A story laced with the irony of Big Money.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
As Europe’s Mediterranean region bakes under the rays of an inordinately hot summer sun, French authorities have taken the rather unusual step of closing the small public beach of Vallauris, a charming little town on the French Riviera. The reason has enraged many local residents: the village is expecting a visit from the Saudi King, Salmán Bin Abdelaziz, who owns an enormous mansion overlooking the beach. And Salmán and his entourage do not want to share the sand with the locals.
Local authorities cite “security reasons” for erecting metal fences to prevent the public from accessing not only the beach but also a tunnel under the railway line connecting the town with the coastline. According to the sub-prefect of the Provence-Alpes-Cote d’Azur region, Philippe Castanet, the closure of the public beach was necessary to avoid putting at risk the head of state of “a country at war,” suggesting that the more bellicose the state, the more special privileges its head of state can expect to receive during a visit to 21st century France.
The story is laced with irony. It was 226 years ago to this very month that France’s starving peasants and opportunistic bourgeoisie brought the country’s ancien régime to its knees – literally! From its ashes rose the three cornerstones of modern European civilization: respect for private property, democracy, and the rule of law. Now French authorities are offering the royal family of one of the world’s most despotic regimes privileges that would have the occupants of the Pantheon (including Rousseau, Voltaire, Victor Hugo and Emile Zola) turning in their graves.
Those privileges – including the right to build an elevator connecting the public beach to Salmán’s private mansion – would have been unimaginable just 20 or 30 years ago. Indeed, in the 1980s the Saudi royal family’s security detail tried to block a public path running alongside the beach property, but local authorities forced them to reopen it. Now, 30 years later, those same authorities, funded by taxpayer money, are working side by side with Saudi security forces to help the King and his entourage take full control of a public beach.
The message is clear: the interests of a foreign head of state are far more important than the so-called rights of the 28,000 regular inhabitants of a small French coastal resort. Perhaps next time the King will just buy the beach outright and be done with it. No doubt the French government would be more than happy to sell up. After all, whatever your language – Arabic or French – money talks. And in the case of Saudi Arabia, still the world’s biggest oil producer, it shouts.
The country is also an insatiable consumer of weapons, and France is one of the world’s biggest producers. No coincidence there. Some local businesses also stand to benefit handsomely, as El Pais reports:
King Salmán will travel with an entourage of 500 people. At least another 500 people will be in the area in order to be close to the monarch. Saudi citizens have reserved hundreds of rooms in luxury hotels in Cannes… Chauffer-driven cars have been hired for dozens of members of the King’s entourage. Local florists alone hope to deliver more than 10,000 flowers to the mansion each day.
With patronage like that, who cares about 28,000 grumpy, beachless Frenchmen and women?
The thing is that this is not just about the power and influence of Saudi Royalty. It is about the irresistible sway that footloose global capital now holds over the world’s cash-starved, semi-bankrupt governments, all desperate for its patronage and willing to sell it just about anything.
As Oxfam reported last year, the wealth of the world can be divided roughly into two parts: almost half going to the richest one percent; the other half to the remaining 99 percent (Wolf discussed it here). The wealthiest 1% had a net worth of $110 trillion, or 46% of the world’s total wealth. The bottom 50% of all humanity, the poorest 3.5 billion people, can lay claim to just $1.7 trillion, or 0.7% of the world’s total wealth, same as the wealthiest 85 individuals. So forget about the 1%, it’s the 0.00000(…)1%.
In my own country-in-law, Mexico, the four richest individuals (that’s four people out of 122 million) own a staggering 9% of the nation’s wealth, up from 2% just 12 years ago.
This trend shows little sign of letting up, especially with central banks around the world continuing to shower the world’s biggest banks, corporations, and investors with virtually unlimited free money. Thanks to countless taxpayer-funded bailouts and numerous iterations of QE and ZIRP, the Fed & Co have created the mother of all wealth effects, with virtually all new money flowing upward.
And with the super rich paying next to no taxes anywhere on the planet, that’s where the money is destined to stay. Those who do pay taxes are getting squeezed out of existence. Under the dual pressure of declining salaries and rising taxes, the fast-shrinking middle classes can no longer sustain the rising costs of government.
To keep servicing their debts, governments are now pawning just about anything and everything they can get their grasping hands on, from the mementos of their nation’s past (c.f. Greece) to the country’s water supply (c.f. Greece, Ireland, Mexico…) — whatever it takes to keep the debt clock ticking.
In the most perverse of ironies, those who are picking up the assets, normally for cents on the dollar, are the same global oligarchs, banks, funds, and corporations that have been the prime beneficiaries of central banking largesse. They are also the same people and institutions who hold the lion’s share of responsibility for the global financial crisis. Despite receiving trillions in bailouts from their ever-loyal friends in government, they hold little sense of allegiance or responsibility to any one nation and pay barely a cent toward its upkeep. By Don Quijones, Raging Bull-Shit.
The autopsy has already begun. Read… Is Mexico Ready For Life Without Its Sugar Daddy?