by Charles Hugh Smith
July 22, 2011
The banks of Europe are the new Feudal Manors
All Europeans now serve them as debt-serfs
in one way or another.
If we knock down all the flimsy screens of artifice and obscuring
complexity, what we see in Europe is a continent of debt-serfs, indentured
to the banks under the whip of the European Union and its secular religion,
I know this isn't the pretty picture presented by the EU Overlords, of a
prosperity built not just on debt, but on resolving the problem of debt with
more debt, but it is the reality behind the Eurozone's phony facade of
What else can we call the stark domination of the big banks other than
Neo-Feudalism? In one way or another, every one of the 27-member nations'
citizens are indentured to the big international banks at risk in Europe,
most of which are based in Europe.
Amidst the confusing overlay of voices and agendas, there is really only one
agenda item: save the big European banks. Everything else is just mechanics.
The banks are the new feudal manor houses, the bankers are the new feudal
lords, and the politicians of the EU and its influential member nations are
the servile vassals who enforce the "rule of law" on the serfs.
Here is the fundamental fact: there are trillions of Euros of debt which can
never be paid back.
In a non-feudal system, one in which the banks
were not the Masters, then this fact would be recognized and acted upon:
something like 50% of the debt would be written off in one fell swoop, all
the banks whose assets had just been wiped out would be declared insolvent
and liquidated, the remaining debt would be sized to the economic surplus of
each debtor nation, and a new, decentralized banking sector of dozens of
strictly limited, smaller banks would be established.
To the degree that is "impossible," Europe is nothing but a Neo-Feudal
Kleptocracy serving its Banker Lords.
The Greek worker whose pay has been slashed in the "austerity" demanded by
the banks serves the Banker Lords, as does the German worker who will be
paying higher taxes to bail out Germany and France's Banker Lords.
the German is constantly told he is bailing out Greece, the truth is Greece
is just the conduit: he's actually bailing out the EU's Banker Lords.
We can clear up much of the purposeful obfuscation by asking:
exactly what tragedy befalls Europe if all
the sovereign debt in the EU was wiped off the books?
The one and only "tragedy" would be the
destruction of the "too big to fail" banks, not just in Europe but around
As the big European banks imploded, then their
inability to service their counterparty obligations on various derivatives
to other big banks would topple those lenders.
While the political vassals call that possibility a catastrophe, it would
actually spell freedom for Europe's 500 million debt serfs. From the lofty
heights of the Manor House, then the loss of enormously concentrated power
and wealth is indeed a catastrophe for the Lords and their political
But for the debt-serfs facing generations of
servitude for nothing, then the destruction of the banks would be the
glorious lifting of tyranny.
Just as a refresher, here is a definition of kleptocracy:
Kleptocracy, alternatively cleptocracy or
kleptarchy, from the Ancient Greek for "thief" and "rule," is a term
applied to a government subject to control fraud that takes advantage of
governmental corruption to extend the personal wealth and political
power of government officials and the ruling class (collectively,
kleptocrats), via the embezzlement of state funds at the expense of the
wider population, sometimes without even the pretense of honest service.
The term means "rule by thieves".
Extracting the wealth of 500 million people via
the EU's central governance machinery to serve a handful of big banks is
definitely a form of systemic embezzlement.
As for corruption: where are the politicians who
speak to the enormous benefits of writing off these debts and destroying the
power of the big banks, utterly and completely, as the only way to free the
people from debt-serfdom?
While the European Central Bank (ECB)
and the vassals' favorite form of oppression, the European Financial
Stability Facility (EFSF),
print or borrow more Euros into existence to fund the illusion of solvency,
the cold reality is that the only way to service these trillions in impaired
debt is to skim the surplus from the labor of the debt-serfs.
Since the political vassals control the means of taxation, then it is their
job to squeeze hundreds of billions of Euros out of the labor of their
There is a fatal weakness in the Grand Scheme of European Neo-Feudalism,
and the lackeys in the EU are desperately trying to fix it under the banner
of "integration." The fatal flaw is that the political union of the EU
vassal states did not include fiscal union in which the EU could impose and
control taxation within all member states.
This flaw means that the Banker Lords lack the necessary means to
impose serfdom directly through the "laws" of the EU itself; instead, they
must coerce the vassal political class within each member state to impose
debt-serfdom on its citizenry.
This has proven cumbersome, as some nation's debt-serfs are threatening to
refuse to submit to serfdom.
Such a rebellion would of course bring down the
entire house of cards that is Neo-Feudal Europe, and so the lackeys in
Brussels and elsewhere are frantically trying to sell "fiscal integration"
as the "necessary step" to centralizing the power of the Banker Lords over
the citizenry of
all 27 EU member states.
The euro was intended to be the enforcement mechanism, but alas, voluntary
agreement is not a solid foundation for neo-feudalism. At its heart, the
Euro currency was ultimately a Grand Arbitrage for the big European banks:
they could loan essentially unlimited sums to citizens and sovereign
member-states in a stable currency, and be guaranteed that they would be
repaid in that same currency regardless of the weaknesses of the debtors.
That was a very sweet deal, an essentially risk-free license to generate
monumental profits, all backstopped/guaranteed by the EU and ECB.
In the old, horribly risky system of independent states and currencies, any
bank foolish enough to loan vast sums to weak states and its citizenry would
soon find the currency in which their loans were paid would weaken to the
point that even if the loans were repaid in full, their losses would be
For example, say a bank loaned Greece 1 billion drachma when the drachma was
equal in value to the U.S. dollar. The loan would thus be worth $1 billion.
But let's say that by the time the loan was repaid, the drachma had fallen
to 50 cents. Measured in dollars, the bank suffered a loss of 50%, even when
the loan was paid in full.
The Euro removed all that nasty risk, and created a massive vassal class of
EU bureaucrats to enforce the rules and make good any defaulted debt via the
European Central Bank (ECB), the supra-national lender that served the big
banks as guarantor.
Ultimately, the ECB was funded by the member
states' taxpayers, which spread the costs of the arbitrage over such a large
number of citizens that it seemed impossible that the guarantee could be
But the Banker Lords got greedy, and they overshot the carrying
capacity of the EU's economy by a trillion Euros; the debt loads are now so
enormous that the surplus skimmed from the debt-serfs isn't enough.
That is the core dilemma of the Banker Lords and their political vassals.
Since the Banker Lords lack the legal mechanism to impose new taxes
via the EU itself, they must rely on the cumbersome processes of illusion
and propaganda, of "extend and pretend" extensions of debt and harsh
"austerity" to skim as much cream as possible.
The cloak has been removed, and the bloodied whip is now visibly in hand. In
a household analogy:
your mortgage has been rolled over into a new form of
servitude, and your wages have been cut even as your taxes have been raised
to service your debt to the Banker Lords.
The vassals are bowing and scraping before their
Lords, promising deeper cuts and higher taxes: yes, Master, we will obey.
But this isn't enough, of course:
the Lords are demanding the rings off
the fingers of the debt-serfs, and the rights to sovereign assets
they are casting a covetous eye on the
comely daughter as well
we can fully expect a discreet demand to
exercise droit du seigneur, a right befitting the Lords of the new