Finance in the run-up to WW1

Harold James provides the latest addition to the VoxEU series on WW1, here.

33 replies on “Finance in the run-up to WW1”

The Independent [UK] have a v. good 100 moments series on WWI

This is the most recent and includes a link to those already published:

A History of the First World War in 100 Moments: Dulce et decorum est – a life cut short for a poet whose work achieved immortality.

In 1914, just after the outbreak of war, Wilfred Owen wrote a poem called “The Ballad of Purchase-Money”, which began:

“O meet it is and passing sweet

To live in peace with others,

But sweeter still and far more meet

To die in war for brothers.”

Three years later, that naive “meet and sweet” sentiment appeared, this time in its original Latin form – “Dulce et decorum est pro patria mori” – as the title of a very different poem, which began:

“Bent double, like old beggars under sacks,

Knock-kneed, coughing like hags, we cursed through sludge,

Till on the haunting flares we turned our backs

And towards our distant rest began to trudge.

Men marched asleep. Manyhad lost their boots

But limped on, blood-shod. All went lame; all blind…”–a-life-cut-short-for-a-poet-whose-work-achieved-immortality-9593044.html

from the James piece:

‘In the aftermath of the 2008 financial crisis, financial institutions appear both as dangerous weapons of mass destruction, and potential instruments for the application of national power.’

Eternal recurrence?

Minor point:

I do not regard Iran as a ‘rogue’ state. The US is easily the world’s greatest ‘rogue’.

On the state of The Rogue – well worth reading …

Oligarchy Blues
Posted on July 11, 2014 by Yves Smith

Yves here. This article by Michael Ventura, on the degeneration of representative process in the US and the rise of oligarchy, calls for new terminology and frameworks in order to describe our current political and economic conditions accurately, which Ventura contends is a necessary condition for action. I imagine many NC readers will agree with him on that, since many of you engage in precisely this sort of debate in the comments section daily. This piece is a quick sketch, but nevertheless hits some key issues.

Thomas Pynchon: “If they can get you asking the wrong questions, they don’t have to worry about the answers.”


A History of the First World War in 100 moments: After 1,560 days, at the eleventh hour, the guns fall silent – but for how long?

In their different ways, figures such as Brittain (who would overcome her despair), Woolf and Lawrence sought to imagine a better future. Yet Europe’s postwar tragic age would reveal that, for many survivors, only a better past could slake their grief. Nietzsche’s idea of eternal recurrence would leap out from philosophy and into history. Hence the cruellest act of political symbolism on record – one that outdid every stagey flourish of 1914-18.

On 22 June 1940, former Gefreiter Hitler of the 16th Bavarian Reserve Infantry ordered that France should surrender in the same railway carriage at Compiègne in which Germany had signed the armistice on 11 November 1918. The Fuhrer sat in Marshal Foch’s chair. Like Foch, in a deliberate act of mirroring, he brusquely got up and left after the preliminaries. In Europe’s long nightmare of a 20th century, the Eleventh Hour had merely marked a pause, not called a halt.

We hope to be able to publish “A History of the Great War in 100 Moments” as a complete collection, initially in e-book form, in early August. If you would like to be notified when the e-books are released – or, later, when a print book is published – please send an email to:–but-for-how-long-9601241.html

@David O’Donnell

Congratulations on your noble efforts on this thread. Six posts. I found them and the links very interesting. But, after 3 days, not a single post from anyone else. You must feel lonely and wasted. So, congratulations again on your perseverance.

There’s a lesson to be learned: the only threads that attract interest on this site are those that allow the Dublin 4 loony-liberal mob to rant agains FF. Since the Dublin 4 loony-liberals haven’t as yet managed to pin the blame on FF for causing the carnage of World War 1 (although they are working on it, and I expect an article saying just that from Fintan O’Foole by mid-August), the subject has little interest for them. But, keep up the good work, and if you can somehow manage to get Bertie Ahern’s name into the list of World War 1 war criminals, the thread will be inundated with posts.


On the day that is in it, surprising that so few wish to discuss the unquestioned links to the period in question, the vast number of Irish involved, and the consequences for The Island of its aftermath.

Bertie Ahern, of course, is not blameless here. He allowed Michael McDowell’s odious ideology to infect whatever level of pragmatism FF had maintained since TACA oligarchs infiltrated the ‘men of no property’; forgetting that McDowell’s crowd had form in this area with McNeil’s cop out in 1916 almost certainly prolonging WWI and leading directly to that little spot of bother in The Ardoyne this evening.

I hear that Fianna Fail are now punting all on Nietzsche’s idea of eternal recurrence as their divine Hibernian right and your prodigal, if welcome, return to the blog provides some empirical support for this belief.

p.s. Blind Biddy, on her return from vacation with Seven_of_9 on a cycling tour of the Rings of Saturn, will have your Regency Mount St. FF couch reconditioned and disinfected from all PD bugs, and returend to you with a replica bazooka; she does not trust FF with WMDs at the mo, nor is she likely to do so in the near future.

Financial War in Ukraine [h/t nakedcapitalism]

No to currency slavery

July 10, 2014
By Michael

From RT news

Western support will allow more IMF and European lending to prop the Ukrainian currency so the Ukrainian oligarchs can move their money safely to British and US banks, economist and author Michael Hudson told RT’s Truthseeker.

RT:Could you summarize for us the tried and tested steps that will lead from IMF loans, to Ukraine’s best assets ending up in private Western hands – the IMF’s ‘knee-breaker’ role as you memorably described it as?

Michael Hudson: The basic principle to bear in mind is that finance today is war by non-military means. The aim of getting a country in debt is to obtain its economic surplus, ending up with its property. The main property to obtain is that which can produce exports and generate foreign exchange. For Ukraine, this means mainly the Eastern manufacturing and mining companies, which presently are held in the hands of the oligarchs. For foreign investors, the problem is how to transfer these assets and their revenue into foreign hands – in an economy whose international payments are in chronic deficit as a result of the failed post-1991 restructuring. That is where the IMF comes in.

The IMF was not set up to finance domestic government budget deficits. Its loans are earmarked to pay foreign creditors, mainly to maintain a country’s exchange rate. The effect usually is to subsidize flight capital out of the country – at a high exchange rate rather than depositors and creditors getting fewer dollars or euro. In Ukraine’s case, foreign creditors would include Gazprom, which already has been paid something. The IMF transfers a credit to its “Ukraine account,” which then pays foreign creditors. The money never really gets to Ukraine or to other IMF borrowers. It is paid to the accounts of foreigners, including foreign government creditors, as in IMF loans to Greece. Such loans come with “conditionalities” that impose austerity. This in turn drives the economy even further into debt – forcing the government to tighten the budget even more, run even smaller budget deficits and sell off public assets.

Its absurd to think that not having oil is a good thing, just because some Islamic countries that have oil are unstable and wracked by sectarian violence. Egypt doesn’t have oil, but its in turmoil. Ditto Syria even more so. Ditto Afghanistan and Pakistan, which don’t have oil either. I’m afraid that the common denominator in Islamic countries at present isn’t oil, but backward Islamic politics combined with fanatical anti-Christian bigotry and several varieties of loony Marxism, all of which has reduced the majority of Islamic countries to basket cases, regardless of whether or not they have oil.

Does Norway wish it didn’t have oil because of the war in Iraq?

Does Scotland wish it didn’t have oil because of the war in Iraq?

I am sure that, when oil is eventually discovered off Ireland, the NIMBYists will try to prevent it coming ashore on the grounds that Ireland will become another ‘Iraq’ if it does.

Alright – I really have nothing better to do. It’s good to discuss these things.
The role of oil in destabilising fragile countries would be interesting to look at.
Oil is not the sole cause of turmoil in the world – as you point out there are others. Nor is oil going to lead to turmoil. As you point out there are countries in which it works to the good. But if you look at the pattern of exploitation of oil in poorly developed countries it seems to be follow a pattern. The west puts in a strong man/faction. He then uses the revenues from the sale of the oil to buy arms from the west. It’s a very attractive model from the point of view of the arms industry.

This model seems to be the way it works only in fragile countries that have no strong democratic tradition. So I accept your points but they don’t counter the idea that oil is a bad thing in a poorly functioning country.

Regarding Ireland and oil – I don’t think that our government has the balls or the sense to negotiate on it strongly enough to be honest. I suspect that they’d sell off the rights for a song, probably not take an appropriate level of tax from it and probably not insist on the environmental stuff. I’m all for exploration and development but they’d want to negotiate reasonably hard. I think that they could give it away to cheaply. They should do what the Norwegians did but I doubt they would.

Anyhow does oil (or any other high value natural resource) destabilise fragile countries and would Ireland be able to deal with it if we found a reserve?

BTW I don’t really like to add too much of the religion into it. Religions tend to come with out of the box economic and social codes and it’s very tempting for your countries to gravitate towards them as they find their feet. The more difficult it is for the country to find its feet that more it will cling to religion. The countries – if given space and security tend to be able to make the step of separation church and state. We are living proof of it in this country. We had catholic politics for years

Good points.
Not saying oil is the only cause. And not saying that oil is an inevitable cause. Just saying that oil in a fragile democracy seems to be particularly problematic.
The Forbes article gives an insight into the thinking that can follow oil.
I don’t think its just oil either – its all high value natural resources in poorly run countries.
For western industrialists there are 2 scenarios. Scenario 1 the people of the country with the reserves take 50% of the profits or scenario 2 the corrupt government of the country with the reserves take 20% and spend half of that on weapons from the arms company you have shares in. Greed will pick option 2 whilst option 1 is much more beneficial for longer term prosperity and equally spread growth.

Our current government can’t even stand up to a country and western music star – do you think it would be able to stand up to oil barons? Can’t stand up to anything or anybody really.

Intresting points though

On local finance in the age of financial sytem imposed austerity …Latest cuts for coalface charities cruel and unnecessary

Opinion: Small organisations doing vital work are being allowed to fall through the cracks

Alan Kelly and Leo Varadkar can make a good start in their new jobs by getting to grips with a cruel and completely unnecessary crisis in funding for almost every small charity for people with disabilities. Last week, while the country was in paroxysms over a fat man in a Stetson hat, a bomb went off over the heads of 26 organisations that provide services and support for people who have other things on their mind – like getting through, not five nights but just the day; every day. Casually and carelessly, the Government essentially informed these organisations that it doesn’t matter if they go out of existence.

We’re not talking here about the mega-charities with the inflated salaries but rather of the collective self-help groups that make life bearable for people who’ve been dealt a bad hand by genetics.

Modest grants Groups like Aspire, for people with Asperger’s syndrome, the Irish Motor Neurone Association, the Centre for Independent Living, which helps people with disabilities with the assistance they need to live their own lives, MS Ireland, for people with multiple sclerosis, Chronic Pain Ireland and the Alzheimer’s Society. Last week, these bodies and others learned that they are having all their core State funding withdrawn immediately.

Meanwhile a bunch of farmers are excused from capital gains tax on transferrng their EU Social Welfare …. Oligarch, local and international, are given million in write downs as they pick through the entrails …. etc

@An Taoiseach

Have a well earned Fig Leaf!

If the young Turks coming into the relevant departments of environment and health want to send a signal that they’re different, they could start by stopping this stupidity now.’



So, oil is out. Country music concerts are out.

Is there any economic activity the Government should allow?

Let’s hope that, if oil/gas is discovered off the coast of Ireland, its off the coast of Northern Ireland. If that happens, it will be brought ashore in double quick time and highlight the difference between the northern and southern mentalities.

On Finance & Complex Adaptive Systems

Financial Interconnectedness and Systemic Risk: New Fed Report Flags 7 Behemoths

Posted: 14 Jul 2014 10:56 PM PDT

Yves here. This post addresses a topic near and dear to my heart: the importance of financial interconnectedness, or what Richard Bookstaber called “tight coupling” in his book A Demon of Our Own Design. Tight coupling occurs when the processes in a system are so closely linked that when certain types of activities begin, they propagate through the system and cannot be halted. Or as Bookstaber put it in 2011:

Non-linear systems are complex because a change in one component can propagate through the system to lead to surprising and apparently disproportionate effect elsewhere, e.g. the famous “butterfly effect”….

I don’t thinks that theory of Complex Adaptive Systems gets enough attention in Macroeconomics & Finance – path dependency to nowhere is not a neat place to be …


I’m more than a mite concerned about Fracking on this island.

On Oil & Gas – bring it on. Your intervention in the Ardoyne is appreciated!

I wouldn’t recommend drawing attention to the Northern Ireland mentalities. Most people outside the wee six couldn’t care less about the great sacrifice at the Somme and the financial liabilities it apparently generated. Painting murals of drug dealers on gable walls is unlikely to go viral. Plamasing the Queen a laJeffrey Donaldson is what Eddie Keher would class unmanly. Calling Fermanagh “the West” is stupid. All the energy wasted on flegs. Ulster Scots is a language, is it ? The cost of political dysfunction. And then the Shinners and their works. God bless HM Treasury for its munificence.


I’m surprised you are still around after the humiliation you suffered at the hands of Francis. I think you’ll find that the drug problem is a lot less in Northern Ireland than it is in Dublin, as is the number of shootings and stabbings. Never denied that the artificial 6-county statelet is dysfunctional. So is the artificial 26-county statelet. Anti-partitionists have been saying that for years. The obvious solution is to abolish both the artificial statelets and replace with a 32-county state asap. Only then will it be a real country. I’m sure that the incoming FF/SF coalition will see this as a priority. When it happens, the big losers will be southern partitionists. Despite its dysfunctionality, N. Ireland is way ahead in many areas. For example it has a far lower road deaths rate, largely because of investment in good roads stretching way back and not being prevented by NIMBYs.

Would have been easier to land oil than that overweight barrel of schmalz.
If the British landed the oil they would ensure british suppliers, british jobs, and a nice little tax return. Our guys would sell it to the first fella who said he liked them and who’d build some toilets for the swimming pool in Castlebar.

But there is another common denominator to all the trouble spots you mention. It’s actually a more logical one. They are all results of European colonialism and creative map drawing (by the British). India and Pakistan – made by the UK, Israel Palestine made by the UK, Kuwait Iraq made by the UK. NI and us – made by the UK
So for all the advances they brought the world the British have a problem – the divisions to exploited to bring the world great prosperity have to be sorted out. It could be the final painful phase of true globalisation.

@David O’Donnell

While I agree largely with what you say about charities, there is no contradiction between wishing to see funding restored to charities and people condemning the DCC for banning the concerts.

The reality is that an additional 100m euros would have been collected in taxes from these concerts taking place (not my figure, but Enda Kenny’s). That money is now lost. How many of these charities could have been funded with the 100m euros? It is typical of the left-wing mindset in this country that, while demanding funding for this, that and the other (sometimes, as in the cases you mention, quite justifiably), they oppose the commercial activities that pays for the funding. Despite what socialists think, money for charities doesn’t come out of thin air.

I’m with you JTO. There’s a lot of self hating Irish People around. ‘They’ll probably mess it up….no faith..never get anything right..would rather european bureaucrats took over..etc’…..boring. They are us.

Considering Irelands over reliance on gas, successful fracking would have huge benefits for our Gas and electricity Price. So higher reward. Also, I can’t see why it can’t be semi-state lead. There are probably higher risks though, we trade off our green image for both tourism and agri-foods. Any negative environmental impact, contaminated water and/or mini quakes could put a dent in both of those potentially high growth businesses. Not to mention the horror story for the locals.

The current wind ‘strategy’ is proven pretty expensive for all concerned and operationally difficult to manage. Then again no one seems too concerned. Some care about the prices but no one seems to be asking why they’re up with highest in Europe.

In regard to exploration. We probably can’t do what Norway has done. As we don’t have what Norway has. I am all for it though. It’s about getting the tax structure sweet spot. Not too hot to kill at tax revenue for the state, no too cold to make no one care what’s off our coast.

Norn irn is special. So ####ing special. Bringing loyalism into a 32 county republic is a pipe dream. Maybe you could at a stretch set up an SPV to IPO Derry, throne, Fermanagh , armagh and South Down and have them reunited with Shangri la.

NI is going to have a lot of problems in the future of low growth and UK political uncertainty.

@ That’s legal
Irish people are the same as people anywhere. There is one thing we don’t do well – discuss issues maturely. It’s good to disagree – doesn’t have to be personal.
Fracking is not clear cut. Do you lose out environmentally and thus impact on food and tourism? Do you wait until global gas decreases and you can sell it off more expensively? Theres a lot to it. Same debate across the world.

It’s good that this thread has wandered onto energy. Alsace and Lorraine and all that…


Is there any chance you can use your influence to have Owen Keegan appointed manager of Dublin GAA team? It pains me, but that’s the only thing I can think of that will stop Dublin winning the Sam Maguire this year.

@That’s legal

There’s a lot of self hating Irish People around.

Exactly correct.

This blog soon become an outlet (whether originally intended or not) for them.

They have dominated it from day one.

Unless there is a radical change in how the blog operates, I can’t see it surviving into the boom (which has already started).

What are the posters going to talk about when growth hits 6/7/8 per cent plus?

Its already at 4.1 per cent (highest in EU) and rising fast.

Signs of blog decline all round. The last new thread was one week ago. When the GDP/GNP figures were released a fortnight ago, even though they were the most important GDP/GNP figures for a decade (since they included very important revisions), no thread was opened specifically for the GDP/GNP figures for the first time since the site opened. Instead, they were hidden at the back of an unrelated thread where few would see them. Like having a sports blog and not mentioning the World Cup.

They’d win regardless

On a more serious note this is an excellent article and thanks to Kevin for posting it.

You’d have to wonder if the point is being missed. The marriage between money and power is an eternal one. The corruption of politics by money is also eternal. The Forbes article, I think, shows how easy it is for thinking to get really muddled and how easy it is for politics to lose sight of its goal.


I’m all in favour of Garth Brooks – as I noted previously, Mad Oul Jozie down the road is leppin furious. Socialists had nothing to do with it ….. big-ball envy from the hand-ballers & Eamonn O’Brien …

…. a total balls-up.

p.s. good to hear that the ethnic cleansing of PD influence from FF is ongoing … that said, Mary Lou is making eyes at Labour – methinks she might need to visit specsavers before/after the next election ….

But I do agree with Mary Lou – FF & FG need a good rest ….. So do The Unionists who regressed into a huff of a huddle …

Finally, returning to the focus of the thread:

Debt is the neu Weapon of Mass Destruction …..

…. load a state with plenty of it – and the financial system controls the state.

@ Eureka

I disagree. I dont believe ‘Irish people’ have a higher tendancy to get personal in a debate. I wastnt being personal. I just stated that the self hate, defeatist nonsense constantly propagated online bores me. The content of your post reminded me of it, not you personally, you seem like a nice chap.

Blog decline ? People are on holidays. Wait until volatility picks up, could be as
early as August. Whatever it takes is not getting through to SMEs.

@ That’s legal?
No need for the compliment – you obviously are an excellent judge of character!
It’s not the Irish people – it’s the Irish culture. Sometimes it is seen as more important to be liked than to be honest.
I think its a mentality that’s fading in the private sector – still a problem in our public sector probably. It may be a cultural issue – nothing more than that and one that can change.

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