrial area immediately went on strike. France and Belgium responded by cutting economic ties with Germany. Several economic superpowers realised that Germany could not afford to repay its debts. Foreign loans were called in and foreign investments were cancelled.
What was the
Treasury doing? The German Treasury attempted to combat the crisis by maintaining four
minting presses that operated twenty-four hours a day, seven days a week.
(Kids, don't try this at home.) As the amount of money in circulation increased, the value decreased. Rapidly.
The height to which prices have climbed may be shown by the fact that as of February 15 1923, wholesale prices have risen on average 5967 times the peacetime level, those of foodstuffs to 4902 times, and those for industrial products 7958 times.
-- Franz Bumm of the Reich Department of Health, quoted in F. K. Ringer, 'The German Inflation of 1923'
September 1923
Loaf of Bread Index: 1,500,000 marks.
The value of the mark plummeted. When single mark notes became worthless, the
Treasury minted 200 mark coins, then 1,000 cloth notes, then 20,000 mark bonds, and these became worthless too. "By the end of the 1923 hyperinflation," said historian Jonathan Tennenbaum, "the total nominal
national debt of Weimar Germany was worth the equivalent of a few pennies or less." Got any spare change? I just need to fix the national debt.
November 1923
Loaf of Bread Index: 200,000,000,000 marks.
At November
1923, the height of the crisis, one American dollar was worth roughly 4,200,000,000,000* marks.
The horror stories about this hyperinflationary period are true.
Menus in restaurants bore no prices because the currency fluctuated so rapidly that a meal could triple in value between ordering it and and paying for it. Paper currency was used to keep fires because the bulk of the currency was greater than the
wood that it bought. If our sense of the
culinary was higher at the time, we might have made
pesto out of it.
May I give you some recollections of my own situation at that time? As soon as I received my salary I rushed out to buy the daily necessitities. My salary . . . was just enough to buy one loaf of bread and a small piece of cheese or oatmeal. On one occasion I had to refuse to give a lecture at a Berlin city college because I could not be assured that the fee would cover the subway fare to the classroom, and it was too far to walk. On another occasion, a private lesson I gave to the wife of a farmer was somewhat better paid - by one loaf of bread for the hour.
An acquaintance of mine, a clergyman, came to Berlin from a suburb with his monthly salary to buy a pair of shoes for his baby; he could only buy a cup of coffee.
-- Dr Frieda Wunderlick, in G. Bry, Wages in Germany 1871 - 1945
Now of course the the government is selling this to us under the guise of it must be done. This may be true. As for all to long the government has allowed the hyper rich to fatten political pocket books, in turn not holding them accountable for robbing the public, instead allowing them to get away with it. Yes we are aware that an occasional sacrificial cow was brought to the altar. But they all had friends in high places.
Now we have heard the blame cast at both parties as being the ones who were lax on their watch and allowed this economic crises to occur through lack of transparency and oversight. However my question to you would be, how many people, republican or democrat, were crying foul when stocks and home prices were going up? I didn't hear a cacophony of persons saying, hey we got to fix this shit, were making to much money!
Now there are those who are saying that this is going to be a good thing because the government will profit and that we, as shareholders in the government will profit through tax breaks etc. as these currently fairly worthless holdings become profitable. However we might note that as quick as the government is to bail out auto makers and wall street it has not been so quick to bail out any little guys. None that I know anyway.
My fear, which unfortunately was somewhat (note that word) validated by Glenn Beck last Friday (I say unfortunately because I'm no member of the Glenn Beck fan club) is that our current economic crises coupled with our "current rulers" propensity to restrict liberty wherever possible is creating a perfect storm that makes our post on 9-14-09 especially ominous.
As I end this post CNBC reports that calls are coming in to congress 9 to 1 against bailing out wall street. Lets see who our representatives listen to.Add to Technorati Favorites
