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Greece debt enslavement reminds Russia economic rape by Clinton administration in  nineties

Case study of neoliberal enslavement of the country

News Debt enslavement  Recommended Links Ukraine debt enslavement IMF as the key institution for neoliberal debt enslavement Neoclassical Pseudo Theories and Crooked and Bought Economists Neocolonialism as Financial Imperialism
Neoliberalism as a New Form of Corporatism Harvard Mafia, Andrei Shleifer and the economic rape of Russia Provisional government as an instrument for Ukraine's debt enslavement Disaster capitalism Predator state Systemic Fraud under Clinton-Bush-Obama Regime Casino capitalism

Neocons

Merkel as Soft Cop in Neocon Offensive on Eastern Europe and Russia  Provisional government as an instrument for Ukraine's debt enslavement Harvard Mafia, Andrei Shleifer and the economic rape of Russia  Color revolutions Neoliberal Compradors and lumpenelite  Looting pays dividends to empire
Regulatory Capture & Corruption of regulators Mayberry Machiavellians The Grand Chessboard Divide and conquer stragegy If Corporations Are People, They Are Psychopaths Resurgence of neofascism as reaction on crisis of neoliberalism and neoliberal globalization "Starving the beast" bait and switcht
The Rape of Russia, Testimony of Anne Williamson  John Kenneth Galbraith Is neoclassical economics a mafia Lysenkoism Deception Humor Etc

Introduction

The neoliberalism in general and EU in particular has been exposed as a loan-sharking conglomerate that cares nothing for democracy. Greece in 2015 looks like Russia in 90th --  a nation stripped of its dignity, its sovereignty, its future. the key difference with old colonialism is the role of local fifth column --  the destructive role of the Greek Oligarchs in putting country into debt slavery. 

luella zarf   -> McBloke 14 Jul 2015 14:02
Doesn't change the fact that it was Greece who ran up the original debt and Greece who should pay it back.

1. Greece was not liable for private debt, that's just silly. The French and German governments should have saved their irresponsible banks, with money from their own tax-payers if they felt they had to. Instead they ganged upon a weaker state like a mafia cartel and robbed it in broad day light. This is odious debt and should not be payed back.

2 Even if the debt was legitimate, which it isn't, Greece should not pay it if she has to self-destruct in order to pay. Governments have a first duty towards their own populations, not towards Mr Schauble, and sovereign defaults are common in history.

luella zarf  -> Samuel Burns 14 Jul 2015 13:49

Nobody is forcing these reforms on Greece.

You don't seem or don't want to understand the political game that is played here. The Greek leaders have been submitted to extraordinary pressures and blackmail from the beginning. At the beginning of the crisis, Greece was forced to accept a bailout that saved the German and French banks on the back of the Greek economy exactly because they were threatened with being thrown out of the Eurozone by the Eurogroup.

Even earlier this year Schauble threatened the Greek delegation during the negotiations not only with a forced grexit but also with the destruction of their banking system. And then the Eurogroup did just that by shutting down ELA, which was a political decision. This is what made Tsipras accept the deal. The bankings system of the country has been shuttered.

These are neocolonial power games, but of course the army of pro-banker and pro-German bots will deny this until the end of times.

luella zarf  -> TheHighRoad 14 Jul 2015 13:30

It might begin to get on my nerves a bit and make me wonder why I should feel guilty anymore.

What Germany does to Greece, and in general to the periphery countries, resembles very much to imperialism and neocolonialism through the means of finance. If you don't see the patterns in history and this doesn't make you feel uncomfortable, angry, or sad, it is understandable. Your country is becoming richer and stronger as a result of its imperialist actions, so this works out well for you, doesn't it?

However, the rest of us are absolutely outraged. People haven't signed up to have their societies run by Germany's and France's finance ministers.

ID0241799, 14 Jul 2015 10:23

You are the naive one. Greece has never been a communist country, rather the opposite. There has been most of the time bipartidism similar to the one in the UK, with conservatives and the PASOK. The PASOK was like the Labour Party, and very far from being communist, rather is part of the capitalist neoliberal system since years ago. Read a bit of history, please. You are not only ignorant about history but also about economics and about current politics. I give you a bit of bibliography to read:

Greek neoliberal fifth column: the destructive role of the Greek Oligarchs

  One underlying problem in Greece, in both its economy and its politics, is the role of a group of wealthy people who control key sectors, including banks and the media, collectively referred to as the Greek oligarchs.'

Joseph E. Stiglitz is a Nobel laureate in economics, a professor at Columbia
Greece, the Sacrificial Lamb - NYT, July 23, 2015

We will define "fifth column" as  the "transnational" part of national elite along the lines of  "The Revolt of the Elites" theory.  There are other definitions. For example

The fifth column is the people in positions of power, who act in the interests of another state, and they are used as a tool to achieve foreign state political goals," 

Previous consensus was that the elite generally shares the idea that the society in which they live works best when all members of society can engage in upward mobility and improve their status via education and entrepreneurship. If there are adequate upward mobility channels, then most members of society perceive themselves as belonging to the same team and care about ensuring that that this team succeeds.

But in the new "internationalized" world dominated by transnational corporations, the notion that a company or corporate executive of transnational corporation or  a professional (for example, IT professionals) working in such a corporation is bound by an allegiance to their country of origin and work for its benefit is passé.

Such elite is leaching the country using stronger neoliberal states as "protection racket" and hiding their stolen money in London, Zurich and New Your with full knowledge of their criminal behaviour (and often support as they represented interests of multinational in their native country)  by government of such neoliberal states.  London generally contains the most interesting and disgusting collection financial criminals from Russia which amazingly after crossing the border escaping prosecution instantly became freedom fighter. 

The elites  of today are more bound to one another and in case of executives to the transnational corporations they serve more to the country where this international corporation reside, then to country where they reside.  And this effect is not limited to executives. For example many programmers read almost exclusively the US computer journals and media and that naturally affects their "social affiliation". This was true even in the time of the USSR, when access to foreign magazines was extremely difficult. 

Also the fact that the greed on neoliberal oligarchy (especially financial) is just overwhelming and  the possibility to get higher salary (sometimes in convertible currency) decimates all other considerations such as patriotism and moral obligations. Amorality became a norm and Randism became a new ideology of elite. 

Kostas Vaxevanis is a magazine publisher and television journalist in his column Greece’s Rotten Oligarchy ( NYT, Jan 6, 2013)  charaterized this neoliberal fifth coumn the forlling way.

DEMOCRACY is like a bicycle: if you don’t keep pedaling, you fall. Unfortunately, the bicycle of Greek democracy has long been broken. After the military junta collapsed in 1974, Greece created only a hybrid, diluted form of democracy. You can vote, belong to a party and protest. In essence, however, a small clique exercises all meaningful political power.

For all that has been said about the Greek crisis, much has been left unsaid. The crisis has become a battleground of interests and ideologies. At stake is the role of the public sector and the welfare state. Yes, in Greece we have a dysfunctional public sector; for the past 40 years the ruling parties handed out government jobs to their supporters, regardless of their qualifications.

But the real problem with the public sector is the tiny elite of business people who live off the Greek state while passing themselves off as “entrepreneurs.” They bribe politicians to get fat government contracts, usually at inflated prices. They also own many of the country’s media outlets, and thus manage to ensure that their actions are clothed in silence. Sometimes they’ll even buy a soccer team in order to drum up popular support and shield their crimes behind popular protection, as the drug lord Pablo Escobar did in Colombia, and as the paramilitary leader Arkan did in Serbia.

In 2011, Evangelos Venizelos, who was then the finance minister and is now the leader of the socialist party, Pasok, instituted a new property-tax law. But for properties larger than 2,000 square meters — about 21,000 square feet — the tax was reduced by 60 percent. Mr. Venizelos thus carved out a big exemption for the only people who could afford to pay the tax: the rich. (Mr. Venizelos is also the man responsible for a law granting broad immunity to government ministers.)

Such shenanigans have gone on for decades. The public is deprived of real information, as television stations, newspapers and online news sites are controlled by the economic and political elite.

Another scandal involves the so-called Lagarde List. In 2010, Christine Lagarde, then the French finance minister (and now the head of the International Monetary Fund), gave the Greek government a list of roughly 2,000 Greek citizens with Swiss bank accounts, to help uncover tax fraud. Greek officials did virtually nothing with the list; two former finance ministers, George Papaconstantinou and his successor, Mr. Venizelos, reportedly even told Parliament they did not know where it was. Meanwhile, several media outlets falsely accused some politicians and business figures of being on the list in order to conceal the ugly reality: rich people were evading taxes while their desperate fellow citizens were searching the trash for food.

When Hot Doc, the monthly magazine I edit and publish, made the list public in October, I was arrested and charged with violating personal privacy, but was acquitted. The result didn’t please those in power. So I am being brought back for a second trial (a date has yet to be set) on similarly vague allegations. Throughout the entire process — the publication of the list, my arrest, my acquittal — the Greek media were absent. The case was a top story in the international press, but not in the country where it took place.


The reason is simple. The Lagarde list implicates a corrupt group that answers to the name of democracy even as it casually nullifies it: officials with offshore companies, friends and relatives of government ministers, bankers, publishers and those involved in the black market.

After my magazine released the list, the Greek government made not a single statement about the case.

When Mr. Venizelos left the Finance Ministry last March, he failed to turn the CD with the list over to his successor. He took it with him. Only when his successor, Yannis Stournaras, told The Financial Times in October that he had never received the list did Mr. Venizelos turn it over to the prime minister’s office. He was never asked about the delay, and leaders of the three parties in the coalition government have not referred his conduct to Parliament’s investigatory committee.

Meanwhile, a newly released version of the list made clear that someone had removed the names of three relatives of Mr. Papaconstantinou, who was the finance minister from 2009 to 2011, before Mr. Venizelos. Last month, Mr. Papaconstantinou was expelled from Pasok. He now faces a Parliamentary investigation, the potential lifting of his immunity from prosecution as a former minister, and charges of tampering with the data. It appears that he may become a new Iphigenia, a scapegoat sacrificed so that the corrupt political system can survive.

This is all unfolding at a time when Greece is walking a tightrope above the abyss of bankruptcy, while the coalition government is instituting new taxes on the lower classes. Half of young Greeks are unemployed. The economy is shrinking at an annual rate of 6.9 percent. People are scrounging for food. And a neo-Nazi party, Golden Dawn, is on the rise, exploiting the resentment and rage toward the ruling class.

The Greek people must remount their bicycle of democracy by demanding an end to deception and corruption. Journalists need to resist manipulation and rediscover their journalistic duties. And the government should revive Greece’s ancient democratic heritage — instead of killing the messenger.


Kostas Vaxevanis is a magazine publisher and television journalist. This essay was translated by Karen Emmerich from the Greek.
 

Austerity is far from being a mistake. This is quintessential neoliberal policy

Austerity is far from being a mistake. This is quintessential neoliberal policy, sometimes called Disaster capitalism

Now that the European authorities — not the Greek government — have pushed the economy back into recession, it will make Greece’s debt situation even worse. The IMF just published a paper showing that the Greek debt is not sustainable, yet the European authorities have refused to discuss debt relief.
The European authorities are demanding more pension cuts and regressive tax increases, as well as primary — excluding interest — budget surpluses that would make it difficult, if not impossible, for the Greek economy to have a recovery any time soon that would be strong enough to make a serious dent in Greece’s 26 percent unemployment rate.
In short, they are not offering Greeks any light at the end of a long tunnel. This is more evidence, if any were needed, that they are not bargaining in good faith.

You can call it "Banks Uber Alles", if you wish.

Timon | Jul 16, 2015 8:48:21 AM | 5

One of the key reasons that Wall St/City/Frankfurt want universal "austerity" is not just that they want people to be frightened, impoverished and insecure; but in particular, because it has the desirable effect of suppressing the political participation of people who must continuously walk the edge, just to get by - and by now this is about half the population -and who might otherwise participate in the political process with decisive effect.

Rise like lions after slumber
In unfathomable number
Shake your chains to earth like dew
That in sleep have fallen on you
Ye are many, they are few.

H.L. Mencken is also very good on this subject - the need of the self-appointed elite to distract and render impotent the average person, and how greatly the big shots hate and fear the "mob".

The basic mechanism of debt enslavement

The whole mechanism of debt enslavement is polished to perfection on developing countries.

  1. Questionable projects. Often peddled by IMF. Sometimes by EU. Sometimes of home origin. In case of Greece it was basically spending big on arms   http://www.analyzegreece.gr/interviews/item/145-frank-slijper-an-insane-level-of-military-spending-led-greece-to-massive-debts-for-weapons-does-not-need The US is the major supplier of Greek arms, with the Americans supplying 42 per cent of its arms,  Germany supplying 22.7 per cent, and France 12.5 per cent of Greece's arms purchases.
  2. The country elite takes large loans for those projects or takes loans to placate the population who is sliding into neoliberal poverty/unemployment swamp of poverty and unemployment in order to survive politically.
  3. Part of the money is immediately stolen by local neoliberal oligarchy (which profess "greed is good" religion with probably more enthusiasm then their counterparts) and quickly repatriated to Western banks.
  4. The rest is partially wasted due to various factors including mismanagement, nepotism, the fact that equipment and often materials were bought from the country that gave the loan at inflated prices.
  5. The net result of the project is growth of the debt.
  6. Bank crisis
  7. Conversion of private loans into state debt (according to standard neoliberalism mechanism of wealth redistribution "appropriate gains, shift losses to public")
  8. Austerity regime is enforced which guarantees that this condition is a permanent one.
  9. The country became a cheap supplier of the raw materials and workforce to G7.

The conditions that have been outlined by "troika" as “a catalogue of cruelties”

Even neoliberal rag Der Spiegel described the conditions that have been outlined by "troika" as “a catalogue of cruelties”. I would add corruption of German leaders, who revealed in brad light their neoliberal cruelty as well. The first paragraph of the article from Greek Reporter says it all.

“German Finance Minister Wolfgang Schaeuble proposed on Saturday that 50 billion euros of Greek public assets be transferred to an external fund and privatized over time. The fund he used as a suggestion, the Institution for Growth in Greece, is owned by the German bank KfW, whose current Chairman of the Board of Supervisory Directors is Schaeuble himself.”
http://greece.greekreporter.com/2015/07/13/institution-for-growth-fund-proposed-to-hold-50-bn-euros-of-greek-assets-is-part-of-german-govenrment-owned-bank/

Looks like Schäuble Foibler has a history of Following The Money wherever it leads. He was ousted for corruption in 2000 for his involvement in running a slush fund of undeclared election campaign donations for former Chancellor Helmut Kohl:
http://conversations.e-flux.com/t/wolfgang-schauble-was-once-ousted-for-corruption/2070 

Enrique Ferro's insight:
In the process, Merkel/Hollande performed more like a NATO commando, delivering a (economic) European remix of Shock and Awe. An unidentified, invisible -- yet appalled -- eurocrat memorably described it as "extensive mental waterboarding." Dick Cheney and Donald "known unknowns" Rumsfeld should be eligible for royalties -- in the spirit of Atlanticist friendship. The result -- this Eurosummit statement -- adds a new twist to the Tacitus maxim, "they make a desert and call it peace." The Financial Times -- who at least is familiar with the history of Rome -- called it, "the most intrusive economic supervision program ever mounted in the EU."

The only good thing about Greek crisis is that the machinations of the leaders of France and Germany as well as the Troika have been exposed. As much as the Troika institutions themselves. The legitimate question arise "Who runs these banks, and for whom?" Is this a new variant of "Deutschland über alles" that now take form of "Banks uber alles"?

 The legitimate question arise "Who runs these banks, and for whom?" Is this a new variant of  "Deutschland über alles" that now take form of "Banks uber alles"?

And banks mean corruption and fraud. The world’s 20 biggest banks have paid a total of about $235 Billion in fines in the last 7 years to settle multiple allegations of fraud. Just recently 6 of the big banks agreed to pay $5.6 Billion in fines for rigging the global foreign currency exchange market, and 4 of the 6 pleaded guilty to criminal behavior. Like the unnamed Barclays trader is alleged to have written, “If you’re not cheatin’, you’re not tryin'”.

Here are typical statements by the Department of Justice (DOJ) about the LIBOR cartel.

“For years, employees at Deutsche Bank illegally manipulated interest rates around the globe – including LIBORs for U.S. Dollar, Yen, Swiss Franc and Pound Sterling, as well as EURIBOR – in the hopes of fraudulently moving the market to generate profits for their traders at the expense of the bank’s counterparties,” said Assistant Attorney General Caldwell. “Deutsche Bank is the sixth major financial institution that has admitted its misconduct in this wide-ranging criminal investigation, and today’s criminal resolution represents the largest penalty to date in the LIBOR investigation.”

“Deutsche Bank secretly conspired with its competitors to rig the benchmark interest rates at the heart of the global financial system,” said Assistant Attorney General Baer. “Deutsche Bank’s misconduct not only harmed its unsuspecting counterparties, it undermined the integrity and the competitiveness of financial markets everywhere.”

European neoliberals as vindictive bullies

While Greece dent is the result of action ot its own neoliberal oligarchy, the enablers were in EU and the USA. As one commenter noted (July 14, 2015 at 5:23 pm )

The whole situation is labyrinthine because of the fateful collision between

Some people like finance minister Yanis Varoufakis think yes (Greek Deal is 'A Coup D'Etat Using Banks Instead of Tanks' - Former FinMin Varoufakis - Novinite.com - Sofia News Agency). At least by calling a referendum Syriza have been able to expose the neoliberals as vindictive bullies. But Greeks remained between a rock and a hard place as cost of leaving euro is way to high.

The former finance minister told the ABC the bailout agreement is a ‘new form of postmodern occupation’ and predicts Greece will fall into the grip of the far right

Austerity measures demanded of Greece by its European creditors will strengthen the far right, the country’s former finance minister Yanis Varoufakis has said.
 

Varoufakis also dubbed the bailout agreement reached in Brussels this week as a new Treaty of Versaille, and a coup d’état which used banks instead of tanks.

The Greek government has found itself in a dire political situation after it was forced to accept draconian austerity measures as part of a bailout offer even harsher than the one a national referendum voted no to last week.

The outspoken former minister, who resigned from his role after the national referendum, despite it returning the result he was calling for, told the ABC the far-right Golden Dawn party could “inherit the mantle of the anti-austerity drive, tragically”.

“If our party Syriza, that has cultivated so much hope in Greece – to the extent that we managed to score 61.5% in the recent referendum – if we betray this hope and if we bow our heads to this new form of postmodern occupation, then I cannot see any other possible outcome than the further strengthening of Golden Dawn,” Varoufakis said.

Speaking to Radio National’s Phillip Adams in his first post-resignation interview, Varoufakis also said he “jumped more than he was pushed” when he resigned from the ministry.

Prime minister Alexis Tsipras “didn’t have what it took, sentimentally, emotionally, at that moment, to carry that no vote to Europe and use it as a weapon,” said Varoufakis.

“So I … decided to give him the leeway that he needs to go back to Brussels and strike what he knows to be an impossible deal. A deal that is simply not viable.”

Varoufakis said he stood back to allow his successor, Euclid Tsakolotos, and the Greek negotiating team work in Brussels.

“I know very well what it feels like to walk inside those neon-lit, heartless rooms, full of apparatchiks and bureaucrats who have absolutely no interest in the human cost of decision-making, and to have to struggle against them and come up with something palatable.”

Greece was “set up” by eurozone leaders in dealings to address the economic crisis, Varoufakis later told the New Statesman, adding Germany was responsible for the view of the Eurogroup.

“Oh completely and utterly,” he said. “Not attitudes – the finance minister of Germany. It is all like a very well-tuned orchestra and he is the director.”

Varoufakis has previously accused the EU of putting a bailout of French and German banks ahead of Greece’s socioeconomic viability.

After 15 hours of talks that stretched through Sunday night and into Monday, Greece walked away from the emergency summit of Eurozone leaders with a “compromise” bailout package.

Growing anger at the creditors’ wishlist played out on social media under the hashtag #thisisacoup, as the drastic demands made were presented as the price to pay if Greece was to stay in the European union.

The referendum result, and the government’s about-turn, has shocked Greeks who had overwhelmingly rejected the previous offer.

Varoufakis said he had not expected a no vote, and suggested neither had Tsipras.

“I had assumed, and I believe so had the prime minister, that our support and the no vote would fade exponentially, but the Greek people overcame fear, they set aside their pecuniary interests, they ignored the fact their savings could not be accessed, and they gave a resounding, majestic no to what was in the end an awful ultimatum on behalf of our European partners,” Varoufakis said.

Tsipras must now take the measures, which include VAT reform, spending cuts, a pensions overhaul and €50bn in privatisation, to a hostile Greek parliament.

“This is indeed the politics of humiliation,” said Varoufakis.

We can talk about the war on Greek people using banks instead of tanks.

The euro zone and Germany want regime change in Greece, or at least to split Syriza. Alexis Tsipras has fought tooth and nail for something resembling the debt restructuring that even the International Monetary Fund acknowledges is needed. The incompetence of a succession of Greek governments and tax evasion within Greece is not in doubt. But the creditors of the euro family knew this as they upped their loans, and must now delude themselves that everything they have done has been for the best. It hasn’t, and now that same family will go in and asset-strip in broad daylight a country that can no longer afford basic medicines. In three days Greece is supposed to push through heaps of legislation on privatisation, tax and pensions so it can be even poorer.


There is to be no debt forgiveness in this family. Tsipras has to sell this to his people so the banks can reopen. His endurance has been remarkable, and more will be needed. The unsustainability of Greek debt, even if the country could achieve growth, remains. The words trust and confidence keep being used but by the wrong people. Trust is gone in this European project. François Hollande, the pseudo–mediator, has whown the Greek the value of EU.

TheHighRoad  ->  luella zarf, 14 Jul 2015 14:29
Anyone who joined the EU not realizing that it was, and always had been, substantially run by Germany and France was being naive - the cornerstone of its foundation was to bind the two of them together.

The power relationship between them has changed over the years - in the early years it was dominated by France while Germany was consumed with guilt and fearful of even the suggestion of power. As Germany got richer and overtook France in GDP, France remained in the driving seat while Germany signed the cheques, still afraid of the shadow of their past. Even the entry of Britain hardly changed that.

The Euro and the sacrifice of the Dmark was the price Germany paid for the support of France and Italy of German re-unification. Eastward expansion was heavily supported by Britain to dilute French power.

Now that Germany is by far the largest economy in every way, regarded by everyone outside the EU as its de facto leader and now that we are 3 generations away from war guilt it is not surprising that they are less reluctant to step up. Germany now is one of the world's best-functioning democracies and hardly an aggressor, but in the real world all of the smaller countries are "sleeping with an elephant" as a Canadian Prime Minister once described Canada's relationship with the US.

I am not German by the way. 

The role of  Schaeuble

Schaeuble, who always was an arrogant, egocentric, right-wing conservative, later became a vengeful and  arrogant  sociopath, who hates everybody who opposes neoliberalism. And he learned that following neoliberal dogma is a safe bet, that will allow him to stay in power.

Schaeuble is a neo-liberal, law-and-order, right-wing nationalist, who thinks of political office not as a service to the nation, but as a business meant to make money for the one who runs it.

Fstephens56 Fstephens56 18 Jul 2015 07:28

In the end Treuhand sold out 95% of the Eastern German economy to Westerners, who in turn didn't even have to present a feasible plan (or money to back the investment). It's easy to suppose that anybody who handed over a few bills to the right hands was able to snatch up a bit of value. Usually the Eastern companies "sold" for 1 Mark.

However, Western German "investors" were not really interested in another automobile manufacturer in the East, or another innovative company that produces household goods. They saw these companies a competition and their only interest was in seeing them closed down or reduced to a minor subsidiary.
If you have any doubts about it, just look up the "Foron" scandal. It is a perfect example on how the Eastern German economy was systematically and deliberately ruined by competitors, who wouldn't even shy away from threats and illegal activities to ensure their position.

Only 5% of former GDR companies were sold to Eastern German investors, interested in carrying on. However, since Treuhand favored Western German buyers over Eastern German investors, these 5% were more or less either "left-overs", that nobody else wanted, or rare examples of factories, where the workers managed to buy out their own company and run it themselves after other investors failed to present themselves.

So in short Treuhand failed in all but 1 thing: filling the pockets of their associates. They stole from the poor and used it to bolster the profits of the rich.

But back to Schaeuble! He was Kohl's favored minister by the time and it's save to assume that he was more or less involved in (or at least aware of) the proceedings. Schaeuble is a neo-liberal, law-and-order, right-wing nationalist, who thinks of political office not as a service to the nation, but as a business meant to make money for the one who runs it. (Just listen to some of his former speeches if you have any doubts about that)

The assault on his life, who forced him to a wheel-chair, made Schaeuble, who always was an arrogant, egocentric, right-wing conservative, a vengeful and bitter arrogant egocentric conservative, who hates everything even remotely socialist.

Over the years his speeches as minister for inner affairs grew more and more disturbing. Making it evident, that Schaeuble thought of common people as nothing more than a violent, incompetent mob, that had to be educated and controlled by a superior political cast. (Just listen to one of his later speeches as minister for inner affairs in Merkel's government concerning his thoughts about public opposition against his political ideas.)

Schaeuble was then by believed by many Germans (including some media) to be an overly bitter and possibly dangerous "lunatic", unfit for political office. Upon Merkel's reelection, Schaeuble was then removed from office and instituted as finance minister. Possibly a step to "ship him off" to a position where he could do less harm.

That said: the second thing to know is that the crisis in Greece is nothing by another crisis of the financial sector. Private investors invested money into Greece, that Greece is unable to pay back. Unfortunate - but such are the risks of the stock market, right?

Not quite! Because what actually happened was that Germany (and other European) countries used tax-payer's money to bail-out European banks a second time, by backing up the already defaulted Greek loans with public money.

So the money "given" to Greece is not really helping the Greek people. It is meant to use public money to support private investors and European banks.

And as always: where big money is moving through many hands, those who would like to hold a sum of it, aren't far removed.
As an example, it is said that Schaeuble talked about an "investment plan" that would see a substantial sum put in an institution run by one of his relatives.

A "mere coincidence" of course, but one that explains more precisely what is going on than the article above. It's all about clever ways to turn public money into private money, while keeping public eyes and public discussion fixed on "hard but necessary" austerity measures. Measures that were never meant to help Greece, let alone end the crisis! All of this maneuvering is just meant to help the private investors and keep them from losing money.
Investors, that were never interested in a strong Greek economy. But only in an opportunity to snatch up some valuable pieces of Greek property for a bargain and either gut and sell them for a short-term profit, or to rid themselves of possible competition.

So in the end, the only relevance the historical context has at this point is one that we have already known and is true for ANY historical context: people are doing gruesome thing for personal gain and few ever care about the consequences their actions impose unto other people.

 

Euro And Greek debt

Little-Known History of the Euro Crisis Was Baked In from the Start Zero Hedge

You’ve heard that the Euro was created to provide two benefits for Europe:

  1. Unite Germany, France and other countries in a peaceful political situation, to prevent repeats of World War I and II
  2. Create a macro-zone to compete against the economic strength of the U.S.

So how did we get to this … austerity and meanness of spirit, as typified by the grim expressions sported by German Finance Minister Wolfgang Schäuble in talks with Greece?

Enter Schauble

Because the Germans don’t view the Euro as a utopian idealistic way to help promote peace and prosperity for all of the EU nations. Instead, Germany sees the Euro as a way to weaken its currency to increase exports. As Ben Bernanke notes today:

Germany has benefited from having a currency, the euro, with an international value that is significantly weaker than a hypothetical German-only currency would be. Germany’s membership in the euro area has thus proved a major boost to German exports, relative to what they would be with an independent currency.

Moreover – in a little-known slice of history – the Euro was really created for very different purposes than peace in Europe or competition against the U.S.

Specifically, this guy – a North American named Robert Mundell – is the father of the Euro:

Mundell is not the least bit European. Born in Canada, Mundell taught at the University of Chicago for 7 years, and has since taught at Columbia University in New York for more than 40 years.

But didn’t Mundell create the Euro to help Europe?

Not according to Guardian, Independent and BBC investigative journalist Greg Palast, who explained in his book Vulture’s Picnic:

Who spawned this cruel little bastard coin?

I called its parent, Professor Robert Mundell. Mundell is known as the Father of the Euro. The Euro is often spoken of as a means to unite post-war Europeans together emotionally and politically and to give this united Europe the economic power to compete with the U.S. economy.

That’s horseshit.

The Euro was invented in New York, New York, at Columbia University. Professor Mundell invented both the Euro and the guiding light of Thatcher-Reagan government: “Supply Side Economics” or, as George Bush Sr. accurately called it, “Voodoo Economics.” Reagan-Thatcher voodoo and the Euro are two sides of the same coin. (Ouch! Some puns hurt.)

Like the Iron Lady and President Gaga. the Euro is inflexible. That is, once you join the Euro, your nation cannot fight recession by using fiscal or monetary policy. That leaves “wage reduction, fiscal constraints (cutting government jobs and benefits) as the only recourse in crisis,” The Wall Street Journal explains with joy—and sell-offs of government property (privatizations).

Why the Euro, Professor? Dr. Mundell told me he was upset at zoning rules in Italy that did not allow him to put his commode where he wanted to in his villa there. “They’ve got rules that tell me I can’t have a toilet in this room. Can you imagine?”

I couldn’t really. I don’t have an Italian villa, so I cannot really imagine the burden of commode placement restriction.

The Euro will eventually allow you to put your toilet any damn place you want.

He meant that the only way the government can create jobs is to fire people, cut benefits, and, crucially, cut the rules and regulations that restrict business.

He told me: “Without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.” Besides bowl location, he was talking about the labor laws, which raise the price of plumbers, environmental regulations, and, of course, taxes.

No, I am not making this up. And I am not saying the Euro was imposed on the Old Country just so the professor could place his toilet at a place of maximum pleasure. The Euro is fashioned as an anti-regulation straitjacket that would eliminate gallons-per-flush laws, flush away restrictive banking regulation, and all other government controls.

Now does the destruction of Greece’s sovereignty make a little more sense?

As Palast pointed out in the Guardian:

The idea that the euro has “failed” is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do.

***

For him, the euro wasn’t about turning Europe into a powerful, unified economic unit. It was about Reagan and Thatcher.

***

And when crises arise, economically disarmed nations have little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the European welfare state down the drain.

***

Far from failing, the euro, which was Mundell’s baby, has succeeded probably beyond its progenitor’s wildest dreams.

In other words, the Euro was intended to impose a Shock Doctrine straightjacket on Europe, where the big banks are stripping Greece and other countries of their public assets, pillaging, plundering and looting them of their natural resources and wealth.

Postscript: Mundell is also the creator of supply side economics … also known as “trickle down” or “piss on the poor” economics.

Many of Reagan’s top economic advisors subsequently admitted that supply side economics don’t work to help the economy.  See this, this this and this. (Washington’s Blog is for free market capitalism … but supply side economics is crony capitalism, not free market capitalism.)

Moreover – as Martin Armstrong has warned for decades – letting countries like Greece join he Euro without first structurally adjusting their debts was a recipe for disaster.   For example, when the Euro double in value a couple of years ago, Greece’s debt doubled in real terms.  That’s when Greek really started sliding towards crisis …

So the wealthy nations like Germany – intentionally or unintentionally – and the other wealthy nations laid the groundwork from the start for asset stripping in Greece and other indebted states.

Indeed, Armstrong and Nigel Farage (member of the European Parliament and leader of the UK Independence Party) say:

The Greek people never voted to enter the euro … it was forced upon them by Goldman Sachs and their politicians.

 

Rich vs poor: class war in a new form

nilssondergard SuzyLeC 14 Jul 2015 15:54

The only reason for allowing the flight of deposits in Greek Banks in Euros into foreign bank accounts till last week when the Banks folded,  as Finance Minister Varoufakis did, was so the Greek rich and well off and Phds could withdraw and stash their Euros in banks in Euro countries.

So they now have German or French Euros safe from the Greek collapse (or heaven forbid Finnish Euros) and then as he says Greece would switch to the Drachma and the only ones directly and utterly decimated by this would be all those less canny who left their money in Greece and have a possible haircut from Greek Banks on those funds.

These are the same continues to be targeted by austerity while those same foreign bank account holding Greeks continued to evade tax and given the time and leeway and allowed to flee with their money in Greek Banks.
 

Vulture  funds are ready  for default

Golden Dawn will be strengthened by more austerity, Yanis Varoufakis warns Discussion The Guardian

windwheel  -> talkingblues 14 Jul 2015 12:25

Good question. The fact is, history shows, countries which default on,or even those which wholly repudiate, their debts, sooner or later require access to capital markets or accumulate overseas assets in the course of trade. Thus, they voluntarily propose a settlement.

It is useful to them, at that point, to show they owe an astronomical, not a manageable, amount of money. Why? Well if I owe you 10,000,000, and have an income of 10,000, you are ready to take a big 'haircut', as are other smaller creditors. If however, you wrote down my debt to 10,000, then there is no incentive for my other creditors to take a 'haircut'.
There's no point restructuring Greek debt now. Okay Tsipras can go home and say -'guys! I got 100 billion or 200 billion written off! I'm a hero!'- but that will take in only ignorant people.

There is nothing stopping Vulture funds holding Greek stock to appeal to the American Courts to sequester Greek assets. The Vulture funds won't actually win, but their stock will rise because it is plausible that, if their claim is small, it will be settled not because of any legal merit but nuisance value simply.

The E.C.B has certain rules. Tsipras said he wanted them to violate those rules. Maybe he did. Maybe he knew they couldn't without turning the Euro into confetti.
I honestly don't know.

This is a Greek Drama about, not us- we aint in the Eurozone, our pensions aint on the line- but the Greek people who have been lied to by an oligarchic media.
Vide- http://socioproctology.blogspot.co.uk/2015/07/has-eurozone-been-destroyed.html
 

Yanis Varoufakis: Neoliberalim as Global Minotaur

Yanis Varoufakis Angela Merkel has a red and a yellow button. One ends the crisis. Which does she push

"... All they do is to reflect a tragic, underlying reality that can be described in simple lay terms without the use of any jargon whatsoever: Europe is disintegrating because its architecture was simply not sound enough to sustain the shockwaves caused by the death throes of what I call the Global Minotaur: the system of neoliberal capitalism centered on Wall Street, extracting tribute from the world after 1971."
"...To cut the Yanis' long story short: for 60 years, the global Minotaur (I prefer "the global Vampire Squid") was colluding with the "core surplus countries " of Europe (Germany, Netherlands, UK, Scandinavia) to keep them economically privileged at the expense and the detriment of the Euro "periphery" countries."
"...The Greek vote is the beginning of the end of the predatory capitalism that was built up on the ruins of the fall of the Soviet Union, distorting every financial institution be it banking or trade. GATT becomes WTO, with instruments like cross retaliation and international bureaucrats sitting on judgement on sovereign nations under dispute resolution mechanism. An unaccountable banking system, with layers of opacity. Now that it has started hurting European countries and not just some Third World country the beginning of the end has started."

The Global Minotaur of neoliberal capitalism centered on Wall Street held the world to ransom from 1971 to 2008. Now Europe’s surplus countries are trying to prop up its corpse

Bankruptocracy is as much a European predicament as it is an American “invention”. The difference between the experience of the two continents is that at least Americans did not have to labour under the enormous design faults of the eurozone. Imagine their chagrin if the citizens of hard-hit states (eg Nevada or Ohio) had to worry about a death embrace between the debt of their state and the losses of the banks who happened to operate within the state.

Additionally, Americans were spared the need to contend with a central bank utterly shackled by inner divisions and the German central bank’s penchant for treating the worst-hit parts of the union (the eurozone, that is) as alien lands that had to be fiscally waterboarded until they ceased to obey the laws of macroeconomics.

In the past two years, the debate in Europe has focused exclusively on issues that sound technical and minor: will there be “conditionality” attached to the purchases of Italian and Spanish bonds by the European Central Bank? Will the ECB supervise all of Europe’s banks, or just the “systemic” ones?

These are questions that ought to be of no genuine interest to anyone other than those with a morbid interest in the interface between public finance and monetary policy. And yet these questions (and the manner in which they will be answered) will probably prove as important for the future of Europe as the treaties of Westphalia, Versailles or even Rome. For these are the issues that will determine whether Europe holds together or succumbs to the vicious centrifugal forces that were unleashed by the crash of 2008.

Even so, they are not issues that are worth expounding upon here. All they do is to reflect a tragic, underlying reality that can be described in simple lay terms without the use of any jargon whatsoever: Europe is disintegrating because its architecture was simply not sound enough to sustain the shockwaves caused by the death throes of what I call the Global Minotaur: the system of neoliberal capitalism centred on Wall Street, extracting tribute from the world after 1971.


Europe's architecture was not sound enough to sustain the shock waves from the death throes of neoliberal capitalism

It is quite obvious that the insolvency of Madrid and Rome had nothing to do with fiscal profligacy (recall that Spain had a lower debt than Germany in 2008 and Italy has consistently smaller budget deficits) and everything to do with the way in which the eurozone’s macroeconomy relied significantly for the demand of its net exports on the Global Minotaur. Once the latter keeled over in 2008, and Wall Street’s private cash disappeared, two effects brought Europe to its knees.

One was the sequential death-embrace of bankrupt banks and insolvent states (beginning with Greece, moving to Ireland, to Portugal and continuing until Italy and Spain were torn asunder). The other was the Minotaur’s simulacrum and its determination to hang on to its option of exiting the eurozone at will, therefore denying each and every rational plan for mending the currency union in a sustainable manner.

The telling question thus becomes: why such resistance, particularly from Germany, to every idea that would end the euro crisis? The standard answer is that Germany does not wish to pay for the debts of the periphery and will resist all federal-like moves (eg a banking or a fiscal union) until it is convinced that its partners will behave responsibly with their German-backed finances. While this captures well the mindset of many northern Europeans, it is beside the point. Consider the following mental experiment, which, I believe, helps us unveil a deeper motive.

... ... ...

For two years now, the German public has become convinced that Germany has escaped the worst of the crisis because of its people’s virtuous embracing of thriftiness and hard work; in contrast to the spendthrift southerners, who, like the fickle grasshopper, made no provision for when the winds of finance would turn cold and nasty.

This mindset goes hand in hand with a moral righteousness which implants into good people’s hearts and minds a penchant for exacting punishment on the grasshoppers – even if punishing them also punishes themselves (to some extent). It also goes hand in hand with a radical misunderstanding of what kept the eurozone healthy and Germany in surplus prior to 2008: that is, the Global Minotaur whose demand-generation antics were for decades allowing countries like Germany and the Netherlands to remain net exporters of capital and consumer goods within and without the eurozone (while importing US-sourced demand for their goods from the eurozone’s periphery).

Interestingly, one of the great secrets of the post-2008 period is that the Minotaur’s death adversely affected aggregate demand in the eurozone’s surplus countries (Germany, the Netherlands, Austria and Finland) more than it did the deficit member states (like Italy, Spain, Ireland, Portugal and Greece). While the sudden withdrawal of capital from the deficit countries brought about their insolvency, countries like Germany saw their “fundamentals” more grievously affected by the crash of 2008. This fact, in conjunction with the terrible squeeze on German wages, explains the deeper causes of the animosity in places like Germany that so very easily translates into anger against the Greeks and assorted Mediterraneans – feelings that are then reciprocated, thus giving the wheel of intra-European animosities another spin, favouring the rise of xenophobia, even Nazism (in countries like Greece, quite incredibly), and thus leading to a wholesale readiness to push all the yellow, as opposed to the red, buttons in sight.

To recap, the Minotaur’s surplus recycling was essential to the maintenance of the eurozone’s faulty edifice. Once it vanished from the scene, the European common currency area would either be redesigned or it would enter a long, painful period of disintegration. An unwillingness by the surplus countries to accept that, in the post-Minotaur world, some other form of surplus recycling is necessary (and that some of their own surpluses must also be subject to such recycling) is the reason why Europe is looking like a case of alchemy-in-reverse: for whereas the alchemist strove to turn lead into gold, Europe’s reverse alchemists began with gold (an integration project that was the pride of its elites) but will soon end up with the institutional equivalent of lead.

This is an extract from Yanis Varoufakis’s book The Global Minotaur: America, Europe and the Future of the Global Economy, published by Zed Books
 


ID9492736 9 Jul 2015 01:56

To cut the Yanis' long story short: for 60 years, the global Minotaur (I prefer "the global Vampire Squid") was colluding with the "core surplus countries " of Europe (Germany, Netherlands, UK, Scandinavia) to keep them economically privileged at the expense and the detriment of the Euro "periphery" countries.

America....Netherlands....Germany....UK....Scandinavia...Hmmmmm...do I see a certain pattern here?

JHobgood deNovo1 9 Jul 2015 01:35

This outcome was forecast well before this juncture, by more than a few.

http://www.concertedaction.com/2011/11/07/curried-emu/

And the Euro will flow to the net exporter, until the periphery nations manage to become competitive with the industrial might of Germany. So, you want the PIIGS to be competitive? If they are successful, I German wages and export prices will have to head in the same direction. Sounds like a nice race to the bottom.

JHobgood HorseCart 9 Jul 2015 01:22

"Don't get yours or our hopes up. Predatory capitalism is a mean and nasty and persistent weed. It is like Japanese knotweed,"

Well, sociopaths have to make a living too. And they do tend to sequester themselves, don't they?

JHobgood HorseCart 9 Jul 2015 01:17

"...not even if that Massa is Barack Obama nowadays....."

These days, ALL successful candidates have their corporate "Massas". They're the same ones that tell you we have to pay back the national debt, while they run full bore in the opposite direction themselves. Having plenty of money to get tripe economics published and backed by "Political Economists" has helped their cause greatly.

JHobgood john4108 9 Jul 2015 01:01

"Evidence already exists that proves the Neoliberal free market capitalist project has been a failure in economic and social terms . "

But a success in terms of privatizing public assets and promoting small public government so Huge Corporate Government can prosper, with even less transparency than the government we have.

msewelldesign Carl King 8 Jul 2015 23:20

The Global Minotaur is available online, and is free.

 
Vulpes7 8 Jul 2015 20:23

The Global Minotaur.... I love it. I would compare it to Frankenstein's monster, dead but stitched awkwardly together and brought back to life by those who seek immortality, but instead give life to a horrible, clumsy, dangerous beast that wreaks havoc.

Keep up the good work Syriza against financial dictatorship.

john4108 8 Jul 2015 18:49

Well put. Evidence already exists that proves the Neoliberal free maket capitalust project has been a failure in economic and social terms . It has fostered greater inequalities in wealth and wellbeing and encouraged the lassai-faire adoption of increasingly complex trading and finance systems . The GFC was awake up call to many but unfortunately not to the few who benefit from the architecture. Another GFC is both predictable and inevitable because neoliberal economic sustems are simply unsustainable. Also inevitable is the rise of political movements opposed to it....ranging from ultra left to ultra right? Its going to be a rough ride.

HorseCart  -> pointsman 8 Jul 2015 18:32

Don't get yours or our hopes up. Predatory capitalism is a mean and nasty and persistent weed. It is like Japanese knotweed, which I also recently thought of as "the Goldman Sachs weed", because it has such vast resources and extensive reserves that you cannot deplete it or eradicate it unless you invite all the non-native pests and diseases which exist where it came from.


HorseCart Okasis 8 Jul 2015 18:26

Yes, that's funny and true! Mind you, Merkel is just a slave to wealthy capitalists, not one herself, and Tsipras is a free man trying to tell a slave that she can be free, she doesn't have to obey her "Massa", not even if that Massa is Barack Obama nowadays.....

 
Plankconstanth deNovo1 8 Jul 2015 16:06

But the U.S. had independent galore at one time--until the authorities said--"stop using all those play monies". The Euro was/is a good idea to counteract the hegemonic primacy of the dollar. Solution: wipe out the debts and impose a Eurozone fiscal policy. Why? For the same the same reason that weak states in the U.S. like Louisiana and some of the other states have not been expelled from the Dollarzone


pointsman 8 Jul 2015 13:00

The Greek vote is the beginning of the end of the predatory capitalism that was built up on the ruins of the fall of the Soviet Union, distorting every financial institution be it banking or trade. GATT becomes WTO, with instruments like cross retaliation and international bureaucrats sitting on judgement on sovereign nations under dispute resolution mechanism. An unaccountable banking system, with layers of opacity. Now that it has started hurting European countries and not just some Third World country the beginning of the end has started.


Vladimir Makarenko GCAT 8 Jul 2015 12:27

Disclosure: I am very biased.

That said let's proceed - I do not believe that "germany" exists, as there is no "russia" - there are different interest groups closely connected.

At least here in the States corruption is regulated by lobbing laws. There are no such in EU. - You wonder yourself as the next stage of civilization? Feudalism but you are a step down to Feudalism: the Greece is an example - die or obey! What is going on? Exemplary execution - today Greece, tomorrow you. Who said this first? Empire hits back but times are different - Greece may ask (for a price) a help from Russians, Chinese etc. Imperial times are OVER.

deNovo1 zoominu 8 Jul 2015 11:55

It's the way the world is heading; global government has always been on the agenda; ever since the UN was formed. The Euro is perhaps an experiment in the eventual creation of a global currency - that will unite all the disparate countries of the world by uniting their economies. If you think that sounds ludicrous - then what you see in the Euro is that ludicrous idea made reality.

zoominu 8 Jul 2015 11:26

Irrespective of what excuses are used to try to blame SYRIZA for the global crisis and the fact that the Greek people have refused to play ball with the ECB, European Council and the IMF (evident with the election 5 months ago of Syriza and the vote against the conditions demanded by the IMF), the big business controlled EU is now thought of as synonymous with austerity. They are also increasingly being exposed as an anti democratic organisation that is trying to impose regime change on the Greek people in favour of a government that will dance to their tune.

SYRIZA need to take note that retreat and making unacceptable concessions to the Troika is unacceptable to the people they should be defending.

deNovo1 8 Jul 2015 10:14

So Greece made less of a Faustian pact with Europe – but more like the covenant Israel made with God, where if certain requirements aren’t met – dire consequences resulted. Perhaps initially – the then Greek government saw the former, morality aside – the gravy train of EU integration was waiting and it seemed to offer first class seats for all. A deal with a Teutonic god – seems to plagiarise the later; and the reality of it – turns out very unpleasant.

Your analysis can’t evade Yanis, that the promise of EU monetary integration and the elevation of Greece’s financial stature – was irresistible to the then Greek government. If you liken the EU to a boys club – Greece was invited to join in the rich kid’s party, Greece licked her lips at the prospects. In reality – that’s what most of her people did in response to having Euros in their hands. They indulged and bought the luxury items meant only for those who could afford.

But the rabid materialism aside, people can be forgiven for falling for that, the reality is – Greece is nowhere near the economic powerhouse that is Germany. You can blame the global financial structures and the “Minotaur” (all of which are jerry–rigged anyway – even in the EU) but at the end of the day – it boils down to how much economic output Greece can deliver – how much real wealth she can create. Even if all debts were cancelled and grudges settled, who is going to make the products and provide the services the world wants? It’s a sad indication of a nation’s lack of capacity to create wealth – when like Spain and Ireland – the only produce Greece can really sell – is sunshine and beds for tourist, not sports cars.

 
eelolondon gibtardo 8 Jul 2015 07:22

thanks, i thought it was a watershed moment in a way when the IMF, traditionaly the very heart of economic thinking and where politics, ecnomics and finanice meet, traditionaly right wing at least in terms of policy, came out and said not only is better inequality neccesary for social reasons, its ESSENTIAL for healthy growth.

THinking is advancing on this collectively since 2008 by many, especially in America, lets not let right wing political resistance to that in the UK or Euro/EU problems in Europe blind us to postive developments building steam, eventually i feel quiet confident enlighetned more sophisticated thinking will break through onto the main stream poltical stage in most countries.

If anything because it will become essential to the well being of people during all the coming changes, Oxford Uniersity and the EU both done two reports recently that estimate around 50% of all current jobs are going to be gone in i think it was either just 20 or 30 years time due to robotics and computerisation.

Goverments just sitting on there hands about that in the traditional free market scenario is not going to be an option, governments will HAVE to get more Interventionist, trying to ensure economies "life all boats", in time the truth will be out.

Maybe im just an eternal opptomist, btu America certainly is givign me hope. Have you seen gibtardo how its going for Bernnie Sannders recently in America and the influence people liek Elizabeth Warren and he is having on Clinton, hw the right there seemed to be virtually knocked into an irrelevane, exciting stuff if its the start, which i belive, of a long term trend that will greatly build momentum.

 
penniless53 Iron Fist 8 Jul 2015 05:55

The picture you paint of Greece is totally inaccurate. Sure, there was a time when corruption and overspending on their welfare state was rife, but this has not been the case for the last five years. The bulk of the bailout monies was spent just on paying the interest on the debts, there was very little left over for investment for jobs and turning around the economy. That is why Mr Varoufakis was holding out for debt restructuring, so that they could have some money left over for investment, and you have to ask yourself why wouldn't the Eurozone/ECB/IMF not want that? When it comes to 'reforms', it's precisely because of austerity reforms that Syriza were voted into office, so it isn't true that nothing was being done. Syriza wanted to spread the pain, take some of the suffering off the poorest in society, and tax the super wealthy more, again, you have to ask yourself why the Eurozone/ECB/IMF would not want that? The vast majority of reporting on the mainstream news channels/press, is skewed. Syriza have been in power (I say in power, but in reality, thanks to the EU, they have not had much power at all), for five months, in that time they have made moves to collect taxes owed, and they have been locked in endless talks with their creditors.

Let them have some debt restructuring for Heaven's sake, and then see how they manage the economy. Germany have emerged as the 'supreme ruler' of the EU, and have very short memories regarding their own debt write-offs. Hypocritical. The Greek banks are not insolvent, they haven't gone belly up, they are just running short of the printed notes that the ECB are illegally withholding. All banks need actual currency deliveries, it doesn't mean the banks are about to collapse. The ECB are supposed to apolitical, but they are clearly taking orders from their masters in Berlin.

What is happening to Greece IS terrorism, it's financial terrorism. And if you believe the hype that the individual taxpayers of the EU have paid this money to Greece, you must be very gullible, they haven't. The banks, yes, the greedy banks, keyed the amount into the computer, and presto, they created the money out of thin air, then sat back waiting for the real money to then roll in from Greece. They even have the nerve to be charging interest on this totally made up money. If you think that if, by some miracle, Greece managed to pay all the money back overnight, that you, or I, or any of us, would see a single penny of it, you are sadly mistaken.

The whole of Europe are being brainwashed into believing the crisis in Greece is solely of their own making, and that the answer to all woes is austerity and yet more austerity. The real reason no agreement has been arrived at in the 'talks' since Syriza came to office, is because the Eurocratic Elites have an aversion to leftwing governments, they have been trying their best to bring about regime change in Greece. They won't be satisfied with the resignation of Yanis Varoufakis, they will keep pushing for the whole government to be brought down. There is nothing democratic about the EU, there hasn't been for a very long time. Everyone needs to look for the truth beyond the media, whose reporting is definitely skewed in favour of the common, but false narrative.


stopaganda Iron Fist 8 Jul 2015 04:03

The shafting was done by the international banking system... I don't see them paying back TARP or any of the other bailouts they extorted from panicked politicians.... the smell of hypocrisy is rank.... the rule is banks create extort and make money, the rest of us have to pay for their excesses.... time to close them down.


Jurriaan Plesman ID6487190 8 Jul 2015 03:42

"US Americans are liable to US taxation anywhere in the world. If Greece introduced a similar taxation law for Greek nationals they could easily avoid defaulting by first collecting from their own citizens before asking European taxpayers." But we all know that the rich and wealthy do not pay taxes or very little. They take extraordinary risks to increase their profits and to avoid paying taxes. Democratic countries tend to fail because they can not control the people who control the wealth of the country


Iron Fist EightEyedSpy 8 Jul 2015 03:34

You've summed up Varoufakis perfectly. He royally shafted the Greek people right before their very eyes and most of them still don't even see it.

The guy just added a very prestigious title to his C.V. and then bailed out just before the whole Greek economy implodes, thanks largely in part to his 6 wasted months as Finance Minister when he obliterated every last bit of trust the rest of the EU had for the Greek government. He timed his decision to abandon ship perfectly. He promised very publically that Greek banks would be open on Tuesday, July 7. Of course that didn't happen, but he resigned on Monday, so now he can pass the buck to someone else within the Greek government for breaking his own promise.

Brilliant strategy on his part. He's made himself a household name around the whole world during his tenure as the "rock star" Finance Minister and now he can milk the talk show and lecture circuit for many years to come. He's got that Marxist "rebel" persona that will make him a great choice for the media to turn to whenever they need a talking head with an "alternative" opinion. I'm sure RT and Sputnik News will be begging him for every opportunity to provide anti-EU commentary.


capitalismsucks1 8 Jul 2015 02:29

Neoliberal economics appear to be responsible in large part for global warming and the 6th mass extinction, two crimes which can probably be called the worst moral failures in human history. It is time for humanity to grow up and find real alternatives to this monstrous, reckless ideology.


medic927 msalahm 8 Jul 2015 01:31

If you only know how much money the Greek politicians spend on their perks it comes very closely shaming that of US Politicians! I still have relatives living in Greece and they're fed up w/the BS going on. Pensioners losing the bulk of their monthly and health benefits because those that were in are not being prosecuted for embezzlement or wantin acts of fraud.

Where is the EU or INTERPOL doing anything about it? To save Union where one part is cancerous it must be cut out or it will MATICISE & kill the whole body.....Greece relies on tourism for income there on few industrial facilities that could generate funds but at cost without its tourism base or agriculture society.
Sometimes the old saying goes, you've made your bed....now sleep in it!!!!!


Simon William Kitt todder 7 Jul 2015 19:36

Seriously good stuff from Zizek!

"The true goal of lending money to the debtor is not to get the debt reimbursed with a profit, but the indefinite continuation of the debt that keeps the debtor in permanent dependency and subordination."

James1403 Dick Eastman 7 Jul 2015 19:30

http://www.spiegel.de/international/germany/germany-faces-billions-in-losses-if-greece-goes-bust-a-1041369.html

Why Debt Sustains Corruption and Vice Versa

July 21, 2015 by  

Yves here. This post makes some important observations about how the elite levels of Greece engage in rent-seeking, aka corruption, and can continue those strategies even in the face of economic collapse, to the detriment to the rest of Greek society. It’s an important counter-frame because many accounts of what has happened in Greece fails to take sufficient account of the role of parties within Greece of profiting despite increasing desperation overall.

One can correctly point out that that focus leads the authors to place too much confidence in cleaning up tax evasion and other “reforms” focused on rentier behavior as having enough impact to get Greece out of its very deep economic ditch. But I trust readers have the sophistication to read past those parts and focus on the analysis, particularly since advanced economies like the US are at an earlier stage of slipping down the corruption slope.

By Christos Koulovatianos, Professor in Macroeconomics, University of Luxembourg and John Tsoukalas, Associate Professor (Reader) in Macroeconomics, Adam Smith Business School, University of Glasgow. Originally published at VoxEU

As numerous Greek MEPs opposed the Eurozone summit deal, implementation will require a broad coalition of political parties. This column argues that corruption in Greek politics will prevent the formation of such a coalition. The heavy debt service leads parties to invent extreme ways of responding to super-austerity and to strongly oppose direct reforms that challenge existing clientelism. The way out is to sign a new agreement that combines debt restructuring and radical transparency reforms, including naming-and-shaming practices, to block clientelism in the medium and long run.

Corruption is typically unobserved in formal data, so it is difficult to document its extent. Since the work of Schattschneider (1935), theories of rent seeking and corrupt legislative bargaining – further developed by Ferejohn (1986) and Persson (1998), and outlined in the book by Persson and Tabellini (2000) – link up the observable effects of corruption to rent-extraction mechanisms. These theories help in estimating rents, but we are unaware of a study that obtains such estimates for Greece. Nevertheless, everyday life in Greece suggests that clientelistic goods traded by political parties include examples such as:

• Civil-servant jobs, for which devoted party members can put in less effort at work, and for which party members may be underqualified.
• Tax evasion, with parties supporting networks of non-transparency through insiders in public authorities.
• Preferential legal treatment using a partisan network of underreporting through public authorities.
• Privileges regarding the management of real estate.
• Fiscal over-invoicing.
• Wasteful public infrastructure related to private benefits, such as building roads leading to specific private properties against city-plan efficiency.
• Fraud in granting disability benefits (Angelos 2012), etc.

Corruption in Greece Relative to Other Eurozone countries, and Its Fiscal Profligacy Problem

Figure 1 plots the Corruption Perceptions Index (CPI) against the average fiscal surplus between 1996-2010. As can also be seen in Table 1, Greece is one of the countries with the highest corruption (CPI) scores. According to Figure 1, Greece is certainly the Eurozone’s outlier in terms of fiscal profligacy. Fiscal surplus to GDP ratios have a correlation coefficient of 73% with the CPI, revealing that corruption is strongly related to fiscal profligacy. Achury et al. (2015) provide a theoretical analysis suggesting a two-sided causality between fiscal profligacy and corruption if a country’s debt-to-GDP ratio is too high (beyond 137%). In that case, a country can be trapped in a vicious circle of corruption and fiscal profligacy that ultimately leads to default. The key to this vicious circle spiral is the unwillingness of rent-seeking groups to cooperate on reforms and on minimum fiscal prudence.

Figure 1 Correlation between the fiscal-surplus/GDP ratio (in percentage points) and the Corruption-Perceptions Index (CPI) for Eurozone countries (t-statistics in parentheses).

Tsoukalas-fog
Note: For Cyprus, Estonia, Malta, Slovakia and Slovenia averages are calculated since four years prior to joining the Eurozone.
Sources: Eurostat, Transparency International; figure taken from Achury et al. (2015).

Table 1 Corruption Perception Index (CPI)

Tsoukalas-table
 

Note: Higher score means lower corruption and numbers appearing in parentheses next to each score is the country’s world-corruption raking based on the score in each particular year.
Source: Transparency International; table taken from the Online Appendix of Achury et al. (2015).

Why Cooperation Among Political Parties Matters for Reform Implementation

The immediate argument in favour of broad coalition governments is that policy reforms and austerity have a high political cost. Cooperation among parties can make them share the political cost. In addition, a broad consensus among parties provides credibility to society concerning technocrat-expert suggestions for solving the fiscal profligacy problem. From the very beginning of the sovereign crisis in the Eurozone, the IMF has provided explicit guidelines in favour of broad coalition governments or for cooperation across parties (see International Monetary Fund, 2010a-d, 2011a-f, and 2012a-f for specific sentences expressing these IMF guidelines).1

In the case of Greece, coalition governments have never been broad across parties, and reforms have progressed slowly, despite the intense monitoring by the IMF (Campos and Coricelli 2015). According to the theory suggested by Achury et al. (2015), the corruption problem in Greece, combined with its high debt-to-GDP ratio, has led Greece into a trap.

What Causes the Corruption-Debt Trap in Greece?

According to the approach of Achury et al. (2015), corrupt political parties in Greece tend to act as rent-seeking groups through the provision of clientelistic goods described above. Cooperation on reforms and austerity measures is a typical coordination game. If the partisan benefits from cooperation exceed the partisan benefits from non-cooperation, then two equilibria are possible: cooperation and non-cooperation, with the latter being the result of bad coordination. If, however, the partisan benefits of non-cooperation exceed those of cooperation, even for one big party, then there is only one sure outcome: non-cooperation (Achury et al. 2015, Section 1.1).

The high cost of servicing the enormous outstanding debt in Greece simply makes non-cooperation more profitable for parties. If parties cooperate, they face a high cost of servicing the debt, especially due to the tight fiscal-surplus requirements. This fiscal burden makes party members think that a partial default and a gang war for rents is more profitable for them, even in a state of economic chaos. This strategic speculation keeps Greece in a trap, because non-cooperating rent-seeking groups engage into a tragedy-of-the-commons equilibrium of excessive rent seeking. Markets pre-calculate the implied fiscal profligacy, Grexit scenarios return with positive probability, investment becomes discouraged, and the debt-to-GDP ratio increases due to a shrinking economy (Greece has lost 26% of its 2008 GDP until year 2014).

The Short-Run Solution and the Long-Run Solution for Escaping the Political Infeasibility Trap: A Synthesis

The ideal long-run solution to Greece’s problem would be to eradicate rent-seeking groups in politics. However, this requires time and a deep understanding of the problem. The short-run solution would be to restructure Greek debt, postponing payments and giving enough time for economic recovery. This short-run strategy could make benefits from a broad-coalition government more attractive to political parties, because it would take away the debt-servicing burden. The working hypothesis is that some rent-seeking activities would still be speculated by parties (Achury et al. 2015, Sections 2.5, 3.1.2, and 3.1.4).

Of course, such debt restructuring requires a new agreement. And certainly the EU should ask for reforms in exchange for debt restructuring. Whether these reforms could solve the corruption problem (or not) in the long run, is a matter of understanding the roots of the corruption problem in Greek society.
The vast majority of Greek citizens are not corrupt: Corruption is a social coordination problem leading to a prisoner’s dilemma

A small but critical mass of citizens and politicians break the rules of fair play and equitability against the law. Businesses that do not pay their taxes oblige other businesses to do the same in order to survive competition. Skilled young people who apply for civil servant jobs are obliged to invest in clientelistic political connections, after seeing inapt persons obtaining such jobs. Citizens see their taxes ending up in the private pockets of people they know, but are unlikely to win a court case because of the political support for involved persons. Lawful citizens, knowing that taxes will not finance public goods but private benefits, are unwilling to pay their income taxes, becoming friendly to parties that promise lenience regarding tax collection.

The list can go on and on, but the issue is not morality. It is the technical perils of a coordination problem that ends up in prisoner’s dilemma situations that arise in everyday life. The sad equilibrium is that Greek citizens do not feel equal among equals against taxpayer law. A feeling of social mistrust pervades citizens, especially young people.

Can society and the partisan network of vividly supporting voters and politicians bring reforms to Greece? This is not likely, unless a key reform is implemented first: transparency. Greece can innovate on that front, making use of information technologies.

Basic Things About Transparency First

A key transparency reform is to put every Greek citizen’s existing personal data into a centralised database. Currently, such data are scattered across different public authorities, a strategy that is most likely intentional. This strategy has led to frivolities with tragic fiscal consequences. An example is the famous disability fraud of certified taxi drivers receiving blindness disability aid in the island of Zakynthos (Angelos 2012). Because of the radical nature of this reform, it is crucial to protect privacy rights in the transition phase.

A Careful ‘Name and Shame’ Transparency Act

Another key transparency reform would be to list the names of all Greek citizens on the web, explaining who has paid all taxes, and if not, the stated reason why. This act should fully protect personal data, such as income and wealth records, exactly because political rent seekers inside and outside Greece may attempt to confiscate wealth through ad hoc bail-in acts. If implemented correctly, this reform is most likely to convince Greek citizens that everyone is equal among equals against taxpayer law. This sense of equality can lead to a new social contract that can fight clientelism and pork-barrel politics, restore social trust, and bring policy certainty. In turn, policy certainty can give confidence to domestic and foreign investors to unlock Greece’s potential for innovation and growth.

Conclusion

The implementation of the ‘aGreekment’ reached on 13 July 2015, after a 17-hour Eurogroup summit, needs a broad coalition government in Greece. The urgent and necessary political cooperation among parties is unlikely to be forthcoming. Political parties have rent-seeking agendas that are crowded out by the burden of servicing the debt. This is a trap.

To escape this trap, we suggest an urgent additional agreement. Drastic debt restructuring (postponing debt maturity) should be exchanged with immediate implementation of radical transparency reforms that aim at eradicating corruption. Debt restructuring should convince rent-seeking political parties that it is more profitable to cooperate. In the short run, parties could keep a small part of their rent-seeking activities, while servicing a smaller, manageable amount of debt.

It is impossible to instantly reverse the momentum of political corruption in Greece, but it is urgent that parties first cooperate on implementing simple and basic transparency reforms. In the beginning, the political cost of implementing these transparency reforms will be low. In the medium and long run, transparency can raise the feeling of equitability among citizens. This feeling can encourage Greek society to move away from supporting rent-seeking parties and to demand governments with public-resource management skills.

See orignal post for references


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[Dec 03, 2018] Neoliberal myth: Austerity is caused by incompetent governments unable to balance their budgets

In reality this is mostly neocolonial way of dealing with countries. Allowing local oligarchy to steal as much loaned by foreign states money as they can and converting the country into the debt slave. Look at Greece and Ukraine for two prominent examples.
The position of OneCommentator is a typical position of defenders and propagandists of neoliberalism
IMF is part of "Washington Consensus" with the direct goal of converting countries into debt slaves of industrialized West. It did not work well with Acia counties, but it is great success in some countries in Europe and most of Africa and Latin America (with Argentina as the most recent example)
Notable quotes:
"... As central banks such as the FED and the ECB operate with insatiable greed and cannot be audited or regulated by any government body anywhere in the world, due to their charters having been set up that way, then bankers are free to meet secretly and plot depressions so as to gain full control over sovereign nations and manipulate markets so that their "chums and agents" in business can buy up assets and land in depressed economies – while possible wars could also make corporations and banks more money as well! ..."
Dec 03, 2018 | discussion.theguardian.com
OneCommentator -> petercs , 8 Jun 2013 11:46
@petercs -

..."neoliberal", concept behind the word, has nothing to do with liberal or liberty or freedom..

Wrong. Traditional liberalism supported both social and economic freedoms. That included support for most of the civil rights and freedoms we enjoy today AND free trade and free investments. It used to be that liberals were practically unpopular with right wing (traditional conservative for example) parties but more or less on the same side as left wing parties, mainly because of their social positions. More recently the left wing parties became more and more unhappy with the economic freedoms promoted by liberals while the right wing parties embraced both the economic and social freedoms to a certain degree.

So, the leftists found themselves in a bind practically having reversed roles which the the conservatives as far as support for liberalism goes. So, typically, they're using propaganda to cover their current reactionary tendencies and coins a new name for liberals: neoliberals which, they say, are not the same as liberals (who are their friends since liberal means freedom lover and they like to use that word a lot).

"austerity" is the financial sectors' solution to its survival after it sucked most the value out of the economy and broke it.

Austerity is caused by incompetent governments unable to balance their budgets. They had 60 years to do it properly after ww2 and the reconstruction that followed but many of them never did it. So now it is very simple: governments ran out of money and nobody wants to lend them more. That's it, they hit the wall and there is nothing left on the bottom if the purse.
OneCommentator , 8 Jun 2013 10:49

The IMF exists to lend money to governments, so it's comic that it wags its finger at governments that run up debt.

It is a bit more complicated than that. Developed countries like Greece are supposed to run more or less balanced budgets over longer periods. Sure, they need to borrow money on a regular basis and may that is supposed to be done by issuing bonds or other forms of government debt that investors buy on the open market. For such governments the IMF is supposed to just fill in in a minor way not to provide the bulk of all the loans needed on a temporary basis. Because of incompetent governments Greece is practically bankrupt hence it is not going to be able to pay back most of the existing debts and definitely not newer debts. So practically the IMF is not, ending money to them, it is giving them the money. So, I would say that they have a good reason to wag its finger.

Malakia123 , 8 Jun 2013 11:15

LOGIC 101: Introductory Course of Study

If private, stockholder-held central banks such as the FED and the FED-backed ECB were not orchestrating this depression, and anybody who believed they were was a "wacko-nutcase conspiracy theorist", then why do they keep repeating the same mistakes of forcing un-payable bailout loans, collapsing banks, wiping out people's savings and then imposing austerity on those nations year after year – when it is clearly a failed policy?

Possible Answers :

1. Bank presidents are all ex-hippies who got hooked on LSD in the 70's and have not yet recovered fully as their brains are still fried!

2. Central bankers have been recruited from insane asylums in both Europe and America in government-sponsored programs to see whether blithering idiots are capable of running large, international financial institutions.

3. All catastrophic events in the banking/business world, such as the derivative and housing crash of 2008, the Stock Market Crash of 1929 and The Great Depression of 1929-40 were totally random events that just occurred out of nowhere and central banks were caught off guard – leaving them no option but to play with their willies for years on end until a major war suddenly happened to pull the whole world out of "bad times"!

4. As central banks such as the FED and the ECB operate with insatiable greed and cannot be audited or regulated by any government body anywhere in the world, due to their charters having been set up that way, then bankers are free to meet secretly and plot depressions so as to gain full control over sovereign nations and manipulate markets so that their "chums and agents" in business can buy up assets and land in depressed economies – while possible wars could also make corporations and banks more money as well!


Please choose one of the possible answers from above and write a short 500 word essay on whether it may or may not true – using well-defined logical arguments. I expect your answers in by Friday of this week as I would like to get pissed out of my mind at the pub on Saturday night!

petercs , 8 Jun 2013 10:44

The neoliberal idea is that the cultivation itself should be conducted privately as well. They see "austerity" as a way of forcing that agenda.

..."neoliberal", concept behind the word, has nothing to do with liberal or liberty or freedom...it is a PR spin concept that names slavery with a a word that sounds like the opposite...if "they" called it neoslavery it just wouldn't sell in the market for political concepts.

..."austerity" is the financial sectors' solution to its survival after it sucked most the value out of the economy and broke it. To mend it was a case of preservation of the elite and the devil take the hindmost, that's most of us.

...and even Labour, the party of trade unionism, has adopted austerity to drive its policy.

...we need a Peoples' Party to stand for the revaluation of labour so we get paid for our effort rather than the distortion, the rich xxx poor divide, of neoslavery austerity.

[Feb 05, 2018] EU Imposes Anti-Union Law On Greece

Feb 05, 2018 | www.moonofalabama.org

Posted by: nottheonly1 | Feb 4, 2018 3:53:08 PM | 17

Speaking about Europe and the advancement of neo-liberal policies by the hands of unelected officials, this news is not boding well:

EU Imposes Anti-Union Law On Greece

The question is, how much longer will European workers remain peaceful dissenters to 'laws' that resemble the prohibition of Unions in NS-Germany? A number of member states are threatening their own exit from the EU, although for entirely different reasons. But more "Exit"-Nations will weaken neo-liberal EU to the much desirable breaking point.

As it stands, EU/NATO policies are the biggest threat to European citizens.

[Jan 29, 2018] Yi it Bulut "I am sorry for the Greeks. They have been left with nothing." Defend Democracy Press

Notable quotes:
"... The plundering of Greece is so huge that the Greek people don't realize it. Tsipras doesn't wear a tie. He was going to stop imperialism. But Tsipras works for them. Do you remember? There was a finance minister who rode around on a motorcycle. An academic. They got rid of him. I mentioned that on this programme in the past. They will sack that Greek finance minister and then Greece will sign the agreement with the INF. I said it. When they had got rid of the finance minister they brought an Englishman and the Englishman became a minister of the Greek government and they signed. We said that on our programme here before it happened. ..."
"... The imperialist model hasn't changed. Countries get into debt. They sink into crisis. The property of the people is transferred and after that they simply change the government. The same thing happened in Turkey in 2001. They sent Kemal Derviş to Turkey to put things in order for the imperialists. They appointed him Roman governor in Turkey. But fortunately Devlet Bahçeli was found to spoil their game for them," ..."
"... Erdoğan's advisor stated, and continued: "I feel sorry for the Greeks. They ..."
Jan 29, 2018 | www.defenddemocracy.press

Yiğit Bulut: "I am sorry for the Greeks. They have been left with nothing." 13/11/2017

Greece will be in a "non-functional condition" until 2020, predicts the advisor to the Turkish President Recep Tayyip Erdoğan Yiğit Bulut, who characterizes the Prime Minister Alexis Tsipras as a "tool of the imperialists".

Speaking on the state television programme "Deep Analysis" he gave the example of Greece to show the consequences of imperialism for global political developments.

"They sold off everything. The banks have passed into the hands of the Germans. They have been left with nothing. People in Greece wait for products from Germany and Italy. There is a film about 300 Spartans who fall heroically in battle. Those 300 of Leonidas should come back to Greece now, because nothing has remained standing.

The plundering of Greece is so huge that the Greek people don't realize it. Tsipras doesn't wear a tie. He was going to stop imperialism. But Tsipras works for them. Do you remember? There was a finance minister who rode around on a motorcycle. An academic. They got rid of him. I mentioned that on this programme in the past. They will sack that Greek finance minister and then Greece will sign the agreement with the INF. I said it. When they had got rid of the finance minister they brought an Englishman and the Englishman became a minister of the Greek government and they signed. We said that on our programme here before it happened.

The imperialist model hasn't changed. Countries get into debt. They sink into crisis. The property of the people is transferred and after that they simply change the government. The same thing happened in Turkey in 2001. They sent Kemal Derviş to Turkey to put things in order for the imperialists. They appointed him Roman governor in Turkey. But fortunately Devlet Bahçeli was found to spoil their game for them," Erdoğan's advisor stated, and continued: "I feel sorry for the Greeks. They are victims of imperialism."

The above declaration by the Turkish official was made to the Turkish state television. It was translated for DDP from the Greek sites that reproduced it, under the headline "Erdogan's advisor makes provocative declarations".

Read also: Prepare for the Trade Wars

Turkey still occupies a large part of Cyprus after having invaded the island in 1974 and expelled more than 200,000 Greeks from their homes. It has territorial claims on Greek Aegean islands and deploys the world's largest fleet of landing craft some miles from them. The Turkish National Assembly has voted a resolution threatening Greece with war in the event of use by Athens of its right to expand Greek territorial waters to 12 miles. It is only natural that Greeks do not much appreciate a Turkish official speaking of their country in this way. It is indeed a "provocation" from the point of view of rules of diplomatic behavior, given that Mr. Erdogan is preparing his visit to Greece.

Of course Greeks know only too well that the description of the Turkish official is quite close to the truth. It is probable that the advisor of the Turkish President does not so much have the intention of provoking Greeks as influencing Turkish politics by showing his public opinion what happens to a country that surrenders to "Western Imperialism".

There is a deep irony to Turkey depicting, as it does here, the EU, Germany, the Eurozone, NATO and big finance destroying a member-state of the EU, and using this argument rhetorically!

D.K.

Also read Dijsselbloem Speaks: The Confessions of an Economic Hit Man

[Jan 22, 2018] German Imperialism as a tool of the "Kingdom of Money" by Thomas Fazi

Ukraine after EuroMaydan is a de-facto EU colony.
Notable quotes:
"... By Thomas Fazi 4 December 2017 ..."
"... For Germany, the idea of Europeanism has provided the country's elites with the perfect alibi to conceal their hegemonic project behind the ideological veil of 'European integration' ..."
"... "That may sound absurd given that today's Germany is a successful democracy without a trace of national-socialism – and that no one would actually associate Merkel with Nazism. But further reflection on the word 'Reich', or empire, may not be entirely out of place. The term refers to a dominion, with a central power exerting control over many different peoples. According to this definition, would it be wrong to speak of a German Reich in the economic realm?" ..."
"... More recently, an article in Politico Europe ..."
"... Even though the power exercised by Europe's 'colonial masters' is now openly acknowledged by the mainstream press, it is however commonplace to ascribe Germany's dominant position as an accident of history: according to this narrative, we are in the presence of an 'accidental empire', one that is not the result of a general plan but that emerged almost by chance – even against ..."
"... Germany (and France) have been the main beneficiaries of the sovereign bailouts of periphery countries , which essentially amounted to a covert bailout of German (and French) banks, as most of the funds were channelled back to the creditor countries' banks, which were heavily exposed to the banks (and to a lesser degree the governments) of periphery countries. German policy, Helen Thompson wrote , overwhelmingly 'served the interests of the German banks'. ..."
"... This is a telling example of how Germany's policies (and the EU's policies more in general), while nominally ordoliberal – i.e., based upon minimal government intervention and a strict rules-based regime – are in reality based on extensive state intervention on behalf of German capital, at both the domestic and European level. ..."
"... German authorities have also been more than happy to go along with – or to encourage – the European institutions' 'exercise of unrestrained executive power and the more or less complete abandonment of strict, rules-based frameworks' – Storey is here referring in particular to the ECB's use of its currency-issuing monopoly to force member states to follows its precepts – 'to maintain the profitability of German banks, German hegemony within the Eurozone, or even the survival of the Eurozone itself'. ..."
"... Germany (and France) are also the main beneficiaries of the ongoing process of 'mezzogiornification' of periphery countries – often compounded by troika -forced privatisations –, which in recent years has allowed German and French firms to take over a huge number of businesses (or stakes therewithin) in periphery countries, often at bargain prices. A well-publicised case is that of the 14 Greek regional airports taken over by the German airport operator Fraport. ..."
"... France's corporate offensive in Italy is another good example: in the last five years, French companies have engaged in 177 Italian takeovers, for a total value of $41.8 billion, six times Italy's purchases in France over the same period. This is leading to an increased 'centralisation' of European capital, characterised by a gradual concentration of capital and production in Germany and other core countries – in the logistical and distribution sectors, for example – and more in general to an increasingly imbalanced relationship between the stronger and weaker countries of the union. ..."
"... In short, the European Union should indeed be viewed a transnational capitalist project, but one that is subordinated to a clear state-centred hierarchy of power, with Germany in the dominant position. In this sense, the national elites in periphery countries that have supported Germany's hegemonic project (and continue to do so, first and foremost through their support to European integration) can thus be likened to the comprador bourgeoisie ..."
"... Exportnationalismus' ..."
"... Modell Deutschland ..."
"... Even more worryingly, Germany is not simply aiming at expanding its economic control over the European continent; it is also taking steps for greater European military 'cooperation' – under the German aegis, of course. As a recent article in Foreign Policy ..."
"... In other words, Germany already effectively controls the armies of four countries. And the initiative, Foreign Policy ..."
Jan 21, 2018 | www.defenddemocracy.press
Originally from: Germany's dystopian plans for Europe: from fantasy to reality? By Thomas Fazi 4 December 2017

For Germany, the idea of Europeanism has provided the country's elites with the perfect alibi to conceal their hegemonic project behind the ideological veil of 'European integration'

After Emmanuel Macron's election in France, many (including myself) claimed that this signalled a revival of the Franco-German alliance and a renewed impetus for Europe's process of top-down economic and political integration – a fact that was claimed by most commentators and politicians, beholden as they are to the Europeanist narrative, to be an unambiguously positive development.

Among the allegedly 'overdue' reforms that were said to be on the table was the creation of a pseudo-'fiscal union' backed by a (meagre) 'euro budget', along with the creation of a 'European finance minister', the centre-points of Macron's plans to 're-found the EU' – a proposal that raises a number of very worrying issues from both political and economic standpoints, which I have discussed at length elsewhere .

The integrationists' (unwarranted) optimism, however, was short-lived. The result of the German elections, which saw the surge of two rabidly anti-integrationist parties, the right-wing FDP and extreme right AfD; the recent collapse of coalition talks between Merkel's CDU, the FDP and the Greens, which most likely means an interim government for weeks if not months, possibly leading to new elections (which polls show would bring roughly the same result as the September election); and the growing restlessness in Germany towards the 13-year-long rule of Macron's partner in reform Angela Merkel, means that any plans that Merkel and Macron may have sketched out behind the scenes to further integrate policies at the European level are now, almost certainly, dead in the water. Thus, even the sorry excuse for a fiscal union proposed by Macron is now off the table, according to most commentators.

At this point, the German government's most likely course in terms of European policy – the one that has the best chance of garnering cross-party support, regardless of the outcome of the coalition talks (or of new elections) – is the 'minimalist' approach set in stone by the country's infamous and now-former finance minister, Wolfgang Schäuble, in a 'non-paper' published shortly before his resignation.

The main pillar of Schäuble's proposal – a long-time obsession of his – consists in giving the European Stability Mechanism (ESM), which would go on to become a 'European Monetary Fund', the power to monitor (and, ideally, enforce) compliance with the Fiscal Compact. This echoes Schäuble's previous calls for the creation of a European budget commissioner with the power to reject national budgets – a supranational fiscal enforcer.

The aim is all too clear: to further erode what little sovereignty and autonomy member states have left, particularly in the area of fiscal policy, and to facilitate the imposition of neoliberal 'structural reforms' – flexibilisation of labour markets, reduction of collective bargaining rights, etc. – on reluctant countries.

To this end, the German authorities even want to make the receipt of EU cohesion funds conditional on the implementation of such reforms , tightening the existing arrangements even further. Moreover, as noted by Simon Wren-Lewis , the political conflict of interest of having an institution lending within the eurozone would end up imposing severe austerity bias on the recovering country.

Until recently, these proposals failed to materialise due, among other reasons, to France's opposition to any further overt reductions of national sovereignty in the area of budgetary policy; Macron, however, staunchly rejects France's traditional souverainiste stance, embracing instead what he calls 'European sovereignty', and thus represents the perfect ally for Germany's plans.

Another proposal that goes in the same direction is the German Council for Economic Experts' plan to curtail banks' sovereign bond holdings. Ostensibly aimed at 'severing the link between banks and government' and 'ensuring long-term debt sustainability', it calls for: (i) removing the exemption from risk-weighting for sovereign exposures, which essentially means that government bonds would no longer be considered a risk-free asset for banks (as they are now under Basel rules), but would be 'weighted' according to the 'sovereign default risk' of the country in question (as determined by credit rating agencies); (ii) putting a cap on the overall risk-weighted sovereign exposure of banks; and (iii) introducing an automatic 'sovereign insolvency mechanism' that would essentially extend to sovereigns the bail-in rule introduced for banks by the banking union, meaning that if a country requires financial assistance from the ESM, for whichever reason, it will have to lengthen its sovereign bond maturities (reducing the market value of those bonds and causing severe losses for all bondholders) and, if necessary, impose a nominal 'haircut' on private creditors.

As noted by the German economist Peter Bofinger , the only member of the German Council of Economic Experts to vote against the sovereign bail-in plan, this would almost certainly ignite a 2012-style self-fulfilling sovereign debt crisis, as periphery countries' bond yields would quickly rise to unsustainable levels, making it increasingly hard for governments to roll over maturing debt at reasonable prices and eventually forcing them to turn to the ESM for help, which would entail even heavier losses for their banks and an even heavier dose of austerity.

It would essentially amount to a return to the pre-2012 status quo, with governments once again subject to the supposed 'discipline' of the markets, particularly in the context of a likely tapering of the ECB's quantitative easing (QE) program. The aim of this proposal is the same as that of Schäuble's 'European Monetary Fund': to force member states to implement permanent austerity.

Read also: Lack of Credible Leftist Alternatives is fueling national movements. Catalonia wants independence from the small Madrid Empire, but inside Brussels Great Empire

Of course, national sovereignty in a number of areas – most notably fiscal policy – has already been severely eroded by the complex system of new laws, rules and agreements introduced in recent years, including but not limited to the six-pack, two-pack, Fiscal Compact, European Semester and Macroeconomic Imbalances Procedure (MIP).

As a result of this new post-Maastricht system of European economic governance, the European Union has effectively become a sovereign power with the authority to impose budgetary rules and structural reforms on member states outside democratic procedures and without democratic control.

The EU's embedded quasi-constitutionalism and inherent (structural) democratic deficit has thus evolved into an even more anti-democratic form of 'authoritarian constitutionalism' that is breaking away with elements of formal democracy as well, leading some observers to suggest that the EU 'may easily become the postdemocratic prototype and even a pre-dictatorial governance structure against national sovereignty and democracies'.

To give an example, with the launch of the European Semester, the EU's key tool for economic policy guidance and surveillance, an area that has historically been a bastion of national sovereignty – old-age pensions – has now fallen under the purview of supranational monitoring as well. Countries are now expected to (and face sanctions if they don't): (i) increase the retirement age and link it with life expectancy; (ii) reduce early retirement schemes, improve the employability of older workers and promote lifelong learning; (iii) support complementary private savings to enhance retirement incomes; and (iv) avoid adopting pension-related measures that undermine the long term sustainability and adequacy of public finances.

This has led to the introduction in various countries of several types of automatic stabilizing mechanisms (ASMs) in pension systems, which change the policy default so that benefits or contributions adjust automatically to adverse demographic and economic conditions without direct intervention by politicians. Similar 'automatic correction mechanisms' in relation to fiscal policy can be found in the Fiscal Compact.

The aim of all these 'automatic mechanisms' is clearly to put the economy on 'autopilot', thus removing any element of democratic discussion and/or decision-making at either the European or national level. These changes have already transformed European states into 'semi-sovereign' entities, at best. In this sense, the proposals currently under discussion would mark the definitive transformation of European states from semi-sovereign to de facto (and increasingly de jure ) non-sovereign entities.

Regardless of the lip service paid by national and European officials to the need for further reductions of national sovereignty to go hand in hand with a greater 'democratisation' of the euro area, the reforms currently on the table can, in fact, be considered the final stage in the thirty-year-long war on democracy and national sovereignty waged by the European elites, aimed at constraining the ability of popular-democratic powers to influence economic policy, thus enabling the imposition of neoliberal policies that would not have otherwise been politically feasible.

In this sense, the European economic and monetary integration process should be viewed, to a large degree, as a class-based and inherently neoliberal project pursued by all national capitals as well as transnational (financial) capital. However, to grasp the processes of restructuring under way in Europe, we need to go beyond the simplistic capital/labour dichotomy that underlies many critical analyses of the EU and eurozone, which view EU/EMU policies as the expression of a unitary and coherent transnational (post-national) European capitalist class.

The process underway can only be understood through the lens of the geopolitical-economic tensions and conflicts between leading capitalist states and regional blocs, and the conflicting interests between the different financial/industrial capital fractions located in those states, which have always characterised the European economy. In particular, it means looking at Germany's historic struggle for economic hegemony over the European continent.

It is no secret that Germany is today the leading economic and political power in Europe, just as it is no secret that nothing gets done in Europe without Germany's seal of approval. In fact, it is commonplace to come across references to Germany's 'new empire'. A controversial Der Spiegel editorial from a few years back event went as far as arguing that it is not out place to talk of the rise of a 'Fourth Reich':

"That may sound absurd given that today's Germany is a successful democracy without a trace of national-socialism – and that no one would actually associate Merkel with Nazism. But further reflection on the word 'Reich', or empire, may not be entirely out of place. The term refers to a dominion, with a central power exerting control over many different peoples. According to this definition, would it be wrong to speak of a German Reich in the economic realm?"

More recently, an article in Politico Europe – co-owned by the German media magnate Axel Springer AG – candidly explained why 'Greece is de facto a German colony'. It noted how, despite Tsipras' pleas for debt relief, the Greek leader 'has little choice but to heed the wishes of his "colonial" masters', i.e., the Germans.

This is because public debt in the eurozone is used as a political tool – a disciplining tool – to get governments to implement socially harmful policies (and to get citizens to accept these policies by portraying them as inevitable), which explains why Germany continues to refuse to seriously consider any form of debt relief for Greece, despite the various commitments and promises to that end made in recent years: debt is the chain that keeps Greece (and other member states) from straying 'off course'.

Read also: Boris Johnson: Why not a preemptive strike on Korea?

Even though the power exercised by Europe's 'colonial masters' is now openly acknowledged by the mainstream press, it is however commonplace to ascribe Germany's dominant position as an accident of history: according to this narrative, we are in the presence of an 'accidental empire', one that is not the result of a general plan but that emerged almost by chance – even against Germany's wishes – as a result of the euro's design faults, which have allowed Germany and its satellites to pursue a neo-mercantilist strategy and thus accumulate huge current account surpluses.

Now, it is certainly true that the euro's design – strongly influenced by Germany – inevitably benefits export-led economies such as Germany over more internal demand-oriented economies, such as those of southern Europe. However, there is ample evidence to support the argument that Germany, far from having accidently stumbled upon European dominance, has been actively and consciously pursuing an expansionary and imperialist strategy in – and through – the European Union for decades.

Even if we limit our analysis to Germany's post-crisis policies (though there is much that could be said about Germany's post-reunification policies and subsequent offshoring of production to Eastern Europe in the 1990s), it would be very naïve to view Germany's inflexibility – on austerity, for example – as a simple case of ideological stubbornness, considering the extent to which the policies in question have benefited Germany (and to a lesser extent France).

Germany (and France) have been the main beneficiaries of the sovereign bailouts of periphery countries , which essentially amounted to a covert bailout of German (and French) banks, as most of the funds were channelled back to the creditor countries' banks, which were heavily exposed to the banks (and to a lesser degree the governments) of periphery countries. German policy, Helen Thompson wrote , overwhelmingly 'served the interests of the German banks'.

This is a telling example of how Germany's policies (and the EU's policies more in general), while nominally ordoliberal – i.e., based upon minimal government intervention and a strict rules-based regime – are in reality based on extensive state intervention on behalf of German capital, at both the domestic and European level.

As Andy Storey notes, not only did the German government, throughout the crisis, show a blatant disregard for ordoliberalism's non-interference of public institutions in the workings of the market, by engaging in a massive Keynesian-style programme in the aftermath of the financial crisis and pushing through bailout programmes that largely absolved German banks from their responsibility for reckless lending to Greece and other countries; German authorities have also been more than happy to go along with – or to encourage – the European institutions' 'exercise of unrestrained executive power and the more or less complete abandonment of strict, rules-based frameworks' – Storey is here referring in particular to the ECB's use of its currency-issuing monopoly to force member states to follows its precepts – 'to maintain the profitability of German banks, German hegemony within the Eurozone, or even the survival of the Eurozone itself'.

Germany (and France) are also the main beneficiaries of the ongoing process of 'mezzogiornification' of periphery countries – often compounded by troika -forced privatisations –, which in recent years has allowed German and French firms to take over a huge number of businesses (or stakes therewithin) in periphery countries, often at bargain prices. A well-publicised case is that of the 14 Greek regional airports taken over by the German airport operator Fraport.

France's corporate offensive in Italy is another good example: in the last five years, French companies have engaged in 177 Italian takeovers, for a total value of $41.8 billion, six times Italy's purchases in France over the same period. This is leading to an increased 'centralisation' of European capital, characterised by a gradual concentration of capital and production in Germany and other core countries – in the logistical and distribution sectors, for example – and more in general to an increasingly imbalanced relationship between the stronger and weaker countries of the union.

These transformations cannot simply be described as processes without a subject: while there are undoubtedly structural reasons involved – countries with better developed economies of scale, such as Germany and France, were bound to benefit more than others from the reduction in tariffs and barriers associated with the introduction of the single currency – we also have to acknowledge that there are loci of economic-politic power that are actively driving and shaping these imperialist processes, which must be viewed through the lens of the unresolved inter-capitalist struggle between core-based and periphery-based capital.

From this perspective, the dichotomy that is often raised in European public discourse between nationalism and Europeanism is deeply flawed. The two, in fact, often go hand in hand. In Germany's case, for example, Europeanism has provided the country's elites with the perfect alibi to conceal their hegemonic project behind the ideological veil of 'European integration'. Ironically, the European Union – allegedly created as an antidote to the vicious nationalisms of the twentieth century – has been the tool through which Germany has been able to achieve the 'new European order' that Nazi ideologues had theorised in the 1930s and early 1940s.

In short, the European Union should indeed be viewed a transnational capitalist project, but one that is subordinated to a clear state-centred hierarchy of power, with Germany in the dominant position. In this sense, the national elites in periphery countries that have supported Germany's hegemonic project (and continue to do so, first and foremost through their support to European integration) can thus be likened to the comprador bourgeoisie of the old colonial system – sections of a country's elite and middle class allied with foreign interests in exchange for a subordinated role within the dominant hierarchy of power.

From this point of view, the likely revival of the Franco-German bloc is a very worrying development, since it heralds a consolidation of the German-led European imperialist bloc – and a further 'Germanification' of the continent. This development cannot be understood independently of the momentous shifts that are taking place in global political economy – namely the organic crisis of neoliberal globalisation, which is leading to increased tensions between the various fractions of international capital, most notably between the US and Germany.

Trump's repeated criticisms of Germany's beggar-thy-neighbour mercantilist policies should be understood in this light. The same goes for Angela Merkel's recent call – much celebrated by the mainstream press – for a stronger Europe to counter Trump's unilateralism. Merkel's aim is not, of course, that of making 'Europe' stronger, but rather of strengthening Germany's dominant position vis-à-vis the other world powers (the US but also China) through the consolidation of Germany's control of the European continental economy, in the context of an intensification of global inter-capitalist competition.

This has now become an imperative for Germany, especially since Trump has dared to openly challenge the self-justifying ideology which sustains Germany's mercantilism – a particular form of economic nationalism that Hans Kundnani has dubbed ' Exportnationalismus' , founded upon the belief that Germany's massive trade surplus is uniquely the result of Germany's manufacturing excellence ( Modell Deutschland ) rather than, in fact, the result of unfair trade practices.

This is why, if Germany wants to maintain its hegemonic position on the continent, it must break with the US and tighten the bolts of the European workhouse. To this end, it needs to seize control of the most coveted institution of them all – the ECB –, which hitherto has never been under direct German control (though the Bundesbank exercises considerable influence over it, as is well known). Indeed, many commentators openly acknowledge that Merkel now has her eyes on the ECB's presidency. This would effectively put Germany directly at the helm of European economic policy.

Even more worryingly, Germany is not simply aiming at expanding its economic control over the European continent; it is also taking steps for greater European military 'cooperation' – under the German aegis, of course. As a recent article in Foreign Policy revealed , 'Germany is quietly building a European army under its command'.

This year Germany and two of its European allies, the Czech Republic and Romania, announced the integration of their armed forces, under the control of the Bundeswehr. In doing so, the will follow in the footsteps of two Dutch brigades, one of which has already joined the Bundeswehr's Rapid Response Forces Division and another that has been integrated into the Bundeswehr's 1st Armored Division.

In other words, Germany already effectively controls the armies of four countries. And the initiative, Foreign Policy notes, 'is likely to grow'. This is not surprising: if Germany ('the EU') wants to become truly autonomous from the US, it needs to acquire military sovereignty, which it currently lacks.

Europe is thus at a crossroads: the choice that left-wing and popular forces, and periphery countries more generally, face is between (a) accepting Europe's transition to a fully post-democratic, hyper-competitive, German-led continental system, in which member states (except for those at the helm of the project) will be deprived of all sovereignty and autonomy, in exchange for a formal democratic façade at the supranational level, and its workers subject to ever-growing levels of exploitation; or (b) regaining national sovereignty and autonomy at the national level, with all the short-term risks that such a strategy entails, as the only way to restore democracy, popular sovereignty and socioeconomic dignity. In short, the choice is between European post-democracy or post-European democracy.

There is no third way. Especially in view of the growing tensions between Germany, the US and China, periphery countries should ask themselves if they want to be simple pawns in this 'New Great Game' or if they want to take their destinies into their own hands.

-- -

Some portions of this article previously appeared in this article published by Green European Journal. Thomas Fazi is the co-author (with William Mitchell) of Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto, 2017).

[Jun 03, 2017] Why the European Financial Dictatorship will continue to torture Greece at least unti by system failure

Jun 03, 2017 | failedevolution.blogspot.gr
... and how this is related mostly with the British, rather than with the German elections

Early this year we saw that Greece's creditors pushed the country to take measures even after the end of the "program", or, the Greek experiment if you like.

Latest developments led to the known scenery: Greece was pushed to take more measures for 2018 and 2019, the creditors promised a form of debt relief, but again, Alexis Tsipras didn't manage to take anything, except the usual hypocritical sympathy for Greece by some of the creditors in Europe. The roles are known: Wolfgang Schäuble has no problem to play the bad guy, and everyone else, including IMF, is hiding behind him.

We have repeatedly said that the representatives of the neoliberal Feudalism pretend that they have different positions concerning the unsolved puzzle of the Greek debt, while in reality, they do not care at all about "solving" it, but only to complete the neoliberal experiment in Greece to the last detail.

And, despite that only a few details are left for the completion of the Greek experiment, it is certain that the European Financial Dictatorship will keep the noose tight around Greece at least until the next national elections in 2019, where they hope that the neoliberal Right, New Democracy, will win.

Also, some Greek government officials expressed recently their optimism that Greece could return to the money markets during the summer with a viable interest rate, but our guess is that it won't happen, because this would give a certain degree of independence to Greece from the ECB and Draghi's liquidity injections.

The neoliberal priesthood knows that there is still a danger of a possible sudden interruption, and even reversal, of the Greek experiment, in case that Tsipras administration find an opportunity to make independent moves, away from the creditors' tight scrutiny, towards social policies and public investments. Then, their new 'model' for the whole eurozone, as they dream, could have been 'blown up'.

Many estimate that the German leadership deliberately postpones any discussion about the Greek debt issue until the German elections, hoping that the current political status quo won't change dramatically. In reality, we don't have to wait until then because it seems that the Left doesn't have any serious momentum that could break the sovereignty of the current political establishment. Therefore, not too many things are expected to change after the result of the German elections.

Instead, we should focus on the next crucial political event in Europe, the oncoming British elections. The rapid rise of Jeremy Corbyn brings additional heat the Brussels-Berlin axis. The Labour party under his leadership represents their worst nightmare. It would be a nightmare for them to see the motherland of neoliberalism start turning to social policies and massive nationalizations of key sectors.

A successful Britain under Jeremy Corbyn that would manage to give rebirth to the social state and hope to its citizens, could become an example for the Greek people (and others). A significant percentage of the Greek society already express quite negative feelings about the euro currency and even the EU itself. Imagine what would happen if the Greek people would realize that Britain (which is now out of the EU) under Corbyn is bringing back social policies at the same time when they experience the brutal neoliberal measures imposed by Greece's creditors.

That's why the European Financial Dictatorship will give nothing to Tsipras. He will be forced to take only further measures against the Greek society under tight scrutiny. The Brussels-Berlin axis will use him and throw him to the dustbin, hoping to replace him with a more secure puppet, like the neoliberal leader of New Democracy, Kyriakos Mitsotakis.

We can only hope for a miracle: that SYRIZA has realized that it's impossible to achieve a decent deal with the Troika (ECB, IMF, European Commission) mafia, and therefore, has built (at last) a plan for Grexit that will lead Greece to freedom.

[May 15, 2017] The explosive mixture of middle-class shrinking and dual economy in the West

This idea of two segregated societies within one nation is pretty convincing.
Notable quotes:
"... A book released last March by MIT economist Peter Temin argues that the U.S. is increasingly becoming what economists call a dual economy; that is, where there are two economies in effect, and one of the populations lives in an economy that is prosperous and secure, and the other part of the population lives in an economy that resembles those of some third world countries. ..."
"... The middle class is shrinking in the United States and this is an effect of both the advance of technology and American policies ..."
"... In the United States, our policies have divided us into two groups. Above the median income - above the middle class - is what I call the FTE sector, Finance, Technology and Electronics sector - of people who are doing well, and whose incomes are rising as our national product is growing. The middle class and below are losing shares of income, and their incomes are shrinking as the Pew studies, both of them, show. ..."
"... The model shows that the FTE sector makes policy for itself, and really does not consider how well the low wage sector is doing. In fact, it wants to keep wages and earnings low in the low wage sector, to provide cheap labour for the industrial employment. ..."
"... As already described , the middle-class, which has not collapsed yet in France, still has the characteristics that fit to the neoliberal regime. However, it is obvious that this tank of voters has shrunk significantly, and the establishment is struggling to keep them inside the desirable 'status quo' with tricks like the supposedly 'fresh', apolitical image of Emmanuel Macron, the threat of Le Pen's 'evil' figure that comes from the Far-Right, or, the illusion that they have the right to participate equally to almost every economic activity. ..."
"... The media promotes examples of young businessmen who have succeed to survive economically through start-up companies, yet, they avoid to tell that it is totally unrealistic to expect from most of the Greek youth to become innovative entrepreneurs. So, this illusion is promoted by the media because technology is automating production and factories need less and less workers, even in the public sector, which, moreover, is violently forced towards privatization. ..."
"... In the middle of the pyramid, a restructured class will serve and secure the domination of the top. Corporate executives, big journalists, scientific elites, suppression forces. It is characteristic that academic research is directed on the basis of the profits of big corporations. Funding is directed increasingly to practical applications in areas that can bring huge profits, like for example, the higher automation of production and therefore, the profit increase through the restriction of jobs. ..."
May 14, 2017 | failedevolution.blogspot.gr

The Pew Research Center, released a new study on the size of the middle class in the U.S. and in ten European countries. The study found that the middle class shrank significantly in the U.S. in the last two decades from 1991 to 2010. While it also shrank in several other Western European countries, it shrank far more in the U.S. than anywhere else. Meanwhile, another study also released last week, and published in the journal Science, shows that class mobility in the U.S. declined dramatically in the 1980s, relative to the generation before that.

A book released last March by MIT economist Peter Temin argues that the U.S. is increasingly becoming what economists call a dual economy; that is, where there are two economies in effect, and one of the populations lives in an economy that is prosperous and secure, and the other part of the population lives in an economy that resembles those of some third world countries.

globinfo freexchange

MIT Economist Peter Temin spoke to Gregory Wilpert and the The Real News network.

As Temin states, among other things:

The middle class is shrinking in the United States and this is an effect of both the advance of technology and American policies . That is shown dramatically in the new study, because the United States is compared with many European countries. In some of them, the middle class is expanding in the last two decades, and in others it's decreasing. And while technology crosses national borders, national policies affect things within the country.

In the United States, our policies have divided us into two groups. Above the median income - above the middle class - is what I call the FTE sector, Finance, Technology and Electronics sector - of people who are doing well, and whose incomes are rising as our national product is growing. The middle class and below are losing shares of income, and their incomes are shrinking as the Pew studies, both of them, show.

The model shows that the FTE sector makes policy for itself, and really does not consider how well the low wage sector is doing. In fact, it wants to keep wages and earnings low in the low wage sector, to provide cheap labour for the industrial employment.

https://www.youtube.com/embed/BRs4VcHprqI" name="I1"

This model is similar to that pursued in eurozone through the Greek experiment. Yet, the establishment's decision centers still need the consent of the citizens to proceed. They got it in France with the election of their man to do the job, Emmanuel Macron.

As already described , the middle-class, which has not collapsed yet in France, still has the characteristics that fit to the neoliberal regime. However, it is obvious that this tank of voters has shrunk significantly, and the establishment is struggling to keep them inside the desirable 'status quo' with tricks like the supposedly 'fresh', apolitical image of Emmanuel Macron, the threat of Le Pen's 'evil' figure that comes from the Far-Right, or, the illusion that they have the right to participate equally to almost every economic activity.

For example, even in Greece, where the middle class suffered an unprecedented reduction because of Troika's (ECB, IMF, European Commission) policies, the last seven years, the propaganda of the establishment attempts to make young people believe that they can equally participate in innovative economic projects. The media promotes examples of young businessmen who have succeed to survive economically through start-up companies, yet, they avoid to tell that it is totally unrealistic to expect from most of the Greek youth to become innovative entrepreneurs. So, this illusion is promoted by the media because technology is automating production and factories need less and less workers, even in the public sector, which, moreover, is violently forced towards privatization.

As mentioned in previous article , the target of the middle class extinction in the West is to restrict the level of wages in developing economies and prevent current model to be expanded in those countries. The global economic elite is aiming now to create a more simple model which will be consisted basically of three main levels.

The 1% holding the biggest part of the global wealth, will lie, as always, at the top of the pyramid. In the current phase, frequent and successive economic crises, not only assist on the destruction of social state and uncontrolled massive privatizations, but also, on the elimination of the big competitors.

In the middle of the pyramid, a restructured class will serve and secure the domination of the top. Corporate executives, big journalists, scientific elites, suppression forces. It is characteristic that academic research is directed on the basis of the profits of big corporations. Funding is directed increasingly to practical applications in areas that can bring huge profits, like for example, the higher automation of production and therefore, the profit increase through the restriction of jobs.

The base of the pyramid will be consisted by the majority of workers in global level, with restricted wages, zero labor rights, and nearly zero opportunities for activities other than consumption.

This type of dual economy with the rapid extinction of middle class may bring dangerous instability because of the vast vacuum created between the elites and the masses. That's why the experiment is implemented in Greece, so that the new conditions to be tested. The last seven years, almost every practice was tested: psychological warfare, uninterrupted propaganda, financial coups, permanent threat for a sudden death of the economy, suppression measures, in order to keep the masses subservient, accepting the new conditions.

The establishment exploits the fact that the younger generations have no collective memories of big struggles. Their rights were taken for granted and now they accept that these must be taken away for the sake of the investors who will come to create jobs. These generations were built and raised according to the standards of the neoliberal regime 'Matrix'.

Yet, it is still not certain that people will accept this Dystopia so easily. The first signs can be seen already as recently, French workers seized factory and threatened to blow it up in protest over possible closure . Macron may discover soon that it will be very difficult to find the right balance in order to finish the job for the elites. And then, neither Brussels nor Berlin will be able to prevent the oncoming chaos in Europe and the West.

Read also:

[May 14, 2017] IMF to Greece Sorry Well Destroy You by Michael Hudson

Notable quotes:
"... It doesn't matter what the people vote for. Either you do what we say or we will smash your banking system." Tsipras's job is to say, "Yes I will do whatever you want. I want to stay in power rather than falling in election." ..."
"... Somebody's going to suffer. Should it the wealthy billionaires and the bankers, or should it be the Greek workers? Well, the Greek workers are not the IMF's constituency. It says: "We feel your pain, but we'd rather you suffer than our constituency." ..."
"... The basic principle at work is that finance is the new form of warfare. You can now destroy a country's economy not merely by invading it. You don't even have to bomb it, as you've done in the Near East. All you have to do is withdraw all credit to the banking system, isolate it economically from making payments to foreign countries so that you essentially put sanctions on it. You'll treat Greece like they've treated Iran or other countries. ..."
"... The class war is back in business – the class war of finance against labor, imposing austerity and shrinking living standards, lowering wages and cutting back social spending. It's demonstrating who's the winner in this economic warfare that's taking place. ..."
"... Then why is the Greek population still supportive of Syriza in spite of all of this? I mean, literally not only have they, as a population, been cut to no social safety net, no social security, yet the Syriza government keeps getting supported, elected in referendums, and they seem to be able to maintain power in spite of these austerity measures. Why is that happening? ..."
"... You also need a contingency plan for when the European Union wrecks the Greek banks, which basically have been the tool of the oligarchy in Greece. The government is going to have to take over these banks and socialize them, and use them for public purposes. Unfortunately, Tsipras never gave Varoufakis and his staff the go ahead. In effect, he ended up double crossing them after the referendum two years ago that said not to surrender. That lead to Varoufakis resigning from the government. ..."
"... Tsipras decided that he wanted to be reelected, and turned out to be just a politician, realizing that in order to he had to represent the invader and act as a client politician. His clientele is now the European Union, the IMF and the bondholders, not the Greeks. What that means is that if there is an election in Greece, people are not going to vote for him again. He knows that. He is trying to prevent an election. But later this month the Greek parliament is going to have to vote on whether or not to shrink the economy further and cut pensions even more. ..."
"... The Greek government has not said that no country should be obliged to disregard its democratic voting, dismantle its public sector and give up its sovereignty to bondholders. No country should be obliged to pay foreign creditors if the price of that is shrinking and self destruction of that economy. ..."
"... They haven't translated this political program of not paying into what this means in practice to cede sovereignty to the Brussels bureaucracy, meaning the European Central Bank on behalf of its bondholders. ..."
May 14, 2017 | www.unz.com
Sharmini Peries: The European Commission announced on May 2, that an agreement on Greek pension and income tax reforms would pave the way for further discussions on debt release for Greece. The European Commission described this as good news for Greece. The Greek government described the situation in similar terms. However, little attention has been given as to how the wider Greek population are experiencing the consequences of the policies of the Troika. On May Day thousands of Greeks marked International Workers Day with anti-austerity protests. One of the protester's a 32-year-old lawyer perhaps summed the mood, the best when he said
"The current Greek government, like all the ones before it, have implemented measures that has only one goal, the crushing of the workers, the working class and everyone who works themselves to the bone. We are fighting for the survival of the poorest who need help the most."

To discuss the most recent negotiations underway between Greece and the TROIKA, which is a European Central Bank, the EU and the IMF, here's Michael Hudson. Michael is a distinguished research professor of Economics at the University of Missouri, Kansas City. He is the author of many books including, "Killing the Host: How Financial Parasites and Debt Bondage the Global Economy" and most recently "J is for Junk Economics: A Survivor's Guide to Economic Vocabulary in the Age of Deception" .Michael, let's start with what's being negotiated at the moment.

Michael Hudson: I wouldn't call it a negotiation. Greece is simply being dictated to. There is no negotiation at all. It's been told that its economy has shrunk so far by 20%, but has to shrink another 5% making it even worse than the depression. Its wages have fallen and must be cut by another 10%. Its pensions have to be cut back. Probably 5 to 10% of its population of working age will have to immigrate.

The intention is to cut the domestic tax revenues (not raise them), because labor won't be paying taxes and businesses are going out of business. So we have to assume that the deliberate intention is to lower the government's revenues by so much that Greece will have to sell off even more of its public domain to foreign creditors. Basically it's a smash and grab exercise, and the role of Tsipras is not to represent the Greeks because the Troika have said, "The election doesn't matter.

It doesn't matter what the people vote for. Either you do what we say or we will smash your banking system." Tsipras's job is to say, "Yes I will do whatever you want. I want to stay in power rather than falling in election."

Sharmini Peries: Right. Michael you dedicated almost three chapters in your book "Killing the Host" to how the IMF economists actually knew that Greece will not be able to pay back its foreign debt, but yet it went ahead and made these huge loans to Greece. It's starting to sound like the mortgage fraud scandal where banks were lending people money to buy houses when they knew they couldn't pay it back. Is it similar?

Michael Hudson: The basic principle is indeed the same. If a creditor makes a loan to a country or a home buyer knowing that there's no way in which the person can pay, who should bear the responsibility for this? Should the bad lender or irresponsible bondholder have to pay, or should the Greek people have to pay?

IMF economists said that Greece can't pay, and under the IMF rules it is not allowed to make loans to countries that have no chance of repaying in the foreseeable future. The then-head of the IMF, Dominique Strauss-Kahn, introduced a new rule – the "systemic problem" rule. It said that if Greece doesn't repay, this will cause problems for the economic system – defined as the international bankers, bondholder's and European Union budget – then the IMF can make the loan.

This poses a question on international law. If the problem is systemic, not Greek, and if it's the system that's being rescued, why should Greek workers have to dismantle their economy? Why should Greece, a sovereign nation, have to dismantle its economy in order to rescue a banking system that is guaranteed to continue to cause more and more austerity, guaranteed to turn the Eurozone into a dead zone? Why should Greece be blamed for the bad malstructured European rules? That's the moral principle that's at stake in all this.

Sharmini Peries: Michael, The New York Times has recently published an article titled, "IMF torn over whether to bail out Greece again." It essentially describes the IMF as being sympathetic towards Greece in spite of the fact, as you say, they knew that Greece could not pay back this money when it first lent it the money with the Troika. Right now, the IMF sounds rational and thoughtful about the Greek people. Is this the case?

Michael Hudson: Well, Yanis Varoufakis, the finance minister under Syriza, said that every time he talked to the IMF's Christine Lagarde and others two years ago, they were sympathetic. They said, "I am terribly sorry we have to destroy your economy. I feel your pain, but we are indeed going to destroy your economy. There is nothing we can do about it. We are only following orders." The orders were coming from Wall Street, from the Eurozone and from investors who bought or guaranteed Greek bonds.

Being sympathetic, feeling their pain doesn't really mean anything if the IMF says, "Oh, we know it is a disaster. We are going to screw you anyway, because that's our job. We are the IMF, after all. Our job is to impose austerity. Our job is to shrink economies, not help them grow. Our constituency is the bondholders and banks."

Somebody's going to suffer. Should it the wealthy billionaires and the bankers, or should it be the Greek workers? Well, the Greek workers are not the IMF's constituency. It says: "We feel your pain, but we'd rather you suffer than our constituency."

So what you read is simply the usual New York Times hypocrisy, pretending that the IMF really is feeling bad about what it's doing. If its economists felt bad, they would have done what the IMF European staff did a few years ago after the first loan: They resigned in protest. They would write about it and go public and say, "This system is corrupt. The IMF is working for the bankers against the interest of its member countries." If they don't do that, they are not really sympathetic at all. They are just hypocritical.

Sharmini Peries: Right. I know that the European Commission is holding up Greece as an example in order to discourage other member nations in the periphery of Europe so that they won't default on their loans. Explain to me why Greece is being held up as an example.

Michael Hudson: It's being made an example for the same reason the United States went into Libya and bombed Syria: It's to show that we can destroy you if you don't do what we say. If Spain or Italy or Portugal seeks not to pay its debts, it will meet the same fate. Its banking system will be destroyed, and its currency system will be destroyed.

The basic principle at work is that finance is the new form of warfare. You can now destroy a country's economy not merely by invading it. You don't even have to bomb it, as you've done in the Near East. All you have to do is withdraw all credit to the banking system, isolate it economically from making payments to foreign countries so that you essentially put sanctions on it. You'll treat Greece like they've treated Iran or other countries.

"We have life and death power over you." The demonstration effect is not only to stop Greece, but to stop countries from doing what Marine Le Pen is trying to do in France: withdraw from the Eurozone.

The class war is back in business – the class war of finance against labor, imposing austerity and shrinking living standards, lowering wages and cutting back social spending. It's demonstrating who's the winner in this economic warfare that's taking place.

Sharmini Peries: Then why is the Greek population still supportive of Syriza in spite of all of this? I mean, literally not only have they, as a population, been cut to no social safety net, no social security, yet the Syriza government keeps getting supported, elected in referendums, and they seem to be able to maintain power in spite of these austerity measures. Why is that happening?

Michael Hudson: Well, that's the great tragedy. They initially supported Syriza because it promised not to surrender in this economic war. They said they would fight back. The plan was not pay the debts even if this led Europe to force Greece out of the European Union.

In order to do this, however, what Yanis Varoufakis and his advisors such as James Galbraith wanted to do was say, "If we are going not to pay the debt, we are going to be expelled from the Euro Zone. We have to have our own currency. We have to have our own banking system." But it takes almost a year to put in place your own physical currency, your own means of reprogramming the ATM machines so that people can use it, and reprogramming the banking system.

You also need a contingency plan for when the European Union wrecks the Greek banks, which basically have been the tool of the oligarchy in Greece. The government is going to have to take over these banks and socialize them, and use them for public purposes. Unfortunately, Tsipras never gave Varoufakis and his staff the go ahead. In effect, he ended up double crossing them after the referendum two years ago that said not to surrender. That lead to Varoufakis resigning from the government.

Tsipras decided that he wanted to be reelected, and turned out to be just a politician, realizing that in order to he had to represent the invader and act as a client politician. His clientele is now the European Union, the IMF and the bondholders, not the Greeks. What that means is that if there is an election in Greece, people are not going to vote for him again. He knows that. He is trying to prevent an election. But later this month the Greek parliament is going to have to vote on whether or not to shrink the economy further and cut pensions even more.

If there are defections from Tsipras's Syriza party, there will be an election and he will be voted out of office. I won't say out of power, because he has no power except to surrender to the Troika. But he'd be out of office. There will probably have to be a new party created if there's going to be hope of withstanding the threats that the European Union is making to destroy Greece's economy if it doesn't succumb to the austerity program and step up its privatization and sell off even more assets to the bondholders.

Sharmini Peries: Finally, Michael, why did the Greek government remove the option of Grexit from the table in order to move forward?

Michael Hudson: In order to accept the Eurozone. You're using its currency, but Greece needs to have its own currency. The reason it agreed to stay in was that it had made no preparation for withdrawing. Imagine if you are a state in the United States and you want to withdraw: you have to have your own currency. You have to have your own banking system. You have to have your own constitution. There was no attempt to put real thought behind what their political program was.

They were not prepared and still have not taken steps to prepare for what they are doing. They haven't made any attempt to justify non-payment of the debt under International Law: the law of odious debt, or give a reason why they are not paying.

The Greek government has not said that no country should be obliged to disregard its democratic voting, dismantle its public sector and give up its sovereignty to bondholders. No country should be obliged to pay foreign creditors if the price of that is shrinking and self destruction of that economy.

They haven't translated this political program of not paying into what this means in practice to cede sovereignty to the Brussels bureaucracy, meaning the European Central Bank on behalf of its bondholders.

Note: Wikipedia defines Odious Debt: "In international law, odious debt, also known as illegitimate debt, is a legal doctrine that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable."

Michael Hudson is the author of Killing the Host (published in e-format by CounterPunch Books and in print by Islet ). His new book is J is For Junk Economics . He can be reached at mh@michael-hudson.com

[Mar 03, 2017] Bad Lenders Make Bad Loans

Notable quotes:
"... A growing impasse between the International Monetary Fund, and the European Central Bank, Greece's two main lenders, is threatening to push Greece into default, and pull out of the euro. Meanwhile, the Greece government told its lenders, that we now call "Troika" today, that it will not agree to any more austerity measures. Joining us today, to take a closer look at the Greek situation is Michael Hudson. Michael is a distinguished Professor of Economics, at the University of Missouri, Kansas City. He's the author of many books, and the latest among them is, J is for Junk Economics: A Guide to Reality in the Age of Deception ..."
"... What do you do in a case where you make a loan to a country, and the entire staff says that there is no way this country can repay the loan? That is what the IMF staff said in 2015. It made the loan anyway – not to Greece, but to pay French banks, German banks and a few other bondholders – not a penny actually went to Greece. The junk economics they used claimed to have a program to make sure the IMF would help manage the Greek economy to enable it to repay. Unfortunately, their secret ingredient was austerity. ..."
"... Sharmini, for the last 50 years, every austerity program that the IMF has made has shrunk the victim economy. No austerity program has ever helped an economy grow. No budget surplus has ever helped an economy grow, because a budget surplus sucks money out of the economy. As for the conditionalities, the so-called reforms, they are an Orwellian term for anti-reform, for cutting back pensions and rolling back the progress that the labor movement has made in the last half century. So, the lenders knew very well that Greece would not grow, and that it would shrink. ..."
"... If you lend money to a country that your statistics show cannot pay the debt, is there really a moral obligation to pay the debt? ..."
Mar 03, 2017 | www.unz.com
Finance as Warfare: The IMF Lent to Greece Knowing It Could Never Pay Back Debt Michael Hudson and Sharmini Peries February 17, 2017 1,700 Words 21 Comments Reply

SHARMINI PERIES: The latest economic indicator showed that the Greek economy shrank by 0.4% in the last three months of 2016. This poses a real problem for Greece, because its lenders are expecting it to grow by 3.5% annually, to enable it to pay back on its bailout loan. Greece is scheduled to make a 10.5 billion euro payment on its debt next summer, but is expected to be unable to make that payment, without another installment from its $86 billion bailout.

A growing impasse between the International Monetary Fund, and the European Central Bank, Greece's two main lenders, is threatening to push Greece into default, and pull out of the euro. Meanwhile, the Greece government told its lenders, that we now call "Troika" today, that it will not agree to any more austerity measures. Joining us today, to take a closer look at the Greek situation is Michael Hudson. Michael is a distinguished Professor of Economics, at the University of Missouri, Kansas City. He's the author of many books, and the latest among them is, J is for Junk Economics: A Guide to Reality in the Age of Deception .

Thank you so much for joining us today, Michael.

MICHAEL HUDSON: It's good to be here. But I take issue with one thing that you said. You said the lenders expect Greece to grow. That is not so. There is no way in which the lenders expected Greece to grow. In fact, the IMF was the main lender. It said that Greece cannot grow, under the circumstances that it has now.

What do you do in a case where you make a loan to a country, and the entire staff says that there is no way this country can repay the loan? That is what the IMF staff said in 2015. It made the loan anyway – not to Greece, but to pay French banks, German banks and a few other bondholders – not a penny actually went to Greece. The junk economics they used claimed to have a program to make sure the IMF would help manage the Greek economy to enable it to repay. Unfortunately, their secret ingredient was austerity.

Sharmini, for the last 50 years, every austerity program that the IMF has made has shrunk the victim economy. No austerity program has ever helped an economy grow. No budget surplus has ever helped an economy grow, because a budget surplus sucks money out of the economy. As for the conditionalities, the so-called reforms, they are an Orwellian term for anti-reform, for cutting back pensions and rolling back the progress that the labor movement has made in the last half century. So, the lenders knew very well that Greece would not grow, and that it would shrink.

So, the question is, why does this junk economics continue, decade after decade? The reason is that the loans are made to Greece precisely because Greece couldn't pay. When a country can't pay, the rules at the IMF and EU and the German bankers behind it say, don't worry, we will simply insist that you sell off your public domain. Sell off your land, your transportation, your ports, your electric utilities. This is by now a program that has gone on and on, decade after decade.

Now, surprisingly enough, America's ambassador to the EU, Ted Malloch, has gone on Bloomberg and also on Greek TV telling the Greeks to leave the euro and go it alone. You have Trump's nominee for the ambassador to the EU saying that the EU zone is dead zone. It's going to shrink. If Greece continues to repay the loan, if it does not withdraw from the euro, then it is going to be in a permanent depression, as far as the eye can see.

Greece is suffering the result of these bad loans. It is already in a longer depression today, a deeper depression, than it was in the 1930s.

SHARMINI PERIES: Yeah, that's an important at the very beginning of your answer here, you were making this very important point, is that although the lenders – this is the Eurozone lenders – had set a target of 3.5% surplus as a condition on Greece in order to make that first bailout loan. The IMF is saying, well, that's not quite doable, 1.5% should be the target.

But you're saying, neither of these are real, or is achievable, or desired, for that matter, because they actually want Greece to fail. Why are you saying that?

MICHAEL HUDSON: Because when Greece fails, that's a success for the foreign investors that want to buy the Greek railroads. They want to take over the ports. They want to take over the land. They want the tourist sites. But most of all, they want to set an example of Greece, to show that France, the Netherlands or other countries that may think of withdrawing from the euro – withdraw and decide they would rather grow than be impoverished – that the IMF and EU will do to them just what they're doing to Greece.

So they're making an example of Greece. They're going to show that finance rules, and in fact that is why both Trump and Ted Malloch have come up in support of the separatist movement in France. They're supporting Marine Le Pen, just as Putin is supporting Marine Le Pen. There's a perception throughout the world that finance really is a mode of warfare.

If they can convince countries somehow to adopt junk economics and pursue policies that will destroy themselves, then they'll be easy pickings for foreign investors, and for the globalists to take over other economies. So, it's a form of war.

SHARMINI PERIES: Right. Michael, you were saying that the newly appointed ambassador, Ted Malloch of the Trump administration to the European Union has suggested that Greece should consider leaving the European Union, or the euro in particular.

What do you make of this, and will this be then consistent with what Greece is suggesting? Because Greece has now said, no more austerity measures. We're not going to agree to them. So, this is going to amount to an impasse that is not going to be resolvable. Should Greece exit the euro?

ORDER IT NOW

MICHAEL HUDSON: Yes, it should, but the question is how should it do it, and on what terms? The problem is not only leaving the euro. The problem really is the foreign debt that was bad debt that it was loaded onto by the Eurozone. If you leave the euro and still pay the foreign debt, then you're still in a permanent depression from which you can never exit.

There's a broad moral principle here: If you lend money to a country that your statistics show cannot pay the debt, is there really a moral obligation to pay the debt? Greece did have a commission two years ago saying that this debt is odious. But it's not enough just to say there's an odious debt. You have to have something more positive.

I've been talking to Greek politicians and Syriza leaders about what's needed, and what is needed is a Declaration of Rights. Just as the Westphalia rules in 1648, a Universal Declaration that countries should not be attacked in war, that countries should not be overthrown by other countries. I think, the Declaration of International Law has to realize that no country should be obliged to impose poverty on its population, and sell off the public domain in order to pay its foreign creditors.

The Declaration would say that if creditors make a debt that cannot be repaid, the debt is by definition odious, so there is no need to pay it. Every country has the right not to pay debts that are unpayable except by bankrupting the country, and forcing it to sell off their public domain to foreign countries. That's the very definition of sovereignty.

So, I'm hoping to work with politicians of a number of countries to draw up this Declaration of Debtor Rights. That's what's been missing. There's an idea that if you withdraw from the euro, you can devalue your currency and can lower labor standards even further, wipe out the pensions, and somehow squeeze out enough to pay the debt.

So, the problem isn't only the Eurozone. True, joining the euro meant that you're not allowed to run a budget deficit to pump money into the economy to recover – like America has done. But the looming problem is that you have to pay debts that are so far beyond your ability to pay that you'll end up like Haiti did after it rebelled after the French Revolution.

France said, sure, we'll give you your independence, but you'll have to reimburse us, for the fact that we no longer hold you as slaves. You have to buy your freedom. You can't say slavery is wrong. You have to make us, the slaveholders, whole. So Haiti took this huge foreign debt to France after it got its independence, and ended up not being able to develop.

A few years after that, in 1824, Greece had a revolution and found the same problem. It borrowed from the Ricardo brothers, the brothers of David Ricardo, the economist and lobbyist for the bankers in London. Just like the IMF, he said that any country can afford to repay its debts, because of automatic stabilization. Ricardo came out with a junk economics theory that is still held by the IMF and the European Union today, saying that indebted countries can automatically pay.

Well, Greece ended up taking on an enormous debt, paying interest but still defaulting again and again. Each time it had to give up more sovereignty. The result was basically a constant depression. Slow growth is what retarded Greece and much of the rest of southern Europe.

So unless they tackle the debt problem, membership in the Eurozone or the European Union is really secondary.

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002). His new book is: Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy (a CounterPunch digital edition). Sharmini Peries is executive producer of The Real News Network. This is a transcript of Michael Hudson's interview with Sharmini Peries on the Real News Network.

[Sep 19, 2015]Greece awaits outcome of Alexis Tsipras gamble: 'We have all aged'

I am not sure that what EU wants is recovery. I think that idea is a fire sell of key Greek assets to Germany for pennies of a dollar. Distressed sales, you know. Welcome to modern debt slavery.
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"..."Dutch economist Maarten Verwey has unprecedented powers as his taskforce oversees the implementation of Greece's cash-for-reforms rescue package...Whoever ends up moving into Maximos Mansion, the official Athens residence of Greece's prime ministers, after Sunday's election, they will not, in any meaningful sense, be running the country.
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That honour might be said to go instead to a besuited Dutch economist in Brussels with the imposing title of director-general in the secretariat-general of the European commission in charge of the Structural Reform Support Service.
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Maarten Verwey, a senior civil servant at the Dutch finance ministry who joined the commission in 2011 and led its Cyprus assistance programme, heads what amounts to an EU taskforce for Greece, Greek media have said. "
Sep 19, 2015 | The Guardian

monzer7 19 Sep 2015 22:28

They sucked up to their politicians, whilst they ignored the obligations of their society. Any collective responsibility was surrendered for personal gain.

As usual... The Politicos grabbed the loot, and did a quick exit.

What remains, is your problem!

====

Do you see it?... That debt necklace that continues to engulf you?

The moral catastrophe this EU promoted...

We have to respond - but do reflect when you vote when Cameron decides.

rberger -> Sehome 19 Sep 2015 21:47

While there might be some economic sense to your idea, the politics make it unlikely to happen. The Southern Europe countries wanted the stable currency and low interest rates associated with the Bundesbank. If you asked Spain whether they wanted to go into a union with people like Greece, it wouldn't make any sense to them - they would prefer to stick to their own currency.

Xenkar -> Mackname 19 Sep 2015 21:42

We have to keep pretences about Democracy in Europe is all. As for the renaissance I can't see Greece waiting 3 centuries as a debt colony, unless you are referring to the word literally, or to the sociological results of the renaissance after its end which was the return of Democracy in a revolutionary fashion.

rberger -> Pannie321 19 Sep 2015 21:40

Of all the privatizations that have been done since the crisis started, not a single one has gone to a German company. (The airport operations one may go to a joint venture with Fraport but it hasn't been finalized yet.) The winners of the privatizations have been from countries like China, Hungary, Azerbaijan, etc (i.e., usually not EZ countries). I don't think there are any German companies involved in any of the upcoming privatizations either.

Mackname 19 Sep 2015 21:27

I don't understand the logical that keeps those people voting for something that they have no power to do a damned thing about it.

Those people need a renaissance.

slipangle -> Shizam13 19 Sep 2015 21:25

"German jackboot" that really is disgraceful, Germany would be far happier if Greece had run proper balanced budgets. The Greeks were the architects of their own disaster,Germans should be thanked for bailing the fools out rather then insulted.

randomguydeaustralie -> Sehome 19 Sep 2015 21:19

What, like an Austro-Hungarian Empire you mean?? That ended pretty badly as I recall

Pannie321 -> rberger 19 Sep 2015 21:14

Merkel has never been supportive of Greece, she along with Schauble are entirely responsible for impoverishing Greece for the benefit of German Banks. Just check out which Country's businesses are buying up Greek assets cheaply, check out the Nationality of the Business that hasn't paid any V.A.T. revenues or social security(N.I.) contributions for the past 20 years. That business has now conveniently sold their interests.

DogsLivesMatter -> TheRuthlessTruth 19 Sep 2015 21:10

The World Bank and the IMF.

deskandchair 19 Sep 2015 20:56

Why have elections when thanks to Tsipras treacherous deal it makes absolutely no difference who's elected. Greece your new PM is Maarten Vervwey:

"Dutch economist Maarten Verwey has unprecedented powers as his taskforce oversees the implementation of Greece's cash-for-reforms rescue package...Whoever ends up moving into Maximos Mansion, the official Athens residence of Greece's prime ministers, after Sunday's election, they will not, in any meaningful sense, be running the country.

That honour might be said to go instead to a besuited Dutch economist in Brussels with the imposing title of director-general in the secretariat-general of the European commission in charge of the Structural Reform Support Service.

Maarten Verwey, a senior civil servant at the Dutch finance ministry who joined the commission in 2011 and led its Cyprus assistance programme, heads what amounts to an EU taskforce for Greece, Greek media have said. "
http://www.theguardian.com/world/2015/sep/18/eurozone-greek-prime-minister-maarten-verway-greece-bailout

Sehome 19 Sep 2015 20:26

I have watched economic problems from Portugal to Greece for a few years now, seemingly insoluble without German/Brussells dictates, and I have a Propossal:
All Southern Europe, with its own level of economic strength, languages and cuisine and weather, should withdraw from EU and be its own Union, with its own currency. All of wealthy, arrogant Northern Europe including Scandinavia would be Europe North, but with no power to order anything at all in Europe South.
This would leave Czech Rep, Slovakia, Poland, the Balts and the poor small countries of Yugoslavia, either to form a Middle Europe, or break to join the North or South.
Three Europes, I think, makes more sense when one considers language, culture, values, and economics.

OXIOXI20 -> TheRuthlessTruth 19 Sep 2015 20:22

You ever hear of bank bailouts, 2008, 2010, 2012 ??

Scrotalyser 19 Sep 2015 19:46

I hate to have to tell them, but the Greeks sold their country for Euros. So they can't do anything, because they gave their power away to a cabal of faceless fraudsters.

Captain_Tibbets 19 Sep 2015 19:41

Tell the EU to shove their debts.

Iceland is doing fine now. You don't need the Euro. It's a curse not a blessing. We did tell you that.

This German mercantilist farce needs to stop. Do it now whilst they're in a blind panic about their disasterous asylum plans which are on the brink of causing war between Hungary and Slovenia. Kick the Germans when they are down - it's the best way, they're not so good fighting on two fronts historically...

[Sep 08, 2015]Yanis Varoufakis How Europe Crushed4 Greece

"...We all know that neoliberal economics is the driver of grotesque mal-distribution of wealth as a privileged nomenclature gorges on resources it has commandeered through insider dealing. The predations of this ideology over recent years mimic the violent reaction of Europe's other great Union – the Soviet Union – to any challenge to the privileges of the nomenclature."
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"...As this story demonstrates yet again, the Troika never meant to negotiate in good faith with the Greek government, but simply imposed its own destructive austerity and privatization program on it. It's also clear that the EU per se has very little independent existence, being mainly administrative scaffolding for the German government to pursue its own essentially predatory policies directed at the subjugation of the rest of Europe."
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"...Mr. Varoufakis also ignores the role that clientelism has played in making a bad situation even worse. He also ignores Greece's excessive debt and runaway fiscal spending. This has been going on since 1980. "
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"...The divergence between Germany, on the one hand, and France and Italy, on the other, has been hinted at in various analyses. The existing Euro system does represent the rule of bankers, enforced by central bank control of the currency and pliable elected officials. As I observed over a long career representing debtors and creditors in big cases, it is useless to expect a realistic evaluation of the debtor's ability to repay, and a rational restructuring of debt, until the personnel responsible for making the ill-advised loans are no longer the decision-makers (i.e. fired, retired or escaped to greener pastures). The European banks, knowing that the Greeks could not repay, pressured their governments to bail them out in stages starting in 2010, and they have succeeded in getting out. The politicians who effected this bailout don't want to now tell the voters that they sold them out for the benefit of the banks; rather they excoriate the Greeks as deadbeats, and refuse to deal with anyone who speaks reality. So Greece, a small country, which can't repay the amount of debt outstanding, must wait for a new cast of European politicians before sound economic arrangements can be implemented. The current deal just kicks the can down the road pending such political change; it has no chance of success. Comme ca change, comme c'est la meme chose."
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"...You are wrong. The bankers knew well that Greece's loans were unsustainable and yet, they kept lending, knowing that Merkel would cover the losses. However, what happened has happened. many were at fault. Countries cause wars and ethic cleansing and are not punished. Germany is a prime example. Why is Greece being held to a different standard? What happened to solidarity. Merkel is showing more solidarity to the migrants, inviting all of the Middle East to come to Europe. She should fly them directly to Germany. Why let them go through Greece first. Germany has a black eye, after her treatment of Greece and now wants to show her "softer side" Let her suffer the consequences then"
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"...His arguments about how irrational the eurozone has been in not transforming its economic framework to a form more convenient to Greece, which represents only about 2% of the eurozone's GDP, is not compelling. It's like the argument of millions of illegal aliens from failed societies given citizenship who then turn around and agitate for changing the host society so that it better resembles the failed societies. The eurozone's economic framework is hardly "undemocratic" if its most vocal critics number so few among the whole."
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"...Greece's rich and powerful, like the elites everywhere, "crushed Greece", because as countless man/woman in the street quotes in this paper indicate Greek business owners and professionals not on salary cheat and do not pay owed taxes. This criminal elite role modeling then infects the rest of the society as well. Obviously when not enough money goes into government treasuries this also causes deficits! But the rich and powerful, and their bought and paid for media, skillfully distract us from this reality by arranging the public discussion to just be about cuts to sympathetic government programs, cuts that are most often offered by the same criminal elites as the only solution to reducing deficits. Which means the same dysfunctional status quo is continued and so yet more and more loans and bailouts and debt forgiveness and screaming and yelling about being "victims" of it all go on - probably forever. "
Sep 08, 2015 | The New York Times

Since the beginning of Greece's financial crisis in 2010, two prime ministers have been swept from office after they were forced to adopt an unfeasible package of austerity measures in exchange for a bailout from the troika, as the eurozone authorities - the European Commission, the European Central Bank and the International Monetary Fund - are known. It pains me to watch the same fate befall a third prime minister, my friend and comrade Alexis Tsipras.

In July, when Mr. Tspiras was forced to capitulate to the troika's latest "program," it spelled the end of our government. It also caused a split in our party, Syriza, between those who reluctantly agreed to implement the program and the rest of us (approximately 40 Syriza members of Parliament, out of a total of 149) who did not. The general election set for Sept. 20 is a result of this crisis.

For my part, having resigned as finance minister over the troika's ruthless, humiliating imposition, I plan to sit this one out. I will not contest my parliamentary seat in a sad election that will not produce a Parliament capable of endorsing a realistic reform agenda for Greece.

Nor can I support the adoption of a troika program that everyone knows is destined to fail. There was a clear consensus, shared not only by myself and Mr. Tsipras, but also by Germany's finance minister, Wolfgang Schäuble, and officials at the International Monetary Fund, that the new bailout deal was not viable.

I will not, however, join those who think that exiting the eurozone, to bring about a major devaluation with a reintroduced drachma, is in itself a program for Greece's recovery.

The cause of this continuing trouble for Greece lies in the eurozone's existential crisis. The pioneers of the single currency, of whom Mr. Schäuble is the last active member, were undecided whether the euro should be modeled on the international gold standard of the interwar period or on a sovereign currency, like the dollar.

The gold standard relied on strict rules that were unenforceable during a crisis. In a severe downturn, these imposed the greatest burden on the worst-hit economies and thus made exit the only alternative to a humanitarian crisis. This is the reason that President Franklin D. Roosevelt took the United States off the gold standard in 1933, expanded the money supply and helped pull America out of the Depression.

A sovereign currency, or state money, demands a different, more flexible set of responses based on political union, as the French government and others have recently proposed. The great questions that Europe must answer are: What kind of political union do we want? And are we prepared to act quickly enough to prevent the fragmentation of the eurozone?

Europe's indecision is a result of a deep rift between Berlin and Paris. Berlin has traditionally backed a rules-based eurozone in which every member state is responsible for its own finances, including bank bailouts, with political union limited to a fiscal overlord's possessing veto power over national budgets that violate the rules. Paris and Rome, cognizant that their deficit position would condemn them to a slow-burning recession under such a rules-based political union, see things differently.

It was in the context of this standoff that Mr. Schäuble felt that accepting an alternative plan for Greece's recovery, in place of the troika's program, would weaken Germany's hand vis-à-vis the French. Thus little Greece was crushed while the elephants tussled.

We had such a plan. In March, I undertook the task of compiling an alternative program for Greece's recovery, with advice from the economist Jeffrey Sachs and input from a host of experts, including the former American Treasury Secretary Larry Summers, and the former British chancellor of the Exchequer Norman Lamont.

Our proposals began with a strategy for debt swaps to reduce the public debt's burden on state finances. This measure would allow for sustainable budget surpluses (net of debt and interest repayments) from 2018 onward. We set a target for those surpluses of no more than 2 percent of national income (the troika program's target is 3.5 percent). With less pressure on the government to depress demand in the economy by cutting public spending, the Greek economy would attract investors of productive capital.

As well as making this possible, the debt swaps would also render Greek sovereign debt eligible for the European Central Bank's quantitative easing program. This in turn would speed up Greece's return to the money markets, reducing its reliance on loans from European institutions.

To generate homegrown investment, we proposed a development bank to take over public assets from the state, collateralize them and so create an income stream for reinvestment. We also planned to set up a "bad bank" that would use financial engineering techniques to clear the Greek commercial banks' mountain of nonperforming loans. A series of other reforms, including a new, independent I.R.S.-like tax authority, rounded out our proposals.

The document was ready on May 11. Although I presented it to key European finance ministers, including Mr. Schäuble, as the Greek Finance Ministry's official plan, it never received the endorsement of our own prime minister. The reason? Because the troika made it abundantly clear to Mr. Tsipras that any such document would be seen as a hostile attempt to backtrack from the conditions of the troika's existing program. That program, of course, had made no provision for debt restructuring and therefore demanded cripplingly high budget surpluses.

The fact that few people ever got to hear about the Greek plan is a testament to the eurozone's deep failures of governance. If the "Athens Spring" - when the Greek people courageously rejected the catastrophic austerity conditions of the previous bailouts - has one lesson to teach, it is that Greece will recover only when the European Union makes the transition from "We the states" to "We the European people."

Across the Continent, people are fed up with a monetary union that is inefficient because it is so profoundly undemocratic. This is why the battle for rescuing Greece has now turned into a battle for Europe's integrity, soul, rationality and democracy. I plan to concentrate on helping set up a Pan-European political movement, inspired by the Athens Spring, that will work toward Europe's democratization.

Naturally, this will take years to bear fruit - years that Greece cannot afford. In the meantime, I shall continue to promote our plan for Greece's recovery as a true, viable alternative to the troika's impossible program.

Yanis Varoufakis, a former finance minister of Greece, is an outgoing member of Parliament for Syriza and a professor of economics at the University of Athens.


DaveG, Manhattan

Greece lied about its financial situation when it joined the Euro zone (with Goldman-Sachs' help.)

Beyond that, with no true political union in Europe, the Euro was a bad idea from the start. (Good for Germany, because it gets to sell its goods abroad more cheaply than if it still used the Mark, but bad for monetary and fiscal policy in less developed countries.)

Now with Greek insolvency, the EU has presented an aid plan, which Greece can never pay back. Austerity with a 25% unemployment rate is no solution. (In 1933, the US had a 25% unemployment rate because of Republican laissez-faire austerity policies. "New Deal" spending would reduce the rate to 15% by at least 1940; unfortunately, WWII did the rest.)

Though the Germans got a "haircut" in 1953 on their accumulated debt (as they had in the 20's/30's), they were not interested in any similar haircut for Greece. (Marshall Plan money the Germans got after the war, and the lack of reparations they were required to pay to countries like Greece under the terms of the 1953 haircut are additional benefits they received then.)

The Greeks and the Germans are no angels in any of this. Europe has just made an economic mess of itself.

Grouch, Toronto

As this story demonstrates yet again, the Troika never meant to negotiate in good faith with the Greek government, but simply imposed its own destructive austerity and privatization program on it.

It's also clear that the EU per se has very little independent existence, being mainly administrative scaffolding for the German government to pursue its own essentially predatory policies directed at the subjugation of the rest of Europe.

Yoda, DC

Dr. Varoufakis makes the same argument in his book "THe Global Minotaur". And he is correct about the very important role that capital flows and crushing debt have played on peripheral nations of which Greece is a member. However, there are other very important factors he ignores (in both this article and the book). He ignores the role and importance of institutions for example. Greece is the only nation in Europe not to have a land registry. Greece's institutions reek of corruption, cronyism and "roufeti" (Greek for you scratch my back, I scratch yours - a subtle form of corruption). This very important fact goes unsaid.

Mr. Varoufakis also ignores the role that clientelism has played in making a bad situation even worse. He also ignores Greece's excessive debt and runaway fiscal spending. This has been going on since 1980.

Robert Jennings, Lithuania/Ireland

A remarkable article.

I am one of the Old believers in the European ideal of Economic and Social cohesion; I have worked in support of the Accession process for over twenty years and watched in dismay as an alien ideology of neoliberalism (Corporatist Capitalism) has reduced the European Ideal to "fumbling in a greasy till", W. B. Yeats on Ireland.

I have also watched in dismay as the same ideology pre-empted Political decision-making in Ireland to force the Irish people to pay the private debts of headstrong and bankrupt Banks.

We all know that neoliberal economics is the driver of grotesque mal-distribution of wealth as a privileged nomenclature gorges on resources it has commandeered through insider dealing. The predations of this ideology over recent years mimic the violent reaction of Europe's other great Union – the Soviet Union – to any challenge to the privileges of the nomenclature.

The Greek people can be proud of their rejection (by referendum) of the European Union nomenclature –their action resonates with the Prague Spring rejection of the Soviet Union nomenclature way back in 1968. The Prague Spring was crushed by Soviet Tanks, the Greek Spring is being throttled by a combination of self-serving International Institutions designed to protect the Neoliberal ideology and the Corporate Capitalist nomenclature it serves.

I hope that people like Yanis Varoufakis can remain a dominant influence in the resistance to the takeover of the European Union.

serban, is a trusted commenter Miller Place

Varoufakis proposals were perfectly reasonably, never mind all the spleen toward Greece displayed by many commenters. None are seem to realize that much of the bloated Greek bureaucracy has in fact been reduced, from where do they think the 25% unemployment comes from? His problem was political weakness, not lack of economic wisdom. Greece did and does not have the muscle to stand up to whatever conditions Germany wanted to impose. Mr. Schauble may honestly believe that Greece needs hard medicine but his approach was to impose a plan that will keep Greece down for many more years. Eventually much of the debt will have to be written of, the longer this goes on the bigger the amount that will not be repaid.

Bill, Boston 8 hours ago

The divergence between Germany, on the one hand, and France and Italy, on the other, has been hinted at in various analyses. The existing Euro system does represent the rule of bankers, enforced by central bank control of the currency and pliable elected officials. As I observed over a long career representing debtors and creditors in big cases, it is useless to expect a realistic evaluation of the debtor's ability to repay, and a rational restructuring of debt, until the personnel responsible for making the ill-advised loans are no longer the decision-makers (i.e. fired, retired or escaped to greener pastures). The European banks, knowing that the Greeks could not repay, pressured their governments to bail them out in stages starting in 2010, and they have succeeded in getting out. The politicians who effected this bailout don't want to now tell the voters that they sold them out for the benefit of the banks; rather they excoriate the Greeks as deadbeats, and refuse to deal with anyone who speaks reality. So Greece, a small country, which can't repay the amount of debt outstanding, must wait for a new cast of European politicians before sound economic arrangements can be implemented. The current deal just kicks the can down the road pending such political change; it has no chance of success. Comme ca change, comme c'est la meme chose.

Uzi Nogueira, Florianopolis, SC 5 hours ago

Mr. Varoufakis: How Europe Crushed Greece. Really?

Greece's eurozone membership was the high point achieved by the political leadership. A tourism-based economy was sharing a common currency along with advanced-wealthy Germany, France, Italy and Netherlands. Everything was fine except for one small detail, the state of a backward economy.

The ruling political elite continued to run the country as business as usual. Namely, an over generous welfare system, a corrupt public patronage system and a backward third world-like economy. The end result, an unsustainable public debt brought about by the 2009 financial crisis.

Mr. Varoufakis -- and fellow politicians -- may still think (erroneously) eurozone membership is an inherited right fore being an European country. He misses, however, a fundamental point about economic integration.

Membership of a rich man's club does not entitle Greece to benefit from other country's wealth and prosperity for free. Greeks have to earn it. This is the ultimate lesson from the current debt crisis.

Richard Luettgen, New Jersey

Mr. Varoufakis needs to re-examine his history. FDR didn't end the Great Depression in the U.S. by abandoning the gold standard. The Great Depression persisted despite all his efforts until the demands of WWII put everyone to work either producing or fighting.

His arguments about how irrational the eurozone has been in not transforming its economic framework to a form more convenient to Greece, which represents only about 2% of the eurozone's GDP, is not compelling. It's like the argument of millions of illegal aliens from failed societies given citizenship who then turn around and agitate for changing the host society so that it better resembles the failed societies. The eurozone's economic framework is hardly "undemocratic" if its most vocal critics number so few among the whole.

Some of the plans Mr. Varoufakis extols have merit, such as his "development bank". But it's Syriza that's been least open to reforming excessively protective labor practices, reforming tax collection and a still-overwhelming public sector. The truth is that they don't really want to change and want the debt to simply go away. The only way it can is by exit, repudiation for a period of debt service and a starting over on a basis that is strategically sustainable.

And Mr. Varoufakis's desire for European "democratization" is merely self-interested rationalization for leveling ALL of Europe to avoid the consequences to peoples of excessive debt voluntarily and knowingly amassed.

Winthrop Staples, is a trusted commenter Newbury Park, CA 6 hours ago

Greece's rich and powerful, like the elites everywhere, "crushed Greece", because as countless man/woman in the street quotes in this paper indicate Greek business owners and professionals not on salary cheat and do not pay owed taxes. This criminal elite role modeling then infects the rest of the society as well. Obviously when not enough money goes into government treasuries this also causes deficits! But the rich and powerful, and their bought and paid for media, skillfully distract us from this reality by arranging the public discussion to just be about cuts to sympathetic government programs, cuts that are most often offered by the same criminal elites as the only solution to reducing deficits. Which means the same dysfunctional status quo is continued and so yet more and more loans and bailouts and debt forgiveness and screaming and yelling about being "victims" of it all go on - probably forever.

bob karp, new Jersey 5 hours ago

You are wrong. The bankers knew well that Greece's loans were unsustainable and yet, they kept lending, knowing that Merkel would cover the losses. However, what happened has happened. many were at fault. Countries cause wars and ethic cleansing and are not punished. Germany is a prime example. Why is Greece being held to a different standard? What happened to solidarity. Merkel is showing more solidarity to the migrants, inviting all of the Middle East to come to Europe. She should fly them directly to Germany. Why let them go through Greece first. Germany has a black eye, after her treatment of Greece and now wants to show her "softer side" Let her suffer the consequences then

Prof.Jai Prakash Sharma, is a trusted commenter Jaipur, India.

For now the Greek bailout deal with all its stringent austerity conditions attached to it might be okay as a one shot emergency move reluctantly accepted by the Greeks, but the lasting solution to the recurring crises in the Eurozone could only be an establishment of pan-European political union to sustain the existing monetary union with a broad common framework of fiscal policies applicable to the entire Union area, as rightly argued by the author.

Michael Boyajian, Fishkill

Thank you for your profound insight into the ham fisted idiocy of the so called troika.

Dr. MB, Irvine, CA

This gentleman seems to be oblivious of fundamental issue -- the duties one has when one talks of his/her rights! Where were the follow-ups on Greece's duties when she took all these debts? Were they (the Greeks) expecting these debts to be forgiven when the income from these "loans/debts" were crucial for the livelihoods of people in member countries of the EU? Simply stated, Greece, like any other party too often only talking of "rights" must realize that rights and duties are two sides of the same coin -- one does --or cannot exist without the other. Sooner Greece begins walking the walk, the better it is!

mr. mxyzptlk, Woolwich South Jersey 8 hours ago

Debt swaps? Selling off the commons to the "private sector" seems to me like a bad idea. Default on the debts to the private banksters, tell them you're writing down your debt at ten cents on the dollar and restart your own currency. Let the people of Greece run their own country and take it back from the banksters.

LG Phillips, California 5 hours ago

Not all of Greece's problems originate from EU membership, but the treatments imposed by the EU to remedy these ills are bizarre, irrational, and dangerous. For ex. while EU administrators insist Greece institute reforms to eliminate corruption and tax avoidance, they imposed govt spending constraints hindering Greek government's ability to implement the government programs/structures necessary to accomplish these reforms. While EU administrators insist Greece "deregulates" its mom and pop bakeries and other such markets, the truly labyrinthine thicket of boards, councils, ministries and agencies dictating Greece's nat'l government and economy is dizzying! There's the EU, the European Commission, the European Council, the European Central Bank, the European Stability Mechanism, & the IMF, which taken together lock-in and maximize inflexibility plus damagingly procyclical response when dealing with economic crises.

And the euro itself is a ridiculously designed and constrained currency. To paraphrase a metaphor given by Warren Mosler, the self-imposed constraints the EU's instituted on its own currency are as nonsensical as putting a big bag over your head to race in the 100m. What US conservatives who think Greece's problems are a harbinger for the US don't get is that Greece status in the EU has reduced to a status akin to PA or OH but WORSE, with no sovereignty of its currency plus (unlike PA or OH) Greece is compelled to fund guarantees of its own private banking system!

An interesting take on the future of Greece banks

http://www.hoocoodanode.org/node/21959#comment-3553180
dilbert dogbert wrote on Fri, 8/7/2015 - 6:07 pm

More wandering around loose on the innertubes and found this interesting take on the future of Greece banks. Chew on it for a while to clean your minds of the late lamented debates.

Mean Squared Errors: Schäuble's ticking clock

[Aug 07, 2015] Billmon The Eurosystems (Monetary) Control of Europes Politics

"..."The oligarchs have built a stable base on ignorant TV watching rubes, that base has to be shocked out of it's complacency. The fourth estate is their key instrument of power.""
Jul 16, 2015 | M of A

Note: This post was composed from a Twitteressay by Billmon.

J.W. Mason lists some Lessons from the Greek Crisis:

Before the crisis no one even knew that national central banks still existed - I certainly didn't. But now it's clear that the creditors' unchallenged control of this commanding high ground was decisive to the outcome in Greece. Next time an elected government challenges the EU authorities, their first order of business must be getting control or cooperation of their national central bank.

The quote says "control or cooperation," but I can guarantee the latter is never going to happen.

It is nearly impossible to exaggerate the degree to which the campaign for central bank "independence" has made them the enemies within for any left governments.

The central bankers waged a 50-60 year political war to wrest back the monetary flexibility that the break down of Bretton Woods gave to national governments. Having won that war across most of the developed world in the 70s and 80s, they extended the battlefield to the emerging markets in '90s and '00s.

The autonomy of central banks (meaning the political allegiance to Wall Street/London City/Frankfurt etc.) was maybe the biggest neoliberal victory of all. If rightwing political victories (Reagan, Thatcher et. al.) were the beachheads of the Great Counterattack on social democracy then "independent" central banks became the citadels of the occupation forces: Neoliberalism's "Republican Guard."

Ironically, the ECB was originally conceived - or at least was sold to the European left - as a way for governments to regain monetary flexibility at a higher level. As a way to a) escape US dollar hegemony and to b) outflank the Bundesbank by formalizing the joint political control of European monetary policy. I do not know if the hack establishment Social Democrats who sold that vision ever believed it, but if so, more fool them. Because what the European Monetary Union became, obvious now, was a way to turn the vision on its head: formalize joint MONETARY control of Europe's politics.

The "Eurosystem", the network of national central banks governed by the European Central Bank, gives central bankers unprecedented ability to squeeze and manipulate national governments in a coordinated way. It is as if every government in the Eurozone ALREADY has a colonial entity watching it like the Troika's agents are supposed to watch Syriza in Athens. And, since the ECB Governing Council (like other EU institutions) tries to operate by a non-transparent "consensus" (i.e. the votes are not revealed), the degree to which national central bank heads are representing the ECB in their countries, rather than the other way around, is often not clear.

As long as the cozy comprador system tied peripheral governments to the core (i.e. Berlin), the role of the ECB and the Eurosystem could be obscured. Peripheral governments appointed "made guys" (i.e. banksters and/or their technicians) to national central bank boards and pretended to govern. Core politicians and their local comprador politicians let the Eurosystem technicians in Frankfurt tell them what "structural reforms" they should push to make the EMU "work."

But the moment an outsider government like Syriza came to power, the role of the Eurosystem and the national central banks in it could no longer be hidden. The fact that the Greek National Bank was an instrument of the ECB in Frankfurt, not of the Greek government in Athens, became obvious to everybody. The ECB's role as the muscle behind the Eurogroup's (Berlin's) diktats put the Greek National Bank in the position of helping to choke its own banks and terrorize its own citizens. And under the rules of EMU the Greek government was completely powerless to do anything about it. A defining moment.

The inescapable conclusion is that the allegedly "independent" Eurosystem now operates not as a network of central banks but as a parallel government.

The role of the Eurosystem within the half-hidden political order of the eurozone really is comparable to the Soviet or Chinese Communist Party. Like the Communist Party, the Eurosystem is now the "leading organ" of the neoliberal order, operating at all levels of the EU structure and providing "guidance" to elected political structures which are not formally under its legal control, but in reality are dominated by it. And behind the administrative apparatus of the party (Eurosystem) is the Central Committee (Eurogroup) and the Politburo (the key creditor government officials). And behind THEM is the real locus of the party's centralized power: the General Secretary (Germany/Merkel).

So J.W. Mason is quite right: it is impossible for any left government to attack the dictatorship of finance unless it controls its national central bank. But while control of the national central bank is necessary, it is hardly sufficient. As long as the EMU exit is off the table, verboten, so to speak, control of the national central banks only eliminates the "near enemy."

Ultimately it comes down to political will, which in parliamentary democracies, comes down to public support. As long as the majority (of all voters or of propertied influentials, depending on the system) is more loyal to the Euro than to national sovereignty an effective challenge to the dictatorship of finance is impossible - no matter how many national central banks the left controls. nmb | Jul 16, 2015 7:20:43 AM | 1

Greece capitulates with the euro-dictatorship ... until the next battle

jfl | Jul 16, 2015 7:33:14 AM | 2

You know this 'independent' central bank as tool of the neolibraconian consensus is the most salient point drummed home about Russia : the central bank as 5th column.

And the Russian central bank preceded the ECB, didn't it? When the boys from Harvard went to Russia to 'straighten' things out they conducted an experiment ... and discovered it worked just great : rinse and repeat. Russia was the archetype of the gelded European nation to come.

So the next time says Russia is not a part of Europe I'll say ... not only of Europe, but the first European nation subverted by the gnomes of neolibraconia.

The Europeans who still have a pulse ought to note now just who their real enemy is : hint, the one that's occupying Europe. And who is their fellow European victim. And ban together to defeat their common enemy ... well run him out of town on a rail, at any rate.

Certainly rearrange their banking arrangements.

dana | Jul 16, 2015 9:09:23 AM | 8

Good post by Billmon and very interesting link posted by nmb, above.

For anyone who may have missed it, Andrew Gavin Marshall published an in-depth, well researched article, July 7, which paints a broad and ominous picture of where the EU is headed.

Between Berlin and a Hard Place: Greece and the German Strategy to Dominate Europe

Excerpt on centralization of monetary control:

"The European Commission is the third pillar of the Troika based in Brussels, functioning as the executive branch of the European Union overseeing a vast bureaucracy of unelected officials with responsibility for managing the union[…].

"Brussels was to be given the centralized power to approve and reject national budgets of eurozone nations, establishing a technocrat-run 'fiscal union' to match the ECB's role in managing the monetary union. EU institutions would have "more powers to serve like a finance ministry" for all the nations of the eurozone, potentially with its own finance minister, "who would have a veto against national budgets and would have to approve levels of new borrowing," said Mr. Schauble, the German Finance Minister".

Note: Technocrat-run EU institutions which would have the power to control national budgets of EU member states.

How about that? Anyway, Marshall's article is packed with information and is well worth reading in full.

ben | Jul 16, 2015 12:03:25 PM | 15

@ 13: "The oligarchs have built a stable base on ignorant TV watching rubes, that base has to be shocked out of it's complacency. The fourth estate is their key instrument of power."

Absolutely true, but, don't hold your breath waiting for a change.

james | Jul 16, 2015 12:08:33 PM | 16

b - thanks.. interesting post in that you seem to be venturing into trying to formulate a concept of how critical the financial system as it is presently defined impacts countries specifically within the euro.. as jfl points out - the recent dynamics in russia are another case in point.. brics is another fairly recent development which is in direct competition with the system in place that most people are in the dark about... well, when i mention the imf, world bank, special drawing rights, bank of international settlements - some of those institutions folks have heard of, but generally don't know much of anything about..

take a look at voting power in the imf membership at the bottom of this page.
then take a look at the basket of key international currencies used at present by the imf to define special drawing rights..

the other doozy is oil priced in us$...

i call it a financial ponzi scheme.. if you want to leave the mafia, or want to think you can work outside the mafia, you better be very prepared for the financial mafia coming after you... the coincidence of the patterns of destruction of countries in the past 15 years, beginning with iraq, and moving onto libya, syria, russia and moving on towards greece - all fit a pattern here and it has much to do with finances.. i wish more people were up on how finances drives many of these military agendas and how countries either work with the mafia, or they set themselves up for a lot of suffering attempting to break free of the same.. that's how i see the planet being run financially..

Hoarsewhisperer | Jul 16, 2015 12:42:22 PM | 17

I'm not convinced that the situation is as bleak as is being suggested.

The term 'left' (imo) is a derogatory epithet coined by Abusive, Ignorant Right Wing Cranks to describe people whom Right Wing Cranks dare not debate in public.
It's all about minimising exposure of their Abusive Ignorant Crankiness.
Hence all the behind-closed-doors negotiations and oaths of silence and confidentiality.

NATO, and now the European Commission, are fraudulently undemocratic 21st Century versions of the Star Chamber and modern people should have as little respect and tolerance for any Star Chamber as their forebears found the good sense to adopt and execute several centuries ago.

No-one should ever feel obliged to tolerate the intolerable.

Jackrabbit | Jul 16, 2015 12:52:58 PM | 18

IMO these 'lessons' miss the biggest one for the left: the loss of independent media. What good is protesting neolib control via banks if no one is listening?

Governments easily manipulate corporate controlled media via access journalism. Thus we get factual truths intermixed with propaganda spin that is relentlessly pro-business, pro-establishment.

Greece is a case in point. As described in Greek Government Insider Lifts the Lid on Five Months of 'Humiliation' and 'Blackmail', the Troika was gradually increasing pressure on Greece to do what the Troika demanded. They withheld billions of euro to Greece and cut off liquidity to the Greek government. Then they waited as the financial pressure on Greece grew. But along with those measures was a caustic media that painted Syriza as incompetent, then undemocratic (because most greeks wanted to remain in the euro), then irresponsible (for calling a referendum), etc.

Too often we give the media a pass when it has been well documented that business and government tries to control MSM (and increasingly other media as well) via access journalism, advertising revenue (a few industries dominate) writing stories that cite in-the-tank 'experts' from establishment-friendly think-tanks and controlled opposition.

Even within Greece, Syriza had trouble getting their message out because oligarchs own virtually all of the media! And many blogs also fell for the spin - even those that have been critical of the media in the past like Yves Smith at nakedcapitalism.com - despite the fact that the delay in Greece putting forth a proposal before the April 30th deadline could be logically attributed to the 2-step process that the Troika had forced (describing how they would service the debt would severely undermine Greece's position in future debt restructuring talks).

A Left that is not in touch with the people - and whose message is undermined by establishment-friendly media - is a disaster far greater than the loss of control of the financial system. The Left's greatest strength should be its connection with the people that it fights for. Yet, instead the Left has allowed itself to be marginalized by a corporate media that has strengthened the centrist 'faux Left' at the expense of the progressive Left. So much so that many people today identify THE LEFT with the identity politics that forms 'the base' for the fauxLeft. In short, people of the 'Left' are viewed as selfishly wanting something for themselves at the expense of others. (It should come as no surprise that reporting about Greece often fell in line with this line of thinking.)

For activists that are outside the centrist political establishment - anti-war, climate change, the environment (fracking, nuclear energy, etc.), inequality, constitutional and civil rights, etc. - it is very difficult to reach a wide audience. All 'change' is channeled into the pro-business, pro-establishment centrist political system. Anyone who is not a centrist is suspect.

Greece's coherent arguments quickly fell off media radar as sniping about their incompetence and their oh-so-strange Finance Minister took center stage. This put even more pressure on the Greeks and deterred potential allies. And the spinning continues. The understanding of most people still does not go much beyond this: the Greeks don't want to pay their bills and Syriza are incompetent radicals that made the problems worse and can't be trusted. In the face of this onslaught by the Troika and Troika-friendly media, Syriza's resistance is all but ignored in favor of trumpeting Greece's defeat (a warning to others?).

=

Is there any hope? Maybe.

1) Syriza formed a government with nationalists (ANEL). Why the Left is depicted as unpatriotic is beyond me, but the left may be getting its patriotic mojo back as WAR and trade deals are increasingly understood as benefiting an international elite. I could see similar political alliances forming in other countries. (In the US, I think the establishment had feared a potential Tea Party - Occupy alliance.)

2) Media reform (or the threat of it). The Greek government has begun investigations into media bias during the referendum (there was very little coverage of government rallies and government positions, etc.). If the Syriza-led government falls, any media reforms are probably less likely.

Ron Paul's "audit the Fed" movement got some traction which caused the Fed to take notice. "Truth in media" efforts should probably be re-doubled.

3) Education. We need to retain humanities education. Higher education is turning into vocational training. For example, IMO it's difficult to appreciate the myriad issues and import of the neolib consumer-oriented approach to government vs. the democratic citizen-oriented approach, without a humanities education.

Also, people don't usually react until it is too late - partly because few have enough learning to understand the impact that new policies will have. They try to make up for their lack of understanding by relying on trusted representatives like Obama. TTIP is a case in point. Look for demonstrations about Obamatrade in a few years when it is too late.

dana | Jul 16, 2015 1:25:52 PM | 19

Following, a link to a German documentary about the various mechanisms of the EU [Troika, Eurogroup, European Commission, Council, etc] which are being used as devastating tools to beat down and extract wealth, vampire style, from Greece [and Cyprus], in order to revive comatose banks and line the pockets of investors, through privatization of public property.

This documentary does a good job of demonstrating just how the power of technocratic branches of the EU is being rolled out to pillage Greek, Portuguese, Cyprus economies, plunging the respective populations into ever greater misery.

The Trail of the Troika [1:29:22]

psychohistorian | Jul 16, 2015 1:34:37 PM | 20

@ 15

james, If you read the Shock Doctrine by Naomi Kline you can follow the same financial rape of South American countries in the 70's that the financial mafia are doing now to the middle east.

The world needs to have a discussion about the world of private finance that exists now and what could be if all finance were sovereign.

psychohistorian | Jul 16, 2015 1:42:55 PM | 21

Let me add to the discussion my repeating postulate that if inheritance and ongoing private ownership of property are effectively neutered, the whole tenor of our social organization stops being Gawd of Mammon focused, kills the existing power bases and allows humanistic leadership to emerge instead of the puppet psychopaths of the global plutocrats we have currently.

guest77 | Jul 17, 2015 12:52:57 AM | 37

I haven't read this all, but looks very applicable to our times...

The network of global corporate control - https://archive.org/details/TheNetworkOfGlobalControl

Stefania Vitali, James B. Glattfelder, and Stefano Battiston

Abstract
The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions.

This core can be seen as an economic "super-entity" that raises new important issues both for researchers and policy makers.

MRW | Jul 17, 2015 2:05:22 AM | 40

The role of the Eurosystem within the half-hidden political order of the eurozone really is comparable to the Soviet or Chinese Communist Party.

No, it's not. Billmon doesn't understand the structure. He's not seeing it clearly, and is not getting to the root of the problem.

The individual EU countries that use the Euro cannot create their own currency. They GAVE UP their sovereign currency for a foreign one, the euro, when they agreed to make themselves subservient to the Maastricht Treaty.

The Maastricht Treaty did/does not allow for a 'federal government of Europe'. It ONLY concerned itself with a monetary union, and it set down strict rules for entry (for instance, a nation's deficits could be no more than 3%--an insanity). It allowed for the creation of a central bank, the European Central Bank (ECB), whose operating rules were dictated by the Maastricht Treaty (and subsequent revisions).

But crucial to understand is this: a central bank CAN ONLY SET MONETARY POLICY. You need a 'federal government' to SET FISCAL POLICY. The EU doesn't have that. Sure, it has the EU parliament, and it has a bunch of unelected officials running the ECB. But it has no overlord, no elected oversight, that can rule in conditions like Greece is going through to ease sectoral pain, and stop the bleeding of ordinary citizens. That requires fiscal policy. The only way that fiscal policy can be changed in the EU is by a change to the treaties. Or the blessing of Angela Merkel, because Germany has captured the ECB.

Let me try to put this in perspective. The US has a federal government AND a central bank. Despite what all the Federal Reserve haters and the 'get rid of the IRS' people claim (inaccurately), the US central bank is a creature of Congress and must answer, by law, to the federal government twice a year. It is the US Treasury's banker, and must, again by law, return all profits each year to the US Treasury.

The US federal government creates fiscal policy. This is the direction for the country that the central must follow and support trhough monetary polices. Fiscal policy is Congress' job although they haven't done it properly for 30 years. For example, if one of the 50 states is in trouble-let's be hyperbolic: devastating earthquake, massive drought, asteroid hits--Congress can authorize ("appropriate") funds--creating them 'out of thin air'-to help the state. With no debt to children or grandchildren.

Why? Because the US federal government issues the currency, the 50 states only use them. The 50 states cannot create their own currency, just like the countries that use the euro. But the 50 states have the protection of the US federal government.

The formerly sovereign countries in the EU that use the Euro are like the 50 US states now. They cannot create their own currency, which would give them the policy space to pay their own citizens and denominate all the debts incurred in their own currency. They are dependent on the ECB, a goddam central bank that has no fiscal authority, to help them. EVEN THOUGH, in Europe, the ECB issues the Euro 'out of thin air'. The ECB is a collection of central banks. And right now Germany's central bank is dominant because it has climbed to the top-Germany was deeply in debt before the euro took over-on the backs of the other nations.

You will not begin to understand what is going on until you realize that the euro was designed by the famous French economist, François Perroux, in 1942 in anticipation of Hitler winning WWII, which was expected then. The plan was that they (the Nazi Pétain government wanted to be aligned with the German hegemon) would introduce a pan-Eurpoean currency and force adoption by the southern and eastern European countries to control and impoverish them. Mitterand, aligned with the Nazi/fascist Cagoulard in the late 1930 and 40s, was a Pétain enthusiast; this only came out in 1990. It was Mitterand who pushed through the euro, if you will check history. Perroux's monetary replacement was the blueprint for the Maastricht Treaty and the subsequent treaties.

Posted by: rufus magister | Jul 18, 2015 12:18:48 PM | 78
Jackrabbit at 38, juliania at 66, jfl & fairleft >67

Like many, I've been waiting for the longest running drama on the Athens stage to finally get to the last act before attempting to make sense of the staging, plot and characters.

I still don't think we're quite there yet; probably a little more political fall-out still, but not much, see e.g., a majority of the Syriza Central Committee opposed the austerity deal.

The question of the political leadership of the left, however, is always an interesting topic. Also from the 17 July "Links" page at - dare I mention the name? - Naked Capitalism, John Pilger at Alternet argues thatThe Leaders of Greece Are Some of the Phoniest Idealists You'll Ever See. It seems hard to disagree.

Having set aside the mandate of the Greek electorate, the Syriza government has willfully ignored last week's landslide "No" vote and secretly agreed a raft of repressive, impoverishing measures....

The leaders of Syriza are revolutionaries of a kind – but their revolution is the perverse, familiar appropriation of social democratic and parliamentary movements by liberals groomed to comply with neo-liberal drivel and a social engineering whose authentic face is that of Wolfgang Schauble, Germany's finance minister, an imperial thug. Like the Labour Party in Britain and its equivalents among former social democratic parties such as the Labor Party in Australia, still describing themselves as "liberal" or even "left", Syriza is the product of an affluent, highly privileged, educated middle class, "schooled in postmodernism", as Alex Lantier wrote. [I could not immediately find whatever Pilger is quoting, he is affiliated with the "wsws" website; such sad sloppiness at a major site in these days of html coding...]

For them, class is the unmentionable, let alone an enduring struggle, regardless of the reality of the lives of most human beings. Syriza's luminaries are well-groomed; they lead not the resistance that ordinary people crave, as the Greek electorate has so bravely demonstrated, but "better terms" of a venal status quo that corrals and punishes the poor. When merged with "identity politics" and its insidious distractions, the consequence is not resistance, but subservience. "Mainstream" political life in Britain exemplifies this.

This is not inevitable, a done deal, if we wake up from the long, postmodern coma and reject the myths and deceptions of those who claim to represent us, and fight.

How then do democratic movements ensure that their leaders views and priorities accord with their own, and can be held responsible and be replaced? What sort of leadership is needed for industrial as well as political democracy?

Posted by: rufus magister | Jul 18, 2015 12:09:41 PM | 77 ps to 77 -- Amongst the parties affected by the Munich Agreement, I think Edvard Beneš, the Czechoslovakian President, is a better fit for poor Tsipras.

Posted by: MRW | Jul 18, 2015 7:29:54 PM | 85

paulmeli at @63 has got it exactly right. In all modern economies on a fiat currency, loans create deposits.

Bankers, as a result, create 'credit money', NOT new interest-free money. (Credit money also means that one person's asset is another person's liability. At the commercial banking level within the real economy that includes collateral, timed repayment schedule, and interest owed, which is income to the issuing bank. Everything nets to zero at this level across the macroeconomy.)

The US federal government, on the other hand, adds new money into the economy. Only entity that can. Only the US federal government can introduce new, interest-free money into the economy, and it does it via congressional spending based on the needs of its citizens, and where it wants the economy to grow (giving 40% of it to the financial institutions is NOT GROWTH). Which the mo-fos we've elected do not understand.

One small quibble, Paul. The amount of physical currency, physical cash and coin, is around 11.5% to12% of the available money. The rest are treasury securities. Don't forget that countries like Ecuador are pegged to the USD and need US cash for their citizens. Ecuador's central bank orders them from the US Treasury (Bureau of Printing and Engraving) and puts up 100% of the demanded amount in assets (treasury securities) to pay for them.

Posted by: MRW | Jul 18, 2015 7:29:54 PM | 85 Tom @61

Sorry for the delay. I'm traveling. Good questions, btw.

First, let's clear up what fractional reserve banking is. This is a lousy simplistic example, but it will work. And let's imagine a small western town with one bank, which I will call Bank Buckeroo. Introducing a second bank in the town mean I would have to explain how interbank reserves work, and it doesn't matter in this explanation. [BTW, US banks DO NOT LEND their reserves; reserves serve another purpose in the US banking system; namely to help the Federal Reserve retain the overnight interest rate target that banks charge each other. Canada, for example, doesn't even have a reserve requirement for their commercial banks.]

Fractional reserve banking explained

OK. Johnny Schwartzburger sidles into his Bank Buckeroo and deposits 100 bucks in cash in his savings account.

Now Bank Buckeroo has got $100 more than it had yesterday.

Because the reserve requirement is, say, 10%-the FRACTION of the loan that the bank must retain under "fractional reserve banking"--Bank Buckeroo holds onto $10 and can loan out $90.

Sally Sweetpea needs $90 for her beauty shop and she borrows $90 from Bank Buckeroo, and deposits that in her checking account.

Now Bank Buckeroo holds onto $9 (10% of $90) and can loan out $81.

Old Ray Saddleback needs $81 to buy supplies for the only café in town, so he hits up Bank Buckeroo for an $81 loan.

Bank Buckeroo holds onto $8.10 (10% of $81) and can loan out $72.90.

Paddy O'Gilligan needs $72.90 to top off his supply of whiskey at the only bar in town (and this banker likes his whiskey), so he borrows $72.90 from Bank Buckeroo.

Bank Buckeroo holds onto $7.29 (10% of $72.90) and can loan out $65.61

You see where I'm going with this. Eventually, Bank Buckeroo will have reserved all $100, but will have extended credit against that $100 to customers that he knows are good to pay back their loans. Under the gold standard system before 1933, each dollar had a statement on it that you could exchange 20 of the one-dollar bills for one ounce of gold (not exactly the statement but that's what it meant). It was a "fixed exchange rate." The value of a dollar (US) was fixed to the value of gold. So Bank Buckeroo has Johnny Schwartzburger's original $100 in cash that guarantees it can trade-in the cash for $100 in gold anytime it wants. It's protected against that loss. The only thing the banker has to worry about is whether his customers can pay back the new loans, and he knows their creditworthiness intimately.

That all changed in 1933-no more gold standard in the US

We went off the gold standard. The value of the USD was no longer pegged to the value of gold, the supply of which the US federal government could not control globally except for certain US mines. Each new goldmine find globally affected the value of the dollar before 1913 and led to extraordinary panics and busts in the last half of the 1800s. More gold available meant the value of the dollar dropped, and that affected international trade, and whether people exchanged their dollars for gold stateside and hoarded it, further diminishing the amount of money available in the real economy. It was the National Gold Something-or-Other Act in 1900 that pegged the USD at $20/ounce.

Interestingly enough, it was Marriner Eccles, whom FDR made the first chairman of the Federal Reserve three years later, a Republican Mormon banker from Provo UT who appeared before the Senate and House of Representatives in 1932/33 to make the case for dropping the gold standard (he wasn't the only one however). Eccles became more popular than Miley Cyrus. Eccles had seen the devastation that the banking system was doing to his municipal and rural customers. Eccles was 22 when he made his first million after his father died and he had to take over the family businesses, which included a bank. He was a financial genius who could speak plain English to commoners about banking and esoteric financial concepts. His ideas predated John Maynard Keynes by three years. (BTW, Keynes was never taught in American universities, so anyone sneeringly invoking Keynes doesn't know what they are talking about. The first Nobel Laureate in Economics, Paul Samuelson, is supposed to be the explainer and keeper of Keynes ideas, but Samuelson admitted in 1989 in a video interview that he never read more than half the book, and that he never understood Keynes' ideas to begin with.)

[to be contd]

Posted by: MRW | Jul 18, 2015 7:31:15 PM | 86 Correction: Each new goldmine find globally affected the value of the dollar before 1913

Should read: Each new goldmine find globally affected the value of the dollar before 1900

Posted by: MRW | Jul 18, 2015 7:34:22 PM | 87 Tom @61 [contd.]

If Private banks "cannot" print as much money as they like ( point 1 ), then how can fractional reserve banking Not exist in most of the world ? ( point 2 ) . If fractional reserves do not exist then they free to print as much as they like.

[…]

And your 3rd doesn't make any sense at all. How does a gold standard have any restrictions on having a 10% fractional reserve, 1000%, or 1,000,000% of gold holdings ? Gold doesn't make decisions, regulations and enforcement are the decision-makers. Whether it's gold or fiat.

Loans create deposits. Yes, 'out of thin air'. Bankers can say 'Yay' or 'Nay' based on the cut of your jib, or the color of your skin, although they are not allowed to.
Banks don't print money. They issue credit, i.e. 'credit money'. They mark up the customer's bank account with computer keystrokes in the amount of the loan. Banks issue credit money based on two things: (1) customer creditworthiness, (2) customer income. They also require collateral.
Banks have to maintain reserves in their banks accounts at the Federal Reserve on all the loans they make.It is a percentage of the loan, and banks cannot loan out this money. If the bank doesn't have enough reserves in their Fed account, they have to borrow from other banks at the Fed Funds Rate, or overnight interest rate, set by the Fed. (The Fed uses this overnight interest rate to promote or demote bank lending in the economy, among other things.)
If the bank has been making bad loans or is overextended-this goes to your Point 1 about banks being free to issue as much credit money as they like-and other banks know that, the other banks might not loan it any reserves.
In that case, the solvency-suspect bank has to slink to the Fed's Discount Window where they can borrow the required reserves, but the interest rate is punitive, and it usually alerts bank examiners that there's a problem at the bank. So having to go to the Discount Window is not something a bank wants to broadcast.
By law, the Federal Reserve must supply reserves to banks within the federally chartered banking system, or declare the overextended bank insolvent.
A 'check and balance' on a bank loaning out as "as much as they like" is meeting its reserves requirement.

About gold. When you have a gold standard, you're on a fixed exchange rate: X amount of currency for each ounce of gold. That's when fractional reserve banking makes sense because the bank only wants to loan out X amount of money based on the amount of gold in the kitty. It's up to the banker to make intelligent and safe decisions about who he loans to by doing his due diligence.

On a gold standard, he who owns the gold, owns the country. When we got rid of the gold standard, goldminers and gold owners stopped owning this country, including Mr. Rothschild. We fucked him up the ass. Our money is based on the 'full faith and credit of the US federal government' and we issue our own currency. To boot, we are the reserve currency worldwide.

Posted by: MRW | Jul 18, 2015 7:36:21 PM | 88 The thread didn't take my formatting in @88. Here is the first half presented in a clearer format:
----------------------------------------------

In response to Tom's @61

• Loans create deposits. Yes, 'out of thin air'. Bankers can say 'Yay' or 'Nay' based on the cut of your jib, or the color of your skin, although they are not allowed to.

• Banks don't print money. They issue credit, i.e. 'credit money'. They mark up the customer's bank account with computer keystrokes in the amount of the loan. Banks issue credit money based on two things: (1) customer creditworthiness, (2) customer income. They also require collateral.

• Banks have to maintain reserves in their banks accounts at the Federal Reserve on all the loans they make.It is a percentage of the loan, and banks cannot loan out this money. If the bank doesn't have enough reserves in their Fed account, they have to borrow from other banks at the Fed Funds Rate, or overnight interest rate, set by the Fed. (The Fed uses this overnight interest rate to promote or demote bank lending in the economy, among other things.)

• If the bank has been making bad loans or is overextended-this goes to your Point 1 about banks being free to issue as much credit money as they like-and other banks know that, the other banks might not loan it any reserves.

• In that case, the solvency-suspect bank has to slink to the Fed's Discount Window where they can borrow the required reserves, but the interest rate is punitive, and it usually alerts bank examiners that there's a problem at the bank. So having to go to the Discount Window is not something a bank wants to broadcast.

• By law, the Federal Reserve must supply reserves to banks within the federally chartered banking system, or declare the overextended bank insolvent.

• A 'check and balance' on a bank loaning out as "as much as they like" is meeting its reserves requirement.

Posted by: MRW | Jul 18, 2015 7:41:19 PM | 89 Some reporters are finally beginning to understand what I have been yammering on here over the past 18 months:

Why America Is Not The Next Greece
The key difference is that the United States has its own central bank -- the most powerful one in the world.

http://www.huffingtonpost.com/entry/why-america-is-not-the-next-greece_55a814c5e4b04740a3df6b11?

Posted by: MRW | Jul 18, 2015 7:45:47 PM | 90 jfl at 84 - Touche!

Posted by: rufus magister | Jul 18, 2015 9:38:39 PM | 91 Noirette at 80 -- I believe it refers to the mandate against austerity that many took the "No" vote to be.

Wayout at 81 -- To be fair, Pilger is saying this is just one more example of a much larger problem endemic to much of the contemporary left. Let's not lose the forest for the trees.

Posted by: rufus magister | Jul 18, 2015 9:42:58 PM | 92 @MRW

"One small quibble, Paul. The amount of physical currency, physical cash and coin, is around 11.5% to12% of the available money. The rest are treasury securities."

Yes, that's true. I tend to include Treasuries as cash equivalents so include them in the calculation, but your distinction is correct. In order to be used for spending securities have to be turned into cash.

Posted by: paulmeli | Jul 19, 2015 8:33:15 AM | 93 jfl @ 83

Greece's citizens, along with the bulk of citizens in the World, have no idea how money works, which is why people like MRW and myself have trouble following these discussions without piping in when the other Gorilla in the room is ignored. There are two parts to the problem, the tyranny of the arithmetic and the political.

Before one can solve a problem one has to define the problem. Leaving monetary economics theory out of the definition makes a solution unlikely unless it happens to be stumbled upon by accident, which doesn't seem to be happening.

If Greece's citizens don't understand how the Euro system undermines their prosperity how can they decide whether to leave the Euro or not?

Posted by: paulmeli | Jul 19, 2015 8:41:14 AM | 94 PM@94

I thought it was corruption and greed along with the Bust of '08 that undermined all of our prosperity. In Greece the Troika has certainly turned a recession into a depression but the other EU members are not prospering under austerity.

The end of growth may doom Greece to suffering decline whether they remain part of the EU or return to petty nation state status isolated from their natural partners in Europe.

Posted by: Wayoutwest | Jul 19, 2015 10:26:38 AM | 95 @86, @94

But isn't it a question of MRW and the loaves and fishes?

Monetary economics theory, as defined, is a shell game. A very profitable one, but it suits no one's interests but the banksters'.

Credit ought to be a utility like water or sewage, depending on your point of view. There's no reason to put up with the banksters' roping it off and renting it to us.

Posted by: jfl | Jul 19, 2015 12:16:34 PM | 96 Wayoutwest @ 95

"I thought it was corruption and greed along with the Bust of '08 that undermined all of our prosperity."

The GFC and events like it are the effect , not the cause.

One can say greed and corruption is a cause but those things have always been a part of human nature.

Regulatory failure is the proximate cause of our loss in prosperity, especially wrt banking crises. The Great Depression (banking crisis) led to Glass-Stegall, under which we had none, to the point that the elites were proclaiming that the problem of bubbles and crises was gone forever…the "Great Moderation"…until Glass-Stegall was repealed and government-sanctioned corruption became the norm.

I say government-sanctioned because those responsible have never been punished. It's a willful failure of the rule of law.

That and as all of the benefits of productivity have been accruing to profits governments have tried to grow their economies while spending less (in relative terms), which is, simply stated…impossible. See here for some evidence of this:

https://research.stlouisfed.org/fred2/graph/?graph_id=246996

…which shows the growth rate of U.S. Federal spending year-to-year. The average is around 7%, last year it hit zero and remains very low…but it has been heading to aero for a long time. Something's got to give.

The problem began in the late 70's-early 80's as governments shifted from public investment to credit-led growth (neo-liberalism, supply-side, "trickle-down" economics).

"The end of growth may doom Greece to suffering decline whether they remain part of the EU or return to petty nation state status isolated from their natural partners in Europe."

If you mean the end of growth in terms of limited resources, you seem to making the assumption that growth is limited by real resources only…it is possible to have growth with efficient use of resources that focuses on human services…labor. The corporate model of constant growth fails under this paradigm.

Unfortunately we are doing our best to eliminate labor altogether with little thought as to who then would be the customers?

They just aren't that into us.

Posted by: paulmeli | Jul 19, 2015 1:20:24 PM | 97 jfl @ 96

"Monetary economics theory, as defined, is a shell game. A very profitable one, but it suits no one's interests but the banksters'."

You are conflating monetary economics with finance, or credit. Finance is a shell game, or can be. Bankers are in control of this in many respects, but would be much less so if properly regulated. Finance is a totally separate system, independent except that as a consequence of saving, debt service relies on expansion of the money supply by other means, as described by MRW above, i.e. government spending (investment in the commons).

Monetary economics is a description of how a monetary system operates, based on simple double-entry accounting rules as applied to economic definitions such as GDP, Investment, saving, net exports, etc., i.e. the Flow of Funds. Everything is out in the open, so where is the shell? Anyone that can add and subtract and is curious can keep up with a monetary system…it's no different than managing a checkbook.

I fully agree that the credit circuit should be operated as a public utility, and no private individuals or groups should profit from the creation of credit using the state money system.

Effectively, credit is a bubble system, since it creates nothing (it splits zero's into assets and liabilities) and allows us to spend income (the asset) we haven't earned yet…it's a bubble because the bill is payable in the future, and if the debt service gets beyond the ability of debtors to pay the bubble pops and we get a banking crisis.

One can only wonder if a more thorough understanding of these systems would improve matters, but the systematic censoring of this subject has always been promoted by TPTB so that no one is allowed in 'the game' if they try to reveal the truth. See here for an example:

Krugman to Lietaer…don't touch the money system

Obviously, Greece is another example… how institutions that are supposedly in the public trust can take on a political role (which is clearly outside it's mandate) and punish a member that tries to operate outside of the 'game'.

Posted by: paulmeli | Jul 19, 2015 2:12:39 PM | 98 paulmeli

Thanks for your posts. I agree that there are "sacred" issues that are avoided unless you become marginalized. Today is awful. The scarcity of jobs means that just being out of work too long black balls you. There is no substitute economic/political system. The Greeks are subjugated because they have no alternative but revolt. The West has ceased to care about the people.

Posted by: VietnamVet | Jul 19, 2015 3:53:03 PM | 99 jfl @96

MRW and the loaves and fishes

[Jul 27, 2015] For Greece, Oligarchs Are an Obstacle to Recovery

Notable quotes:
"... ordering an employee to withdraw the money in bags of cash. ..."
Dec 05, 2012 | The New York Times

ATHENS - A dynamic entrepreneur, Lavrentis Lavrentiadis seemed to represent a promising new era for Greece. He dazzled the country's traditionally insular business world by spinning together a multibillion-dollar empire just a few years after inheriting a small family firm at 18. Seeking acceptance in elite circles, he gave lavishly to charities and cultivated ties to the leading political parties.
But as Greece's economy soured in recent years, his fortunes sagged and he began embezzling money from a bank he controlled, prosecutors say. With charges looming, it looked as if his rapid rise would be followed by an equally precipitous fall. Thanks to a law passed quietly by the Greek Parliament, however, he avoided prosecution, at least for a time, simply by paying the money back.

Now 40, Mr. Lavrentiadis is back in the spotlight as one of the names on the so-called Lagarde list of more than 2,000 Greeks said to have accounts in a Geneva branch of the bank HSBC and who are suspected of tax evasion. Given to Greek officials two years ago by Christine Lagarde, then the French finance minister and now head of the International Monetary Fund, the list was expected to cast a damning light on the shady practices of the rich.

Lavrentis Lavrentiadis embezzled money from a bank he controlled, prosecutors say

Instead, it was swept under the rug, and now two former finance ministers and Greece's top tax officials are under investigation for having failed to act.
Greece's economic troubles are often attributed to a public sector packed full of redundant workers, a lavish pension system and uncompetitive industries hampered by overpaid workers with lifetime employment guarantees. Often overlooked, however, is the role played by a handful of wealthy families, politicians and the news media - often owned by the magnates - that make up the Greek power structure.

In a country crushed by years of austerity and 25 percent unemployment, average Greeks are growing increasingly resentful of an oligarchy that, critics say, presides over an opaque, closed economy that is at the root of many of the country's problems and operates with virtual impunity. Several dozen powerful families control critical sectors, including banking, shipping and construction, and can usually count on the political class to look out for their interests, sometimes by passing legislation tailored to their specific needs.

The result, analysts say, is a lack of competition that undermines the economy by allowing the magnates to run cartels and enrich themselves through crony capitalism. "That makes it rational for them to form a close, incestuous relationship with politicians and the media, which is then highly vulnerable to corruption," said Kevin Featherstone, a professor of European Politics at the London School of Economics.

This week the anticorruption watchdog Transparency International ranked Greece as the most corrupt nation in Europe, behind former Eastern Bloc states like Bulgaria, Romania and Slovakia. Under the pressure of the financial crisis, Greece is being pressed by Germany and its international lenders to make fundamental changes to its economic system in exchange for the money it needs to avoid bankruptcy.

But it remains an open question whether Greece's leaders will be able to engineer such a transformation. In the past year, despite numerous promises to increase transparency, the country actually dropped 14 places from the previous corruption survey.

Mr. Lavrentiadis is still facing a host of accusations stemming from hundreds of millions of dollars in loans made by his Proton bank to dormant companies - sometimes, investigators say, ordering an employee to withdraw the money in bags of cash. But with Greece scrambling to complete a critical bank recapitalization and restructuring, his case is emblematic of a larger battle between Greece's famously weak institutions and fledgling regulatory structures against these entrenched interests.

Many say that the system has to change in order for Greece to emerge from the crisis. "Keeping the status quo will simply prolong the disaster in Greece," Mr. Featherstone said. While the case of Mr. Lavrentiadis suggests that the status quo is at least under scrutiny, he added, "It's not under sufficient attack."

In a nearly two-hour interview, Mr. Lavrentiadis denied accusations of wrongdoing and said that he held "a few accounts" at HSBC in Geneva that totaled only about $65,000, all of it legitimate, taxed income. He also sidestepped questions about his political ties and declined to comment on any details of the continuing investigation into Proton Bank.
Sitting in the office of his criminal lawyer last month, relaxed, smiling and dressed in a crisp blue suit and red-and-blue tie, Mr. Lavrentiadis said he found it puzzling that he had been singled out in reports about the Lagarde list when other powerful figures appeared to evade scrutiny.

"My question is, 'Why me?' " he said. "I'm the scapegoat for everything."

In the interview, Mr. Lavrentiadis depicted himself as an outsider and upstart, an entrepreneur in a small country dominated by old families who frown on newcomers. "I am not from a third-generation aristocratic family," he said repeatedly.

Indeed, by some lights, Mr. Lavrentiadis fell in part because he rose too quickly and then failed to secure enough of the right friends to protect him, a perception he did not dispute.

[Jul 27, 2015] Mathew D. Rose: The Crisis In Europe Has Only Just Begun

Jul 24, 2015 | nakedcapitalism.com

Ping July 24, 2015 at 11:04 am

Article does great service cutting thru the 'noise'.

I don't know why half billion 'clawback' and hefty penalties from GS isn't demanded for structuring fraudulent accounting in Greece's entry to EU.

Also unaddressed, the 12-14 billion olympic boondoggle that undoubtedly was wildly profitable for a few, leaving the Greek population with abondoned facilities and the bill.

susan the other July 24, 2015 at 11:06 am

Rose is correct. But the EU was doomed from the start. Now the Europeans are deliberating about having formed a political (as in purely political) union, without a viable economic model. We put it just the opposite but the result is the same. The thing that gets me, whether it is Germany or the US, is how holier-than-thou creditors are when the game is up. They seem to have only one religion: IBGYBG. When they are not repaid they pontificate about how irresponsible the debtors are, nevermind a worldwide depression. The main reason the EU was doomed from the start was that it was founded on a growth model that didn't really have legs. It was just a convenient magic show. They shouldn't pretend they didn't see this coming. Already their talk has shifted to saving the Core. Merkel, and probably Hollande, has decided to cut her losses, I'd bet. Save the Core instead of lose the whole unsalvageable mess. In so doing they should write off the debts of the periphery to zero.

Synoia July 24, 2015 at 12:49 pm

The EU was formed to prevent more wars between Germany and France.

This is unlikely:

In so doing they should write off the debts of the periphery to zero.

There appear to be many derivatives which would be triggered by such an event.

susan the other July 24, 2015 at 1:39 pm

nullify them all

paulmeli July 24, 2015 at 4:01 pm

Derivatives create a lot of counter-party risks because the Masters of the Universe™ were selling them to each other to hedge their bets.

Seems to me then that much of the risk is circular and so would cancel itself out. Self-nullifying.

IsabelPS July 24, 2015 at 11:21 am

"This has been a conflict between a small European nation, led by a leftist government, attempting to reassert its autonomy under crushing German predominance. That may sound simplistic, but there is not much more to it."

I've stopped reading here.

salvo July 24, 2015 at 1:45 pm

well, if you lived in germany like I do, you'll make the experience of an everyday propaganda in the mass media including the state owned ones repeating the narrative of the lazy greek.

IsabelPS July 24, 2015 at 3:13 pm

And?

In what way that is a proof of "a small European nation, led by a leftist government, attempting to reassert its autonomy under crushing German predominance"?

salvo July 24, 2015 at 3:59 pm

well, I think it's not wrong to say the Germany is projecting its power on the other nations in the eurozone and that greece loss of sovereignity is a result of such power projection

IsabelPS July 24, 2015 at 6:54 pm

And, of course, there's not much more to it.

Windsock said it well:

"The wealthy Greeks seek to conserve their wealth as much as the wealthy Germans. To devolve this down to nationalistic stereotypes is to play the game of the wealthy. Divide and rule. This article buys into that, big time."

I would say it more bluntly: useful idiots.

norm de plume July 25, 2015 at 2:42 am

Well of course, there is more to it. 'Germany' is part of a transnational neoliberal power elite, even if 'the German people aren't, and it is a central component. Its participation in what has happened to Greece may not have been sufficient, but it was certainly necessary.

If Merkel and Schauble and co had been sensible out loud from January and actually listened to and dealt fairly with Varoufakis, even if the IMF and ECB were hardline, would we be where we are?

And whatever influence the US or her own finance-capilitalists wield over her, ultimately Merkel is voted in or out by constituents. Win them over to a sounder view and she either listens or plans her retirement.

Democratic sovereignty may be virtually dead in Greece, thanks in part to the efforts of Merkel and co, but it is still breathing in powerful nations like Germany.

'To devolve this down to nationalistic stereotypes is to play the game of the wealthy'

That's true. The real issue is the elite, whatever canton they happen to hail from.

To that end you might be interested in a reply I just appended to a comment of yours from a couple of weeks ago, in a discussion on whether Tsipras will do a Blair and end up on the yachts of his erstwhile enemies. You said:

'Which does not mean that he, and Syriza, will not fall into the clientelist trap (some, like Guy Verhofstadt, say they have already started)'

I said 'Well, Guy Verhofstadt certainly knows of which he speaks.

Follow the money. Their money, that is. Not ours.'

That's the enemy of both Germans and Greeks, good or bad, lazy or industrious.

IsabelPS July 25, 2015 at 6:37 pm

I don't doubt it. Guy Verhofstadt also knows a thing or two about inflated governments, as Belgians do.

There is a lot of noise and little information.

German native speaker July 25, 2015 at 2:49 pm

Just today, from FAZ: http://www.faz.net/aktuell/wirtschaft/eurokrise/griechenland/medikamente-griechen-bekommen-fast-nur-teurere-originalarzneien-13719073.html

Who is responsible for Greeks not able to buy cheaper generic pharma drugs? The Greeks, and there are no two ways about it.

Your claim that German mass media depict the Greeks as lazy "on a daily basis" is nothing but propaganda, and obviously easy to do if you conveniently forget to include (or read, or watch) all examples to the contrary. Discussions in Sueddeutsche were often very good, you ever took the time to read them? This programm is publicly financed: https://www.youtube.com/watch?v=_QimxVuicZU

Ishmael July 24, 2015 at 11:30 am

There are many things in this article I would disagree with.

Yes, Greece was made to suffer by the French and German banks during the bailout; however, if Greece had really buckled down and changed it probably could have got through this and moved forward.

It is not German's fault that the Greeks have not improved their tax collection. Nope German assistance was kicked out of the country. It was not the Germans who failed to go after past Greek elites. No it was the Greeks. It was not the Germans who constructed an enormous counter productive government bureaucracy in Greece and refused to reform it. It was the Greeks. It was not the Germans who put in an unsustainable pension system and refused to reform it, it was the Greeks. It was not the Germans who have failed to put in place an up to date property system so that the owners (mainly Greek elites) of the property pay their property taxes, and still refused to do this, it was the Greeks.

I saw some report that said approximately $50 billion a year of taxes from Greek elites goes uncollected each year. The problem is Germany and the rest of the EU expected Greece to reform itself when it hit the wall. It has refused to do so. I keep saying, why does the Greek population keep wanting to stay on the Euro. It distrusts its own govt more than the EU.

FedUpPleb July 24, 2015 at 12:26 pm

Yes, Greece was made to suffer by the French and German banks during the bailout; however, if Greece had really buckled down and changed it probably could have got through this and moved forward.

Actually they did. Greece was in a primary surplus at the beginning of this year.

What changed was a new government was elected whom the European powers disapproved of. In league with the ECB, these powers - pincipally Germany - deliberately engineered a bank run in Greece so as to topple theis elected government or bring it into line. There is no other explanation.

This is not the Europe most europeans ever signed up for. It is the end of the EU as a political project as far as I, what some other assorted cranks, but now an alarmingly new number of ordinary commentators have concluded.

The elites and assorted Quis across the continent will continue to laud and implement the new German and neoliberal coup. But don't expect the general population to be pleased about it.

Yves Smith Post authorJuly 24, 2015 at 4:13 pm

*Sigh*

The bank run was underway before Syriza came into office. It's fair to say that the ECB took measures to make it worse (giving only minimal ELA increases) but it's not accurate to depict them as its sole cause. It's more akin to fanning flames.

The creditor conduct has been terrible. There's no need to overegg the pudding. It only hurts the credibility of critics.

Synoia July 24, 2015 at 1:36 pm

It is not American's fault that the Americans have not improved their tax collection.

It was not the Americans who failed to go after past American elites.

paulmeli July 24, 2015 at 4:08 pm

It doesn't matter much at this point whose fault it is…the obstinance in dealing with the problem will ensure that the Euro system fails catastrophically.

It would be hard to make an argument that the Greeks were responsible for that outcome. Any system that can be brought down by it's weakest member is a very poor system indeed.

TheCatSaid July 24, 2015 at 4:32 pm

Wasn't it the Greek elites who had the agency to make these changes, but chose to protect their own interests instead? Like what is happening in the USA?

In each case what is needed is to create genuinely democratic power structures. Maybe the broader populace needed to see things really fall apart, before taking up the mantle of taking responsibility to create something new that is capable of moving things forward in a constructive way for the people at large.

Ishmael July 24, 2015 at 5:18 pm

The elites (and this includes many ex-junta members) have controlled the govt since late 70's. The people have gone along with this because crumbs have been handed out to the people while the elites were stealing the country blind. One of the big backers of Syrzia is govt workers. They and the elites do not want govt reforms. Change will not come until it is forced upon them.

My first reaction to the new deal (my wife is Greek and I am around lots of Greeks) is basically that Germany was annexing the country but later as I thought about it I decided maybe that is a good thing. The Greek people have not been able to have a functioning country for 30 years. It is ranked as the most corrupt place in Europe and also one of the hardest countries in Europe to open a business.

JTMcPhee July 25, 2015 at 9:18 am

One can be sure that "the Greeks," like the Czechs maybe, ought to cheer the victory of their new masters. In the New Libertarian vein, you only got what you ( or the Government-Like Organization you as a weak little individual and serf-able mope must perforce become attached to) can Take and then Hold against the other Galtian Enterprises.

So it's the case, then, that Friedmania has flattened the earth so completely that the armies of Bidness can send the tanks and JU-87s and F-16s in a clean, bloody sweep over the Lowlands… Interesting that backward tribespeople in places like Afghanistan (our name for that collection) have resisted the actual tanks, preserving their identities as, e.g., Pashto, while happily soaking up the bribes and floods of corruption, pallets of $100 bills and Viagra and stuff…

Moneta July 24, 2015 at 10:23 pm

The blame is circular. Germany knew Greece restructured its debt to enter the zone.

As for the generous pensions, I keep on scratching my head wondering how many would consider 10k generous if they were receiving it. Money value is not the only measure of the size of a pension. One must look at what it buys. And frankly, they seem to consume way less resources than we do here in Canada.

windsock July 24, 2015 at 11:35 am

Any excuse to avoid getting on with it?

http://www.telegraph.co.uk/finance/economics/11761028/Greek-bail-out-talks-delayed-by-Troika-security-fears.html

MyLessThanPrimeBeef July 24, 2015 at 1:04 pm

Maybe they can meet inside a NATO base?

windsock July 24, 2015 at 11:49 am

I was one of those people who, in my youth, welcomed the EEC, then EC, then EU, from the shores of Old Blighty, hoping and believing it would tie us in to a balancing power against the US and USSR (giving my age away). I bought into that "preventing war" schtick.

Now I realise that they didn't want to prevent war because of its effects upon the populations who fought and suffered it. Now, watching Greece (and my own government), I can see that the reason they wanted to prevent war is because war destroys wealth. It is wealth, above all else, that all governments of the world, now seek to conserve.

The wealthy Greeks seek to conserve their wealth as much as the wealthy Germans. To devolve this down to nationalistic stereotypes is to play the game of the wealthy. Divide and rule. This article buys into that, big time.

William C July 24, 2015 at 1:12 pm

It is unfair to cast aspersions on the intentions of a dead generation on the grounds of the behaviour of their grandchildrens' generation. Monnet and Schumann were active 60 to 70 years ago.

Although British myself, I had French relations (now dead) who were passionate about uniting Europe precisely on the grounds that they wanted no repetition of the slaughter and rapine which traumatised their lives. There are no grounds for supposing that they were insincere and motivated by concern for their (often trivial) personal possessions.

Windsock July 24, 2015 at 2:03 pm

I am not casting aspersions on the people. I am saying that maybe we, the people have been duped? Or maybe, good causes get hijacked as a vehicle of convenience by others with different intentions?

Linus Huber July 24, 2015 at 8:31 pm

It often happens that cause and effect are set in incorrect order. The creation of the EC in this form was simply possible due to a peaceful period experienced during that time but has little real effect on peace itself what its main objective is supposed to be.

On another level I do not like the above article at all. It is exactly the worst way that nationalism is used to divert attention from the failure of the power hungry elite to the seemingly inappropriate conduct of people of another nation. It is a dangerous development and shows that the unsustainable policies of individual governments may be in trouble.

On the aspect of racism we have to differentiate. It is normal that one feels more comfortable with persons of the same background/culture/language etc. and therefore favors those in his personal choices which is part of the individual's freedom. The line is to be drawn when someone ACTS against another race/person of different background or culture where the word racism is appropriate. To now use the German's sentiment towards Greece as prove of being racist is completely inappropriate except when the believe that someone can endlessly live above his own means is completely ingrained in the mind set. We all have sentiments in that we mostly believe our culture/way of life etc. is somehow a bid superior to others' culture for defining one's identity and we generally do not appreciate that our "negative" character attributes are blown out of proportion.

Synoia July 24, 2015 at 1:37 pm

The Road to Hell is Paved with Good Intentions.

MyLessThanPrimeBeef July 24, 2015 at 6:26 pm

The other road to Hell is paved with bad intentions.

At times, it seems all roads lead to Hell.

Jim July 24, 2015 at 12:45 pm

As many of the remarks in this thread concerning the shortcoming of various European populations demonstrate, Europe lacks any sense of common identity. Europe is not a community and Europeans are not a people. A unified Europe might be ruled by force as a multicultural empire like the Ottoman Empire but the notion of a United States of Europe is utter fantasy.

c wenn July 24, 2015 at 4:25 pm

Thank You… I've spent a bunch of time in Europe, and all the above generalizations are more true than not.

However, Greek and Italian government is so corrupt, so sleazy, and so unlike the German system, that it's been pretty well accepted that tax evasion is a way of life there. Germany has its bad apples, but not anywhere near the kind of corruption you see in the PIIGS…. and yes, that's probably a sly acronym.

BUT – however colorful and memorable my stays in Italy [north or south], Greece, or even Spain – I would rather have Swiss, Belgian, German or even French neighbors. Sorry… there IS a difference in these peoples, if only in the overall flavor of their respective countries.

The Swiss are niggardly so and so's… and every time I'm there I curse their petty, judgmental, xenophobic ways…. but Switzerland will be a better place to live and prosper for it.

There is something to be said about grumpy old white people…. they make the neighborhood better. And safer.

sorry… but these conversations are going to have to be had as the world is awash in migratory peoples… some who are overwhelming their environments are not who we want moving in…. sorry… Hamilton's Rule

why oh why can't we have the necessary discussion about over population, migratory populations… and who and how many can play?

It's coming to all of you… and I don't care how lofty the rhetoric, there IS a difference between cultures. I would rather have Swiss neighbors than Hmong.

MyLessThanPrimeBeef July 24, 2015 at 6:44 pm

In general, a Swiss would rather have Swiss neighbors, a Hmong Hmong neighbors, a Martian Martian neighbors.

But as you say, not everyone is the same.

Take, for example, Bilbo Baggins.

He likes to venture out and hang around stranger creatures, like men, elves, wizards, etc.

Generally speaking, pardon the generalization, but people usually don't like to migrate to strange new places, unless their homes have been destroyed (or captured as slaves/indentured laborers)…not even to make more money. They rather their home nation grow more prosperous, so they can make more money at home…generally speaking.

Jim July 24, 2015 at 7:01 pm

Not to even mention foreigners there is little love lost between German, French and Italian Swiss. Xenophobia is a basic Swiss principle just as it is for say the Japanese.

Hans Suter July 25, 2015 at 2:30 am

Mr. Rose's contribution creates a relaxed ambiente in which a wide garden variety of small and large racism thrives. What about facts about xenophobic Switzerland ? Here a few: "With more than 20% of the population resident aliens, Switzerland has one of the highest ratios of non-naturalized inhabitants in Europe (comparable to the Netherlands; roughly twice the ratio of Germany). In 2003, 35,424 residents were naturalized, a number exceeding net population growth. Over the 25-year period of 1983 to 2007, 479,264 resident foreigners were naturalized, yearly numbers rising gradually from below 10,000 (0.1%) in the 1980s to above 40,000 (0.6%) in the 2000s.[16] Compare the figure of 0.2% (140,795) in the United Kingdom (2004).["

Linus Huber July 25, 2015 at 4:17 pm

@ Hans

Thanks to put the matter in proper perspective. It is not a matter of being xenophobic but rather a matter of volume, size and sustainability. Switzerland has a strong tradition to welcome real refugees and to ignore the mentioned circumstances by people who may belong to a nation whose government may be responsible for many bad policies implemented worldwide that contributed to a large degree to the present disorder is a faulty logic. But again, the blame game between nationalities and nations is exactly the wrong way to go but is the preferred choice by governments and the elite to divert the attention from their failures.

Jim July 24, 2015 at 6:51 pm

"Culture" is the epiphenomenal shadow of polynucleotides.

Barry Fay July 25, 2015 at 9:05 am

Boy do you have that wrong! You don´t mean "neighbors" at all. You mean "prosperity" and that you would rather live in a prosperous place than a poor one. I can only pity you. You have simply swallowed the kool-aid that capitalism preaches about "happiness". Both the Germans (I live in Berlin) and the Swiss are the unhappiest people I´ve ever been around. And the happiest? I´d have to say the Cubans! They know how to ENJOY LIFE.

JTMcPhee July 24, 2015 at 12:46 pm

What's with the persistent, insistent, often inconsistent turn to personification/reification/hypostatization in what purports to be "sophisticated and informed analysis" of complex intersections and interactions and interrelations? Is "Greece" a useful category, or "Germany," or "The US," when it comes to trying to keep the species alive? Or is that latter notion not really part of the goal at all?

TheCatSaid July 24, 2015 at 4:36 pm

I can't imagine any EU meeting starting with a request to consider what is needed to keep the species alive.

Linus Huber July 25, 2015 at 4:24 pm

@ JTMcPhee

An excellent question.

One might need to differentiate between the interest of the people and the interest of the governments. The government's interest might in many cases not be what serves the people best but what ensures and enhances their own power.

Generalfeldmarschall von Hindenburg July 24, 2015 at 1:34 pm

These historical episodes always remind me of Terence McKenna's dictum that 'Culture is not your friend'. These 'Germans/Greeks/English are mean/kind/clueless/uncivilized…' are all notions generated by cultural baggage that all peoples carry.
There are a lot of issues coming to a head in the Greek econonomic debacle. It's a real shame that the EU institutions can't seem to find a way to ameliorate conditions for the common people in Greece and maybe inflict a little suffering on the knaves and fools of various nationalities who brought Greece to this pass. But supranational institutions these days are all tailored to cater to the comfort of an internationalist elite that transcends ethnicity. They have their own culture and it involves laughing at you while peeing off a cliff on your head.

Synoia July 24, 2015 at 1:47 pm

Two points:

First, I'm astonished at the speed with which the cultural stereotypes have returned in public discourse. "Good German, Lazy Greek, Arrogant German, Junker, etc"

Thus I fear war. Dehumanizing others with labels is the start of a series of excuses to start killing.

Second, War has become so profitable (for some), and the epithet 'War Profiteer," whihc if issued when I was young was about the worst epithet which could be slung at another, has lost its power to shame, and now appears as a medal of achievement aka: Defense Industry CEO.

salvo July 24, 2015 at 1:56 pm

yes, you're right, but living in Germany I experience such kind of generalizations everyday, the narrative of the lazy greek has become common sense

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c wenn July 24, 2015 at 4:28 pm

I am sick to death of tip toeing around the reality of how GENERALIZATIONS get to be truths.

They are more truthful than not.. and never fair to the individual.

But we are highly selective in our outrage. THAT is what steams me.

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German native speaker July 25, 2015 at 5:53 pm

What you are bringing to the discussion are generalizations, and instead of the Greeks being badmouthed, you are badmouthing Germans. Same exact thing.

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Brian M July 24, 2015 at 2:08 pm

General Smedley Butler's "War is a Racket" remains a definitive (and delightfully simple) polemic on this very topic, Synoia.

That and the classic Black Sabbath song "War Pigs"!

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vidimi July 24, 2015 at 2:25 pm

imo, war between any of the eu states seems inconceivable in the next decade. of course, the political landscapes can change quickly, but europeans have always held stereotypes of each other. a case in point is the joke about european heaven and hell from years back: european heaven: the french are the cooks, the germans the mechanics, the british the police, the italians the lovers, and it's all organised by the swiss. european hell: the british are the cooks, the french the mechanics, the swiss the lovers, the germans the police and it's all organised by the italians.

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Jim July 24, 2015 at 2:47 pm

The present borders in Eastern Europe which were drawn up by Stalin at the end of WWII are fundamentally unstable.

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OpenThePodBayDoorsHAL July 24, 2015 at 5:23 pm

European (and world) war is already in full swing, it's financial. So much easier to pursue without all those messy flag-draped coffins to hide at the airport, the Pulitzer shots of crying babies, or the CNN live feeds of missile strikes destroying buildings. It's a casino, and we are the chips.

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MyLessThanPrimeBeef July 24, 2015 at 6:49 pm

Financial wars are less messy or not as gory, but can be more lethal.

Non-violence* kills.

*We think of physical violence as the only kind of violence. So, when I say non-violence, it could mean mental violence (which is not physical violence).

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craazyman July 24, 2015 at 5:35 pm

they're just trying to refill your beer, is that so bad?

It must be the wind . . . .

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VietnamVet July 24, 2015 at 2:15 pm

The article is true. The Eurozone is a dead man walking. The fault line between the Western and Greek Orthodox cultures is real. The article is wrong in sense that like almost all working journalists he is a handmaiden to the Davos Elite. The oligarchs are the ones pushing debt. They then suck the debtors dry till dead. Exploiting ethnic hatreds furthers their crimes.

Class Warfare is very 19th century. Today we have plunder capitalism. Plutocrats and their servants robbing everyone else. This is oblivious to corporate media.

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paulmeli July 24, 2015 at 4:13 pm

Robber baron financier Jay Gould quipped "I can hire one-half of the working class to kill the other half".

Same as it ever was.

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EmilianoZ July 24, 2015 at 3:04 pm

Germany is back to its good old self. The atonement period is over, folks. As the French say: chassez le naturel, il revient au galop. And the more repressed it was, the more virulent the come back.

Emmanuel Todd gives some clues as to what the new Reich might look like:

https://www.les-crises.fr/translation-germanys-fast-hold-on-the-european-continent-by-emmanuel-todd/

It's not very different to what Doktor Schaeubble is supposed to have planned according to an article in the links some time ago. In addition, Doktor Schaeubble wants Slovakia too. An old ally from Barbarossa must not be forgotten.

Emmanuel Todd thinks the UK is in the process of escaping by leaving the EU altogether (I think there's a referendum on that). He has put France in gray denoting "voluntary servitude". I'm sure the French elite wants to be collaborators, like in the old times (Sartre said that was the reason the French army collapsed so rapidly). The French people probably want out and join the Club Med.

I wouldn't mind a euro north and a euro south. There's nothing to visit up north but if the currency becomes cheaper, it would make visiting France, Italy and Spain very attractive.

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Dean Plassaras July 24, 2015 at 3:20 pm

Well written and formulated.

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john c. halasz July 24, 2015 at 3:31 pm

Deutschland raus! This ought to be the marching slogan of every truly democratically minded citizen in Europe, no matter how strange the ideological alliances. It has been remarked by many economists over the years, most recently by that former IMF guy, that having Germany leave the Euro and return to the DM would be the cleanest, least disruptive and fairest way to resolve the Euro-crisis.

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Steve H. July 24, 2015 at 5:27 pm

Excellent comments about implicit racism, nationalism, ismism. Not necessarily mutually exclusive.

What is the degree of homogeneity in a culture? Is it in the DNA, like lactose intolerance? Is it a product of circumstance, sea-farers in antithesis to mountain dwellers? Does it scale with size?

In smaller groups with a survival mentality, non-compliance may be ruthlessly selected out, with compliance being actions we might consider superstitious or abhorrent. Urban living requires a skill set which starts to look like a global culture, as long as the three billion people cooking on three-stone fires are peripheralized.

Here's what I know. When I hear or read about what America is doing in the world, I remember that a quarter of a million people were in a single protest march against the wars in 2003 and it didn't mean shit. That our government routinely does actions that over 2/3 of the population does not support. That corporations are both not people and 'not people'.

There is a difference between homogeneity and agency. When those with agency in Germany attempted to create a master race, they created a cultural identity that those looking at Germans can never forget.

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craazyman July 24, 2015 at 5:45 pm

A little FDI would solve the whole problem. Where is it?

Wasn't it supposed to have been here by now? This is like JEB Stuart at Gettysburg. Where is he? (Sorry for the Civil War allusion, it's too abstract, since he did show up. Evidently he liked to roam around the countryside.).

Where is FDI? Where is it roaming? Where is it? It must be sitting in a pile somewhere, like baseballs, or tennis balls. Is it at the ECB? Is it in Germany? Where the hell is it? it must be a big pile by now. Can't somebody see it protruding above a horizon like the Matterhorn? Oh! maybe it's in Switzerland! maybe it's in a Swiss Bank! No. There's too much of it. It wouldn't fit. It has to be somewhere - or maybe it's spread out all over the place. Maybe it's so spread out it's lost it "congealiality". Oh man. That's a property of FDI. It doesn't work if it's only a euro or two. It has to congeal. Evidently it can't be too spred out or all in one place. If it's all in one place, it's a big pile and it's useless, since it congeals and hardens like glue. If it's too spread out, it loses all congealiality. This sounds like a chemistry problem. It may be.

Where the hell is it? I've not seen one macroeconomics article on the interet that says where the FDI is. Not one. (Although maybe I haven't looked hard enough. That's certainly a possibility).

Maybe it's coming "soon".

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BEast July 24, 2015 at 9:37 pm

Very interesting article. I would like more background on the campaign of condemnation of Gutmenschen - on what basis were they condemned? "Impracticality"? Failure to get on board with various Eurozone proposals? EU skepticism? General lack of sociopathy?

How was the campaign orchestrated, and by whom?

(This is obviously the first I've heard of it.)

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mesfern July 25, 2015 at 5:28 am

I believe Rose is referring to a controversy about the possible origin of the expression "Gutmenschen" in Nazi lingo. It became popular in the late 90s after the publication of a "Dictionary of the Gutmenschen", by satirist Klaus Bittermann, which mocked many instances of self-righteousness in Germany's public life. With time, however, it came to target the Left and "Political Correctness" in particular; thus, a "Gutmensch" would be a do-gooder who supported all kinds of progressive causes, from feminism to environmentalism, but had no knowledge of the hard facts of life (that is, the business world). Eventually, a journalism association traced the expression back to a few Nazi leaflets; it was hardly conclusive evidence, but enough to blow things out of proportion and start another culture battle. At its most erudite, it was related to the Weberian opposition between the Gutmensch's ethics of conviction and the ethics of responsibility; at its most tribal, the "Gutmensch" became an umbrella term for everything inimical to the methods and the aims of the Right. Hence, one can have "Gutmenschen issues", "Gutmenschen arguments", "Gutmenschen politics". When used by the Right, it is a strongly derogatory expression, very hostile and openly dismissive.

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German native speaker July 25, 2015 at 2:09 pm

There was no campaign ever.

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salvo July 25, 2015 at 3:47 am

I don't understand what the problem is about: saying Germans are racists would be a generalization if the sentence means each individual german is a racist, but I think it points to a structural fact, that the mainstream public discourse in germany, and certainly in many other countries, is driven by the need to constitute a collective identity where the german is somewhat superior to the other. You just need to live here in Germany and listen to the everyday discourse, most people are not explicit racists, but they tend to assign positive attributes to themselves in constituting that collective identity while at the same time assigning the opposite negative attribute to another collective identity, we are diligent, trustworthy, thrifty and so on because some other, i.e. the Greek, are exactly the opposite, lazy, untrustworthy, profligate. The people who constitute themselves this way don't think as themselves as racists, because being racist is a negative trait in the public discourse. It is simply a fact that the mainstream public discourse in Germany is full of such stereotypes, positive for themselves and negative for the other (not only in tabloids like bild but in the so-called Qualitätspresse, even in the fee-financed state media.) This process is amplified by the fact that Germany has become the hegemonic power in Europe. Projecting one's power needs an ideological discourse which legitimates the unavoidable violence linked to this process, so if the Greeks are impoverished, disenfranchised in the process of power projection, then this has to be morally justified, usually by ascribing inferiority.

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Windsock July 25, 2015 at 4:24 am

I think my issue with this is that someone who is not German is heavily insinuating that the German nation is "reverting to type". Phrases like " a primordial fear" suggest there is a fixed reference in the very nature of those who speak German that is incapable of change or challenge. I would dispute that.

But then the very existence of the nation state is defined by those cultural commons that others do not share – language, religion, governance etc – and who is ever going to define themselves as inferior to anyone else?

Much of the early EU history was built on predicating the subsidiarity of the nation state to the continental whole. It has morphed, in my view, into a tool for the trans/multi-national globalist wealthy and the result is the playing off of nation states against each other, in both economic and cultural terms. I think this article is complicit in that.

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James Miller July 25, 2015 at 1:51 pm

During my university studies in Sociology, I was always amazed at the endless pressure to refrain from judging culture-only record it, dissect it (in a non judgmental way, of course), and teach the fragments left over to the next crop of undergrads. A museum of culture, poorly displayed and heavily redacted.
Judgement is required, or it's all useless.
There are such things as sick cultures, and it's not very difficult to find reasonable criteria to identify them.
One cannot, for the purposes of solving problems of the sort that we debate here, ignore this fact.
Tax theft as a cultural norm is a reality in Greece, and it cannot be the basis of an accusation of racism to point this out.
Greek culture, no matter how rich in history, literature and art, contains elements that make it non-viable in even the medium run, and the national sport of tax theft is only one of many of them.
It is equally clear, now, that the same is true of the "European Union".

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German native speaker July 25, 2015 at 1:59 pm

It is interesting to me that Mr. Rose wanted the comments open. He lives in Berlin, and has been described as an investigative journalist (http://www.spiegel.de/kultur/gesellschaft/mathew-d-rose-der-investigator-von-berlin-a-321596.html). I don't see much investigative journalism in the above piece. In his books, Rose's career consists of mainly criticizing the country that he chose as his residence. Yet some commenters claim that there is no "freedom" in Germany – go figure. Would be interesting to know if he collected money from the state that he loathes.
Lving in Berlin, there is ample possibility to talk to Polish people and other Eastern Europeans. Not done in above article, and this should be easy, living there. There are so many yuppy-like people who used illegal Polish laborers to fix up their Prenzlauer Berg/ Kreuzberg properties – this comes to mind.

Not sure what Mr. Rose's agenda is – sounds as if he wants to elicit emotional responses from foreigners, about the awfulness of Germans as such. Sorry you have to live amongst them.

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Gaylord July 25, 2015 at 5:41 pm

This is not merely Germany vs. Greece, but rather the Western Banking Cabal asserting heightened control over the economies of the world, particularly those nations which depend on the dollar and the euro for trade. The reason for the austerity policy, aside from unbridled greed (class war), is the fact of Peak Resources which means increasing scarcity into the future - energy, raw materials, food, water. The oligarchs are also preparing for Climate Chaos which they anticipate will be infinitely costly. They expect record-breaking losses and repair costs from storm damage, drought, wildfires, floods and sea level rise, crop losses, fishery collapses, and health care costs resulting from Fukushima's poisons that have been spreading through oceans and the air during the last four + years. The cost of disposing of all the dead human remains will also be a challenge, as the Great Extinction event proceeds.

[Jul 26, 2015]Greece, [yet another] the Sacrificial Lamb

"...these policy debates are really about ideology and power."
.
"...special interests, in and out of the country, are using the troika to get what they could not have obtained by more democratic processes."
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"...The battle, however, is not just about Greece. It's not even just about the money, although special interests in the rest of Europe and some within Greece itself have taken advantage of the troika to push their own interests at the expense of ordinary Greek citizens and the country's overall economy. This is something I saw repeatedly firsthand when I was at the World Bank, most noticeably in Indonesia. When a country is down, there is all manner of mischief that can be done."
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"...One underlying problem in Greece, in both its economy and its politics, is the role of a group of wealthy people who control key sectors, including banks and the media, collectively referred to as the Greek oligarchs."
.
"...More likely than not, though, the troika will do what it has done for the last five years: Blame the victim."
JOSEPH E. STIGLITZ
Jul 25, 2015 | The New York Times

As I read the details, I had a sense of déjà vu. As chief economist of the World Bank in the late 1990s, I saw firsthand in East Asia the devastating effects of the programs imposed on the countries that had turned to the I.M.F. for help. This resulted not just from austerity but also from so-called structural reforms, where too often the I.M.F. was duped into imposing demands that favored one special interest relative to others. There were hundreds of conditions, some little, some big, many irrelevant, some good, some outright wrong, and most missing the big changes that were really required.

Back in 1998 in Indonesia, I saw how the I.M.F. ruined that country's banking system. I recall the picture of Michel Camdessus, the managing director of the I.M.F. at the time, standing over President Suharto as Indonesia surrendered its economic sovereignty. At a meeting in Kuala Lumpur in December 1997, I warned that there would be bloodshed in the streets within six months; the riots broke out five months later in Jakarta and elsewhere in Indonesia. Both before and after the crisis in East Asia, and those in Africa and in Latin America (most recently, in Argentina), these programs failed, turning downturns into recessions, recessions into depressions. I had thought that the lesson from these failures had been well learned, so it came as a surprise that Europe, beginning a half-decade ago, would impose this same stiff and ineffective program on one of its own.

Whether or not the program is well implemented, it will lead to unsustainable levels of debt, just as a similar approach did in Argentina: The macro-policies demanded by the troika will lead to a deeper Greek depression. That's why the I.M.F.'s current managing director, Christine Lagarde, said that there needs to be what is euphemistically called "debt restructuring" - that is, in one way or another, a write-off of a significant portion of the debt. The troika program is thus incoherent: The Germans say there is to be no debt write-off and that the I.M.F. must be part of the program. But the I.M.F. cannot participate in a program in which debt levels are unsustainable, and Greece's debts are unsustainable.

Austerity is largely to blame for Greece's current depression - a decline of gross domestic product of 25 percent since 2008, an unemployment rate of 25 percent and a youth unemployment rate twice that. But this new program ratchets the pressure up still further: a target of 3.5 percent primary budget surplus by 2018 (up from around 1 percent this year). Now, if the targets are not met, as they almost surely won't be because of the design of the program itself, additional doses of austerity become automatic. It's a built-in destabilizer. The high unemployment rate will drive down wages, but the troika does not seem satisfied by the pace of the lowering of Greeks' standard of living. The third memorandum also demands the "modernization" of collective bargaining, which means weakening unions by replacing industry-level bargaining.

None of this makes sense even from the perspective of the creditors. It's like a 19th-century debtors' prison. Just as imprisoned debtors could not make the income to repay, the deepening depression in Greece will make it less and less able to repay.

Structural reforms are needed, just as they were in Indonesia, but too many that are being demanded have little to do with attacking the real problems Greece faces. The rationale behind many of the key structural reforms has not been explained well, either to the Greek public or to economists trying to understand them. In the absence of such an explanation, there is a widespread belief here in Greece that special interests, in and out of the country, are using the troika to get what they could not have obtained by more democratic processes.

Consider the case of milk. Greeks enjoy their fresh milk, produced locally and delivered quickly. But Dutch and other European milk producers would like to increase sales by having their milk, transported over long distances and far less fresh, appear to be just as fresh as the local product. In 2014 the troika forced Greece to drop the label "fresh" on its truly fresh milk and extend allowable shelf life. Now it is demanding the removal of the five-day shelf-life rule for pasteurized milk altogether. Under these conditions, large-scale producers believe they can trounce Greece's small-scale producers.

In theory, Greek consumers would benefit from the lower prices, even if they suffered from lower quality. In practice, the new retail market is far from competitive, and early indications are that the lower prices were largely not passed on to consumers. My own research has long focused on the importance of information and how firms often try to take advantage of the lack of information. This is just another instance.

One underlying problem in Greece, in both its economy and its politics, is the role of a group of wealthy people who control key sectors, including banks and the media, collectively referred to as the Greek oligarchs. They are the ones who resisted the changes that George Papandreou, the former prime minister, tried to introduce to increase transparency and to force greater compliance with a more progressive tax structure. The important reforms that would curb the Greek oligarchs are largely left off the agenda - not a surprise since the troika has at times in the past seemed to have been on their side.

As it became clear early on in the crisis that the Greek banks would have to be recapitalized, it made sense to demand voting shares for the Greek government. This was necessary to ensure that politically influenced lending, including to the oligarchic media, be stopped. When such connected lending resumed - even to media companies that on strictly commercial terms should not have gotten loans - the troika turned a blind eye. It has also been quiescent as proposals were put forward to roll back the important initiatives of the Papandreou government on transparency and e-government, which dramatically lowered drug prices and put a damper on nepotism.

Normally, the I.M.F. warns of the dangers of high taxation. Yet in Greece, the troika has insisted on high effective tax rates even at very low income levels. All recent Greek governments have recognized the importance of increasing tax revenues, but mistaken tax policy can help destroy an economy. In an economy where the financial system is not functioning well, where small- and medium-size enterprises can't get access to credit, the troika is demanding that Greek firms, including mom and pop stores, pay all of their taxes ahead of time, at the beginning of the year, before they have earned it, before they even know what their income is going to be. The requirement is intended to reduce tax evasion, but in the circumstances in which Greece finds itself, it destroys small business and increases resentment of both the government and the troika.

This requirement seems at odds, too, with another of the demands with which Greece has been confronted: that it eliminate its cross-border withholding tax, which is the withholding tax on money sent from Greece to foreign investors. Such withholding taxes are a feature of good tax systems in countries like Canada and are a critical part of tax collection. Evidently, it is less important to ensure that foreigners pay their taxes than that Greeks do.

There are many other strange features of the troika bailout packages, in part because each member of the troika has its favorite medicine. As doctors warn, there can be dangerous interactions. The battle, however, is not just about Greece. It's not even just about the money, although special interests in the rest of Europe and some within Greece itself have taken advantage of the troika to push their own interests at the expense of ordinary Greek citizens and the country's overall economy. This is something I saw repeatedly firsthand when I was at the World Bank, most noticeably in Indonesia. When a country is down, there is all manner of mischief that can be done.

But these policy debates are really about ideology and power. We all know that. And we understand that this is not just an academic debate between the left and the right. Some on the right focus on the political battle: the harsh conditions imposed on the left-wing Syriza government should be a warning to any in Europe about what might happen to them should they push back. Some focus on the economic battle: the opportunity to impose on Greece an economic framework that could not have been adopted any other way.

I believe strongly that the policies being imposed will not work, that they will result in depression without end, unacceptable levels of unemployment and ever growing inequality. But I also believe strongly in democratic processes - that the way to achieve whatever framework one thinks is good for the economy is through persuasion, not compulsion. The force of ideas is so much against what is being inflicted on and demanded of Greece. Austerity is contractionary; inclusive capitalism - the antithesis of what the troika is creating - is the only way to create shared and sustainable prosperity.

For now, the Greek government has capitulated. Perhaps, as the lost half decade becomes the lost decade, as the politics get uglier, as the evidence mounts that these policies have failed, the troika will come to its senses. Greece needs debt restructuring, better structural reforms and more reasonable primary budget surplus targets. More likely than not, though, the troika will do what it has done for the last five years: Blame the victim.

Joseph E. Stiglitz is a Nobel laureate in economics, a professor at Columbia and the author, most recently, of "The Great Divide: Unequal Societies and What We Can Do About Them."

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pieceofcake -> konstanz germany 3 hours ago

'One underlying problem in Greece, in both its economy and its politics, is the role of a group of wealthy people who control key sectors, including banks and the media, collectively referred to as the Greek oligarchs.'

Thank you - as it was the Oligarchic system which ruined Greece and perhaps it could have been mentioned in this article - how much money these Oligarchs moved out of the country into foreign bank accounts - and if you have been in Athens you probably had Greeks telling you, that with this money in Greece there would be no need for another bailout.

And for sure the debt - which is more or less the main 'incentive' for Greece to reform - should be forgiven - and the other European nations will agree to another 'haircut' AFTER the reforms are implemented - and you might be able to trust such a prediction - as all our predictions about the Greece Crisis -(documented by the published comments in the NYT) have come true.

And it is a very welcome change of the narrative by progressive US economists - that at least the distructive role of the Greek Oligarchs is recognized. It comes up late in the article and the suggestion - the troika seemed to be at times on their side is probably as unfair as the idea that progressive US economists have been on the Oligrachs side.

As from the beginning of the crisis it was rarely mentioned by US economists. They built a narrative all about 'austerity' insted of 'money for reforms' or a working taxation system for Greece!

[Jul 26, 2015]The great Greece fire sale

"... "Privatisation in Greece right now means a fire sale," political economist Jens Bastian said."
.
"...The Guardian is not the paper you think it is... or would like it to be.
Even if its support for the previous Coalition government wasn't clear enough, the nature of its coverage of Russia, Greece, and lately the Corbyn candidacy, very obviously reveals its true loyalties."

.
"... Privatization will make the Greek economy look like Russia. Mafia State 2.0. The cost of everything will rise as the profiteers stripmine any assets left after the sellout of the Greek people. Those assets deemed unprofitable will be dumped onto the bankrupt state government. Your last paragraph is neocon boilerplate and simply doesn't apply in a situation where pirates move in to clean the bones of their victims. "
July 24, 2015 | The Guardian

Greece needs to sell off €50bn worth of state assets such as airports and marinas quickly as part of its third bailout deal. But is such a plan realistic?

In the early days of the Greek debt crisis, two German politicians came up with a radical solution: Greece should sell off some of its uninhabited islands and property to pay back its creditors. "Sell your islands you bankrupt Greeks! And sell the Acropolis too!" was how the German tabloid Bild summed up their idea.

While selling off ancient monuments was never a serious idea, the privatisation of state assets has always been an integral feature of Greece's international bailouts. Over the past five years, Greece has faltered on promises to sell vital parts of its infrastructure – ports, airports, marinas and waterworks – in exchange for billions of euros in loans.

Privatisation remains a vital element of Greece's latest bailout deal. Under threat of being forced out of the eurozone, Athens agreed to transfer "valuable assets" to an independent fund, with the aim of raising €50bn (£35bn). Half the proceeds will be used to shore up capital reserves at Greek banks; a quarter will be used to repay Greece's creditors, and the remainder will be spent on unspecified investments.

The privatisation fund was the issue that almost forced a Grexit at the marathon 17-hour, all-night summit of European leaders in Brussels earlier this month. "It was the only thing discussed at the summit," recalls one diplomat.

At 6am, as Greece teetered on the brink of leaving the euro, the Greek prime minister, Alexis Tsipras, was still haggling over privatisation details with his counterparts, Angela Merkel and François Hollande.

The idea of the privatisation fund first emerged in a leaked German government paper which argued Greece should leave the eurozone if it did not agree to put €50bn in a Luxembourg fund as collateral for its debts. Although drafted in Berlin, the plan soon found support among Greece's hardline creditors in central Europe and the Baltics.

Tsipras wrung two concessions: the fund would be run from Athens, not Luxembourg, and a tranche of the cash would be earmarked for investments in Greece.

The privatisation fund is likely to remain one of the most contentious issues as Greece and its creditors strive to conclude bailout talks by mid-August.

From the creditors' perspective, Greek privatisation has been failure heaped upon failure. In 2011, international creditors decreed that Athens would raise €50bn by the end of 2015 from selling state assets. By early 2015, only €3.2bn had been raised; none of the most sensitive aspects – airports, ports, railways – had been sold. Neither officials at the European commission nor the International Monetary Fund are taking the €50bn target remotely seriously.

In a devastating analysis of Greece's debt burden published in July, the IMF said it was realistic to assume asset sales would be worth no more than €500m a year – meaning it could take 100 years to raise €50bn.

Gabriel Sterne at Oxford Economics argues that the IMF has failed to learn from its recent history that "less is more" when it comes to setting numerical targets. "It is economics versus faith – 'Somehow we will make this work even if it doesn't add up' – but the economics really doesn't add up."

When Syriza swept to power in January, one of its first actions was to sack the people in charge of Greece's privatisation agency and cancel plans to sell Greece's electricity transmission operator (ADMIE). The sale of other assets – most notably regional airports and the port of Piraeus – had almost been completed, but was thrown into doubt. The government is expected to put up little resistance to the sales now being concluded. Venues purpose-built for the 2004 Athens Olympic games, which have sat derelict and rotting for the past decade, will also be among the assets moved to the fund, alongside state utilities, including the water board and ADMIE.

Both Russia and China have expressed interest in snapping up the state-run railway network, one of the biggest encumbrances on public finances before the debt crisis erupted in late 2009. The Greek state is also rich in buildings bequeathed by individuals to municipalities and the Orthodox Church – properties that are also expected to be included in the fund. Contrary to popular perception, the public sector owns very few islands. The sale last week to Hollywood star Johnny Depp of the Aegean islet of Stroggilo, for a reputed €4.2m, was conducted privately.

While Tsipras has been forced into a humiliating climbdown over the sale of state assets, he has repeatedly branded the entire bailout plan as a bad deal that he doesn't believe in.

Unions with ties to the governing party have already vowed to "wage war" to stop the sale of docks in Piraeus, where the Chinese conglomerate, Cosco, currently manages three piers. With the debt-stricken country on its knees, officials have stressed that the prime minister will fight to ensure the denationalisations are not seen as a fire sale.

However, independent observers fear just that. "Privatisation in Greece right now means a fire sale," political economist Jens Bastian said.

Bastian was one of the officials responsible for privatisation under the European commission's Taskforce for Greece, a body of experts distinct from the troika. He thinks it was a "political mistake" to set a target to raise €50bn from asset sales, in the absence of support from Greek politicians across the political spectrum, from the centre-right New Democracy party, to Pasok on the centre-left and Syriza on the left.

"We have never had a political majority to embrace the idea of privatisation. How are you going to create the political momentum that has been absent in the past years under more difficult conditions today?" he asks.

Greece's creditors share such scepticism. Their answer is tighter controls. The privatisation fund will be managed by Greeks under the close watch of creditors.

The privatisation fund has few precedents, although it has been compared to the Treuhandanstalt, the German agency created in the dying days of the GDR to privatise East German assets shortly before reunification. Greece's former finance minister, Yanis Varoufakis, was one of the first to draw the parallel, although others offer the comparison unprompted. Peter Doyle, a former IMF economist, says the Treuhand offers the closest parallels: the agency had full control over government ministries to sell assets quickly. "The principal task was to sell these things to somebody for cash."

Greek government officials and opposition politicians said it was too early to know how the Greek fund would operate.

"We've got a long way to go before we have a clear picture of what this fund and the privatisation scheme will entail," Anna Asimakopoulou, shadow finance minister with the main opposition New Democracy party, told the Guardian. "But the entire privatisation process will feature large in negotiations because Tsipras is so opposed to them and creditors see them as a good way to raise revenues."

Greece has an urgent need for cash: although the eurozone bailout is meant to be worth up to €86bn, only €50bn is on the table, via the eurozone's bailout fund, the European Stability Mechanism.

Doyle thinks Greece's bailout is underfunded. "The Europeans just don't have enough cash ... and a major way to fill that gap is through privatisation." Officials at the Greek privatisation agency are "going to find their arms very strongly twisted to provide needed cash", he says.

"The privatisation agency is facing a trade off between doing something that is fair and open and following judicial procedures, or something that is going to deliver needed cash."


He fears Greece could be heading down the path taken by Russia in the 1990s, when valuable state assets were sold at knockdown prices to raise urgently-needed cash, creating a new oligarch class in the process.


"The very thing we all think that Greece needs – to get rid of its oligarchy – will in fact be entrenched by privatisation done this way," argues Doyle, who worked on privatisations in the Czech Republic, Slovakia and Poland in the 1990s. The difference between those countries and Greece, he thinks, is that the population and political class in central Europe accepted the idea of privatisation, despite the short-term hardships.

He is convinced the current privatisation plan for Greece is doomed to fail. "The programme was set up to encourage Greece to leave the euro and that plan didn't work, so now we are stuck with the privatisation arrangement that nobody, not even the original creditors, ever intended to happen."

Up for sale

Helliniko Olympic complex

Ports of Piraeus and Thessaloniki

14 regional airports

PPC power company, including ADMIE, the electricity transmission operator

DEPA natural gas company

Hellenic Petroleum
Hellenic Post
Athens Water Supply and Sewerage Company
Xenia Hotels in Rhodes
Marinas of Chios, Pylos and other locations

Source: Hellenic Republic Asset Development Fund


MrShigemitsu -> Byron73 26 Jul 2015 15:49

surely a newspaper like the Guardian

Woah, back up now.... you see, there's your problem right there.

The Guardian is not the paper you think it is... or would like it to be.

Even if its support for the previous Coalition government wasn't clear enough, the nature of its coverage of Russia, Greece, and lately the Corbyn candidacy, very obviously reveals its true loyalties.

It supports the neoliberal status quo - don't kid yourself otherwise.


JaneThomas 25 Jul 2015 22:07

"It's neither more moral nor a matter of just desserts to call for that internal devaluation, that austerity, than it is to call for the currency devaluation. Indeed, I would argue entirely the other way: the currency devaluation will cause a lot less human pain so that's the way the problem should be solved. Thus Greece must leave the euro because that's the way to solve the problem with the least pain."

http://www.forbes.com/sites/timworstall/2015/07/25/greece-really-should-leave-the-euro-the-economics-is-entirely-clear-here/


delaxo kimdriver 25 Jul 2015 17:34

How many Greeks really want Eurozone at any cost can only be seen through a referendum.
Remember that prior to the last referendum of 61-39, the same opinion poll companies were predicting a 50-50 result.
Are they more trustworthy on the Eurozone question?

someoneionceknew Drosophilasrule 25 Jul 2015 17:24

Capital's motivation is to accumulate financial assets i.e. supplying the least possible service/product for the greatest possible return.

delaxo kimdriver 25 Jul 2015 16:32

"the Greek political establishment was held to account by its electorate":
Excuse me but his sounds like a joke, when 61% of the electorate expressed a will that was summarily rejected by the true rulers of the colony.


Alfie Silva kimdriver 25 Jul 2015 16:11

Al well and good in principle and I agree with most of what you say.

However, privatisations are not always the nirvana you make them out to be.

You see it everywhere across Europe; the privatisation of EDP, PT, REN for example in Portugal; customer service is now appalling in these former nationalized industries.

I experienced it first hand in the UK; NORWEB and North West Water becoming United Utilities; service to the public again is appalling.

In the rush to privatise, the need for an ombudsman and guaranteed standards by statute is as necessary as making a return to shareholders.


Moniq Vervoort 25 Jul 2015 12:43

The list of Oligarch Greeks that don t pay tax in Greece should be plastered all over the internet , newspapers , tv , etc

Out of the 100 richest people on Earth right now 8 are Greek , one lady and 7 gents that ought to get a BBC camera and a competent interviewer asking their take on the situation ' back Home'!

That would make more sense that simply flogging the place off to Tom Dick and Harry (IMO)


Ryleigh RedCoat4Ever 25 Jul 2015 09:48

Except they are a nation state, not a household or a company. The ability of one country to intervene in another and seize assets smells of imperialism and colonialism.


deskandchair -> Winhoering 25 Jul 2015 09:20

Another corporatist fantasist:
"Spain and Ireland are reporting good growth rates"
AND soaring poverty and unemployment and mass emigration, really great EZ success stories there NOT.


deskandchair -> whitewolfe 25 Jul 2015 09:17

"Smaller the state less corruption"
More corporatist lies, small state = large corporate power and in which fairy-tale lala land do you imagine there's no corruption in private companies? Indeed, corruption is even MORE COVERT in private companies you dunce.


LibertineUSA 25 Jul 2015 09:06

Making Greece poorer one step at a time. What a triumph of neoliberal economics...for at least the beneficiaries of neoliberal economics. Who just happen to be the same people who own everything and don't want to pay their taxes.


FourtyTwo Drosophilasrule 25 Jul 2015 09:01

Germany already owns fully the Greek telecom company (Deutsche Telekom) and is preparing to secure the purchase of all Greek regional airports (Fraport AG). There are also rumours that Sofina, based in Brussels is after Thessaloniki's water company EYATH (ΕΥΑΘ). Interestingly enough Guy Verhofstadt sits on this company's board. So I grant you it is not just "Germany" but Germany's sphere of influence out to buy Greece. ;)

But even if some Greek oligarchs manage to get a piece of that cake, do you really think that would be anything to be proud of? I hear that Greece's "national contractor" George Bobolas is collaborating with Sofina to get a piece of EYATH. What do you have to say about that?

Everybody knows that the non-paper regarding the Greece Treuhand (let's call a spade a spade, shall we?) was circulated by Schaeuble even before the beginning of the summit meeting and that originally the fund would be based in Luxembourg, be run by non-Greeks and all the money from the privatisations would go to creditors to service the debt. The summit almost collapsed because of this aggressive move as Tsipras abandoned the negotiations in dismay and several more moderate people had to intervene to get him back to the negotiation table. Later we found that the non-paper was known and endorsed by both Merkel and the SPD. So yes, pretty much all of "Germany" was behind that caper.

Joint control of assets (Greek state and private companies) has already been proposed by the Greek government, namely Varoufakis himself, but that was deemed unsatisfactory. And even a neoliberal has to agree that selling off assets at a time of a big depression and uncertainty will effect in their being sold for peanuts with a great loss to the seller and a humongous gain for the buyer. Especially if the assets are monopolies of basic commodities like water which means they are totally risk-free, or related to the country's basic means of revenue, tourism.


Kompe75 hungrycocky 25 Jul 2015 07:59

We knew that Germans and reason coincide....but now with Schaueble everything is possible...they have tradition in electing paranoid leaders


MacNara -> whitewolfe 25 Jul 2015 06:31

You are clearly an ultra-capitalist, while I am not, so it's difficult to talk with you. But like many with a religious belief in capitalism, you don't seem to have much idea how it works.

Let's take your point 1:


Selling them contributes to the government, cash. Cash that the country desperately needs.

No: all this money is going abroad; the Greek government won't see any of it. From the point of view of the Greek government, the sale alone (assuming nothing else happened) would be purely an accounting change with no effect in the real world. So, from their point of view, if they were capitalists it would be best to carry on as is, or declare bankruptcy and have a pre-arranged buyer for the bankrupt company (i.e. themselves).


As long as trains run and electricity is deliver[ed] who cares who owns it?

Well, shareholders seem to, otherwise why would there be stockmarkets? And the reverse is true from the customers' point of view. That is to say, if the company became profitable and the profits went to the Greek state rather than others, then it would make a big difference to the citizens.

And so on for your other three points, which I had also already answered in my original post.

John Bennetts -> whitewolfe 25 Jul 2015 06:02

Total BS, Whitewolf. I expect that putting others down makes you feel bigger.

Name examples of "smaller state less corruption". Where has this worked?

The foreign banks made bad deals, lost the gamble and then pressured their governments, led by Germany, to extract penalties far i n excess of the supposed crime. The whole nation is being pauperised.

But that doesn't matter... they're only olive-sucking Greeks, after all. Not German or French banks. So that's OK.

MacNara 25 Jul 2015 00:02

I don't understand why the idea of management contracts for Greek state-owned industries has not been given an airing.

For example, Deutsche Bahn (German government) could be given a ten or twenty year contract to make the railways profitable, and EDF (French government) could do the same for the power system. And this could be done without privatisation (after all, the German and French equivalents are state-owned).

This would surely have several benefits:

1. When the companies were profitable, they could contribute to Greek government finances.

2. Alternatively, once profit-making, they could be sold off, but not at fire-sale prices as looks likely at the moment.

3. This would be a clear example of the German and French (and other governments') desire to help Greece improve, and not to asset-strip, so it would be a PR win, and a plus for all sides (especially if these contracts were 'at cost' and non-profit).

4. Making these businesses profitable will probably initially involve job losses, wage cuts, and price rises. Keeping them in state ownership would mean that the benefits of these sacrifices by Greeks would be kept in-house (i.e. go to the government and not foreign capitalists or Greek oligarchs) and therefore make it more likely that they would get social acceptance.

Has such a plan really never been discussed? Or is my logic faulty?


deskandchair 24 Jul 2015 23:52

". It is a necessary component of a healthy economy because it ensures private sector efficiency and productivity"

Straight from the '90's handbook and absolute RUBBISH. Look at for example public transport systems privatised in Australia. They're now less efficient (schedules are a joke) rolling stock is older and shoddy and private companies STILL DEPEND on state governments for injections of hundreds of millions of dollars to maintain infrastructure.

Then there's electricity supplies in Aus states that have privatised, over-investment in infrastructure (so they can pump the cost of electricity so while households are using less power, costs far exceed inflation). The same with water, gas etc.

I have yet to see ONE example of privatisation of public assets in Aus that resulted in better service, efficiencies etc etc etc. Privatisation of assets is simply a cash-cow for certain companies to bleed the public dry and am happy to consider any REAL example where this is not so.


Alto Cumulus 24 Jul 2015 22:56

Multinational corporations hire battalions of lawyers precisely to AVOID paying taxes. And foreign governments collude, allowing multinationals and Greek oligarchs to park their money in the Luxemburg, Netherlands, or other tax havens.

So selling of Greece's water utilities or ports does NOT mean the corporate buyers will be compelled to pay taxes in Greece. The burden of tax payment will continue to fall to Greek small businesses and Greek families.

The little taxes the new corporate overlords may pay will be immediately sucked up by Greece's creditors.

Marty Wolf -> psygone 24 Jul 2015 15:30

Privatization will make the Greek economy look like Russia. Mafia State 2.0. The cost of everything will rise as the profiteers stripmine any assets left after the sellout of the Greek people. Those assets deemed unprofitable will be dumped onto the bankrupt state government. Your last paragraph is neocon boilerplate and simply doesn't apply in a situation where pirates move in to clean the bones of their victims.

Olastakarvouna 24 Jul 2015 15:12

Helliniko Olympic complex, and 14 regional airports have already been sold (with only bureaucratic hurdles remaining). So has DEPA the natural gas company, but its sale is being held up by EU regulators. The PPC power company will NEVER be sold (unless you believe that Britain will sell its NHS). The Athens Water Supply and Sewerage Company will also NEVER be sold, as its sale (and that of Thessaloniki water supply co) was deemed unconstitutional a year ago by Greece's highest court. Helena Smith, please try refining your reporting a little bit more.

[Jul 26, 2015] Mathew D. Rose The Crisis In Europe Has Only Just Begun naked capitalism

Posted on July 24, 2015 by
By Mathew D. Rose, a freelance journalist in Berlin

Five months ago I attempted to explain why the conflict between Germany and Greece was destined culminate as it has:

Following the recent elections in Greece, Germany and its EU compradors are making it clear who is in charge. The Germans are currently not offering any compromise, but iterate the same blunt demand: Greece has to accept what is being dictated; in other words, capitulate or be annihilated. This time it will not be the Wehrmacht und Luftwaffe that are to force the Greek nation into submission, but a weapon just as lethal: national bankruptcy.

This conflict has nothing to do with Greek debt or finances. Syriza's strategy was based upon the rational assumption that the nation's debt and recovery are being stifled by austerity. As we know from most any respected economist, Greece's debt can never and will never be repaid. On the continent that prides itself as the cradle of the enlightenment, there should have been an amicable, lasting solution to Greece's untenable financial situation. Greece has had to learn the hard way, that the EU is no longer a European project for peace, democracy and prosperity, but a German tool for hegemony.

This has been a conflict between a small European nation, led by a leftist government, attempting to reassert its autonomy under crushing German predominance. That may sound simplistic, but there is not much more to it.

In past postings I have also attempted to explain the German mindset leading to this – and there is no other word for it – disaster. The negotiations have been surprisingly linear. Syriza's main goal was debt relief. They always saw Chancellor Merkel as the lone decision maker in the negotiations. Ms Merkel on the other hand has unremittingly demanded unconditional capitulation. The rest has been spectacle. There is a saying: "Clowns entertain in the intervals between the acts. The circus director runs the show". Dijsselbloem, Juncker and the rest may have had a lot to say to the media, but little to say in negotiations. Finland, Slovakia and Slovenia are irrelevant. The only other player of any importance besides Merkel was ECB president Mario Draghi, who assisted Germany's financial blitzkrieg by questionably terminating the ECB's support of Greek banks. Schäuble was Merkel's executioner.

The intervention of France's President Francois Hollande was uncannily reminiscent of Neville Chamberlain. The only thing lacking was his arrival at Charles de Gaulle Airport brandishing a letter from Chancellor Merkel. The conclusion of "negotiations" was reminiscent of the Munich Dictate. Greece has been "saved", much as Czechoslovakia 77 years ago.

The humanitarian disaster had reached dimensions that defy any definition of a "United Europe". With the media's obsession with the pseudo negotiations the fact that this was an existential decision for millions of Greeks was forgotten, many of whom stood at the edge of an abyss. This became clear as affected Greeks were asking how they were to pay for their insulin and if it would soon become unavailable due to the financial embargo that was being created. This was the terrorism that Yanis Varoufakis denounced.

The reaction of what I would term "enlightened Germans" to Varoufakis's claim was what one expects. For them, they were being compared to ISIS. Even though the fear emanating from much of Greece's population was palpable, there was little reflection by many of those Germans capable of doing so, with regard to the aggression conducted in the name of Germany. In the phase immediately before Syriza's capitulation there was an increasing awareness among some Germans that something was going terribly wrong, but it was too little and too late.

This brings me to the first main point of this posting. The history of the "good Germans" has always been one of ineffectuality. In the course of history there have been many Germans who believed in the enlightenment, be it Martin Luther, Immanuel Kant or Wolfgang Goethe. These however never questioned the authoritative role of the state against the will of the people. The class of "enlightened" Germans always regret what their nation is doing, but more often than not, in the end participate in the very actions they deplore. As A.J.P. Taylor wrote: "There were, and I daresay are, many millions of well-meaning kindly Germans; but what have they added up to politically?" In the case of Greece, this has occurred still again.

Not that the ethical Germans have had an easy time of it lately. A few years ago there was a massive campaign in commentaries and politics condemning so called Gutmenschen (literally translated: good people), who were defined by their critics as persons following their moral conscience – regardless of being leftist, moderate or conservative. In a nation that is responsible for the holocaust, this is a very worrying development. Thus the transition of Germany's hegemonic role in Europe, among many internal transitions such as the unjust redistribution of wealth, has been thoroughly ideologically prepared.

It is worth mentioning a sort of landmark book written by the German historian Heinrich August Winkler, "The Long Journey to the West", which appeared in the year 2000. It traces the purported progress of Germany becoming a responsible member of Western Europe's democratic tradition and intellectual enlightenment. Winkler may have been too quick with his conclusion. Under German hegemony we are seeing heads of state removed by financial pressure (Italy and Greece), nations forced to take over debts from reckless private banks (Ireland and Spain) and Greece being pounded into submission and having its autonomy reduced to passing legislation dictated by Berlin. The Germany of today has little to do with Western European democracy, resembling more traditional German anti-democratic authoritarianism.

The second point I wash to make is that the real losers with regard to the disaster in Greece are not even aware of their plight: the Eastern Europeans. What the Germans have done to Greece has its basis in racism, but the Germans have a primordial fear and hate of eastern Europeans, resulting in a commensurate brutality. When the opportunity arrives to subjugate these peoples, the process will not be as gentle as in Greece. Ukraine could already be the first example of this.

The only exception might be Poland, which throughout history has been invaded and occupied by the Germans. Not only have the Germans always considered Poland a colony, but after the Second World War German territory was added to Poland. This is something that Germans resent to this day. Willy Brandt falling to his knees in Warsaw was an important gesture, but in Germany these days Willy Brandt numbers among the derogated "Gutmenschen". The Poles are fortunately highly distrustful of the Germans – with good reason – and are still not members of the eurozone . They surely have been following the developments in Greece and hopefully comprehended the writing on the wall.

Lastly, no one seems to have really thought through what the "reforms" forced upon Greece will mean in practice. Up to now Greeks apparently were reluctant to pay taxes because hardly any one, especially the oligarchs, did so. To alter a nation's attitude to taxation is a herculean task for a government at the best of times, a process that Yanis Varoufakis interestingly had initiated very early on. The imposition of a ridiculously high value added tax increase by Germany is nothing more than taxation without representation. Not paying ones taxes in Greece will become a patriotic act of resistance against the Germans and the troika. There can be no crdible political discourse from a politically disgraced Syriza, leaving coercion as the only alternative (Varoufakis knew why he resigned as finance minister and has voted against the German dictate). The Greek people clearly rejected the dictate that has been foisted upon them. They will not be supporting the so called "reforms", especially as they simply cannot afford to do so.

The crisis in Greece and in Europe is not over, it is only just beginning.


John Jones, July 25, 2015 at 2:36 am

Yeah and Greeks and eastern Europeans and other minorities etc also live the experience of been on the end of the racism by Germans, English and other northern Europeans. And it is not 'some people' in their experience.
And it is always satire and funny when you are not the one on the other end of the joke.

The wealthy Greeks seek to conserve their wealth as much as the wealthy Germans. To devolve this down to nationalistic stereotypes is to play the game of the wealthy. Divide and rule. This article buys into that, big time.

Stereotypes which most of the German population has had no problem believing and spouting off towards Greeks. Preconceived notions that not only the Germans have but England and northern Europe.


Skippy, July 24, 2015 at 11:45 am

The strange thing is the Germans were late to the colonization party, tho at that time there was some funky stuff happening in German philosophy and spiritualism.

Skippy…. and at the end of the day all the other anglophone nations history is white washed and Germany was left holding the bag as the bad guy.


vidimi, July 24, 2015 at 12:05 pm

yup. i would say the english probably qualify as history's greatest all-time villains…or should i say "some english people".


flora, July 24, 2015 at 12:49 pm

Yes. " A few years ago there was a massive campaign in commentaries and politics condemning so called Gutmenschen (literally translated: good people), who were defined by their critics as persons following their moral conscience – regardless of being leftist, moderate or conservative."

This remark makes me wonder if Hegel is still the guiding philosophy in Germany.

"Since the state is mind objectified, it is only as one of its members that the individual has objectivity, genuine individuality, and an ethical life…" Hegel

Hegel gives the state the primacy, not the family or community or individual conscience.

dk, July 24, 2015 at 11:47 am

The reality is that oligarchs use proxies of many kinds, from nations to individuals. They gain resources and profit from the products and byproducts of elaborately manufactured scenarios, pitting groups against each other to produce illusions of demand, debt, etc. Germany and Greece are no more than proxies in this gambit.

Beware the kayfabe.

DJG, July 24, 2015 at 11:06 am

The Anglo-German media have steeped in racism. Are you forgetting the acronym PIIGS? Do you think that is referring to hams on the hoof in Finland?

I'll write it again: The DJG rule. The Anglophone world (and the Germans and Dutch) prefer their Romans and Greeks dead. The current ones are too "excitable."

MyLessThanPrimeBeef, July 24, 2015 at 12:15 pm

Brown people, little people, poor people, desert people don't do too well either in that world.

hemeantwell, July 24, 2015 at 11:35 am

To add: the more I think about this, the more off target this post is. Precisely at a time when it is necessary to consider features of the current crisis like, in no particular order, falling German productivity, the dwindling of Chinese demand that fueled Germany's economy, growing difficulties in finding investment options for surplus capital >>> bubble investment, how a NATO that is dominated by the US is fostering a crisis in the Ukraine, Rose focuses on the diffuse sentimental templates that can regressively steer a crisis response, especially when elites want to play the nationalism card. Rose does next to nothing to draw our attention back to crisis drivers, he just forecasts how it can be misinterpreted.

German native speaker, July 25, 2015 at 5:43 pm

For years, after starting an illegal war in Iraq, after the US caused the banking/ derivatives crisis, and after the truth about NSA/Snowdon, whenever someone in Germany talked bad about the "Amis" (short for Americans) because of the way the US behave, I have reminded them that not all Americans are 'behind' and supportive of the 'system'.
I guess I can now follow your reasoning and encourage all Germans to pile it on about how bad Americans are, and unless all of them are called ruthless imperialists, the US won't change (according to your logic).


OpenThePodBayDoorsHAL, July 24, 2015 at 4:56 pm

The "most successful" in recent memory gets to dictate the narrative because their view is seen as "right". Germany gets to crow about their "economic miracle", founded on running surpluses, exchange rate suppression that would never have been possible under the deutschemark, and the inconvenient truth of the massive debt forgiveness and restructuring they were afforded in 1953. America benefits similarly from their long-in-the-tooth supremacy after WW II, a victory of excellent river systems, large protective oceans, bounteous agricultural acres, and skillful realpolitik at Bretton Woods. Of course there's no possible chance that a 23% VAT on tourism will remedy Greece's predicament, but the ultimate failure of the program will be whitewashed because the "right" countries in the dominant narrative du jour did their best. We used to have a few politicians who understood at least a tiny bit about history and economics, but that era is long gone indeed, they're either ignorant (Reagan, Bush, Trump) or utterly corrupt (Clinton, Obama, Clinton).

Jim, July 24, 2015 at 7:19 pm

"excellent river systems, large protective oceans, bounteous agricultural acres" – these are all things that Brazil or for that matter the Congo Republic has. Going by natural resources and geographical advantages the Congo Republic should be vastly richer than remote mountainous Japan with it's earthquakes, almost total lack of natural resources and with only 3% of it's surface area suitable for agriculture.Japan has only one thing going for it – the Japanese people. But that makes all the difference in comparison with that treasure house of natural resources – the Congo.

Tinky, July 25, 2015 at 6:16 am

Did you really not understand that HAL was referring to aggregate advantages, and that isolating one in comparison is not at all useful?

Or should we also list the countless island nations that enjoy "large protective oceans", yet somehow fail to threaten the economic dominance of the U.S.?

mesfern, July 25, 2015 at 7:25 am

Believe it or not, the relative amount of agricultural land is the same in Japan and the Congo (~12%; the US have 45%). It may not be the first impression one has from the Congo, but its terrain is rather mountainous and rocky; as one nears the eastern provinces, one might even be tempted to say they are the African Himalaya. Add in the rainforests, and it becomes obvious why it is so difficult to build and maintain the necessary infrastructures.

praedor, July 24, 2015 at 2:21 pm

Clear political correctness corrupting your vision. The German people (by and large, the majority, the bulk, the CULTURE) label the Greeks as lazy and deserving of what they are getting. They label the GREEKS as LAZY and deserving of their plight. They don't deserve aid, succor, etc, because they're Greeks and Greeks are…Greek (lazy leeches). That is an objective fact of the coverage and the overall conceit of the German people en bank. It is racist. I don't give a flying crap if you can find one or two coffee shop teenager Germans who disagree, they aren't the ones running the show, propping up the show, supporting the show, creating the show, kowtowing to the show (though they too are kowtowing). The German machine as a whole, in focus, by design, by preference, is racist and hegemonic. The Troika IS the German establishment, the German heart, the German soul as it is run and supported, directly and indirectly, actively and passively, by Germans. Virtually all of them.

FedUpPleb, July 24, 2015 at 12:19 pm

Shill harder Jesper. What was done to Greece cannot be explained by any rational political policy. It has its roots in emotion, domination, nationalism and yes, racism. You can call the latter "cultural differences" if you like, but it only puts a euphemism on the shocking behaviour seen over the last two months.

Europe has been cast back into the 1950s by this euro crisis. A large portion of the blame now lies with German intransigence in the face of the reality of both bank and soverign bankruptcies. This German intransigence is, at its heart, motivated by national interest, which by casting us back into the 1950s, makes many nervous.

I have been watching commentary and coverage from across the world closely since the end of May on these issues. I can assure anyone still in doubt that the opinions in this post are representative of a very wide and indeed deep shift in mood following what was done to Greece. Europe has lost the cafe-latte front and one must understand the points being made in this post to realise it.

Or one can remain in terminal denial and wait for the market to come along and make things better. In any case, please have the graces not to simply stand around shilling.

salvo, July 24, 2015 at 1:50 pm

well, I live in Germany and am formally German myself and I can assure you the main narrative repeated in German mainstream discourse by the mass media is that the Greeks are somewhat inferior, lazy, profligate, untrustworthy and so on, something most people tend to believe. Indeed most of them feel that the German politics is way too soft towards them. I could start linking to a few articles by German mainstream media to underwrite my point


Gabriel, July 24, 2015 at 10:59 am

One of the few bright spots for me in how the Greece has played out is that in Poland people seem indeed to have picked up that joining the Euro might be something besides a badge of honor of being "Western" and European.

http://fortruss.blogspot.com/2015/07/germanys-policies-pose-danger-to-europe.html

My partner Polish and is currently stuck there for preposterous reasons, and she's confirmed that "sensible," cosmopolitan, Warsaw, pro-EU people are taking a hard look at what actually adopting the Euro might expose them to.

I was gloomy about the chance of this happening, because the pattern I remember from Argentina in the 90s is that the lackeys who aren't being punished by the hegemon think they'll score points by sounding even more punitive than the hegemon (Slovakia seems to have played that role in this crisis), and far too many intelligent people don't understand that adopting a currency cannot be considered in purely symbolic terms. Perhaps Poles' not altogether delightful history with German-run international systems has made them more alert about this kind of thing.

PS. Apropos well-meaning Germans, I linked to a couple of vids by some of their contemporary equivalents here.


susan the other, July 24, 2015 at 11:19 am

I was surprised by the Fortruss post because there is so much censorship here we don't get any idea about the manipulations of our State Department until they fail or succeed. It made me think that we and Germany/France are truly on opposite sides when it comes to the future of Europe. Without "Old Europe" on our side to manipulate eastern Europe it is doubtful we will succeed in drawing them in (and keeping them) into the neoliberal model we seem so determined to export. Hopefully the crisis in neoliberalism has just begun.


Jim Haygood, July 24, 2015 at 11:03 am

Change one word; here's how it reads:

'The class of "enlightened" Americans always regret what their nation is doing, but more often than not, in the end participate in the very actions they deplore.'


nobody, July 24, 2015 at 11:26 am

Mark Ames:

I really started with the idea that in every age, there is some awful oppression that is not yet recognized and therefore doesn't exist, but later seems horribly obvious. This became clear to me working in Moscow in the '90s. No one in the "liberal" Western press corps, academia, world financial aid organizations or Clinton Administration had a shred of sympathy for the millions of Russians suffering from so-called "privatization" programs that we rammed down their throats.

Literally millions of Russians went to their graves early in the '90s, yet many respectable Westerners openly said that the old generation would "have to die off" before the proper mindset set in to allow full Westernization in Russia. Those millions of deaths are still not seen as part of something larger and evil.

http://www.alternet.org/story/24796/a_brief_history_of_rage,_murder_and_rebellion


Gabriel, July 24, 2015 at 11:52 am


Excellent quote. Thanks for posting it. And today's crop of "respectable Westerners" wonder why Putin seems to have Svengali-high approval ratings when facing down the full disapproval of DC and the EU.

Our Western elite really has gone one-up on the Bourbons. Latter remembered everything and learned nothing; ours does away with the remembering bit.

Eric Patton, July 24, 2015 at 11:27 am

Germany has money, industry, resources, brains, and will. They think strategically, and they plan well. You have to admire it.

Inverness, July 24, 2015 at 4:10 pm

Germany has benefited tremendously from both debt forgiveness and cheap Turkish labour.

Jim, July 24, 2015 at 7:30 pm

Oh get real! Germany has been devastated numerous times in history. Almost totally destroyed by the Thirty Years War, again almost totally destroyed, occupied and divided at the end of WWII, devastated both by the Napoleonic Wars as well as WWI. It always recovers to become the strongest state in Western Europe.

YankeeFrank, July 25, 2015 at 4:04 pm

And you say that as if its a good thing. The 20th century would beg to differ. I'd "admire" Germany a bit more perhaps if they managed to build a strong nation without it always seeming to be built on a sneering arrogance and racist hatred of those not "German", meaning specifically Prussian or Bavarian, and it not always winding up with the total domination and ruin of other nations. I guess its easy for them to get up and engineer every day when motivated by an overweening pride.

To me they have a singular inability to do anything other than engineer other peoples' ideas and start wars that make the world cringe in horror at their monstrous deeds. Some cultural things never change I guess.

And no, I'm not letting the US off the hook for its misdeeds, but there is something fundamentally vicious and yes, I'll say it, evil, about the German culture that not only justifies the suffering of "others" at their hands but actually revels in it, as the OP and some commenters who are actually German have made clear here.

MyLessThanPrimeBeef, July 24, 2015 at 12:25 pm

It's interesting how often we exclude ourselves in our analyses of events abroad, or fail to include the international dimension of our domestic policies.

It's the hegemonic-power projection cartographic map you mentioned a few days ago.


[Jul 24, 2015] Mario Draghi: The ECB Has No Mandate To Ensure Checks Clear Or Credit Cards Work

July 23, 2015 | nakedcapitalism.com

By Nathan Tankus, a writer from New York City. Follow him on Twitter at @NathanTankus

Last week Mario Draghi held a press conference following the decision to raise ELA a paltry 900 million dollars for Greek banks. In that press conference he said many things but I'd like to focus on one passage that has gotten no attention:

There is an article in the Treaty that says that basically the ECB has the responsibility to promote the smooth functioning of the payment system. But this has to do with the functioning of TARGET2, the distribution of notes, coins. So not with the provision of liquidity, which actually is regulated by a different provision, in Article 18.1 in the ECB Statute: "In order to achieve the objectives of the ESCB, the ECB and the national central banks may conduct credit operations with credit institutions and other market participants, with lending based on adequate collateral." This is the Treaty provision. But our operations were not monetary policy operations, but ELA operations, and so they are regulated by a separate agreement, which makes explicit reference to the necessity to have sufficient collateral. So, all in all, liquidity provision has never been unconditional and unlimited.

This is a truly shocking statement. To understand why, we need to go back to the basics of central banking. Banks have accounts at the central bank (I'm going to call the balances in these accounts "settlement balances" in line with non U.S. Conventions) which are primarily used to settle payments with other banks. When you use a debit card issued by one bank to pay someone with a bank account in another bank, your bank has to in turn send a payment using settlement balances to make that payment.

As should be obvious from that description, in order to make that payment your bank has to have sufficient settlement balances in its account at the central bank or the central bank must provide an overdraft. Thus, if the smooth functioning of the payments system is defined as the ability of depository institutions to clear payments, the central bank must ensure that settlement balances are available at some price.

The Federal Reserve explicitly recognizes this in its "Policy on Payment System Risk" by stating that "the Board recognizes that the Federal Reserve has an important role in providing intraday balances and credit to foster the smooth operation of the payment system". Draghi is arguing that the ECB's mandate to "promote the smooth functioning of the payments system" is defined differently than the Federal Reserve's mandate and (as far as I can tell) every other Central Bank's payment system mandate around the world. I can't over-emphasize how radical a departure Draghi's position is from the norms of central banking. Whatever else we may want to criticize the Federal Reserve's and the government's response to the financial crisis, they did preserve the the smooth functioning of the payments system with their alphabet soup of lending facilities and ultimately an FDIC guarantee on interbank lending. The problem was that they didn't put Too Big To Fail banks in a form of receivership and didn't prosecute bank executives, not that they made sure payments continued to take place.

As disturbing as the European Central Bank position already is, it becomes more frightening when we analyze why the Greek banking system has been cut off in detail. First, remember that the ECB's official position has been that the Greek banking system is solvent as long as Greek government bonds preserve a certain value. Second, the ECB judges the value of those government bonds not be their market price but by their view of the Greek government's "compliance" with the dictates of the EU and the IMF. As Vice President Constâncio said during the press conference:

when a country has a rating which is below the investment grade which is the minimum, then to access monetary policy operations, it has to have a waiver. And the waiver is granted if there are two conditions. The first condition is that the country must be under a programme with the EU and IMF; and second, we have to assess that there is credible compliance with such a programme.

The bigger picture here is that under this interpretation of the ECB's operating mandates the European Central Bank can, at any time choose to exclude a particular country's bonds from its monetary policy operations, watch its credit rating fall and eventually, force the country to choose between an IMF program and having a frozen banking system and no ability to borrow. Not only must that country enter an IMF program but it must be judged to be in "credible compliance" by the ECB at all times.

Being in credible compliance is a necessary not sufficient condition for borrowing. Recall that the statute Draghi quoted said that it "may", not must, "conduct credit operations". This is how they've justified keeping the Greek banking system on such a tight leash despite claiming that the Greek Government was in "credible compliance" up until recently and how they can justify not extending ELA by enough to restore normal operations in the current situation. The ECB is like an abusive spouse who believes marriage means they can beat their significant other for any reason and that previous beatings justify beatings in the future.

Even worse, if the Greek banking system is insolvent because of defaults from the private sector in Greece (very likely), the Troika has made the reduction in value of deposits (a bail-in) the preferred tool (along with privatization) to return solvency to the banking system. In other words, there is not only no guarantee of orderly clearing of payments but also no guarantee that depositors will eventually be made whole. It is official policy that at any time the value of a deposit in one bank does not equal the value of a deposit in another bank. Cyprus was not a fluke. It would be foolish for depositors in other countries to feel safe, except perhaps those in Germany and France. Their political leaders would likely suddenly discover the need for depositors to be fully protected in the Eurozone if they were ever forced to recognize insolvency.

Putting all this together, Europe now has a system where liquidity and insolvency problems can occur and can be deliberately generated (at least in part) by the central bank. Then the Troika can force that country into an "IMF program" if it wants to continue having a functioning banking system. Alternatively, the central bank can choose to simply "suspend convertibility" to the unit of account and force the write down of deposits until the banks are solvent again. During this drawn out period payments grind to a halt and mass business disruptions and failures can and will be generated. In other words Europe has created a system where you either comply with the dictates of unelected bureaucrats or you accept a more disorderly version of the United States banking system before the Civil War. The bottom line is that if you feel inclined to visit Europe remember that the payments system can fail you at any time. Plan accordingly.

[Jul 23, 2015] Greece, Iran, and the Rules of the Game

Jul 23, 2015 | LobeLog

Alexis Tsipras had a choice. As the leader of the fledgling Syriza government in Greece, he could have told the European Union to stuff its austerity plan. He could have taken the risk that the EU would offer a better deal to keep Greece in the Eurozone. Or, failing that, he could have navigated his country into the uncharted waters of economic independence.

But he chose to "follow the rules" by accepting the EU plan. Greece is getting its financial bailout, Greeks are tightening their belts, and the Eurozone will survive more-or-less intact. Tsipras learned what happens when you challenge the rules of an elite club. Once in a while, the club changes the rules. Most of the time, the club issues an ultimatum: suck it up or move on.

Hassan Rouhani had a choice. As the leader of a new reformist government in Iran, he could have told the international community to keep its nose out of his country's business. He could have kept adding to Iran's civilian nuclear program, arguing all the time that it was not in violation of any international agreements. He could have tried to chip away at the international sanctions regime by concluding economic agreements with willing countries.

But he chose to negotiate with the permanent five members of the UN Security Council - plus Germany - and bring Iran into full compliance with International Atomic Energy Agency requirements. By "following the rules" in this way, Rouhani is hoping that the windfall that comes from the lifting of sanctions will provide enough capital to turn around the Iranian economy and boost the prospects of his political cohort.

In Hollywood movies and on TV, the rule breakers usually triumph. I can't begin to count how many films and shows feature CIA operatives, FBI agents, and police officers that must defy the chain of command in order to do the right thing and collar the bad guys.

But in the real world, breaking the rules usually comes with big penalties. Of course, it all depends on who sets the rules and who dares to defy them. Sometimes the outlaws face a lifetime behind bars. And sometimes they not only break the rules with impunity but win the proverbial jackpot as well.

... ... ...

Iran, a larger country that plays a strategic role in the Middle East, has considerably more room for maneuver than does Greece. But it too cannot unilaterally remake the rules of the game. It can only negotiate the best deal it can. In the end, it must open itself up to the kind of inspection regime that more powerful countries would never tolerate. It is, of course, the height of hypocrisy for Israel, which refuses to disclose whether it has a nuclear program at all - much less permit access to its secret sites - to insist that Iran open up virtually every corner of the country to a highly intrusive verification regime.

But the rules of the game are changing. The model of "international community" that we've been driving is more than 65 years old, and its engine is starting to conk out.

All the major rule-setting institutions reflect the balance of power that reigned in the immediate aftermath of World War II. The World Bank was founded in 1944, the IMF and United Nations in 1945, and the European Coal and Steel Community (which served as the cornerstone of the future European Union) in 1951. But what will happen as Germany and France exert less control within the EU, as China builds new international financial institutions, as the UN finally tackles the problem of reforming the Security Council? What will happen as U.S. relative power in the world continues to decline?

New rule-makers mean new rules. Get ready: A new world is not only possible, it's just around the corner.

John Feffer is the the editor of LobeLog and the director of Foreign Policy In Focus at the Institute for Policy Studies. He is also the author, most recently, of Crusade 2.0. He is a former Open Society fellow, PanTech fellow, and Scoville fellow, and his articles have appeared in The New York Times, Washington Post, Los Angeles Review of Books, Salon, and many other publications.

[Jul 22, 2015] This is What Economists do not Understand About the Euro Crisis – or the U.S. Dollar

Jul 22, 2015 | Economist's View

bakho

The powers are not stupid but they are incredibly naive and misinformed. The idea of the Eurozone was to subsume nationalist fever into a multicultural Eurozone. The Germans in their Nationalist Pride have made this a failure of Greece instead of the failure of the Eurozone. The rhetoric is one of nationalism, not one of unity. The economics is Nationalist, not Post-Nationalist.

DrDick said in reply to bakho...

The German economic policy is, and long has been, deutschland über alles.

pgl

Is Merkel related to Jeb! I was looking for what the term Club Med nations really means - and it seems to be a put down for nations like Italy and Greece. But check this out. Merkel's "solution" is for the Italians and Greeks to work more:

http://blogs.wsj.com/source/2011/05/19/merkel-club-med-countries-must-work-more/

Of course they want to work more but the stupid fiscal austerity that Merkel is cramming down their throats is leading to massive unemployment. And guess what? Jeb! wants to impose annually balanced budgets for the US through spending cuts. Wow - the US may indeed become the next Greece if Jeb! becomes President.

pgl said in reply to pgl...


OK - I had to post this:

http://econospeak.blogspot.com/2015/07/is-jeb-related-to-angela-merkel.html

RC AKA Darryl, Ron said...

Kathleen McNamara actually believes the cover story for why elites pushed the Euro zone. Yes a great peace keeping mission this has been :<)

Economic elites in Europe have used the Euro to roll back democratic socialism and increase the global reach of European based multi-national corporations. The Euro is about the Davos economic elite and their goals. The Davos economic elite did not want fiscal union, they wanted fiscal disintegration of the welfare state. They have institutionalized fuss budgetry and inflationphobia for 19 of the 28 EU states.

Eclectic Obsvr

Gee, I don't think any of the critiquing economists doubt that the Euro was created as a political matter in the EU. It's just that they thought it economically unwise and to that extent economics matters to politics. It is the same thing about preaching austerity with the idea that exports will make up for lost domestic demand. At some point it's not logical to believe that all Eurozone countries have have a current account surplus. Appears to me that this is something coming out of a perhaps arrogance of foreign policy "experts".

Kenneth Thomas said in reply to Eclectic Obsvr...

Yes, although I believe France actually got the idea after its policy about-face in 1984. They dreamed of a multinationally controlled ECB replacing the Bundesbank, but let austerity and deficit mania get written into the ECB's mandate.

Michael Derry

Sometimes people overlook the easiest of things. The problem in Europe is the same as the U. S. faced under the Articles of Confederation. The Constitutional Convention was originally called to address the economic problems of the Confederation by strengthening the then existing Congress. The solution involved a fiscal union and it still took a few years to get the monetary and trade imbalances settled. You would figure a political scientist would know this.

Barkley Rosser said...

At the end here we have some people talking about the realities of the politics of this in the 80s, particularly regarding France. It also occurs to me that most of the commentators here are Americans, where all the people now getting their backs patted (Feldstein, Krugman, Friedman, etc.) while now able to crow about the current problems were all massively dead wrong back in the 90s and after when pretty much all of them declared loudly that the Europeans would not even be able to get the euro established at all. All along they totally under rated the political push behind this, which was arguably seriously flawed and well beyond plots by Davos elites, although that crowd clearly has done well under this at the expense of others. In that regard, this article serves a useful purpose.

The political strength of the euro in face of its now obvious and glaring economic problems is seen both by the fact that we have recently seen more countries joining, the Baltic nations, clearly for political/security reasons (join Europe! Get away from Russia!), but the fact that after all this stuff this spring, here is Greece accepting this horrible deal because their leaders recognize that the overwhelming majority of Greeks want to stay in the euro. Greece should probably never have joined, and it looks to me that they would probably be better off to obey the desires of the horrible Wolfgang Schauble, but there they are, hanging on in there.

Let us also keep in mind that these current problems have arisen due to the depths of the Great Recession, which basically none of us foresaw how bad it would be. Indeed, it has been a tough test, and the critics have been able to see their forecasts of problems be fulfilled.

likbez said in reply to Barkley Rosser...

Economically all three Baltic nations now are basket case. Latvia is probably in worst condition.

They lost most of the trade with Russia and nobody else wants what they can produce. Emigration is rampant. Especially among young people, who see no perspectives in their home country.

They also destroyed most of their manufacturing base (the same is true for Poland).

While partially inevitable with the independence, Baltic's version of Russophobia has its economic and political costs.

Jesse said...

Her central hypothesis seems to be that money is power, and that the deployment of the euro is an exercise in the centralization of power over a heterogeneous collection of nations and economies. And that the US dollar is similar.

How fitting that she teaches at Carroll Quigley's old university.

She *could* be correct. And if so, then we are in for interesting times.

http://jessescrossroadscafe.blogspot.com/2015/07/comex-registered-deliverable-gold.html

DrDick said in reply to Jesse...

It is the German's wet dream. Their economic policies have long focused on artificially suppressing the prices of their manufactures to keep their exports competitive. Now everyone's currency is pegged to their economy and they control the system.

[Jul 22, 2015] The Courage of Hopelessness by Slavoj Zizek

This article described well what damage Syriza might have done to the neoliberal paradigm which seems to be entrenched everywhere these days
.
Very interesting comparison in there between EU government and the Chinese Communist Party which I hadn't heard before. "It should shamelessly flirt with Russia and China, playing with the idea of giving an island to Russia as its Mediterranean military base, just to scare the shit out of Nato strategists. To paraphrase Dostoyevsky, now that the EU God has failed, everything is permitted." And while he does mention Golden Dawn and other euro- right wing parties he isn't especially critical of them. Not all that familiar with Zizek's overarching philosophy but one wonders if he shouldn't be careful what he wishes for in terms of allies in the struggle against neoliberalism. Anyway, other than that lots to chew on here.
.
"...However, statements like those from IMF demonstrate that the true problem lies elsewhere: does EU really believe in their own bailout plan? Does it really believe that the brutally imposed measures will set in motion economic growth and thus enable the payment of debts? Or is it that the ultimate motivation for the brutal extortionist pressure on Greece is not purely economic (since it is obviously irrational in economic terms) but politico-ideological – or, as Paul Krugman put it in the New York Times, "substantive surrender isn't enough for Germany, which wants regime change and total humiliation - and there's a substantial faction that just wants to push Greece out, and would more or less welcome a failed state as a caution for the rest." One should always bear in mind what a horror Syriza is for the European establishment – a Conservative Polish member of the European parliament even directly appealed to the Greek army to make a coup d'etat in order to save the country."
.
"...At a deeper level, however, one cannot avoid a suspicion that the true goal is not to give Greece a chance but to change it into an economically colonised semi-state kept in permanent poverty and dependency, as a warning to others. But at an even deeper level, there is again a failure – not of Greece, but of Europe itself, of the emancipatory core of European legacy."
.
"...Sounds familiar? Yes, to anyone who knows how Chinese power functions today, after Deng Xiaoping set in action a unique dual system: the state apparatus and legal system are redoubled by the Party institutions which are literally illegal - or, as He Weifang, a law professor from Beijing, put it succinctly: "As an organisation, the Party sits outside, and above the law. It should have a legal identity, in other words, a person to sue, but it is not even registered as an organization. The Party exists outside the legal system altogether." (Richard McGregor, The Party, London: Allen Lane 2010, p. 22) It is as if, in McGregor's words, the state-founding violence remain present, embodied in an organisation with an unclear legal status:"
.
"...And it is crucial to note how the obverse of this non-transparency of power is false humanitarianism: after the Greek defeat, there is, of course, time for humanitarian concerns. Jean-Claude Juncker immediately stated in an interview that he was so glad about the bailout deal because it would immediately ease the suffering of the Greek people which worried him very much. Classic scenario: after a political crack-down, humanitarian concern and help… even postponing debt payments."
.
"...In the guise of Syriza "contradictions", the EU establishment is merely getting back its own message in its true form. And this is what Syriza should be doing now. With a ruthless pragmatism and cold calculation, it should exploit the tiniest cracks in the opponent's armour. It should use all those who resist the predominant EU politics, from British conservatives to Ukip in the UK. It should shamelessly flirt with Russia and China, playing with the idea of giving an island to Russia as its Mediterranean military base, just to scare the shit out of Nato strategists. To paraphrase Dostoyevsky, now that the EU God has failed, everything is permitted."
.
"...The ultimate problem is a much more basic one. The recurrent story of the contemporary Left is that of a leader or party elected with universal enthusiasm, promising a "new world" (Mandela, Lula) – but, then, sooner or later, usually after a couple of years, they stumble upon the key dilemma: does one dare to touch the capitalist mechanisms, or does one decide to "play the game"? If one disturbs the mechanisms, one is very swiftly "punished" by market perturbations, economic chaos and the rest."

Greece is not being asked to swallow many bitter pills in exchange for a realistic plan of economic revival, they are asked to suffer so that others in the European Union can go on dreaming their dream undisturbed.

The Italian philosopher Giorgio Agamben said in an interview that "thought is the courage of hopelessness" - an insight which is especially pertinent for our historical moment when even the most pessimist diagnostics as a rule finishes with an uplifting hint at some version of the proverbial light at the end of the tunnel. The true courage is not to imagine an alternative, but to accept the consequences of the fact that there is no clearly discernible alternative: the dream of an alternative is a sign of theoretical cowardice, it functions as a fetish which prevents us thinking to the end the deadlock of our predicament. In short, the true courage is to admit that the light at the end of the tunnel is most likely the headlight of another train approaching us from the opposite direction. There is no better example of the need for such courage than Greece today.

The double U-turn that took the Greek crisis in July 2015 cannot but appear as a step not just from tragedy to comedy but, as Stathis Kouvelakis noted in Jacobin magazine, from tragedy full of comic reversals directly into a theatre of the absurd – is there any other way to characterize the extraordinary reversal of one extreme into its opposite that would bedazzle even the most speculative Hegelian philosopher? Tired of the endless negotiations with the EU executives in which one humiliation followed another, Syriza called for a referendum on Sunday July 5 asking the Greek people if they support or reject the EU proposal of new austerity measures. Although the government itself clearly stated that it supported No, the result was a surprise: the overwhelming majority of more than 61 per cent voted No to European blackmail. Rumors began to circulate that the result – victory for the government – was a bad surprise for Alexis Tsipras himself who secretly hope that the government would lose, so that a defeat will allow him to save face in surrendering to the EU demands ("we have to respect the voters' voice"). However, literally the morning after, Tsipras announced that Greece was ready to resume the negotiations, and days later Greece negotiated a EU proposal which is basically the same as what the voters rejected (in some details even harsher) – in short, he acted as if the government has lost, not won, the referendum. As Kouvelakis wrote:

"How is it possible for a devastating 'no' to memorandum austerity policies to be interpreted as a green light for a new memorandum? … The sense of the absurd is not just a product of this unexpected reversal. It stems above all from the fact that all of this is unfolding before our eyes as if nothing has happened, as if the referendum were something like a collective hallucination that suddenly ends, leaving us to continue freely what we were doing before. But because we have not all become lotus-eaters, let us at least give a brief résumé of what has taken place over the past few days. … From Monday morning, before the victory cries in the country's public squares had even fully died away, the theater of the absurd began. …

The public, still in the joyful haze of Sunday, watches as the representative of the 62 percent subordinated to the 38 percent in the immediate aftermath of a resounding victory for democracy and popular sovereignty. … But the referendum happened. It wasn't a hallucination from which everyone has now recovered. On the contrary, the hallucination is the attempt to downgrade it to a temporary 'letting off of steam,' prior to resuming the downhill course towards a third memorandum."

And things went on in this direction. On the night of July 10, the Greek Parliament gave Alexis Tsipras the authority to negotiate a new bailout by 250 votes to 32, but 17 government MPs didn't back the plan, which means he got more support from the opposition parties than from his own. Days later, the Syriza Political Secretariat dominated by the left wing of the party concluded that EU's latest proposals are "absurd" and "exceed the limits of Greek society's endurance" – Leftist extremism?

But IMF itself (in this case a voice of minimally rational capitalism) made exactly the same point: an IMF study published a day earlier showed that Greece needs far more debt relief than European governments have been willing to contemplate so far - European countries would have to give Greece a 30-year grace period on servicing all its European debt, including new loans, and a dramatic maturity extension…

No wonder that Tsipras himself publicly stated his doubt about the bailout plan: "We don't believe in the measures that were imposed upon us," he said during a TV interview, making it clear that he supports it out of pure despair, to avoid a total economic and financial collapse. The eurocrats use such confessions with breathtaking perfidity: now that the Greek government accepted their the tough conditions, they doubt the sincerity and seriousness of their commitment. How can Tsipras really fight for a program he doesn't believe in? How can the Greek government be really committed to the agreement when it opposes the referendum result?

However, statements like those from IMF demonstrate that the true problem lies elsewhere: does EU really believe in their own bailout plan? Does it really believe that the brutally imposed measures will set in motion economic growth and thus enable the payment of debts? Or is it that the ultimate motivation for the brutal extortionist pressure on Greece is not purely economic (since it is obviously irrational in economic terms) but politico-ideological – or, as Paul Krugman put it in the New York Times, "substantive surrender isn't enough for Germany, which wants regime change and total humiliation - and there's a substantial faction that just wants to push Greece out, and would more or less welcome a failed state as a caution for the rest." One should always bear in mind what a horror Syriza is for the European establishment – a Conservative Polish member of the European parliament even directly appealed to the Greek army to make a coup d'etat in order to save the country.

Why this horror? Greeks are now asked to pay the high price, but not for a realist perspective of growth. The price they are asked to pay is for the continuation of the "extend and pretend" fantasy. They are asked to ascend to their actual suffering in order to sustain another's (eurocrats') dream. Gilles Deleuze said decades ago: Si vous etez pris dans le reve de l'autre, vous etez foutus. ("if you are caught into another's dream, you are fucked"), and this is the situation in which Greece finds itself now. Greeks are not asked to swallow many bitter pills for a realistic plan of economic revival, they are asked to suffer so that others can go on dreaming their dream undisturbed.

The one who now needs awakening is not Greece but Europe. Everyone who is not caught in this dream knows what awaits us if the bailout plan is enacted: another 90 or so billions will be thrown into the Greek basket, raising the Greek debt to 400 or so billion euros (and most of them will quickly return back to Western Europe - the true bailout is the bailout of German and French banks, not of Greece), and we can expect the same crisis to explode in a couple of years.

But is such an outcome really a failure? At an immediate level, if one compares the plan with its actual outcome, obviously yes. At a deeper level, however, one cannot avoid a suspicion that the true goal is not to give Greece a chance but to change it into an economically colonised semi-state kept in permanent poverty and dependency, as a warning to others. But at an even deeper level, there is again a failure – not of Greece, but of Europe itself, of the emancipatory core of European legacy.

The No of the referendum was undoubtedly a great ethico-political act: against a well-coordinated enemy propaganda spreading fears and lies, with no clear prospect of what lies ahead, against all pragmatic and "realist" odds, the Greek people heroically rejected the brutal pressure of the EU. The Greek No was an authentic gesture of freedom and autonomy, but the big question is, of course, what happens the day after, when we have to return from the ecstatic negation to the everyday dirty business – and here, another unity emerged, the unity of the "pragmatic" forces (Syriza and the big opposition parties) against the Syriza Left and Golden Dawn. But does this mean that the long struggle of Syriza was in vain, that the No of the referendum was just a sentimental empty gesture destined to make the capitulation more palpable?

The really catastrophic thing about the Greek crisis is that the moment the choice appeared as the choice between Grexit and the capitulation to Brussels, the battle was already lost. Both terms of this choice move within the predominant eurocratic vision (remember that the German anti-Greek hardliners like Wolfgang Schauble also prefer Grexit!). The Syriza government was not fighting just for a greater debt relief and for more new money within the same overall coordinates, but for the awakening of Europe from its dogmatic slumber.

Therein resides the authentic greatness of Syriza: insofar as the icon of the popular unrest in Greece were the protests on the Syntagma (Constitution) Square, Syriza engaged in a Herculean labor of enacting the shift from syntagm to paradigm, in the long and patient work of translating the energy of rebellion into concrete measures that would change everyday life of the people. We have to be very precise here: the No of the Greek referendum was not a No to "austerity" in the sense of necessary sacrifices and hard work, but a No to the the EU dream of just going on with the business as usual.

The country's former finance minister, Yanis Varoufakis, repeatedly made this point clear: no more borrowing but an overall rehaul needed to give the Greek economy a chance to rebound. The first step in this direction should be an increase in the democratic transparency of our power mechanisms. Our democratically elected state apparatuses are thus more and more redoubled by a thick network of "agreements" and non-elected "expert" bodies which yield the real economic (and military) power. Here is Varoufakis's report on an extraordinary moment in his dealings with EU negotiator Jeroen Dijsselbloem:

"There was a moment when the President of the Eurogroup decided to move against us and effectively shut us out, and made it known that Greece was essentially on its way out of the Eurozone. /…/ There is a convention that communiqués must be unanimous, and the President can't just convene a meeting of the Eurozone and exclude a member state. And he said, 'Oh I'm sure I can do that.' So I asked for a legal opinion. It created a bit of a kerfuffle.

For about 5-10 minutes the meeting stopped, clerks, officials were talking to one another, on their phone, and eventually some official, some legal expert addressed me, and said the following words: 'Well, the Eurogroup does not exist in law, there is no treaty which has convened this group.' So what we have is a non-existent group that has the greatest power to determine the lives of Europeans. It's not answerable to anyone, given it doesn't exist in law; no minutes are kept; and it's confidential. So no citizen ever knows what is said within… These are decisions of almost life and death, and no member has to answer to anybody."

Sounds familiar? Yes, to anyone who knows how Chinese power functions today, after Deng Xiaoping set in action a unique dual system: the state apparatus and legal system are redoubled by the Party institutions which are literally illegal - or, as He Weifang, a law professor from Beijing, put it succinctly: "As an organisation, the Party sits outside, and above the law. It should have a legal identity, in other words, a person to sue, but it is not even registered as an organization. The Party exists outside the legal system altogether." (Richard McGregor, The Party, London: Allen Lane 2010, p. 22) It is as if, in McGregor's words, the state-founding violence remain present, embodied in an organisation with an unclear legal status:

"It would seem difficult to hide an organization as large as the Chinese Communist Party, but it cultivates its backstage role with care. The big party departments controlling personnel and the media keep a purposely low public profile. The party committees (known as 'leading small groups') which guide and dictate policy to ministries, which in turn have the job of executing them, work out of sight. The make-up of all these committees, and in many cases even their existence, is rarely referred to in the state-controlled media, let alone any discussion of how they arrive at decisions."

No wonder that exactly the same thing happened to Varoufakis as to a Chinese dissident who, some years ago, formally brought to court and charged the Chinese Communist Party for being guilty of the Tienanmien massacre. After a couple of months, he got a reply from the ministry of justice: they cannot pursue his charge since there is no organization called "Chinese Communist Party" officially registered in China.

And it is crucial to note how the obverse of this non-transparency of power is false humanitarianism: after the Greek defeat, there is, of course, time for humanitarian concerns. Jean-Claude Juncker immediately stated in an interview that he was so glad about the bailout deal because it would immediately ease the suffering of the Greek people which worried him very much. Classic scenario: after a political crack-down, humanitarian concern and help… even postponing debt payments.

What should one do in such a hopeless situation? One should especially resist the temptation of Grexit as a great heroic act of rejecting further humiliations and stepping outside - into what? What new positive order are we stepping into? The Grexit option appears as the "real-impossible", as something that would lead to an immediate social disintegration. Krugman writes: "Tsipras apparently allowed himself to be convinced, some time ago, that euro exit was completely impossible. It appears that Syriza didn't even do any contingency planning for a parallel currency (I hope to find out that this is wrong). This left him in a hopeless bargaining position."

Krugman's point is that Grexit is also an "impossible-real" which can happen with unpredictable consequences and which, as such, can be risked.

"All the wise heads saying that Grexit is impossible, that it would lead to a complete implosion, don't know what they are talking about. When I say that, I don't mean that they're necessarily wrong - I believe they are, but anyone who is confident about anything here is deluding himself. What I mean instead is that nobody has any experience with what we're looking at."

While in principle this is true, there are nonetheless too many indications that a sudden Grexit now would lead to utter economic and social catastrophe. Syriza economic strategists are well aware that such a gesture would cause an immediate further fall of the standard of living for an additional (minimum) 30 per cent, bringing misery to a new unbearable level, with the threat of popular unrest and even military dictatorship. The prospect of such heroic acts is thus a temptation to be resisted.

Then there are calls for Syriza to return to its roots: Syriza should not become just another governing parliamentary party, the true change can only come from grassroots, from the people themselves, from their self-organization, not from the state apparatuses… another case of empty posturing, since it avoids the crucial problem which is how to deal with the international pressure concerning debt, or, more generally, how to exert power and run a state. Grassroots self-organization cannot replace the state, and the question is how to reorganize the state apparatus to make it function differently.

It's nonetheless not enough to say that Syriza put a heroic fight, testing what is possible - the fight goes on, it has just began. Instead of dwelling on the "contradictions" of Syriza policy (after a triumphant No one accepts the very program that was rejected by the people), and of getting caught in mutual recriminations about who is guilty (did the Syriza majority commit an opportunistic "treason", or was the Left irresponsible in its preference for Grexit), one should rather focus on what the enemy is doing: the "contradictions" of Syriza are a mirror image of the "contradictions" of the EU establishment gradually undermining the very foundations of united Europe.

In the guise of Syriza "contradictions", the EU establishment is merely getting back its own message in its true form. And this is what Syriza should be doing now. With a ruthless pragmatism and cold calculation, it should exploit the tiniest cracks in the opponent's armour. It should use all those who resist the predominant EU politics, from British conservatives to Ukip in the UK. It should shamelessly flirt with Russia and China, playing with the idea of giving an island to Russia as its Mediterranean military base, just to scare the shit out of Nato strategists. To paraphrase Dostoyevsky, now that the EU God has failed, everything is permitted.

When one hears the complaints that the EU administration brutally ignores the plight of the Greek people in their blind obsession with humiliating and disciplining the Greeks, that even Southern-European countries like Italy or Spain didn't show any solidarity with Greece, our reaction should be: but is there any surprise in all this? What did the critics expect? That the EU administration will magically understand the Syriza argumentation and act in compliance with it? The EU administration is simply doing what it was always doing. Then there is the reproach that Greece is looking for help in Russia and China – as if Europe itself is not pushing Greece in that direction with its humiliating pressure.

Then there is the claim that phenomena like Syriza demonstrate how the traditional Left/Right dichotomy is outlived. Syriza in Greece is called extreme Left, and Marine le Pen in France extreme Right, but these two parties have effectively a lot in common: they both fight for state sovereignty, against multinational corporations. It is therefore quite logical that in Greece itself, Syriza is in coalition with a small Rightist pro-sovereignty party. On April 22, 2015, Francois Hollande said on TV that Marine le Pen today sounds like George Marchais (a French Communist leader) in 1970s – the same patriotic advocacy of the plight of ordinary French people exploited by international capital – no wonder Marine le Pen supports Syriza . . . a weird claim which doesn't say a lot more than the old Liberal wisdom than Fascism is also a kind of Socialism. The moment we bring into the picture the topic of immigrant workers, this whole parallel falls apart.

The ultimate problem is a much more basic one. The recurrent story of the contemporary Left is that of a leader or party elected with universal enthusiasm, promising a "new world" (Mandela, Lula) – but, then, sooner or later, usually after a couple of years, they stumble upon the key dilemma: does one dare to touch the capitalist mechanisms, or does one decide to "play the game"? If one disturbs the mechanisms, one is very swiftly "punished" by market perturbations, economic chaos and the rest.

The heroism of Syriza was that, after winning the democratic political battle, they risked a step further into disturbing the smooth run of the Capital. The lesson of the Greek crisis is that Capital, though ultimately a symbolic fiction, is our Real. That is to say, today's protests and revolts are sustained by the combination (overlapping) of different levels, and this combination accounts for their strength: they fight for ("normal" parliamentary) democracy against authoritarian regimes; against racism and sexism, especially the hatred directed at immigrants and refugees; for welfare-state against neoliberalism; against corruption in politics and economy (companies polluting environment, etc.); for new forms of democracy that reach beyond multi-party rituals (participation, etc.); and, finally, questioning the global capitalist system as such and trying to keep alive the idea of a non-capitalist society. Both traps are to be avoided here: the false radicalism ("what really matters is the abolition of liberal-parliamentary capitalism, all other fights are secondary"), as well as the false gradualism ("now we fight against military dictatorship and for simple democracy, forget your Socialist dreams, this comes later – maybe…").

When we have to deal with a specific struggle, the key question is: how will our engagement in it or disengagement from it affect other struggles? The general rule is that, when a revolt begins against an oppressive half-democratic regime, as was the case in the Middle East in 2011, it is easy to mobilize large crowds with slogans which one cannot but characterise as crowd pleasers – for democracy, against corruption, etc. But then we gradually approach more difficult choices: when our revolt succeeds in its direct goal, we come to realize that what really bothered us (our un-freedom, humiliation, social corruption, lack of prospect of a decent life) goes on in a new guise. In Egypt, protesters succeeded in getting rid of the oppressive Mubarak regime, but corruption remained, and the prospect of a decent life moved even further away. After the overthrow of an authoritarian regime, the last vestiges of patriarchal care for the poor can fall away, so that the newly gained freedom is de facto reduced to the freedom to choose the preferred form of one's misery – the majority not only remains poor, but, to add insult to injury, it is being told that, since they are now free, poverty is their own responsibility. In such a predicament, we have to admit that there was flaw in our goal itself, that this goal was not specific enough - say, that standard political democracy can also serve as the very form of un-freedom: political freedom can easily provide the legal frame for economic slavery, with the underprivileged "freely" selling themselves into servitude. We are thus brought to demand more than just political democracy – democratization also of social and economic life. In short, we have to admit that what we first took as the failure to fully realize a noble principle (of democratic freedom) is a failure inherent to this principle itself – to learn this move from the distortion of a notion, its incomplete realization, to the distortion immanent to this notion is the big step of political pedagogy.

The ruling ideology mobilises here its entire arsenal to prevent us from reaching this radical conclusion. They start to tell us that democratic freedom brings its own responsibility, that it comes at a price, that we are not yet mature if we expect too much from democracy. In this way, they blame us for our failure: in a free society, so we are told, we are all capitalist investing in our lives, deciding to put more into our education than into having fun if we want to succeed, etc. At a more directly political level, the US foreign policy elaborated a detailed strategy of how to exert damage control by way of re-channeling a popular uprising into acceptable parliamentary-capitalist constraints – as was done successfully in South Africa after the fall of apartheid regime, in Philippines after the fall of Marcos, in Indonesia after the fall of Suharto, etc. At this precise conjuncture, radical emancipatory politics faces its greatest challenge: how to push things further after the first enthusiastic stage is over, how to make the next step without succumbing to the catastrophe of the "totalitarian" temptation – in short, how to move further from Mandela without becoming Mugabe.

The courage of hopelessness is crucial at this point.

[Jul 21, 2015] Greece: plea for unity as banks reopen

"...Well, they found out how hard it is when you have no leverage to put up a strong fight. "
.
"...The whole premise that the EU would crumble if Greece left the EU was pushed by Yanis V....and he was 2 years to late to the party... the markets had priced in the Grexit over the last 3 years and it showed in the lack of volatility during the leadup to the Vote."
Jul 20, 2015 | The Guardian

KateShade -> curious3 21 Jul 2015 10:49

Curious3, here is the direct quote from the July 12th Proposal (downloaded from BBC)

"to develop a significantly scaled up privatisation programme with improved governance; valuable Greek assets will be transferred to an independent fund that will monetize the assets through privatisations and other means. The monetization of the assets will be one source to make the scheduled repayment of the new loan of ESM and generate over the life of the new loan a targeted total of EUR 50bn of which EUR 25bn will be used for the repayment of recapitalization of banks and other assets and 50 % of every remaining euro (i.e. 50% of EUR 25bn) will be used for decreasing the debt to GDP ratio and the remaining 50 % will be used for investments."

thecatspyjamas2 -> picar52 21 Jul 2015 10:21

As Paul Krugman said yesterday " I find it hard to believe they didn't have a plan B" ...That was the worst thing they did...not just the stupid promises they made..but the fact they had no leverage AND they did not have the common sense to even try to create some fake leverage during the negotiations. Syriza must have thought the previous Greeks in charge just did not put up any fight against the Austerity.

Well, they found out how hard it is when you have no leverage to put up a strong fight.

The whole premise that the EU would crumble if Greece left the EU was pushed by Yanis V....and he was 2 years to late to the party... the markets had priced in the Grexit over the last 3 years and it showed in the lack of volatility during the leadup to the Vote.

KateShade -> curious3 21 Jul 2015 09:41

Dear curious, according to July 12 summit proposal 50% of money is to go on recapitalizing banks, 25% on bringing down debt to GDP ratio and 25% on investment.
So the answer to the question how much of money raised is to go on interest is "none".
Does that clarify things?

picar52 -> TokyoJones 21 Jul 2015 06:55

I appreciate your comments and will reply in as few words as possible. My dismay is not solely with the present government but with the whole political establishment that has ever since the beginning of the crisis, in 2009, consistently avoided doing their bit with regard to each and every agreement they signed with the troika, etc. As a result they all lost international credibility, as the only game they ever knew how to play was that of populist rhetoric vis-a-vis the local electorate. In fact George Papandreou, who was in power for three years (2009-11), did absolutely nothing in terms of reforms. The opposition parties, conservative New Democracy and left Syriza attacked the PASOK government in every possible way. Meanwhile, in other southern European countries, the opposition parties took a more responsible approach and thus measures were introduced that ensured that their crises quickly ended. In Greece however, things took a different turn. And the end result is there for all to see.

I shall give you another example of populist misleading rhetoric. Andreas Papandreou, who first gained power in 1981, got elected on slogans such as

EEC and NATO, the same syndicate! (EOK kai NATO to idio syndikato!)

or

Out with the (US military) bases of death! (Exo oi vaseis tou thanatou!)

Papandreou had promised (in 1981) to hold a referendum for Greeks to decide to on membership of the EEC. When elected, he never held it. He promised to close down the US military bases. He never did - instead the US stopped operating them because they no longer served their purpose.

So please understand, Greek politicians are a special breed. Their cynical streak as regards the implementation of measures required to gain power is probably unmatched in any other European democracy.

Europeans who have not experienced this at close hand cannot appreciate the level of lying and hypocrisy we have had to put up with.


bally38 -> areianos 21 Jul 2015 06:43

1. Please Stop shouting.
2. Credit Default Swaps were triggered. Here's the story in Reuters (march 2012)
3. "WHY ARE YOU PEOPLE SUCH MEDIA MUPPETS" As they say, when you point the finger, three fingers are pointing back at you.


areianos Grishnakh 21 Jul 2015 06:21

This is the last of it, after 2015 debt is highly manageable.

http://graphics.wsj.com/greece-debt-timeline/

Varoufakis is an intelligent and honourable man and fought for the people very well

Tsipras had to make the most difficult executive decision of his life.

By January 2016 the Greek crisis will be over.

I don't blame Germany for protecting its own unregulated and gambling interests I just find it somewhat unique that Americans have more concern about the Greeks in Greece than Germans.

[Jul 21, 2015] Pro&Con Greeks rightly stymied Europe's attempt to force regime change

"...that despite a massive propaganda campaign by what The New York Times described as "the oligarch-dominated news organizations," they were not easily fooled, either: They knew who was to blame for their suffering in the run-up to the vote."

southcoasttoday.com - New Bedford, MA

...Second, that despite a massive propaganda campaign by what The New York Times described as "the oligarch-dominated news organizations," they were not easily fooled, either: They knew who was to blame for their suffering in the run-up to the vote.
Third, they understood who was responsible for the never-ending depression, and that the European authorities were not offering a way out of it. The European authorities had severely underestimated Greek national pride and solidarity, and the Greek people's understanding of basic economics.
With no sense of irony, the creditors are now trying to blame the Greek government for the serious damage to the Greek economy caused by the ECB's forced closure of the banking system.
But this is a continuation of what the European authorities have been doing for more than five years.
The reason that the Greeks need so much debt relief is because the European authorities have shrunk the economy by more than 25 percent and drastically reduced Greece's ability to pay.
Now that the European authorities - not the Greek government - have pushed the economy back into recession, it will make Greece's debt situation even worse. The IMF just published a paper showing that the Greek debt is not sustainable, yet the European authorities have refused to discuss debt relief.
The European authorities are demanding more pension cuts and regressive tax increases, as well as primary - excluding interest - budget surpluses that would make it difficult, if not impossible, for the Greek economy to have a recovery any time soon that would be strong enough to make a serious dent in Greece's 26 percent unemployment rate.
In short, they are not offering Greeks any light at the end of a long tunnel. This is more evidence, if any were needed, that they are not bargaining in good faith.
The Greek government is in a tough spot. Since they are committed to remaining within the eurozone, their only option is to change Europe.
But the eurozone officials have their own vision for a new Europe, and it is one with less of a social safety net, with lower pensions, less spending on health care, weaker unions and a smaller welfare state. Hence the collision: Greece is an obstacle on their path to a new Europe. But it is proving to be a stubborn one.
Mark Weisbrot is co-director of the Center for Economic and Policy Research (cepr.net), a think tank dedicated to promoting debate on vital economic and social issues. He holds a doctorate in economics from the University of Michigan. Readers may write him at CEPR, 1611 Connecticut Avenue NW, Suite 400, Washington, DC 20009. Distributed by Tribune Content Agency LLC.

[Jul 19, 2015] Negotiating with Germany is a Waste of Time

"...Germany is a loanshark with a gang of Northern countries and they just kneecapped Greece to get the word out in the neighborhood, aka Eurozone. This isn't about moral hazard, it's Germany saying to the periphery if you don't submit we will pound you into the ground."
.
"...Since Prof. Varoufakis is an expert in Game Theory, I'm surprised that he didn't realize that BEFORE he started negotiations. If the Eurozone hardliners gave in to Greece, they would have to give the same deal to everyone who asked for it.
I wonder if he's going to use this experience in his classes."

.
"..."Ireland, Spain and Portugal endured the pain associated with their bailouts and emerged economically stronger." Lies. Europe is sinking into economic weakness because of Germany's insane ideas about economics."
.
"...The euro is essentially the successor to the Deutsche mark, whatever other Europeans might think of it. Germany's currency had far more global weight than those of the other members before the monetary union was created, and Germany's exit would destroy the euro immediately."
.
"...I do not hate Germans, my family are of German descent and I have German friends. What I hate are destructive neoliberal policies like those imposed by the German government. Let us be clear, from all reports the people who refuse to negotiate here are the Germans. The French, Italians, and others have shown some flexibility, but the Germans have not, and as the dominant economy in the ECU, they pretty much get their way."
.
"...Germany and the UK have been fighting for decades (really since Bismark) over who should politically run Europe. That is why the so called UK "exit" from the EU is a real joke. More like hurt feelings of being the loser. "
.
"...Let's not waste time with wishful thoughts about the foresight of the German elites. As they so often say, "We Germans reject Keynesian economics." Indeed. They reject not only deficit spending in a liquidity trap but, more fundamentally, the paradox of thrift, and not just as the paradox applies to households but also as it applies to sovereign nations.
.
So the German elites announce, over and over again, their dictum for the rest of Europe. "Imitate Germany! Be more competitive!" That is to say, always run a large current-account surplus.
"
.
"...
"We Germans reject Keynesian economics." Should we call this MerkelNomics? Sort of like Herbert Hoover economics. Or Cameron-Osborne economics. The kind of stupidity that JohnH apparently hearts. Of course this is also the economics of the modern Republican Party. We are ruled by morons. "
.
"...The historic way a weaker economy became more competitive was to have a weaker currency and to protect its developing industry with various protections against imports. That route is not available to the periphery nations."
.
"...Stripped of ambitions for a political and economic union, the bloc changes into a utilitarian project
.
A few things that many of us took for granted, and that some of us believed in, ended in a single weekend. By forcing Alexis Tsipras into a humiliating defeat, Greece's creditors have done a lot more than bring about regime change in Greece or endanger its relations with the eurozone. They have destroyed the eurozone as we know it and demolished the idea of a monetary union as a step towards a democratic political union.
.
In doing so they reverted to the nationalist European power struggles of the 19th and early 20th century. They demoted the eurozone into a toxic fixed exchange-rate system, with a shared single currency, run in the interests of Germany, held together by the threat of absolute destitution for those who challenge the prevailing order. The best thing that can be said of the weekend is the brutal honesty of those perpetrating this regime change."
Jul 13, 2015 | Economist's View

David

Germany is a loanshark with a gang of Northern countries and they just kneecapped Greece to get the word out in the neighborhood, aka Eurozone. This isn't about moral hazard, it's Germany saying to the periphery if you don't submit we will pound you into the ground.

What a great democratic experiment. And what a model of solidarity and social cohesion. What a joke.

anne -> Peter K....

http://research.stlouisfed.org/fred2/graph/?g=11bD

January 15, 2015

Government debt and balance of trade as shares of Gross Domestic Product for France, 2000-2012

(Percent)

[ President Hollande has been shockingly conservative or a staunch conservative wearing socialist clothes. ]

DrDick -> anne...

It has been pretty obviously the latter from the outset. He is a socialist in name only, much like the British Labour Party these days.

MacAuley -> Peter K....

Since Prof. Varoufakis is an expert in Game Theory, I'm surprised that he didn't realize that BEFORE he started negotiations. If the Eurozone hardliners gave in to Greece, they would have to give the same deal to everyone who asked for it.
I wonder if he's going to use this experience in his classes.

pgl

"be willing to act unilaterally, be willing to default unilaterally, have a plan for achieving primary surplus if you haven't already achieved it, have a hard default and euro exit (now possible, thanks to the Germans) option in your back pocket, and be willing to use it at the first sign of hassle from the ECB."

YES! Only edit to this comes from the fact that Greece already has a large primary surplus. Exit the Euro Zone and say the heck with the Germans.

Fred C. Dobbs

(Many hold that Germany should have given
in to Greece, not the other way around.
That was not to be. Go figure.)

The Greek Deal Is a Disaster for Greece, and Maybe
for Europe http://nyti.ms/1UUXCHl via @UpshotNYT
NYT - Neil Irwin - July 13

For years, Greece's negotiations with its European creditors have featured moments in which all parties stare into the abyss, fear what they see, and step back to reach a deal.

On Monday, there was yet another deal. But this time it is one that pushes Greece into the abyss, even if financial markets don't acknowledge it just yet and even if what happens next is deeply uncertain.

Greece already has 26 percent unemployment, a tourism industry that is suffering as would-be visitors stay away, and banks and a stock market that have been closed going on three weeks. Just a week ago, its voters overwhelmingly rejected a bailout offer that was less punitive than the one its leaders just accepted.

Yet the deal that Greek leaders and their creditors reached Monday morning after a brutal series of overnight talks promise to deepen political and economic strains in a country already in depression.

It was a momentous weekend for Europe, and not in a good way. The deal will keep Greece in the eurozone at least a while longer, at great cost, and with little certainty about the future of either Greece or Europe in the not too distant future.

In exchange for a cash lifeline, the country has agreed to much greater concessions than those that were under discussion a few weeks ago. Among them: higher taxes, cuts to government pensions and a sell-off of $55 billion worth of state assets in order to recapitalize banks and make debt payments. That last strategy is a little like a family selling off its furniture to make its mortgage payment; you can do it, but it does not exactly amount to a long-term solution.

A week ago, thousands of Greeks crowded Syntagma Square, in front of the nation's parliament, celebrating their country's emphatic "No" vote on a proposed financial rescue. Right and left, old and young, the Greek people were united: They would not accept the further austerity that Germany and other European countries were demanding as a condition of further bailout money. ...

(The new harsh scheme can only work if Greece corrects
a lot of 'systemic problems', and - unfortunately -
maybe not even then.)
Monday, July 13, 2015 at 12:24 PM

Fred C. Dobbs -> Fred C. Dobbs...

The Eurozone's Damaging Deal for Greece
http://nyti.ms/1JeyJgO
NYT - editorial - July 13

In the end, after trying every possible tactic, Prime Minister Alexis Tsipras of Greece threw in the towel and accepted the toughest demands yet made by creditors to extend life support for Greece and keep it in the eurozone. That may avert an immediate catastrophe, but there is little to celebrate since it will do little to address, much less repair, the slow-moving disaster of the Greek economy.

The Greek Parliament has to approve the main portions of the package by Wednesday just to start negotiations on a new three-year bailout of up to 86 billion euros ($96 billion). Despite pleas from the Greeks for debt relief, the creditors gave only vague indications that they might consider easing terms on Greece's total debt of more than 300 billion euros, which it cannot possibly repay.

Mr. Tsipras certainly didn't help his cause with the European leaders by calling for a confusing last-minute referendum, in which Greek voters rejected an earlier bailout deal. And now his capitulation has enraged members of his left-wing Syriza party, raising the possibility of another national election, with the attendant unknowns, or at least a thorough reshuffling of the government.

The guiding notion behind the creation of the European Union was to resolve problems like this through consensus and cooperation. Instead, the final 17-hour negotiating session was marked by acrimony not only between Greece and the European leaders, but also between Germany and France; between the German finance minister and the head of the European Central Bank; between north and south, east and west.

So the tragedy is not only that the Greek debt crisis has no end in sight, but that instead of the one-for-all-and-all-for-one ethic that was supposed to govern Europe, the rancorous talks showed a roomful of national leaders with sharply differing conceptions of what to do about a bankrupt fellow member.

The Greek Parliament is likely to accept the deal, if only because there is no choice. Austerity will remain firmly in place, and the increased taxes and reduced pension payments imposed in the package will only further erode the demand that the Greek economy needs to avoid a deepening depression. The deal also requires that a fund be created to sell off public assets worth 50 billion euros to repay debts and recapitalize banks, a condition hard for a socialist government to swallow, and continued monitoring of Greece's adherence to bailout terms by the International Monetary Fund. ...
Monday, July 13, 2015 at 05:16 PM

Eric

there is only one problem with this plan, there is no popular support for it.

Some of you probably think that if the economy in some countries continues to stagnate, this attitude will change. But popular support for the euro in those countries is not about macro-economics, but because they don't trust their own politicians to handle their own currencies properly.

I think there is a higher chance that the Northern countries exit the eurozone than the troubled countries, even when it would be wise from a macro economic perspective.

David -> Eric...

Actually there are lot of problems with it as others have posted.

Odd note. when did the Finns become jerks? I have known a few who were super cool. I get there's a politics thing but I expected this out of Germany, not the Finns.

Peter K. -> Eric...

"but because they don't trust their own politicians to handle their own currencies properly."

You have no evidence of this and just are making things up out of thin air.

pgl -> Peter K....

Eric does not even know the difference between the overall surplus/deficit versus the primary surplus. Dumb? Dishonest? Either way - he is a troll.

am -> pgl...

I thought also that the ps had disappeared since the start of the year.

But the mystery in all of the crisis has been the wish to retain the euro by the Greek people. It may be some sense of belonging to the euro group that they desire. But it is more like knowing the history of the drachma. His point that Peter copied in is not all unreasonable.

They don't want the drachma because monetary and fiscal policy may revert to drachma like figures of the past, including devaluation.

I posted up a link before on the recent history of the drachma. From ww2 to the collapse of the Bretton Wood institutions it was good: called the golden period. From 1972 or thereabouts until the attempt at convergence to join the euro it was very poor. During the convergence period it was good. I think the people can remember the bad period with devaluations. It was one of the reasons they wanted to join the euro.

Eric

''Want the Euro? Be More Like the Germans''

...

The euro is essentially the successor to the Deutsche mark, whatever other Europeans might think of it. Germany's currency had far more global weight than those of the other members before the monetary union was created, and Germany's exit would destroy the euro immediately. By contrast, the common currency could feasibly survive the exit of any other member, probably even France. If you want to use an essentially German currency, you have to be a little German. That means low or nonexistent budget deficits, extreme tax discipline (tax dodging in Germany is not just a crime -- it causes genuine moral outrage), and a rule-based approach to government and economic life.

Europeans like the euro, and most of them make an honest attempt at German-ness. Ireland, Spain and Portugal endured the pain associated with their bailouts and emerged economically stronger. Their political landscape also became more German: The center left and the center right, increasingly indistinguishable from one another, alternate in power or even share it, and the extreme right and extreme left have been marginalized. In Greece, the extreme left won. That was extremely un-German. The result is politically -- and probably economically -- disastrous for Greece.

The message for other euro countries is that if they want to enjoy the trade, convenience and interest-rate benefits of the common currency, they cannot afford to elect the far left and far right. The German-led currency union will fight back and make it painful. If Podemos wins in Spain, or if the Finns Party triumphs in Finland, they will need to take their countries out of the euro area to escape Greece's fate.
...

http://www.bloombergview.com/articles/2015-07-13/want-the-euro-be-more-like-the-germans

David -> Eric...

How rule based were the Germans after WW2 when their debt was forgiven and they were gifted the Marshall plan after they started the worst war in human history, genocide etc. This was the greatest crime foriveness in human history.

DrDick -> David ...

Also after WW I, when they defaulted on their debts.

Peter K. -> Eric...

Wow what a horrible piece. Not surprising coming from Eric.

"Ireland, Spain and Portugal endured the pain associated with their bailouts and emerged economically stronger."

Lies. Europe is sinking into economic weakness because of Germany's insane ideas about economics.

Peter K. -> Eric...

"Leonid Bershidsky is a Bloomberg View columnist. He is a Berlin-based writer, author of three novels and two nonfiction books."

The Germans are reverting to form.

Just saw Brad Pitt's movie Fury. Good movie. Pitt kills a lot of Nazis as the Americans invade Germany.

Peter K. -> Peter K....

Pitt likes to kill Nazis.

https://www.youtube.com/watch?v=grq0rhtbtAw

Peter K.

Feckless as Syriza? What other choice did they have?

One. Default and exit. But the Greeks don't want to do that, so why have a backup plan? I don't really go along with these criticisms of Tsipras and Syriza. Nobody could have done better. Being "nice" to the Germans wouldn't have mattered at all. The Greeks were nice for 5 years and just gave them a broken economy.

The Greeks recognized it wasn't working and elected Syriza to get a better deal. They couldn't. They held a referendum and the Greeks voted No to the austerity deal. But they don't want to leave the Eurozone so they have to accept the bailout terms. They're in a no win situaion.

I agree with Krugman and Dean Baker that default and getting your own monetary policy is the way to go, but the Greeks don't want to leave Europe.

John Cummings -> Eric...

I suspect there is a bunch of pro-anglo sentiment in secret. Basically progressives and Margie Thatcher are crying together at the diminished anglo role....

pgl -> Eric...

We don't hate Germans. We hate horrific economic policies. We also don't like trolls - like you.

Eric -> Eric...

actually it was Germany that proposed a possible better way out for Greece this weekend: a time out from the euro zone for at least five years, debt restructuring, humanitarian aid and growth enhancing measures:

http://www.focus.de/finanzen/news/staatsverschuldung/finanzministerium-verschickt-papier-schaeuble-schlaegt-grexit-auf-zeit-vor_id_4810445.html

This German plan was ridiculed and dismissed by other eurozone countries, in particular France. I wonder why.

John Cummings -> Eric...

That was only by "select" Germans and only if Greece didn't capitulate. It may still happen if Greece doesn't follow their edict.

DrDick -> Eric...

I do not hate Germans, my family are of German descent and I have German friends. What I hate are destructive neoliberal policies like those imposed by the German government. Let us be clear, from all reports the people who refuse to negotiate here are the Germans. The French, Italians, and others have shown some flexibility, but the Germans have not, and as the dominant economy in the ECU, they pretty much get their way.

Peter K. -> Eric...

My family is of German descent. My father's father had German parents, one of whom came over on a boat. My grandfather fought the Japanese in World War II while some of his cousins were drafted by the Nazis late in the war and sent to the Eastern Front never to be heard from again.

Your lack of concern over the well-being of the Greeks is shameful. You're a stupid troll.

John Cummings

Germany and the UK have been fighting for decades (really since Bismark) over who should politically run Europe. That is why the so called UK "exit" from the EU is a real joke. More like hurt feelings of being the loser.

btg -> John Cummings...

The Brits kept out of Europe and have never seen themselves as being fully part of Europe - the EU was always a French/German thing.

Britain/England is an island and as such it never needed a large standing army and instead became a maritime power with an empire larger than its European neighbors.

Britian sees the defeat of Germany as a highpoint but even then it was largely overtaken by the US since then as the US forced it to dismember the empire.

Peter K.

http://macromarketmusings blogspot.com/2015/07/did-monetary-policy-really-offset.html

Monday, July 13, 2015

Did Monetary Policy Really Offset Fiscal Austerity in Canada?
by David Beckworth

The blogosphere is once again talking about Canada's successful fiscal austerity in the mid-to-late 1990s. Paul Krugman rekindled the conversation with this statement:

"[L]ook at everyone's favorite example of successful austerity, Canada in the 1990s. Canada came in with gross debt of roughly 100 percent of GDP, roughly comparable to Greece on the eve of the financial crisis. It then proceeded to do a pretty big fiscal adjustment -- 6 percent of GDP according to the IMF's measure of the structural balance, which is about a third of what Greece has done but comparable to other European debtors. But unemployment fell steadily. What was Canada's secret?"

Ramesh Ponnuru and I have argued numerous times that Canada's secret was a monetary policy offset. That is, monetary policy eased to offset the drag of fiscal tightening. Paul Krugman agrees in the above post. The evidence that we and others have pointed to in support of this view is the Bank of Canada cutting its target interest rate more than 500 basis points between 1995 and 1997.

Some of our conservative and libertarian friends, however, are not convinced by this evidence. David Henderson and Robert Murphy, in particular, have pushed back against this view. They contend there was no monetary offset. Henderson questions how much influence the Bank of Canada actually has over interests rates. Murphy goes further and provides a list of data points that he claims show the Canadian success story did not rely on loose money. So are Henderson and Murphy's skepticism of the monetary offset warranted?

The answer is no.....

....

Note that nominal GDP follows its trend path rather closely during the period of fiscal austerity. The Bank of Canada, in other words, did what was necessary to keep aggregate demand on a stable growth path during this time. Given the evidence shown above, the Bank of Canada offset the fiscal tightening via lower interest rates and a permanently higher monetary base path. This story is completely missed by Murphy's cursory look at nominal GDP growth rates over a few years. So yes, monetary policy did offset fiscal austerity in Canada in the mid-to-late 1990s.

The policy implications from this experience are clear. Economies undertaking fiscal austerity are best served by expansionary monetary policy. It provides a viable path to obtaining a more sustainable debt level. The ECB, however, tightened monetary policy twice during the Eurozone crisis. Given the one-size-fits-all approach problems, this tightening proved excessive for the periphery countries and helped spawn the soveriegn debt crisis. Just imagine how different the Eurozone would be today had the ECB began its QE program back in 2008.

------------------

Obviously JohnH and other critics of monetary policy and QE don't agree. The banks had enough liquidity and QE wouldn't help. How wrong they are. They're just like conservatives.

Reply Monday, July 13, 2015 at 01:56 PM
John Cummings -> Peter K....

Debt expanded due to the corporate debt bubble(that financed Y2K overhaul) of the 1990's which gave the illusions that "austerity" worked. "Monetary" Policy became looser as would expect during that time of disinflation (which was the point). Glibers don't want to give the BoC any credit, but that is their way. In the end the BoC didn't really offset anything. The debt market is the debt market.

pgl -> John Cummings...

What a bunch of irrelevant babble. Read what Krugman wrote and learn. Duh!

John Cummings -> pgl...

Krugman ignored the debt expansion of corporate balance sheets in the mid-late 90's. That was the key driver. Overrating central banks is a classic sign of neo-classical/new keynesian garble.

A debt expansion is a debt expansion. It will drive growth. Always have. Since the 1600's.

pgl -> John Cummings...

Are you talking about US corporate balance sheets in 1995. How the F is this relevant to the current Greek crisis? Krugman has noted Greece's debt before the crisis. So pardon my French but what the FUCK are you babbling about now?

Bert Schlitz -> John Cummings...

"Some of our conservative and libertarian friends, however, are not convinced by this evidence. David Henderson and Robert Murphy, in particular, have pushed back against this view. They contend there was no monetary offset. Henderson questions how much influence the Bank of Canada actually has over interests rates. Murphy goes further and provides a list of data points that he claims show the Canadian success story did not rely on loose money. So are Henderson and Murphy's skepticism of the monetary offset warranted?"

1.Libertarian/Austrian types don't believe in the nation state. Any function, even if run privately by a monopoly is considered bad when connected to the nation state. Their ideal is more of a Wealth/Propertarian run global syndicate that handles wealth tranfers via what true conservatives would call a degenerated imperial state of capitalists/merchants. Very non-democratic.

2.They believe capitalism can survive without debt expansion. This silly notion is what separates them from neo-liberals who quite understandably, know this is not true. Debt is what makes capitalism go. Without it, it is not sustainable. That is why the economic contraction from a libertarian regime would eventually drive them from power and enable conservatives and socialists to unite, much like it did in the late 19th century during what was the closest to the last libertarian period.

pgl -> Peter K....

"Some of our conservative and libertarian friends, however, are not convinced by this evidence."

These conservatives and libertarians may be his friends but they know nothing about economics. Just check out the devaluation of the C$ and you'll see what Krugman was talking about.

anne -> Peter K....

http://krugman.blogs.nytimes.com/2010/06/18/fiscal-fantasies-2/

June 18, 2010

Fiscal Fantasies
By Paul Krugman

It's really amazing to see how quickly the notion that contractionary fiscal policy is actually expansionary is spreading. As I noted yesterday, * the Panglossian view has now become official doctrine at the European Central Bank.

So what does this view rest on? Partly on vague ideas about credibility and confidence; but largely on the supposed lessons of experience, of countries that saw economic expansion after major austerity programs.

Yet if you look at these cases, every one turns out to involve key elements that make it useless as a precedent for our current situation.

Here's a list of fiscal turnarounds, ** which are supposed to serve as role models. What can we say about them?

  • Canada 1994-1998: Fiscal contraction took place as a strong recovery was already underway, as exports were booming, and as the Bank of Canada was cutting interest rates. As Stephen Gordon explains, *** all of this means that the experience offers few lessons for policy when the whole world is depressed and interest rates are already as low as they can go.
  • Denmark 1982-86: Yes, private spending rose - mainly thanks to a 10-percentage-point drop in long-term interest rates, hard to manage when rates in major economies are currently 2-3 percent.
  • Finland 1992-2000: Yes, you can have sharp fiscal contraction with an expanding economy if you also see a swing toward current account surplus of more than 12 percent of GDP. So if everyone in the world can move into massive trade surplus, we'll all be fine.
  • Ireland, 1987-89: Been there, done that. **** Let's all devalue! Also, an interest rate story something like Denmark's.
  • Sweden, 1992-2000: Again, a large swing toward trade surplus.

So every one of these stories says that you can have fiscal contraction without depressing the economy IF the depressing effects are offset by huge moves into trade surplus and/or sharp declines in interest rates. Since the world as a whole can't move into surplus, and since major economies already have very low interest rates, none of this is relevant to our current situation.

Yet these cases are being cited as reasons not to worry as austerity becomes the rule.

You know what? I'm worried.

* http://krugman.blogs.nytimes.com/2010/06/17/magical-thinking-at-the-ecb/

** http://www.scribd.com/doc/27294711/Fiscal-Turnarounds

*** http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/06/on-the-lessons-to-be-learned-from-the-elimination-of-the-canadian-federal-deficit-in-the-1990s.html

**** http://krugman.blogs.nytimes.com/2010/06/15/magical-foreigners-austerity-edition/

Reply Monday, July 13, 2015 at 04:22 PM
anne -> Peter K....

http://krugman.blogs.nytimes.com/2015/07/08/policy-lessons-from-the-eurodebacle/

July 8, 2015

Policy Lessons From the Eurodebacle
By Paul Krugman

[Graph]

It's now clear, or should be clear, that the Greek program was doomed to failure without major debt relief; no matter how hard the Greeks tried, austerity would shrink GDP faster than it reduced debt relative to the baseline, so that the debt situation was bound to worsen even as the attempt to balance the budget imposed vast suffering.

And there was no good, or even non-terrible, answer given Greece's membership in the euro.

But there's a broader lesson from Greece that is relevant to all of us - and it's not the usual one about mending our free-spending ways lest we become Greece, Greece I tell you. What we learn, instead, is that fiscal austerity plus hard money is a deeply toxic mix. The fiscal austerity depresses the economy, and pushes it toward deflation; if it's accompanied by hard money (in Greece's case the euro, but a fixed exchange rate, a gold standard, or any kind of obsessive fear of inflation would do the trick), the result is not just a depression and deflation, but quite likely a failure even to reduce the debt ratio.

For comparison, look at everyone's favorite example of successful austerity, Canada in the 1990s. Canada came in with gross debt of roughly 100 percent of GDP, roughly comparable to Greece on the eve of the financial crisis. It then proceeded to do a pretty big fiscal adjustment - 6 percent of GDP according to the International Monetary Fund's measure of the structural balance, which is about a third of what Greece has done but comparable to other European debtors. But unemployment fell steadily. What was Canada's secret?

The answer was, easy money and a large currency depreciation. * These offset the drag from austerity, allowing growth to continue.

So, how does this play into U.S. policy debates? Well, Republicans love to warn that America might turn into Greece any day now. ** But look at the policy mix that is now de facto GOP orthodoxy: sharp cuts in government spending (maybe offset by tax cuts for the rich, but these won't provide much stimulus), combined with a monetary policy obsessed with fears of dollar "debasement". That is, the conservative side of the US political spectrum, while holding up Greece as a cautionary tale, is actually demanding that we emulate the policy mix that turned Greek debt into a complete disaster.

* https://research.stlouisfed.org/fred2/graph/?g=1m1K

** http://www.washingtonpost.com/posteverything/wp/2015/07/06/the-only-lesson-the-united-states-should-draw-from-greece/

anne -> Peter K....

http://research.stlouisfed.org/fred2/graph/?g=147Z

Price of an American Dollar in Canadian Dollars, 1990-2000

Canadian Dollars

1990 ( 1.17)
1991 ( 1.15)
1992 ( 1.21)
1993 ( 1.29) Clinton
1994 ( 1.37)

1995 ( 1.37)
1996 ( 1.36)
1997 ( 1.39)
1998 ( 1.48)
1999 ( 1.49)

2000 ( 1.49)

anne -> Peter K....

https://research.stlouisfed.org/fred2/graph/?g=1rjx

January 4, 2015

Interest Rate on 10-Year Canadian Government Bonds, 1990-2000

Reply Monday, July 13, 2015 at 04:31 PM
anne -> anne...

The value of the Canadian dollar fell by 27% against the American dollar through the 1990s. The interest rate on 10-year Canadian government bonds fell 33% during the 1990s.

pgl -> anne...

Yep - very big drop in interest rates and large devaluation of the C$. So fiscal austerity was offset by more investment demand and higher net exports.

Reply Monday, July 13, 2015 at 05:57 PM
am

The poster should have noted that no other government is in the Greece position. The Podemos leader, likely to be the next Spanish PM, said there was a big difference between Greece and Spain and in debt numbers that is very true.

Reply Monday, July 13, 2015 at 01:59 PM
anne -> am...

http://research.stlouisfed.org/fred2/graph/?g=ZaL

January 15, 2015

Central government debt as a share of Gross Domestic Product for Ireland, Portugal, Spain, Italy and Greece, 2007-2012

[ Central government debt as a share of GDP was above 120% for Ireland, Portugal, Italy and Greece by 2012. Spain alone had a reasonably low debt ratio at 65%. ]

Reply Monday, July 13, 2015 at 04:40 PM
anne -> am...

Spain maintained a relatively and reasonably debt ratio in the wake of the recession at the expense of a searing loss of employment:

https://research.stlouisfed.org/fred2/graph/?g=1rjU

January 4, 2015

Spain Employment-Population Ratio, * 2007-2014

* Employment age 25-54

Reply Monday, July 13, 2015 at 05:06 PM
anne -> am...

Correcting:

Spain maintained a relatively and reasonably low debt ratio in the wake of the recession at the expense of a searing loss of employment, with the employment-population ratio for men and women 25-54 falling from 77.2 to 65.6 between 2007 and 2013:

https://research.stlouisfed.org/fred2/graph/?g=1rjU

January 4, 2015

Spain Employment-Population Ratio, * 2007-2014

* Employment age 25-54

Reply Monday, July 13, 2015 at 05:08 PM
anne -> anne...

By contrast, when the Spanish employment-population ratio for men and women 25-54 was 65.6 in 2013, the German employment-population ratio was 83.5 for a shocking difference:

https://research.stlouisfed.org/fred2/graph/?g=1rjX .

Jan

Let's not waste time with wishful thoughts about the foresight of the German elites. As they so often say, "We Germans reject Keynesian economics." Indeed. They reject not only deficit spending in a liquidity trap but, more fundamentally, the paradox of thrift, and not just as the paradox applies to households but also as it applies to sovereign nations.

So the German elites announce, over and over again, their dictum for the rest of Europe. "Imitate Germany! Be more competitive!" That is to say, always run a large current-account surplus.

Of course, this dictum would first impoverish laggard European nations, including the UK, then Latin American nations, then Russia and the USA.

Therefore, a German-dominated Europe would in the future find itself surrounded by mortal enemies, which would have no choice but to destroy it again.

Reply Monday, July 13, 2015 at 02:21 PM
pgl -> Jan...

"We Germans reject Keynesian economics."

Should we call this MerkelNomics? Sort of like Herbert Hoover economics. Or Cameron-Osborne economics. The kind of stupidity that JohnH apparently hearts. Of course this is also the economics of the modern Republican Party. We are ruled by morons.

Eric -> Jan...

Hoe does becoming more competitive impoverish your country?

RGC -> Eric...

The historic way a weaker economy became more competitive was to have a weaker currency and to protect its developing industry with various protections against imports. That route is not available to the periphery nations.

The Germans would be wise to recognize that it is in their long-term interest to help those nations become more competitive and thereby create a balanced, stable trading zone where everyone can succeed.

The best way to do that is via some sort of development fund that is targeted at the most urgent projects wherever they may be. To do that the Germans are going to have to be magnanimous ala the Marshall Plan, although it is also in their self-interest. The current situation may also require some purely cash transfers to bridge a ramp-up period.

The Germans need to think like true Europeans, ditch the "lazy Greeks" talk and think of the periphery nations somewhat like East Germany. Either that or forget about united Europe and go back to the dangers of nationalism.

Eric -> RGC ...

Thanks. But don't you think the Germans want convergence, that is help the weaker nations become more competitive? They do understand that there is no future for the eurozone without convergence.

There are and have been loads of subsidies in the EU. If you travel through poorer parts of Europe, you see the EU signs that projects have been paid with EU money. Infrastructure is pretty good in countries like Spain, Portugal and Greece, partly thanks to EU funds, now the same is happening to Eastern Europe. But this has not made a country like Greece more competitive.

The Germans don't believe it's (just) about the money, they believe in reforms.

The thing is that reforms have been ridiculed by the likes of Krugman, it's all about fiscal stimulus in their world, something the Germans are skeptical about.

Eastern Europe is actually a good example, but the problem is they could run this program at home, but can't in a country like Greece. In the end only the Greek can help themselves.

Eric -> Eric...

I meant East Germany is a good example

RGC -> Eric...

IIRC, some from the West said similar things about their East brothers before reunification.

I've read a lot of Varoufakis' papers and I think he was on the right track. He has been very critical of Greece's corruption and lack of administrative competence. His economics is socialist/Keynesian. He proposed a solution similar to my prior post:

http://yanisvaroufakis.eu/euro-crisis/modest-proposal/

Of course there are plutocrats, self-serving politicians, banksters and dummkopfs in all countries. I think all the larger economies, except maybe China, suffer right now from neo-liberal or just incompetent governments.

Bert Schlitz -> Eric...

All capitalism is unsustainable eventually. I always viewed the "horrible" East Germany not so horrible indeed when visiting their and exploring its inner bowels. They had a better work ethic and weren't so concerned about materialistic obsession.

Having the Russians completely leaving them alone by the 1990's without unification would have been interesting. There was indeed quite a bit of leftover national socialism embedded over there.

Western Germany on the other hand was binging on debt expansion like all other OCD countries in the 1980's and its economic situation "appeared" to improve rapidly. Like all capitalist music boxes, that story has to end. Once debt expansion ends and the state can't hold up the carcass anymore, the situation in 1980's East Germany would seem like a paradise.

pgl -> Eric...

East Germany is a good example of how NOT to do this. Do you know anything? It appears not.

pgl -> Eric...

It depends on how one does the more competitive part. The right way to do this is to devalue the currency but Greece can't do this as long as they are this Euro and the Germans don't help. Have you read ANY part of this discussion? Seriously - you are like the 3 year old who just fell off the turnip truck.

Peter K. -> Eric...

Wolfgang Munchau:

"We will soon be asking ourselves whether this new eurozone, in which the strong push around the weak, can be sustainable. "

Eric likes it when the strong push around the weak. He identifies with the bully.

Jan -> Eric...

"Competitive" does mean productive. It means a regular current account surplus. Germany achieved a regular surplus not by upgrading labor or capital but by thrift (shifting income from consumption to production)-- repressing wages/benefits and acquiring a quasi-pegged currency.

A regular surplus benefits the nation which runs it at the expense of other nations. Latin American economists have been saying in recent years that the German surplus has been "hollowing out" their economies and at least one prominent German economist has agreed with them.

The EU is a huge economy. If it were to run a surplus as large as Germany now runs, the USA and Russia would soon become friends again.

am

The Euro group negotiators are reported to be pleased with the package on offer. It would seem probable that the Greek government or parliament will not approve the deal. This will mean grexit. The Euro group negotiators are reported to be pleased with the package on offer.

cogitoman

What is wrong to being made to stick to the rules?

RGC -> cogitoman...

Rules are necessary and good. The next question is "do we have the right rules?". IMO the Eurozone has unworkable rules.

anne

http://www.theguardian.com/business/2015/jul/13/athens-and-eurozone-agree-bailout-deal-for-greece

July 13, 2015

Tsipras faces clash with Syriza radicals opposed to eurozone bailout for Greece

After marathon talks to secure third bailout, Greek prime minister prepares for showdown with MPs opposed to deal described as harsher than Versailles treaty
By Phillip Inman and Jennifer Rankin - Guardian

Brussels

[ So a Greek legislator would have to be a "radical" to vote against a "deal described as harsher than Versailles treaty." ]

gordon

I have a suspicion that many Greeks fear that leaving the Eurozone would mean they would no longer be able to leave Greece to work in Eurozone countries and send remittances home. The bulk of remittances to Greece appear to come from Germany:
http://www.pewsocialtrends.org/2014/02/20/remittance-map/

anne -> gordon...

I have a suspicion that many Greeks fear that leaving the Eurozone would mean they would no longer be able to leave Greece to work in Eurozone countries and send remittances home....

[ Would there be migration limits if Greece simply remained in the European Union? ]

David

There is a modern meme I hate, the idea that everything has to be a "brand".

But if the Eurozone falls apart it will be the German brand that suffers. No one likes a bully.

Reply Monday, July 13, 2015 at 05:26 PM
Peter K. -> David ...

Yes and the idea of Europe as a symbol of progress.

http://www.ft.com/intl/cms/s/0/e38a452e-26f2-11e5-bd83-71cb60e8f08c.html#axzz3fpG5IsRy

July 13, 2015 10:45 am

Greece's brutal creditors have demolished the eurozone project

by Wolfgang Munchau

Stripped of ambitions for a political and economic union, the bloc changes into a utilitarian project

A few things that many of us took for granted, and that some of us believed in, ended in a single weekend. By forcing Alexis Tsipras into a humiliating defeat, Greece's creditors have done a lot more than bring about regime change in Greece or endanger its relations with the eurozone. They have destroyed the eurozone as we know it and demolished the idea of a monetary union as a step towards a democratic political union.

In doing so they reverted to the nationalist European power struggles of the 19th and early 20th century. They demoted the eurozone into a toxic fixed exchange-rate system, with a shared single currency, run in the interests of Germany, held together by the threat of absolute destitution for those who challenge the prevailing order. The best thing that can be said of the weekend is the brutal honesty of those perpetrating this regime change.

[clipped]

nor even the total capitulation of Greece. The material shift is that Germany has formally proposed an exit mechanism. On Saturday, Wolfgang Schäuble, finance minister, insisted on a time-limited exit - a "timeout" as he called it.

I have heard quite a few crazy proposals in my time, and this one is right up there. A member state pushed for the expulsion of another. This was the real coup over the weekend: not only regime change in Greece, but also regime change in the eurozone.

The fact that a formal Grexit may have been avoided for the moment is immaterial. Grexit will be back on the table when you have the slightest political accident - and there are still many things that could go wrong, both in Greece and in other eurozone parliaments. Any other country that in future might challenge German economic orthodoxy will face similar problems.

This brings us back to a more toxic version of the old exchange-rate mechanism of the 1990s that left countries trapped in a system run primarily for the benefit of Germany, which led to the exit of the British pound and the temporary departure of the Italian lira. What was left was a coalition of countries willing to adjust their economies to Germany's. Britain had to leave because it was not.

What should the Greeks do now? Forget for a moment the economic debate of the past few months, over issues such as the impact of austerity or economic reforms on growth. Instead ask yourself this simple question: do you really think that an economic reform programme, for which a government has no political mandate, which has been explicitly rejected in a referendum, that has been forced through by sheer political blackmail, can conceivably work?

The implications for the rest of the eurozone are at least as troubling. We will soon be asking ourselves whether this new eurozone, in which the strong push around the weak, can be sustainable. Previously, the strongest argument against any forecasts of break-up has been the strong political commitment of all its members. If you ask Italians why they are in the eurozone, few have ever pointed to the economic benefits. They wanted to be part of the most ambitious project of European integration undertaken so far.
We will soon be asking ourselves whether this new eurozone, in which the strong push around the weak, can be sustainable

But if you take away the political aspiration, you may end up with a different judgment. From a pure economic point of view, we know that the euro has worked well for Germany. It worked moderately well for The Netherlands and Austria, although it produced quite a degree of financial instability in both.

But for Italy, it has been an unmitigated economic disaster. The country has seen virtually no productivity growth since the start of the euro in 1999. If you want to blame the lack of structural reforms, then you have to explain how Italy managed decent growth rates before then. Can we be sure that a majority of Italians will support the single currency in three years' time?

The euro has not worked out for Finland either. While the country is considered the world champion of structural reforms, its economy has slumped ever since Nokia lost the plot as the world's erstwhile premier mobile phone maker. Whether the euro is sustainable for Spain and Portugal is not clear. France has performed relatively well during the euro's early years, but it, too, is now running persistent current account deficits. It is not only Greece where the euro is not optimal.
Once you strip the eurozone of any ambitions for a political and economic union, it changes into a utilitarian project in which member states will coldly weigh the benefits and costs, just as Britain is currently assessing the relative advantages or disadvantages of EU membership. In such a system, someone, somewhere, will want to leave sometime. And the strong political commitment to save it will no longer be there

anne

https://twitter.com/TIME/status/620723673675251712

TIME.com @TIME

Greece may have to sell islands and ruins under its bailout deal http://ti.me/1CCqn5s

3:37 PM - 13 Jul 2015

Reply Monday, July 13, 2015 at 06:03 PM
anne -> anne...

We could do a time share on Corfu, I mean the whole island.

Sign here ...

anne

https://research.stlouisfed.org/fred2/graph/?g=1paT

August 4, 2014

Real per capita Gross Domestic Product for Ireland, Portugal, Spain,
Italy and Greece, 2007-2014

(Indexed to 2007)

[ Real per capita GDP has failed to recover in each of these 5 countries. ]

Reply Monday, July 13, 2015 at 06:50 PM
anne

https://research.stlouisfed.org/fred2/graph/?g=1r1K

August 4, 2014

Real per capita Gross Domestic Product for Sweden, Denmark, Norway,
Finland and Iceland, 2007-2014

(Indexed to 2007)

[ Real per capita GDP has only recovered in Sweden and that barely. ]

Reply Monday, July 13, 2015 at 06:52 PM
anne

https://research.stlouisfed.org/fred2/graph/?g=1rkL

August 4, 2014

Real per capita Gross Domestic Product for United Kingdom, Germany,
France and Netherlands, 2007-2014

(Indexed to 2007)

[ Real per capita GDP has recovered only in Germany which had recovered by 2010. ]

Reply Monday, July 13, 2015 at 06:55 PM
MacAuley

Greece was not ready to join the Eurozone in 1999 and it was pretty clear by 2011 that Greece would be better off outside the Eurozone.
By 2013 it was obvious that the only reason to delay Grexit (and to continue Greek austerity) was to prepare for the inevitable. The Eurozone is now prepared for Grexit, and it's time. In five years the Greeks will be grateful.

[Jul 19, 2015] Paul Craig Roberts Greece's Lesson For Russia

"...The Wolfowitz doctrine, the basis of US foreign and military policy, declares that the rise of Russia or any other country cannot be permitted, because the US is the Uni-power and cannot tolerate any constraint on its unilateral actions. As long as this doctrine reigns in Washington, neither Russia, China, nor Iran, the nuclear agreement not withstanding, are safe. As long as Iran has an independent foreign policy, the nuclear agreement does not protect Iran, because any significant policy conflict with Washington can produce new justifications for sanctions."
"...If Obama were to dismiss Victoria Nuland, Susan Rice, and Samantha Power and replace these neoconservatives with sane diplomats, the outlook would improve. Then Russia, China, and Iran would have a better possibility of reaching accommodation with the US on terms other than vassalage."
"...With the deregulation that began in the Clinton regime, Western capitalism has become socially dysfunctional. In the US and throughout the West capitalism no longer serves the people. Capitalism serves the owners and managers of capital and no one else."
"...The "globalism" that is hyped in the West is inconsistent with Washington's unilateralism. No country with assets inside the Western system can afford to have policy differences with Washington. The French bank paid the $9 billion fine for disobeying Washington's dictate of its lending practices, because the alternative was the close down of its operations in the United States. The French government was unable to protect the French bank from being looted by Washington."

Jul 19, 2015 | Zero Hedge
Submitted by Paul Craig Roberts,

"Greece's debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far." - International Monetary Fund

Greece's lesson for Russia, and for China and Iran, is to avoid all financial relationships with the West. The West simply cannot be trusted. Washington is committed to economic and political hegemony over every other country and uses the Western financial system for asset freezes, confiscations, and sanctions. Countries that have independent foreign policies and also have assets in the West cannot expect Washington to respect their property rights or their ownership. Washington freezes or steals countries' assets, or in the case of France imposes multi-billion dollar fines, in order to force compliance with Washington's policies. Iran, for example, lost the use of $100 billion, approximately one-fourth of the Iranian GDP, for years simply because Iran insisted on its rights under the Non-Proliferation Treaty.

Russian journalists are asking me if Obama's willingness to reach a deal with Iran means there is hope a deal can be reached over Ukraine. The answer is No. Moreover, as I will later explain, the deal with Iran doesn't mean much as far as Washington is concerned.

Three days ago (July 14) a high ranking military officer, Gen. Paul Selva, the third in about as many days, told the US Senate that Russia is "an existential threat to this nation (the US)." Only a few days prior the Senate had heard the same thing from US Marine commander Joseph Dunford and from the Secretary of the Air Force. A few days before that, the Chairman of the US Joint Chiefs of Staff warned of a Russian "hybrid threat."

Washington is invested heavily in using Ukraine against Russia. All the conflict there originates with Washington's puppet government in Kiev. Russia is blamed for everything, including the destruction of the Malaysian airliner. Washington has used false charges to coerce the EU into sanctions against Russia that are not in the EU's interest. As Washington has succeeded in coercing all of Europe to harm Europe's political and economic relationships with Russia and to enter into a state of conflict with Russia, certainly Washington is not going to agree to an Ukrainian settlement. Even if Washington wanted to do so, as Washington's entire position rests on nothing but propaganda, Washington would have to disavow itself in order to come to an agreement.

Despite everything, Russia's president and foreign minister continue to speak of the US and Washington's EU vassal states as "our partners." Perhaps Putin and Lavrov are being sarcastic. The most certain thing of our time is that Washington and its vassals are not partners of Russia.

The Wolfowitz doctrine, the basis of US foreign and military policy, declares that the rise of Russia or any other country cannot be permitted, because the US is the Uni-power and cannot tolerate any constraint on its unilateral actions.

As long as this doctrine reigns in Washington, neither Russia, China, nor Iran, the nuclear agreement not withstanding, are safe. As long as Iran has an independent foreign policy, the nuclear agreement does not protect Iran, because any significant policy conflict with Washington can produce new justifications for sanctions.

With the nuclear agreement with Iran comes the release of Iran's $100 billion in frozen Western balances. I heard yesterday a member of the Council for Foreign Relations say that Iran should invest its released $100 billion in US and Europe companies. If Iran does this, the Iranian government is setting itself up for further blackmail. Investing anywhere in the West means that Iran's assets can be frozen or confiscated at any time.

If Obama were to dismiss Victoria Nuland, Susan Rice, and Samantha Power and replace these neoconservatives with sane diplomats, the outlook would improve. Then Russia, China, and Iran would have a better possibility of reaching accommodation with the US on terms other than vassalage.

Russia and China, having emerged from a poorly functioning communist economic system, naturally regard the West as a model. It seems China has fallen for Western capitalism head over heels. Russia perhaps less so, but the economists in these two countries are the same as the West's neoliberal economists, which means that they are unwitting servants of Western financial imperialism. Thinking mistakenly that they are being true to economics, they are being true to Washington's hegemony.

With the deregulation that began in the Clinton regime, Western capitalism has become socially dysfunctional. In the US and throughout the West capitalism no longer serves the people. Capitalism serves the owners and managers of capital and no one else.

This is why US income inequality is now as bad or worse than during the "robber baron" era of the 1920s. The 1930s regulation that made capitalism a functioning economic system has been repealed. Today in the Western world capitalism is a looting mechanism. Capitalism not only loots labor, capitalism loots entire countries, such as Greece which is being forced by the EU to sell of Greece's national assets to foreign purchasers.

Before Putin and Lavrov again refer to their "American partners," they should reflect on the EU's lack of good will toward Greece. When a member of the EU itself is being looted and driven into the ground by its compatriots, how can Russia, China, and Iran expect better treatment? If the West has no good will toward Greece, where is the West's good will toward Russia?

The Greek government was forced to capitulate to the EU, despite the support it received from the referendum, because the Greeks relied on the good will of their European partners and underestimated the mendacity of the One Percent. The Greek government did not expect the merciless attitude of its fellow EU member governments. The Greek government actually thought that its expert analysis of the Greek debt situation and economy would carry weight in the negotiations. This expectation left the Greek government without a backup plan. The Greek government gave no thought to how to go about leaving the euro and putting in place a monetary and banking system independent of the euro. The lack of preparation for exit left the government with no alternative to the EU's demands.

The termination of Greece's fiscal sovereignty is what is in store for Italy, Spain, and Portugal, and eventually for France and Germany. As Jean-Claude Trichet, the former head of the European Central Bank said, the sovereign debt crisis signaled that it is time to bring Europe beyond a "strict concept of nationhood." The next step in the centralization of Europe is political centralization. The Greek debt crisis is being used to establish the principle that being a member of the EU means that the country has lost its sovereignty.

The notion, prevalent in the Western financial media, that a solution has been imposed on the Greeks is nonsense. Nothing has been solved. The conditions to which the Greek government submitted make the debt even less payable. In a short time the issue will again be before us. As John Maynard Keynes made clear in 1936 and as every economist knows, driving down consumer incomes by cutting pensions, employment, wages, and social services, reduces consumer and investment demand, and thereby GDP, and results in large budget deficits that have to be covered by borrowing. Selling pubic assets to foreigners transfers the revenue flows out of the Greek economy into foreign hands.

Unregulated naked capitalism, has proven in the 21st century to be unable to produce economic growth anywhere in the West. Consequently, median family incomes are declining. Governments cover up the decline by underestimating inflation and by not counting as unemployed discouraged workers who, unable to find jobs, have ceased looking. By not counting discouraged workers the US is able to report a 5.2 percent rate of unemployment. Including discouraged workers brings the unemployment rate to 23.1 percent. A 23 percent rate of unemployment has nothing in common with economic recovery.

Even the language used in the West is deceptive. The Greek "bailout" does not bail out Greece. The bailout bails out the holders of Greek debt. Many of these holders are not Greece's original creditors. What the "bailout" does is to make the New York hedge funds' bet on the Greek debt pay off for the hedge funds. The bailout money goes not to Greece but to those who speculated on the debt being paid. According to news reports, Quantitative Easing by the ECB has been used to purchase Greek debt from the troubled banks that made the loans, so the debt issue is no longer a creditor issue.

China seems unaware of the risk of investing in the US. China's new rich are buying up residential communities in California, forgetting the experience of Japanese-Americans who were herded into detention camps during Washington's war with Japan. Chinese companies are buying US companies and ore deposits in the US. These acquisitions make China susceptible to blackmail over foreign policy differences.

The "globalism" that is hyped in the West is inconsistent with Washington's unilateralism. No country with assets inside the Western system can afford to have policy differences with Washington. The French bank paid the $9 billion fine for disobeying Washington's dictate of its lending practices, because the alternative was the close down of its operations in the United States. The French government was unable to protect the French bank from being looted by Washington.

It is testimony to the insouciance of our time that the stark inconsistency of globalism with American unilateralism has passed unnoticed.

[Jul 18, 2015] M of A - Billmon The Eurosystem's (Monetary) Control of Europe's Politics

"...The "Eurosystem", the network of national central banks governed by the European Central Bank, gives central bankers unprecedented ability to squeeze and manipulate national governments in a coordinated way. It is as if every government in the Eurozone ALREADY has a colonial entity watching it like the Troika's agents are supposed to watch Syriza in Athens. And, since the ECB Governing Council (like other EU institutions) tries to operate by a non-transparent "consensus" (i.e. the votes are not revealed), the degree to which national central bank heads are representing the ECB in their countries, rather than the other way around, is often not clear."
.
"...IMO these 'lessons' miss the biggest one for the left: the loss of independent media. What good is protesting neolib control via banks if no one is listening?
.
Governments easily manipulate corporate controlled media via access journalism. Thus we get factual truths intermixed with propaganda spin that is relentlessly pro-business, pro-establishment.
.
Greece is a case in point. As described in Greek Government Insider Lifts the Lid on Five Months of 'Humiliation' and 'Blackmail', the Troika was gradually increasing pressure on Greece to do what the Troika demanded. They withheld billions of euro to Greece and cut off liquidity to the Greek government. Then they waited as the financial pressure on Greece grew. But along with those measures was a caustic media that painted Syriza as incompetent, then undemocratic (because most greeks wanted to remain in the euro), then irresponsible (for calling a referendum), etc.
"
.
"... Following, a link to a German documentary about the various mechanisms of the EU [Troika, Eurogroup, European Commission, Council, etc] which are being used as devastating tools to beat down and extract wealth, vampire style, from Greece [and Cyprus], in order to revive comatose banks and line the pockets of investors, through privatization of public property.
.
This documentary does a good job of demonstrating just how the power of technocratic branches of the EU is being rolled out to pillage Greek, Portuguese, Cyprus economies, plunging the respective populations into ever greater misery.
.
The Trail of the Troika [1:29:22]
Jul 18, 2015 | Moon of Alabama

Billmon: The Eurosystem's (Monetary) Control of Europe's Politics

Note: This post was composed from a Twitteressay by Billmon.

J.W. Mason lists some Lessons from the Greek Crisis:

Before the crisis no one even knew that national central banks still existed - I certainly didn't. But now it's clear that the creditors' unchallenged control of this commanding high ground was decisive to the outcome in Greece. Next time an elected government challenges the EU authorities, their first order of business must be getting control or cooperation of their national central bank.

The quote says "control or cooperation," but I can guarantee the latter is never going to happen.

It is nearly impossible to exaggerate the degree to which the campaign for central bank "independence" has made them the enemies within for any left governments.

The central bankers waged a 50-60 year political war to wrest back the monetary flexibility that the break down of Bretton Woods gave to national governments. Having won that war across most of the developed world in the 70s and 80s, they extended the battlefield to the emerging markets in '90s and '00s.

The autonomy of central banks (meaning the political allegiance to Wall Street/London City/Frankfurt etc.) was maybe the biggest neoliberal victory of all. If rightwing political victories (Reagan, Thatcher et. al.) were the beachheads of the Great Counterattack on social democracy then "independent" central banks became the citadels of the occupation forces: Neoliberalism's "Republican Guard."

Ironically, the ECB was originally conceived - or at least was sold to the European left - as a way for governments to regain monetary flexibility at a higher level. As a way to a) escape US dollar hegemony and to b) outflank the Bundesbank by formalizing the joint political control of European monetary policy. I do not know if the hack establishment Social Democrats who sold that vision ever believed it, but if so, more fool them. Because what the European Monetary Union became, obvious now, was a way to turn the vision on its head: formalize joint MONETARY control of Europe's politics.

The "Eurosystem", the network of national central banks governed by the European Central Bank, gives central bankers unprecedented ability to squeeze and manipulate national governments in a coordinated way. It is as if every government in the Eurozone ALREADY has a colonial entity watching it like the Troika's agents are supposed to watch Syriza in Athens. And, since the ECB Governing Council (like other EU institutions) tries to operate by a non-transparent "consensus" (i.e. the votes are not revealed), the degree to which national central bank heads are representing the ECB in their countries, rather than the other way around, is often not clear.

As long as the cozy comprador system tied peripheral governments to the core (i.e. Berlin), the role of the ECB and the Eurosystem could be obscured. Peripheral governments appointed "made guys" (i.e. banksters and/or their technicians) to national central bank boards and pretended to govern. Core politicians and their local comprador politicians let the Eurosystem technicians in Frankfurt tell them what "structural reforms" they should push to make the EMU "work."

But the moment an outsider government like Syriza came to power, the role of the Eurosystem and the national central banks in it could no longer be hidden. The fact that the Greek National Bank was an instrument of the ECB in Frankfurt, not of the Greek government in Athens, became obvious to everybody. The ECB's role as the muscle behind the Eurogroup's (Berlin's) diktats put the Greek National Bank in the position of helping to choke its own banks and terrorize its own citizens. And under the rules of EMU the Greek government was completely powerless to do anything about it. A defining moment.

The inescapable conclusion is that the allegedly "independent" Eurosystem now operates not as a network of central banks but as a parallel government.

The role of the Eurosystem within the half-hidden political order of the eurozone really is comparable to the Soviet or Chinese Communist Party. Like the Communist Party, the Eurosystem is now the "leading organ" of the neoliberal order, operating at all levels of the EU structure and providing "guidance" to elected political structures which are not formally under its legal control, but in reality are dominated by it. And behind the administrative apparatus of the party (Eurosystem) is the Central Committee (Eurogroup) and the Politburo (the key creditor government officials). And behind THEM is the real locus of the party's centralized power: the General Secretary (Germany/Merkel).

So J.W. Mason is quite right: it is impossible for any left government to attack the dictatorship of finance unless it controls its national central bank. But while control of the national central bank is necessary, it is hardly sufficient. As long as the EMU exit is off the table, verboten, so to speak, control of the national central banks only eliminates the "near enemy."

Ultimately it comes down to political will, which in parliamentary democracies, comes down to public support. As long as the majority (of all voters or of propertied influentials, depending on the system) is more loyal to the Euro than to national sovereignty an effective challenge to the dictatorship of finance is impossible - no matter how many national central banks the left controls.

Posted by b at 06:57 AM | Comments (90)
Selected Skeptical Comments
Posted by: nmb | Jul 16, 2015 7:20:43 AM | 1

Greece capitulates with the euro-dictatorship ... until the next battle

Posted by: jfl | Jul 16, 2015 7:33:14 AM | 2

You know this 'independent' central bank as tool of the neolibraconian consensus is the most salient point drummed home about Russia : the central bank as 5th column.

And the Russian central bank preceded the ECB, didn't it? When the boys from Harvard went to Russia to 'straighten' things out they conducted an experiment ... and discovered it worked just great : rinse and repeat. Russia was the archetype of the gelded European nation to come.

So the next time says Russia is not a part of Europe I'll say ... not only of Europe, but the first European nation subverted by the gnomes of neolibraconia.

The Europeans who still have a pulse ought to note now just who their real enemy is : hint, the one that's occupying Europe. And who is their fellow European victim. And ban together to defeat their common enemy ... well run him out of town on a rail, at any rate.

Certainly rearrange their banking arrangements.

Posted by: Timon | Jul 16, 2015 8:48:21 AM | 5

One of the key reasons that Wall St/City/Frankfurt want universal "austerity" is not just that they want people to be frightened, impoverished and insecure; but in particular, because it has the desirable effect of suppressing the political participation of people who must continuously walk the edge, just to get by - and by now this is about half the population -and who might otherwise participate in the political process with decisive effect.

Rise like lions after slumber
In unfathomable number
Shake your chains to earth like dew
That in sleep have fallen on you
Ye are many, they are few.

H.L. Mencken is also very good on this subject - the need of the self-appointed elite to distract and render impotent the average person, and how greatly the big shots hate and fear the "mob".

why would a small country like Greece need to be the second biggest spender in nato after the USA. ...

Posted by: mcohen | Jul 16, 2015 8:57:04 AM | 6

According to an editorial published by the Greek conservative newspaperKathimerini, after the removal of the right-wing military junta in 1974, Greek governments wanted to bring disenfranchised left-leaning portions of the population into the economic mainstream[28] and so ran large deficits to finance enormous military expenditure, public sector jobs, pensions and other social benefits.

Greece is, as a percentage of GDP, the second-biggest defense spender[29] in NATO, the highest being the United States, according to NATO statistics.

The US is the major supplier of Greek arms, with the Americans supplying 42 per cent of its arms, Germany supplying 22.7 per cent, and France 12.5 per cent of Greece's arms purchases.[30]

Everybody and I mean everybody is king fu fighting
those bankers are as fast as lightning

Posted by: ab initio | Jul 16, 2015 10:32:40 AM | 12

It should be obvious with how the ECB structure was formed that any country that uses the euro as its currency is dependent on the ECB for liquidity if there is deposit flight from the banks in that country.

There is only two ways for a country to retain full sovereignty. One have a national currency with a national monetary authority that controls it and second a government that if it runs a deficit has the ability to borrow in private markets and maintains a currency board (e.g: Ecuador which uses the US dollar).

Ecuador is a good example where its government debt became untenable. It defaulted on the debt and so was for all intents shut out from private debt markets, so the government could not run a deficit. It continued to use the US dollar as its currency.

Greece had to make a choice. Continue in the eurosystem and accept the hegemony of the eurogroup or exit. It's parliament accepted the former. One can blame Schauble and Merkel all you want but the bottom line is that the Greek government and parliament acquiesced to its loss of sovereignty. The Greek people have the power to change it if they want. They just have to decide to exit the eurosystem and elect a government that does that.

In France, Marine Le Pen is clear. She will take France out of the eurosystem if elected. Of course we'll have to see if she honors her campaign promise but at least she is categorical about it. Syriza got elected promising they'll be able to get a better deal compared to the center-right party before them. In this case the Left in Greece delivered an even worse result for the average Greek citizen.

Posted by: Jackrabbit | Jul 16, 2015 12:52:58 PM | 18

IMO these 'lessons' miss the biggest one for the left: the loss of independent media. What good is protesting neolib control via banks if no one is listening?

Governments easily manipulate corporate controlled media via access journalism. Thus we get factual truths intermixed with propaganda spin that is relentlessly pro-business, pro-establishment.

Greece is a case in point. As described in Greek Government Insider Lifts the Lid on Five Months of 'Humiliation' and 'Blackmail', the Troika was gradually increasing pressure on Greece to do what the Troika demanded. They withheld billions of euro to Greece and cut off liquidity to the Greek government. Then they waited as the financial pressure on Greece grew. But along with those measures was a caustic media that painted Syriza as incompetent, then undemocratic (because most greeks wanted to remain in the euro), then irresponsible (for calling a referendum), etc.

Too often we give the media a pass when it has been well documented that business and government tries to control MSM (and increasingly other media as well) via access journalism, advertising revenue (a few industries dominate) writing stories that cite in-the-tank 'experts' from establishment-friendly think-tanks and controlled opposition.

Even within Greece, Syriza had trouble getting their message out because oligarchs own virtually all of the media! And many blogs also fell for the spin - even those that have been critical of the media in the past like Yves Smith at nakedcapitalism.com - despite the fact that the delay in Greece putting forth a proposal before the April 30th deadline could be logically attributed to the 2-step process that the Troika had forced (describing how they would service the debt would severely undermine Greece's position in future debt restructuring talks).

A Left that is not in touch with the people - and whose message is undermined by establishment-friendly media - is a disaster far greater than the loss of control of the financial system. The Left's greatest strength should be its connection with the people that it fights for. Yet, instead the Left has allowed itself to be marginalized by a corporate media that has strengthened the centrist 'faux Left' at the expense of the progressive Left. So much so that many people today identify THE LEFT with the identity politics that forms 'the base' for the fauxLeft. In short, people of the 'Left' are viewed as selfishly wanting something for themselves at the expense of others. (It should come as no surprise that reporting about Greece often fell in line with this line of thinking.)

For activists that are outside the centrist political establishment - anti-war, climate change, the environment (fracking, nuclear energy, etc.), inequality, constitutional and civil rights, etc. - it is very difficult to reach a wide audience. All 'change' is channeled into the pro-business, pro-establishment centrist political system. Anyone who is not a centrist is suspect.

Greece's coherent arguments quickly fell off media radar as sniping about their incompetence and their oh-so-strange Finance Minister took center stage. This put even more pressure on the Greeks and deterred potential allies. And the spinning continues. The understanding of most people still does not go much beyond this: the Greeks don't want to pay their bills and Syriza are incompetent radicals that made the problems worse and can't be trusted. In the face of this onslaught by the Troika and Troika-friendly media, Syriza's resistance is all but ignored in favor of trumpeting Greece's defeat (a warning to others?).

=

Is there any hope? Maybe.

1) Syriza formed a government with nationalists (ANEL). Why the Left is depicted as unpatriotic is beyond me, but the left may be getting its patriotic mojo back as WAR and trade deals are increasingly understood as benefiting an international elite. I could see similar political alliances forming in other countries. (In the US, I think the establishment had feared a potential Tea Party - Occupy alliance.)

2) Media reform (or the threat of it). The Greek government has begun investigations into media bias during the referendum (there was very little coverage of government rallies and government positions, etc.). If the Syriza-led government falls, any media reforms are probably less likely.

Ron Paul's "audit the Fed" movement got some traction which caused the Fed to take notice. "Truth in media" efforts should probably be re-doubled.

3) Education. We need to retain humanities education. Higher education is turning into vocational training. For example, IMO it's difficult to appreciate the myriad issues and import of the neolib consumer-oriented approach to government vs. the democratic citizen-oriented approach, without a humanities education.

Also, people don't usually react until it is too late - partly because few have enough learning to understand the impact that new policies will have. They try to make up for their lack of understanding by relying on trusted representatives like Obama. TTIP is a case in point. Look for demonstrations about Obamatrade in a few years when it is too late.

Posted by: dana | Jul 16, 2015 1:25:52 PM | 19

Following, a link to a German documentary about the various mechanisms of the EU [Troika, Eurogroup, European Commission, Council, etc] which are being used as devastating tools to beat down and extract wealth, vampire style, from Greece [and Cyprus], in order to revive comatose banks and line the pockets of investors, through privatization of public property.

This documentary does a good job of demonstrating just how the power of technocratic branches of the EU is being rolled out to pillage Greek, Portuguese, Cyprus economies, plunging the respective populations into ever greater misery.

The Trail of the Troika [1:29:22]

Posted by: psychohistorian | Jul 16, 2015 1:34:37 PM | 20

@ 15

james, If you read the Shock Doctrine by Naomi Kline you can follow the same financial rape of South American countries in the 70's that the financial mafia are doing now to the middle east.

The world needs to have a discussion about the world of private finance that exists now and what could be if all finance were sovereign.

Posted by: Thrasyboulos | Jul 16, 2015 2:26:43 PM | 22

The role of the European Central Bank and their buttler, Stournaras, at the Greek Central Bank in this fiasco needs this kind of discussion, and more, since it lies at the heart of German blackmail and coup attempt of the Greek government. Thank you b for this post.

@5

One reason that there have been inordinate arms purchase by Greece is that the Greek elite -- media, oligarchy, politicians (especially the latter) are up to their armpits in corruption, and one of the vehicles for corruption is arms deals.

The all powerful "socialist" minister of defence under Papandreou and minister of development under Simitis is now in jail, almost prime minister, now serving 20 years in the hoosgow, for being bribed by German arms dealers (Siemens, among others). It is widely believed that the previous governments went after this easy and obvious target to cut off investigations of others, a lot of others.

The nationalist minister of defence under the Tsipras government, Panos Kammenos is sending document after document to prosecutors involving a bewildering array of bribery, thievery, fraud, and so on in the Greek armed forces. Submarines that lean, helicopters that can't fly, because of onerous service after purchase contracts. The list is huge.

One reason why both German and Greek corruptos hate him so much, and tried to bring down the Tsipras government. It remains to be seen if he keeps his post, after Tsipras's deal with the Germans.

The other, of course, is the Turkey threat, also used to justify military procurement.

Posted by: Thrasyboulos | Jul 16, 2015 3:31:55 PM | 24

Quote from Jacobin from an article titled The End of Europe.

http://tinyurl.com/nt2g8g3

The discussions with Greece are thus a formal process designed to politically defeat Greece's left forces, burying any prospects of meaningful political change across the continent. This is the only explanation for the creditors' inflexibility despite Tsipras crossing all Syriza's red lines in terms of pensions reforms, tax policy, privatizations, and market liberalization. This punitive stance was made crystal clear by late June, when the ECB actively incited a bank run, warning of an "uncontrollable crisis," and abruptly capped its emergency loans to the banking sector, triggering bank holidays and capital controls.

Also in the site, an informative behind the scenes interview with Left Platform Syriza MP, Stathis Kouvelakis.

Posted by: Jackrabbit | Jul 16, 2015 3:34:47 PM | 25

Here's another lesson: Resistance works.

The Troika was willing to 'punch' Syriza's ticket ("Welcome to the Club"!) with minor concessions. But Tspiras/Varoufakis did not simply accept what the Troika demanded.

As bad as the deal is, Greece managed to get the debt restructuring that the Troika had refused to talk about. They had even refused to put their promises of a future debt restructuring in writing.

Many are saying that Greece should've prepared for GRexit; critizing Syriza/Tspiras as too establishment and too europhile to contemplate that path. But they have bought time to prepare for the next round. And in the next round, it may be that a GERexit is on the table as well.

Euro QE is not a magic elixir; just more extend and pretend. It'll exacerbate core vs. periphery problems as much as it exacerbates inequality (as it has in the USA). And political and fiscal integration is hard to do when people feel that they are not treated fairly.

Posted by: tom | Jul 16, 2015 3:45:06 PM | 26

This $50 billion Greek asset theft fund that was willingly handed over by Syriza traitors, as well as other politicians responsible, Is exactly the collateral needed for a independent Greek central bank to create, let's say for eg, a fractional reserve base of 10% to create $500 billion.

With that now $500 billion, the Greek government could pay off all the debt, including the criminally induced ones, and it's based on those $50 billion worth of assets.
And That's only if you agree to the idea of paying off all your criminally in deuced debts.

An independent and sovereignly principled government or parliament would do exactly that.
And there's more fractional reserves using National assets that can be used to grow the economy and serve the people.

Syriza knows this, but since they are unprincipled, Ideologically weak, cowardly towards their aggressors and more interested in power than public service, means you're never get that from these freaks.
Obvious from day one. Judge them on their actions, not on their whingeing on how they've been mistreated and violated.

How the fuck is it accepted, that private banks can print as much national currencies as they like, but the owners of the those national currencies - the people and the government - cannot do with fractional reserves and money printing, like what the private banks do.

Posted by: juliania | Jul 16, 2015 4:45:18 PM | 31

jackrabbit@17, I would like to point out that the Greek populace ignored the media when they voted in the referendum, so I think the importance of such propagandistic power is overblown. Once you lose faith in that source of information, it's gone; it doesn't come back. Russia under the Soviets is a case in point, and currently also there is an erosion in US confidence that what they see and hear is trustworthy. What happened after the referendum confused the public, and that was a huge mistake.

Back a ways, in support of Tsipras, I wanted him to do as Putin has done and shore up that public confidence because then you can make decisions in the moment and the support will grow. Immense popularity is a powerful weapon. Varoufakis was correct in seeing that as an important pivotal moment, when the people supported the 'no' vote that Tsipras had also supported. The course he chose confused his supporters. Paramount should have been the dictum that the people could not bear further austerity and that was that - the austerity they would face at that point would be the prideful kind that can see a brave future beyond.

Tsipras had embraced the New Deal outlook, but he forgot Roosevelt's famous saying, 'You have nothing to fear but fear itself.' Varoufakis welcomed, FDR style, the banksters' hatred. It's too bad Tsipras could not do the same. Long lines of grateful poor people stood by the tracks as FDR's funeral train passed. Will that happen for Tsipras? There's a Greek saying that one should count no man happy until after his death. Roosevelt, loved by his people and by history, was a happy man. I hope there's time for Tsipras to become one as well.

Posted by: jfl | Jul 16, 2015 7:50:55 PM | 33

PPS/23: Review of Current Trends in U.S. Foreign Policy, 1948 CE


Furthermore, we have about 50% of the world's wealth but only 6.3% of its population. This disparity is particularly great as between ourselves and the peoples of Asia. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world-benefaction.

For these reasons, we must observe great restraint in our attitude toward the Far Eastern areas. The peoples of Asia and of the Pacific area are going to go ahead, whatever we do, with the development of their political forms and mutual interrelationships in their own way. This process cannot be a liberal or peaceful one. The greatest of the Asiatic peoples-the Chinese and the Indians-have not yet even made a beginning at the solution of the basic demographic problem involved in the relationship between their food supply and their birth rate. Until they find some solution to this problem, further hunger, distress, and violence are inevitable. All of the Asiatic peoples are faced with the necessity for evolving new forms of life to conform to the impact of modern technology. This process of adaptation will also be long and violent. It is not only possible, but probable, that in the course of this process many peoples will fall, for varying periods, under the influence of Moscow, whose ideology has a greater lure for such peoples, and probably greater reality, than anything we could oppose to it. All this, too, is probably unavoidable; and we could not hope to combat it without the diversion of a far greater portion of our national effort than our people would ever willingly concede to such a purpose.

Between Berlin and a Hard Place: Greece and the German Strategy to Dominate Europe, 2012 CE


As Chancellor Merkel and other German leaders would frequently remind the rest of Europe and the world, with 7% of the world population, 25% of global GDP and 50% of world social spending, Europe's economic system was unsustainable and uncompetitive in a globalized economy. Germany's vision for Europe was aimed at introducing "rules to force Europe's economies to become more competitive." But competitiveness was defined by Germany, and thus, "the rest of Europe needs to become more like Germany."

I nearly choked when I read Timothy Geithner quoted at the beginning of dana's link ... but it makes perfect sense. None of this is about 'economics' - that chimerical, dismal 'science' - all of it is about politics, and power politics, and imperial politics.

The Germans - like everyone else - can see the US has had its run and is headed for its fall. But they also know that Germany by itself is not of a size to pick up where the US leaves off, when the US leaves off. So Germany needs to take over Europe.

I think I've heard this before.


Between 2008 and 2013, the Greek government cut 40% of its budget, healthcare costs soared, tens of thousands of doctors, nurses and other healthcare workers were fired, drug costs rose, as did drug use with HIV infections doubling and a malaria outbreak was reported for the first time since the 1970s, while suicide rates increased by 60%. ... Unemployment has grown to 26% (and over 50% for youth), wages dropped by 33%, pensions were cut by 45%, and 40% of retired Greeks now live below the poverty line.

Cleanliness is next to Godliness. The Germans are cleaning up Greece, and Europe.

The IMF's latest move - fake debt reduction for Greece, the kind of stuff that flows out of Geither's pie-hole in dana's link above - seems to be overt recognition of this fact, bringing it into play.

So they new dynamic will be the US on one side and Russia on the other, containing Germany's New Europe?

Makes sense, really. (None of this makes any sense ... only to the zero-summers playing games with our world). China surely has its eyes on all that Lebensraum in eastern Russia. The US and Russia can team up to defeat the NAZIs who have 'stolen' the Ukrainian revolution (to contain both Europe and China). (And then the US can double-cross Russia when the time is ripe).

Hey, looks like it's 'working' with our new, soon to be 'best friends' in Iran.

Arghhhh. Makes me want to stop reading the news, stop watching the movie. Or do something to help change it.

Posted by: jfl | Jul 16, 2015 10:29:16 PM | 34

More on the reaction to Germany's power plays, from Fort Russ ...

"Germany's policies pose a danger to Europe for the first time since 1945"--A View From Poland

... and the US' possible doubly convoluted play as hypothesized by Joaquin Flores last September ...

Pravy Sektor Coup as ISIS Scenario: NATO to Feign a 'Unilateral' Alliance With Russia

... just substitute the US for NATO. Germany has certainly knocked the scales from some eyes. I can't imagine Russia will be drawn in.

Greed and geopolitics do make strange bedfellows though. Nations don't have friends they have interests. And it's hard to see any of these 'nation' that have identified its citizens' interests with its own. Of the big ones ... maybe Russia under Putin? All he has is the support of the Russian people.

Posted by: guest77 | Jul 17, 2015 12:48:32 AM | 36

Excellent thread.

Syriza has shown, I suppose, that gaining access to power isn't enough. The party has to be involved with its members and those they hope to make members. Helping people get access to food, medicine, security, and anything else the state is refusing to help with. The left cannot just win elections, it must be threatening to those in power. It must be prepared to take control of those things the people demand they control (and it must be willing to relax when the people demand this). People must look to the organization in Latin America, that is all I can say. There, under the harshest repression, democracy is thriving.

The story of Greece I suppose is a lesson for the rest of the left parties though, who of them has a chance outside of Podemos - and what of Podemos anyway. They don't seem particularly able sadly.

The world- but especially the west - in the last 30 years, has changed so fundamentally that democracy is nowhere to be found. Nor democratic forms of social organization are even gone for the most part. And now they are turning the screws on whatever remains. Even the middle classes live under turn-key totalitarianism, as it was said by someone, (as opposed to before, where it was just the lower classes) and everyone knows this. And it is proved more and more with each passing event it seems. The people are thoroughly boxed in and controlled, but unlike juliania I think the media has so much to do with it. The massive media conglomeration is a keystone of the changes over the last 30 years, as well as the emergence of the internet - brought to a great many people by those media conglomerates.

The oligarchs of the west are determined to return to their royal status and complete political power they had before WW1. This is really a hopeless feeling attached to this, their seemingly complete victory over democracy. And I imagine that is much of the point...

Posted by: guest77 | Jul 17, 2015 12:52:57 AM | 37

I haven't read this all, but looks very applicable to our times...

The network of global corporate control - https://archive.org/details/TheNetworkOfGlobalControl

Stefania Vitali, James B. Glattfelder, and Stefano Battiston

Abstract
The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions.

This core can be seen as an economic "super-entity" that raises new important issues both for researchers and policy makers.

Posted by: Jackrabbit | Jul 17, 2015 1:33:03 AM | 38

juliania @30

Yes, Tsipras seems to have been ambivalent. The referendum was a bold move that actually worked in his favor but then turned cautious. Maybe he worried that if he threatened GRexit Schauble and the Troika would call his bluff?

In an earlier thread, I likened Tsipras to Chamberlain, who had the best intentions but is remembered as an appeaser. This may seem like a dramatic comparison but Michael Hudson has made the point that economics is now war by other means.

Chamberlain satisfied the public's overwhelming desire for peace just as Tspiras satisfied his public's desire to stay in the Euro. Each one had misgivings about the deal that they signed. Chamberlain began to rearm - especially building up British air power. Tsipras may also prepare for a future confrontation with the Troika.

Posted by: MRW | Jul 17, 2015 2:05:22 AM | 40

The role of the Eurosystem within the half-hidden political order of the eurozone really is comparable to the Soviet or Chinese Communist Party.


No, it's not. Billmon doesn't understand the structure. He's not seeing it clearly, and is not getting to the root of the problem.

The individual EU countries that use the Euro cannot create their own currency. They GAVE UP their sovereign currency for a foreign one, the euro, when they agreed to make themselves subservient to the Maastricht Treaty.

The Maastricht Treaty did/does not allow for a 'federal government of Europe'. It ONLY concerned itself with a monetary union, and it set down strict rules for entry (for instance, a nation's deficits could be no more than 3%--an insanity). It allowed for the creation of a central bank, the European Central Bank (ECB), whose operating rules were dictated by the Maastricht Treaty (and subsequent revisions).

But crucial to understand is this: a central bank CAN ONLY SET MONETARY POLICY. You need a 'federal government' to SET FISCAL POLICY. The EU doesn't have that. Sure, it has the EU parliament, and it has a bunch of unelected officials running the ECB. But it has no overlord, no elected oversight, that can rule in conditions like Greece is going through to ease sectoral pain, and stop the bleeding of ordinary citizens. That requires fiscal policy. The only way that fiscal policy can be changed in the EU is by a change to the treaties. Or the blessing of Angela Merkel, because Germany has captured the ECB.

Let me try to put this in perspective. The US has a federal government AND a central bank. Despite what all the Federal Reserve haters and the 'get rid of the IRS' people claim (inaccurately), the US central bank is a creature of Congress and must answer, by law, to the federal government twice a year. It is the US Treasury's banker, and must, again by law, return all profits each year to the US Treasury.

The US federal government creates fiscal policy. This is the direction for the country that the central must follow and support trhough monetary polices. Fiscal policy is Congress' job although they haven't done it properly for 30 years. For example, if one of the 50 states is in trouble-let's be hyperbolic: devastating earthquake, massive drought, asteroid hits--Congress can authorize ("appropriate") funds--creating them 'out of thin air'-to help the state. With no debt to children or grandchildren.

Why? Because the US federal government issues the currency, the 50 states only use them. The 50 states cannot create their own currency, just like the countries that use the euro. But the 50 states have the protection of the US federal government.

The formerly sovereign countries in the EU that use the Euro are like the 50 US states now. They cannot create their own currency, which would give them the policy space to pay their own citizens and denominate all the debts incurred in their own currency. They are dependent on the ECB, a goddam central bank that has no fiscal authority, to help them. EVEN THOUGH, in Europe, the ECB issues the Euro 'out of thin air'. The ECB is a collection of central banks. And right now Germany's central bank is dominant because it has climbed to the top-Germany was deeply in debt before the euro took over-on the backs of the other nations.

You will not begin to understand what is going on until you realize that the euro was designed by the famous French economist, François Perroux, in 1942 in anticipation of Hitler winning WWII, which was expected then. The plan was that they (the Nazi Pétain government wanted to be aligned with the German hegemon) would introduce a pan-Eurpoean currency and force adoption by the southern and eastern European countries to control and impoverish them. Mitterand, aligned with the Nazi/fascist Cagoulard in the late 1930 and 40s, was a Pétain enthusiast; this only came out in 1990. It was Mitterand who pushed through the euro, if you will check history. Perroux's monetary replacement was the blueprint for the Maastricht Treaty and the subsequent treaties.

Posted by: MRW | Jul 17, 2015 2:46:03 AM | 42

@tom | Jul 16, 2015 3:45:06 PM | 25

How the fuck is it accepted, that private banks can print as much national currencies as they like, but the owners of the those national currencies - the people and the government - cannot do with fractional reserves and money printing, like what the private banks do.

1. Private banks cannot "print as much national currencies as they like."

2. Fractional reserve banking does not exist. It died 80 years ago in most modern economies. I think only Hong Kong and Bulgaria (I think) use it now. The US doesn't' use it. Neither does any single country in the EU or Europe. Fractional reserve banking can only exist in countries that have a gold standard.

3. The only entity that prints the euro is the ECB, although the national central banks do it for the ECB under contract. BUT. BUT. BUT. These national central banks do it by keystroke. They don't control the physical printing presses. Besides, physical currency is such a small part of the currency.

4.

but the owners of the those national currencies - the people and the government
any country using the euro is not using a "national" currency. They are using a foreign currency.
Posted by: james | Jul 17, 2015 3:06:57 AM | 43

@19/20 psychohistorian.. i like where you are coming from, but people are slow to change and always looking for leadership.. many think that because someone is rich or has a type of power that comes with money, that they will be good enough to lead.. that is a mixed bag to me personally.. there are just as many losers with money as not..

@28 Laguerre.. thanks.. you've given a specific example to my more generalized observations already posted.. indeed - visa and mastercard are a part of the same ponzi scheme run by the same kleptomaniacs under the guise of whatever they want to pass themselves off as.. playing with the bank of international settlements is only a step away..

@35 guest77 quote.. "The world- but especially the west - in the last 30 years, has changed so fundamentally that democracy is nowhere to be found." i think that is very true..

@39 mrw.. good post, but you are not addressing the issue directly either.. making a comparison to what was a country like greece to one of the states in the usa, cheapens the idea of what a country is.. the euro has done this too.. doesn't mean we have to go along with it, but in terms of drawing a parallel, it isn't a bad one to make. and of course the big difference here is now that greece has given up it's control of monetary policy, as have all the other countries gobbled up in this insane idea of an european community - greece is an opportunity for everyone within the stupid structure to see it for what it is - a complete rip off of any shred of democracy that might have remained...

mrw - we've had these conversations before.. you appear to think the fed reserve is some sort of good two shoes neutral structure that follows a mandate and is not beholden to malevolent interests.. i see it as just the opposite.. the euro was another way to diversify the ponzi scheme by duping a lot of ignorant people into something they would have been better knowing more about.. i would be curious to hear a response from you that provides an answer as to the solution here.. mine would be greece to say fuck you to the euro currency and go back on it's own...

Posted by: psychohistorian | Jul 17, 2015 3:29:02 AM | 44

@jackrabbit.....you said that us "lower class" folk rely on the "upper class" folk to keep the world running

In the 66 years of my life I have seen untold potential waiting/begging for opportunity and I think your neck might break watching the momentary vacuum be filled getting rid of the top 50K social parasites and their attendant sociopaths. It is a myth that us poor 99% can't make it without the 1%. It is a myth that has been around for centuries and never has been true. The 1% are and have been an impediment to that advancement of humanity for quite some time. In most major ways we stopped evolving during the Enlightenment period when faith didn't become deprecated but instead became one of the tenets of the Western form of social organization, others being private property/finance, inheritance and "rule of law".

If all that were to change by neutering inheritance and ongoing ownership of private property (yeah, neuter public policy influence of religions too)
With Capital being returned to the global Commons, public education regains its priority and is a right for all but at the higher levels; and private education disappears. With those of faith no longer being in control of public policy, population control can be discussed, managed and alternatives like birth control researched/provided. We have answers for many of our pressing social problems, but we do not have the will to break out of the anthropological mold we are in.

Would the 99% agree to develop and use a technology that burdened the next thousand generations of humans to manange the potentially extinction causing effluent (i.e. Fukushima)? We live according to a very sick, no longer defensible and currently committing war crimes against humanity form of social organization, who's administrators we used to prosecute at the Hague 70 years ago. American empire is now the tool of the global plutocrats and the odds of the 99% wresting control away and changing the course of our species and world look slim.......but creating textual white noise on the intertubes is cathartic.

Posted by: chris m | Jul 17, 2015 6:06:08 AM | 47

Regarding events of past 6 months between Greece and the EU
(and Greek membership of the euro).
Following the recent Greek capitulation,it is clear to almost everyone now that the fuse has been lit beneath the euro.(and possibly even the entire European project.

Eurosceptism is starting to break out (and its only just starting) throughout the entire EU.
We can now all see politicians such as Marine Le Pen getting elected in next French Presidential Election on a purely "leave the euro now" ticket.

PS the entire Europe project was always predicated on a "lets destroy individual National Sovereignty" premise (a sort of EUSSR).

I never did understand why when Communism officially died around 1990
that it seemed to make an almost simultaneous and miraculous rebirth, but then Europe is the land of Dracula
and various other 19th century horror stories.

Posted by: Noirette | Jul 17, 2015 11:00:23 AM | 51

Syriza has shown, I suppose, that gaining access to power isn't enough. The party has to be involved with its members and those they hope to make members. guest77 at 35.

I agree, also pretty much with the rest of the post. What happened is that there was a power vacuum in Greece (when PASOK threw in the towel and the old structure crumbled) and the only ones willing to enter the breach were Syriza. One might also say that in Greece the political power structure does not match the real power structures in a good or efficient way. This democratic hoopla is all peachy cool when it is Swiss burghers discussin' and votin' on the color of the trams, or property tax, while being faithful to their 'radical' or 'socialist' -whatever- roots. In Greece, in its present form, it does not work. See for ex. the fantastical abyss between the OXI vote and the acceptance by the elected representatives of even harsher austerity.

Ideally, in a hypothetical genuine, true? democratic system, after the OXI vote a unitary or even technocatic Gvmt should have been formed (ironically, Tsipras did just that in a way ..) behind the OXI vote, to collectively resist and bargain (doubt any positive result would have been forthcoming but who knows), but naturally that was not possible.

One argument is that the 'Left' must be 'more in touch', 'must reform', must be 'more grass roots' etc. (Sounds a bit like what they say about the EU, heh? And in Greece that argument is made, plenty) - true, but imho it won't be enough. No way.

So some other avenues have to be explored, sought, implemented.. One imperative (under the present cirucumstances) is national sovereignity, see in Greece, New Democracy being say 'for austerity', 'for the euro' and so on because they are tied up in comprador not to say Mafia circles linked to the EU, big capital, banks, instituted corrupt structures, tax evasions, etc.

Anyway this debacle has shown that parliamentary democracy is not to be afforded to small powerless countries that have been taken for a ride. I think ppl are seeing that now, that facade is cracking.

Overall the EU is in deep sh*t. It won't survive for very long in its present shape.

Posted by: Jackrabbit | Jul 17, 2015 11:16:30 AM | 53

camelotkidd

This article fails to note the 'eurosclerosis' that plagued Europe in the 70's and 80's. Uncompetitive economies with large social obligations and clientist political systems that still exist in some areas.

The 'evil genious' moniker doesn't really fit. I doubt he is the only economist that would've offered such a solution. And he is certainly not the only guy that found European labor laws of the time to be a costly headace. I think he just got there first. And his demeanor is grandfatherly not menacing.

And he is not unmindful of how his work can be misused. When I took his advanced economics class in the early 90's I argued against the excesses of supply-side economics while others in the class seemed to be eager to show their support of what they assumed Mundell believed in. I got an A-.

=

There are problems with the Euro - the disparate economies, the lack of political and fiscal union, the uneven benefits, etc. - but blaming it on the academics seems like scape-goating, and nearly as bad as blaming it on the victims. Should we blame Marx for the fall of the Soviet Union?

Posted by: tom | Jul 17, 2015 4:34:48 PM | 59

MRW @42

How do you reconcile the contradiction between your points 1 and 2.

If Private banks "cannot" print as much money as they like ( point 1 ), then how can fractional reserve banking Not exist in most of the world ? ( point 2 ) . If fractional reserves do not exist then they free to print as much as they like.

Of course whem I say they can "print as much as they like" , that is not a children's imagination interpretation where the private banks are free to print infinitelt, that's of course the private banks have been unlinked from previously acceptable amount of printing/keyboard strokes, to create money.

And your 3rd doesn't make any sense at all. How does a gold standard have any restrictions on having a 10% fractional reserve, 1000%, or 1,000,000% of gold holdings ? Gold doesn't make decisions, regulations and enforcement are the decision-makers. Whether it's gold or fiat.

And your point 4 is right. It is my argument to why no country should join a single currency like the euro, and nations should always have their own sovreign national currencies

Posted by: juliania | Jul 18, 2015 1:08:20 AM | 66

Jackrabbit@38

Sorry to be late on here. The Chamberlain comparison is an interesting one, and Tsipras' tragic flaw may be his devotion to the Eurozone - I think it is his, not really any perceived mandate, because surely he knows a good leader makes choices as events change - to go back to my example, that's what FDR did, and very risky choices they were. Some of FDR's didn't work, so he did other things. He was making it up as he went along, and I think that's very similar to what would be needed in exiting the eurozone. You would have to bring the people along with you, with the confidence and trust that something needed to happen, charting a new course. Tsipras doesn't seem to have been willing to do that, and consequently he runs the risk of being just one more in the line of leaders who have caved under pressure.

I think it has a lot to do with lack of faith in the people themselves on the part of such leadership. Obama showed this when he didn't take public financing but already was turning to the banksters. He didn't need to do that, and he probably would have even had a bigger vote tally if he'd stayed with the people. I wonder why this new leadership seems so divorced from sympathy with those who elect them and whom they presumably serve? I don't think Tsipras is as two-faced as Obama, but he's starting to wear the same shoes. The tragedy is the Greek people so much need him to step up - the way a tennis player steps up if he's really a champion. I think there's still time but it's getting late. If he keeps on with this deal, history will take note. That's a huge price to pay.

Posted by: jfl | Jul 18, 2015 1:24:02 AM | 67

Tsipras ... he messed up. If 'his' deal goes through Greece suffers the full catastrophe. The thing to do is to prevent that happening. Tsipras is a lame duck. It makes little difference why he messed up ... character flaw, bribery, incompetence, all the usual failings of the political class.

The point is he has set Greece up for more lethal loans and so his 'program' must be repudiated. The only way I can imagine that happening is via the direct participation of the Greek people in their government. If there is a majority NO! on the new' program, good. Make a counter offer ... when (if, I suppose, to be inclusive) it's rejected, exit the euro - there's life at the end of the tunnel. If not ... well, they're done for, aren't they?

Debt-slaves of the German-dominated EU : deprived of their remaining assets and their own government.

Posted by: fairleft | Jul 18, 2015 2:58:03 AM | 68

Lapavitsas Calls for Exit as the Only Strategy for Greek People (the video, audio and transcript):

Why this capitulation? Why have we come to this after all the enthusiasm of six months ago? After the surge of grassroots support in this country and in Europe? The answer is clear to me. And it has to do with the wrong strategy, that was good enough to win elections, but proved disastrous in government. What is this wrong strategy? It's very simple, expressed openly time and time again. We will achieve radical change in Greece, radical change in Europe, and we will do it within the Eurozone. That was the strategy. Well, that's not possible, period.

As far as I'm concerned, the Greek left has found its leader. Lapavitsas says it all, clearly and brilliantly: Grexit and nationalize the banks.

You can't advance if you do not understand that Syriza has failed, if you keep making excuses for their failure, or try to pretend it was anything but failure. Greece must leave the euro. This has been obvious for several years, but unreasoning, 'no matter what' Eurozone love, especially prevalent within Syriza and generally among the middle-class European left and pseudo-left (Podemos, I'm looking at you!), MUST be abandoned. The euro doesn't love you; it's time to stop loving it back.

The MAIN task for the European left, if it wants to be left rather than neoliberal, is to abandon the euro. It's easy: listen and be persuaded by Lapavitsas.

Posted by: okie farmer | Jul 18, 2015 4:10:39 AM | 69

More from Lapavitsas:
Finally, the deal is quite clearly neocolonial. The government of the left has signed up Greece to a neocolonial agreement.

And it is--it is neocolonial for many reasons. I will mention three. First, the deal proposes the establishment of a privatization fund of 50 billion Euros which will basically sell public property under foreign management. 25 billion of that, the first 25 billion, will go to the banks by the agreement. If there's anything left, and there won't be anything left because they'll never make 50 billion, it might go to repaying the debt and possibly to investment. Essentially, then, this fund will sell what it can of public property to recapitalize the banks. We've just agreed the deal that sells the family silver to recapitalize the failed Greek banks.
~~~
The real winner of this deal is obvious. It's staring you in the face. The real winner is the Greek oligarchy expressed in the mass media. That's why the mass media are thriving and celebrating [a win].
~~~
Because the monetary union in which, to which Greece belongs, is not ideological. I mean, it is, but it isn't just ideology. And it isn't just a balance of forces. It is an institutional mechanism. The sooner the Greeks understand this, the better for all of us. It is an institutional mechanism, it is a monetary union that's, it's a hierarchical body that works in the interests of big business and in the interests of a few countries within it. That's what the EMU is.
~~~
Now, what do we do, then? What we need to do is to withdraw our consent to this agreement. To withdraw our consent to this agreement. And to redesign a radical program that is consistent with our values, our aims, and what we've told to the Greek people all this time, all these years. And that radical program is impossible without Euro exit. The only thing that we really need to do is focus on developing a plan for Euro exit that will allow us to implement our program. It is so obvious I'm amazed that people still don't see it after five months of failed negotiations.

Posted by: okie farmer | Jul 18, 2015 4:23:57 AM | 70

http://www.bbc.com/news/world-europe-33578778
The former Greek finance minster has said his country's economic reforms are "going to fail", just as formal talks on a huge bailout are set to begin.

In a BBC interview, Yanis Varoufakis said Greece was subject to a programme that will "go down in history as the greatest disaster of macroeconomic management ever".
~~~
I may disagree with [PM Tsipras] and I declared that by resigning my post
~~~
The bailout could total €86bn (£60bn) in exchange for austerity measures.

In a damning assessment, Mr Varoufakis said: "This programme is going to fail whoever undertakes its implementation."

Asked how long that would take, he replied: "It has failed already."

Posted by: fairleft | Jul 18, 2015 4:51:18 AM | 71

Varoufakis is just whining. He doesn't provide a solution to the immediate and staggeringly important problem, imposition of worse austerity on Greece's people. He sounds not dissimilar to Tsipras, who also says he's unhappy/pessimistic yada yada. They're like old men complaining about the weather. Whining and whinging, Tsipras has signed up to carry out the police state repression that's the only way his new legislation can be carried out.

Even though the solution/escape is clear, as Lapavitsas points out. It's almost as if the Syriza apologists are incapable of saying/thinking the word 'Grexit'. Who is holding their tongues?

Posted by: mcohen | Jul 18, 2015 6:59:22 AM | 72

parking weapons like f-16 and submarines in countries is a good idea...they are maintained and serviced and kept ready for active service...this all under the cover of arms deals etc etc.

there is only one flaw..the government of that country must be trusted....they cannot change sides...greece is in a unique position.opposite north africa,on the med, so it is well positioned for launching of attacks,on countries like libya or tunisia or even egypt.

discrete crete sounds like a good name.

Posted by: paulmeli | Jul 18, 2015 8:15:45 AM | 73

"Varoufakis is just whining. He doesn't provide a solution…"

Exactly. There is no solution that doesn't include leaving the Euro and reclaiming monetary sovereignty (although that alone won't do it…they need astute, competent leadership too). A solution that presumes changing the fundamental Euro structure to include a fiscal component is never going to happen, the big guns (Germany) would leave before that would happen.

Playing long shots works in the movies, in real life not so much.

Most of the billions of words that have been written on this subject have been little more than wailing and gnashing of teeth. Denial.

There are several stages to go before there is any viable solution that citizens will sign on to, that won't be co-opted by TPTB.

Posted by: honest! | Jul 18, 2015 9:28:16 AM | 74

I'm not saying Syriza made all of the right mover, but neither do I think they can be considered "the Greek People's enemy". Not at all. They appear to be being honest.

Posted by: guest77 | Jul 17, 2015 7:52:02 PM | 64

What a load of utter nonsense.

Honest?

They demanded the right to seek a mandate from the people before proceeding. They then got exactly the mandate they claimed to have sought . . . . . .

. . . And then, promptly ignored it entirely.

=======

There's nothing "honest" in that. Cynical? Absolutely. Manipulative? Certainly

Threacherous? Most definitely

But "honest"? . . . . GTFO!.

Posted by: jfl | Jul 18, 2015 10:06:29 AM | 75

@71, @73

And you guys are just endlessly whining about the whiners ... the political class has chosen its preferred 'solution'. They're all done. If there is to be a real solution it has got to come from the Greek people.

@37

That's quite an article. I cut and pasted the picture of the 'bow-tie' graph and made the table of the 50 top controllers from page 33 sortable below it.

page 33 of The network of global corporate control

I'll try to summarize the significance of the bow-tie graph and its abbreviated labels tomorrow, for those who don't want to read the full article themselves.

Twenty-four of the top 50 controllers are nominally American.

Forty-four are financial.

Posted by: Noirette | Jul 18, 2015 11:43:49 AM | 76

Posted some time back about the ESM (etc.) Here some info that give OK descriptions.

Eric Zuesse, global research

http://tinyurl.com/pqwbvqa

> a link in that article to the Treaty (automatic download)

then this, from the Corporate Europe Observatory

http://tinyurl.com/o3eyg25

> a link to a leaked text explaining the Troikas plans for the privatization fund (that 50 bn) pdf

http://corporateeurope.org/sites/default/files/esm_report_to_greece_0.pdf

for some extra financial info (the only available to the public?) one must go to their site and click through and through - all automatic downloads.

http://www.esm.europa.eu

As MRW writes, at 40, there is no resemblance between EU financial and pol. structures those of the Soviet, Chinese Communist Parties.

MRW maybe you are hyping the Nazi past? Mitterand and Thatcher particularly were against the re-unification of Germany. Mitterand wanted to lock Germany down in the Euro in an 'alliance' (or because he was a bankster's man, in fact laws prohibiting speculation were lifted in France well before Billy C's annulment of Glass-Steagall, the US played catch-up) and Germany made the trade, with difficulty (attachment to the mark, independence, etc.) Controlling countries through their currency and banking system is not an original or particularly Nazi idea. For ex it works right now in parts of Africa with the CFA and nobody talks about it. The French didn't borrow that idea from the Nazis.

Posted by: rufus magister | Jul 18, 2015 12:09:41 PM | 77

Jackrabbit at 38, juliania at 66, jfl & fairleft >67

Like many, I've been waiting for the longest running drama on the Athens stage to finally get to the last act before attempting to make sense of the staging, plot and characters.

I still don't think we're quite there yet; probably a little more political fall-out still, but not much, see e.g., a majority of the Syriza Central Committee opposed the austerity deal.

The question of the political leadership of the left, however, is always an interesting topic. Also from the 17 July "Links" page at - dare I mention the name? - Naked Capitalism, John Pilger at Alternet argues thatThe Leaders of Greece Are Some of the Phoniest Idealists You'll Ever See. It seems hard to disagree.

Having set aside the mandate of the Greek electorate, the Syriza government has willfully ignored last week's landslide "No" vote and secretly agreed a raft of repressive, impoverishing measures....

The leaders of Syriza are revolutionaries of a kind – but their revolution is the perverse, familiar appropriation of social democratic and parliamentary movements by liberals groomed to comply with neo-liberal drivel and a social engineering whose authentic face is that of Wolfgang Schauble, Germany's finance minister, an imperial thug. Like the Labour Party in Britain and its equivalents among former social democratic parties such as the Labor Party in Australia, still describing themselves as "liberal" or even "left", Syriza is the product of an affluent, highly privileged, educated middle class, "schooled in postmodernism", as Alex Lantier wrote. [I could not immediately find whatever Pilger is quoting, he is affiliated with the "wsws" website; such sad sloppiness at a major site in these days of html coding...]

For them, class is the unmentionable, let alone an enduring struggle, regardless of the reality of the lives of most human beings. Syriza's luminaries are well-groomed; they lead not the resistance that ordinary people crave, as the Greek electorate has so bravely demonstrated, but "better terms" of a venal status quo that corrals and punishes the poor. When merged with "identity politics" and its insidious distractions, the consequence is not resistance, but subservience. "Mainstream" political life in Britain exemplifies this.

This is not inevitable, a done deal, if we wake up from the long, postmodern coma and reject the myths and deceptions of those who claim to represent us, and fight.

How then do democratic movements ensure that their leaders views and priorities accord with their own, and can be held responsible and be replaced? What sort of leadership is needed for industrial as well as political democracy?

Posted by: rufus magister | Jul 18, 2015 12:18:48 PM | 78

ps to 77 -- Amongst the parties affected by the Munich Agreement, I think Edvard Beneš, the Czechoslovakian President, is a better fit for poor Tsipras.

Posted by: paulmeli | Jul 18, 2015 12:54:19 PM | 79

"the political class has chosen its preferred 'solution'. They're all done. If there is to be a real solution it has got to come from the Greek people."

No kidding?

I don't know what's worse, repeating the obvious ad nauseam or whining.

Posted by: Noirette | Jul 18, 2015 2:00:07 PM | 80

Having set aside the mandate of the Greek electorate, the Syriza government has willfully ignored last week's landslide "No" vote and secretly agreed a raft of repressive, impoverishing measures…. a quote by rufus at 77

NO. Syriza was elected on a platform of 'staying in the EU-Euro' and at the same time 'reducing /abolishing austerity.'

This mandate might be considered contradictory or ridiculous, illusory, doomed to fail, etc. (Yes I agree.)

Also Syriza has a slim voter support and thus had to form a coalition Gvmt.

Well in function of that contradictory mandate they managed (at terrible cost and perhaps misguidely) half of it. Staying in the Euro.

What is surprising? Nothing.

Why they chose the one above the other is abundantly clear.

Posted by: Wayoutwest | Jul 18, 2015 2:24:51 PM | 81

RM@77

I enjoy good discussion and criticism but this carping and sniping about Syriza from the US Left says more about writers such as JP and the weaklings of the Left, that have attained a new level of meaninglessness, and has allowed someone like Bernie Sanders to claim to be a Socialist without any real blowback, is trying.

Posted by: MRW | Jul 18, 2015 7:29:54 PM | 85

paulmeli at @63 has got it exactly right. In all modern economies on a fiat currency, loans create deposits.

Bankers, as a result, create 'credit money', NOT new interest-free money. (Credit money also means that one person's asset is another person's liability. At the commercial banking level within the real economy that includes collateral, timed repayment schedule, and interest owed, which is income to the issuing bank. Everything nets to zero at this level across the macroeconomy.)

The US federal government, on the other hand, adds new money into the economy. Only entity that can. Only the US federal government can introduce new, interest-free money into the economy, and it does it via congressional spending based on the needs of its citizens, and where it wants the economy to grow (giving 40% of it to the financial institutions is NOT GROWTH). Which the mo-fos we've elected do not understand.

One small quibble, Paul. The amount of physical currency, physical cash and coin, is around 11.5% to12% of the available money. The rest are treasury securities. Don't forget that countries like Ecuador are pegged to the USD and need US cash for their citizens. Ecuador's central bank orders them from the US Treasury (Bureau of Printing and Engraving) and puts up 100% of the demanded amount in assets (treasury securities) to pay for them.

Posted by: MRW | Jul 18, 2015 7:31:15 PM | 86

Tom @61

Sorry for the delay. I'm traveling. Good questions, btw.

First, let's clear up what fractional reserve banking is. This is a lousy simplistic example, but it will work. And let's imagine a small western town with one bank, which I will call Bank Buckeroo. Introducing a second bank in the town mean I would have to explain how interbank reserves work, and it doesn't matter in this explanation. [BTW, US banks DO NOT LEND their reserves; reserves serve another purpose in the US banking system; namely to help the Federal Reserve retain the overnight interest rate target that banks charge each other. Canada, for example, doesn't even have a reserve requirement for their commercial banks.]

Fractional reserve banking explained

OK. Johnny Schwartzburger sidles into his Bank Buckeroo and deposits 100 bucks in cash in his savings account.

Now Bank Buckeroo has got $100 more than it had yesterday.

Because the reserve requirement is, say, 10%-the FRACTION of the loan that the bank must retain under "fractional reserve banking"--Bank Buckeroo holds onto $10 and can loan out $90.

Sally Sweetpea needs $90 for her beauty shop and she borrows $90 from Bank Buckeroo, and deposits that in her checking account.

Now Bank Buckeroo holds onto $9 (10% of $90) and can loan out $81.

Old Ray Saddleback needs $81 to buy supplies for the only café in town, so he hits up Bank Buckeroo for an $81 loan.

Bank Buckeroo holds onto $8.10 (10% of $81) and can loan out $72.90.

Paddy O'Gilligan needs $72.90 to top off his supply of whiskey at the only bar in town (and this banker likes his whiskey), so he borrows $72.90 from Bank Buckeroo.

Bank Buckeroo holds onto $7.29 (10% of $72.90) and can loan out $65.61

You see where I'm going with this. Eventually, Bank Buckeroo will have reserved all $100, but will have extended credit against that $100 to customers that he knows are good to pay back their loans. Under the gold standard system before 1933, each dollar had a statement on it that you could exchange 20 of the one-dollar bills for one ounce of gold (not exactly the statement but that's what it meant). It was a "fixed exchange rate." The value of a dollar (US) was fixed to the value of gold. So Bank Buckeroo has Johnny Schwartzburger's original $100 in cash that guarantees it can trade-in the cash for $100 in gold anytime it wants. It's protected against that loss. The only thing the banker has to worry about is whether his customers can pay back the new loans, and he knows their creditworthiness intimately.

That all changed in 1933-no more gold standard in the US

We went off the gold standard. The value of the USD was no longer pegged to the value of gold, the supply of which the US federal government could not control globally except for certain US mines. Each new goldmine find globally affected the value of the dollar before 1913 and led to extraordinary panics and busts in the last half of the 1800s. More gold available meant the value of the dollar dropped, and that affected international trade, and whether people exchanged their dollars for gold stateside and hoarded it, further diminishing the amount of money available in the real economy. It was the National Gold Something-or-Other Act in 1900 that pegged the USD at $20/ounce.

Interestingly enough, it was Marriner Eccles, whom FDR made the first chairman of the Federal Reserve three years later, a Republican Mormon banker from Provo UT who appeared before the Senate and House of Representatives in 1932/33 to make the case for dropping the gold standard (he wasn't the only one however). Eccles became more popular than Miley Cyrus. Eccles had seen the devastation that the banking system was doing to his municipal and rural customers. Eccles was 22 when he made his first million after his father died and he had to take over the family businesses, which included a bank. He was a financial genius who could speak plain English to commoners about banking and esoteric financial concepts. His ideas predated John Maynard Keynes by three years. (BTW, Keynes was never taught in American universities, so anyone sneeringly invoking Keynes doesn't know what they are talking about. The first Nobel Laureate in Economics, Paul Samuelson, is supposed to be the explainer and keeper of Keynes ideas, but Samuelson admitted in 1989 in a video interview that he never read more than half the book, and that he never understood Keynes' ideas to begin with.)

[to be contd]

Correction: Each new goldmine find globally affected the value of the dollar before 1913

Should read: Each new goldmine find globally affected the value of the dollar before 1900

Posted by: MRW | Jul 18, 2015 7:34:22 PM | 87

Tom @61 [contd.]

If Private banks "cannot" print as much money as they like ( point 1 ), then how can fractional reserve banking Not exist in most of the world ? ( point 2 ) . If fractional reserves do not exist then they free to print as much as they like.

[…]

And your 3rd doesn't make any sense at all. How does a gold standard have any restrictions on having a 10% fractional reserve, 1000%, or 1,000,000% of gold holdings ? Gold doesn't make decisions, regulations and enforcement are the decision-makers. Whether it's gold or fiat.

Loans create deposits. Yes, 'out of thin air'. Bankers can say 'Yay' or 'Nay' based on the cut of your jib, or the color of your skin, although they are not allowed to.
Banks don't print money. They issue credit, i.e. 'credit money'. They mark up the customer's bank account with computer keystrokes in the amount of the loan. Banks issue credit money based on two things: (1) customer creditworthiness, (2) customer income. They also require collateral.
Banks have to maintain reserves in their banks accounts at the Federal Reserve on all the loans they make.It is a percentage of the loan, and banks cannot loan out this money. If the bank doesn't have enough reserves in their Fed account, they have to borrow from other banks at the Fed Funds Rate, or overnight interest rate, set by the Fed. (The Fed uses this overnight interest rate to promote or demote bank lending in the economy, among other things.)
If the bank has been making bad loans or is overextended-this goes to your Point 1 about banks being free to issue as much credit money as they like-and other banks know that, the other banks might not loan it any reserves.
In that case, the solvency-suspect bank has to slink to the Fed's Discount Window where they can borrow the required reserves, but the interest rate is punitive, and it usually alerts bank examiners that there's a problem at the bank. So having to go to the Discount Window is not something a bank wants to broadcast.
By law, the Federal Reserve must supply reserves to banks within the federally chartered banking system, or declare the overextended bank insolvent.
A 'check and balance' on a bank loaning out as "as much as they like" is meeting its reserves requirement.

About gold. When you have a gold standard, you're on a fixed exchange rate: X amount of currency for each ounce of gold. That's when fractional reserve banking makes sense because the bank only wants to loan out X amount of money based on the amount of gold in the kitty. It's up to the banker to make intelligent and safe decisions about who he loans to by doing his due diligence.

On a gold standard, he who owns the gold, owns the country. When we got rid of the gold standard, goldminers and gold owners stopped owning this country, including Mr. Rothschild. We fucked him up the ass. Our money is based on the 'full faith and credit of the US federal government' and we issue our own currency. To boot, we are the reserve currency worldwide.

Posted by: MRW | Jul 18, 2015 7:36:21 PM | 88

The thread didn't take my formatting in @88. Here is the first half presented in a clearer format:
----------------------------------------------

In response to Tom's @61

  • Loans create deposits. Yes, 'out of thin air'. Bankers can say 'Yay' or 'Nay' based on the cut of your jib, or the color of your skin, although they are not allowed to.
  • Banks don't print money. They issue credit, i.e. 'credit money'. They mark up the customer's bank account with computer keystrokes in the amount of the loan. Banks issue credit money based on two things: (1) customer creditworthiness, (2) customer income. They also require collateral.
  • Banks have to maintain reserves in their banks accounts at the Federal Reserve on all the loans they make.It is a percentage of the loan, and banks cannot loan out this money. If the bank doesn't have enough reserves in their Fed account, they have to borrow from other banks at the Fed Funds Rate, or overnight interest rate, set by the Fed. (The Fed uses this overnight interest rate to promote or demote bank lending in the economy, among other things.)
  • If the bank has been making bad loans or is overextended-this goes to your Point 1 about banks being free to issue as much credit money as they like-and other banks know that, the other banks might not loan it any reserves.
  • In that case, the solvency-suspect bank has to slink to the Fed's Discount Window where they can borrow the required reserves, but the interest rate is punitive, and it usually alerts bank examiners that there's a problem at the bank. So having to go to the Discount Window is not something a bank wants to broadcast.
  • By law, the Federal Reserve must supply reserves to banks within the federally chartered banking system, or declare the overextended bank insolvent.
  • A 'check and balance' on a bank loaning out as "as much as they like" is meeting its reserves requirement.

Posted by: MRW | Jul 18, 2015 7:41:19 PM | 89

Some reporters are finally beginning to understand what I have been yammering on here over the past 18 months:

Why America Is Not The Next Greece
The key difference is that the United States has its own central bank -- the most powerful one in the world.

http://www.huffingtonpost.com/entry/why-america-is-not-the-next-greece_55a814c5e4b04740a3df6b11?

Posted by: MRW | Jul 18, 2015 7:45:47 PM | 90

[Jul 18, 2015] Disaster In Europe

Paul Krugman:

Disaster In Europe: ...all the wise heads saying that Grexit is impossible, that it would lead to a complete implosion, don't know what they are talking about. When I say that, I don't mean that they're necessarily wrong - I believe they are, but anyone who is confident about anything here is deluding himself. What I mean instead is that nobody has any experience with what we're looking at. It's striking that the conventional wisdom here completely misreads the closest parallel, Argentina 2002. The usual narrative is completely wrong: de-dollarization did *not* cause economic collapse, but rather followed it, and recovery began quite soon.

There are only terrible alternatives at this point, thanks to the fecklessness of the Greek government and, far more important, the utterly irresponsible campaign of financial intimidation waged by Germany and its allies. And I guess I have to say it: unless Merkel miraculously finds a way to offer a much less destructive plan than anything we're hearing, Grexit, terrifying as it is, would be better.

[Jul 18, 2015] Greece bailout revives image of the 'cruel German'

Jul 18, 2015 | The Washington Post

A divided Germany rose from the ashes of the Nazi defeat in World War II, weathering the Cold War to transform into one of the good guys. Modern Germany quickly molded itself into the standard-bearer of global pacifism, a hotbed of youth culture and the tree-hugging Lorax of nations in the fight against climate change.

But, just like that, the image of the "cruel German" is back.

Germany - more specifically, its chancellor, Angela Merkel - has faced years of derision for driving a hard bargain with financially broken Greece, which has received billions in bailouts since 2010. But for both Germany and Merkel, the concessions extracted this week from Athens appear to have struck a global nerve. By insisting on years more of tough cuts and making other demands that critics have billed as humiliating, Berlin is wiping out decades of hard-won goodwill.

In the aftermath of the deal with Greece, the hashtag #Boycottgermany - calling on users not to buy German products - has started trending on Twitter. Evoking Hannibal Lecter, the cannibal from "The Silence of the Lambs," some are sharing caricatures depicting Merkel as an E.U.-eating "Angela Lecter." A cartoon portraying Wolfgang Schäuble - Merkel's even-harder-line finance minister - as a knife-wielding killer from the Islamic State militant group has gone viral.

Germany was one of more than a dozen nations that insisted on a tough deal with Greece. But Britain's Daily Mail singled out Germany, saying Greece had surrendered to austerity "with a German gun at his head."

In the United States, New York Times columnist Paul Krugman this week noted the hate mail he had received from Germany for repeatedly criticizing its tough line on fiscal reforms. The Germans, he wrote, had suggested that as a Jew, he should know "the dangers of demonizing a people." To that, Krugman responded with sarcasm: "Because criticizing a nation's economic ideology is just like declaring its people subhuman."

In Greece, those actively supporting the austerity deal are being heckled by their countrymen as "Nazi collaborators." Another image making the rounds on social media shows a doctored version of the European Union flag, its circle of gold stars against a blue background reshaped into a swastika.

French daily Le Figaro declared that "conditions were imposed on a small member state that would have previously required arms." In a commentary that sneered at Merkel's "half smile" after the deal was reached, Britain's Guardian newspaper argued that rather than being cruel to be kind, the terms of the bailout were simply "cruel to be cruel."

In its online edition, even Germany's own Der Spiegel magazine decried the Berlin-led demands as "the catalogue of cruelties."

In a country that can be highly sensitive about its brutal past, some Germans are beside themselves. On Friday, the German parliament is set to vote on whether to green-light rescue talks under the onerous new terms. It is expected to vote yes. In any case, some argue, the damage to Germany's image has been done.

"Merkel, Schäuble and [Vice Chancellor Sigmar] Gabriel in two and a half days burned the trust that had been built over 25 years," Reinhard Bütikofer, a German politician from the progressive Green Party, declared during an emotional outburst on local television. "The heartless, dictatorial and ugly Germany again has a face, and that is Schäuble."

He finished by saying, "I am upset, as you can see, very upset."

... ... ...


[Jul 18, 2015] Billmon The Eurosystem's (Monetary) Control of Europe's Politics

"...The "Eurosystem", the network of national central banks governed by the European Central Bank, gives central bankers unprecedented ability to squeeze and manipulate national governments in a coordinated way. It is as if every government in the Eurozone ALREADY has a colonial entity watching it like the Troika's agents are supposed to watch Syriza in Athens. And, since the ECB Governing Council (like other EU institutions) tries to operate by a non-transparent "consensus" (i.e. the votes are not revealed), the degree to which national central bank heads are representing the ECB in their countries, rather than the other way around, is often not clear."
"...IMO these 'lessons' miss the biggest one for the left: the loss of independent media. What good is protesting neolib control via banks if no one is listening?
Governments easily manipulate corporate controlled media via access journalism. Thus we get factual truths intermixed with propaganda spin that is relentlessly pro-business, pro-establishment.
Greece is a case in point. As described in Greek Government Insider Lifts the Lid on Five Months of 'Humiliation' and 'Blackmail', the Troika was gradually increasing pressure on Greece to do what the Troika demanded. They withheld billions of euro to Greece and cut off liquidity to the Greek government. Then they waited as the financial pressure on Greece grew. But along with those measures was a caustic media that painted Syriza as incompetent, then undemocratic (because most greeks wanted to remain in the euro), then irresponsible (for calling a referendum), etc."
"... Following, a link to a German documentary about the various mechanisms of the EU [Troika, Eurogroup, European Commission, Council, etc] which are being used as devastating tools to beat down and extract wealth, vampire style, from Greece [and Cyprus], in order to revive comatose banks and line the pockets of investors, through privatization of public property.
This documentary does a good job of demonstrating just how the power of technocratic branches of the EU is being rolled out to pillage Greek, Portuguese, Cyprus economies, plunging the respective populations into ever greater misery.
"...None of this is about 'economics' - that chimerical, dismal 'science' - all of it is about politics, and power politics, and imperial politics."
The Trail of the Troika [1:29:22]
Jul 18, 2015 | Moon of Alabama

Billmon: The Eurosystem's (Monetary) Control of Europe's Politics

Note: This post was composed from a Twitteressay by Billmon.

J.W. Mason lists some Lessons from the Greek Crisis:

Before the crisis no one even knew that national central banks still existed - I certainly didn't. But now it's clear that the creditors' unchallenged control of this commanding high ground was decisive to the outcome in Greece. Next time an elected government challenges the EU authorities, their first order of business must be getting control or cooperation of their national central bank.

The quote says "control or cooperation," but I can guarantee the latter is never going to happen.

It is nearly impossible to exaggerate the degree to which the campaign for central bank "independence" has made them the enemies within for any left governments.

The central bankers waged a 50-60 year political war to wrest back the monetary flexibility that the break down of Bretton Woods gave to national governments. Having won that war across most of the developed world in the 70s and 80s, they extended the battlefield to the emerging markets in '90s and '00s.

The autonomy of central banks (meaning the political allegiance to Wall Street/London City/Frankfurt etc.) was maybe the biggest neoliberal victory of all. If rightwing political victories (Reagan, Thatcher et. al.) were the beachheads of the Great Counterattack on social democracy then "independent" central banks became the citadels of the occupation forces: Neoliberalism's "Republican Guard."

Ironically, the ECB was originally conceived - or at least was sold to the European left - as a way for governments to regain monetary flexibility at a higher level. As a way to a) escape US dollar hegemony and to b) outflank the Bundesbank by formalizing the joint political control of European monetary policy. I do not know if the hack establishment Social Democrats who sold that vision ever believed it, but if so, more fool them. Because what the European Monetary Union became, obvious now, was a way to turn the vision on its head: formalize joint MONETARY control of Europe's politics.

The "Eurosystem", the network of national central banks governed by the European Central Bank, gives central bankers unprecedented ability to squeeze and manipulate national governments in a coordinated way. It is as if every government in the Eurozone ALREADY has a colonial entity watching it like the Troika's agents are supposed to watch Syriza in Athens. And, since the ECB Governing Council (like other EU institutions) tries to operate by a non-transparent "consensus" (i.e. the votes are not revealed), the degree to which national central bank heads are representing the ECB in their countries, rather than the other way around, is often not clear.

As long as the cozy comprador system tied peripheral governments to the core (i.e. Berlin), the role of the ECB and the Eurosystem could be obscured. Peripheral governments appointed "made guys" (i.e. banksters and/or their technicians) to national central bank boards and pretended to govern. Core politicians and their local comprador politicians let the Eurosystem technicians in Frankfurt tell them what "structural reforms" they should push to make the EMU "work."

But the moment an outsider government like Syriza came to power, the role of the Eurosystem and the national central banks in it could no longer be hidden. The fact that the Greek National Bank was an instrument of the ECB in Frankfurt, not of the Greek government in Athens, became obvious to everybody. The ECB's role as the muscle behind the Eurogroup's (Berlin's) diktats put the Greek National Bank in the position of helping to choke its own banks and terrorize its own citizens. And under the rules of EMU the Greek government was completely powerless to do anything about it. A defining moment.

The inescapable conclusion is that the allegedly "independent" Eurosystem now operates not as a network of central banks but as a parallel government.

The role of the Eurosystem within the half-hidden political order of the eurozone really is comparable to the Soviet or Chinese Communist Party. Like the Communist Party, the Eurosystem is now the "leading organ" of the neoliberal order, operating at all levels of the EU structure and providing "guidance" to elected political structures which are not formally under its legal control, but in reality are dominated by it. And behind the administrative apparatus of the party (Eurosystem) is the Central Committee (Eurogroup) and the Politburo (the key creditor government officials). And behind THEM is the real locus of the party's centralized power: the General Secretary (Germany/Merkel).

So J.W. Mason is quite right: it is impossible for any left government to attack the dictatorship of finance unless it controls its national central bank. But while control of the national central bank is necessary, it is hardly sufficient. As long as the EMU exit is off the table, verboten, so to speak, control of the national central banks only eliminates the "near enemy."

Ultimately it comes down to political will, which in parliamentary democracies, comes down to public support. As long as the majority (of all voters or of propertied influentials, depending on the system) is more loyal to the Euro than to national sovereignty an effective challenge to the dictatorship of finance is impossible - no matter how many national central banks the left controls.

Posted by b at 06:57 AM | Comments (90)
Selected Skeptical Comments
nmb | Jul 16, 2015 7:20:43 AM | 1

Greece capitulates with the euro-dictatorship ... until the next battle

jfl | Jul 16, 2015 7:33:14 AM | 2

You know this 'independent' central bank as tool of the neolibraconian consensus is the most salient point drummed home about Russia : the central bank as 5th column.

And the Russian central bank preceded the ECB, didn't it? When the boys from Harvard went to Russia to 'straighten' things out they conducted an experiment ... and discovered it worked just great : rinse and repeat. Russia was the archetype of the gelded European nation to come.

So the next time says Russia is not a part of Europe I'll say ... not only of Europe, but the first European nation subverted by the gnomes of neolibraconia.

The Europeans who still have a pulse ought to note now just who their real enemy is : hint, the one that's occupying Europe. And who is their fellow European victim. And ban together to defeat their common enemy ... well run him out of town on a rail, at any rate.

Certainly rearrange their banking arrangements.

Timon | Jul 16, 2015 8:48:21 AM | 5

One of the key reasons that Wall St/City/Frankfurt want universal "austerity" is not just that they want people to be frightened, impoverished and insecure; but in particular, because it has the desirable effect of suppressing the political participation of people who must continuously walk the edge, just to get by - and by now this is about half the population -and who might otherwise participate in the political process with decisive effect.

Rise like lions after slumber
In unfathomable number
Shake your chains to earth like dew
That in sleep have fallen on you
Ye are many, they are few.

H.L. Mencken is also very good on this subject - the need of the self-appointed elite to distract and render impotent the average person, and how greatly the big shots hate and fear the "mob".

why would a small country like Greece need to be the second biggest spender in nato after the USA. ...

mcohen | Jul 16, 2015 8:57:04 AM | 6

According to an editorial published by the Greek conservative newspaper Kathimerini, after the removal of the right-wing military junta in 1974, Greek governments wanted to bring disenfranchised left-leaning portions of the population into the economic mainstream[28] and so ran large deficits to finance enormous military expenditure, public sector jobs, pensions and other social benefits.

Greece is, as a percentage of GDP, the second-biggest defense spender[29] in NATO, the highest being the United States, according to NATO statistics.

The US is the major supplier of Greek arms, with the Americans supplying 42 per cent of its arms, Germany supplying 22.7 per cent, and France 12.5 per cent of Greece's arms purchases.[30]

Everybody and I mean everybody is king fu fighting. And those bankers are as fast as lightning

ab initio | Jul 16, 2015 10:32:40 AM | 12

It should be obvious with how the ECB structure was formed that any country that uses the euro as its currency is dependent on the ECB for liquidity if there is deposit flight from the banks in that country.

There is only two ways for a country to retain full sovereignty. One have a national currency with a national monetary authority that controls it and second a government that if it runs a deficit has the ability to borrow in private markets and maintains a currency board (e.g: Ecuador which uses the US dollar).

Ecuador is a good example where its government debt became untenable. It defaulted on the debt and so was for all intents shut out from private debt markets, so the government could not run a deficit. It continued to use the US dollar as its currency.

Greece had to make a choice. Continue in the eurosystem and accept the hegemony of the eurogroup or exit. It's parliament accepted the former. One can blame Schauble and Merkel all you want but the bottom line is that the Greek government and parliament acquiesced to its loss of sovereignty. The Greek people have the power to change it if they want. They just have to decide to exit the eurosystem and elect a government that does that.

In France, Marine Le Pen is clear. She will take France out of the eurosystem if elected. Of course we'll have to see if she honors her campaign promise but at least she is categorical about it. Syriza got elected promising they'll be able to get a better deal compared to the center-right party before them. In this case the Left in Greece delivered an even worse result for the average Greek citizen.

Jackrabbit | Jul 16, 2015 12:52:58 PM | 18

IMO these 'lessons' miss the biggest one for the left: the loss of independent media. What good is protesting neolib control via banks if no one is listening?

Governments easily manipulate corporate controlled media via access journalism. Thus we get factual truths intermixed with propaganda spin that is relentlessly pro-business, pro-establishment.

Greece is a case in point. As described in Greek Government Insider Lifts the Lid on Five Months of 'Humiliation' and 'Blackmail', the Troika was gradually increasing pressure on Greece to do what the Troika demanded. They withheld billions of euro to Greece and cut off liquidity to the Greek government. Then they waited as the financial pressure on Greece grew. But along with those measures was a caustic media that painted Syriza as incompetent, then undemocratic (because most greeks wanted to remain in the euro), then irresponsible (for calling a referendum), etc.

Too often we give the media a pass when it has been well documented that business and government tries to control MSM (and increasingly other media as well) via access journalism, advertising revenue (a few industries dominate) writing stories that cite in-the-tank 'experts' from establishment-friendly think-tanks and controlled opposition.

Even within Greece, Syriza had trouble getting their message out because oligarchs own virtually all of the media! And many blogs also fell for the spin - even those that have been critical of the media in the past like Yves Smith at nakedcapitalism.com - despite the fact that the delay in Greece putting forth a proposal before the April 30th deadline could be logically attributed to the 2-step process that the Troika had forced (describing how they would service the debt would severely undermine Greece's position in future debt restructuring talks).

A Left that is not in touch with the people - and whose message is undermined by establishment-friendly media - is a disaster far greater than the loss of control of the financial system. The Left's greatest strength should be its connection with the people that it fights for. Yet, instead the Left has allowed itself to be marginalized by a corporate media that has strengthened the centrist 'faux Left' at the expense of the progressive Left. So much so that many people today identify THE LEFT with the identity politics that forms 'the base' for the fauxLeft. In short, people of the 'Left' are viewed as selfishly wanting something for themselves at the expense of others. (It should come as no surprise that reporting about Greece often fell in line with this line of thinking.)

For activists that are outside the centrist political establishment - anti-war, climate change, the environment (fracking, nuclear energy, etc.), inequality, constitutional and civil rights, etc. - it is very difficult to reach a wide audience. All 'change' is channeled into the pro-business, pro-establishment centrist political system. Anyone who is not a centrist is suspect.

Greece's coherent arguments quickly fell off media radar as sniping about their incompetence and their oh-so-strange Finance Minister took center stage. This put even more pressure on the Greeks and deterred potential allies. And the spinning continues. The understanding of most people still does not go much beyond this: the Greeks don't want to pay their bills and Syriza are incompetent radicals that made the problems worse and can't be trusted. In the face of this onslaught by the Troika and Troika-friendly media, Syriza's resistance is all but ignored in favor of trumpeting Greece's defeat (a warning to others?).

=

Is there any hope? Maybe.

1) Syriza formed a government with nationalists (ANEL). Why the Left is depicted as unpatriotic is beyond me, but the left may be getting its patriotic mojo back as WAR and trade deals are increasingly understood as benefiting an international elite. I could see similar political alliances forming in other countries. (In the US, I think the establishment had feared a potential Tea Party - Occupy alliance.)

2) Media reform (or the threat of it). The Greek government has begun investigations into media bias during the referendum (there was very little coverage of government rallies and government positions, etc.). If the Syriza-led government falls, any media reforms are probably less likely.

Ron Paul's "audit the Fed" movement got some traction which caused the Fed to take notice. "Truth in media" efforts should probably be re-doubled.

3) Education. We need to retain humanities education. Higher education is turning into vocational training. For example, IMO it's difficult to appreciate the myriad issues and import of the neolib consumer-oriented approach to government vs. the democratic citizen-oriented approach, without a humanities education.

Also, people don't usually react until it is too late - partly because few have enough learning to understand the impact that new policies will have. They try to make up for their lack of understanding by relying on trusted representatives like Obama. TTIP is a case in point. Look for demonstrations about Obamatrade in a few years when it is too late.

dana | Jul 16, 2015 1:25:52 PM | 19

Following, a link to a German documentary about the various mechanisms of the EU [Troika, Eurogroup, European Commission, Council, etc] which are being used as devastating tools to beat down and extract wealth, vampire style, from Greece [and Cyprus], in order to revive comatose banks and line the pockets of investors, through privatization of public property.

This documentary does a good job of demonstrating just how the power of technocratic branches of the EU is being rolled out to pillage Greek, Portuguese, Cyprus economies, plunging the respective populations into ever greater misery.

The Trail of the Troika [1:29:22]

psychohistorian | Jul 16, 2015 1:34:37 PM | 20

@ 15

james, If you read the Shock Doctrine by Naomi Kline you can follow the same financial rape of South American countries in the 70's that the financial mafia are doing now to the middle east.

The world needs to have a discussion about the world of private finance that exists now and what could be if all finance were sovereign.

Thrasyboulos | Jul 16, 2015 2:26:43 PM | 22

The role of the European Central Bank and their buttler, Stournaras, at the Greek Central Bank in this fiasco needs this kind of discussion, and more, since it lies at the heart of German blackmail and coup attempt of the Greek government. Thank you b for this post.

@5

One reason that there have been inordinate arms purchase by Greece is that the Greek elite -- media, oligarchy, politicians (especially the latter) are up to their armpits in corruption, and one of the vehicles for corruption is arms deals.

The all powerful "socialist" minister of defence under Papandreou and minister of development under Simitis is now in jail, almost prime minister, now serving 20 years in the hoosgow, for being bribed by German arms dealers (Siemens, among others). It is widely believed that the previous governments went after this easy and obvious target to cut off investigations of others, a lot of others.

The nationalist minister of defence under the Tsipras government, Panos Kammenos is sending document after document to prosecutors involving a bewildering array of bribery, thievery, fraud, and so on in the Greek armed forces. Submarines that leak, helicopters that can't fly, because of onerous service after purchase contracts. The list is huge.

One reason why both German and Greek corruptos hate him so much, and tried to bring down the Tsipras government. It remains to be seen if he keeps his post, after Tsipras's deal with the Germans.

The other, of course, is the Turkey threat, also used to justify military procurement.

Thrasyboulos | Jul 16, 2015 3:31:55 PM | 24

Quote from Jacobin from an article titled The End of Europe.

http://tinyurl.com/nt2g8g3

The discussions with Greece are thus a formal process designed to politically defeat Greece's left forces, burying any prospects of meaningful political change across the continent. This is the only explanation for the creditors' inflexibility despite Tsipras crossing all Syriza's red lines in terms of pensions reforms, tax policy, privatizations, and market liberalization. This punitive stance was made crystal clear by late June, when the ECB actively incited a bank run, warning of an "uncontrollable crisis," and abruptly capped its emergency loans to the banking sector, triggering bank holidays and capital controls.

Also in the site, an informative behind the scenes interview with Left Platform Syriza MP, Stathis Kouvelakis.

Jackrabbit | Jul 16, 2015 3:34:47 PM | 25

Here's another lesson: Resistance works.

The Troika was willing to 'punch' Syriza's ticket ("Welcome to the Club"!) with minor concessions. But Tspiras/Varoufakis did not simply accept what the Troika demanded.

As bad as the deal is, Greece managed to get the debt restructuring that the Troika had refused to talk about. They had even refused to put their promises of a future debt restructuring in writing.

Many are saying that Greece should've prepared for GRexit; critizing Syriza/Tspiras as too establishment and too europhile to contemplate that path. But they have bought time to prepare for the next round. And in the next round, it may be that a GERexit is on the table as well.

Euro QE is not a magic elixir; just more extend and pretend. It'll exacerbate core vs. periphery problems as much as it exacerbates inequality (as it has in the USA). And political and fiscal integration is hard to do when people feel that they are not treated fairly.

tom | Jul 16, 2015 3:45:06 PM | 26

This $50 billion Greek asset theft fund that was willingly handed over by Syriza traitors, as well as other politicians responsible, Is exactly the collateral needed for a independent Greek central bank to create, let's say for eg, a fractional reserve base of 10% to create $500 billion.

With that now $500 billion, the Greek government could pay off all the debt, including the criminally induced ones, and it's based on those $50 billion worth of assets.
And That's only if you agree to the idea of paying off all your criminally in deuced debts.

An independent and sovereignly principled government or parliament would do exactly that.
And there's more fractional reserves using National assets that can be used to grow the economy and serve the people.

Syriza knows this, but since they are unprincipled, Ideologically weak, cowardly towards their aggressors and more interested in power than public service, means you're never get that from these freaks.
Obvious from day one. Judge them on their actions, not on their whingeing on how they've been mistreated and violated.

How the fuck is it accepted, that private banks can print as much national currencies as they like, but the owners of the those national currencies - the people and the government - cannot do with fractional reserves and money printing, like what the private banks do.

juliania | Jul 16, 2015 4:45:18 PM | 31

jackrabbit@17, I would like to point out that the Greek populace ignored the media when they voted in the referendum, so I think the importance of such propagandistic power is overblown. Once you lose faith in that source of information, it's gone; it doesn't come back. Russia under the Soviets is a case in point, and currently also there is an erosion in US confidence that what they see and hear is trustworthy. What happened after the referendum confused the public, and that was a huge mistake.

Back a ways, in support of Tsipras, I wanted him to do as Putin has done and shore up that public confidence because then you can make decisions in the moment and the support will grow. Immense popularity is a powerful weapon. Varoufakis was correct in seeing that as an important pivotal moment, when the people supported the 'no' vote that Tsipras had also supported. The course he chose confused his supporters. Paramount should have been the dictum that the people could not bear further austerity and that was that - the austerity they would face at that point would be the prideful kind that can see a brave future beyond.

Tsipras had embraced the New Deal outlook, but he forgot Roosevelt's famous saying, 'You have nothing to fear but fear itself.' Varoufakis welcomed, FDR style, the banksters' hatred. It's too bad Tsipras could not do the same. Long lines of grateful poor people stood by the tracks as FDR's funeral train passed. Will that happen for Tsipras? There's a Greek saying that one should count no man happy until after his death. Roosevelt, loved by his people and by history, was a happy man. I hope there's time for Tsipras to become one as well.

jfl | Jul 16, 2015 7:50:55 PM | 33

PPS/23: Review of Current Trends in U.S. Foreign Policy, 1948 CE

Furthermore, we have about 50% of the world's wealth but only 6.3% of its population. This disparity is particularly great as between ourselves and the peoples of Asia. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world-benefaction.

For these reasons, we must observe great restraint in our attitude toward the Far Eastern areas. The peoples of Asia and of the Pacific area are going to go ahead, whatever we do, with the development of their political forms and mutual interrelationships in their own way. This process cannot be a liberal or peaceful one. The greatest of the Asiatic peoples-the Chinese and the Indians-have not yet even made a beginning at the solution of the basic demographic problem involved in the relationship between their food supply and their birth rate. Until they find some solution to this problem, further hunger, distress, and violence are inevitable. All of the Asiatic peoples are faced with the necessity for evolving new forms of life to conform to the impact of modern technology. This process of adaptation will also be long and violent. It is not only possible, but probable, that in the course of this process many peoples will fall, for varying periods, under the influence of Moscow, whose ideology has a greater lure for such peoples, and probably greater reality, than anything we could oppose to it. All this, too, is probably unavoidable; and we could not hope to combat it without the diversion of a far greater portion of our national effort than our people would ever willingly concede to such a purpose.

Between Berlin and a Hard Place: Greece and the German Strategy to Dominate Europe, 2012 CE

As Chancellor Merkel and other German leaders would frequently remind the rest of Europe and the world, with 7% of the world population, 25% of global GDP and 50% of world social spending, Europe's economic system was unsustainable and uncompetitive in a globalized economy. Germany's vision for Europe was aimed at introducing "rules to force Europe's economies to become more competitive." But competitiveness was defined by Germany, and thus, "the rest of Europe needs to become more like Germany."
I nearly choked when I read Timothy Geithner quoted at the beginning of dana's link ... but it makes perfect sense. None of this is about 'economics' - that chimerical, dismal 'science' - all of it is about politics, and power politics, and imperial politics.

The Germans - like everyone else - can see the US has had its run and is headed for its fall. But they also know that Germany by itself is not of a size to pick up where the US leaves off, when the US leaves off. So Germany needs to take over Europe.

I think I've heard this before.


Between 2008 and 2013, the Greek government cut 40% of its budget, healthcare costs soared, tens of thousands of doctors, nurses and other healthcare workers were fired, drug costs rose, as did drug use with HIV infections doubling and a malaria outbreak was reported for the first time since the 1970s, while suicide rates increased by 60%. ... Unemployment has grown to 26% (and over 50% for youth), wages dropped by 33%, pensions were cut by 45%, and 40% of retired Greeks now live below the poverty line.

Cleanliness is next to Godliness. The Germans are cleaning up Greece, and Europe.

The IMF's latest move - fake debt reduction for Greece, the kind of stuff that flows out of Geither's pie-hole in dana's link above - seems to be overt recognition of this fact, bringing it into play.

So they new dynamic will be the US on one side and Russia on the other, containing Germany's New Europe?

Makes sense, really. (None of this makes any sense ... only to the zero-summers playing games with our world). China surely has its eyes on all that Lebensraum in eastern Russia. The US and Russia can team up to defeat the NAZIs who have 'stolen' the Ukrainian revolution (to contain both Europe and China). (And then the US can double-cross Russia when the time is ripe).

Hey, looks like it's 'working' with our new, soon to be 'best friends' in Iran.

Arghhhh. Makes me want to stop reading the news, stop watching the movie. Or do something to help change it.

jfl | Jul 16, 2015 10:29:16 PM | 34

More on the reaction to Germany's power plays, from Fort Russ ...

"Germany's policies pose a danger to Europe for the first time since 1945"--A View From Poland

... and the US' possible doubly convoluted play as hypothesized by Joaquin Flores last September ...

Pravy Sektor Coup as ISIS Scenario: NATO to Feign a 'Unilateral' Alliance With Russia

... just substitute the US for NATO. Germany has certainly knocked the scales from some eyes. I can't imagine Russia will be drawn in.

Greed and geopolitics do make strange bedfellows though. Nations don't have friends they have interests. And it's hard to see any of these 'nation' that have identified its citizens' interests with its own. Of the big ones ... maybe Russia under Putin? All he has is the support of the Russian people.

guest77 | Jul 17, 2015 12:48:32 AM | 36

Excellent thread.

Syriza has shown, I suppose, that gaining access to power isn't enough. The party has to be involved with its members and those they hope to make members. Helping people get access to food, medicine, security, and anything else the state is refusing to help with. The left cannot just win elections, it must be threatening to those in power. It must be prepared to take control of those things the people demand they control (and it must be willing to relax when the people demand this). People must look to the organization in Latin America, that is all I can say. There, under the harshest repression, democracy is thriving.

The story of Greece I suppose is a lesson for the rest of the left parties though, who of them has a chance outside of Podemos - and what of Podemos anyway. They don't seem particularly able sadly.

The world- but especially the west - in the last 30 years, has changed so fundamentally that democracy is nowhere to be found. Nor democratic forms of social organization are even gone for the most part. And now they are turning the screws on whatever remains. Even the middle classes live under turn-key totalitarianism, as it was said by someone, (as opposed to before, where it was just the lower classes) and everyone knows this. And it is proved more and more with each passing event it seems. The people are thoroughly boxed in and controlled, but unlike juliania I think the media has so much to do with it. The massive media conglomeration is a keystone of the changes over the last 30 years, as well as the emergence of the internet - brought to a great many people by those media conglomerates.

The oligarchs of the west are determined to return to their royal status and complete political power they had before WW1. This is really a hopeless feeling attached to this, their seemingly complete victory over democracy. And I imagine that is much of the point...

guest77 | Jul 17, 2015 12:52:57 AM | 37

I haven't read this all, but looks very applicable to our times...

The network of global corporate control - https://archive.org/details/TheNetworkOfGlobalControl

Stefania Vitali, James B. Glattfelder, and Stefano Battiston

Abstract
The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions.

This core can be seen as an economic "super-entity" that raises new important issues both for researchers and policy makers.

Jackrabbit | Jul 17, 2015 1:33:03 AM | 38

juliania @30

Yes, Tsipras seems to have been ambivalent. The referendum was a bold move that actually worked in his favor but then turned cautious. Maybe he worried that if he threatened GRexit Schauble and the Troika would call his bluff?

In an earlier thread, I likened Tsipras to Chamberlain, who had the best intentions but is remembered as an appeaser. This may seem like a dramatic comparison but Michael Hudson has made the point that economics is now war by other means.

Chamberlain satisfied the public's overwhelming desire for peace just as Tspiras satisfied his public's desire to stay in the Euro. Each one had misgivings about the deal that they signed. Chamberlain began to rearm - especially building up British air power. Tsipras may also prepare for a future confrontation with the Troika.

MRW | Jul 17, 2015 2:05:22 AM | 40

The role of the Eurosystem within the half-hidden political order of the eurozone really is comparable to the Soviet or Chinese Communist Party.


No, it's not. Billmon doesn't understand the structure. He's not seeing it clearly, and is not getting to the root of the problem.

The individual EU countries that use the Euro cannot create their own currency. They GAVE UP their sovereign currency for a foreign one, the euro, when they agreed to make themselves subservient to the Maastricht Treaty.

The Maastricht Treaty did/does not allow for a 'federal government of Europe'. It ONLY concerned itself with a monetary union, and it set down strict rules for entry (for instance, a nation's deficits could be no more than 3%--an insanity). It allowed for the creation of a central bank, the European Central Bank (ECB), whose operating rules were dictated by the Maastricht Treaty (and subsequent revisions).

But crucial to understand is this: a central bank CAN ONLY SET MONETARY POLICY. You need a 'federal government' to SET FISCAL POLICY. The EU doesn't have that. Sure, it has the EU parliament, and it has a bunch of unelected officials running the ECB. But it has no overlord, no elected oversight, that can rule in conditions like Greece is going through to ease sectoral pain, and stop the bleeding of ordinary citizens. That requires fiscal policy. The only way that fiscal policy can be changed in the EU is by a change to the treaties. Or the blessing of Angela Merkel, because Germany has captured the ECB.

Let me try to put this in perspective. The US has a federal government AND a central bank. Despite what all the Federal Reserve haters and the 'get rid of the IRS' people claim (inaccurately), the US central bank is a creature of Congress and must answer, by law, to the federal government twice a year. It is the US Treasury's banker, and must, again by law, return all profits each year to the US Treasury.

The US federal government creates fiscal policy. This is the direction for the country that the central must follow and support trhough monetary polices. Fiscal policy is Congress' job although they haven't done it properly for 30 years. For example, if one of the 50 states is in trouble-let's be hyperbolic: devastating earthquake, massive drought, asteroid hits--Congress can authorize ("appropriate") funds--creating them 'out of thin air'-to help the state. With no debt to children or grandchildren.

Why? Because the US federal government issues the currency, the 50 states only use them. The 50 states cannot create their own currency, just like the countries that use the euro. But the 50 states have the protection of the US federal government.

The formerly sovereign countries in the EU that use the Euro are like the 50 US states now. They cannot create their own currency, which would give them the policy space to pay their own citizens and denominate all the debts incurred in their own currency. They are dependent on the ECB, a goddam central bank that has no fiscal authority, to help them. EVEN THOUGH, in Europe, the ECB issues the Euro 'out of thin air'. The ECB is a collection of central banks. And right now Germany's central bank is dominant because it has climbed to the top-Germany was deeply in debt before the euro took over-on the backs of the other nations.

You will not begin to understand what is going on until you realize that the euro was designed by the famous French economist, François Perroux, in 1942 in anticipation of Hitler winning WWII, which was expected then. The plan was that they (the Nazi Pétain government wanted to be aligned with the German hegemon) would introduce a pan-Eurpoean currency and force adoption by the southern and eastern European countries to control and impoverish them. Mitterand, aligned with the Nazi/fascist Cagoulard in the late 1930 and 40s, was a Pétain enthusiast; this only came out in 1990. It was Mitterand who pushed through the euro, if you will check history. Perroux's monetary replacement was the blueprint for the Maastricht Treaty and the subsequent treaties.

MRW | Jul 17, 2015 2:46:03 AM | 42

@tom | Jul 16, 2015 3:45:06 PM | 25

How the fuck is it accepted, that private banks can print as much national currencies as they like, but the owners of the those national currencies - the people and the government - cannot do with fractional reserves and money printing, like what the private banks do.

1. Private banks cannot "print as much national currencies as they like."

2. Fractional reserve banking does not exist. It died 80 years ago in most modern economies. I think only Hong Kong and Bulgaria (I think) use it now. The US doesn't' use it. Neither does any single country in the EU or Europe. Fractional reserve banking can only exist in countries that have a gold standard.

3. The only entity that prints the euro is the ECB, although the national central banks do it for the ECB under contract. BUT. BUT. BUT. These national central banks do it by keystroke. They don't control the physical printing presses. Besides, physical currency is such a small part of the currency.

4.

but the owners of the those national currencies - the people and the government
any country using the euro is not using a "national" currency. They are using a foreign currency.
james | Jul 17, 2015 3:06:57 AM | 43

@19/20 psychohistorian.. i like where you are coming from, but people are slow to change and always looking for leadership.. many think that because someone is rich or has a type of power that comes with money, that they will be good enough to lead.. that is a mixed bag to me personally.. there are just as many losers with money as not..

@28 Laguerre.. thanks.. you've given a specific example to my more generalized observations already posted.. indeed - visa and mastercard are a part of the same ponzi scheme run by the same kleptomaniacs under the guise of whatever they want to pass themselves off as.. playing with the bank of international settlements is only a step away..

@35 guest77 quote.. "The world- but especially the west - in the last 30 years, has changed so fundamentally that democracy is nowhere to be found." i think that is very true..

@39 mrw.. good post, but you are not addressing the issue directly either.. making a comparison to what was a country like greece to one of the states in the usa, cheapens the idea of what a country is.. the euro has done this too.. doesn't mean we have to go along with it, but in terms of drawing a parallel, it isn't a bad one to make. and of course the big difference here is now that greece has given up it's control of monetary policy, as have all the other countries gobbled up in this insane idea of an european community - greece is an opportunity for everyone within the stupid structure to see it for what it is - a complete rip off of any shred of democracy that might have remained...

mrw - we've had these conversations before.. you appear to think the fed reserve is some sort of good two shoes neutral structure that follows a mandate and is not beholden to malevolent interests.. i see it as just the opposite.. the euro was another way to diversify the ponzi scheme by duping a lot of ignorant people into something they would have been better knowing more about.. i would be curious to hear a response from you that provides an answer as to the solution here.. mine would be greece to say fuck you to the euro currency and go back on it's own...

psychohistorian | Jul 17, 2015 3:29:02 AM | 44

@jackrabbit.....you said that us "lower class" folk rely on the "upper class" folk to keep the world running

In the 66 years of my life I have seen untold potential waiting/begging for opportunity and I think your neck might break watching the momentary vacuum be filled getting rid of the top 50K social parasites and their attendant sociopaths. It is a myth that us poor 99% can't make it without the 1%. It is a myth that has been around for centuries and never has been true. The 1% are and have been an impediment to that advancement of humanity for quite some time. In most major ways we stopped evolving during the Enlightenment period when faith didn't become deprecated but instead became one of the tenets of the Western form of social organization, others being private property/finance, inheritance and "rule of law".

If all that were to change by neutering inheritance and ongoing ownership of private property (yeah, neuter public policy influence of religions too)
With Capital being returned to the global Commons, public education regains its priority and is a right for all but at the higher levels; and private education disappears. With those of faith no longer being in control of public policy, population control can be discussed, managed and alternatives like birth control researched/provided. We have answers for many of our pressing social problems, but we do not have the will to break out of the anthropological mold we are in.

Would the 99% agree to develop and use a technology that burdened the next thousand generations of humans to manange the potentially extinction causing effluent (i.e. Fukushima)? We live according to a very sick, no longer defensible and currently committing war crimes against humanity form of social organization, who's administrators we used to prosecute at the Hague 70 years ago. American empire is now the tool of the global plutocrats and the odds of the 99% wresting control away and changing the course of our species and world look slim.......but creating textual white noise on the intertubes is cathartic.

chris m | Jul 17, 2015 6:06:08 AM | 47

Regarding events of past 6 months between Greece and the EU
(and Greek membership of the euro).
Following the recent Greek capitulation,it is clear to almost everyone now that the fuse has been lit beneath the euro.(and possibly even the entire European project.

Eurosceptism is starting to break out (and its only just starting) throughout the entire EU.
We can now all see politicians such as Marine Le Pen getting elected in next French Presidential Election on a purely "leave the euro now" ticket.

PS the entire Europe project was always predicated on a "lets destroy individual National Sovereignty" premise (a sort of EUSSR).

I never did understand why when Communism officially died around 1990
that it seemed to make an almost simultaneous and miraculous rebirth, but then Europe is the land of Dracula
and various other 19th century horror stories.

Noirette | Jul 17, 2015 11:00:23 AM | 51

Syriza has shown, I suppose, that gaining access to power isn't enough. The party has to be involved with its members and those they hope to make members. guest77 at 35.

I agree, also pretty much with the rest of the post. What happened is that there was a power vacuum in Greece (when PASOK threw in the towel and the old structure crumbled) and the only ones willing to enter the breach were Syriza. One might also say that in Greece the political power structure does not match the real power structures in a good or efficient way. This democratic hoopla is all peachy cool when it is Swiss burghers discussin' and votin' on the color of the trams, or property tax, while being faithful to their 'radical' or 'socialist' -whatever- roots. In Greece, in its present form, it does not work. See for ex. the fantastical abyss between the OXI vote and the acceptance by the elected representatives of even harsher austerity.

Ideally, in a hypothetical genuine, true? democratic system, after the OXI vote a unitary or even technocatic Gvmt should have been formed (ironically, Tsipras did just that in a way ..) behind the OXI vote, to collectively resist and bargain (doubt any positive result would have been forthcoming but who knows), but naturally that was not possible.

One argument is that the 'Left' must be 'more in touch', 'must reform', must be 'more grass roots' etc. (Sounds a bit like what they say about the EU, heh? And in Greece that argument is made, plenty) - true, but imho it won't be enough. No way.

So some other avenues have to be explored, sought, implemented.. One imperative (under the present cirucumstances) is national sovereignity, see in Greece, New Democracy being say 'for austerity', 'for the euro' and so on because they are tied up in comprador not to say Mafia circles linked to the EU, big capital, banks, instituted corrupt structures, tax evasions, etc.

Anyway this debacle has shown that parliamentary democracy is not to be afforded to small powerless countries that have been taken for a ride. I think ppl are seeing that now, that facade is cracking.

Overall the EU is in deep sh*t. It won't survive for very long in its present shape.

Jackrabbit | Jul 17, 2015 11:16:30 AM | 53

camelotkidd

This article fails to note the 'eurosclerosis' that plagued Europe in the 70's and 80's. Uncompetitive economies with large social obligations and clientist political systems that still exist in some areas.

The 'evil genious' moniker doesn't really fit. I doubt he is the only economist that would've offered such a solution. And he is certainly not the only guy that found European labor laws of the time to be a costly headace. I think he just got there first. And his demeanor is grandfatherly not menacing.

And he is not unmindful of how his work can be misused. When I took his advanced economics class in the early 90's I argued against the excesses of supply-side economics while others in the class seemed to be eager to show their support of what they assumed Mundell believed in. I got an A-.

=

There are problems with the Euro - the disparate economies, the lack of political and fiscal union, the uneven benefits, etc. - but blaming it on the academics seems like scape-goating, and nearly as bad as blaming it on the victims. Should we blame Marx for the fall of the Soviet Union?

tom | Jul 17, 2015 4:34:48 PM | 59

MRW @42

How do you reconcile the contradiction between your points 1 and 2.

If Private banks "cannot" print as much money as they like ( point 1 ), then how can fractional reserve banking Not exist in most of the world ? ( point 2 ) . If fractional reserves do not exist then they free to print as much as they like.

Of course whem I say they can "print as much as they like" , that is not a children's imagination interpretation where the private banks are free to print infinitelt, that's of course the private banks have been unlinked from previously acceptable amount of printing/keyboard strokes, to create money.

And your 3rd doesn't make any sense at all. How does a gold standard have any restrictions on having a 10% fractional reserve, 1000%, or 1,000,000% of gold holdings ? Gold doesn't make decisions, regulations and enforcement are the decision-makers. Whether it's gold or fiat.

And your point 4 is right. It is my argument to why no country should join a single currency like the euro, and nations should always have their own sovreign national currencies

juliania | Jul 18, 2015 1:08:20 AM | 66

Jackrabbit@38

Sorry to be late on here. The Chamberlain comparison is an interesting one, and Tsipras' tragic flaw may be his devotion to the Eurozone - I think it is his, not really any perceived mandate, because surely he knows a good leader makes choices as events change - to go back to my example, that's what FDR did, and very risky choices they were. Some of FDR's didn't work, so he did other things. He was making it up as he went along, and I think that's very similar to what would be needed in exiting the eurozone. You would have to bring the people along with you, with the confidence and trust that something needed to happen, charting a new course. Tsipras doesn't seem to have been willing to do that, and consequently he runs the risk of being just one more in the line of leaders who have caved under pressure.

I think it has a lot to do with lack of faith in the people themselves on the part of such leadership. Obama showed this when he didn't take public financing but already was turning to the banksters. He didn't need to do that, and he probably would have even had a bigger vote tally if he'd stayed with the people. I wonder why this new leadership seems so divorced from sympathy with those who elect them and whom they presumably serve? I don't think Tsipras is as two-faced as Obama, but he's starting to wear the same shoes. The tragedy is the Greek people so much need him to step up - the way a tennis player steps up if he's really a champion. I think there's still time but it's getting late. If he keeps on with this deal, history will take note. That's a huge price to pay.

jfl | Jul 18, 2015 1:24:02 AM | 67

Tsipras ... he messed up. If 'his' deal goes through Greece suffers the full catastrophe. The thing to do is to prevent that happening. Tsipras is a lame duck. It makes little difference why he messed up ... character flaw, bribery, incompetence, all the usual failings of the political class.

The point is he has set Greece up for more lethal loans and so his 'program' must be repudiated. The only way I can imagine that happening is via the direct participation of the Greek people in their government. If there is a majority NO! on the new' program, good. Make a counter offer ... when (if, I suppose, to be inclusive) it's rejected, exit the euro - there's life at the end of the tunnel. If not ... well, they're done for, aren't they?

Debt-slaves of the German-dominated EU : deprived of their remaining assets and their own government.

fairleft | Jul 18, 2015 2:58:03 AM | 68

Lapavitsas Calls for Exit as the Only Strategy for Greek People (the video, audio and transcript):

Why this capitulation? Why have we come to this after all the enthusiasm of six months ago? After the surge of grassroots support in this country and in Europe? The answer is clear to me. And it has to do with the wrong strategy, that was good enough to win elections, but proved disastrous in government. What is this wrong strategy? It's very simple, expressed openly time and time again. We will achieve radical change in Greece, radical change in Europe, and we will do it within the Eurozone. That was the strategy. Well, that's not possible, period.

As far as I'm concerned, the Greek left has found its leader. Lapavitsas says it all, clearly and brilliantly: Grexit and nationalize the banks.

You can't advance if you do not understand that Syriza has failed, if you keep making excuses for their failure, or try to pretend it was anything but failure. Greece must leave the euro. This has been obvious for several years, but unreasoning, 'no matter what' Eurozone love, especially prevalent within Syriza and generally among the middle-class European left and pseudo-left (Podemos, I'm looking at you!), MUST be abandoned. The euro doesn't love you; it's time to stop loving it back.

The MAIN task for the European left, if it wants to be left rather than neoliberal, is to abandon the euro. It's easy: listen and be persuaded by Lapavitsas.

okie farmer | Jul 18, 2015 4:10:39 AM | 69

More from Lapavitsas:
Finally, the deal is quite clearly neocolonial. The government of the left has signed up Greece to a neocolonial agreement.

And it is--it is neocolonial for many reasons. I will mention three. First, the deal proposes the establishment of a privatization fund of 50 billion Euros which will basically sell public property under foreign management. 25 billion of that, the first 25 billion, will go to the banks by the agreement. If there's anything left, and there won't be anything left because they'll never make 50 billion, it might go to repaying the debt and possibly to investment. Essentially, then, this fund will sell what it can of public property to recapitalize the banks. We've just agreed the deal that sells the family silver to recapitalize the failed Greek banks.
~~~
The real winner of this deal is obvious. It's staring you in the face. The real winner is the Greek oligarchy expressed in the mass media. That's why the mass media are thriving and celebrating [a win].
~~~
Because the monetary union in which, to which Greece belongs, is not ideological. I mean, it is, but it isn't just ideology. And it isn't just a balance of forces. It is an institutional mechanism. The sooner the Greeks understand this, the better for all of us. It is an institutional mechanism, it is a monetary union that's, it's a hierarchical body that works in the interests of big business and in the interests of a few countries within it. That's what the EMU is.
~~~
Now, what do we do, then? What we need to do is to withdraw our consent to this agreement. To withdraw our consent to this agreement. And to redesign a radical program that is consistent with our values, our aims, and what we've told to the Greek people all this time, all these years. And that radical program is impossible without Euro exit. The only thing that we really need to do is focus on developing a plan for Euro exit that will allow us to implement our program. It is so obvious I'm amazed that people still don't see it after five months of failed negotiations.

okie farmer | Jul 18, 2015 4:23:57 AM | 70

http://www.bbc.com/news/world-europe-33578778
The former Greek finance minster has said his country's economic reforms are "going to fail", just as formal talks on a huge bailout are set to begin.

In a BBC interview, Yanis Varoufakis said Greece was subject to a programme that will "go down in history as the greatest disaster of macroeconomic management ever".
~~~
I may disagree with [PM Tsipras] and I declared that by resigning my post
~~~
The bailout could total €86bn (£60bn) in exchange for austerity measures.

In a damning assessment, Mr Varoufakis said: "This programme is going to fail whoever undertakes its implementation."

Asked how long that would take, he replied: "It has failed already."

fairleft | Jul 18, 2015 4:51:18 AM | 71

Varoufakis is just whining. He doesn't provide a solution to the immediate and staggeringly important problem, imposition of worse austerity on Greece's people. He sounds not dissimilar to Tsipras, who also says he's unhappy/pessimistic yada yada. They're like old men complaining about the weather. Whining and whinging, Tsipras has signed up to carry out the police state repression that's the only way his new legislation can be carried out.

Even though the solution/escape is clear, as Lapavitsas points out. It's almost as if the Syriza apologists are incapable of saying/thinking the word 'Grexit'. Who is holding their tongues?

mcohen | Jul 18, 2015 6:59:22 AM | 72

parking weapons like f-16 and submarines in countries is a good idea...they are maintained and serviced and kept ready for active service...this all under the cover of arms deals etc etc.

there is only one flaw..the government of that country must be trusted....they cannot change sides...greece is in a unique position.opposite north africa,on the med, so it is well positioned for launching of attacks,on countries like libya or tunisia or even egypt.

discrete crete sounds like a good name.

paulmeli | Jul 18, 2015 8:15:45 AM | 73

"Varoufakis is just whining. He doesn't provide a solution…"

Exactly. There is no solution that doesn't include leaving the Euro and reclaiming monetary sovereignty (although that alone won't do it…they need astute, competent leadership too). A solution that presumes changing the fundamental Euro structure to include a fiscal component is never going to happen, the big guns (Germany) would leave before that would happen.

Playing long shots works in the movies, in real life not so much.

Most of the billions of words that have been written on this subject have been little more than wailing and gnashing of teeth. Denial.

There are several stages to go before there is any viable solution that citizens will sign on to, that won't be co-opted by TPTB.

honest! | Jul 18, 2015 9:28:16 AM | 74

I'm not saying Syriza made all of the right mover, but neither do I think they can be considered "the Greek People's enemy". Not at all. They appear to be being honest.

guest77 | Jul 17, 2015 7:52:02 PM | 64

What a load of utter nonsense.

Honest?

They demanded the right to seek a mandate from the people before proceeding. They then got exactly the mandate they claimed to have sought . . . . . .

. . . And then, promptly ignored it entirely.

=======

There's nothing "honest" in that. Cynical? Absolutely. Manipulative? Certainly

Threacherous? Most definitely

But "honest"? . . . . GTFO!.

jfl | Jul 18, 2015 10:06:29 AM | 75

@71, @73

And you guys are just endlessly whining about the whiners ... the political class has chosen its preferred 'solution'. They're all done. If there is to be a real solution it has got to come from the Greek people.

@37

That's quite an article. I cut and pasted the picture of the 'bow-tie' graph and made the table of the 50 top controllers from page 33 sortable below it.

page 33 of The network of global corporate control

I'll try to summarize the significance of the bow-tie graph and its abbreviated labels tomorrow, for those who don't want to read the full article themselves.

Twenty-four of the top 50 controllers are nominally American.

Forty-four are financial.

Noirette | Jul 18, 2015 11:43:49 AM | 76

Posted some time back about the ESM (etc.) Here some info that give OK descriptions.

Eric Zuesse, global research

http://tinyurl.com/pqwbvqa

> a link in that article to the Treaty (automatic download)

then this, from the Corporate Europe Observatory

http://tinyurl.com/o3eyg25

> a link to a leaked text explaining the Troikas plans for the privatization fund (that 50 bn) pdf

http://corporateeurope.org/sites/default/files/esm_report_to_greece_0.pdf

for some extra financial info (the only available to the public?) one must go to their site and click through and through - all automatic downloads.

http://www.esm.europa.eu

As MRW writes, at 40, there is no resemblance between EU financial and pol. structures those of the Soviet, Chinese Communist Parties.

MRW maybe you are hyping the Nazi past? Mitterand and Thatcher particularly were against the re-unification of Germany. Mitterand wanted to lock Germany down in the Euro in an 'alliance' (or because he was a bankster's man, in fact laws prohibiting speculation were lifted in France well before Billy C's annulment of Glass-Steagall, the US played catch-up) and Germany made the trade, with difficulty (attachment to the mark, independence, etc.) Controlling countries through their currency and banking system is not an original or particularly Nazi idea. For ex it works right now in parts of Africa with the CFA and nobody talks about it. The French didn't borrow that idea from the Nazis.

rufus magister | Jul 18, 2015 12:09:41 PM | 77

Jackrabbit at 38, juliania at 66, jfl & fairleft >67

Like many, I've been waiting for the longest running drama on the Athens stage to finally get to the last act before attempting to make sense of the staging, plot and characters.

I still don't think we're quite there yet; probably a little more political fall-out still, but not much, see e.g., a majority of the Syriza Central Committee opposed the austerity deal.

The question of the political leadership of the left, however, is always an interesting topic. Also from the 17 July "Links" page at - dare I mention the name? - Naked Capitalism, John Pilger at Alternet argues thatThe Leaders of Greece Are Some of the Phoniest Idealists You'll Ever See. It seems hard to disagree.

Having set aside the mandate of the Greek electorate, the Syriza government has willfully ignored last week's landslide "No" vote and secretly agreed a raft of repressive, impoverishing measures....

The leaders of Syriza are revolutionaries of a kind – but their revolution is the perverse, familiar appropriation of social democratic and parliamentary movements by liberals groomed to comply with neo-liberal drivel and a social engineering whose authentic face is that of Wolfgang Schauble, Germany's finance minister, an imperial thug. Like the Labour Party in Britain and its equivalents among former social democratic parties such as the Labor Party in Australia, still describing themselves as "liberal" or even "left", Syriza is the product of an affluent, highly privileged, educated middle class, "schooled in postmodernism", as Alex Lantier wrote. [I could not immediately find whatever Pilger is quoting, he is affiliated with the "wsws" website; such sad sloppiness at a major site in these days of html coding...]

For them, class is the unmentionable, let alone an enduring struggle, regardless of the reality of the lives of most human beings. Syriza's luminaries are well-groomed; they lead not the resistance that ordinary people crave, as the Greek electorate has so bravely demonstrated, but "better terms" of a venal status quo that corrals and punishes the poor. When merged with "identity politics" and its insidious distractions, the consequence is not resistance, but subservience. "Mainstream" political life in Britain exemplifies this.

This is not inevitable, a done deal, if we wake up from the long, postmodern coma and reject the myths and deceptions of those who claim to represent us, and fight.

How then do democratic movements ensure that their leaders views and priorities accord with their own, and can be held responsible and be replaced? What sort of leadership is needed for industrial as well as political democracy?

rufus magister | Jul 18, 2015 12:18:48 PM | 78

ps to 77 -- Amongst the parties affected by the Munich Agreement, I think Edvard Beneš, the Czechoslovakian President, is a better fit for poor Tsipras.

paulmeli | Jul 18, 2015 12:54:19 PM | 79

"the political class has chosen its preferred 'solution'. They're all done. If there is to be a real solution it has got to come from the Greek people."

No kidding?

I don't know what's worse, repeating the obvious ad nauseam or whining.

Noirette | Jul 18, 2015 2:00:07 PM | 80

Having set aside the mandate of the Greek electorate, the Syriza government has willfully ignored last week's landslide "No" vote and secretly agreed a raft of repressive, impoverishing measures…. a quote by rufus at 77

NO. Syriza was elected on a platform of 'staying in the EU-Euro' and at the same time 'reducing /abolishing austerity.'

This mandate might be considered contradictory or ridiculous, illusory, doomed to fail, etc. (Yes I agree.)

Also Syriza has a slim voter support and thus had to form a coalition Gvmt.

Well in function of that contradictory mandate they managed (at terrible cost and perhaps misguidely) half of it. Staying in the Euro.

What is surprising? Nothing.

Why they chose the one above the other is abundantly clear.

Wayoutwest | Jul 18, 2015 2:24:51 PM | 81

RM@77

I enjoy good discussion and criticism but this carping and sniping about Syriza from the US Left says more about writers such as JP and the weaklings of the Left, that have attained a new level of meaninglessness, and has allowed someone like Bernie Sanders to claim to be a Socialist without any real blowback, is trying.

MRW | Jul 18, 2015 7:29:54 PM | 85

paulmeli at @63 has got it exactly right. In all modern economies on a fiat currency, loans create deposits.

Bankers, as a result, create 'credit money', NOT new interest-free money. (Credit money also means that one person's asset is another person's liability. At the commercial banking level within the real economy that includes collateral, timed repayment schedule, and interest owed, which is income to the issuing bank. Everything nets to zero at this level across the macroeconomy.)

The US federal government, on the other hand, adds new money into the economy. Only entity that can. Only the US federal government can introduce new, interest-free money into the economy, and it does it via congressional spending based on the needs of its citizens, and where it wants the economy to grow (giving 40% of it to the financial institutions is NOT GROWTH). Which the mo-fos we've elected do not understand.

One small quibble, Paul. The amount of physical currency, physical cash and coin, is around 11.5% to12% of the available money. The rest are treasury securities. Don't forget that countries like Ecuador are pegged to the USD and need US cash for their citizens. Ecuador's central bank orders them from the US Treasury (Bureau of Printing and Engraving) and puts up 100% of the demanded amount in assets (treasury securities) to pay for them.

MRW | Jul 18, 2015 7:31:15 PM | 86

Tom @61

Sorry for the delay. I'm traveling. Good questions, btw.

First, let's clear up what fractional reserve banking is. This is a lousy simplistic example, but it will work. And let's imagine a small western town with one bank, which I will call Bank Buckeroo. Introducing a second bank in the town mean I would have to explain how interbank reserves work, and it doesn't matter in this explanation. [BTW, US banks DO NOT LEND their reserves; reserves serve another purpose in the US banking system; namely to help the Federal Reserve retain the overnight interest rate target that banks charge each other. Canada, for example, doesn't even have a reserve requirement for their commercial banks.]

Fractional reserve banking explained

OK. Johnny Schwartzburger sidles into his Bank Buckeroo and deposits 100 bucks in cash in his savings account.

Now Bank Buckeroo has got $100 more than it had yesterday.

Because the reserve requirement is, say, 10%-the FRACTION of the loan that the bank must retain under "fractional reserve banking"--Bank Buckeroo holds onto $10 and can loan out $90.

Sally Sweetpea needs $90 for her beauty shop and she borrows $90 from Bank Buckeroo, and deposits that in her checking account.

Now Bank Buckeroo holds onto $9 (10% of $90) and can loan out $81.

Old Ray Saddleback needs $81 to buy supplies for the only café in town, so he hits up Bank Buckeroo for an $81 loan.

Bank Buckeroo holds onto $8.10 (10% of $81) and can loan out $72.90.

Paddy O'Gilligan needs $72.90 to top off his supply of whiskey at the only bar in town (and this banker likes his whiskey), so he borrows $72.90 from Bank Buckeroo.

Bank Buckeroo holds onto $7.29 (10% of $72.90) and can loan out $65.61

You see where I'm going with this. Eventually, Bank Buckeroo will have reserved all $100, but will have extended credit against that $100 to customers that he knows are good to pay back their loans. Under the gold standard system before 1933, each dollar had a statement on it that you could exchange 20 of the one-dollar bills for one ounce of gold (not exactly the statement but that's what it meant). It was a "fixed exchange rate." The value of a dollar (US) was fixed to the value of gold. So Bank Buckeroo has Johnny Schwartzburger's original $100 in cash that guarantees it can trade-in the cash for $100 in gold anytime it wants. It's protected against that loss. The only thing the banker has to worry about is whether his customers can pay back the new loans, and he knows their creditworthiness intimately.

That all changed in 1933-no more gold standard in the US

We went off the gold standard. The value of the USD was no longer pegged to the value of gold, the supply of which the US federal government could not control globally except for certain US mines. Each new goldmine find globally affected the value of the dollar before 1913 and led to extraordinary panics and busts in the last half of the 1800s. More gold available meant the value of the dollar dropped, and that affected international trade, and whether people exchanged their dollars for gold stateside and hoarded it, further diminishing the amount of money available in the real economy. It was the National Gold Something-or-Other Act in 1900 that pegged the USD at $20/ounce.

Interestingly enough, it was Marriner Eccles, whom FDR made the first chairman of the Federal Reserve three years later, a Republican Mormon banker from Provo UT who appeared before the Senate and House of Representatives in 1932/33 to make the case for dropping the gold standard (he wasn't the only one however). Eccles became more popular than Miley Cyrus. Eccles had seen the devastation that the banking system was doing to his municipal and rural customers. Eccles was 22 when he made his first million after his father died and he had to take over the family businesses, which included a bank. He was a financial genius who could speak plain English to commoners about banking and esoteric financial concepts. His ideas predated John Maynard Keynes by three years. (BTW, Keynes was never taught in American universities, so anyone sneeringly invoking Keynes doesn't know what they are talking about. The first Nobel Laureate in Economics, Paul Samuelson, is supposed to be the explainer and keeper of Keynes ideas, but Samuelson admitted in 1989 in a video interview that he never read more than half the book, and that he never understood Keynes' ideas to begin with.)

[to be contd]

Correction: Each new goldmine find globally affected the value of the dollar before 1913

Should read: Each new goldmine find globally affected the value of the dollar before 1900

MRW | Jul 18, 2015 7:34:22 PM | 87

Tom @61 [contd.]

If Private banks "cannot" print as much money as they like ( point 1 ), then how can fractional reserve banking Not exist in most of the world ? ( point 2 ) . If fractional reserves do not exist then they free to print as much as they like.

[…]

And your 3rd doesn't make any sense at all. How does a gold standard have any restrictions on having a 10% fractional reserve, 1000%, or 1,000,000% of gold holdings ? Gold doesn't make decisions, regulations and enforcement are the decision-makers. Whether it's gold or fiat.

Loans create deposits. Yes, 'out of thin air'. Bankers can say 'Yay' or 'Nay' based on the cut of your jib, or the color of your skin, although they are not allowed to.
Banks don't print money. They issue credit, i.e. 'credit money'. They mark up the customer's bank account with computer keystrokes in the amount of the loan. Banks issue credit money based on two things: (1) customer creditworthiness, (2) customer income. They also require collateral.
Banks have to maintain reserves in their banks accounts at the Federal Reserve on all the loans they make.It is a percentage of the loan, and banks cannot loan out this money. If the bank doesn't have enough reserves in their Fed account, they have to borrow from other banks at the Fed Funds Rate, or overnight interest rate, set by the Fed. (The Fed uses this overnight interest rate to promote or demote bank lending in the economy, among other things.)
If the bank has been making bad loans or is overextended-this goes to your Point 1 about banks being free to issue as much credit money as they like-and other banks know that, the other banks might not loan it any reserves.
In that case, the solvency-suspect bank has to slink to the Fed's Discount Window where they can borrow the required reserves, but the interest rate is punitive, and it usually alerts bank examiners that there's a problem at the bank. So having to go to the Discount Window is not something a bank wants to broadcast.
By law, the Federal Reserve must supply reserves to banks within the federally chartered banking system, or declare the overextended bank insolvent.
A 'check and balance' on a bank loaning out as "as much as they like" is meeting its reserves requirement.

About gold. When you have a gold standard, you're on a fixed exchange rate: X amount of currency for each ounce of gold. That's when fractional reserve banking makes sense because the bank only wants to loan out X amount of money based on the amount of gold in the kitty. It's up to the banker to make intelligent and safe decisions about who he loans to by doing his due diligence.

On a gold standard, he who owns the gold, owns the country. When we got rid of the gold standard, goldminers and gold owners stopped owning this country, including Mr. Rothschild. We fucked him up the ass. Our money is based on the 'full faith and credit of the US federal government' and we issue our own currency. To boot, we are the reserve currency worldwide.

MRW | Jul 18, 2015 7:36:21 PM | 88

The thread didn't take my formatting in @88. Here is the first half presented in a clearer format:
----------------------------------------------

In response to Tom's @61

  • Loans create deposits. Yes, 'out of thin air'. Bankers can say 'Yay' or 'Nay' based on the cut of your jib, or the color of your skin, although they are not allowed to.
  • Banks don't print money. They issue credit, i.e. 'credit money'. They mark up the customer's bank account with computer keystrokes in the amount of the loan. Banks issue credit money based on two things: (1) customer creditworthiness, (2) customer income. They also require collateral.
  • Banks have to maintain reserves in their banks accounts at the Federal Reserve on all the loans they make.It is a percentage of the loan, and banks cannot loan out this money. If the bank doesn't have enough reserves in their Fed account, they have to borrow from other banks at the Fed Funds Rate, or overnight interest rate, set by the Fed. (The Fed uses this overnight interest rate to promote or demote bank lending in the economy, among other things.)
  • If the bank has been making bad loans or is overextended-this goes to your Point 1 about banks being free to issue as much credit money as they like-and other banks know that, the other banks might not loan it any reserves.
  • In that case, the solvency-suspect bank has to slink to the Fed's Discount Window where they can borrow the required reserves, but the interest rate is punitive, and it usually alerts bank examiners that there's a problem at the bank. So having to go to the Discount Window is not something a bank wants to broadcast.
  • By law, the Federal Reserve must supply reserves to banks within the federally chartered banking system, or declare the overextended bank insolvent.
  • A 'check and balance' on a bank loaning out as "as much as they like" is meeting its reserves requirement.

MRW | Jul 18, 2015 7:41:19 PM | 89

Some reporters are finally beginning to understand what I have been yammering on here over the past 18 months:

Why America Is Not The Next Greece
The key difference is that the United States has its own central bank -- the most powerful one in the world.

http://www.huffingtonpost.com/entry/why-america-is-not-the-next-greece_55a814c5e4b04740a3df6b11?

MRW | Jul 18, 2015 7:45:47 PM | 90

[Jul 18, 2015] Show Some Mercy

"..."The euro has turned into an economic liability that has exacerbated political tensions. For this, the European elites who pushed for the currency union bear some responsibility."
"Some responsibility" must be the understatement of the year.
They also bear the responsibility for ECB's deflationary policy and for encouraging private lenders to treat Greek sovereign debt like German sovereign debt. Those are acts of stupidity over and above the foresight of Friedman and Feldstein and Krugman. [The British should be lighting candles to George Soros for keeping them out of the EMU.] "
"...Greece story is not so much about economics (pseudoscience often called dismal science). It is mainly about politics, and first of imperial politics within EU (think Forth Reich)."
Jul 18, 2015 | Economist's View '
anne:

http://research.stlouisfed.org/fred2/graph/?g=10O8

January 15, 2015

Government debt and balance as shares of Gross Domestic Product for Greece, 2000-2012

(Percent)

likbez:

Austerity is far from being a mistake. This is quintessential neoliberal policy. Greece is just yet another country that got into permanent debt slavery. As simple as that.

ThomasH:

"The euro has turned into an economic liability that has exacerbated political tensions. For this, the European elites who pushed for the currency union bear some responsibility."

"Some responsibility" must be the understatement of the year.

They also bear the responsibility for ECB's deflationary policy and for encouraging private lenders to treat Greek sovereign debt like German sovereign debt. Those are acts of stupidity over and above the foresight of Friedman and Feldstein and Krugman. [The British should be lighting candles to George Soros for keeping them out of the EMU.]

And then to compound the errors, those elites cooked up a "bailout" that prevented Greece from simply defaulting in 2010. If that would have caused some banks to go under, that is a feature, not a bug. The ECB could have dealt with systemic effects.

Yes, Greek governments deserves blame for not investing the borrowed money well, for accepting the poisoned chalice in 2010, and for clinging to the Euro even now.

paine:

The people of greece were victims
of decades of pro europe bally hoo

gordon -> paine...

I commented earlier (on another thread) that large remittances by Greeks working abroad might be imperiled by Grexit. I don't know this for a fact (what if Greece left the Eurozone but not the EU?) but if it is it could explain the apparent death-grip the Euro seems to have on Greek politics.

http://www.pewsocialtrends.org/2014/02/20/remittance-map/

The remittance map shows that Germany is the biggest source of Greek remittances!

likbez:

Greece story is not so much about economics (pseudoscience often called dismal science). It is mainly about politics, and first of imperial politics within EU (think Forth Reich).

Cruelty of lenders was about beating left-leaning government into full submission, to make a lesson for Spain and other countries with similar parties.

From the speech by Dr. Goebbells to Czech Intellectuals and journalists, Berlin 1940.

You gentlemen have now seen something of the Reich, and I made a point of allowing you to make this journey before I addressed you. You have seen the Reich in Wartime, and you will have formed some idea of what it can be in peace. Out great nation with its large population, together with Italy, will in practice take over the leadership of Europe. There are no two ways about that. What it means for you is that you are already members of a great Reich which is preparing to reorganize Europe, tearing down the barriers that still separate the European peoples and making it easier for them to come together. Germany intends to put an end to a situation which quite clearly cannot satisfy mankind for long. We are performing here a work of reform which I am convinced will one day be recorded in large letters in the book of European history. Can you imagine what the Reich will actually be like after the war? (…)

[Jul 18, 2015] Variable Geometry Bites Back: Schäuble's Motives

Fabio Ghironi in Vox EU:

Variable geometry bites back: Schäuble's motives, by Fabio Ghironi: Success of the German-inspired solution for the latest Greek crisis is far from assured. If it fails, the Eurozone may be changed forever. This column argues that the failure would lead to an outcome that has been favoured for decades by Germany's Finance Minister, Wolfgang Schäuble. Perhaps the package the Eurozone agreed is just a backdoor way of getting to the 'variable geometry' and monetary unification for the core that the Maastricht criteria had failed to achieve.

The Greek crisis risks shattering the Eurozone as we know it. Germany's Finance Minister Wolfgang Schäuble has been leading a coalition of hawks who appear determined to make Grexit an unavoidable outcome. If not immediately then at least once it becomes clear (or clearer) that it is impossible for Greece to satisfy the conditions it is being asked to meet.

As one ponders Mr. Schäuble's possible motives for insisting on such demanding (many would say infeasible) targets, it is instructive to recall his political and intellectual history in the run-up to the euro.

How Schäuble viewed the Eurozone

Mr. Schäuble was Minister of the Interior of the Federal Republic of Germany between 1989 and 1991. In this capacity, he played a central role in the negotiations that led to German reunification. The same period saw the negotiations leading up to the Maastricht Treaty, which established the foundation for the Eurozone.

A widely held view at the time was that Germany agreeing to give up the deutschmark and to participate in a European monetary union was the quid pro quo for British and French acquiescence to German reunification – an event of monumental implications, given Europe's history.[1]

Germans were understandably reluctant to give up a very successful currency for the uncertainty of monetary union with less rigorous partners. Thus, at their insistence, the Maastricht Treaty included convergence criteria that would have to be fulfilled for euro membership. In effect, those conditions were intended to keep unreliable Southern European countries out of the monetary union.

In those years, Mr. Schäuble – heir apparent to Chancellor Helmut Kohl at the time – championed a 'variable geometry' approach to the Eurozone. A key implication of this 'variable geometry' was that that monetary unification should be restricted to a set of 'core' countries that shared Germany's preference for austerity.

Mr. Schäuble originally made his argument explicit in a blueprint for the Eurozone co-authored with Karl Lamers and released by Germany's Christian Democratic Union in the late summer of 1994 (Lamers and Schäuble 2014). Responding to critics less than two weeks later, Mr. Schäuble stated that "We cannot set the pace of European integration according to the slowest ship in the convoy."[2] Speed was clearly defined relative to the German benchmark, as enshrined in the Maastricht convergence criteria. Chancellor Kohl described the Schäuble-Lamers document as a 'discussion paper,' but he did not explicitly distance himself from it, and he defended the plan of a 'core' Europe.[3]

Schäuble after German and France flouted the Maastricht criteria

In August of 2014, Mr. Schäuble and Mr. Lamers reiterated their plea for 'variable geometry' in a Financial Times article 20 years after their original paper (Lamers and Schäuble 2014). They conclude: "In order to make progress […], we should keep using the approach that proved its mettle back in 1994: to establish cores of co-operation within the EU that enable smaller, willing groups of member states to forge ahead." Importantly, the article acknowledges the crucial role of Germany (and France) in scuttling the credibility of the Stability Pact's fiscal policy rules in 2003.

Mr. Schäuble's commitment to European integration is unquestioned, and no better description can be found than the remarks by IMF Managing Director Christine Lagarde when Mr. Schäuble was awarded the Charlemagne Prize in 2012 (Lagarde 2012). But Mr Schäuble's history shows that his commitment to 'variable geometry' is just as strong -- to the point that his most recent statements on support for Grexit within the German government are creating a rift with Chancellor Angela Merkel.[4]

As it turned out, the Maastricht criteria that were meant to implement Mr Schäuble's vision failed to keep Southern European countries out of the euro, and through steps that we all became more or less familiar with, we have gotten to the start of the crisis in 2010, and the current situation.

The cost of Schäuble's strategy

If Greece exits the euro it will become evident to everyone that irreversibility of euro membership is an illusion as long as the countries involved retain their essential sovereignty.

  • Markets will likely test the resolve of countries' governments to stay in the euro, and costly trade-offs will provide additional fuel for populism and nationalism.

While government commitment and ECB firepower may prevent a domino effect, the balance of market and political forces may well result in other Mediterranean countries leaving the euro.

At that point, Germany would be left in a Eurozone that would consist of Mr Schäuble's early 1990s 'core,' plus partners to the East and Baltic countries who have been renewing their historical economic ties with Germany since joining the EU.

Concluding remarks

All this raises the following question: Is Mr Schäuble's position simply intended to find a backdoor way to return to the 'variable geometry' and monetary unification for the 'core' that the Maastricht criteria had failed to achieve?

History will be the judge, but if this was the way to revive 'variable geometry,' it was better to leave it resting. ...

Posted by Mark Thoma on Saturday, July 18, 2015 at 09:47 AM in Economics, Politics | Permalink Comments (1)

An Unsustainable Position

Paul Krugman:
An Unsustainable Position: Everyone is talking about the IMF's new update to its debt sustainability analysis, which says that Greece's attempt to surrender is doomed to failure without massive debt relief. That's surely the right conclusion.
However, it's hard to accept the document's claim that this is a new development...
The point, surely, is that the plan for Greece was never feasible. No matter how willing a nation is to suffer, no matter how willing to run primary surpluses on a scale that is very rare in history, trying to pay off high debt through austerity without any kind of monetary offset is basically a recipe for debt deflation and failure. This is, in fact, what the IMF's own research has said. ...
So it's good to see the IMF being realistic here, but the institution remains unwilling to face up fully to past errors - which matters, because these past errors are prologue to the doom that faces any attempt to stay the course.

Posted by Mark Thoma on Wednesday, July 15, 2015 at 10:11 AM in Economics, International Finance, Politics | Permalink Comments (75)

[Jul 18, 2015] Faithocrats

Paul Krugman:
One of the ideas floating around in the aftermath of the sack of Athens has been that of, in effect, deposing Syriza from outside and installing a "technocratic" government. It wouldn't be the first time in this dismal saga, and I won't be surprised if it happens, for a few months anyway.
But let me note, as I have before, that what Europe calls technocrats aren't people who know how the world works; they're people who subscribe to the approved fantasies, and never change their minds no matter how badly wrong things go. Despite the overwhelming evidence that austerity has exactly the dire effects basic textbook macro says it will, they cling to belief in the confidence fairy. Despite a striking lack of evidence that "structural reform" delivers much of a growth boost, especially in an economy suffering from a huge output gap, they continue to present structural reform - mainly in the form of disempowering workers - as a sovereign remedy for all ills. Despite a clear record of past failure, they continue to push for asset sales as a supposed answer to debt overhang.
In short, what Europe usually means by a "technocrat" is a Very Serious Person, someone distinguished by his faith in received orthodoxy no matter the evidence. ...

Posted by Mark Thoma on Tuesday, July 14, 2015 at 09:01 AM in Economics | Permalink Comments (19)

[Jul 18, 2015] Negotiating with Germany is a Waste of Time

Kevin O'Rourke:

...I don't suppose that any other left wing party that may come to power in the future seeking to challenge the current European economic policy mix will be as feckless as Syriza. The lesson that they will draw from this debacle is: negotiating with Germany is a waste of time; be willing to act unilaterally, be willing to default unilaterally, have a plan for achieving primary surplus if you haven't already achieved it, have a hard default and euro exit (now possible, thanks to the Germans) option in your back pocket, and be willing to use it at the first sign of hassle from the ECB. A deal could have been done today that would have strengthened the Eurozone, but instead it has just become a lot more fragile.

Posted by Mark Thoma on Monday, July 13, 2015 at 11:09 AM in Economics, International Finance, Politics | Permalink Comments (129)

[Jul 18, 2015] Little-Known History of the Euro Crisis Was Baked In from the Start

Jul 18, 2015 | Zero Hedge
windcatcher

Communism definition: A political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs.

Central banksters are not advocating communism. Indeed, the totalitarian fascist financial criminals advocate no publically owned property. They are buying public lands for pennies on the dollar as they enslave the population via representative debt.

The banksters are plundering criminals that want all that is valuable and to hell with the population, there are too many people anyway, let them starve. The criminal fascist central banksters hate any public support of the people. That is not a communist or a socialist and certainly not a democratic concept; it is a totalitarian criminal bankster cartel fascist concept.

Benito Mussolini in his book titled "The Doctrine of Fascism" defined fascist form of government as the merger of corporate monopoly with government. The bankster modern fascist should be branded as fascist, and no other, to distinguish them from representative democracy (government of, for and by the People.

windcatcher

The European Union before the Eurozone, was designed and implemented by the bankster financed and controlled Council on Foreign Relations and the Trilateral Commission. Goldman Sachs is but one tentacle of the criminal bankster world financial octopus of the New World Order Empire.

Our American Constitution has not been destroyed (same for Greece Constitution); it has been overthrown by bankster fascist (government of, for and by multinational corporate monopoly). The American Constitution and our Bill of Rights, as authored primarily by James Madison and explained in the Federalist Papers, are still intact today.

Our Founding Fathers had to deal with the same problems we are facing today: domination by corporate monopoly over the American economy and obeying foreign laws.

We fought the American Revolution to be free from the corporate monopoly and domination of the American economy by the British Empire.

After we won the war, our Founding Fathers along with economist Adam Smith's "Free Enterprise" economy, the American Constitution was written to guarantee the American People that the government function was for and by the People--- not government of, for and by the criminal corporate monopoly. The Age of Enlightenment of constitutional democratic republics began.

To paraphrase Thomas Jefferson, the Constitution, if not vigilantly guarded against criminal corporate monopoly corruption, the people will have to refreash our Constitution with revolution. Indeed, our nation was founded on revolution in rejection of corporate monopoly and domination by totalitarian criminal banksters.

Enough is enough! Nationalize the banks and requisition them to serve the People to restart our American Free Enterprise economy, throw the fascist totalitarian bankster criminals in prison!

If the criminal banksters were prosecuted for American mortgage fraud back in 2000 the criminals would have been in prison instead of destroying the economies of the world with their fascist totalitarian New World Order Empire.

Radical Marijuana

I did not previously know those historical details presented in the article above, however, those do not surprise me! The European Union and its Euro were projects of the international bankers, within which context almost all of the successful national politicians were the banksters' puppets, voted for by enough of the people who have become the banksters' muppets, while the European politicians, and those that voted for them, became mostly even more so...

The EU and Euro were stepping stones.

Tragedy and Hope by Carroll Quigley:

"powers of financial capitalism
had another far-reaching goal,
nothing less than to create a
world system of financial
control in private hands
able to dominate the
political system of
each country and
the economy of
the world as
a whole ..."

That has already been mostly achieved, to make:

WONDERLAND MATRIX BIZARRO MIRROR WORLD,

where everything appears absurdly backwards!

[Jul 18, 2015] Why is Germany so tough on Greece? Look back 25 years

"...The lesson Schäuble learned – and which is likely to influence his decision-making now – is that if you act the pure-hearted neoliberal you can still get away with decisions that don't make perfect economic sense."
.
"...But Schäuble should have learned from history that the Treuhand gamble had catastrophic psychological consequences. Even though the agency was run by Germans, who spoke German, still it was seen by many in the east as an occupying force."
.
"...Schäuble's idea of foreign countries controlling Greek assets and moving them abroad is an even more humiliating concept for any country. Schäuble comes across as a tough and sober accountant. In fact he is just an ordinary politician repeating old mistakes. "
.
"...The assault on his life, who forced him to a wheel-chair, made Schaeuble, who always was an arrogant, egocentric, right-wing conservative, a vengeful and bitter arrogant egocentric conservative, who hates everything even remotely socialist."
.
"...And the whole Greece thing just shows how idiotic neoliberalism actually is..."
.
"...This talk of nation vs nation is a distraction. It's better to follow the money. It quickly becomes clear that those who have profited from Greece joining the Euro are keeping their money and the rest are having to suffer the consequences. Goldman Sacks have made billions as have investors in Europe. Meanwhile the people of Greece, Germany or the broader EU are being told they have been reckless and will have to suffer the consequences."
.
"...It's enough to be in the wider neoliberal EU to go under. Being in the eurozone just adds extra pain, waterboarding and rectal feeding. As EU apparatchiks admitted themselves. Maybe the US can now shut down Gitmo by sending the inmates to Greece, where conditions are just as harsh."
.
"...Whilst national governments are printing money in gay abandon to bail out their banker backers... Simultaneously fleecing their taxpayers under the the moral pretence of 'Austerity', we have witnessed an unelected cartel eviscerate a sovereign nation. The Greek Balance Sheet of Misery is deep in the red! Apparently, people no longer matter - Politicians and Bankers have a free rein. Greece fell for the EU dream... It was a political sucker to be exploited for the benefit of the Project. Post 2008, it has been treated like dirt. Its neighbours should take note - this Union is a nasty creature."
.
"...Many many people these on both sides of the former border are living in a way where 1990 GDR living standards would just about be an upgrade."
.
"...The nepotism and clientelism of the ruling class has been a problem since independence from Turkey and successive Greek governments have promised and failed to rectify it but that doesn't excuse humiliating an entire nation and pushing it to the point of economic and civil collapse because 'they deserve to reap what they sow' regardless of the consequences for the entire region with IS just a few hundred kilometres away. This is the worst case of being unable to see the wood for the trees that we have seen since the 'allies' invaded Iraq on the pretext of saving the West from nuclear weapons that did not exist.

The vindictive behaviour towards Greece marshalled by Germany last weekend has lost it a lot of friends and reminded us where its mindset comes from and where it leads to if more civilised nations do not step in to reel it in. Habermas in particular is particularly cognisant of this."

Jul 18, 2015 | The Guardian
Every drama needs a great baddie, and in the latest act of the Greek crisis Wolfgang Schäuble, the 72-year-old German finance minister, has emerged as the standout villain: critics see him as a ruthless technocrat who strong-armed an entire country and now plans to strip it of its assets. One part of the bailout deal in particular has scandalised many Europeans: the proposed creation of a fund designated to cherrypick €50bn (£35bn) worth of Greek public assets and privatise them to pay the country's debts. But the key to understanding Germany's strategy is that for Schäuble there is nothing new about any of this.

It was 25 years ago, during the summer of 1990, that Schäuble led the West German delegation negotiating the terms of the unification with formerly communist East Germany. A doctor of law, he was West Germany's interior minister and one of Chancellor Helmut Kohl's closest advisers, the go-to guy whenever things got tricky.

The situation in the former GDR was not too dissimilar from that in Greece when Syriza swept to power: East Germans had just held their first free elections in history, only months after the Berlin Wall fell, and some of the delegates from East Berlin dreamed of a new political system, a "third way" between the west's market economy and the east's socialist system – while also having no idea how to pay the bills anymore.

The West Germans, on the other side of the table, had the momentum, the money and a plan: everything the state of East Germany owned was to be absorbed by the West German system and then quickly sold to private investors to recoup some of the money East Germany would need in the coming years. In other words: Schäuble and his team wanted collateral.

At that time almost every former communist company, shop or petrol station was owned by the Treuhand, or trust agency – an institution originally thought up by a handful of East German dissidents to stop state-run firms from being sold to West German banks and companies by corrupt communist cadres. The Treuhand's mission: to turn all the big conglomerates, companies and tiny shops into private firms, so they could be part of a market economy.

Schäuble and his team didn't care that the dissidents had planned to hand out shares of companies to the East Germans, issued by the Treuhand – a concept that incidentally led to the rise of the oligarchs in Russia. But they liked the idea of a trust fund because it operated outside the government: while technically overseen by the finance ministry, it was publicly perceived as an independent agency. Even before Germany merged into a single state in October 1990, the Treuhand was firmly in West German hands.

Their aim was to privatise as many companies as possible, as soon as possible – and if you were to ask most Germans about the Treuhand today they would say it achieved that objective. It didn't do so in a way that was popular with the people of East Germany, where the Treuhand quickly became known as the ugly face of capitalism. It did a horrible job in explaining the transformation to shellshocked East Germans who felt overpowered by this strange new agency. To make matters worse, the Treuhand became a hotbed of corruption.

The agency took all the blame for the bleak situation in East Germany. Kohl and Schäuble's party, the conservative CDU, was re-elected for years to come, while others paid the price: one of the Treuhand's presidents, Detlev Karsten Rohwedder, was shot and killed by leftwing terrorists. (Schäuble too became the victim of an attack that left him permanently in a wheelchair, only days after German reunification – but his paranoid attacker's motives were unrelated to the political events)

But the reality of what the Treuhand did is different from the popular perception – and that should be a warning for both Schäuble and the rest of Europe. Selling East Germany's assets for maximum profit turned out to be more difficult than imagined. Almost all assets of real value – the banks, the energy sector – had already been snapped up by West German companies. Within days of the introduction of the West German mark, the economy in the east completely broke down. Like Greece, it required a massive bailout programme organised by Schäuble's government, but in secret: they set aside 100bn marks (£35bn) to keep the old East German economy afloat, a figure that became public only years later.

With prices for labour and supplies going through the roof, the already stressed East Germany economy went into freefall and the Treuhand had no chance to sell many of its businesses. After a couple of months it started to close down entire companies, firing thousands of workers. In the end the Treuhand didn't make any money for the German government at all: it took in a mere €34bn for all the companies in the east combined, losing €105bn.

What the Treuhand did should be a warning for Schäuble and Europe: the economy in East Germany completely broke down

In reality, the Treuhand became not just a tool for privatisation but a quasi-socialist holding company. It lost billions of marks because it went on paying the wages of many workers in the east and kept some unviable factories alive – a positive aspect usually drowned out in the vilifications of the agency. Because Kohl and, during the summer of 1990, Schäuble weren't Chicago economists keen on radical experiments but politicians who wanted to be re-elected, they pumped millions into a failing economy. This is where parallels with Greece end: there were political limits to the austerity a government could impose on its own people.

The lesson Schäuble learned – and which is likely to influence his decision-making now – is that if you act the pure-hearted neoliberal you can still get away with decisions that don't make perfect economic sense. If Schäuble is acting tough with Greece right now, it is because his electorate wants him to act that way; it's not just that he doesn't care about the Greek people, he wants people to believe he doesn't care, because he sees the political advantage in it.

But Schäuble should have learned from history that the Treuhand gamble had catastrophic psychological consequences. Even though the agency was run by Germans, who spoke German, still it was seen by many in the east as an occupying force.

Schäuble's idea of foreign countries controlling Greek assets and moving them abroad is an even more humiliating concept for any country. Schäuble comes across as a tough and sober accountant. In fact he is just an ordinary politician repeating old mistakes.

Related: Greece's debt can be written off –whatever Wolfgang Schäuble says | Philip Inman


DerFremde 18 Jul 2015 07:48

If Schäuble is acting tough with Greece right now, it is because his electorate wants him to act that way;

Yes, after they were programmed to feel that way by the well-orchestrated media campaign that's gone on for 5 years now.

Zabka 18 Jul 2015 07:42

Schäuble is a nasty sociopath and Europe is paying for the fourth time Germany's folly and Imperial ambitions


sacco ThinkingAustralian 18 Jul 2015 07:41

How could the Greek MPs have voted against the package ? The unelected euro institutions deliberately crippled their banking system just prior to the referendum. The unelected euro institutions have had an ongoing police of regime change in Greece. For that alone they need to be abolished.

You appear to be confusing several things. The governance of the Eurozone is largely in the hands of the so-called Eurogroup of EZ finance ministers, and what you describe as the "unelected euro institutions" are, for the most part, as mortified by the situation as you or I but do not have a role in which they can exercise significant control.

Their influence is (one might even say "unfortunately" in the light of events) rather limited. In particular, as regards the ferocious arguments over the release of €7.2bn which have dominated the headlines for the last six months with its endless arbitrary deadlines, the European Commission team of civil servants who provide the secretariat which performs technical work and assessments for the Eurogroup concluded that Greece had satisfied the conditions set for release of the funds, and this outcome was communicated by the "unelected" Commissioner for Economic and Financial Affairs -Pierre Moscovici- at their meeting last December!

The Eurogroup ministers decided, however, (possibly together with the influence of the IMF) that they had other reasons not to release the funds. Why? Many observers concluded that they did so mainly in order to retain a powerful political lever to prevent any incoming Greek government after the elections from taking any decisions of which they, the Eurogroup, might not approve.

it's worth remembering, though, that the weighting of Germany's vote alone is sufficient to impose a blocking veto, and that this is also the group with most political power over the European Central Bank. Although the ECB has some nominal independence, in practice the current conditions are far beyond what can be dealt with using the instruments and policies that it has been given, so it is constantly beholden to its political masters for permission to take necessary action: in these urgent circumstances, a veto is almost as effective as absolute control, as the only actions that can be proposed are those which won't be vetoed.

Fstephens56 Fstephens56 18 Jul 2015 07:28

In the end Treuhand sold out 95% of the Eastern German economy to Westerners, who in turn didn't even have to present a feasible plan (or money to back the investment). It's easy to suppose that anybody who handed over a few bills to the right hands was able to snatch up a bit of value. Usually the Eastern companies "sold" for 1 Mark.

However, Western German "investors" were not really interested in another automobile manufacturer in the East, or another innovative company that produces household goods. They saw these companies a competition and their only interest was in seeing them closed down or reduced to a minor subsidiary.
If you have any doubts about it, just look up the "Foron" scandal. It is a perfect example on how the Eastern German economy was systematically and deliberately ruined by competitors, who wouldn't even shy away from threats and illegal activities to ensure their position.

Only 5% of former GDR companies were sold to Eastern German investors, interested in carrying on. However, since Treuhand favored Western German buyers over Eastern German investors, these 5% were more or less either "left-overs", that nobody else wanted, or rare examples of factories, where the workers managed to buy out their own company and run it themselves after other investors failed to present themselves.

So in short Treuhand failed in all but 1 thing: filling the pockets of their associates. They stole from the poor and used it to bolster the profits of the rich.

But back to Schaeuble! He was Kohl's favored minister by the time and it's save to assume that he was more or less involved in (or at least aware of) the proceedings. Schaeuble is a neo-liberal, law-and-order, right-wing nationalist, who thinks of political office not as a service to the nation, but as a business meant to make money for the one who runs it. (Just listen to some of his former speeches if you have any doubts about that)

The assault on his life, who forced him to a wheel-chair, made Schaeuble, who always was an arrogant, egocentric, right-wing conservative, a vengeful and bitter arrogant egocentric conservative, who hates everything even remotely socialist.

Over the years his speeches as minister for inner affairs grew more and more disturbing. Making it evident, that Schaeuble thought of common people as nothing more than a violent, incompetent mob, that had to be educated and controlled by a superior political cast. (Just listen to one of his later speeches as minister for inner affairs in Merkel's government concerning his thoughts about public opposition against his political ideas.)

Schaeuble was then by believed by many Germans (including some media) to be an overly bitter and possibly dangerous "lunatic", unfit for political office. Upon Merkel's reelection, Schaeuble was then removed from office and instituted as finance minister. Possibly a step to "ship him off" to a position where he could do less harm.

That said: the second thing to know is that the crisis in Greece is nothing by another crisis of the financial sector. Private investors invested money into Greece, that Greece is unable to pay back. Unfortunate - but such are the risks of the stock market, right?

Not quite! Because what actually happened was that Germany (and other European) countries used tax-payer's money to bail-out European banks a second time, by backing up the already defaulted Greek loans with public money.

So the money "given" to Greece is not really helping the Greek people. It is meant to use public money to support private investors and European banks.

And as always: where big money is moving through many hands, those who would like to hold a sum of it, aren't far removed.
As an example, it is said that Schaeuble talked about an "investment plan" that would see a substantial sum put in an institution run by one of his relatives.

A "mere coincidence" of course, but one that explains more precisely what is going on than the article above. It's all about clever ways to turn public money into private money, while keeping public eyes and public discussion fixed on "hard but necessary" austerity measures. Measures that were never meant to help Greece, let alone end the crisis! All of this maneuvering is just meant to help the private investors and keep them from losing money.
Investors, that were never interested in a strong Greek economy. But only in an opportunity to snatch up some valuable pieces of Greek property for a bargain and either gut and sell them for a short-term profit, or to rid themselves of possible competition.

So in the end, the only relevance the historical context has at this point is one that we have already known and is true for ANY historical context: people are doing gruesome thing for personal gain and few ever care about the consequences their actions impose unto other people.

Fstephens56 18 Jul 2015 07:27

The article couldn't be any more dead wrong, if it told us that Schaeuble did it because he was a reptilian overlord from another dimension.

First thing to know about him: he was close friends with former chancellor Kohl and his minister for inner affairs. Now Kohl is a man as corrupt as they come. Kohl had close ties to the media via his dear friend Leo Kirch (a media-mogul) and various companies. And if you doubt that Kohl ran his office like a business: the GDR secret service had surveillance tapes of Kohl accepting bribes. I say "had" because Kohl used the power of his office to see them destroyed.

After which he made it a habit of using his money and influence to sue people who dared to openly oppose his version of the truth. A habit that he hasn't given up until today: he recently sued a ghost-writer, that he fired over "differences of opinion" for publishing some of the less favorable things he had learned during his interviews with the former chancellor.

Schaeuble and Kohl were then involved in the "Leuna" affair. Where several French officials, Kohl as the then-chancellor of Germany and probably some of his ministers where allegedly taking bribes for one of the most obvious heists ever! The most grotesque scandal yet in German history.

"Leuna" was the name of a former GDR chemistry empire worth billions and billions of pounds and the beating heart of the Eastern German economy. High-quality plastics, artificial fabrics and pharmaceutical products were amongst the key export products and fed a whole region bigger than Wales.

Kohl used the power of his office to personally take control over the "Leuna" asset, snatching it away from under the nose of Treuhand. And gifted it to French company Total for the symbolic price of 1 Mark (about a quarter of a British Pound).

With this "deal" French "Total" took sole control of ALL gas-stations throughout Eastern Germany, THE ONLY petrol refinery in Eastern German able to produce gasoline, a long-running fixed-price deal with Russia for deliverance of finest Siberian oil reserves paid in Ruble at a bargain price, control over SEVERAL PIPELINES was included for free, and ALL of the chemistry production of Eastern Germany combined in an industrial complex the size of the City of London complete with its own railroad system, able to produce plastics and high-quality pharmaceutical products 24/7.

And like this wasn't enough, the Kohl-Schaeuble-duo than "gifted" Millions of German tax-payers money to the company. Because it was quite obvious that Total got more out of that heist than they could possibly chew.

This "Leuna" heist affected roughly 500.000 workers in Eastern Germany. It cost the job of tens of thousands of people. The result of which were angry protests against Kohl and people throwing eggs and foul vegetables at the man, as he later visited the region.

However, this is not even the end of it. The article states that the banks had already been sold before the Treuhand came to be, but fails to mention "how" exactly that happened. It was Kohl himself who oversaw the process and gave them away on a bargain due to a little "accounting error" that "miscalculated" the value of these banks much to the advantage of the buyers. With this deal Kohl effectively gifting billions to Western German banks, circumventing any public control of what is happening.

Meanwhile the Treuhand had some shady dealings of its own. The article mentions that one of the heads of "Treuhand" was assassinated. What the article fails to mention however is, that the man killed was believed to be the first (and only) ever not to be part of a government-friendly group of individual and he was killed right BEFORE he to get a good look at the books. He was quickly replaced by another, more agreeable individual.

In other words: the reunification was a mess and a huge scandal, where most people involved were doing their very best to siphon as much money and personal gain out of the process as possible, before proper order could be established.

The price for this corruption was paid by those, unable to fight back:

  • - pensioners were denied money from their private pension plans (a result of the bank-deal)
  • - millions of people lost their jobs
  • - nearly all small businesses went bankrupt, breaking the back of what remained of Eastern German economy
  • - highly educated and young people fled the country in hundreds of thousands, leaving behind ghost cities (some cities like Halle-Neustadt lost up to half of their population)
  • - real-estate values plummeted, leaving people with nothing

ItsAnOutrage2 cpp4ever 18 Jul 2015 07:02

...the creditors should have done their due diligence better and never lent to Greece in the first place, and at some point they will have to accept some lose.

They have already accepted a loss of over €100billion. The argument over further lending to Greece is, in essence, about paying Greece not to devalue the Euro and damage the political and economic structure of the EU. Some people think it's worth the hit, and others think we should let Greece go. I am in the latter camp; I've nothing against the Greeks, but their government is only interested in getting re-elected. Greece is toast in either event, so let them start rebuilding sooner rather than later.

AndrewDavidBoyle Paidenoughalready 18 Jul 2015 06:52

'Other peoples money?!' The crisis was manfactured from 2008 by banks and institutions. This video is the confession of an economic hitman. It shows how financial crisis are manufactured. It was his job.

https://m.youtube.com/watch?v=XWuAct1BxHU

tichchurch t1m0thy1 18 Jul 2015 06:51

The bankers don't just have a lot to answer for, they have it ALL to answer for. This is ALL their mess. Their corruption,and their greed. They should be the ones to pay, not the innocent citizens of Greece who, on top of suffering the high unemployment and hardships imposed on them by austerity, are also having to put up with the unfair accusations, insults and vilification, that the wrongly informed general public from the rest of the EU is directing at them.

AndrewDavidBoyle 18 Jul 2015 06:36

The Investment For Greece Fund

KFW is led by a six-member Managing Board headed by Ulrich Schröder, which in turn reports to a 37-member Supervisory Board. The chair of the Supervisory Board changes annually between the German Federal Ministers of Finance and Economic Affairs; the chairman for 2015 is Wolfgang Schäuble.
The KfW will contribute financially to the fund and provide it with technical assistance. Whatever that means.

The Investment For Greece fund was a bilateral agreement between KMF and the Greek government. Interesting that Tsipras was keen to avoid this fund and instead create another one!

Up to €50bn (£35bn) worth of Greek assets will be transferred to a new fund, which will contribute to the recapitalisation of the country's banks. The fund will be based in Athens, not Luxembourg as Germany had originally demanded.

The location of the fund was a key sticking point in the marathon overnight talks. Transferring the assets out of Greece would have meant "liquidity asphyxiation", Tsipras said.

We will see what happens here...

johnbig SenseCir 18 Jul 2015 06:29

Very interesting article giving information not generally known, at least by me.

However the lesson I take from this is that the reunification of Germany on a 1 D mark for 1 Ost mark basis was a political decision of the highest order probably made by Kohl himself. The economics then had just to follow as best possible without negating or modifying the main decision. Schauble was obliged to follow Kohl's policy decision

In Greece it seems to be the economics leads all other considerations and the political aim of helping back to its feet a small economy and thus keeping a healthy European Union takes a back seat. Unless the political decision being applied is to do anti-Keynes economics for all always. Markel is obliged to follow Schauble"s policy.

EcoNasty huzar30 18 Jul 2015 05:26

If they were stupid and greedy enough to throw money at me if I'm a high risk then they shouldnt be surprised when I don't pay them back...

After all, we wouldn't have had the crash would we if it hadn't been for stupid greedy moneymen making crap decisions ??

And the whole Greece thing just shows how idiotic neoliberalism actually is...

I mean, I actually think Tsipras is playing a blinder. He knows that Greece may have been pushed into a corner I'm the short term, but in the long game Greece has Merkel et al over a barrel ..they can't (despite the tub thumping last week) allow Greece to leave because the disastrous impact this would have on the EZ and wider global economy and they'd have to write down hundreds of billions - yet their austerity measures will make it far less likely that Greece can meet its next payment deadline meaning they'll be back here again in a few months ...

...of course there's no more room for more restructuring or austerity after this bailout so they're stuffed essentially...either they let Greece leave with the huge risks that poses or they have to lose face and write down Greece's debts.

Tsipras ..the man who broke neoliberalism. He'll get statues erected ;

Peter Gentoo 18 Jul 2015 05:25

Why the British Empire ruined the world part II:

Scramble of Africa:

During the final twenty years of the nineenth century, Britain occupied or annexed territories which accounted for more than thirty-two percent of Africa's population, making the British the most dominant Europeans on the continent.By 1965, Britain had lost its stranglehold on the continent-but the consequences of imperialism were immense. Firstly, the settler states of Kenya, Rhodesia, and South Africa saw many episodes of violence before African nationalists could forge a return to stability, after the departure of the colonial governments. Corrupt African "strongmen," or dictators, often gained power-despite ignoring the social needs of the people. Economic dependence on the West, coupled with political corruption, crippled attempts to diversify.Even today, Africa is the least developed region in the world, with poverty and malnutrition running rampant. The idea that Europeans wanted to "civilize" Africa was an utter lie, and a means to justify the exploitation of the continent.

Palestine:

After defeating the Ottoman Empire in World War One, Great Britain did not liberate their Arab allies but instead colonized them. The British received Palestine, Jordan, and Iraq. After centuries of anti-Semitism, many Jews began migrating to their original homeland of Palestine (ancient Judaea), and after the War, these migrations greatly increased. Many British officials, some of whom were also anti-Semitic, wanted to establish a Jewish homeland in the Middle East in order to kick the Jews out of Europe altogether.The British announced in 1947 their intention to withdraw from Palestine in 1948. On November 1947 the United Nations General Assembly passed a plan to partition Palestine into two separate states-one Arab, and one Jewish. The Jews accepted, but the Arabs rejected the partition. The British officially left on May 14, 1948, without providing a resolution to the situation; that same day the Jews proclaimed the state of Israel. Arab countries immediately attacked the new Jewish state, but the Israelis drove off the invaders and conquered more territory. Roughly nine hundred thousand Arab refugees fled-or were expelled from-old Palestine.This war left an enormous legacy of Arab bitterness towards Israel and its political allies, Great Britain and the United States. The Arab-Palestinian conflict has provided a deep divide between East and West, and between Christianity and Judaism on the one hand and Islam on the other hand. The modern "War on Terror" stems from the American and Western support of Israel. In addition, Israel has been accused of atrocities ranging from bulldozing Palestinian homes, to acts of terror committed by Mossad, the Israeli CIA

Partition of India:

After two centuries of colonialism in India, the British Labour government agreed to a speedy independence of India after 1945. But conflict between Hindu and Muslim nationalists led to murderous clashes between the two communities in 1946. When it became clear that the Muslim League would accept nothing less than an independent Pakistan, India's last viceroy, Lord Louis Mountbatten, proposed partition. Both sides accepted, and at the "stroke of midnight" on August 14, 1947, one fifth of humanity gained political independence.Yet independence through partition brought tragedy. In the weeks afterwards, communal strife exploded into an orgy of massacres and mass expulsions. Hundreds of thousands of Hindus and Muslims were slaughtered, and an estimated five million made refugees. Indian Congress Party leaders were completely powerless to stop the violence. "What is there to celebrate?" exclaimed Gandhi in reference to the much-sought independence; "I see nothing but rivers of blood." In January 1948, Gandhi himself was gunned down by a Hindu fanatic who believed that he was too lenient on Muslims.After the ordeal of independence, relations between India and Pakistan remain tense to this day. Fighting over the disputed area of Kashmir continued until 1949, and broke out again in 1965-1966, 1971, and 1999. What makes the Indo-Pakistani conflict even more dangerous is that both sides contain nuclear weapons. With the possibility that Pakistan might become a failed state, there is a good chance of a major genocide erupting in the twenty-first century.

Peter Gentoo 18 Jul 2015 05:23

Why the British Empire ruined the world:

Apartheid:

Apartheid was a system of racial segregation enforced through legislation by the National Party governments, the ruling party in South Africa from 1948 to 1994. The rights of the nation's black majority were curtailed, and white supremacy and Afrikaner-minority rule was maintained. After one hundred years of wars, and having gained complete political control, the British made a decision that doomed many South Africans. They gave Boer republics the green light to disenfranchise all non-whites. The apartheid system was entrenched in the Union constitution, which was drawn and approved by the British government. In 1913, the Native Land Act was brought into force; it pushed black people off the land on which they were either owners or tenants, and relocated them to shantytowns in the cities.

Irish Potato Famine:

During the summer of 1845, a "blight of unusual character" devastated Ireland's potato crop-the staple of the Irish diet. A few days after potatoes were dug up from the ground, they began to rot. Over the next ten years more than 750,000 Irish died from the ensuing famine, and another two million left their homeland for Great Britain, Canada and the United States. Within five years, the Irish population was reduced by a quarter.

Invention of the machine gun:

In 1879, the Gardner Machine Gun was demonstrated for the first time. It could fire ten thousand rounds in twenty-seven minutes, and its accuracy was superior to that of the Gatling gun. This impressed military leaders from Britain, and the following year the British Army purchased the gun.In 1881, the American inventor Hiram Maxim visited the Paris Electrical Exhibition. While he was at the exhibition a man he met told him "if you wanted to make a lot of money, invent something that will enable the Europeans to cut each other's throats with greater facility." Maxim decided to move to London, and began working on a more effective machine-gun. The British Army adopted the Maxim Machine Gun in 1889. The following year, Austria, Germany, Italy, and Russia also purchased the gun, causing an arms race on the European continent. The machine gun would haunt the British during the Battle of the Somme, when the British suffered 60,000 casualties on the first day. Since its introduction, the machine gun has caused countless fatalities across the world, and has allowed for more people to be killed within a shorter time span.

Atlantic slave trade:

The British did not start the slave trade or even import the most slaves (both of these dubious distinctions belong to the Portuguese). In the beginning, British traders merely supplied slaves for the Spanish and the Portuguese colonies; but eventually, British slave traders began supplying slaves to the new English colonies in North America. The first record of enslaved Africans landing in British North America occurred in 1619, in the colony of Virginia.In the 1660s, the number of slaves taken from Africa in British ships averaged 6,700 per year. By the 1760s, Britain was the foremost European country engaged in the slave trade, owning more than fifty percent of the Africans transported from Africa to the Americas. The British involvement in the slave trade lasted from 1562 to until the abolishment of slavery in 180-a period of 245 years. History Professor David Richardson has calculated that British ships carried more than 3.4 million enslaved Africans to the Americas during this time. In addition to being a major player in the slave trade, the British supported the pro-slavery Confederates during the Civil War. The British needed cotton to fuel their machines; this caused the demand for cotton to skyrocket, which in turn demanded slave labor. If the Confederates had won at the battle of Antietam, the British would have given full support to the rebels, and may even have tipped the Civil War in favor of the Confederates. And although Great Britain was one of the first nations to abolish slavery, they quickly made up for the loss of human labor by extracting Africa's raw materials and resources.

DeeDee99 18 Jul 2015 05:18

"Look at what he inflicted on his own country."

Yes. HIS OWN COUNTRY.

Now he's doing it to another country: and both he, the President of the other country, the IMF and the ECB all know it isn't going to work.

So he is destroying another country for what ........... ? So the EU can continue to build an anti-democratic and increasingly dictatorial United States of Europe where national democracies are irrelevant (unless they happen to be Germany).

ZankFrappa 18 Jul 2015 05:12

This talk of nation vs nation is a distraction. It's better to follow the money. It quickly becomes clear that those who have profited from Greece joining the Euro are keeping their money and the rest are having to suffer the consequences. Goldman Sacks have made billions as have investors in Europe. Meanwhile the people of Greece, Germany or the broader EU are being told they have been reckless and will have to suffer the consequences.

anita66 18 Jul 2015 05:05

Maybe worth noting, that Schäuble's readon to make Greece fail is also related to the vast oil resources in the Aegean sea. And his generally corrupt manner. In the past he accepted bribes and bribed for weapon deals and other operations. and thats who most deals in Greece were agreed.

bloomday Budanevey 18 Jul 2015 05:03

Greece's economic performance from the mid-90's to the beginning of 2010 was better than the EU average (3.9% vs 2.4%). Once the European financial crisis began to make itself felt in Greece, in 2010, they followed the Troika's austerity instructions to the letter, slashing expenditures and increasing taxes. A 25% decline in GDP and 25% unemployment, with youth unemployment twice that was the result. This economic downturn happened because they followed and implemented creditor demands for austerity, measures that are now seen not to work for Greece. What is more, It is a fiction that all the bailout money loaned to Greece is at it's disposal to use as it pleases, most has been recycled back to the creditors in loan repayments - Joseph Stiglitz estimates that 90% of the money loaned Greece has been paid straight back to the Creditors, leaving Greece with insufficient sums to invest to create growth. Austerity is an anti-growth economic policy and the sooner the leadership of the German CDU wake up to the fact the better it will be for the Eurozone.

lundberg 18 Jul 2015 04:53

The link between the early 1990's and now (2008 till forever?) is that Germany and Schäuble caused all-European recessions. The 1990's recession was very bad in for example Sweden and Finland. One reason for this German behaviour is a myth that inflation (as of 1923) is the only thing to be avoided. Others have noted that other bad things have happened in Germany even after 1923. Tight Money, high interest rates is the perpetual formula, though exactly that brought Hitler into power.

The reunification was performed in a stupid way (1 West Mark= 1 East Mark, overnight, when market value was 7:1 or so). This stupidity was repeated, and worse, with the Maastrich treaty in 1992. All Europe had to pay for it, which led to a first wave of rightwing populism rather than European unity. We are now living through the second wave.

Germany was eventually essentially reunited, though it took much longer time and inflicted a lot more pain than was necessary, in Germany and abroad.
Europe remains broken, because you cannot have a single currency without a single government. This has been known all along, though the smart-alecs in Brussels, Berlin and Paris thought that they would solve that problem by stepwise federalization. Not likely.

bootayjam grumpyoldman 18 Jul 2015 04:34

Well said. I find it amazing that the Guardian is only now waking up to the fact that maybe, just maybe, the EU is bought and paid for and part of the global corporate banking system that has a stranglehold on us all.

Look at the IMF, which acts as a member of the Troika.
But it has has no elected position, and cannot be removed from power.
The second unelected member is Mario Draghi of the ECB. The same Mario Draghi who worked for Goldman Sachs and helped Greece hide it's true debt in order to join the Euro. How do you get rid of him? And more importantly, how did he get the job?
And finally, the head of Europe, Juncker, is also unelected by the people. And he was responsible for introducing corporate tax dodging in Luxembourg when he was PM there.

The entire government design is totally un-Democratic and therein lies the crisis, but not just in the EU, but across the world. Can you vote out the IMF or World Bank?

But in terms of the EU, not a single member of the Troika ever needs to worry about polls since they do not have to worry about elections.

This is authoritarian government if we have ever seen one, and Tony Benn's 5 awkward questions to ask those in power seem more relevant every day.

laSaya TomHalpin 18 Jul 2015 04:32

Reparations and exploitation
Further information: German reparations for World War II
Contrary to common myth, the US did in fact take "reparations"; parts of it by John Gimbel called "plunder and exploitation", directly from Germany. The US for instance took an 8.9% share of dismantled Western German industry.
The Allies also confiscated large amounts of German intellectual property (patents and copyrights, but also trademarks). Beginning immediately after the German surrender and continuing for the next two years the US pursued a vigorous program to harvest all technological and scientific know-how as well as all patents in Germany. John Gimbel comes to the conclusion, in his book "Science Technology and Reparations: Exploitation and Plunder in Postwar Germany", that the "intellectual reparations" taken by the US (and the UK) amounted to close to $10 billion. The US competitors of German firms were encouraged by the occupation authorities to access all records and facilities. l Law No. 25) for fear of the research directly profiting their competitors.
The patents, drawings and physical equipment taken in Germany included such items (or drawings for) as electron microscopes, cosmetics, textile machinery, tape recorders, insecticides, ... and other technologies - almost all of which were either new to American industry or 'far superior' to anything in use in the United States."
The British took commercial secrets too, by abducting German scientists and technicians, or simply by interning German businessmen if they refused to reveal trade secrets.
Konrad Adenauer stated: "According to a statement made by an American expert, the patents formerly belonging to IG Farben have given the American chemical industry a lead of at least 10 years.
In JCS 1067 there were provisions allowing German scientists be detained for intelligence purposes as required. Although the original focus on the exploitation was towards military means, much of the information collected by FIAT was quickly adapted commercially to the degree that the office of the Assistant Secretary of State for Occupied Areas requested that the peace treaty with Germany be redacted to protect US industry from lawsuits.
The US made no attempt to evaluate the value of what was taken from Germany, and in the contracts that led to sovereignty for West Germany in 1955 the West Germans had to formally renounce all claims to possible compensation for all types of assets taken, including scientific and technical know-how.
The property taken in Germany was without regard to the rules of the Hague Convention, which prohibits the seizure of enemy private property "unless it is susceptible of direct military use",

German reparations for World War II

Division of Germany as of the Potsdam Conference.

After World War II, both West Germany and East Germany were obliged to pay war reparations to the Allied governments, according to the Potsdam Conference. Other Axis nations were obliged to pay war reparations according to the Paris Peace Treaties of 1947.

Contents
1 Early propositions
2 Recipients
2.1 Greece
2.2 Israel
2.3 The Netherlands
2.4 Poland
2.5 Yugoslavia
2.6 Soviet Union
3 Other forms of payment
3.1 Annexation of territories
3.2 Dismantling of industries
3.3 Intellectual property
3.4 Forced labour
4 See also
5 References

Other forms of payment
According to the Yalta Conference, no reparations to Allied countries would be paid in money. Instead, much of this value consisted of German industrial assets, as well as forced labour.

Annexation of territories
Poland and the Soviet Union annexed the German territories east of the Oder-Neisse, leading to the expulsion of 12 million Germans. These territories were incorporated into Poland and the Soviet Union respectively and resettled with citizens of these countries.
France controlled the Saar protectorate from 1947 to 1956, with the intention of using its coal deposits and possibly annexing the region to France permanently. The same mines had been under French control from the end of the First World War until 1935. Following the results of a plebiscite, France had to relinquish its control of the Saar region on January 1, 1957, however it continued to extract coal from the area's mines until 1981.

Dismantling of industries
Further information: Allied plans for German industry after World War II
At the beginning of the occupation, the Allies started dismantling the remnants of German industries. Later abandoned this plan in favour to the Marshall Plan.

Intellectual property
The Allies confiscated significant values of German patents, copyrights and trademarks.

Forced labour
See German prisoners of war in the Soviet Union, Forced labour of Germans in the Soviet Union and Forced labour of Germans after World War II.
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For some ignorance is bliss.

Never led the facts get into the way of prejudice.

Prejudice is what fool use for reason.
Voltaire.

romantotale17 ID0958318 18 Jul 2015 04:28

With a Gini coefficient of 0.78, Germany has a high degree of wealth inequality compared to other countries and there is still a wide gap between western and eastern Germany, almost 25 years after unification. In 2012, the average net worth of eastern Germans was less than half that of western Germans.

Sounds like the country is well run, then. According to current definitions of a successful society: ie benefiting the wealthy, ability of the wealthy to conceal their gains, increasing inequality...

wilk 18 Jul 2015 04:20

Before reunification West Germany had a growth rate of aboaut 3.6%. and East Germany full employment . After - Schauble Germany managed to reach 2.2% the other year - the highest since reunification; eastern Germany has an double the unemployment rate of the west - over 10%. Workers rights in Germany have been decimated with most of those in work on zero- hour contracts or temporary work and the rich states are refusing to put more money into the failing eastern ones.
Like most of us the German people like to have a "Greece" so that we can feel well off and that our governments and big business are working for us - so the Merkels' and Schaubles' keep in power

phil49 -> probitase 18 Jul 2015 04:13

Rather simplistic. North America achieved its independence well before most Latin American countries and before rapacious 19th century capitalism had developed. By the time the Latin American countries achieved independence, European (mainly British) companies were ready to step in and siphon off vast amounts of the wealth generated, unlike in the United States, where most of the wealth was home-owned and reinvested, before the US was ready to take over from the European imperialists and do as they had done.

someoneionceknew -> Mister_T 18 Jul 2015 04:12

Cool story, bro. But completely untrue. Germany is being run for the benefit of its corporations and its banks i.e. neoliberal fundamentalism.

It's 'success' is arguable. Its future looks bleak.

laSaya smiley08 18 Jul 2015 03:46

When people bang on about what W. Germany got in Marshall plan aid after WWII they never look at the facts.
Read on.

The largest recipient of Marshall Plan money was the United Kingdom (receiving about 26% of the total), followed by France (18%) and West Germany (11%). Some 18 European countries received Plan benefits.

Criticism of the Marshall Plan became prominent among historians of the revisionist school, such as Walter LaFeber, during the 1960s and 1970s. They argued that the plan was American economic imperialism, and that it was an attempt to gain control over Western Europe just as the Soviets controlled Eastern Europe.

Henry Hazlitt criticized the Marshall Plan in his 1947 book Will Dollars Save the World?, arguing that economic recovery comes through savings, capital accumulation and private enterprise, and not through large cash subsidies. Ludwig von Mises criticized the Marshall Plan in 1951, believing that "the American subsidies make it possible for [Europe's] governments to conceal partially the disastrous effects of the various socialist measures they have adopted"

Hard luck story

We all know the easy British explanation for our cumulative export defeat in world markets from the 1950s onwards, especially at the hands of the Germans. This story tells us that lucky West Germany had all her industries and infrastructure bombed flat or removed as reparations, and then was able to re-equip herself from scratch with Marshall Aid dollars. Meanwhile, so this hard-luck story goes on, poor old Britain had to struggle on with worn-out and old-fashioned kit.

Britain actually received more than a third more Marshall Aid than West Germany ...

This is utter myth. Britain actually received more than a third more Marshall Aid than West Germany - $2.7 billion as against $1.7 billion. She in fact pocketed the largest share of any European nation. The truth is that the post-war Labour Government, advised by its resident economic pundits, freely chose not to make industrial modernisation the central theme in her use of Marshall Aid.

Successive governments squandered billions of Marshall Plan Aid to support British world power pretensions, and so jeopardised the economic future of Britain.

The sad irony is that it had been in vain that the Labour Government had sacrificed the modernisation of Britain as an industrial country for the sake of using Marshall Aid to support a world power role - strategic and financial.

What a monumental waste of a great and unrepeatable opportunity.

Refer http://www.bbc.co.uk/history/british/modern/marshall_01.shtml
The Wasting of Britain's Marshall Aid
By Correlli Barnett
Last updated 2011-03-03

As for the 1953 debt agreement, read on.

Germany, which up until the 1953 Debt agreement had to work on the assumption that all the Marshall plan aid was to be repaid, spent its funds very carefully. Payment for Marshall plan goods, "counterpart funds", were administered by the Reconstruction Credit Institute, which used the funds for loans inside Germany. In the 1953 Debt agreement the amount of Marshall plan aid that Germany was to repay was reduced to less than 1 billion USD.[85] This made the proportion of loans versus grants to Germany similar to that of France and the UK.[84] The final German loan repayment was made in 1971.

----------------------
Arguing that economic recovery comes through savings, capital accumulation and private enterprise, and not through large cash subsidies.

Greece please take note of this advice from Henry Hazlitt .

For those that claim that the 193 debt agreement was so instrumental in German economic recovery because it was " generous " read the above and think again.

Further lets look at what the aid was intended to be used for.
The Marshall Plan aid was mostly used for the purchase of goods from the United States.

Oh, such generosity.

NickFletcher19 18 Jul 2015 03:35

Can people please do referring to him and his ilk as "technocrats". These people aren't experts in economics, business, management, if anything other than politics.

diotima1 18 Jul 2015 03:33

It's nauseating that such proposals, disguised as "rational" are taken seriously by EU and set the agenda for finding a solution to the Greek tragedy. In this the Greek goverment is also to blame. Advised by flamboyant Varoufakis , who failed to table any serious proposal for the past five months, it wasted all credibility and played into the hands of Shauble and US think tanks ready to experiment with demise of euro at the expense of Greek people.


Thomas W. Gallant 18 Jul 2015 03:07

A full understanding of the relationship between Greece and Germany requires a longer-term historical perspective. See th following article (in English) from the Greek magazine 'Chronos.' http://chronosmag.eu/index.php/tw-gallant-greece-and-germany-the-last-tango.html


DefeatedParty benjaoming 18 Jul 2015 02:31

They may have an Onassis or two, but that certainly doesn't make them prosper that much. Had they built those ships you might have a point. We are talking heavy industry here and since tourism is hardly the high point of any really successful economy, your reply is just a lot of useless left-wing hot air. The idea that the whole economy even the size of the small Greek economy was somehow reduced to its present malaise by a few tax dodges is another simplistic answer to the troubles affecting Greece. Your answer is in effect a few scattered breadcrumbs which had no other effect than to make you look completely silly and irrelevant.

angiefay 18 Jul 2015 00:38

Schäuble and Merkel have split Europe. They are trying to force their ORDER on everyone.

Against them we have France, who, however naïvely, believes more in JUSTICE. Nothing about the New German Order is just, only about profit and control. The situation in Greece has exposed how much they are trying to take control of Europe though the banks.

Instead of trying to help Greece set up systems such as a Land Registry, local Tax Offices free from corruption etc, which would provide a more just tax system, they want to sell off/buy up any remaining assets the country has.


hfakos Ben McCarty 17 Jul 2015 20:00

So what are you proposing, exterminating the native cultures in Europe to create a new coherent one? I didn't say the U.S. reaching its current stage was a rosy process, but it's a fact they now have a coherent enough culture mostly speaking the same language. We cannot reach this stage in Europe, because civilization has advanced enough not to tolerate the forced engineering of a new culture from already thriving and existing ones. So, there always be very serious constraints on the cohesion of Europe. You just have to live with that.


seaspan Steve Sage 17 Jul 2015 19:42

The social/private structure of Greece is typically European, that isnt the problem. The problem started with euro integration, and the negative balance of trade in the private economy unable to devalue local currency, stimulate Exports, investment in local industry, etc. Imports vastly exceeded Exports, so the Govt floated bonds to buy back the difference (ballooning deficits), But also Pools of euro money in foreign banks recycled back to Greece as easy loans, which increased Imports accentuating the difference to Exports -- a downward spiral, and ever increasing govt debt. This structural flaw hasnt been addressed at all...


eastofthewall BeatonTheDonis 17 Jul 2015 19:35

That was the biggest surprise in this saga. That even the yanks had more sense than to pathologically stick to austerity. They had a stimulus program. When the U.S. is less cruel than you, it's time for self-reflection.

Have you been to America lately? Visit Baltimore for me, will you! After the dotcom bubble burst the U.S. had a stimulus program which helped building up the even bigger housing bubble. That is why we now live in the age of "The Second Great Depression". Do you really think another stimulus bubble will help you out of this mess?

be_kul 17 Jul 2015 19:25

Sorry, the parallels go far beyond that:

(1) Schäuble wants the new "Greek Treuhand" to be a part of the ESM. In the ESM – in case the author forgot about that – every person MUST and CAN NOT be put on juridical trial for his/her deeds. The same was true for the Treuhand in East Germany.

(2) Schäuble wants the new "Greek Treuhand" to be managed 'inside' the ESM by a little German bank which is part of the German governmental KfW – which is headed by Schäuble (and his minions).

(3) But the best is yet to come: While the new Greek Treuhand will be modelled after the East German Treuhand, the latter itself was modelled after another "Treuhand" in German history: That one which was established to plunder the "Generalgouvernement" i.e.: the occupied Poland under Hitler. It had the same legal structure as the East German Treuhand … and even the name was the same.

So, there you have it: Schäuble does not even try to hide that his plans for Greece are those of an occupier – he can just simply count on (the vast majority of) people who don't know history.

By the way: Did anyone mention that Greece in 1953 joined the creditors of Germany when they were cutting down Germany's depth from WW II by 60% and re-structured the rest so that Germany could come out of its own hell with the "Wirtschaftswunder" (economic wonder – which was not a wonder at all!)? And did anyone mention the credit Hitler's Germany stole from Greece during WW II and never paid back (except a very small part of it)?

If anyone now thinks that I would "pull a godwin" now … sorry, I won't.

Because I guess anyone can draw his/her own historical parallels and consequences in viewing Schäuble correctly.

Phil Porter Dritan Nikolla 17 Jul 2015 18:54

I'm just trying to change myself and become the heartless, soulless and cultureless husk the EU and it's citizens seemingly now aspire to.
The Euro symbol will become the new crucifix!


hfakos 17 Jul 2015 18:34

It's enough to be in the wider neoliberal EU to go under. Being in the eurozone just adds extra pain, waterboarding and rectal feeding. As EU apparatchiks admitted themselves. Maybe the US can now shut down Gitmo by sending the inmates to Greece, where conditions are just as harsh.


someoneionceknew 17 Jul 2015 18:28

If Schäuble is acting tough with Greece right now, it is because his electorate wants him to act that way; it's not just that he doesn't care about the Greek people, he wants people to believe he doesn't care, because he sees the political advantage in it.

That's possibly the most disturbing aspect of the analysis.


monzer7 17 Jul 2015 18:19

Whilst national governments are printing money in gay abandon to bail out their banker backers... Simultaneously fleecing their taxpayers under the the moral pretence of 'Austerity', we have witnessed an unelected cartel eviscerate a sovereign nation.

The Greek Balance Sheet of Misery is deep in the red!

Apparently, people no longer matter - Politicians and Bankers have a free rein.

Greece fell for the EU dream... It was a political sucker to be exploited for the benefit of the Project.

Post 2008, it has been treated like dirt. Its neighbours should take note - this Union is a nasty creature.


girlmostlikely sailorjeff 17 Jul 2015 18:15

It's also why German's are skeptical of transfer unions. They were promised by Kohl and Schäuble and Waigel, that Eastern Germany would just bloom and it would magically catch up to Western living standards on it's own merits. Those were Germans after all. None of that happened, the catching up has been the other way round. Many many people these on both sides of the former border are living in a way where 1990 GDR living standards would just about be an upgrade.


erpiu 17 Jul 2015 18:15

schäuble and his bunch of rightwing political hacks who pass as eurozone finance ministers are know-nothing frauds or if you prefer, fantasists --as p.krugman calls them.

schäuble himself is an opportunist par excellence, a now-aparatchick/political hack formerly a small-time lawyer with several one-week courses in "economics explained to homemakers" and a dissertation on "public accountants" as special qualifications for his current position as "supreme social-dumping master of western europe"('s rentier-subjugated economies) with distant adolfian resonances.

https://en.wikipedia.org/wiki/Wolfgang_Sch%C3%A4uble
======
Schäuble studied law and economics at the University of Freiburg and the University of Hamburg, which he completed in 1966 and 1970 by passing the First and Second State Examinations respectively, becoming a fully qualified lawyer.

In 1971 Schäuble obtained his doctorate in law, with a dissertation called "The public accountant's professional legal situation within accountancy firms".
======
https://en.wikipedia.org/wiki/Wolfgang_Sch%C3%A4uble


kcfussball -> DT48 17 Jul 2015 18:13

Agreed, it seems to be part of the neo - con agenda to create divides amongst ordinary people. I wonder what they are scared of.

hfakos -> Phil Porter 17 Jul 2015 17:53

It's the liberal "intellectuals" we. They know better what's good for you. In Eastern Europe they were called Bolsheviks.

Pharaoh9 MartinLunnon 17 Jul 2015 17:46

In the German mind the problem is always with you, never with the bank.

monzer7 17 Jul 2015 17:44

I admire Germany for the way in which it has rebuilt its country. Their products demonstrate an envious capability. Every German I have ever met has been easy going, and friendly - nice people.

Their politicians stink!

This rape of Greece was unnecessary... It portrays an unassailable bully humiliating a people.

The image has been tarnished. My admiration diluted.


monzer7 17 Jul 2015 17:44

I admire Germany for the way in which it has rebuilt its country. Their products demonstrate an envious capability. Every German I have ever met has been easy going, and friendly - nice people.

Their politicians stink!

This rape of Greece was unnecessary... It portrays an unassailable bully humiliating a people.

The image has been tarnished. My admiration diluted.


MartinLunnon RationalPlan 17 Jul 2015 17:34

This is clearly a relevant point. Perhaps it's been made by many previous BTL commentators, but I'm surprised that it wasn't brought out in the article.
The parallels with the situation in Greece are many: both East Germany then and Greece now are experiencing the pains of a fixed exchange rate with the strong (West) German economy. In both cases the fixed exchange rate (and thus strong currency while the fix holds) favours savers over borrowers - I suspect that many Germans instinctively believe this to be necessary ever since the inflation if the 1920s and 30s.

In Greece now the borrower is the government. In Germany shortly after reunification the burden fell on Treuhand-owned companies which had liabilities to pay wages in DM coverted from OstMarks at 1:1: "With prices for labour and supplies going through the roof, the already stressed East Germany economy went into freefall"

"When you owe the bank £1000 you have a problem: when you owe the bank £1,000 million the bank has a problem". In the CDU's image of the German mind the problem is always with you, never with the bank.

hfakos linesanddots 17 Jul 2015 17:33

These are all Cold War dinosaurs. Merkel included. With them at the helm a different, livable Europe has no chance.

paulc156 Christian Abel 17 Jul 2015 17:25

Frankly, though the IMF have been culpable in previous instances of crisis management both with Greece and others they have exhibited some capacity to learn from past mistakes. As for the EU and especially the German dominated ECB they have pushed half of Europe to the precipice based on an imbecilic policy prescription that hasn't been tried since the UK tried to stay on the gold standard after WW1. You seem to have sided with the cranks!

Lafcadio1944 Cerebral_Football 17 Jul 2015 17:24

I recommend you read Naomi Kline's well documented book Shock Doctrine which makes the case for what I said far better than I can.

As to your apparent view that the appropriate social behavior is to always and under all circumstances take every possible advantage available to enrich ourselves. I suggest you investigate that period in history known as the Enlightenment.


LiberteEgalite1 trickster5 17 Jul 2015 17:14

trickster, you are incorrect! At least 400 million people in India live in abject poverty in suffering as a direct result of England's plundering of India over 200 years, this is not counting the millions that it killed in the name of keeping order because the Indians dared to raise their heads against the British tyranny.

You need to read real history and not the blinkered one that you read in the glossy magazines glorifying the inhuman British empire.


hfakos probitase 17 Jul 2015 16:59

But there are many mini-jobs. Which is practically unemployment if that's the only thing you have. Statistics are easy to manipulate.


hfakos KrissCross 17 Jul 2015 16:56

What a success story, climbing all the way up to being the EU's poorest nation with an EUR300 monthly salary and loosing a million people who emigrated to the West, and it keeps counting. You have also become a much more sovereign nation, that's why you cancelled South Stream a nanosecond after McCain showed up in Sofia. I mean EUR300 is more than enough, let's not be greedy and try get more revenue in the EU's poorest country. Thanks but no thanks, I wouldn't like to emulate Bulgaria's "success".


FactsForFood Mevagissey 17 Jul 2015 16:55

Hmmm, in comparison the US killed at least 129,000 civilians in a few seconds when it dropped two nuclear bombs on Japan. And many more civilians were long-term disabled afterwards.

So you are saying that we should remember this terrible crime by the US and hold them accountable for it as well.


Cerebral_Football Fani Papas 17 Jul 2015 16:48

Here's a brilliant quote from yesterday's Atlantic:

By 2010 one of those countries-Greece-could no longer pay its bills. Over the prior decade Greece had built up massive debt, a result of too many people buying too many things, too few Greeks paying too few taxes, and too many promises made by too many corrupt politicians, all wrapped in questionable accounting. Yet despite clear problems, bankers had been eagerly lending to Greece all along.

Greece is made up of Greeks, you can't disassociate them. The Greek people borrowed that money when they were levering up and buying homes, not paying taxes, doling out public sector pensions and benefits like they had discovered the cure for cancer.

Greece owes money to Spain, Italy, Slovenia, Portugal and every other country in the Eurozone. But first and foremost, before all of that, they owed the money to the banks. Yes and the banks needed to be paid back.

If you think that's unfair, try telling your credit card/bank company that you won't pay them back.


Mevagissey Susan Dechancey 17 Jul 2015 16:47

The nepotism and clientelism of the ruling class has been a problem since independence from Turkey and successive Greek governments have promised and failed to rectify it but that doesn't excuse humiliating an entire nation and pushing it to the point of economic and civil collapse because 'they deserve to reap what they sow' regardless of the consequences for the entire region with IS just a few hundred kilometres away. This is the worst case of being unable to see the wood for the trees that we have seen since the 'allies' invaded Iraq on the pretext of saving the West from nuclear weapons that did not exist.

The vindictive behaviour towards Greece marshalled by Germany last weekend has lost it a lot of friends and reminded us where its mindset comes from and where it leads to if more civilised nations do not step in to reel it in. Habermas in particular is particularly cognisant of this.

hfakos -> jozef77 17 Jul 2015 16:46

Don't worry, you will see many other cents extracted from the periphery by German corporations. You know, such when I pay international rates calling my Deutsche Telekom customer parents in Hungary from my Deutsche Telekom line in Germany. Borderless Europe, ain't it great?


probitase -> DT48 17 Jul 2015 16:41

One of the rules of the Eurozone is that a country is not allowed to default on its debts. The EU is indeed designed to pull countries in until they find they cannot or do not have the power to extricate themselves.


hfakos -> angryboy 17 Jul 2015 16:38

Yes, the Greeks are like stupid kids. What a worn-out cliche. The only countries that matter here are Germany and maybe France. Lol, do you really believe that whatshisname FinMin of mighty Slovakia has any say in this crises? Germany is using the clowns of these midget EZ countries to deflect some blame. I have never seen that many Mickey Mouse politicians suffering from delusions of grandeur than during the Greek torture sessions. As if whatshername from the Baltic grand duchies has any weight behind her proclamations.

TomorrowsWorld Barry1858 17 Jul 2015 16:35

It's a hard battle getting people to realise just how much so-called wealth is predicated on the money market casino rather than goods and services. Perhaps because it makes all the effort of putting in your relatively honest 9 to 5 fairly irrelevant, most people would rather talk about lazy Greeks than face the fact that they're the living fuel for a casino lifestyle they will only get close to if they happen to buy a winning lottery ticket.


Susan Dechancey 17 Jul 2015 16:33

where are the insights into how Greece got here ? a contra to this :

http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-201010

In just the past decade the wage bill of the Greek public sector has doubled, in real terms-and that number doesn't take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece's rail passengers into taxicabs: it's still true. "We have a railroad company which is bankrupt beyond comprehension," Manos put it to me. "And yet there isn't a single private company in Greece with that kind of average pay."

So lets look a t Greece .. it like watching a magician ....


BeastNeedsMoreTorque papalibre 17 Jul 2015 16:32

But that argument doesn't put the banks lending the money in the clear does it? Even if we accept your argument about the stupid borrowers it doesn't exonerate the banks does it?
It's called fraud.
If I sell you a car that I know is unsafe but you're too stupid to check before I hand over the cash, its still fraud on my part.

Here's a quote that might persuade you:

Financial fraud can be broadly defined as an intentional act of deception involving financial transactions for purpose of personal gain. Fraud is a crime, and is also a civil law violation. Many fraud cases involve complicated financial transactions conducted by 'white collar criminals' such as business professionals with specialized knowledge and criminal intent.

[Jul 18, 2015] There's no end in sight to the Greco-European drama

"..."It is like a dysfunctional family where narcissistic parents believe a fantasy of their own perfection and scapegoat one of the children as the cause and epitome of all that is wrong." Nice analogy. This is the world that propaganda created. A completely parallel universe. But it's not exactly a new development. Look at the US, they are at their n-th invasion, and everybody still pretends that they are slaughtering people for 'humanitarian' reasons. Or the IMF, which has ruined the economies of pretty much every single state in the Third World and everybody pretends that 'we are helping them to escape poverty'."
.
"...It all started with the 2008 global financial meltdown caused by private banker greed. Since the rich cannot be paid for their mistakes--i.e. nationalize the banks--then the rest of us, the state, take over the debt."
.
"...Yes, what's happening to Greece is happening (or will happen) to us all. I will continue to vote however I've seen what happens to a fine government representing to the best of their ability the people & country - they got knocked around & overruled. What I thought was non-negotiable turns out some Hayek adoration readers in powerful positions decide now is time to dismantle social security provision, employment protections & public infrastructure is made over to privateers. Scary times. "
.
"...Warren Buffet said we are in a class warfare and we (the rich) are winning. Strong words since Americans don't believe in class or Marxism."
Jul 15, 2015 | The Guardian

The last act of the classical Greek tragedy ends with two outcomes: disaster and catharsis. In the current Greek debt drama, however, there has been no catharsis. The purification has failed to materialise.

It would have meant that both sides had seen the error of their ways and come to their senses. Instead, the madness continues: Greece will take on €86bn of debt in addition to the existing €317bn (not including the emergency loans from the ECB). From Angela Merkel through François Hollande to Alexis Tsipras, all eurozone government leaders assert that Greece will emerge from over-indebtedness more quickly this way and will be economically healed in three years. Europe pretends that the bailout will help. And Greece acts as if everything is fine now.

The Brussels summit was not a disaster, though. Greece does not fall into chaos and the euro remains stable. Maybe Walter Benjamin, who once said: "The real disaster is if everything stays as it is," was right. When it comes to classical drama, it seems we have not reached the final act after all. The fourth act, the "retardation", continues. The action is slowing down, with suspensory moments: the troika returns to Athens and monitors the situation, while the Greek authorities delay and tinker about again. Until the action moves into a phase of extreme tension towards the finale. When will that be? Merkel hopes it will be after the next parliamentary elections.

The troika is not operating as a trustee, but representing highly selfish interests

For the Greeks, there is more at stake in this drama than there is for the Germans. The Germans will lose a lot of money at the most. The Greeks, however, have long since come under the tutelage of the donors. What Tsipras signed on Monday is the permanent abandonment of Greek sovereignty. Athens will be told what budget surplus it must achieve and what taxes it should raise. Fiscal sovereignty is broken. The constitution will be interfered with to impose pension cuts. The administration and judiciary must be rebuilt according to the standards of the northerners. It is not about a bailout loan, but it is avowedly about nation building, as if Greece were a failed state. Even the IMF has condemned the deal as unworkable and said the levels of debt are unsustainable.

Greek culture is being encroached upon in every way. The Sunday opening of shops is being enforced, whether the still strongly religious population likes it or not. Consumption is more important than orthodox religion – that is the credo of the north. In international law the internal affairs of a nation are largely taboo; in the euro protectorate there are no taboos.


citizenJA -> Neil59 17 Jul 2015 08:58

If Greece was a corporation, would we be concerned about this "takeover"? What is happening now is no different than an administrator stepping in, only it is happening to a government.

Wrong. Greece is a sovereign nation, sovereign people, not a business full of employees. Greece's government is functional & democratically accountable. A nation isn't a corporation. A country isn't a business. I can't tell you how horrifying your post is to me.


citizenJA Johanes 17 Jul 2015 08:08

Tecup, I really hope it is opening a few eyes to the real state of affairs.

We are all Greece, and sadly, this is not a statement of solidarity. It is a metaphor for what our rulers are turning us into. And we vote for them ...

Yes, what's happening to Greece is happening (or will happen) to us all. I will continue to vote however I've seen what happens to a fine government representing to the best of their ability the people & country - they got knocked around & overruled. What I thought was non-negotiable turns out some Hayek adoration readers in powerful positions decide now is time to dismantle social security provision, employment protections & public infrastructure is made over to privateers. Scary times.


HauptmannGurski CjCanada 16 Jul 2015 20:49

The elephant in the room is NATO. They wanted to keep Greece in at all costs, and now they have all costs.


luella zarf CjCanada 16 Jul 2015 19:05

It is like a dysfunctional family where narcissistic parents believe a fantasy of their own perfection and scapegoat one of the children as the cause and epitome of all that is wrong.

Nice analogy. This is the world that propaganda created. A completely parallel universe.

But it's not exactly a new development. Look at the US, they are at their n-th invasion, and everybody still pretends that they are slaughtering people for 'humanitarian' reasons. Or the IMF, which has ruined the economies of pretty much every single state in the Third World and everybody pretends that 'we are helping them to escape poverty'.

The problem is that once the sociopaths have completed the capture of the developing world, they have nothing left to plunder but the developed world. No surprise there, capitalism is a Ponzi scheme, but imagine the shock of the Western middle classes when they finally realize that this is their future too.


luella zarf competentcrew 16 Jul 2015 18:47

The market structure has not changed from 100 years ago and is archaic, more Oriental than European. Something has to change.

The 'burden of the white man' reloaded. With this attitude, Germans will end up being again the most hated people in Europe, and rightly so. Nobody asked them to 'zivilise' us.


luella zarf DieSacheUndOderIch 16 Jul 2015 18:40

That is the point! Germany only subscribed to the Euro under its conditions, that included a stable currency.

In 10 years the European Union will either break up or we will have war again. People are not going to put up with enforced austerity and German colonialism forever. You can hide your head in sand or you can try to understand the macroeconomics of EU, which are a bit complicated but not beyond what the average intelligence can grasp.

But Germans, to quote the economist Heiner Flassbeck, suffers from 'a collective denial of the truth', when it comes to the 'failure of German economic and financial policies and their devastating consequences'.

http://www.flassbeck-economics.de/the-euro-crisis-and-germanys-collective-denial-of-the-truth/


Areal Person -> Johanes 16 Jul 2015 17:04

Yeah, although I'm with John Gray and his post-Marxist analyses of the cyclical nature of human civilization, and would if pushed say the outlook is bleak with a few rays of sunshine here and there. The UK is likely to move further to the right when things worsen - that's not a definite, but it's likely if the post-Thatcherite years are to be viewed as a legitimate litmus test.


competentcrew -> luella zarf 16 Jul 2015 12:27

53 small businesses go bankrupt every day in Greece. 1.5 million former private sector employees are unemployed. There's no time to romanticise about beauty and variety. We are talking about people scavenging bins for food. The market structure has not changed from 100 years ago and is archaic, more Oriental than European. Something has to change.


competentcrew -> kay_dee 16 Jul 2015 12:21

Excuse me? 200.000 skilled professionals emigrated from Greece (in the last 2 years and this is a low estimate) not because they were bored, but because the way the Greeks want to run their country left them with no jobs and no hope. The country is ruined and desperately needs growth, so Sunday trading might just help a fraction. Living in a time warp doesn't.


wheresrobinhood 16 Jul 2015 01:57

It all started with the 2008 global financial meltdown caused by private banker greed. Since the rich cannot be paid for their mistakes--i.e. nationalize the banks--then the rest of us, the state, take over the debt.

The author is projecting a finality when the state cannot take on the debts of the rich any longer.

Warren Buffet said we are in a class warfare and we (the rich) are winning. Strong words since Americans don't believe in class or Marxism.

[Jul 16, 2015] The crucifixion of Greece is killing the European project

"...Spot on. Greece's debts have now been made effectively unrepayable in order to send the deafening warning to the Spaniards, Portuguese, Italians, etc., not to dare elect anti-austerity governments. It's pretty desperate stuff."
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"...if Greece was free to decide would they be in this spot. no.. they are being dictated. period. the people understand that and are protesting, but the politicians can only do what the banks tell them so they will do exactly what they are told and then have elections - the people will then elect new government which will negotiate so minor changes to the payment plans or some other irrelevant term which the new government will tout as a victory which of course the media will lap up like a dog in heat and everything will be as it should according to the control exerted by these financial oligarchs who dont give a crap about the people and only care to own own own. "
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"...Just as Sven Linqvist shows in The History of Bombing that World War Two was essentially the result of Germany importing practices into Europe which were formerly common and universally accepted (even applauded) in the West's administration of its colonies (mass murder, genocide, gun boat diplomacy), so Europe's next breakdown will be able to trace its roots back to this importing of economic practices formerly reserved by Western institutions for the developing world into the heart of the developed world. This is the beginning of the end for Europe, and it certainly marks the end of my--and many others'--dreams of a powerful, unified Europe underpinned by the acquis communautaire."
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"...The EU is a tool of banks and corporations to squeeze the poor."
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"...This article points out what has been obvious for some time. The neo liberalist European elites cannot tolerate Syriza or any other far left political movement. There is to be no credible alternative to austerity and anyone who says otherwise will be crushed. "
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"...I have just read the Hans-Ulrich Goerges column in yesterday's Stern magazine. It points out how much untaxed money rich Greeks, including the families of Greek government ministers, have parked in Switzerland over the last few years and particularly in the last few months and weeks. The amount of money involved dwarfs other sums under discussion here. And nobody does anything about it! What sort of a society is mainland western Europe, that everybody involved knows exactly what is going on, but all turn a blind eye?"
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"...You do realise that the biggest tax evading entities in Greece are of German interests? You do realise that the fund where undervalued Greek assets will be going into is directed by none other than Dr Schauble (the German finance minister) himself. Greece won't be reformed because of many interests and mostly external. The rest is a charade."
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"...To quote the great economist - J K Galbraith - 'In economics, the majority is always wrong' and that is certainly the case with the euro. For twenty years The Guardian has been mocking those of us who foresaw that the euro would impoverish southern Europe. We were also ridiculed for pointing out that the EU was undemocratic - run by unelected and unaccountable bureaucrats. Well, now the penny appears to have dropped - which is great - but I don't expect any apology to us eurosceptics! "
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"...Thank you for the better analysis I've read. As a Portuguese, from a country that is going through a very similar situation, I feel that we are not living anymore in a democracy: only a formal one, under the economical-financial diktat of the UE bureaucracy, Germany, IFM and North-American geopolitical interests. If you have a good memory, as a people we have freed ourselves from a 48 years dictatorship in April 1974, and now we are falling under another one, like the Greeks, who suffered also in the flesh the Dictatorship of the Colonels. What is waiting us? A long agony, in a humiliating, almost colonial situation. The "Evil Empire" is now formed by a nebulous cloud of hidden interests, speculators and corporations. I also had an internationalist dream, I dreamed with a democratic United Europe where the richness of its several cultures and its cross pollination could have given birth to o New Renaissance and an enlarged Atlantic-Mediterrean Pax. Not any more. After the abject humilitiation of Greece I feel ashamed of even be classified as an European. In the now quickly decaying corpse of a dream all the extremims will found, as worms, the fertile ground of a graveyard. No, thank you. Keep your money and, when needed, try to eat it."
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"...For me this is a wake up call. The European project has been stripped of its social pretensions and bare naked it's ugly. A project which was originally intended to maintain the social and economic balance in a Europe which would otherwise inevitably be dominated by Germany's disproportionate mass and scale has become a means of achieving and maintaining German financial and economic supremacy over the rest of Europe."
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"...In a speech from Goebbells to Czech Intellectuals and journalists, Berlin 1940.

You gentlemen have now seen something of the Reich, and I made a point of allowing you to make this journey before I addressed you. You have seen the Reich in Wartime, and you will have formed some idea of what it can be in peace. Out great nation with its large population, together with Italy, will in practice take over the leadership of Europe. There are no two ways about that. What it means for you is that you are already members of a great Reich which is preparing to reorganize Europe, tearing down the barriers that still separate the European peoples and making it easier for them to come together. Germany intends to put an end to a situation which quite clearly cannot satisfy mankind for long. We are performing here a work of reform which I am convinced will one day be recorded in large letters in the book of European history. Can you imagine what the Reich will actually be like after the war? (…)"
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"...What preparations did the Euro-zone make for a Greek default? They moved the private debt to the Euro-zone tax payers. 2009 - 2014 - reduction in private creditors exposure: France - 50 billion, Germany - 20 billion ..... etc ......."
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"...... Wake up call for Mr.Milne: The European Project was never meant to be of benefit for the people, only for business (and politicians). You better focus on TTIP, the coming super USA/EU, where we will all be Greece. And we don't get a referendum... This is why the UK no longer needs to be in the EU, TTIP will take care of that. All a matter of "look over here!", so you don't see what's happening over there.... "
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"...The fact that war is inconceivable between the members of the EU is the often forgotten achievement. You do not have to look very far back from its foundation to realise what has been achieved. The tragedy in my view is that the vision of Europe has been hijacked by the federalists and euro (the currency)-philes