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.
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.
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:
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.'
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, 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.
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 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.
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.
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.
The net result of the project is growth of the debt.
Bank crisis
Conversion of private loans into state debt (according to standard neoliberalism mechanism
of wealth redistribution "appropriate gains, shift losses to public")
Austerity regime is enforced which guarantees that this condition is a permanent one.
The country became a cheap supplier of the raw materials and workforce to G7.
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.
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.”
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
political jockeying to avoid being left holding the bag of the disaster that is the EMU on
any country and on any timescale
the growing disastrous weight of that bag
the fact that the economic incoherency of neo-liberalism makes solutions completely out
of reach EVEN on a logical level and without even taking into account the fact that the political
power relations make any Damoscene conversion of European power brokers akin to their deciding
to become a suicide bomber
the fact that there has been no even intellectual insurgency in Europe in the numbers
required to support Greece’s – to my mind – heroic stand against what I believe is an anti-human
ideology. (As the bond trader Warren Mosler says: the levels of unemployment in Greece, especially
among youth, is a “crime against humanity.”)
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.
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.
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.
You’ve heard that the Euro was created to provide two benefits for Europe:
Unite Germany, France and other countries in a peaceful political situation, to prevent repeats
of World War I and II
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 leastbit 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?
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.
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,
thisthis 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 …
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.
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
"... 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.
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."
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).
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)
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.
In a recent presentation of his book, Laid
Low , which examines the International Monetary Fund's role in the eurozone crisis, author
and journalist Paul Blustein disclosed a memo dated May 4, 2010, from the IMF's then head of
research Olivier Blanchard, to Poul Thomsen, who headed the Greek mission at the time.
In his missive, Blanchard warned that the cumulative fiscal adjustment of 16 percentage
points being demanded of Greece in such a short period of time and with such a high level of
frontloading had never been achieved before.
According to Blanchard, not only was the task unprecedented, but Greece was being asked to
achieve the impossible in unfavourable external circumstances, when everyone was barely
recovering from the 2008 global financial crisis and without any other policy levers (low
interest rates or exchange rate adjustment).
Blanchard foresaw what became a reality only about a year later: Even with "perfect policy
implementation" the programme will be thrown off track rather quickly and the recession will be
deeper and longer than expected, he warned.
Blanchard's scepticism and warnings were ignored. Instead, political limitations took hold
of the decision-making process and domestic-focussed calculations pushed Greece into trying to
achieve the impossible.
This week, the former IMF chief economist admitted on Twitter that although he was not the
one that leaked the memo he was not unhappy that the truth has been revealed because "it is
seven years and still there is no clear/realistic plan" for Greece.
I did not leak, but am not too unhappy that it did leak :). 7 years already, and still no
clear/realistic plan. https://t.co/8mCzO3TYvL
Athens is currently under pressure to adopt another 2 percent of GDP in new fiscal measures,
which relate to the tax-free threshold and pension spending. Since 2010, Greece has adopted
revenue-raising measures and spending cuts that are equivalent to more than a third of its
economy and more than double what Blanchard had described as unprecedented almost seven years
ago.
The Greek economy has been burdened with 35.6 billion euros in all sorts of taxes on income,
consumption, duties, stamps, corporate taxation and increases in social security contributions.
When totting all this up, it is remarkable that the economy still manages to function.
During the same period, the state has also found savings of 37.4 billion euros from cutting
salaries, pensions, benefits and operational expenses. Discretionary spending is now so lean
that even the IMF argues that in certain areas it needs to increase if Greece is to meet the
minimum requirements in the provision of public services.
When this misery started, Greece had to correct a primary deficit of 24 billion euros. But
the painful fiscal adjustment Greeks have had to endure had turned out to be three times as
much.
The IMF's Thomsen, now the director of its European Department, recently argued that Greece
doesn't need any more austerity but brave policy implementation. Somehow, though, the
discussion has ended up being about finding another 3.5 billion euros in taxes and cuts to
pension spending. Bravery is nowhere to be seen.
Poul Thomsen, the IMF assassin of Greece leaves with a pension of more than 18.000
Dollars. He contributed, along with German leaders, to the death of thousands of Greeks who
committed suicide and to the destruction of the life of millions of Greeks. More than half of
Greek pensioners are living now on pensions less of 500 euros, in a country where prices are
the same as in France or Germany and the social protection network much worse. All Thomsen's
estimations have been proven wrong. In fact they were not errors, they were necessary to pursue
the program of "execution" of Greece and its people, by an alliance of the "Empire of Finance"
and German and other European elites, through EU, ECB and IMF. Thomsen, a white collar
international criminal has also worked and contributed to the destruction of ex-Yugoslavia and
of Russia before getting busy with Greece. DKWikileaks: Thomsen/Velkouleskou. Greek Default and Brexit "is going to be a
disaster"
Wikileaks has just published the records of a discussion between the IMF director of
European Affairs Paul Thomsen and the Mission Chief in Greece, Delia Velkouleskou. In it, the
two officials share their worry that the third bailout deal will end up in disaster, in fact
foreseeing a synchronism between a Greek default and a Brexit. Read the piece by Julian
Assange
by Julian Assange April 2, 2016
Today, 2nd April 2016, WikiLeaks publishes the records of a 19 March 2016 teleconference
between the top two IMF officials in charge of managing the Greek debt crisis – Poul
Thomsen, the head of the IMF's European Department, and Delia Velkouleskou, the IMF Mission
Chief for Greece. The IMF anticipates a possible Greek default co-inciding with the United
Kingdom's referendum on whether it should leave the European Union ('Brexit').
"This is going to be a disaster" remarks Velkouleskou in the meeting.
According to the internal discussion, the IMF is planning to tell Germany that it will abandon
the Troika (composed of the IMF, European Commission and the European Central Bank) if the IMF
and the Commission fail to reach an agreement on Greek debt relief.
Thomsen: "Look you, Mrs. Merkel, you face a question: you have to think about what is more
costly, to go ahead without the IMF–would the Bundestag say 'The IMF is not on board?',
or [to] pick the debt relief that we think that Greece needs in order to keep us on board?"
Remaining in the Troika seems an increasingly hard sell internally for the IMF, because
non-European IMF creditor countries view the IMF's position on Greece as a violation of its
policies elsewhere of not making loans to countries with unsustainable debts.
In August the IMF announced it would not participate in last year's €86 billion Greek
bailout, which was covered by EU member states. IMF Chief Christine Lagarde stated at the time
that the IMF's future participation was contingent on Greece receiving "significant debt
relief" from creditors. Lagarde announced that a team would be sent to Greece, headed by
Velkouleskou.
Thomsen said internally that the threat of an imminent financial catstrophe is needed to
force the other players into a "decision point". For Germany, on debt relief, and In the case
of Greece, to accept the IMF's austerity "measures," -- including raising taxes and cutting
Greek pensions and working conditions. However the UK "Brexit" referendum in late June will
paralyse European decision making at the critical moment.
"I am not going accept a package of small measures. I am not " said Thomsen. "What is going
to bring it all to a decision point? In the past there has been only one time when the decision
has been made and then that was when [the Greeks] were about to run out of money seriously and
to default. [ ] And possibly this is what is going to happen again. In that case, it drags on
until July, and clearly the Europeans are not going to have any discussions for a month before
the Brexits "
Last year Greek Finance Minister Tsakalotos accused the IMF of imposing "draconian
measures," including on pension reform. While Velkouleskou concedes in the meeting that "What
is interesting though is that [Greece] did give in they did give a little bit on both the
income tax reform and on the . both on the tax credit and the supplementary pensions."
But Thomsen's view is that the Greeks "are not even getting close [to coming] around to
accept[ing] our views." Velkouleskou argues that "if [the Greek government] get pressured
enough, they would But they don't have any incentive and they know that the Commission is
willing to compromise, so that is the problem."
Velkouleskou: "We went into this negotiation with the wrong strategy, because we negotiated
with the Commission a minimal position and we cannot go further [whereas] the Commission is
just starting from this one and is willing to go much further. So, that is the problem. We
didn't negotiate with the Commission and then put to the Greeks something much worse, we put to
the Greeks the minimum that we were willing to consider and now the Greeks are saying [that] we
are not negotiating."
While the Commission insists on a Primary Government Budget Surplus (total tax minus all
government expenditure excluding debt repayments) of 3.5%; the IMF thinks that this target
should be set at 1.5% of GDP. As Thomsen puts it, "if [Greece] come around to give us 2.5% [of
GDP in tax hikes and pension-wage-benefits cuts] we should be fully behind them." -- meaning
that the IMF would, in exchange for this fresh austerity package, support the reduction of the
Primary Surplus Target imposed upon them from the 3.5% that the European Commission insists on
to 1.5%.
These targets are described as "very crucial" to the IMF. The IMF officials ask Thomsen "to
reinforce the message about the agreement on the 2.5%, because that is not permeating and it is
not sinking very well with the Commission."
At one point, Velkouleskou refers to an unusual solution: to split the problem into two
programs with two different targets: "The question is whether [the Europeans] could accept the
medium term targets of the Commission, for the purposes of the program, and our targets for the
purposes of debt relief." Thomsen further explains that "They essentially need to agree to make
our targets the baseline and then have something in that they hope that will overperform. But
if they don't, they will still disburse."
The EWG [Euro Working Group] needs to "take a stand on whether they believe our projections
or the Commission's projections." The IMF's growth projections are the exact opposite of the
Commission's. The Commission projects a GDP growth of 0.5%, and the IMF a GDP decline of 0.5%
(even if Greece accepts all the measures imposed by the IMF).
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! ..."
..."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.
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.
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!
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.
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.
"... 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 ..."
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. Theyarevictimsofimperialism."
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".
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!
"... 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 ..."
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.
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'.
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.
... 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.
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. ..."
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.
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.
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.
"... 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. ..."
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."
"... 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? ..."
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.
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. . "..."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. "
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.
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.
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...
"...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."
.
"...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."
.
"...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. "
.
"...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."
.
"...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"
.
"...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."
.
"...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.
"
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!
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.
"..."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.""
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
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.
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.
"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.
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..
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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:
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.
"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.
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?
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.
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.
"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:
…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?
"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:
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'.
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.
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.
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.
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.
"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."
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.
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"?
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
"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."
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.
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
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.
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.
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.
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.
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.
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.
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…
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.
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.
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.
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?
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.
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.
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.
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.
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.
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).["
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.
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.
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?
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.
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.
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.
What you are bringing to the discussion are generalizations, and
instead of the Greeks being badmouthed, you are badmouthing Germans.
Same exact thing.
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.
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.
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).
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.
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:
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.
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.
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.
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).
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?
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.
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.
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.
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".
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.
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.
"...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." . "...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." . "...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."
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."
'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!
"... "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. "
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."
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?
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.
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.
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.
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.
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.
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.
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:
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.
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.
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.
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.
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.
"...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."
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.
"...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."
...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.
"...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."
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.
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.
...
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.
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:
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.
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.
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.
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.
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.
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.
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.
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%. ]
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:
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:
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.
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:
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.
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.
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
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.
"...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."
"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.
"...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]
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.
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.
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. ...
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
... 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.
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...
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.
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.
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.
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.
@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...
@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.
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.
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.
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?
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
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.
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.
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.
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.
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."
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?
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.
"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.
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
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.
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.
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.
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.
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?
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.
"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.
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.
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.
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.
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
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.
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.
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.
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."
"...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."
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.
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.
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. ...
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
... 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.
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...
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.
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.
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.
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.
@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...
@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.
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.
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.
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?
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
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.
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.
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.
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.
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."
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?
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.
"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.
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
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.
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.
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.
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.
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?
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.
"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.
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.
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.
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.
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
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.
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.
"..."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)."
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.
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? (…)
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. ...
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.
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. ...
...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.
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 ..."
"...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."
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.
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.
'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.
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.
-------------
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.
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.
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.
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 :
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.
"..."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."
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'.
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.
"...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."
.
"...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. "
.
"...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."
.
"...The EU is a tool of banks and corporations to squeeze the poor."
.
"...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. "
.
"...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?"
.
"...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."
.
"...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! "
.
"...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."
.
"...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."
.
"...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?
(…)"
.
"...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 ......."
.
"...... 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.... "
.
"...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.
Enforcing a single currency made this crisis only a matter of time, as we have all known since it started.
Spare a thought for German tax-payers who are doing the lion's share of the funding while hearing Germany
abused on all sides."
.
"...I agree with Seamus' analysis and find it moves to the core of what's wrong with the financial Management
of Greece by the Interests of World, European Capital. "Greed is good for Greece" is what it's democratic
and financial institutions are being told by wealthy power Brokers. "If you don't shape up to our expectations
of ever more atavistic desire for exponential Profit margins....you will be punished. So shape up and
take your medicine. Corporate Fascism. This greed for Profit at exponential expectation is commodifying
the very space between human communities and is philosophically. morally and spiritually bankrupt. I
fear the the reptilian brain has taken over the asylum! See Chomsky's "Profit Before People"..."
.
"...We're always talking about the loans, but the loans are not the problem, nor was the Greek economy
the problem: between 2001 and 2008, the Greek economy grew faster than the German economy. If you do
not believe this, don't quarrel, look it up.
.
The fundamental problem of the euro zone has nothing to do with Greece, it has to do with Germany and
with the macroeconomic architecture of the euro: it can't work. Since 2001, and against agreements,
Germany put enormous pressure on wages: wages did not increase in sinc with productivity, but remained
far below it. The consequence of this was that, by 2010, the Germans will able to produce a product
and sell it in the EU for 15 % cheaper than an basically identical product made in France. With Greece,
the difference was 25 %. This is how Germany exported its unemployment across the union, how it created
unemployment everywhere else, how, year after year, it accumulates record trade surpluses that end up
in German banks that borrow it to us so we can buy more cheap German products."
.
"...You have not addressed the most horrible fact which was that the German officials conspired for
years to use Grexit to manipulate other EU states into giving up their sovereignty, which is black on
white in Geithner's memoirs. Yet you go on with the same moralistic crap: that nobody forced Greece
to do this or that. Which tells me that you do not have an ethical bone in your body, because that is
Dark Vader shit. "
.
"...Central Europe is painting Greece as the naughty boy, while Spain and Portugal are the good little
boys who did what they were told and imposed painful austerity on their peoples. This is the colonial
tactic of divide and rule. The truth is that the euro enriches Central Europe and impoverishes the periphery.
All the PIIGS faced painful choices after the 2008 crash as a result. The Spanish wrote off the chances
of their young people. The Greeks tried to blag, bluster and fight their way out. Central Europe want
everybody to think about how terrible the Spanish and the Greeks are for making these different bad
choices. Actually, Central Europe are the villains (not only Germany but also Benelux and Finland).
They used to say that you should not have monetary union without political union. We should now say:
Monetary union without political union is perfect, if you want a mechanism for central imperial domination
of their peripheral colonies."
.
"...Greek elites, also wedded to the same system, long ago placed their country in this unpleasant
position. While I acknowledge that Greece must reform, many think the reforms the Troika wishes for
are not the best ones to achieve results, lacking fairness and justice, and again penalising the poorest
sections of Greek society. Both Germany and Greece, pushed by the EU to be the stars of this drama,
are engaged in an impossible stand off."
.
"...in 2014 Timothy Geithner, US Secretary of the Treasury 2009-2013 published his Memoirs, where he
details how he met Schauble in 2012. Well well, and Mr Schauble told him that kicking the Greeks out
of the eurozone was a desirable strategy because "a Grexit would be traumatic enough that it would help
scare the rest of Europe into giving up more sovereignty to a stronger banking and fiscal union".
http://www.nytimes.com/2015/06/30/business/dealbook/the-hard-line-on-greece.html
Translation: Since 2012, the Germans have attempted to throw Greece under the bus in order to manipulate
other states to give up their sovereignty to the bankers! You can't make this up if you tried it! Disgusting."
.
"...No taxpayers lent money to Greece : that was private banks. This only became a problem for European
taxpayers when the troika decided in 2010 to take over responsibility for the debts, thereby transferring
liability from bankers to taxpayers. They then imposed macroeconomic policies which gutted the Greek
economy making it unlikely European taxpayers would ever get much of their money back . The newspapers
really have got you hating the oppressed and loving your oppressors, haven`t they ?"
.
"...Yes, I was thinking the right wing voters are most hypocritical, even in their condemnation
of the EU, because they vote for the same neoliberal ideology that got Greece into this mess, for their
own nations!"
.
"...I was raised to have a horror of clubs and organizations with memberships. Do not see why a country
would want to be a member of a club, especially when the economic disparities are so great. The EU can
never operate like the USA, because every one of the countries in it as a long and different history,
different language and culture. To run efficiently it will have to imitate the former USSR and develop
a dictatorial central administration. Seems that Merkel has grasped that fact. Arbeit macht Frei
will be the watchword and goodbye to La dolce vita."
.
"...Did it occur to you that the EU has changed in recent years. It is now run by right wing governments
who promote a failed austerity and a failed banking system. A decade ago, it was full of socialist governments
who went on a spending spree. The Banks were the winners in both cases, but now the poorest pay with
unemployment, rights taken, and assets stripped, while those who benefitted most still enjoy their riches
and stack money away in tax havens."
This attempt to turn Athens into a debt colony will fail – and open the way to the breakup of
the eurozone
"That's been a familiar pattern in the developing world for decades, in the guise of IMF and
World Bank structural adjustment programmes. But the eurozone has now given it permanent institutional
form."
afurada crystaltips2 17 Jul 2015 18:31
It means what it says - that over 90% of the demands made by the Troika were carried out by
successive governments. I'm listing some of them here (in order of occurrence from 2010): a freeze
in the salaries of all government employees; a 10% cut in bonuses and overtime for govt workers;
a freeze on pensions; an increase in VAT from 19% to 21%; rises in taxes on fuel, cigarettes,
and alcohol; rises in taxes on luxury goods; cuts in public sector pay; pension reform including
increasing retirement age from 60 to 65 for women; cap on monthly wages and introduction of 10%
cuts on salaries above €1,800; new taxes and new cuts of workers' wages; property tax collected
through the electricity bill; public pension cuts to 15%; increase of the retirement age from
65 to 67; additional wage cuts for civil servants up to 20%; public salary wage cuts up to 30%;
Public Broadcasting Service shut down; thousands of layoffs and wage cuts for civil service workers.
They could have done more, and harmed the economy even further. As it turns out, it is a good
thing that they didn't.
Graham Jones 17 Jul 2015 18:25
Indeed, the bullying of Greece and the introduction of secretive treaties like TTIP and TISA
which threaten all our public services, making a mockery of having a parliamentary democracy,
have convinced me to vote no in a referendum. The EU is a tool of banks and corporations to
squeeze the poor. It seems our MEPs are as blissfully unaware of the broad tide of disaffection
with the EU as they are with the real effects of the secret treaties. I bet Cameron is kicking
himself about offering a referendum on EU membership, naively thinking that the leftish, greenish
and liberal voters would weigh against the Tory euroscepts and kippers. He really needs the SNP
on this one!
eamono MaroonMango 17 Jul 2015 17:50
Absolute crap as the Finance Minister was defeated 4-2 in a ministerial vote prior to his resignation.
What were his policies and decisions? They were to take control of the Greek National Bank before
the ECB acting unlawfully, stopped the funding. Why aren't you questioning the political actions
of a bank that is deemed to be economic not political? Who in Europe ordered the ECB to act like
this? The Germans? It wasn't the French. Do some research!!! Dr. Eamon
ukchange68 iOpenerLo114Lat51 17 Jul 2015 17:33
'real money' investors have been cheated, and stolen from, just like the rest of us, I'm afraid
Euvosto Taivas gooner40 17 Jul 2015 16:39
Regrettable, the political egos in Brussels, Paris and Berlin could never stand the Union's
dissolution without tragedy.
bolshevik96 17 Jul 2015 15:55
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. The fact that the
democratically elected government of a free and sovereign nation can be bullied into accepting
harsh, economic strictures despite their election on an anti austerity ticket shines a revealing
light on the bureaucratic reality of the European Union. The Greek people made their voices heard
in the referendum and the message was loud and clear - NO. Democracy in the Union now only exists
on the sufferance of the financial elites and if you think that this has no implications for the
UK you couldn`t be more wrong. The writing is on the wall for the smaller, newer members (and
some of the older ones) : elect governments acceptable to the new neo liberalist orthodoxy or
face the consequences.... For years the right wing press has been banging on about European interference
in British domestic affairs and the left has been dismissing it as xenophobic scare mongering
but maybe they have actually been calling it right.... if that`s the case the left had better
start re-thinking their position and start putting British interests first, last and always........
tnbskts icarus32fly 17 Jul 2015 15:21
Because when a country gets into deep financial trouble, what's the alternative? And the problem
is, the deep financial trouble isn't always self-inflicted; sometimes governments are destabilised
from without in order to bring about this very situation, sometimes the problems are part of a
more widespread financial or other crisis (which is at least part of the problem in this case,
even though I know the Tories like to claim that the 2008 financial crisis was totally down to
the Labour government).
And then the vultures circle and pick the bones clean. Austerity for the masses, public holdings
transferred to private ownership at fire-sale prices, laws passed to favour foreign investors
and trade at the expense of local businesses and individuals, and a society and economy wrecked
for decades to come.
mjlynley 17 Jul 2015 12:50
While I have lots of sympathy with the Greek (I used to live there), and I agree that the terms
are onerous, those who are vociferously criticizing the Europeans and blaming especially the Germans
must ask themselves 1) what about Greece's responsibility (and trustworthiness) and 2) what is
the alternative.
With regard the first, the Greeks and their sympathizers talk all the time about the democratic
will of the people. But democracy also means collective responsibility for what the governments
you elect do in your name. Let us not forget, Greece was actually starting to recover at the end
of last year before Syriza started its disastrous and ill-conceived theatrics. Also, you can't
put the blame for the debt on the creditors - the Greeks LIED and CHEATED about their true level
of indebtedness, and they failed to keep their promises. The Greeks are adults and must take responsibility
for their decisions. If they are not considered adults able to make sensible decisions, then they
don't deserve to rule.
Another important point, frequently mentioned, but not stressed enough, is that the Greeks
themselves don't want to pay for their country. Tax evasion is rampant. I was there a couple of
months ago and was surprised by the number of petrol stations that were cash only, no receipt.
If the Greeks aren't at least prepared to meet the world half-way, why should taxpayers in northern
Europe be forced to subsidize them ad infinitum. The reforms are designed to get Greece to a primary
budget surplus (i.e. before interest). Surely that is not unreasonable?!
What is the alternative to the current deal? Everyone knows there will be some form of debt
relief, even if it's only making a large chunk virtually interest-free, and stretched out far
into the future. If there is a write-off, someone has to pay. The money doesn't come out of thin
air. And that will be borne by taxpayers whose countries kept the rules!
Sadly, it's a mess with no winners, only losers.
dr8765 17 Jul 2015 08:50
Near perfect closing paragraph Seumas.
On the assumption that The Guardian will allow a "free vote" amongst its journalists, I hope
that you will lead the "out" faction in the run-up to the referendum. Although, judging by some
of the things written by others this past week, you may have some competition.
At last the left in this country seems to have woken up to what is happening, although that
doesn't extend to the politicians. But then, when was the last time the Labour party really represented
the views of the disenfranchised?
Liam DC Nisbet LiberteEgalite1 17 Jul 2015 08:34
Do your research. Greeks are well aware of the endemic corruption and tax evasion, and this
has certainly contributed towards their economic woes, but it's not the whole picture.
Greece was lent a lot of money, by Germany, when Germany knew it couldn't pay it back. That's
called irresponsible lending and it would land your average high street bank in deep water, but
the Troika are not your average high street banks.
This article is not baseless at all, in fact it's right on the money.
It's your kind of poorly informed rhetoric that stokes nationalist resentment. Keep your childish
opinions to yourself in future because you're not helping anyone.
LiberteEgalite1 17 Jul 2015 08:14
Countries poorer than Greece in the EU such as Latvia, Slovakia, and Lithuania have made the
reforms and adjustments required to reign in borrowing in order to be competitive and are starting
to succeed. Their aspire to be like Netherlands and Germany and are working hard to attain this
goal. Greece on the other hand wants to send a begging bowl around the EU so that it can hand
generous welfare to its citizens using other people's money. This article is baseless and not
helpful in helping Greeks understand the real source of their plight, which is their endemic corruption
and tax evasion of its elite.
MaxDrei 17 Jul 2015 07:30
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?
NickLS -> nicholass 17 Jul 2015 07:25
Greece does not have an export oriented economy, this is a fact. It would be great if it did,
but to develop one would take time and - surprise! - development; yes, the opposite of austerity!
Given this factual situation of negligible exports, cutting pensions and wages effectively
means killing the internal market and shrinking the economy because - surprise! - people will
have less money to buy stuff from the companies that sell them. Thus, the remaining companies'
sales will fall more and they will have to close shop.
As for the characterisation of SYRIZA, I do not know what you justify it on and what your experience
with them is, but I think it should be more than clear that your opinion does not necessarily
reflect the truth.
Actually they checked their books, however Eurostat rules said that derivative positions did't
have to be on the books. Many complained about this rule, but Greece with the help of Goldman
Sachs completely abused it by turning what looks like a loan from GS (ie GS give Greece a load
of money, Greece pay small 'interest charges', Greece repays a load of money) into something structured
as a derivative position that didn't have to show up.
estremoz -> NickLS 17 Jul 2015 05:57
It won't be NATO, it will be Eurogendfor, militarily equipped, rapid reaction force entirely
at the operational control of the Commission, not the Council of Ministers.
Already formed, already fully operational.
Anti EU protests, which will increase, will be termed domestic terrorism.
NickLS -> cpp4ever 17 Jul 2015 05:49
Greece is not going to exit the Eurozone for the simple reason that Greek assets have been
and will keep being sold off at ridiculously low prices to foreign interests. This includes infrastructure,
utilities, telecommunications, banks, road tolls, ports, airports, minerals, oil rights, land,
tourist businesses, etc. For example, Fraport (a German company) will be gaining ownership of
14 airports throughout Greece soon and Deutsche Telecom already owns the biggest telecommunication
company in Greece. Canadian companies and funds own the Athens airport and the gold reserves in
the north of the country.
Can you imagine what long term profits these are going to make for foreign companies and for
lender countries who bought it all for 1/100th of their real value through the bailout terms?
A return to the drachma would mean the end of the profits and their feast, so it won't happen.
And even if a revolt happens one day, you will start hearing in the media how Greek "extremists"
are out of control and need to be suppressed by NATO or Juncker's army, if he has it by then.
icarus32fly 17 Jul 2015 05:48
Crucifixion: what an apt image! And the sheer weight of the voices behind the plethora of links
you provide in this piece is ample evidence that most people of good sense are hating what's happening.
Wonder if a shotgun wedding -the very rushed formation of the EU-can possibly end in an amicable
and civilised divorce?
tnbskts 17 Jul 2015 05:45
Naomi Klein pointed out in The Shock Doctrine in 2007 that banker-imposed austerity was incompatible
with democracy, and that the financial sector along with its bought-and-paid-for governments would
do whatever it took to make sure that its interests prevailed, so this outcome was pretty much
inevitable. Not exactly surprising that Greece has been added to the parade of countries that
have already been impoverished so that the few at the top can become even richer.
icarus32fly MaxDrei 17 Jul 2015 05:44
No, not heart breaking at all; heartbreak involves losing something worthwhile and precious,
the whole EU Project was never anything like this but a cock-eyed, ill-conceived, misguided shotgun
monetary wedding...to continue your marriage metaphor...I'm still trying to figure out who was
pregnant and had to get married.
orsat1 17 Jul 2015 05:42
I have had many happy experiences in the past 47 years whilst visiting Greece. I would like
to go again but, I fear a backlash from all Greeks who do not profit from tourism. Tourism is
a major part of the Greek economy and many Germans holidayed there: they will now stay away thus
exacerbating the problem. Likewise many other EU citizens will feel as I do and stay away.
The IMF and now the ECB have said that the debt is unsustainable, only the EU [mainly Germany]
believes that they can get blood out of a stone. PLEASE LEAVE THE EU if only temporarily, and
bring back the drachma. Tourists will flock to your shores.
cpp4ever 17 Jul 2015 05:38
Have to agree with you, Seumas Milne, Greece will eventually have to exit the Eurozone and
default on many of its debts if the EU Troika continues with policies that have singularly failed
in the past and I reckon will no doubt fail again. The current course for Greece makes a mockery
of any Democracy requirements of the Eurozone when it can apparently be effectively over ruled
so easily. If anyone thinks otherwise, then consider this, Greek businesses going bankrupt is
about the most successful business there at the moment and that is going to do nowt for their
GDP, or make the profits required to service any debts, let alone pay them off. But that is what
Troika policy has achieved and can hardly be called a success!
johnc2tinit 17 Jul 2015 05:31
Perhaps now is the time to point out the obvious: On the scale of Europe Greece is a tiny country.
The Greek population is a mere 5% that of France, Germany and Britain combined. It is similar
to that Lombardy and just double that of Ireland. With a third of the population is in the city
or metropolitan area of Athens there is neither the workforce nor the infrastructure to rebuild
a viable economy, capable of sustaining the payback expected.
Even with a florid economy Greece would have struggled to pay back the "investments" that other
European countries poured in as bail-out. The error was as much on the part of the "rescuers"
as on the government then in power for accepting such disproportionate sums.
Any private investor will find in small print at the foot of a prospectus the warning: past
performance is no guarantee of future returns. In Greece's case, following years of corrupt government,
this codicil should have made the EU all that much more careful to help Greece to become solvent
again – innovating industry and creating jobs – rather than encouraging her to dig a deeper hole
to be finally swallowed in.
Until those now crying for their money back realise that their money as lost and start supporting
all the smaller members of the union in order to rebuild a single economic entity the future is
bleak. For all of us, even for the larger and more wealthy members.
John Crawford, Bergamo, Italy
NickLS Mark Hatton 17 Jul 2015 05:30
It is misleading to say there is a Greek situation. There is a situation for almost everyone
in Europe; some are feeling the effects now, some felt it earlier and some will feel it later.
However, you are right to say the the EU is a very opaque bureaucratic hegemony, on that is empowered
by the de facto diversity, inequality and the lack of effective bottom-up organisation throughout
the continent.
AgeingAlbion 17 Jul 2015 05:30
Over 40 years ago Tony Benn and Enoch Powell joined forces and argued that the EU was undemocratic;
that you could not have a single government without a single minister of finance; and that the
EU (Eec for pedants) was an ever expanding monster that was a one way street to a superstate.
The dishonest Ted Heath pretended he disagreed. The more honest on the left agreed but thought
it was a good thing, since for them more government is always better government.
So well done for waking up Seamus to what was predicted by intelligent people from opposite
ends of the spectrum before you were even born.
Christopher Deans 17 Jul 2015 05:28
There was not one member country that did not fudge entry conditions to the common currency
of the euro and Greece was aided by other members. The only way the euro could have worked was
within the confines of a Federal Europe, and a common currency was the lure. This was Germany's
third attempt to dominate Europe in the last 100 years and it has failed. The Greeks will leave
the Euro and they will be followed by the Mediterranean Nations whose economy is being stifled
by debts greater than 100% of GDP; they need to devalue their currency to survive. German goods
and services will become increasingly expensive, and equitable trade balances will eventually
be restored. The process of restoration will cause some considerable hardships, which are inevitable.
but who wants to use currency and a fiscal system in which trade deficit will see German bailiffs
at the door demanding possession of national assets.
Mark Hatton 17 Jul 2015 05:23
The European Union is not a democratic institution, neither was it created to be. It's basis
is ideological federalism, or bureaucratic hegemony, if you prefer.
The EU project was always a method for Germany and/or France to attempt to dominate the mainland.
There was long an unspoken agreement between these two senior nations to this end, whilst each
plotted to usurp the other, 'France by other means', 'ever closer union'. The disparate identities
of the European members are being gently sanded to match the homogeneous banality of the bureaucratic
elite themselves. Peace in our time intending to be achieved by grim uniformity.
That the Greek situation is political as well as financial is self evident. But it is not as
black and white, good vs evil as some commentators would have you believe. The Greek establishment
are as responsible for their predicament as the EU is. As a nation it has lived beyond it's means,
and saw Euro membership as it's ticket to do this. It is naive to imagine the EU, IMF and German
banks would be given pause by a pointless referendum and empty bluster. For all Tsipras' guts
and political mandate, its was always a matter of time before he had to capitulate, or leave the
Euro. Everyone round that table knew it.
imp44791 oak101 17 Jul 2015 05:23
For once a decent comment in CiF that doesn't go on about either "banksters" or "lazy Greeks".
There are no good guys in this affair.
1. Not those European politicians who are risking to wreck (and possibly have already wrecked)
decades' worth of effort to build a system to keep the nationalist beast quiet over a point of
philosophy ("moral hazard") and protocol ("why did you lot call a referendum while we were still
negotiating"?).
2. Not the supposed left-wingers in Greece who have repeatedly lied to their own voters for
years on end (latest one: "vote No, and we will force a good agreement in 48 hours"), and who
once elected immediately proved themselves to be the usual force of conservatism that the Greek
"left" has always been: the protectors of guild privileges, the sacrificers of workers in the
private sector to protect the cushy positions of their clients in the civil service, the persistent
deniers of any modernising reform.
3. Not the voting public in Greece who cannot rid itself of the ridiculous sense of exceptionalism,
entitlement (on the achievements of some chaps who lived 2500 years ago), and myth-making ("the
Russians will save us")
4. Not the voting public in Europe, who has fallen hook, line and sinker for all the inane
stereotypes of feckless Southerners who will retire at 30 to sit out in the sun, and buy luxuries
with the hard earned money of Berlin bakers.
5. And certainly not the commenters of CiF, who ride their own personal ideological hobby-horses
(be that "banksters" or "morally bankrupt socialists") over an affair that has little to do with
any of that.
I am a Greek expat of some 25 years, after despairing of points 2 and 3 above. Because Syriza's
BS is not just BS. It's also old-hat BS: all a silly mish-mash of old Pasok clientelism and anti-modernising
reflexes, seasoned by the illiterate ramblings of the extra-parliamentary far left. But the last
five years have also led me to despair of the supposedly better Europeans. Perhaps it's time to
up sticks again and try a less ideologically bankrupt continent. Is New Zealand far enough? How
about Tuvalu?
NickLS rCharel 17 Jul 2015 05:23
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.
bill9651 17 Jul 2015 05:11
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!
ThinBanker justonetom 17 Jul 2015 05:06
With respect, I think you miss a crucial angle on Syriza. Tsipras and Varoufakis are very intelligent
men, so is it realistic to suggest that they were naively offering the undeliverable and crossing
their fingers? No, the point of their strategy was fear: take a bold, brazen stance and evoke
the clear understanding that they will not back down and all the time leverage fear of the repurcussions
for the eurozone as a whole if they are kicked out. Such a strategy requries a poker face, a brazen
bluff til the end.
When it came to showing hands, Germany won .... but if you think about it, this was the only
viable strategy if Greece was to try and remove its straitjacket.
ManuelGiraldes 17 Jul 2015 04:58
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.
JackBz 17 Jul 2015 04:53
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.
Right now Greece can go hang, but the message is - actually - you can all go hang, if it doesn't
work for Germany it's not going to happen.
Shipyardwelder 17 Jul 2015 04:11
Greece has been made a sort of sacrificial lamb for the Euro project. On the altar of the European
dream, a nation has been reduced to penury. Yes, they were stupid to borrow money in the way that
they did. But, more stupid is a E.U., that allowed a situation like this to develop in the first
place. -- May the fine Greek people find resurrection that comes after crucifixion.
estremoz 17 Jul 2015 03:39
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? (…)
mitchellkiwi 17 Jul 2015 03:30
Well, Merkel, Schauble, Juncker, congratulations! You'll be able to buy the Piraeus, already
you own plenty of properties there. You'll be able to buy energy, water and other public services.
But more and more of the British public now know they no longer want to be a part of such an abusive
organisation. The UK will be leaving after their referendum. We don't want to know you any longer.
Euvosto Taivas FrankMartin 17 Jul 2015 03:30
At least very many Finns would like to resign the euro. They have begun collecting names, in
order to give the opportunity to a referendum. The eurozone represents the dictatorship of the
international banksters. The whole European Union is hated every day more and more. Names against
it are collected, too. As we know, Eu does not allow referendums regarding its decisions or very
existence.
soundofthesuburbs David Parris 17 Jul 2015 03:21
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 .......
The taxpayers have been loaded up with the bankers bad loans.
Who do you think funded people like Jean Monnet? The campaign for European Union was in Britain
until Britain made it clear it was not going to commit, then it shifted to France.
Yes, it is a US project - some European politicians may have been anti-American, but surely
it is obvious by now that the US is politically pragmatic and would consider that a small price
to pay for the desired geopolitical outcomes.
Enoch Powell 17 Jul 2015 02:57
The crucifixion of Greece is killing the European project
The European project is dead. Dead as a dodo !! The free trade concept looked good on paper
but the EU has transformed into something quite different than what was originally intended.
If the British people knew that political union was on the agenda and that millions of poor
East Europeans would have free access to British jobs, public services and social housing they
would have comprehensively rejected EU membership at conception. The fact is the British and Greek
people have been lied to time and time again by the political establishment. The chickens have
come home to roost and it's game over for this failed and corrupt European project. Get over it
!!
taxmillionaires admonfr 17 Jul 2015 02:55
You conveniently forget that of the 'bail outs' allegedly given to Greece, more than a 90%
went straight to the banks, therefore, they should not be called bail outs for Greece. They were
at all effects bailouts for the effing failing banks.
Greece couldn't pay its debt and that debt shouldn't been payed. When you walk into a casino
and you gamble, you may win or loose. If you loose, you don't have the European taxpayers covering
for your loses. The same should be applied to banks and investors. You invest at your own peril.
You may win a fortune in profits and interest but you may lose if the borrower cannot pay back.
However, the way it is in Europe now, the banks and creditors gamble and profit from the interests
while the taxpayers foot the bill for the loses. If there is not enough taxpayers' money to cover
the astronomical loses of those banks, then bleed the taxpayers dry by imposing an artificial
austerity destined to suck up to the last cent of EU states to give to banks. What a cosy arrangement,
no?
I will only believe that it was Greece's fault if up to the last cent of those 300 bn or so
in 'bail outs' had remained in Greece's economy. As it is, for me, it was, it is and it will continue
to be the fault of the banks and the apologists for those banks. As we stand, the eurocrats have
catastrophically failed not only to Greece, to the rest of the eurozone countries, but to every
country in the EU because they have tramped democracy and put in the open what the EU project
is all about. Nobody apart from Greece's democratically elected government should have a say in
how the country is run.
What those eurocrats have done in Greece is at all effects a coup and history will make them
pay dearly for it.
muezzin maricaangela 17 Jul 2015 02:49
Well, as you know, ties between Germany and Croatia are deep :) We'll see if Germans will help
if Croats implode.
As for the commercial loans - this is how the Chinese and Americans operate. Standard MO. Only,
the Germans, Swiss and Italians did it a bit more ineptly, crashing many a East/Southern European
family with unfavorable loans. Note however, that this does not apply to Greece, where interests
rates were slashed a few years ago.
FenlandBuddha Thorlar1 17 Jul 2015 02:49
"The "European project" was largely designed by the US in the aftermath of WWII specifically
to resist Soviet Russian expansion."
Absolute bollocks. The drivers behind the European project were all European (sometimes anti-American).
It was all about no more European wars and at its core how can France and Germany live together
after 3 destructive wars in one lifetime. That's what drive men like Jean Monnet. If the USSR
hasn't existed they would have acted in exactly the same way. The Americans couldn't wait to get
out of Europe after the war.
Utter anti-American " twist rhe facts to make the US the villain" drivel
hertsman GMPierce 17 Jul 2015 02:46
The money went to the German and French banking system and was added to Greece's bill.
The Greeks didn't see a nickle of that money.
Wrong. They got 9% or around 25 Bn - that's a lot of nickels. Please make your contributions
more accurate.
the ordinary Greek people don't profit from that corruption.
Really ? Where do you think the money came from to allow public servants to retire at 55 with
80% pension ? A Guardian article on Greek pensions featured a clerk who had retired at 55 and
received E 940/month pension. This must be the most generous pension system in the world.
David Parris 17 Jul 2015 02:35
Germany wants influence in proportion to its size, and its size is huge; this has led to dangerous
hegemonism leaving smaller states (except Luxembourg) counting for little. Essentially, European
democratic structures exist only on paper; in practice, France and Germany collude to stitch up
major decisions in advance, to the detriment of smaller Member States. The mechanism of so-called
"bail-outs" should be noted; they consist of loans at better interest rates than the bank gives
me, and are used to pay off German bond holders. So in effect, Germans are the main beneficiaries
of bail-outs, and although they tie up capital, they provide a decent return to the lender.
jorjo stui2000 17 Jul 2015 02:30
Some consequences of the mess imposed by Germany and their vassals
- in a few months Germany has lost a lot of the political capital and reputation it had
acquired post WWII
- Euroscepticism growing all over Europe, not only within rightwing populists but amongst
liberal and progressive part of society
- Probability of UK exiting EU as a result of the referendum increasing materially
- Possibility of Scotland leaving UK as a result of it
What a shamble, and I have not even mentioned the consequences in Greece!
soundofthesuburbs admonfr 17 Jul 2015 02:26
It is interesting to contrast how Greece is being treated for its debt of 300 – 400 billion
to how the bankers were treated when they lost 6 trillion.
James Rickards in Currency Wars gives this figure (before anyone asks):
Losses from sub-prime - less than $300 billion
With derivative amplification - over $6 trillion
Thorlar1 17 Jul 2015 02:21
The "European project" was largely designed by the US in the aftermath of WWII specifically
to resist Soviet Russian expansion. Consequently there has never been any place for left wing
politics, let alone economics, at the high tables of European economic policy.
Germany, the greatest recipient of post war reconstruction funds (bail outs) at the end of
the war, is dutifully toeing an economic line drawn by America, via the IMF, World Bank and now
the ECB. Europe is not a unifying project, it is a neoliberal test bed for economic Darwinism
and magic pudding thinking where survival of the fittest is the first and only rule.
Ironically it took the US, an outsider, to dictate the terms of Breton Woods and the new global
world order to Europeans, especially France, who wanted to do another Versailles treaty on Germany
all over again.
But as always America's motives were far from pure, it created a powerful anti-communist bulwark
in central Europe, and new 'trading partners' for its exports and has retained economic supremacy
ever since, essentially on the back of arms manufacture and associated industries that has accounted
for up to a third of the the US's GDP. For a while it not only survived at the expense of its
'competitors' it thrived.
But all good things come to an end and the end for the US economic dominance was the signaled
by rejection of Keynesianism in the late 70s and 1980's debt-fueled consumption. This and other
magic pudding ideas became a global exports along with structural adjustment, aka austerity.
After a brief fling with communism Greece avidly imported all this economic nonsense, peddled
by dealers like Goldman Sachs et al, little realising that unlike America with its huge economy
and global fiat currency, they could not money-print their way out of living beyond their means.
When it came time to pay the piper the down side of debt-fueled consumption was made very clear
by Germany, a principal lender, who has no problem doing to Greece what the US stopped France
from doing to Germany all those years ago.
The only answer for Greece now is to forget tourism and convert its entire economy to arms
manufacturing, this will not only enable it to repay all its loans, but be in surplus in no time.
They could get some advice on this from another small European arms manufacturing country: Sweden!
Scrotalyser Euvosto Taivas 17 Jul 2015 02:18
The EU always was a Banking Project. We must thank the Greeks for showing us the true nature
of the beasts. And apologies to all those whose warnings were brushed off as conspiracy theories.
Gjenganger Charliezulu 17 Jul 2015 02:14
I beg to differ. Postwar Germany must have been a place of crushing austerity. They had had
their system rewritten by outsiders, they had taken on board the new way of doing things and decided
to make a success of it no matter what. Then the outside world decided to stop demanding the impossible
and thereby cause unnecessary ruin (and, yes, that kind of foresight is in short supply today).
We should not push the parallel too far - Greece is 'guilty' of economic mismanagement, not
of world war and genocide. But some of the same spirit of accepting reality and dealing with your
problems would go a long way to make debt relief easier. Germany did not hold a referendum to
decide that they were having their pre-war living standard back, the occupying troops out, and
their country unified, and the US and USSR would kindly move out of the way and provide the money
to finance the project.
Gayreekslayer 17 Jul 2015 02:13
Greece has a per capita GDP that is lower than that of West Virginia (both before and after
the meltdown), one of America's poorest states. West Virginia doesn't have subway stations with
marble. It couldn't afford it even if it wanted to have them.
Bottom line is when you have an economy that is worse than West Virginia, you can't live like
you're in The Netherlands or in Germany.
GMPierce 17 Jul 2015 02:03
Guess what guys -- The old man crying in front of the Bank ATM was not one of the people who
collected the cash from the previous bail-outs.
The money went to the German and French banking system and was added to Greece's bill. The
Greeks didn't see a nickle of that money.
The Greek government is obviously corrupt, but again, the ordinary Greek people don't profit
from that corruption. The Greeks banks are broke because all of the money is in the hands of the
EU bureaucrats and a dozen other varieties of thieves.
You can call them socialists or you can call them free-enterprisers, but whatever label they
use is just a justification for why they are entitled to rob the ordinary people blin.
mrmikeeu 17 Jul 2015 01:59
The crucifixion of Greece is killing the European project
... 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....
Healthymongrel 17 Jul 2015 01:55
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. Enforcing a single currency made this crisis only a matter of
time, as we have all known since it started. Spare a thought for German tax-payers who are doing
the lion's share of the funding while hearing Germany abused on all sides.
The real blame lies with the people who will never be called to account: the fantasists for
a federal Europe who pulled countries into the Euro knowing perfectly well that their economies,
their whole ways of looking at the world, were incompatible.
That was a criminal act.
Meanwhile, in the UK the advantages of Europe are being masked by this disaster, the will of
the Greek (and I suspect the German) people is being driven over, public opinion in France is
moving against all things European.
ID3090731 17 Jul 2015 01:55
I agree with Seamus'analysis and find it moves to the core of what's wrong with the financial
Management of Greece by the Interests of World, European Capital.
"Greed is good for Greece" is what it's democratic and financial insitutions are being told
by wealthy power Brokers.
"If you don't shape up to our expectations of ever more atavistic desire for exponential Profit
margins....you will be punsished. So shape up and take your medicin.
Corporate Facism. This greed for Profit at exponential expectation is commodifying the very
space between human communities and is philosophivally. morally and spiritually bankrupt. I fear
the the reptilian brain has taken over the asylum! See Chomsky's "Profit Before People"
trp981 17 Jul 2015 01:25
"The ex-finance minister Yanis Varoufakis compared the 'deal' to the Versailles treaty."
The post WW1 Versailles treaty and the post WW2 Marshall Plan can be profitably compared to
everyone's favorite US Constitution amendments: 18th and 21st. The former instituted the prohibition
on alcoholic beverages, while the latter repealed the former. The zeal of austerity-mongers in
torturing Greece in the guise of a morality play, while much of the bailout money is being transferred
in the background to the coffers of the creditors - who hold more than at least as much responsibility
in making risky loans in pursuit of higher gains - could possibly lead to a system-wide collapse
beyond Greece. After a prolonged period of avoidable suffering, something like a Marshall Plan/21st
Amendment will be required to repeal a stupid "pre-Keynesian balanced-budget economics" and wash
away the damage wrought by the banks and the financial sector in general. An unnecessary lessons-not-learned
repetition of historical events and/or the return of the repressed.
"That's been a familiar pattern in the developing world for decades, in the guise of
IMF and World Bank structural adjustment programmes. But the eurozone has now given it permanent
institutional form."
The Troika's algorithmic cruelty towards the Greeks has thrown into relief – yet again - the
consequences of "structural adjustment programmes", which effectively redefine the economic concept
of GDP as generalized debt peonage. The only novelty in the Greek situation, and by extension
"southern Europe", is that the GDP has now contracted from faraway places to the outskirts of
the civilized continent.
"The idea that this crisis has simply pitted one democratic mandate – that of Greece
– against the hard-pressed taxpayers of 18 other eurozone members is nonsense."
The good news for those into the dark arts of manufacturing consent is that a politically
sufficient number of people can be fooled a politically sufficient number of times. Especially
effective is the national-economy-is-like-household-economy ruse, which always succeeds in corralling
the economic illiterate. Which leaves us with the wise words of Cheech and Chong: "I know exactly
where we are."
CroppyNotDown 17 Jul 2015 01:13
The ECB happy to illegally egg on then stand and watch a bank run destroy an entire country,
for whom it is the central bank; all at the behest of its most powerful shareholder.
This is surely a world first in the history of central banking.
Now the ECB will loosen the noose, ever so slightly, just to allow a few short breadths.
Europe knows its destruction techniques well. It has a long and bloody history learning them.
The humiliation of Greece cries out for vengence, and that is probably what it will get.
apacheman 16 Jul 2015 20:28
You might call this the opening stages of The War of the 1%.
Truly it is a war of sociopaths against humanity, and it will be very, very ugly before it
is through.
It has happened repeatedly in human history, and it always ends in the same way: the extermination
of the current 1% and and their families after the slaughter of millions of innocents.
I wish they would learn to accept limits, but their natures demand complete and utter control...they
enjoy watching the suffering, and always think they can get off scot-free, right up to the moment
they are on the steps of the guillotine, or facing the firing squads.
Sadly, it is beginning again.
ID9173573 16 Jul 2015 20:14
We're always talking about the loans, but the loans are not the problem, nor was the Greek
economy the problem: between 2001 and 2008, the Greek economy grew faster than the German economy.
If you do not believe this, don't quarrel, look it up.
The fundamental problem of the euro zone has nothing to do with Greece, it has to do with Germany
and with the macroeconomic architecture of the euro: it can't work. Since 2001, and against agreements,
Germany put enormous pressure on wages: wages did not increase in sinc with productivity, but
remained far below it. The consequence of this was that, by 2010, the Germans will able to produce
a product and sell it in the EU for 15 % cheaper than an basically identical product made in France.
With Greece, the difference was 25 %. This is how Germany exported its unemployment across the
union, how it created unemployment everywhere else, how, year after year, it accumulates record
trade surpluses that end up in German banks that borrow it to us so we can buy more cheap German
products.
France did never did anything 'wrong,' it followed the wage rule, it was not over it and it
was not under it. Now France is bleeding. Greece went over: wages increased faster than rises
in productivity, but it was, all by all, not that much and it should not have been important.
Now you can say, what's wrong with it, isn't that competition? Isn't that the name of the game,
trying to sell your products cheaper than your competitors. No, it is not. It's mere mercantalism,
it is as stupid as it gets. The German policies destroyed demand everywhere in Europe, up to the
point that there is deflation everywhere. It is called Japanese disease: deflation, high and persistent
unemployment and a low rate of investment. There is only one way out of this and that is to let
wages rise. But no one understands that, although there is a clear historical precedent: in the
1920s the golden standard created basically the same imbalances as we have now but politicians
from whatever stripe or colour continue to swear by it - we know where it ended. The euro will
go down the same road if no changes will be made. In the meantime, let just suck the living daylight
out of the Greeks and turn the place into a protectorate. But it won't help. It is not a new problem,
it is an old problem. Wages have to rise, social welfare allowances and pensions have to rise,
the ridiculous and idiotic obsession with decreasing the government deficit as a priority has
to be left behind, instead priority has to be given to bringing the aggregate private debt down
and up to the day that this happens there will be no growth anywhere - for those who believe that
the conservatives are doing a great job: look at manufacturing output, look at productivity growth
(ridiculous), look at the investment rate (still way below 2008) - these factors and pretty much
nothing else determine growth, not financialisation, not the insane inflation of real estate.
Either we change or we'll become developing countries. For the truth is that if Greece is bankrupt,
no one else is far off.
luella zarf Cigars 16 Jul 2015 20:07
You have not addressed the most horrible fact which was that the German officials conspired
for years to use Grexit to manipulate other EU states into giving up their sovereignty, which
is black on white in Geithner's memoirs. Yet you go on with the same moralistic crap: that nobody
forced Greece to do this or that. Which tells me that you do not have an ethical bone in your
body, because that is Dark Vader shit.
But I'm not going to bother to deconstruct all your ideological nonsense, it's not worth my
time and energy, I'll just copypaste again Mark Blyth's ending from his article in Foreign Affairs:
''To fix the problem, someone in core Europe is going to have to own up to all of the
above and admit that their money wasn't given to lazy Greeks but to already-bailed bankers
who, despite a face-value haircut, ended up making a profit on the deal.''
No surprise there, like in any casino, the house never loses.
Central Europe is painting Greece as the naughty boy, while Spain and Portugal are the good
little boys who did what they were told and imposed painful austerity on their peoples. This is
the colonial tactic of divide and rule.
The truth is that the euro enriches Central Europe and impoverishes the periphery. All the
PIIGS faced painful choices after the 2008 crash as a result. The Spanish wrote off the chances
of their young people. The Greeks tried to blag, bluster and fight their way out. Central Europe
want everybody to think about how terrible the Spanish and the Greeks are for making these different
bad choices. Actually, Central Europe are the villains (not only Germany but also Benelux and
Finland).
They used to say that you should not have monetary union without political union. We should
now say: Monetary union without political union is perfect, if you want a mechanism for central
imperial domination of their peripheral colonies.
maricaangela CarolusB 16 Jul 2015 19:38
Thanks for your polite reply, Charles. I too know many people from those areas and have lived
in Serbia and Croatia, as well as Germany.
Yes, the poor will suffer most, but rather than blame Syriza entirely, I think two irreconcilable
ideologies came up against each other, and there was no room for manouevre at all, to move to
a logical and helpful conclusion.
This is a terrible deal for Greece - it doesn't even avert disaster, just makes it more long-winded
and painful - and a terrible deal for the tax payers footing the bill. So who should we blame?
As the saying goes, 'The fish rots from the head'. The EUs weak leadership has meant they have
co-opted German politicians, who are unfortunately equally wedded to failed economics and have
too much 'inat' to change course, and possibly too much to lose politically?
Greek elites, also wedded to the same system, long ago placed their country in this unpleasant
position. While I acknowledge that Greece must reform, many think the reforms the Troika wishes
for are not the best ones to achieve results, lacking fairness and justice, and again penalising
the poorest sections of Greek society. Both Germany and Greece, pushed by the EU to be the stars
of this drama, are engaged in an impossible stand off.
Why do you only blame Syriza? Why not the lack of oversight of the EU, the corrupt behaviour
of the previous Greek governments, and the fact that within the EU, since 2008, the Banks have
not been regulated or checked but continually bailed out and the recipients of enormous funds
from QE? Why has Germany made the taxpayers of Europe fund the Bank's bailouts?
This is a catastrophic situation and exposes democracy in peril. I am sure in Germany, opinion
is also split, and can understand that all those carrying the load are equally fed up, but I do
think people should think more clearly about how we got here.I do not see apportioning blame appropriate
any more but I see no contrition from the EU, nor any desire to change the trajectory of policy,
however unpopular it increasingly becomes, and when even the IMF says it will no longer work.
The EU should have made sure Greece was solvent before membership, and they have thrown good
money after bad. Do you think they are competent decision makers, and why do they carry on protecting
the Banks at the expense of taxpayers? In fact, Varafoukis wanted a Grexit, he couldn't find the
means to do it, and in a way, he and Schauble obviously separately thought that was the better
option, and it would have been in accord with the results of the referendum that was held in Greece.
I'm sorry, but you do not offer explanations of these anomalies, while only blaming Syriza,
a government in power for only 6 months, and constantly negotiating in that time to stave off
disaster, when this crisis has been dragging on for years.
Austerity has been proven not to work, and yet the medicine is still administered, even though
it kills the patient (and in the end, the nurse(!), no doubt). Obama rejected it, Osborne is no
longer following it in reality, numerous economists reject it's value. Yet here we are with more
austerity for Greece, none for the Banks, Financial Institutions and elites who have taken the
money out of Greece, and placed it in foreign banks and tax havens.
I am very sorry for the taxpayers who are footing the bill, and the Greek people. I am not
sorry for those who will not take any responsibility for their mistakes, and I will vote to go
out of the EU. I cannot, on principle, vote to stay in such a misguided institution which holds
in contempt the citizens of Europe, and upholds elitism and corruption.
I do not think the Greek governments are innocent, but I find it very hard to find any innocents
among the leaders here. As usual, the people who had no say in these events will pay the highest
price, whether Germans, Greeks, Finns, Slovenians - let's hope they remember when next they vote
in elections.
I wish you well, in the hope we might have light at the end of the tunnel eventually!
Santiago Barreiro Jim Jetson 16 Jul 2015 19:36
Half of my family live in Spain, and they´re pretty honest taxpayers, well-meaning townsfolk.
Since the EU showed up and the EURO replaced the peseta, the quality of life there has decreased.
The issue in the eurozone isn´t honest vs. dishonest countries, but rich vs. poor countries. France
is noticeably corrupt, improductive and with a bloated, inefficient bureaucracy and they haven´t
suffered. Simply because they´re rich enough so an overvalued currency doesn´t affect them.
luella zarf -> Cigars 16 Jul 2015 19:33
Mark Blyth, a noted economist, has a recent article in Foreign Affairs, subtitled Why Greece
Isn't to Blame for the Crisis: ''According the Bank of International Settlements, by 2010 when
the crisis hit, French banks held the equivalent of nearly 465 billion euros in so-called impaired
periphery assets, while German banks had 493 billion on their books.''
The article explains the mechanisms through which the banks were bailed out and even made a
profit despite the alleged haircut which ends up like this: "To fix the problem, someone in core
Europe is going to have to own up and admit that their money wasn't given to lazy Greeks but to
already-bailed bankers who, despite a face-value haircut, ended up making a profit on the deal.''
https://www.foreignaffairs.com/articles/greece/2015-07-07/pain-athens
HoolyK maricaangela 16 Jul 2015 19:17
Look, ... there are a ton of countries and peoples around the world who would love to be like
Germany and the Germans ... a disciplined, cultured, technologically advanced people with a successful
economy. Like China and Russia for example, their leaders are basically aping the Germans, trying
to turn their countries into bigger versions of Germany. Greece has an opportunity for direct
German rule that can turn it into a mini-Germany, but with sun and beaches. Why not take this
offer? Because the Greeks, ever since independence from the Ottoman Empire has not shown itself
very worthy of self rule. Why shy away? After all, Greece once had a German prince upon its thrown,
and Greece's very flag is based upon the colors of Bavaria. The alternative is wallowing in Balkan
mediocrity and Mediterranean sloth.
duke_widin 16 Jul 2015 18:53
This week has made a mockery of monetary union as a path to a united democratic Europe and
opened the way for the eurozone's breakup.
Greece is important for the EU that's why every aspect is analysed and discussed but, still
small fry... Greece needs the the 3rd time bailed out in 5 years,this makes it hard to understand
how the program works . I read columns and articles here in the Guardian from economy professors
who don't seem to understand how solid the Euro zone is set up in contrast to the USDollar who
still got a private central bank the FED something even the UK gave up more as 75 years ago ....
However,the euro has the highest combined value of banknotes and coins in circulation in the
entire world and in only 15 years(the US Dollar took ca.150 years) it has become the second reserve
currency after the USDollar without any other competitor in sight....
The EU with over 500 million inhabitants in this short time has became the world most potent
and biggest consumer market..
And now the EU will find a even greater stability in more political integration...
darkwhy ShiresofEngland 16 Jul 2015 18:36
And the blatant absence of due diligence. When a loan shark lends money there is no due diligence,
just fear and the breaking of bones.
Lack of due diligence was the major driver behind the sub-prime mortgage crime-all the way to
the top. They [the bankers] got of with it Scot -free and kept on awarding themselves £$billions
while their victims suffer without end[the poor in the Uk for one
luella zarf -> Cigars 16 Jul 2015 18:30
The lenders were more than willing to help if economic reforms were implement.
This a shameless lie, that reform were not implemented (why are you doing this? didn't your
mummy teach you basic morality?). If you search the website OECD Going for growth 2015, you will
find a chart called OECD Going for growth reform responsiveness, average 2007-1014 showing that
Greece leads the OECD reform ranking.
The problem is that austerity is a ruinous idiotic policy and the reforms have thrown Greece
into a 1933-style depression. Unemployment in Greece is over 25 percent now, higher than the United
States during the Great Depression.
The lenders were not considering Grexit.
Unfortunately for all of you the trolling trolls who promote this propagandistic bullshit,
in 2014 Timothy Geithner, US Secretary of the Treasury 2009-2013 published his Memoirs, where
he details how he met Schauble in 2012. Well well, and Mr Schauble told him that kicking the Greeks
out of the eurozone was a desirable strategy because "a Grexit would be traumatic enough that
it would help scare the rest of Europe into giving up more sovereignty to a stronger banking and
fiscal union". http://www.nytimes.com/2015/06/30/business/dealbook/the-hard-line-on-greece.html
Translation: Since 2012, the Germans have attempted to throw Greece under the bus in order
to manipulate other states to give up their sovereignty to the bankers! You can't make this up
if you tried it! Disgusting.
8911steven Jim Jetson 16 Jul 2015 18:21
No taxpayers lent money to Greece : that was private banks. This only became a problem
for European taxpayers when the troika decided in 2010 to take over responsibility for the debts,
thereby transferring liability from bankers to taxpayers. They then imposed macroeconomic policies
which gutted the Greek economy making it unlikely European taxpayers would ever get much of their
money back . The newspapers really have got you hating the oppressed and loving your oppressors,
haven`t they ?
HolyInsurgent 16 Jul 2015 18:05
Seumas Milne: A eurozone nakedly dominated by one state, Germany, enforcing destructive
austerity on its vassals with such brutality, can have no enduring legitimacy.
Ironically including for Germany when it enters an inevitable recession in the boom-and-bust
cycle. Then watch German politicans and economists howl when their surrounding markets have all
been crippled by Germany's "success." What goes around comes around. And Germany will learn this
hard lesson too late.
What kind of a union of partners treats one of its members like a recalcitrant colony,
destroys its economy if it steps out of line, and dismisses its democracy as an impudent affront?
In fact it's one that has always ducked democratic accountability, embedded deregulation and
privatisation in treaties, and preferred to fix policy – including the race-to-the-bottom Transatlantic
Trade Investment Partnership – with corporate interests in secret.
Agreed. The neoliberal policies of the Troika are the culprit and require re-evaluation
before there are intra-European boycotts...or worse.
maricaangela CarolusB 16 Jul 2015 17:51
The mindset of the Balkans is not easily understood by Western Europe. Cut off from their cultural
Christian roots by the Ottomans for centuries, deeply divided and distrustful, forced to fight
for freedom from their occupiers, and centuries of begging for any favour, job, or entitlement,have
left them with a deep distrust of the State (hence the endemic non-payment of taxes even now they
have self rule) yet eager to be part of the Europe they were separated and distanced from for
so long. Same goes for other countries, e.g. Bulgaria, Romania, and Hungary and the former Jugoslav
states, on similar lines, often uniting to fight the Ottomans, but otherwise quarreling over borders,
land and ethnic divisions, and divided in WWs by forces beyond their control. This is not foremost
in the national mindsets now, but is deeply subconscious, rather like our sabres are rattled at
Germany/Prussia in an almost visceral way, and despite the jokes about us and the French, we look
to them to show a united front against any German encroachment of our powers. Unfortunately, German
actions have ignited that subconscious fear, of being cast out, isolated and alone. So they grab
at straws for now.
I guess this historical sense of being forced apart from the rest of the continent, yet fighting
two WWs alongside the allies (with Serbia) makes them feel they are safer in than out, even though
that position may be very tenuous. People in continental Europe are eager for peace and tolerant
of their neighbours only to a certain degree, and in the Balkans this is exacerbated by a deep
inferiority complex of being pawns in the games of the bigger powers, and deeply misunderstood.
In a similar sense, Serbs have a lot of contempt for Milosevic, yet feel outraged that Britain,
a former ally bombed them. This burns them deeper than their own politicians, who they expect
to be venal and corrupt and do nothing good for them. Thus Greece is behind Syriza because they
are the best they've had for a long time, they are willing to include the people who were denied
a voice for so long, yet have ultimately ended up with a terrible deal. These countries feel martyred
by all sides, like victims of their own and others, so they make, for us, strange decisions, it's
true.
inmateN7 16 Jul 2015 17:48
Any of us in the UK who have been at the sharp end of our incumbent governments' austerity
programme can only feel sympathy for the people of Greece, who have been well and truly shafted
by this 'fix'. However, this does not justify a knee-jerk, one-size-fits-all assumption that both
we and Greece, would be better out of the EC.
For Greece, a forced exit may be the only outcome, but they have their reasons for wanting to
stay in the EC, they are not masochists. While we in the UK have always been cynical of the 'provisions'
of EC membership, I don't think we're half as cynical as those on the continent, many of whom
underwent near stratospheric inflation when they swapped their currencies. Membership is not a
dictatorship, it's always up for negotiation, and what we need are the leaders and representatives
to navigate this negotiation in a mature and truly democratic way. Sure TTIP gives me the fear,
and there's a lot to argue against, but I still feel more secure about the nations of Europe being
united in a common purpose, and not fracturing under different ideologies, returning to eyeing
each other with jingoistic suspicion...
Alarmcall 16 Jul 2015 17:30
All Europe should be questioning whether this European Union has lost its way, has strayed
too far from the enlightened founding principles of the Treaty of Rome, has forgotten their
purpose to prevent history repeating the fateful folly of letting bankers exploit workers,
keeping working conditions harsh, spreading impoverishment, fanning nationalism and seeding
revolt and warfare.
The European Union, not just the Euro Zone, is now at risk of being destroyed by stupidity,
bruised egos, weak visionless collective leadership and no clear chain of command. The so called
leaders need to wake up to the lack of Unity at the heart of both the Eurozone and the wider EU.
Too many countries are preoccupied with self interest, not sharing, and not uniting under the
EU flag; this includes the shameful United Kingdom government.
Market makers do not plan for or buy long term security, they simply exploit opportunity for profit.
Markets will let a population starve, they will let a nation go bankrupt regardless of the suffering,
they will let a nation be defenceless, they will pollute and disrupt the biosphere for as long
as governments let them, unless they are paid not to.
Markets corrupt governments to put GDP growth above responsibility for people or life on Earth.
Anything that gets in the way of greed driven corporations making more profits is ignored, denied
or if needs be fought by mercenary intermediaries paid to misinform, to make political donations
and provide other reward channels to lure away opposition. Above all they rely on selfishness
dominating community.
Markets are in conflict with the needed good governance of this planet now that humans are
changing the conditions that have enabled us to flourish.
As the last three decades have shown, markets push government towards ever more deregulation,
and lower taxes to increase debt driven unconstrained growth of consumption, regardless of financial
risk to individuals, or countries, and without heeding the clear scientific evidence that pollution
of the atmosphere with greenhouse gasses is causing a speed of global warming that will in a lifetime
radically change the climate system with catastrophic consequences for the stability of civilisation
around the planet.
The citizens of all the member states of the European Union need to come to their senses
and reflect on these matters. The European Union has not responded well to the internal economic
problems of the Euro Zone nor the wider EU, nor major international problems, because the member
states retain the real power and they act like slaves to blindly further this out of control
corporate machine, that is taking their countries on a suicidal route to savage resource wars
in a hungry climate ravaged world.
For too long Europe has relied upon leadership from the United States, but the US Congress
has been neutered by the misuse of the power and wealth of Corporations.
We can see the result in the staggeringly huge government debts in America and across the EU
including Britain. These are primarily down to rescuing commercial banks that were going bust
and governments taxing far too little at the expense of a bleak future for the young.
The loans to Greece were designed to rescue European banks, transfer the debt to taxpayers, and
through harsh terms provide more opportunities for buying up Greek distressed assets by commercial
vultures.
This dangerous global banking system needs putting back in its box. Global problems can
only be solved by responsible governance.
The three decades of cut taxes, de-regulate, "small government is best", started in the 1980's
has corrupted and crippled the West with runaway greed, destroyed global economic stability through
debt, deepened inequality and through damage to the biosphere is undermining the stability of
the climate, the habitable zones, and the food and water resources that have made modern large
scale civilisation possible.
Europe should say no to TTIP, no to ISDS and concentrate on making Europe united and self sufficient.
This highly dangerous century is no time for Europe to revert to small disagreeable countries
led by blinkered narrow minded leaders. Europe must find leaders with the courage and the vision
to stand up for the high principles of the Treaty of Rome and put a real Union into the heart
of Europe.
It is time for a new Europe to emerge under new leadership with a proper Federal Democratic
Structure. There is no way back to pre 2007. There will be no good way forward to manage this
isolated rock in space for mutual benefit without a real United States of Europe influencing
the fast approaching global choice between war and peace.
Socialism and Keynesianism for the rich.
Austerity for the rest of us.
Garry Coll 16 Jul 2015 17:28
The recent, and ongoing, Greek episode of the Eurozone soap opera borders on the absurd.
Notwithstanding the excellent article above by Mr Milne, it seems that there is more to this
than a conflict between Greece and its Eurozone partners.
When the threat of default loomed several weeks ago, the Greek government said in plain language,
we can't pay this.
To which they were told, pay up, because if you go into default we will have to take serious
action like kick you out of the Euro and possibly the EU also.
So Greece went into default by not paying a tranche of it agreement with the IMF.
To which they were told, alright now that you're in default you must accept this bailout or
we'll kick you out of the Euro and possibly the EU also.
Grand said Greece, we'll put your bailout proposal to the people in a referendum. And the Greek
people in a democratic plebiscite voted against the bailout proposal.
After which Greece defaulted again on an IMF payment.
To which they were told, here are our final bailout
Kenny6501 16 Jul 2015 17:25
The 50B was the amount of holdings the government was supposed to privatize from the last package.
In the last rescue package, the implication is that the european and germans agree to trust that
the Greeks will manage these sales themselves to pay for the loans that the other countries have
put in (primarily Germany and France, but even the poorer baltics chipped in). So selling these
assets from the previous rescue was a "we trust the greeks to do what is right" - the equivalent
of a call from our bank reminding you to sell your 3rd or 4th condo to pay for the 5th one to
reduce your debt to the bank.
The 50B is now a forced sale because the last one didn't happen and only 7B of asset sale was
in place, of which Syriza tried to reverse at least one (the port in Piraeus), the structure of
explicitly saying 50B has to be sold is just one step below the equivalent of the Germans sending
Guido in with a process server to repossess your nice furniture. It's what happens when your lender
no longer trusts you.
YouHaveComment 16 Jul 2015 17:25
Plan to save Europe
1 - Direct elections for the EU Commission - we have to be able to vote them out.
2 - None of this TTIP / BIT nonsense of negotiating away the democratic will of the people behind
closed doors.
3 - Direct elections for the EU Commission - we have to be able to vote them out.
4 - Euro to be reformed so that no country ever again gets to be in Greece's or Germany's position.
5 - Direct elections for the EU Commission - we have to be able to vote them out.
6 - There is no point 6.
7 - Direct elections for the EU Commission - we have to be able to vote them out.
(with apols to Monty Python)
luella zarf AnotherBerliner 16 Jul 2015 17:20
The principle is called "No taxation without representation" (that is, European taxpayers
have the right to decide how their tax money is spent, including if on loans to Greece).
Actually, when the Troika coerced Greece to accept the bailout in 2011, Papandreou didn't want
to sign without a public mandate and tried to organize a referendum, but the Eurocrats immediately
ousted him and buried the referendum and now Greeks are saddled with this huge unpayable debt
for which they have never voted. What democracy, what representation?!
People have no idea of what the sociopaths at the top did in order to save the gambling German,
French, British and American banks, and now are screaming for blood, but the Greeks were not allowed
to vote either.
umweltAT2100 16 Jul 2015 17:19
Everything Mr. Milne has written is factually correct - it is a horror scenario!
A real shocker and an alarming eye-opener was the letter in the Guardian by Elmar Brok* supposedly
addressed to Mr Tsipras but clearly aimed at making known that the German CDU/CSU avowed intention
was to rid the Greeks of this terrible Syriza government that they had democratically elected
and re-endorsed in the subsequent referendum. It was also to prepare the ground for Schäubles'
secret master-plan** (that wasn't shared or agreed to by the other Euro countries) Grexit for
5 years, at the end of which Greece probably would not qualify to re-enter the Euro.
A lot of anti-bailout rabble-rousing seems to have been beaten up by the German Bild newspaper
– and national hostility was so high, that the SPD party leader Gabriel joined his CDU/CSU coalition
partners against any debt relieve or restructuring of the repayment terms. (So even without Murdoch
the media can be a deadly instrument – or is he running the Bild!)
The way the Troika mismanaged this whole catastrophic, short-sighted/visionless and merciless
episode has done irreparable damage to the EU, and its nations states see quite plainly that it
is not Greek that cannot be trusted, but that strong nationalistic and right-wing governments
are all speaking with different voices, and like the Tower of Babel, the whole thing is in danger
of imploding. The EU has also goofed up badly on issues like Ukraine and Mediterranean migrants
over the last two years.
The Greeks have suffered irreparable damage – chaos, confusion, not knowing whether they could
still get a few Euro out of the bank to buy essentials, anger at being humiliated, terrified of
what the next day's disasters would hold in store for them, the country crippled and grinding
to a halt right at the beginning of the tourist season which is one of the main sources of income.
At the same time, like Italy, Greece is handling a steady flow of Mediterranean migrants, over
68,000 this year alone. And now they are force to sell their port of Piraeus, so any profits will
go to its new owners, probably China.
Killing the European Project by Paul Krugman
http://krugman.blogs.nytimes.com/2015/07/12/killing-the-european-project/?smid=tw-NytimesKrugman&seid=auto&_r=1
Mr Tsipras, we need to rebuild trust before we can talk | Elmar Brok | Comment is free | The
Guardian
http://www.theguardian.com/commentisfree/2015/jul/06/tsipras-restore-trust-greece-eu
*Profile: Elmar Brok is a German MEP, CDU* member, and chairman of the European parliament committee
on foreign affairs
Great article, and why I put the Guardian above all other UK media sources for unbiased reporting.
Predatory Lending is illegal, and the EU and ECB and the German banks reasonably knew that
the last bailouts were beyond Greece ability to repay.
So now money created out of thin air [loaned into existence], is now franked and made solid and
legit, and Greece's hard assets are nailed down as collateral for the lenders to rob Greece of
its few real assets.
The banks have taken over, and democracy and votes are just symbols with no real value.
This is our future. Elected Governments being dictated to by Corporations and Banks, and Nations
swindled in clear day light out in the open.
Just my opinion.
goudar30 maricaangela 16 Jul 2015 17:15
Yes an evident consequence , my comment was not meant to be offensive , but sarcastic towards
this absurd situation & the huge gap between cold technocracy and the hardship of the weakest
, I think it is and will become more & more a serious matter for every single european Citizen,
Those kind of outrageous policies are bound to bring suffering.to people and not only in Greece
, more and more weakened people are suffering from those ideologies. in many Eu countries.
and these days , many -& more then politicians may wish- feel & are greek .
No they damned well are not. In many cases private European banks made reckless loans to private
entities in Greece, and now they demand 100 cents plus on the Euro in bailout. In any loan situation,
part of the responsibility is on the lender. To have it any other way you'll ultimately blow the
system up; lenders would do whatever they could get away with and it would take capitalism itself
down. But that now seems to be the mentality of the German finance ministry, and most of the rest
of the EU is bending down for it.
This changes everything for 2017 in the UK. Everything. Whose situation do you prefer, Iceland,
or Greece? I think the answer to that is easy, the one with the glaciers and the herring. And
for the EU to survive, and Britain to survive in it, the choice CANNOT be limited to those two
options. Yet limiting to those two is precisely what the German approach does.
maricaangela Alfie Silva 16 Jul 2015 17:10
In Croatia, the same has happened. For short term profit for their broke economy, the politicians
loaned them to the Chinese who stuck high tolls on them, far too expensive for locals to use and
which even Swiss and Austrian tourists try to avoid. Thus the old, and bad roads, are blocked
in summer, and busy in winter, with these new highways empty.
I heard in Spain the same problem exists. No sense at all.
FOARP Charliezulu 16 Jul 2015 17:05
Greece already received debt-relief in 2012 to the tune of more than 100 billion Euros, in
the form of a 50% hari cut on private loans (those evil "banksters" everyone keeps blaming for
this crisis received 50 cents back for every euro they originally lent Greece). Why should she
receive more such largesse?
sacco TeutonClown 16 Jul 2015 16:29
I would love to see what would happen if Germany had that big a problem.
I am pretty sure Germany would not have received a single bail-out, let alone three.
Germany, together with France, already had just this kind of problem in 2009–10 and on to 2012,
when they vetoed any proposal to restructure massive debts that were clearly unpayable after the
global banking crash in order to protect the exposure of their own banks.
While other countries were forced to bear the major costs of re-capitalising their own banking
systems, German banks had vast tranches of their bad debts bought out at above the market rate
by programmes such as SMP; those that remained in the private sector were marked down to less
than 47% in 2012 (and even that was more than they were worth). Ironically, given your comment,
it is precisely the bill for their portion of these debts that is currently being used to keep
Greece under the heel.
The unfathomable sums that have to be raised according to en endless series of deadlines that
have rendered normal political responsibility impossible in Greece -the Troika has thus far seen
off three governments, five Prime Ministers, and eight ministers of Finance- serve nothing more
than to make scheduled repayments on these even though they were officially declared unpayable
in 2010 - if they weren't unpayable losses, then why were the Eurozone rules violated by bailing
out the banks with programmes such as SMP? No Greek government can hope to make any impression
on this cause of permanent tribute as, without control over their own policy priorities and with
the Eurozone & ECB policies acting to maximise uncertainty over their future trajectory -the very
opposite of the support that should be offered to build the confidence required to promote investment-
the numbers are simply too big in relation to the diminished Greek economy.
Yet they are forced to continue with the endless irrelevance of this coercive and corrosive
mill of debt recycling, because otherwise the the political masters will force the ECB (contrary
to its mandate) to shut down Greek banks, just as we have seen.
To sum up: Germany has already had its bail-out through its banks. They have proved sufficiently
powerful -and ill-advised- to saddle the full bill on the Greeks, the least able to pay. The longer-term
results will be to stall and even reverse progress on many aspects of the European project that
has served German prosperity so well, and to promote the rise of far-right populist nationalism
in both Greece and Germany (and likely in France and elsewhere too).
maricaangela Nanome 16 Jul 2015 16:28
Yes, I was thinking the right wing voters are most hypocritical, even in their condemnation
of the EU, because they vote for the same neoliberal ideology that got Greece into this mess,
for their own nations!
The Left is hypocritical until now, because ideology blurred their vision and their judgement,
but at least they don't vote for it at home.
Ideology and dogma is dangerous. Right and left are now vague concepts with little solid principle
involved. The main principle with Greece is that democracy itself is threatened when Corporations
and Banks make the rules, and politicians from all sides are their puppets.
Greece isn't blameless and who can fault Eurozone taxpayers for not wanting to keep funnelling
cash to them?
Do you mean that EZ taxpayers should expect those debts in 2010 to stay as bank debts, and
Article 125 of the Treaty of Lisbon to be upheld which if the EU/ECB/IMF had played with a straight
bat then it would have been a default in 2010.
Didn't happen did it? Those who ask themselves why leaves a bitter taste in the mouth if they
are europhiles.
JensBa mp66 16 Jul 2015 16:08
There was a secret plan, that 4-5 people had worked out. But their was no decision to implement
it from the leadership of Syriza, which would have been necessary. For details see the interview
of Varoufakis with New Statesman.
ShiresofEngland 16 Jul 2015 16:06
What kind of a union of partners treats one of its members like a recalcitrant colony, destroys
its economy if it steps out of line, and dismisses its democracy as an impudent affront? In
fact it's one that has always ducked democratic accountability, embedded deregulation and privatisation
in treaties, and preferred to fix policy – including the race-to-the-bottom Transatlantic Trade
Investment Partnership – with corporate interests in secret.
The EUSSR
OMG not that tired old cliche, and I put it in bold! You can spot me walking the streets as
I am the handsome chap wearing a "Told You So" T shirt. [Smugness mode off]
There is always one big drawback of being a eurosceptic, and it isn't the irritant of being
called racists, loonies and fruitcakes. The real problem is when we are right it always come at
a heavy price, and today the Greek people are paying that price. Euroloon zealots will test
to destruction their beliefs which always comes at the expense of the 'little people'. Those poor
buggers like all of us just trying to get by and do what is right for ourselves and families.
This deal for Greece is vicious stupidity of the highest order. It is unworkable, and nobody
wants it other than the banksters and the euroloons. The silver lining is many europhiles are
having second thoughts as the EU's mask has slipped. It is always hard to make a U turn, but I
did as once one myself (yep honestly!). I commend those who have changed their position and offer
a welcome to the darkside.
inLondon10 16 Jul 2015 16:05
Costas Lapivitsas from the left platform of Syriza, Larry Elliot from the Guardian, Ambrose
Evans Pritchard from the Telegraph are not necessarily political soul mates but all make convincing
arguments that,with the current terms on offer, Greece would be better out of the Euro. Surely
the most constructive way forward is for Tsipras and the EU to organise a way out of the Euro
with as little damage as possible.
vicepopeeric Wolfgang Amadeus 16 Jul 2015 16:02
Lets see, we gave the banks almost a quadrillion dollars for f***ing up the economy by gambling
with other peoples money.
Greece has had about 370 billion dollars (works out at about 3.7% of what we gave the banks).
Of that 370 billion dollars, only about 10% actually went to the Greeks, the rest went to banks
to pay other banks.
No its NOT the economy stupid it's PEOPLE that count.
Drewv PolydentateBrigand 16 Jul 2015 16:01
Immolation, crucifixion, waterboarding... stop this emotive hyperbole.
These are accurate descriptions. Your "generous loan" will be used almost entirely to pay the
interest on a debt that will never be repaid, to German and French banks.
The country isn't bankrupt, that is the entire fucking point. Bankrupt countries get major
debt relief.
candy44maker JohnG4 16 Jul 2015 15:59
There are but a few German banks affected!
Some interesting Infographics:
The Greeks will need to hire 180 truck drivers to transport the money.
Who Loaned Greece the Money?
Greece owes a lot of money to a lot of people, and it's not at all that German or French banks
are affected. Check out who loaned the money.
Information Date: 2012 February. Source: EBA (European Banking Authority)
Greece meanwhile owes to their lenders 0.5 trillion Euro. They claim that only 10% was spent
on the Greek people, and 90% of the money lent was going back to foreign banks. This is simply
not true. Approx. 30% of the money was used for the annual budget in Greece, about 35% was spent
to make loan payments and approx. 35% of the money left Greece and was transferred to offshore
bank accounts.
I was raised to have a horror of clubs and organizations with memberships. Do not see why a
country would want to be a member of a club, especially when the economic disparities are so great.
The EU can never operate like the USA, because every one of the countries in it as a long and
different history, different language and culture. To run efficiently it will have to imitate
the former USSR and develop a dictatorial central administration. Seems that Merkel has grasped
that fact. Arbeit macht Frei will be the watchword and goodbye to La dolce vita.
Drewv -> SimpleOldSailor 16 Jul 2015 15:46
So the Eurozone breaks up, in that case the winners will be the big banks and the other
leeches that live off the blood stream of international finance.
Will theybe? Their short-term losses would be enormous, with vast amounts of public and private
debt being written off as the dominoes start falling. International finance as a whole would take
a pounding worse than in 2007/2008.
DomesticExtremist hood 16 Jul 2015 15:36
That is to expect neo-liberal high priests in Brussels to dismantle their own temple.
It's not going to happen.
maricaangela wondrinfree 16 Jul 2015 15:32
Did it occur to you that the EU has changed in recent years. It is now run by right wing
governments who promote a failed austerity and a failed banking system. A decade ago, it was full
of socialist governments who went on a spending spree. The Banks were the winners in both cases,
but now the poorest pay with unemployment, rights taken, and assets stripped, while those who
benefitted most still enjoy their riches and stack money away in tax havens.
Mistakes have been made, but those who should be paying are still at the party, while those
who had no hand in all this have been kicked into the gutter.
Oligarchy is winning, with the support and help of political elites.
Seppo Janhonen feliciafarrel 16 Jul 2015 15:28
Good comment. I share your view of the idea of truth and honour as well as most - as I believe
- of us Finns. The Greek catastrophy is right now shaking our trust to the honesty, reliability
and endurance of the European project. It´s interesting how the views of single Europian citizens
are being shaped in these days. Many of us are asking why on earth we are paying the debts of
a state that is not willing (and obviously not able either) to manage its own businesses. Mr.
Tsipras is not much respected in Finland right now.
Also the EU membership will without doubt enjoy less support in future; The Guardian itself
encourages this development by stating the simple truth that a small country like Finland has
no influence in decision making in EU. That´s what we have seen right now although our leaders
have maintained it´s important to sit at the table where the decisions are made. Well, the results
can be seen... Why stay in an immoral society like (euro group) or even EU? Therefore it is probable
that there will start processes to quit euro or even EU in my country.
Who knows whether one day the EU countries Greece, Finland and Britain on extreme sides of
our continent share one more thing in common? That´s quitting EU.
AngrySkeptic WitNit 16 Jul 2015 15:26
It's all very well to talk in objective terms such as "public finance". The problem is
what the people of the country will be forced to live through and have been living through foe
a while. Is it absolutely necessary that they should? Probably not. Is this what a united Europe
means? Probably. Is this what a united Europe should be? I think not.
oxleydan CarolusB 16 Jul 2015 15:05
Well the 18 EZ governments can send their CCJs or whatever to the muppets that took out the
loans in the first place, rather than sacrificing the entire civilian population.
And can you see any possible issues with medicine that kills the patient? If the terms of the
bailout further reduce demand in the Greek economy, thereby actually reducing the prospects of
economic growth necessary for paying back the loans, then you have to question the motivation
behind the terms of the bailout. Is it motivated by a punitive desire to make an example of Greece,
to deter Spain, Italy and Portugal? In other words, it's political rather than economic.
Alfie Silva -> feliciafarrel 16 Jul 2015 15:04
Your propaganda goes against all that is decent and correct.
You may accuse me of propaganda, but I have no axe to grind nor vested interest to protect.
In Portugal, every graduate who graduates, is another graduate who leaves Portugal. Or they
stay and find work in McDonalds. If they can get it.
The Euro may have benefited a small number of Portuguese, but the majority are fed up. They
may not be as vocal as the Greeks, but the next macro-economic shock to hit Europe will change
that.
cascade14 16 Jul 2015 15:04
The "crucifixion" of Greece is only an outward manifestation of the true intentions of the
EU, which are most often hidden within the myriad of Directives, Regulations and Decisions that
are produced with Teutonic efficiency and, which are designed to control, subliminally, every
aspect of the lives of all of those who have been mesmerised by the lure of a European Utopia.
The cruelty inflicted upon the Greek population is a PR aberration and error by the EU, brought
about by the unexpected temerity of the Greeks to dare to express their wishes, nay despair, through
a democratic process of a Referendum which stands in stark opposition to the ideals of Empire
building and subjugation of the masses; which is essential to the expansion of the EU.
The side effect of which is to try to keep in line those other "none- believers" who might
wish to put their heads above the parapet and say "Boo" to Merkel and Schauble.
LanceLee Wolfgang Amadeus 16 Jul 2015 15:04
It has long ceased to be about money.
Even on the level of money, the current 'deal' is an absurdity: it amounts to loaning more
money to Greece which cannot pay back the money it already owes. This goes on, bizarrely, because
among other realities the Euro zone institutions make money from these loans, a sum currently
standing at 1.9 billion Euros. It pays to devastate Greece. We could all be in total agreement
that Greece pay everything back- and be faced with the conundrum an impoverished society that
cannot meet its own needs can hardly meet outside debtors' without incurring more debt. What is
needed, if money is what we're talking about, is a plan that provides for growth to provide the
money to repay debt. It's really very simple.
Well, let them 'Grexit' and default... Really? Repay none of the 240 billion and climbing Euro
debt? Another great idea.
The problem is that if the solution really isn't very hard to imagine, sparking a reasoned
growth with reform, allowing for debt repayment and national functioning, there is a political
investment primarily on Germany's part in a policy called 'austerity' that has no intellectual
or economic justification that in effect says: 'in hard time, raise taxes and cut spending'. We
could as well call this the rebirth of the economic policies of Herbert Hoover. But values like
'thrift' 'responsibility' 'integrity' have been high-jacked by this theory, so that advising a
modern Keynesian policy as has been carried out in the United States with such radically different,
and better results, compared to the Euro zone, is tantamount to these misguided politicos to 'profligacy'.
Worse, having invested their political capital in this approach, predominantly German inspired,
the Euro zone leaders have denied themselves the possibility of a rational settlement.
So I find myself in the very odd position of agreeing with Seumas Milne, who is a bright person
but whose views I usually find exaggerated to the point of absurdity. How odd to think Mrs. Merkel
has so bungled things that she has made Milne right.
Lafcadio1944 16 Jul 2015 14:46
The European project has long sense been dead. Apparently commentators and just now figuring
this out and far far to late. Europe through the maneuvering of Germany especially under Merkel
has taken over Europe and now acts as its overseer. Through German writing of the "rules" to its
own advantage and then being the enforcer of the rules essentially has turned the once proud nations
of Europe into German bantustans. No country or even group of countries can now leave the EZ without
serious and prolonged economic suffering, and staying in they have only the opportunity of offering
the equivalent of -0- hour feudal work for a pittance, insuring their perpetual poverty.
These are the present conditions and it remains to be seen whether or not the people of Europe
are going to do anything about it but history shows that people are obedient to power to the point
of digging their own graves as the Greeks have done.
Democracy may be wonderful and might some day offer benefits to the general population, but
for now the democratic process elects people who say they are left and govern from the far right.
This happens over and over from the "hope" Obama exploited to win election to the leftest slogans
Syriza used to win election. Once in power suddenly they discover the great virtue of Neoliberal/Ordoliberal
(I write the rules you obey) ideologies of oligarch worship and oppression.
Germany wrote the rules for the EU and they advantage Germany exclusively. Germany is now running
a trade surplus in excess of 7% - people don't seem to understand or care that this is a deliberate
violation of EU regulation and rules and so no commentators mention it. The German trade surplus
especially sense it is so very high acts as a tool to dominate the rest of Europe, disadvantage
them seriously and insure that if they left the EU there economies would collapse. Thus, Germany
has a very big hammer which it shows to Hollande each time he makes some feeble attempt to disagree
with Merkel.
The EU has been converted by Germany/Merkel to a mechanism for transferring wealth from the
middle and lower classes of Europe to oligarchs. Even German workers have not escaped and will
only find their living standards continue to deteriorate.
Think of life in Bangladesh, that is Neoliberal heaven.
ilove2shop -> ID7524597 16 Jul 2015 14:34
You really should use Google to see the state of the countries you mentioned. Ireland has had
a mass exodus of it's population, like the Great Potato Famine exodus,Spain has double digit unemployment
(and it had a surplus before the crash),as do Portugal and Italy with people leaving for former
Portugese and Spanish colonial economies.Why do you think Podemos is on the rise?
Italy, Ireland and Portugal, all had democratic mandates that were reversed by the eurozone.
Their economies are mired in a deflationary near-recession. Italy's GDP peaked at $31,764 in
inflation-adjusted U.S. dollar per capita in 2008; by 2014, it had fallen to $28,376. On the same
basis, Ireland's GDP per capita has fallen from $51.002 in 2008 to $45,119 today. And Spain's
GDP per capita is now $24,573, vs. $26,927 in 2008.
At the same time, inflation in the eurozone has fallen to -0.5% in March 2015 from 5% in December,
2007. Low inflation and low growth means low demand for money, and that means lower interest rates
- despite these countries' staggering debt.
Another reason for the low rates: The European Central Bank is buying long-term bonds in a
bid to keep rates low and give a boost the economy. It's a page out of the Federal Reserve's playbook.
At the same time, however, the ECB is demanding austerity programs from its weakest members, often
involving drastic cuts in government spending. It's a bit like bleeding a patient at the same
time as giving a transfusion - which is why the Eurozone is facing a long recovery.
It is clear that the banks can get away with just about anything. They are corrupt, venal,
rapacious and largely incompetent and irresponisble yet everything is done to save them and make
sure that they never pay for their mistakes, indeed they are rewarded. Meanwhile ordinary people
like the ordinary people of Greece are made to pay for the banks mistakes, see their pensions
and savings eroded and squandered by these vultures. So sad and angry at what is being done to
Greece, crucifixion is an apt description of what is being done to the country and its people.
JohnG4 ID7524597 16 Jul 2015 14:04
You are completely ignorant of the concept of bank lending and bank money. Greece borrowed
from banks brand new money (not pre-existing money) at interest. It did not borrow from your bank
account! It did not borrow from your government! So how is it that Greece lived at your expense?
On the contrary: Germany benefited immensely from the monetary expansion (the lush bank lending)
since the expansion financed the trade surplus of Germany. It was a monetary expansion for the
German economy, only the latter did not have to pay interest or seignorage tax.
None of this writes off the responsibilities of successive Greek governments. But, the banking
system that financed this expansion concealed the true credit risk even from the Greek electorate.
JosephH79 JohnG4 16 Jul 2015 14:04
Because that narrative helps impose technocratic, plutocratic, neo-liberal, hegemonic, ...
... idiocy upon European people.
michalakis 16 Jul 2015 14:02
I find nothing to disagree with in this article; no hyperbole of any sort.
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.
justonetom citizenJA 16 Jul 2015 13:36
Syriza did not destroy the economy. The Greek economy was a basket-case long before they came
to power. However, the economy has sharply worsened on their watch. The figures are all in the
public domain; stating that is not contentious.
Look, Greece could choose to default. To say, sorry, can't pay these loans and never will.
Formally default. So why don't they? Because they know that without further loans their country
is bankrupt.
Beyond Seamus's banner-waving, it's not complicated. Country that can't pay its debts seeks
more loans. People willing to advance loans demand a better quality of proof that this time loans
will be repaid (ie. reforms). Greece can choose to accept or decline.
What Tsipras offered was a total chimera. Merkel knew it, we all knew it. "No cuts! No reforms!
But more loans to us! And staying within the EZ!". This was demagogy. He was never going to be
able to deliver that, and lo and behold...
Seamus wants, desperately, this to be a story about "evil neoliberal bankers". And there
is some truth in a narrative that includes bad lending. But ultimately Tsipras was a poor
negotiator, insulting the very people whose help he required, acting in bad faith with 'stunts'
like springing a referendum without giving notice to his partners... Syriza has proved incompetent.
A classic "opposition" party that crashes and burns as soon as it has real-world work to do from
a position of real power.
Had the Greeks seen through him/it, and voted for a party that could do business with the troika,
they might have ended up with better terms from more sympathetic partners in the EZ.
Weefox 16 Jul 2015 13:24
Greece had a choice. For some reason it decided that it was better to stay in the EU, which
it hates and slags it at every turn. Why? The neoliberal economy of Europe is something which
Syriza and the hard left reject, but they still expects it to cover their debts.
I am beginning to smell a whiff of hypocrisy.
welcomeparty lawbag 16 Jul 2015 13:14
Well you should talk to the leadership of the EU who had the gal in 2012 to take the debt held
by privat banks who had just had a "haircut" of 43% of their holding but what does the EU do they
purchase the debt, not at the 57% value but pays it at a full 100% of price (this makes good the
loss the bankers made - why?), so now we the tax payer "own" the debt. It was a Privat debt but
the EU leadership made it a public debt.
You tell me is that the fault of the Greek people or is it the Crew of bankers that hold office
in the EU and who have favoured the German and French bank's with the deposit of 90% of the Billions
Greece was lend. Greece only ever saw 10% flowing into their banks.
It is bordering on criminal what they have been doing and is doing to the Greek nation, who
needs enemies when you have friends like these.
If you are worried about Greece not paying the money they have borrowed, ask the EU why they
will not talk about debt restructure (Pay in full over time) or rather why they have not allowed
Greece to access this function that the IMF has spouted about.
Why has the EU promised if Greece swallow the bitter and accessive austerity imposed on them
The banks will be allowed Greece to access the QE program of 1 TRILLON EURO allocated to banks,
should Greece need it they will be able to access this fund they can from 2018. But guess what
the QE program finishes in 2018.
What kind of negotiation is that- they have emasculated Greece and they believe that these
sort of thing are allowed - which they are not...
You maybe rushing to get into the full Union of the EU, me I would rather be poor but outside
the EU - why, well if they will do what they are doing to the Greek people in public, I feel I
would be scared silly wondering what they would do behind closed doors and I was in trouble.
Making people scared is easy and is extreme, fear is a new God the propaganda machine of the
EU are using , the 3rd world war has arrived without a shot being fired, not becourse you and
I have issues, but becourse they can....
Steven Savage 16 Jul 2015 13:14
"What kind of a union of partners treats one of its members like a recalcitrant colony,
destroys its economy if it steps out of line, and dismisses its democracy as an impudent affront?
"
The same kind of union that allowed Greece to enter when it no doubt had very good reason to
suspect that Greece was cooking its books to show its deficit was far lower than it actually was,
and that allowed Goldman to create derivatives to further shore up its sovereign balance sheet.
No one ever really seems to take the European currency union to task over this. The Greek entrance
into the Euro should have been "annulled," for lack of a better word, years and years ago, perhaps
as early as 2003. That annulment would have allowed the EU to remove Greece by legitimately claiming
fraud, and as such, would have been a way out of the Euro that no one else would have been privy
to. It would have kept the currency union together for the rest of the members, and would have
hopefully stopped the worst of the bad debt way before it grew to such unmanageable, toxic levels.
The EU had its chance to dismiss Greece but chose not to. We all know EU vanity and arrogance
were heavily involved in retaining Greece. Greece is wrong for its economic deceptions and culture
of tax avoidance, but the EU darn well knew it was letting Greece get away with, and it knew it
about a dozen years ago.
waterme888 objectinspace 16 Jul 2015 13:14
the imf does austerities to countries for a reason.. to think that they are enforcing these
rules on greece just for the benefit of greeks is laughable.. greece is a small small economy
with little impact on world economics.. so why is not a single media asking the hard questions
why now.. why is this happening now and why is the economic union of europe going to be effected
by such an insignificant economy collapsing.
in the 1988-1989 this very same thing was done to poland --- few remember as todays society
does not study history and relies on being told what to think by the corrupt and reprehensible
media.
now i dont have enough room to explain the totality of keynesian economic reforms pushed forth
by these huge financial oligarchs but if you think even for one moment that these banks have the
best interests of the greeks in mind your off your rocker.
OneCommentator 16 Jul 2015 13:13
This week has made a mockery of monetary union as a path to a united democratic Europe
and opened the way for the eurozone's breakup.
So true! Hence the problem is not neo-liberalism or German intransigence but the monetary union
of disjunct and completely different economic and even political systems. Greece's politics not
only their economic performance are completely different from Germany's. Why should they be in
the EZ together? Free trade? Sure, it makes sense. But that's about it. There is no need of a
United Europe. It is naive and meaningless dream.
GordonGecko real tic 16 Jul 2015 13:13
'Proof? or is this more tendentious opinion conjuring fairy facts as it goes along? '
and note the phrase 'money wasn't given to lazy Greeks but to already-bailed bankers who, despite
a face-value haircut, ended up making a profit on the deal."
'It's hardly surprising that hostility to the EU, which shows no signs of being open to deep-seated
reform, is growing across the continent.'
Hostility is perhaps too strong, but nonetheless there is now a tendency to question whether
the European Institutions are there to protect us from neoliberalism or have already sold out.
Personally I have been a europhile for over 40 years but I am now wondering if this is the sort
of Europe I really want.
Lastwordsusie viscount_jellicoe 16 Jul 2015 13:04
It's desperately frightening.
The government of pretty much all of the globe with a few exceptions is run by rightwing corporate
ideologues.
Neoliberalism has - at least for now - triumphed and those on the left are feeling pretty bewildered
and rudderless.
Greece's pain is not just that of CRUSHING austerity without end, but also of ritual humiliation.
That's a recipe not for meek compliance - but ultimately, seething anger, division and civil unrest.That
will no doubt be crushed also but the troika has successfully set the left against itself once
more.
I don't doubt that what the troika seeks is the restoration of ruthless and corrupt rightist
government - (maybe they'd like another Junta to deal with.)
I'm not sure there ever can be a bloodless revolution unless there's a way of overcoming the
power of capital and those that wield it without some miraculous change in human behaviour and
some genetic evolution that ceases to regard the earths resources as belonging to the few with
the many in hock to their whims or largesse.
Uncertain times?
No! Much, much more than that.
What will the right do when population drifts of the desperate, fleeing war and hunger, along
with ecological resource imperatives -become insuperable, as the world's ability to withstand
the rapacious greed of its exploiters start forcing its hand?
658176529539572 16 Jul 2015 12:55
Centuries ago, Thomas Jefferson gave the American people this warning:
"If the American people ever allow private banks to control the issue of their currency,
first by inflation, then by deflation, the banks and corporations that will grow up around
them will deprive the people of all property until their children wake up homeless on the continent
their Fathers conquered."
-- Central banks (all over the world), are apparently using this method of conquest…
roola 16 Jul 2015 12:54
Thank God one journalist sees the political truths behind the EU's policies for Greece. Weimar
Republic, anyone?
And, no, the EU has never been a solely economic union. How can it be while it implements undemocratic
procedures that can dictate, as in Greece, a country's economic future? Whatever happens, Greece,
with a now greater accumulation of swinging debts and with the EU's intent to break its left-wing
government, eventually will be forced to leave Europe. When that happens, EU 'unity' will be seen
for the sham it is.
I was one of those who voted 'yes' in the original UK referendum for joining Europe, though
with misgivings about the undemocratic set-up. Not now. The misgivings have proven themselves
to be the reality and my vote would be a 'no' vote.
michalakis greatapedescendant 16 Jul 2015 12:51
Yes, seriously.
The fallout could not have been more if the Germans had just send the Luftwaffe in to bomb
the place. I'm 47, a formerly middle class, middle income, self-employed professional. I've been
working abroad for the last 4 years, as has almost every other 'dad' I know. My former life is
destroyed: the infrastructure I worked in, the people I worked with, have gone. My clients, my
colleagues, my connections are all gone. I cannot return to Greece to work. I cannot watch my
daughter grow up. Seriously.
rightwinggit 16 Jul 2015 12:50
The idea that this crisis has simply pitted one democratic mandate – that of Greece – against
the hard-pressed taxpayers of 18 other eurozone members is nonsense.
It is, of course completely true.
Very little of Greek government debt is now held by private institutions. By far the biggest
creditor is the German government (read taxpayer) followed by the French taxpayer followed by
the Italian taxpayer followed by the Spanish taxpayer.
The only countries where significant amounts of Greek debt are held in private hands are in
the US and the UK and the US favours debt relief.
In terms of percentage of GDP Malta is in deep shit - its exposure to Greece is 5% of its GDP.
Personally I think Greece should leave the EZ and return permanently to the Drachma but don't
pretend that there will be no cost to EZ taxpayers.
Germany is owed €90bn. If half of it is written off, that would cost each German €550. When
you look at it like that it doesn't sound like very much. All you have to do is persuade the German
voter that it is a price worth paying....
Silas Walter Adams (1958). The legalized crime of banking and a constitutional remedy. Boston:
Meador. pp. 13,30,58,90,246. OCLC 3906807
AXWE08 lawbag 16 Jul 2015 12:46
I think we have heard this Neoliberal prescription before. It is ironic that such avowed loyalty
to the EU's machinations comes from the very sector that would see the UK leave the EU. The truth
is simple enough: A debt that can't be paid, won't. No matter how much squeezing is applied to
Greece the outcome will be the same, namely debt write down at some time in the near future. Austerity
was seen to be a failure long before Syriza and Tisparas took office and this was the reason why
they were voted in.
Jantar 16 Jul 2015 12:45
I totally agree that this deal/putsch is a disgrace - but let's not fall in that simplistic
Hollywood trap that suggests that because one side acted disgracefully the other side must be
the side of the angels.
Greece has been a thoroughly corrupt state since the Colonels were forced out. Their democracy
was always fake, hijacked from the start by economic & political cabals. So let's not pretend
this is a story about some virtuous/democratic David being crushed by wicked Goliath. The referendum
was a farce: the choices badly chosen & put, with a government playing to the gallery, promising
things not even covered by the actual referendum . Still, and as always, the true and self-appointed
leaders of the EU fear elections and hate referendums and have never accepted any of the latter.
The government of the day lied about the economic situation when they joined the Euro but that
was something the Eurocrats knew, of course but they had their own self-glorious reasons to publicly
pretend Greece was ready to join.
So, yes, this is a mess - but there really are no 'white hats' here. Black and dark grey are
the only colour options in this movie.
As always, as throughout the whole of human history, it's the common people (who can be venal,
yes, and short-sighted, and plain dumb - and often are; not many white hats there either) who
get screwed. Nothing new under the sun indeed.
viscount_jellicoe 16 Jul 2015 12:40
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.
waterme888 -> objectinspace 16 Jul 2015 12:39
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.
this happens in every country - its called Keynesian economics and even your country is under
the influence.. or perhaps your buying power has gone up over the past 20 years..
this whole system is a illusion and education into finance is the only cure.
viewcode 16 Jul 2015 12:37
Dear Guardian
Speaking seriously at the moment, don't you think this article is over the top? It's a rant,
and quite an intense one at that. You should step back, take a deep breath, and try to regain
a sense of proportion. Germany is not the Wehrmacht, Greece has not been immolated and - as even
the Eurosceptics have realised (http://blogs.spectator.co.uk/coffeehouse/2015/07/a-beginners-guide-to-euroscepticism/
) - this is driven more by hysteria than by rationality. "Brutal authoritarianism"? Seriously?
658176529539572 16 Jul 2015 12:37
"Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take
it away from them, but leave them the power to create deposits, and with the flick of a pen
they will create enough deposits to buy it back again. However, take it away from them, and
all the fortunes like mine will disappear, and they ought to disappear, for this world would
be a happier and better world to live in. But if you wish to remain slaves of the Bankers and
pay for the cost of your own slavery, let them continue to create deposits."
-- Sir Josiah Stamp, President of the Bank of England in the 1920s, the second richest man
in Britain
FourtyTwo 16 Jul 2015 12:35
What helped win the election became a fatal handicap in office, as Tsipras resisted pressure
even to make contingency plans for Grexit. That would have strengthened his negotiating hand,
as well as giving Greece the option of escaping indefinite economic depression.
According to both Tsipras and Varoufakis there was a contingency plan being made by a small
group of 5 people. Varoufakis stated in an interview that he knew since March that Schaeuble wanted
a grexit and of course he wanted to prepare for such an outcome as best as he could. The plan
did not turn up well and was abandoned because it showed that Greece didn't have enough financial
power left to prop up a new currency, which would immediately devaluate out of control.
The reason for the clandestineness of this plan was that if the media found out about it they
would blow the whistle and accuse Syriza of actively planning a grexit, something that terrified
Greeks at that time.
Goias Goias -> lawbag 16 Jul 2015 12:34
"Why should the French, the Germans et al, give more money to the Greeks to enable them
to do silly left wing populist things?"
This is an interesting statement, it ignores completely the silly little right-wing things
like the global financial crisis in 2008 and the ripple effect it had over the banking system
first and the countries having to sustain that system later. I guess our lenience towards these
silly little right-wing things makes us accomplices of the destruction they bring.
If only the Greek officials wore ties. Don't they now how important that is?
bally38 16 Jul 2015 12:31
As that well-known negotiating guru Yannis Varoufakis put it:
If you are not willing to even contemplate the prospect of a breakdown, then you're not
negotiating
He wasn't joking. He didn't just contemplate it. He planned for it. The referendum was planned,
just as the two sides had nearly clinched a deal. He had prepared for enforced capital controls,
and admitted in the New Statesman interview what his advice to Tsipras was. Take over the Bank
of Greece and pay salaries for another few months with the last reserves, while issuing IOUs.
ie: Unilateral Grexit. For which Syriza has no mandate.
Tsipras, to his credit, refused to implement the plan, instead asked for Varoufakis' resignation.
Any crucifixion of Tsipras was on a cross that Yannis Varoufakis nailed him to. But he's an
adult. As he said in his TV address two nights back. He's responsible, because he's the Premier.
waterme888 Renato Timotheus 16 Jul 2015 12:31
the unemployment was a gift of these same banks who use influence and covet means to enforce
their will upon those countries they need to capitulate into a deep control algorithm.
look up keynesian economic theory and then study what happened to the countries of south america
in through the 1950-1970's and understand that is exactly what is happening to greece..
the media does not report these facts for they are owned or influenced by the same banks perpetrating
the control.
do you smell extinction.
liberalexpat 16 Jul 2015 12:28
The bias of many of the articles on Greece in the British media has gone completely OTT - it's
patently obvious that there are glaring faults on both sides - and the misuse of the word democracy
is flagrant.
Certainly, the eurozone countries have acted harshly. But the Greek crisis stems from decades
of tax cheating, clientelism and other ills, many of them stemming from the uncontrollable behaviour
of the Greek mega-rich. Liberal British commentators normally lambast the mega-rich, tax evaders
and the widening rich-poor divide - why let the Greeks off the hook?
A major problem is that so many British europhobic commentators are projecting their views
onto the Greeks: look how furious with them Henry the Eighth Farage is. They hate the EU, and
tell us other Europeans do, too: they are in denial of the fact that poll after poll has shown
the Greek majority in favour of staying in both the euro and the EU since they can't and won't
understand it.
Democracy. Is Greece the only eurozone country to have it - and should it be allowed to impose
its view on 18 other member countries? (Note to commentators: the EU and the eurozone are not
the same.) And if the Greek referendum was the touchstone of European democracy, why not have
one in the other 18 countries?
Secondly, the workings of Greek democracy à la Tsipras. He calls a snap referendum on a non-existent
deal, says its conclusive 'no' vote will strengthen his hand in fighting austerity - then trashes
the people's vote and has to rely on the opposition to get the austerity bailout vote through.
Hmmm.
waterme888 wondrinfree 16 Jul 2015 12:26
they want to remain in it because you only read what the news reports and assume that what
they are telling you is what the people want... if the people want this so badly then why did
they just announce they may have elections in the fall. now consider that when have elections
changed anything.. in the long run nothing changes and everything remains the same.. history is
so very clear..
distract the masses with rhetoric as people in groups are easily swayed into false beliefs.
societal engineering done in the name of control.
parttimer 16 Jul 2015 12:26
Greece would be turned into an economic "protectorate", one purred, where all key decisions
would be taken by foreign governments and unelected EU bureaucrats.
Wow. If only someone had told you in advance that EU membership resulted in all key decisions
being taken by foreign governments and unelected EU bureaucrats.
sjxt 16 Jul 2015 12:24
An unusually good article for Seumus - the only point I would take issue with is the comparison
with the IMF's third world debt programs and bank handling of sovereign defaults.
The only reason the IMF is involved in this case at all is DSK's EU/French politicking - the
IMF's lending here should have prevented it lending to a palpably bust sovereign.
And if we were looking at private bank loans negotiations on debt relief would have started
months ago - such loans would be written down in the bank's books under GAAP already.
The real culprits here are the northern governments who have pretended for years this is a
liquidity rather than a solvency problem to their electorates and on that basis crucified Greece
in the earlier bailouts to bail out their own banks, and now refuse to face their electorates
with the unpalatable truth most of their money ain't coming back.
But with the IMF and now the ECB calling for debt relief - probably disguised as massive maturity
extensions, plus other EU governments like France and Italy, 2 and a half of the Troika are now
lining up against the Germans their allies......
MartinAMiss worldsworstposter 16 Jul 2015 12:23
France was the first country to break the 3% rule. Germany has broken Eurozone rules. This
isn't just about Greece, but Germany & France shielding their banks from bad debts they shouldn't
have made.
Other rule breaks, the ECB cutting ELA fundding to Greek banks. Under the rules that govern
it, ECB's job is to keep banks opne, not close them like an enforcer for a loan shark.
If you are in doubt about that fact it is the banks that are being bailed out, perhaps the
former head of Bundesbank & board member of IMF will convince you.
Greece is being crushed to remind the Spanish and Italians of the price of disobedience
zappa2007 16 Jul 2015 12:08
The Greeks had no option to accept this awful deal because not to have done so would have left
them with no banking system, hunger, poverty and riots. The new Government came to power thinking
they could have a rational conversation with the EU on he basis of reform and explaining to the
EU about the logic of their rational position. The Germans and other rightists have imposed a
political settlement in the face of the economics of the situation that even the IMF recognises.
Yes, just like the Treaty of Versailles. Look how well that turned out.
A cruel trick has been played on the Greeks and the rest of us too. It is the banks that have
swallowed all the cash in vast bailouts but the public who have to pay it back. Profits have been
privatised and losses socialised. Meanwhile we voluntarily give up our rights and living standards.
What fools we all are.
itin78 16 Jul 2015 12:06
The 'European project',has brought Greece a ticket to the third world.
The Common market was sold to us as,a Free Trade Area.
The currency union,which was meant to be the precursor of a European Superstate,was dreamt
up by empire building politicians,without consulting the citizens of Europe.
The project is undemocratic.
It is not long ago that a lady on the BBC was telling us that we must join the Euro.
Thank goodness that we actually kept out.
It was a rare piece of good fortune for the UK.
In the meantime,there will be no end to the amount of our taxes that disappear into the bottomless
pit of the Greek 'economy.'
midnightschild10 16 Jul 2015 12:02
When I was young I went to Europe on vacation, before it became the EU. It may only be remembering
as a child how happy and welcoming the Greeks were to visitors. The singing and dancing on the
Palatka was a fond memory. I have visited the EU three times since, and saw how Europe had changed,
particularly under the austerity programs. The concept of the EU might have sounded good in theory,
but in practice, the strong countries got richer while the weaker countries got the shaft. You
can't build a country by keeping the people on their knees. What happened to Greece is tragic.
It showed the punitive measures taken against those who voice their choices in a democratic way.
The world watched, and saw how the EU had changed from a financial trade cooperation became nothing
more than a political class attack by the rich against the poor.
Julius Marklovitz 16 Jul 2015 11:59
This situation is absolutely ridiculous. Tsipras is a genius I will admit. He has essentially
made himself and his country look like poor victims of a bully. Only one problem. This bailout
is 100% voluntary. Nothing dictates that Greece has to ask or receive a bailout. Oh and not to
mention that this is bailout number 3! When all is said an done your talking about half a TRILLION
dollars for a country of 11 million. $50,000 per Greek. That is OBSCENE. But their rampant government
corruption, rampant tax evasion, and the cultural belief that it is ok to steal and kickbacks
are an everyday part of life warrants no responsibility. I'm a democrat and this makes me sick.
This isn't some child being bullied. This is a country who by choice has done everything in its
power to squander it's resources and then guilt trips the world into buying its victim stance.
It's manipulative. And get this through your head. Countries who are fiscally responsible are
not responsible for those who plunge their countries into recessions . I'm not a fan of Germany
in terms of how they use Greece to devalue their currency. But this it's Germany's fault is just
garbage.
Jmbowsher mittelfeld 16 Jul 2015 11:53
Well Varoufakis and co (who, if you remember, have only been in power less than 6 months) were
committed to reform, particularly where the fat cats were concerned. But as Varoufakis states,
they were told they couldn't make reforms because to do so would be to act unilaterally. In other
words, any perceived impotence is largely down to the troika...
shalone 16 Jul 2015 11:43
And the misery of greek people has aroused so much sympathy in many countries. If anything,
Schauble and Merkel are being accused of being ruthless. So it is not only greeks that hate the
two leaders.
"…it seems to me that the European leaders undermined the fact or didn't pay any attention
to the fact that in Greece, that was the only country that there was a democratic response to
austerity, while in every other-almost in every other European countries, probably with the exception
of Spain and Ireland, the political rearrangement had - gave signs and gave room to the right-wing
populist euroskepticism, and even neo-Nazism. And it seems to me that the European leadership,
it's more tolerant to these developments than the radical-left-however, democratic-response to
austerity in Europe. And this is very disappointing. And this is another dimension of the coup."
A direct hit. Brussels – and Germany – are far more tolerant and indulgent of Ukraine's alarming
Naziism and continue to downplay it, but the clearly-expressed democratic will of the Greek people
was a trigger for EuroLeaders to lean on Greece hard. If only they had ever held Kiev accountable
for its hijinks. And it is hard not to notice the glee with which those same leaders fancied they
were going to make Russian depositors
take a haircut on deposits in Cyprus just about exactly 2 years ago today. You don't see the
same eagerness for depositor haircuts now. Because Russians won't take the heat.
An interesting conclusion in the referenced article, too, which I didn't see when the crisis
was ongoing – depositors got shares in exchange for their haircuts, which resulted in Russians
controlling the Bank of Cyprus.
Perhaps the Greeks made a mistake, and relied too much on rationality, on a belief in a Eurozone
in which good sense and reason would prevail. As it was, the Germans were willing to
ruthlessly crush the Greek banking system, while the ECB and IMF stood idly by, fomenting a financial
panic and humanitarian disaster in order to displace a sovereign government and put an entire nation
'in its place.' We certainly have seen this kind of example made before.
This was an exercise in raw power. It was a financial blitzkrieg, an act of economic warfare
and reckless destruction on a people that ought to be condemned by the free world. But this
kind of ruthless abuse of financial systems seems to be the accepted thing now amongst the developed
economies. And we might view Greece as a sort of an experiment in a new form of warfare and
ruthlessness, as were Guernica, Warsaw, and Lidice.
It is a shame if the Greeks have not prepared
for Grexit, although there are still clearly options despite the naysayers who see only difficulties
in everything. Freedom is rarely the easier way.
The lesson that the countries of the Eurozone cannot trust Germany to act with wisdom and goodwill
was known, but now we also see that restraint is also not in their repetoire. If one can read
between the lines, it would be a pity if the rest of the European countries do not start planning
now for their own active exit from such an failed concept as the European Monetary Union.
And it would be a tragedy if the rest of the world does not now see plainly where a single currency
for the world would also take them, where it is already taking them. Modern theories
about its benign utility to do only good aside, money is raw power. And one must be exceptionally
careful of granting that power to create and distribute and manage money into the hands of vain and
corruptible people without stringent transparency, checks and balances, and provisions for
justice and individual freedom.
Are the lights going out all over Europe? Not yet, but there is a darkness casting
its shadow over the earth. I fear that Greece is only the beginning of a new phase in
the degradation of the human condition by the power of insatiable greed, and spiritual wickedness
in high places.
"The earth, entire peoples and individual persons are being brutally punished. And behind all
this pain, death and destruction there is the stench of what Basil of Caesarea called 'the dung
of the devil'. An unfettered pursuit of money rules. The service of the common good
is left behind.
Once capital becomes an idol and guides people's decisions, once greed for money presides over
the entire socioeconomic system, it ruins society, it condemns and enslaves men and women, it
destroys human fraternity, it sets people against one another and, as we clearly see, it even
puts at risk our common home."
"...Is this Democracy? Is this the Europe we want to live in? A Europe of blackmailers and liars,
were every day people pay the recapitalization of banks with the help of corrupted politicians? Is this
what EU was all about?"
"...Also if Merkel had not insisted on bailing out the banks that Greece owed money to when
it went bankrupt then the Greek debt would not have been transferred to the ECB and hence the taxpayers
of the member countries."
"...Tsipras was never going to be able to force the EU to back down. Never would they allow
a left populist government score a victory and inspire others to follow. The only chance of an EU backdown
was a broad pro-Greek popular movement in Germany, France etc forcing Merkel to relent ."
"...For decades, two parties – New Democracy and Pasok – ruled Greece. In that respect nothing has
changed these parties have the votes necessary to condemn Greece to generations of deep poverty, caused
by there very own cooking of the books and corruption of every variety. And with Tsipras does finally
go and the center-right/left takes over they will become wardens of a prison of servitude to Neoliberal
ideology as administered by Merkel and Schnoble. Greece is now just a little German Palestine not a
nation."
"...This economic plunge happened because they followed and implemented creditor demands for
austerity measures to the letter. It is the fact that Syriza has had the temerity to point out the failure
of these austerity measures that has provoked the wrath of the likes of Wolfgang Schäuble and Jeroen
Dijsselbloem, both of whom are hard-line ideological neo-liberals."
"...And it's not just ND responsible for the financial mess. PASOK had had a majority for nearly
a decade when it cooked the books to get into the euro. It's only been five years in the last 20 when
PASOK wasn't running the show."
Alitogata 14 Jul 2015 23:06
Eu leaders blackmailed Tsipras. Tsipras in his turn, though he promised not to agree to a new
austerity deal agreed to exactly the same austerity deal that was proposed before the referendum
ignoring Greek people's decisions.
Is this Democracy? Is this the Europe we want to live in? A Europe of blackmailers and
liars, were every day people pay the recapitalization of banks with the help of corrupted politicians?
Is this what EU was all about?
Bob adda -> oresme 14 Jul 2015 20:46
The eurozone didn't accept Greek bankruptcy until now. In 2010 they called it liquidity difficulties
and the bailout was born. If bankruptcy had been acknowledged in the beginning, these ridiculous
bailouts would never have started.
Also if Merkel had not insisted on bailing out the banks that Greece owed money to when
it went bankrupt then the Greek debt would not have been transferred to the ECB and hence the
taxpayers of the member countries.
Bob adda 14 Jul 2015 19:10
I think Tsipras genuinely believed that his party could get an anti austerity/pro growth package
and stay in the eurozone. The Greek people supported him because they trusted him to fight for
them. He tried, but failed. That doesn't make him a traitor; naive and inexperienced, but not
a traitor.
luella zarf -> eveofchange 14 Jul 2015 17:23
What are lacking are mass, democratic, genuine socialist parties, that could explain all
this
I agree that we lack an infrastructure of dissent, but waiting for the next socialist party
is not a solution either. Our lives are to short.
In Latin America, teachers have worked tirelessly to educate and organize the population against
austerity. We can also set up reading groups, for example, and built a network a grassroots communities
before the big socialist party comes to save the day. And a grassroots movement has much better
chances to generate strong leaders too.
But we really lost the capacity to respond collectively to our predicaments.
ID961799 14 Jul 2015 15:28
Tsipras was never going to be able to force the EU to back down. Never would they allow a left
populist government score a victory and inspire others to follow. The only chance of an EU backdown
was a broad pro-Greek popular movement in Germany, France etc forcing Merkel to relent .
The mistake was not to head for the exit from January after the election and be in control
of the process. But that would mean (a) be honest with people about not staying with the euro
and (b) making the Greek business elite pay the main cost of the ensuing recession and chaos.
Tsipras is not that kind of socialist however...he is a nationalist ('anti-imperialist ') who
lays the blame for Greek capitalism's faults at the doors of the EU rather than his own ruling
class.
luella zarf -> Trumbledon 14 Jul 2015 15:08
After the pain, capitalist renewal is the only thing that can save Greece. Suck it up,
Marxist losers.
Yes, yes, we know, we should all shut up and get on with the program.
I'd like to see your expression when the international financial system, which is loaded with
financial derivatives will blow up in your face. Financial analysts have put the dollar value
of the derivatives sloshing though the world's banks at one quadrillion and a half, which is the
world GDP x 20 times. This is not payable debt. It is not a question of if, it is a question of
when it will all go belly up. Read WSJ from time to time. Also experts say that governments have
exhausted all their tricks in order to save the banks last time, which crashed their own balance
sheets, and next time they would be incapable to mount a successful intervention.
And although the world economy is barely dragging on, our dear leaders have imposed austerity
policies which are destroying effective demand everywhere. China's stock markets have just gone
kabloom, which will end up affecting China's real economy in a couple of months. So aggregate
world demand is not looking good at this moment.
Obviously, the perspectives of the young generation to find employment are not too bright either.
And how could they be? This is a brave new world in which you make much more money speculating
in real estate, buying debt, and hedging risk, than investing in the real economy where people
produce real things.
But otherwise, leaving aside the global slump, the austerity, the armies of unemployed and
underpaid people, and the demented financial speculators which are cannibalizing the real economy,
capitalism is just peachy. Should we feel worried that we are losing our labour rights, public
pensions, education and healthcare with a vertiginous speed? Why should we, when everything else
goes so well?
Nikolay Nikolov -> PlatosNave 14 Jul 2015 14:11
Surely you can find some less naive Greeks to interview? It's hard to believe that all Greeks
are so naive as to think a) Syriza would make a difference to the debt, which is an international
matter, b) the referendum was a good idea
You might be overestimating the political culture in Greece. Ancient Greece was the cradle
of democracy but modern Greece has been democratic for less than 40 years - and during 95% of
that time the EU and the EZ was showering them with subsidies and cheep credits. It was easy for
the politicians to make unrealistic promises - as somebody else was paying for them.
RexInCanada 14 Jul 2015 14:04
Tsipras has betrayed his electoral mandate, has betrayed the referendum, has betrayed many
in his own party, and has betrayed the Greek nation.
Syriza as a party will fall apart and not exist six months from now except as a small skeleton
of it's former self. It can never win an election again.
It ran on one principle, and in the end betrayed that principle utterly. Tsipras personally
is finished.
The only real winners here are the KKE on the hard left (who accurately predicted from Day
One how this "renegotiation" fiasco would end), the Golden Dawn on the far right, and Angela Merkel.
Phil_Paris 14 Jul 2015 13:50
Instead of turning against the EU and Germany Tsipras should have investigated Pasok and
New Democracy.
If the Greeks voted these 2 parties during 40 years they have only to blame themselves
Nick Mavroyenneas 14 Jul 2015 13:14
He has just been the recipient of a brutal lesson in Realpolitik. Let's hope he is intelligent
enough to learn and prepare properly next time. Let's hope he also realises that the EU is neither
the real Europe nor the promised land.
From what I have seen of EU solidarity, respect and support, I cannot think why Greeks want
to stay.
Just for the record I'm a Welshman with a paternal Greek grandfather. In the 70s I said "Yes"
to the Common Market but, as soon as I can, I'll be saying a resounding NO to this grotesque parody
of a democratic political union. Thank God we did not join the EZ. They have really shown us their
true "mettle".
They will carry on trading with us. They always have and always will. The profit motive is
too strong. Mr. Schauble and his near sighted politics may try and prevent it, but he will not
be able to.
Great Britain OUT. All IMHO, of course.
Coolhandluke77 14 Jul 2015 13:03
Nothing has been resolved by this. There is no credible repayment plan, only a seizure of assets
plan. With austerity only approach, debt to GDP will likely rise and result in ever more crippling
payments. The whole bailout is a fraud which - yet again - kicks the can down the road.
Also badly judged was imposing capital controls after the capital had been drained from the
banks. That seems somewhat to defeat the object. It was hardly unpredicted.T
What Tsipiras has done is put saving the Euro before saving Greece. He claimed - like Thatcher
- there is no alternative to this deal. Well I can think of around 350 billion reasons by this
is a bad deal.
eveofchange -> Trumbledon 14 Jul 2015 12:18
"Why on earth would anyone want to follow the Greek example when Greece is an international
joke and her people are near-universally considered to be lazy and feckless?"
---
The above piece of, basically, racist rubbish, has been the constant theme of the unelected ,
unaccountable, cheerleading, bought and paid for liars,of the capitalist supporting, mass media
of Europe.They propagate that pure piece of partisan propaganda,so as to divert attention away
from the absolute guilt of decaying capitalism, and the pernicious role that the effete, and parasitic,
Greek ruling class has played in this.
The working class of Europe will not be fooled by the above piece of lying racism, not in the
majority anyway. They too are under attack from the self same capitalists as are the Greek working
class---especially in Spain, Portugal and Ireland. If the Greek working class wins--then so will
they too.
Lafcadio1944 14 Jul 2015 11:47
For decades, two parties – New Democracy and Pasok – ruled Greece.
In that respect nothing has changed these parties have the votes necessary to condemn Greece
to generations of deep poverty, caused by there very own cooking of the books and corruption of
every variety. And with Tsipras does finally go and the center-right/left takes over they will
become wardens of a prison of servitude to Neoliberal ideology as administered by Merkel and Schnoble.
Greece is now just a little German Palestine not a nation.
WBruiser 14 Jul 2015 11:43
On 2nd July, the headline on an article by Chris Giles in a well-known financial newspaper
was: "Tsipras has earned his punishment", and now, today, in this newspaper, David P. leads off
with the headline "Many Greeks now think Tsipras is a traitor..." for his CiF piece.
I've been following this issue reasonably closely for months now and there's something very
fishy about the media coverage from a l l the media, in total (supposedly) representing many different
shades of opinion.
Whatever the rights and wrongs of the issue, there have clearly been a multitude of mistakes
over the past couple of decades by everyone involved: the Greek population and their various governments,
the EU, the EuroGroup, the creditors etc.
Given the sh1tload of mistakes made outside Greece, the disproportionate level of loathing
and blame expressed about Greeks in general, more specifically Syriza, and most specifically Tsipras
and the recently-departed Varoufakis is what I find so very fishy.
And that brings us back to the headlines from the first paragraph: "Tsipras has earned his
punishment", and, especially, the one in this article: "Many Greeks now think Tsipras is a traitor.."
In David P.'s article the source of this inflammatory and perhaps vastly over-hyped and over-emotionalised
statement by David seems to be a late-night conversation he had very recently with a group of
4 or 5 people having a beer in a doorway in a side-street of Athens. Please don't misunderstand
me, I'm perfectly willing to accept that group's opinion and I have no doubt that David P. has
faithfully transcribed the views of the group.
Instead, my very great concern about the article is very simple: to take the views of a group
of 4 or 5 people and suddenly inflate that into "many Greeks now think that Tsipras is a traitor"
is an extrapolation too far from me.
bloomday -> ID7778243 14 Jul 2015 11:11
The advantage of the view you are expressing is that it is simplistic and easy to digest -
hence it reflects the Creditors propaganda.
However the historical reality of Greece's economic performance is that, from the mid-90's
to the beginning of the crisis in 2010, the Greek economy was growing at a faster rate than the
EU average (3.9% vs 2.4%). The Greeks then followed the Troika's instructions slashing expenditures
and increasing taxes.
They even achieved a primary surplus (that is, tax revenues exceeded expenditures excluding
interest payments), and their fiscal position would have been truly impressive had they not gone
into depression, a 25% decline in GDP and 25% unemployment, with youth unemployment twice that.
This economic plunge happened because they followed and implemented creditor demands for
austerity measures to the letter. It is the fact that Syriza has had the temerity to point out
the failure of these austerity measures that has provoked the wrath of the likes of Wolfgang Schäuble
and Jeroen Dijsselbloem, both of whom are hard-line ideological neo-liberals.
They knowingly stuck all their chips on an unlikely winner and they lost, and now the people
of Greece will pay an even higher price than they would have done under the previous regime.
It was worth the 1 in 10 chance that it would come off than take the 10 in 10 chance that Greece
would be financially destitute for aeons to come. It's not Tsipras' fault that Greece is in dead
shtuk.
Where you blame Tsipras is that he had the ace up his sleeve - Grexit, which too many in the
EU don't want, as it blows their little game apart - and he threw it away when he needed it the
most.
And it's not just ND responsible for the financial mess. PASOK had had a majority for nearly
a decade when it cooked the books to get into the euro. It's only been five years in the last
20 when PASOK wasn't running the show.
Malakia123 14 Jul 2015 09:59
The price of a deal is tax rises, spending cuts and siphoning off billions of euros of assets
into a fund to reassure creditors that their bills really will be paid...
What is this madness...my ancestors fought and died and spent their fortunes on freeing Greece
from the Ottomans so that a bunch of paid off traitor politicians and bankers could sell her off
to international land speculators! Bring back the Drachma now before there is nothing left of
the country - Cyprus is already gone and after Greece who's next?
Is it not better to default on a corrupt banking system that is driving the world's economy
into the ground to buy up our assets and control our lives to the point of slavery to them?!?
I would rather have potholes on the roads, homegrown food, and freedom from un-payable debt than
total control by the central bankers any day!
We still have the establishment ruling in Greece now – only it is through their children -
a bunch of rich "pseudo-communist" Oxford-trained brats! Why don't they begin printing the Drachma
immediately and tell the central bankers to F-off? Because Mommy and Daddy have a shit-pile of
money in Switzerland and they don't want to lose their inheritance – that's why!
Follow the money folks - the central banks - that's where the power lies - not in the people
of Greece or even Europe and the USA for that matter! They seriously need to be put on a bench
at Den Hagen for crimes against humanity...but that will probably happen when Hell freezes over!
Tenthred 14 Jul 2015 09:52
I'm not in Greece and not in touch with things and I could be wrong, but from someone who is
outside it but who cares, this is how I see it:
I think he only betrayed the rhetorical oppositionism of parts of the left. Syriza wasn't voted
in by a people committed to radical policies, but by people fed up with pointless austerity and
complicit government by a corrupt oligarchy. I think the referendum was saying that people trust
their government, more than previous ones.
If they keep supporting Tsipras and implement this stupid deal they can regroup and grow in
strength to survive it and to challenge it, and to show how stupid and contrary it is. Then they
will be able to fight back successfully, or choose another path.
To take another path needs planning and preparation and it needs popular support. At the moment,
AFAICS, it would lack all three.
"...Even in a Social democratic Europe the problems of the Euro would remain. The difference in
economies and outlook, the needs are too different. Neo-Liberalism has accelerated the exposing
of the contradictions though." . "...Yes, although Syriza are basically mopping up what earlier, usually right-wing, governments
screwed up." . "...Seems to me that Europe is being ruled by Germany. Germany is the main beneficiary of the
Euro of course, and it was the Euro which got the country's economy moving forward powerfully again
after its stagnation of the nineties. " . "...Having said all this, I have a lingering suspicision that my local airport on Syros is going
to be sold off for a bargain basement price to some asset stripping International Bank. That shouldn't
happen. Greece's financial woes shouldn't be an excuse to asset strip the whole of Greece." . "...And if you had any idea about 'facts', you'd know that even the very identification of a
'fact' is subjective and therefore not 'neutral', which was your choice of word. And the process of
identifying 'facts' comes before the act of reporting them, another process that is subjective and thus
not neutral. But you feel free to kid yourself that German newspapers contain 'neutral' reporting while
accusing others of stupidity. Must be great belonging to a superior nation, nein?" . "...Do me a favour, the Greek nation isn't a naughty child that has to be humiliated into "behaving".
If the French and German bankers had "behaved" there would have been a fraction debt owed in the first
place. " . "...There is no " agreement". There is an ultimatum." . "...Therefore: yes, we Germans have indeed access to neutral reporting. It is part of our media
landscape. Amazing. Any English-speaking student of the philosophy of history will tell you that
'neutral' or 'objective' history does not and cannot exist. And what happened yesterday, indeed just
now, is 'history'. However, according to you, it seems that Germans have overcome the problems
of identifying a 'fact' and presenting 'facts' in a manner which in no way reflects the author's prejudices.
Which means (i) you Germans really are robots devoid of human emotion, or (ii) you be talking rubbish.
Personally I reckon it's the latter but feel free to correct me." . "..."They crucified Tsipras in there," a senior eurozone official who had attended the summit remarked.
"Crucified." http://t.co/Ue9ENl3tIz "
Although couched in fairly careful language, subject to votes in
the Greek parliament and with the proposed privatisation fund to be based in the country rather than
– as originally suggested – abroad, the
agreement reached deprives Greece of an enormous amount of its sovereignty. It may stop short
of the "coup" mentioned at times overnight, but – unless the Greek parliament balks in coming days
– Greece is no longer master of its own destiny.
... ... ...
The southern countries face the refugee crisis from across the Mediterranean;
France has made a partial return to Africa, as a byproduct of the chaos in Libya. The countries to
the north, and especially the east, are newly apprehensive about Russia, following events in Ukraine,
but their fears are not entirely shared by the "new" Europeans further south, who are more concerned
about their economic losses from anti-Russian sanctions.
The EU countries are suddenly looking outward in many different and divisive ways. Until now, though,
the Franco-German alliance has remained constant, and the union, including the common currency, remains
intact. Last night it was possible, if only fleetingly, to sense the perils that await if that centre
cannot hold.
mattus 13 Jul 2015 19:02
You can take money off a country, but you have to do it on the sly! So that the country does
not notice.
Troika does not equal lifeboats, they are destroyers!
mattus 13 Jul 2015 18:57
Grexit has not been avoided, just as the Versaille treaty did not avoid the eventual non-compliance
by the Germans. Greeks 2015 and Germans 1918 were both humiliated. They have to produce for foreign
powers under severe oversight and a treaty that is not perceived to be fair.
That will not work.
What will work, however is a Grexit which allows Greece to keep Euro as its currency. Is that
possible? Of course Montenegro does so:
Amusing that you quote what was seen as the worst decision by a British Foreign Office in recent
history. It gave away the moral authority and high-grund the UK has in 1955 (against the wishes
of Mr Churchill), it allowed the original 6 to go on to be hugely more successful than the UK
in the next 30 years and within 10 years a British government was begging to be let in, finally
being allowed once de Gaulle had lost power.
By the time the UK entered we were bankrupt, had tried to spend and devalue our way out of repeated
crises (and failed) at the cost of the value of the pound and the destruction of most big industries.
We then entered to an EEC which was almost entirely crafted to support a French-style agricultural
sector and ensure that the Berlin-Paris axis would rule the roost. In subsequent years of course
we have acted as the cuckoo-in-the-nest, constantly bitching, moaning and belittling and finally,
with the John Major widen-don't-deepen approach to undermining may get the way of the Tory Europhobe.
TimTimpson HolgerHallmann 13 Jul 2015 16:09
But Germany IS doing it again; assuming she knows what's best for other countries, imposing
her Will on other Peoples, seeking to dominate Europe and doing it by abusing her power.
Rather than showing the generosity and humanity of the Greeks and others after WWII, when the
vast debt owed by Germany was written off, she seeks to humiliate and dictate to another nation
in order to expropriate their treasures.
retsdon -> Eddiel899 13 Jul 2015 15:26
I don't think it was a deliberate scam. The problem was the cash from massive German trade
surpluses looking for a higher return outside domestic Germany meeting massive demand from peripheral
Europe to jig their lifestyles, competitiveness, infrastructure, whatever up to northern standards.
As there was nothing to within the combined Eurozone to stop northern banks lending or peripheral
Europeans borrowing ( at negative real rates at times), it's hardly surprising that the result
was an enormous credit bubble which was sooner or later bound to burst in tears.
The real problem is that the losses from the burst were not equitably assigned - far too much
of the cost landing on the shoulders of peripheral Europe's workers and middle-class savers already
mired in the inevitable recession.
Danny Sheahan -> Marendins 13 Jul 2015 14:17
Even in a Social democratic Europe the problems of the Euro would remain. The difference
in economies and outlook, the needs are too different.
Neo-Liberalism has accelerated the exposing of the contradictions though.
TimTimpson -> Vincent Veal 13 Jul 2015 13:38
Are you serious? you want to remain in the organisation that has just behaved in that manner
towards a member requiring support. You must have shares in JP Morgan or something.
jackheron -> CaptainGrey 13 Jul 2015 13:26
Yes, although Syriza are basically mopping up what earlier, usually right-wing, governments
screwed up. If you do a little, you know, reading about the subject, you'll find that since
democracy was introduced in Greece (I tend to go for 1952, when women finally got the vote), Greeks
have in fact been cautious, conservative voters, cleaving to the right in times of crisis.
Although frankly why I'm bothering to explain this to someone who identifies with one of the weedier
characters in Captain Scarlet and the Mysterons is, I will confess, baffling. Everyone knows that
Captain Black was the ne'er-do-well hipster, and with that five o'clock shadow that makes Greek
men so irresistible.
Coolhandluke77 13 Jul 2015 12:46
That is what the Euro or shared currency means - loss of sovereignty.
The new deal seems to a new take on fraudulent loans: assets are seized and loans given even though
there is no credible way they can be paid back.
If this is "a coup" then the coup leaders are easy to identify. They are The Great Left Hope -
Syriza. Many on the left were spell bound by Syriza, and now they turn on the anti-German chauvinism
rather than see their illusions punctured.
It's all about maintaining the Euro - a political and vanity project - at any cost.
BritCol Tracey Savage 13 Jul 2015 12:20
Try reading some economists other than Milton Friedman. Maybe start with Heilbroner, or Galbraith
or even Schumpeter. There are other options besides the Chicago school of trickle down pennies.
Danny Sheahan whitecross 13 Jul 2015 12:13
Also that anyone who challenges Germany's economic needs will be slammed down hard.
A currency union where the needs and protection of one trumps the needs of all others is doomed
to fail in acrimony.
afortiorama misterlunch 13 Jul 2015 11:46
It's exactly the same, they had debts and they didn't have the money to repay them. Iceland
defaulted and recovered, Argentina defaulted and didn't recover (wait for Kirchner to step down
and then you'll see the vultures that are already circling it will tead Argentina apart); Greece
has a EU anchor. Tsipras tried to bluff his way out - I don't blame him - and lost.
whitworthflange Eddiel899 13 Jul 2015 11:34
Seems to me that Europe is being ruled by Germany. Germany is the main beneficiary of the
Euro of course, and it was the Euro which got the country's economy moving forward powerfully
again after its stagnation of the nineties.
Germany lent the money to its neighbours to buy German goods in its new European wide home market,
and in the process most of those neighbours lost the majority of their manufacturing capability
as Germany out competed and drove it out of business.
So - how's the privatised power industry working out for everyone in the UK?
david119 13 Jul 2015 11:24
"The agreement reached deprives Greece of an enormous amount of its sovereignty"
If a country joins the Euro it does loose some national sovereignty, that has been obvious from
the start.
But it was not necessary to deprive Greeks of dignity and hope.
There is nothing in the rules of the Euro that says that European taxpayers have to bail out banks
that engage in reckless and irresponsible lending. Those banks should have been allowed to go
bust as Northern Rock was allowed to go bust when it engaged in irresponsible and reckless lending
to individuals.
There are two sides to this.
Greece needs hope. It will never realistically be able to pay back it's mountain of debt, much
of its debt needs to be cancelled.
But on the other hand anyone who has lived in Greece knows that the creaking, bureaucratic Greek
State will never reform itself and if Greeks want to continue to use the Euro this reform urgently
needs to happen.
So the EU needs to combine basic humanity with toughness over the reform of the Greek State. If
Greeks want to carry on as usual then they have to exit the Common Currency. All the Greeks that
I know accept this.
Having said all this, I have a lingering suspicision that my local airport on Syros is going
to be sold off for a bargain basement price to some asset stripping International Bank. That shouldn't
happen. Greece's financial woes shouldn't be an excuse to asset strip the whole of Greece.
MrGadgie HolgerHallmann 13 Jul 2015 11:10
And if you had any idea about 'facts', you'd know that even the very identification of
a 'fact' is subjective and therefore not 'neutral', which was your choice of word. And the process
of identifying 'facts' comes before the act of reporting them, another process that is subjective
and thus not neutral.
But you feel free to kid yourself that German newspapers contain 'neutral' reporting while accusing
others of stupidity. Must be great belonging to a superior nation, nein?
letsbeavinya MerlinUK 13 Jul 2015 11:06
The end of sovereignty? Possibly. The start of responsibility?
Do me a favour, the Greek nation isn't a naughty child that has to be humiliated into "behaving".
If the French and German bankers had "behaved" there would have been a fraction debt owed in the
first place.
cessle 13 Jul 2015 10:59
There is no " agreement". There is an ultimatum.
If Greece has any sense at all it will reject this ultimatum and default. It will receive more
humanitarian aid from the EU that will actually get to the people who need it most than if it
capitulates to the EU, EC, ECB and IMF and re-capitalises it banks from more unrepayable bail-outs
designed to keep the failed European project afloat.
Germany, quite unfairly, will be blamed for forcing out the Greeks and for setting in motion the
end of the EU and its bastard progeny the Euro. Its relationship with France will deteriorate
markedly.
France, Spain and Italy will be looking nervously over their shoulders as they watch speculators
bet on who will be next out of the failed currency.
Will a Brexit be necessary? Could be academic.
Eddiel899 13 Jul 2015 10:55
The predictable outcome has been arrived at.
The bankers are again happy and the losers are again going to be Germany and Greece. For this
is a charade to rob Germany of whatever wealth it has left with the pretence of keeping Europe
and Greece on the right path. And we don't have to look far to see who is pulling the strings
....... the oligarchs who now rule Europe through what is euphemistically called the Troika.
MrGadgie HolgerHallmann 13 Jul 2015 10:51
Therefore: yes, we Germans have indeed access to neutral reporting. It is part of our
media landscape.
Amazing. Any English-speaking student of the philosophy of history will tell you that 'neutral'
or 'objective' history does not and cannot exist. And what happened yesterday, indeed just now,
is 'history'.
However, according to you, it seems that Germans have overcome the problems of identifying
a 'fact' and presenting 'facts' in a manner which in no way reflects the author's prejudices.
Which means (i) you Germans really are robots devoid of human emotion, or (ii) you be talking
rubbish. Personally I reckon it's the latter but feel free to correct me.
reddan 13 Jul 2015 10:33
This from the Financial Times
"They crucified Tsipras in there," a senior eurozone official who had attended the summit
remarked. "Crucified." http://t.co/Ue9ENl3tIz
Interesting debate below between Syrizia central committee member Stathis Kouvelakis and Proffessor
Alex Callinicos on 11th July at Marxism in London.
What a fudge, what a deliberate attempt to downplay the significance of what has been occurring.
How perfidious.
letsbeavinya taketheatrain 13 Jul 2015 10:24
Although the deal is imposed from outside it is a good deal. It offers the opportunity for
Greece to start to rebuild its finances and governance. In my view this is a better option than
Grexit, a return to the Drachma, a world of hurt and a probable return to business as usual.
What a load of guff.
This is the end of sovereignty for the Greek parliament.
"The independent economics-writer, Charles Hugh Smith - who was one of
only 29 economists worldwide who predicted the 2008 crash in advance and who explained accurately
how and why it was going to occur - has provided a more honest description of the sources of Greece's
depression:
1. Goldman Sachs conspired with [actually: were hired by] Greece's corrupt kleptocracy to conjure
up an illusion of solvency and fiscal prudence so Greece could join the Eurozone [despite Greek
aristocrats' massive tax-evasion, which created the original problem].
2. Vested interests and insiders gorged on the credit being offered by German and French [and
other] banks, enriching themselves to the tune of tens of billions of euros, which were transferred
to private accounts in Switzerland at the first whiff of trouble. When informed of this, Greek
authorities took no action; after all, why track down your cronies and force them to pay taxes
when tax evasion is the status quo for financial elites?
3. If Greece had defaulted in 2010 when its debt was around 110 billion euros, the losses would
have fallen on the banks that had foolishly lent the money without proper due diligence or risk
management. This is what should have happened in a market economy: those who foolishly lent extraordinary
sums to poor credit risks take the resulting (and entirely predictable) losses."
Here's
a very interesting article by recently-departed Greek Finance Minister Yanis Varoufakis. He contends
that Germany is the driving force behind it, and that Germany is attempting to force Greece out of
the common currency union as a lesson to France, to put the fear of God into them. In such circumstances,
Tsipras's erratic behaviour and overall spinelessness just gets in the way.
This fits well with
the image of Germany as the emerging leader of a new Europe, but not so well with the concept of
a Germany that is more a friend to Moscow and less a tool of Washington.
In fact, it sounds like
a country rent with internal struggle which is trending toward a boil itself.
Greece remain a debt slave.... The condition in which it was put by previous neoliberal goverments...
.
"...All of it is nasty. It revolts me. Rich scumbags win and the small people pay"
.
"...Greece will now be governed in the way that all countries will be governed in the future. Neoliberal
institutions will have the world in their grip and dictate all policy so they can squeeze every last
drop out of the people justifying this because money is owed. Conquest by indebting nations this is
the perfect instrument to destroy all self determination."
.
"...Its not the germans. They are just the convenient target. We all know its the banks behind the governments."
All of it is nasty. It revolts me. Rich scumbags win and the small people pay
The majority of leading politicians, business owners and bankers need to take a long look in the
mirror and ask themselves what divides them from Norman Bates, to me they all seem to be psychopaths
rogerfranklin 13 Jul 2015 10:01
Well, I never thought I'd say this, but well done to French socialist Hollande and Italian
banker Draghi for doing just enough to (hopefully) prevent armageddon. Of course this deal won't
work and we'll all be back here in a year or so but at least the eurozone hasn't been turned into
the ERM with Italy and Spain the next targets.
Branko Dodig -> inconvenient_truth 13 Jul 2015 10:00
They don't want to waste their people's money? They have already done so when Greece was technically
in default in 2012; they bought off the bank-held bad debt (which happened due to irresponsible
lending of banks wishing for higher returns since Germany etc could not absorb the capital and
had very unattractive interest rates).
Realistically, bubbles form and deficit soars when there is an inflow of cheap capital, as
it was to the periphery of Europe in the 2000s. It's not just a "periphery of Europe thing", a
mentality or cultural problem, because the same thing happened in the USA in various periods,
and in Germany as well (the famous French "indemnity" which caused a crisis in Germany afterwards).
If we treat the symptoms and not the causes in the way the EU and specifically the Eurozone
is set up, we're just going to have recurring problems of this sort.
RichardDargan 13 Jul 2015 09:58
Perhaps this is the end of democracy, in that the will of the people in a country however misguided
it might be in what it wants, has been subjugated to the money machine.
The Greeks voted against austerity at least twice. The first time was when they elected Syriza
and the second time was when they voted 'No' in the referendum a week ago. The ratcheting up of
the terms of what the Greeks have to do to get their money means they now have worse terms than
those they started with. Vindictiveness or what, on the part of the ECB and others calling the
shots? Is the vindictiveness aimed as a warning to other countries (?Italy and Spain?) who might
find themselves, in the future, in a similar position?
I have the nagging feeling that the 'result' of these negotiations has more to do with the
internal politics of Germany and Finland and other countries pushing for harder terms than with
the situation in Greece.
It will be the 'ordinary' Greeks who will have to pay for the fecklessness of the political
and wealthy classes who probably have got their money out and safe in some offshore location.
It all leaves something of a dirty taste in the mouth the way this has been handled. So much for
democracy when the unelected money-men and women start dealing with the affairs of countries.
nursinggardener 13 Jul 2015 09:53
Greece will now be governed in the way that all countries will be governed in the future.
Neoliberal institutions will have the world in their grip and dictate all policy so they can squeeze
every last drop out of the people justifying this because money is owed. Conquest by indebting
nations this is the perfect instrument to destroy all self determination.
lsjogren -> AdelJ 13 Jul 2015 09:52
Greece is not in debtor's prison. They are free to reneg on their debts and abandon the Euro.
And that is what they should do because;
1). In the long run it will be in their best interest
2). It will expose the Eurofarce and force the other countries of Europe to stop basing their
economies on the false premise that failed economies are capable of paying off their debts over
time.
trobriander 13 Jul 2015 09:50
A word of truth must be said here. Tspiras deserves an applause. The man was voted in to help
a nation on the brink. He was fighting hard to save those dearest to him while trying to talk
some sense into creditors who make the merchant of Venice look like a gentleman.
He called for a tough referendum to exercise transparency with the Greeks for the initial bail
out. Conversely, Merkel (who earned herself a solid F [0/100] for the Greek course) called it
a bluff and threatened if outcome were NO then it was immediate Euro exit – she even refused to
talk until after the referendum, which was further damaging.
With a big OXI mandate, the man went back to Brussel to negotiate better proposal – carrying
with him even a bigger load, in return, the EZ have further entrenched – as if every leader held
a bat, waiting turn to get a swing at the ball
Once a wise man said: good finance brings about good friends…
Dear Tspiras, There are hardly any good friends left within the EZ!
thinkoutloud 13 Jul 2015 10:07
I have always supported our membership of the EU and have seen as a force for good and particularly
as a way Europe can be big enough to manage rather than be controlled by finance.
Well, this has given me real cause for concern and i am now far less worried about the prospect
of our leaving the EU. Indeed I may vote for it (100% reversal of previous views).
The Eu has turned on its people, putting finance and the markets first. if you ever had any
doubts, you now know what loss of national sovereignty really means.
Almost the only time we hear of Nations nowadays is in their role as supporters of the finance
industry, to bear their risk and to have their ordinary people bear the consequences of financial
system (greed and ) failure. Beyond that, Nations as cultural and political entities no longer
exist, they are just 'economies' - they serve the markets.
I had thought financiers and bankers got high salaries because they took huge risks, but it
appears it is we the ordinary people who take the risks while they take the profits with the help
of our politicians.
Thank you for your wishes, but I think that Tsipras will soon be a political zombie. This was
the plan of the gang in Brussels and Berlin, and I cannot understand why he failed to do something
to avoid the traps. The agreement is not viable. We will have a discussion about this subject
again, very soon. Unfortunately, now the only alternative in the Greek political system is Golden
Dawn. A racist and nationalist party. The Greeks will vote to support this party, not because
they are racists and nationalists. (You can see almost all Greeks offering food and cloths to
the thousands of illegal immigrants and refugees. A problem that has its roots to the irresponsibility
of the northern countries.) But they will support Golden Dawn because they want a way to express
their opposition to all politicians which act as betrayers, like Tsipras.
jonathanpt 13 Jul 2015 10:06
This is not the deal they rejected last week, that was a short term extension of the second
bail-out for 8 billion.This is a new 3 year 3rd bail-out for 80 billion.
However as a long term europhile and strong supporter of Britains membership of the EU ,the
way Greece has been treated leaves me wondering,for the first time, about our continuing membership
and there will be more like me, unintended consequences.... Brixit???
lsjogren crumlinbob 13 Jul 2015 09:48
crum: Greece has taken a stand, "we hate the neo-liberal superstate, and we want to remain
part of the neo-liberal superstate".
Sorry, they can't have it both ways.
amrit radnor 13 Jul 2015 09:48
These previous Greek leaders were hovering in Brussel like birds looking for dead animal's
body.
Regime change game is yet to end.
Present government could get defeated and new elections could take place.
illywacker Gulfstream5 13 Jul 2015 09:46
1) It is the private banks that ran out of our money with which to gamble.
2) Socialism is precisely about using richer people's money to help those who have little.
Thatcher does not acknowledge such generosity as a factor in human relations ("no such thing as
society", etc. etc.), which tells you everything you need to know.
lsjogren crumlinbob 13 Jul 2015 09:44
crum: You just don't get it. National sovereignty and a common currency with other nations
are incompatible. Greece can either have the Euro or national sovereignty, not both.
soundofthesuburbs 13 Jul 2015 09:43
"Athens has also agreed to sell off state assets worth €50bn, with the proceeds earmarked for
a trust fund supervised by its creditors. Half the fund will be used to recapitalise Greek banks,
while the remaining €25bn will pay down Greek debts."
Banks are institutions where the profits remain in private hands and the losses are socialised.
Can anyone explain?
brnost 13 Jul 2015 09:42
When unelected bodies force an elected government to surrender its financial sovereignty, the
word "coup" is the only one that can be used. No one emerges with credit from this, but Germany
and Merkel come out looking very ugly indeed. It should never have come to this. It was Syriza's
predecessors who got into the mess, but the troika were complicit, and their humiliation of Greece
to cover their own culpability has exposed the moral bankruptcy of the whole Euro project.
mgtuzairodtiiasn PeregrineSlim 13 Jul 2015 09:42
It is true. The first loans were given to Greece when the state was born after the Ottoman
occupation. So, all subsequent loans were given just for the payment of the previous loans. But,
although the nominal amounts were very large, only small parts of them were received by the Greeks.
The rest of the money was considered in all cases as warranties, commission etc. The Greek state
in fact was forced to get this loans with the threat of favoring the "enemies". Except of a small
period before 1893, when some money was spent to improve the infrastructure, in all other periods
the money was spent for military equipment, mainly warships which were sold by the lenders.
crumlinbob 13 Jul 2015 09:35
Disgraceful treatment of a soverign country. The EU has become a nasty shambles. The austerity
measure being forced on the Greeks will not help that country one bit. Things will get worse as
most economists (without a right wing blinkered view) have stated. Hell even the IMF have said
they got their figures wrong. So what is being foistered on Greece wont work. So whay is it being
forced on them? To teach the people that democracy is in no way equal to corporate finance and
how dare they vote a left wing government to cause such upset to the neo liberal superstate. The
EU is a disgrace.
AdelJ 13 Jul 2015 09:31
The result of the agreement will probably not be known until six months hence but if more damage
is done to the Greek economy will this be considered a success? I hope it works but on the face
of it it looks both a political and economic disaster for Greece. Did Greece stuff up in the way
they borrowed and spent - most certainly, but surely the end result has to be both reform and
the chance of a thriving economy in the future. I fear this agreement will not deliver. The Greeks
have basically been put in debtors prison. When Schauble asked the Greek negotiators how much
to leave the eurozone the best answer might have been to give him a figure.
ukchange68 jahiz123 13 Jul 2015 09:31
slave states - ALL to do with finance, nothing to do with countries
pedro15 Doug_Niedermeyer 13 Jul 2015 09:29
Russia would have defeated the Axis on its own ,just taken a bit longer.
You came into the War in '17 when the Europeans had lost millions over 4 years ,Germany was
using 16 year olds and on its last legs with rampant starvation. Bit like you stand back ,watch
3 guys batter a fourth into the ground then when the fourth is unconscious you join in helping
the kicking .Just enough time in ww1 to get enough experience for your 'we saved the world movies.
You didn't declare War on Germany until Hitler ,down to some weird sense of loyalty to Japan
declared war on USA after Pearl Harbour, and after Germany had in effect lost the Russian campaign
befor Moscow. I believe for the aid of a few destroyers you took a chunk of the Caribbean off
us.
If you are so great please explain why you have not won a single War, up to and including Iraq,
since ww2.
In fact the Finnish economy faces huge problems. It is even in a worse situation than the Greek
one. The Greek problems are in some degree artificial, due e.g. to the actions of Schauble, but
the Finnish problems are all substantial. Finland has lost two of its main sectors, the Forest
industry, and telecommunications. Also, there is a huge housing bubble, as in Sweden too. I expect
that while we are talking about Greece, another country (Finland? Belgium? ) will soon explode.
Notice that while the Greek public debt is very high, the total debt is much lower than that of
other countries. E.g. the mean household of Greece owes 109% of its income, while the Dutch one
owes 317%. So, there are many countries much more indebted, and all this noise about Greece helps
politicians to hide the problems there are existent in their countries.
david wright 13 Jul 2015 09:26
Angela Merkel said: "I never make historical comparisons."
Of course not. She daren't. In 1953, Germany was essentially let of the hook for huge amounts
in return for bveing a good ally and helping ounter the Soviet union (which indeed needed countering).
Then in Reunification, the former West germany accepted East german currency at par with the Deutschmark,
a huge giveaway - 25% would have been generous. Finally, EuroReichsKanzlor Merkel daren't think
of the possible blowback from her imposition of a 'worse than Versailles' solution on Greece.
Hear and see no evil. If only she could have made the hat trick, and done none. The underlying
situation is utterly unchanged. The same go-round will begin in between a couple of months, and
three years. It ain't over til it's over, and it ain't over yet, baby.
soundofthesuburbs 13 Jul 2015 09:23
Greece is a banker gamble that didn't pay off.
Bankers worked on the assumption that Germany would pick up all debts, if there were problems.
This lead to bond yields across the Euro-zone being exceptionally low.
Following this assumption, lending to anyone was like lending to Germany, but there was a slightly
higher margin in lending to Greece which made it more profitable.
When it became apparent Germany was not going to pick up the tab, bond yields soared in countries
like Greece and sustainable debt became unsustainable.
The EU moved the banker's bad debts to the taxpayers of Europe and the bankers gamble has been
left to run its course, with them being saved from any losses.
bensdad 13 Jul 2015 09:23
And there we have it. The EU may be dead in the water, but at least we now have a IVth Reich.
TimTimpson EloiCasali 13 Jul 2015 09:20
Greece's hidden economy is about 25% of GDP.
Germany's 15%
Britain's around 10%
USA 7%
Germans should let the British and Americans run their economy, the tax dodgers!
I concur. One of my reasons for wanting to be in the EU, apart from peace etc, was that it
gave us a level of protection from the right wing Neo-Liberal drift in the UK. The recent treatment
of Greece in these negotiations and the coup yesterday has left me scratching my head, particularly
as we also have right wing group of fanatics in charge here as well.
ukchange68 drdirk 13 Jul 2015 09:19
very, very well said.
Its not the germans. They are just the convenient target. We all know its the banks behind the
governments.
This greek capitualtion will go down in history as one of those moments that was missed/wasted.
the orcs are on the march........
It is important that the Greek people not be alone in this struggle. In the United States
and other countries, we should connect our struggles against austerity at home to solidarity
with the Greek people, their social movements and with left political parties who share this
politics and practice. The struggle in Greece for an alternative to austerity is so important
not only for the Greek people but for all people who want to live in a world where human needs
are put at the center of our politics and economics.
drdirk 13 Jul 2015 09:14
People, please stop bashing the Germans in general. As a German, I feel very ashamed what the
Merkel administration and its allies did to Greece in these "negociations". We should all concentrate
on the matter, that democracy has been hijacked by a neoliberal elite of politicians and banks.
All over Europe, led by the northern states. They are trying to establish a new form of governing
all over Europe. There is no difference whether you live in England, Germany or elsewhere. They
want it all and they want it now. Believe me, I know many fellow Germans who strongly feel disgusted
by this government, maybe not enough ( the German media has been rediculously supportive of the
German finance minister ) . The social democrats are dead. They should just join the Conservatives.
If progressive left wing and liberal people don't come up with a new political way for Europe,
things will go dark. The orks are already waiting to come out of their holes...
LouisianaAlba 13 Jul 2015 09:10
Bad deals are cemented in history and this one looks ready to be cemented. Krugman labels the
process leading to it, vindictive. We all want to hope for the best and trust in the abilities
of those managing the bad end of this deal in Greece, but I think all their abilities will be
tested too much. I put in an earlier comment that magically disappeared from these columns who
and what I thought was the beginning of all this. The magic word Versailles has now been brought
elsewhere. Read the Varoufakis New Statesman interview..there is no doubt who was in charge of
all this.
A typical case of "damned if you do, damned if you don't" , especially for Germany. I remember
well the times when everybody (including the UK incidentally) was criticizing Germany for lack
of leadership. Now Merkel leads and gets criticized for being heavy-handed, Versailles-jackboot-Panzer
analogies included. I am not a fan of hers and I don't delude myself that this deal is going to
solve Greece's problems for the next decades. However, considering the alternatives, namely a
messy Grexit with a humanitarian crisis of biblical proportions, it doesn't warrant all that name
calling. Don't forget that Merkel has to sell this deal in Germany as well. Considering public
opinion there is staunchly anti-bailout. that's not going to be a lot of fun either. Perhaps we
should all pipe down a notch and wait how this plays out before declaring the end of the EU.
W61212 Alexander2015 13 Jul 2015 09:06
No, capital debts remain. If Greece left EZ it would at least not be locked into another larger
bailout that would like the prior, is impossible to repay. Grexit now and not increase the debt,
or stay in EZ, get another bailout and the debt would be unpayable sometime down the line. Bailouts
for Greece are carousel, get bailout, can't repay, get another bailout, can't pay - and can't
pay because of imposed austerity. Which is why this must stop.
Isanybodyouthere 13 Jul 2015 09:05
Interesting, the fledgling Finnish govt which is a coalition of right wing and right of centre
groups would have fallen if they had voted to give Greece more concessions. So it's not just Tsipras
and Syriza living dangerously. I also have a feeling Finland's EU membership will be severely
tested if this coalition is to hold.
psygone 13 Jul 2015 08:56
After Greece defaulted on its sovereign debt in 1893, the UK, France, the Austria-Hungarian
Empire, the German Empire, the Russian Empire and several Italian independent states created the
"International Financial Commission of Control".
The institution headquartered in Athens with more than 5,000 mostly foreign employes, supervised
the public finances of Greece which was imposed by European powers, who had bailed out Greece
in autumn of 1897 when the country bankrupted four years earlier.
The Commission supervised the collection ot taxable incomes from salt, olive oil, matches,
playing cards, cigarette papers and Naxos emery, tobacco, stamp duties and the Piraeus customs
office's duties.
The goal was the payment of the country's debts to its creditors.
However, the institution's official last act was an emergency evacuation on 6 April 1941 as
Nazi German and Italian troops entered Athens.
The "International Financial Commission of Control" did return to Athens in 1945 but with only
12 employees and continued to operate in Greece until 1978 when the 1893 debt was finally "written
off" -- 81 years total.
Lawrie Griffith Casablancaboy 13 Jul 2015 08:54
Poland is being shored up as a bastion of containment against Russia.
If Greece was strategically important in this new cold war with Russia it be awash with money
and its debts wiped.
CroppyNotDown W61212 13 Jul 2015 08:53
Tsipras is too young to know the full extent of German vindictiveness. He is not to be faulted
for assuming that he was negotiating with democrats.
Greece should have sent Manolis Glezos. He has a better gut feel for what he is up against. He
has seen it before.
Γιώργος Πρίμπας Phil Gollin 13 Jul 2015 08:51
And the truth is that Greece is occupied by Germans conservatives politicians (who will borrow
money with 0,0something % rate and will lend the Greeks with at least 2,5% rate) who promise to
eat the money from Greeks.
Thank you for yours help!
Of course if the German government will want to cut money from social heath it will say: the
Greeks! :-)
so idiots are those who will believe it!
AnOwl 13 Jul 2015 08:50
I'll tell you what the demands look like. They look like the demands that Austria-Hungary made
of Serbia in July 1914. IN that case, the Austro-Hungarians thought that Serbia would never accept
the terms and expected a war. Serbia, of course, did accept them (even though they were widely
regarded in European diplomatic circles as a humiliation) and we all ended up going to war anyway.
Whilst there is little militarism in today's Europe, I can't help but note the similarities
in the degree of belligerence. And I agree with Varoufakis that the end result of this will be
as significant for th elong-term future of Europe as Westphalia, Versailles or the Treat of Rome.
Silvertown DJT1Million 13 Jul 2015 08:50
The EU has behaved totally dishonourably preferring to destroy the economy of a fellow member
of the EU to protect the bankers who foolishly had loaned the Greek state billions.
The Greek people are suffering so the bankers of Frankfurt, Paris Milan, Madrid etc do not
have sleepless nights waiting for the 'people's governments' to require the Banks to take a haircut
rather than pauperise their citizens.
"...A country in the Euro has no control of its monetary
policy. Therefore when Greece had negative real interest rates during the boom time, there was
nothing
it could do to prevent people borrowing money. When added to a government also borrowing to appease
special interests, this can be disastrous."
"......Tsipras has done a great job at playing the other side of the table off against each
other. So much so, it doesn't even have to have been intentional, and it still works out great.
He's exposed the entire EU structure as a bag of bones, let alone a naked emperor. "
"...Who says Germany wants to avoid a Greek debt "crisis"?"
"...Well, Illargi's analysis agrees
with my own. And I agree with him that too many have been influenced by Troika-friendly
MSM that has done a fantastic job turning the knife by painting the Greeks as profligate, Syriza
as incompetent, and Tsipras as a betrayer.The message: Greeks MUST do whatever the
Troika asks and anyone who thinks otherwise is a fool or worse."
"...Greece fiscal sovereignty surrender is demanded by elite European terrorists. But these
terrorists wear nice suits.
The fourth Reich is showing its fangs a lot more now more now. "
"...Seems obvious now ( if it wasn't already ) that debt slavery isn't just about asset theft
and depredations, it's about smaller nation state surrender to ongoing long term domination
by larger states.
Since war is currently unacceptable, then financial war is widely accepted by the vast
majority of the people in the West, when it West on West wars.
"...All this " trust" talk is fucking bullshit.
So, for the last 5 years that the terrorist troika and EU states knew that Greece couldn't
pay off it's fraudulently induced and locally corrupt debt, but kept lending it to them anyway
so to steal and impoverish them with near zero real fightback, because they trusted there would
be no fightback. Weaken and then conquer is the plan."
On Twitter recently, someone posted that anyone who doesn't understand the importance of the difference
between a sovereign money supply and a non-sovereign money supply does not understand economics.
I wholeheartedly agree with this. And the majority of comments I see on articles about the Greek
situation confirms that most people don't understand economics. I don't even know where to begin
with criticisms of the idea of a shared currency without shared government.
There are three main
problems:
Problem 1: It is very easy to get into debt:A country in the Euro has no control of its monetary
policy. Therefore when Greece had negative real interest rates during the boom time, there was
nothing
it could do to prevent people borrowing money. When added to a government also borrowing to appease
special interests, this can be disastrous. But Spain had this problem even whilst running government
budget surpluses. A country in the Euro has very little control over fiscal policy due to the rules
determining how much governments can borrow and save. So even if a government wanted to combat loose
monetary policy with correctly tight fiscal policy, it couldn't.
Problem 2: Once in debt is impossible to get out of debt: There are three main ways a government
has historically gotten out of debt. The first is economic growth; a growing economy means that debt
to GDP ratios go down as GDP rises. The second is inflation; if a government's debt gets too large
it can always resort to the printing press to help it out. The third is outright default.
Problem 3: After both of these are realized, economic growth becomes very difficult: Governments,
chastened by the experience of Greece and knowing that they are effectively borrowing in a foreign
currency, can not borrow much more. A sovereign nation would have no problem issuing 150 or 200%
debt to GDP. The central bank would support them and they would know that real interest rates could
not get too high. Not so a borrower of a foreign currency.
I think I show three things here:
The only policy a country can follow if it wants to avoid debt crisis is to run a current account
surplus.
This leads to a policy of internal devaluation and deflation.
This creates a positive feedback mechanism which leads to a spiral of deflation and unemployment.
This is true certainly as long as Germany insists on low inflation and trade surpluses but possibly
anyway, just by the nature of the riskiness of sovereign borrowing. I would like to hereby offer
my humble advice to the leaders in Europe; now is the time to give up on this unworkable idea before
it becomes even more of a disaster.
It shows the bulk of the debt is lodged at the The EFSF, European Financial Stability Facility,
founded May 2010. All decent articles will state the same, or cite the ESM.
The EFSF is a *Private Company* under *Luxemburg* law. It flogs low-yield bonds. The investors
are Central Banks/Gvmts/Sovereign Funds (30%), Banks (40%), Fund managers, Pension funds, and
private. 50% in the Euro Area, next Asia (Nomura and Daiwa are bank partners), next UK and
Switzerland.
It is often confused with the ESM - European Stability Mechanism, founded Sept. 2012, an
inter-governmental institution under International Law.
If the ESM is or not an EU institution is hard to say (there *is* text in the Treaty on
the Functioning of the European Union - the amendement was specifically designed to exclude
the possibility of a referendum) though its scope of action is European (geographical) and
its members are all Euro currency countries. Its investors resemble those of the EFSF, bonds
are low-yield.
I could not figure out the relationship between the two (imho the ESM it to take over the
EFSF but that hasn't been done yet?), it is all very confused, deliberately so imho.
Those who will 'pay', i.e. absorb some financial losses - not garnering the 'interest' they
counted on (they took that risk), on the face of it, thus, are these bondholders.
There is a knot (I'm not in finance, so please correct if, this is only from looking things
up wiki like) it appears (very unclear, see links) that the members of the ESM (to treat only
that for the mo) are at the same time the guarantees for these bonds, they can be forced to
stump up to compensate losses. These bonds have a TOPTOP rating, are considered super-safe.
Because, I suppose, of that guarantee. See Pension funds buying...
So in a sense you are right, as the Gvmts. are the end of the line on the hook, but it there
is many a slip betwix the cup and the lip, and an Exit of the Euro changes the situation (imho.)
Addendum. The Troika (ECB, IMF, European Commission) decides what program (IMF, ESM, etc.,
what conditions, reforms, etc.) will be implemented, so far for Ireland, Portugal, Spain, Cyprus,
and Greece. These are NOT the creditors, they are the decisionary / supervisory board. They
may however also be financially involved (yikes.)
Confused? So am I. The shame is the real structures are kept under cover, or layered into
arcane, obfuscating guff, misdirection. Finns think they have to pay for bouzouki CDs and Retsina
for Greeks so they can party while they shiver, argh.
...Tsipras has done a great job at playing the other side of the table off against each
other. So much so, it doesn't even have to have been intentional, and it still works out great.
He's exposed the entire EU structure as a bag of bones, let alone a naked emperor.
...Tsipras has known forever that for Greece to stay inside the eurozone was a losing proposition.
But he never had the mandate. Well, after Schäuble's antics last night, (Schäuble snapped at
Draghi last night: "Do you hold me for a fool?") that mandate has come a lot closer.
"I would like to hereby offer my humble advice to the leaders in Europe; now is
the time to give up on this unworkable idea before it becomes even more of a disaster."
Who says Germany wants to avoid a Greek debt "crisis"?
To add to your spot-on post (if everyone read Bill Mitchell this lack
of understanding would change fast), in order for any economy to grow, it's money supply has
to grow…spending (GDP) can't be increased (in the real world) without printing more money,
because very little of the money we have (savings) ever gets spent. For every dollar someone
spends, someone else is saving two. There is no 'circulation' per se without some entity (almost
always the government) forcing money through the system.
The conventional wisdom that 'printing' money (government spending) is harmful or inflationary
is so much nonsense yet it seems to have been internalized by 95% of the World's population.
Without money 'printing' we would all be living like the Amish. I will take inflation over
deflation any day. Our last 'liberal' President, Richard Nixon, (in public investment terms)
believed the ideal level of inflation was 4% per year…now, we target 2%.
Greece's money supply is 'draining' away towards it's trading partners…Greece's borrowing
is funding them. Good luck to them as they drain one economy after another in the Eurozone.
When one player in a poker game ends up with all the money at the table, the game is over.
Well, Illargi's analysis agrees
with my own. And I agree with him that too many have been influenced by Troika-friendly
MSM that has done a fantastic job turning the knife by painting the Greeks as profligate, Syriza
as incompetent, and Tsipras as a betrayer.The message: Greeks MUST do whatever the
Troika asks and anyone who thinks otherwise is a fool or worse.
As I've outlined in Greek posts of the last few days, even those who should know better
(like Yves Smith) have fallen in with this mantra.
Instead, the Greeks held firm to their pro-EU and anti-austerity positions and forced the
issue to the EU-wide political level. In the process they have gained powerful friends (US,
France, Italy, etc.) and will likely win a much more favorable outcome than if they had quietly
succumbed to the Troika in February (Yves preferred course).
* Debt restructuring is now "on the table" and Europe recognizes that they will have to
help if there is any GRexit, instead of making an example of Greece.
Greece fiscal sovereignty surrender is demanded by elite European terrorists. But these
terrorists wear nice suits.
The fourth Reich is showing its fangs a lot more now more now.
Because Merkel and other poorly concealed fascists elite in Europe posing as Democrats,
they are even more pissed off about weak democratic resistance in Greece where they haven't
out right surrendered yet.
because of that resentment of human independence, she now demands The Greek government handover
Greeces fiscal control as part of a worsening debt slavery deal.
These terror elite freaks a super pissed and want to drive Greece into the fucking dirt
as an example, and as punishment for not being willing slaves.
I'd like to take Tsipras fishing, he's so patient in waiting as the Troika finishes building
its own scaffold and tying its noose! For almost a month now, the Greeks have had an out--Most
of the debt's been determined to be odious and just needs to be officially declared as thus
formally. Zip!! There's a massive haircut!! And there's nothing the Troika can do about it
except to withhold liquidity for Greek banks. If it does, then Tsipras will trump them by saying
so-long to the EU, Eurozone and NATO, while adding insult to injury by refinancing its debt
through the other resources offered.
@13: - Interesting proposal: Greece could temporarily leave the Eurozone. Although Greece doesn't
have to. They could give each saver a "haircut" of say 30%. That's a devaluation as well.
I disagree with the cartoon. Circumstances already have taken a turn for the worst. Even WITH
or WITHOUT the politicians.
Seems obvious now ( if it wasn't already ) that debt slavery isn't just about asset theft
and depredations, it's about smaller nation state surrender to ongoing long term domination
by larger states.
Since war is currently unacceptable, then financial war is widely accpected by the vast
majority of the people in the West, when it West on West wars.
To Tom @15: The US degenerated to become the TBTF debtor. Of course it would sink to perpetual
asset theft and depredation. The neoliberalized world follows.
Germany talking heavy. That's not going to go down well. Either you make of the Eurozone
a fiscal unity, whereby Germany is forced to help out other areas, as in the US. Or you let
them go, and suffer the losses implied in a Greek default.
All this " trust" talk is fucking bullshit.
So, for the last 5 years that the terrorist troika and EU states knew that Greece couldn't
pay off it's fraudulently induced and locally corrupt debt, but kept lending it to them anyway
so to steal and impoverish them with near zero real fightback, because they trusted there would
be no fightback.
Weaken and then conquer is the plan.
The European Evil elite "trusted" all those years of stealing from Greece and starving their
people to death with much resistance, but since the democratic vote, now trust is an issue?!?!?!
After 5 years of un-payable debt loaded on with endless amount of more un-payable debt......yeah
right.
It's obvious, but unsaid of course, that the real lack of trust, is a lack of trust of full
Greek surrender to their slave masters in the EU. So that "trust" PR bullshit ( which will
work on the majority of people in the West ) will be used to try get general support and to
force Greece to hand over their economic sovereignty, which is no sovereignty at all, but an
attempt at forced surrender to domination-ists.
"..."The demonization of Putin is not a policy. It's an alibi for not having a policy."" . "...I understood some time ago that USA presidents are very fickle animals, nobody can trust
them and nobody is safe of them, they could turn from being a friend to be your enemy overnight"
Last week I had the honor of interviewing Stephen F. Cohen, Professor Emeritus of Russian Studies
and Politics at NYU and Princeton University, where for many years he was director of its Russian
Studies program. Professor Cohen, a long-time friend of Mikhail Gorbachev, is one of the most important
Russia scholars in the world and a member of the founding board of directors of the
American Committee for East-West Accord,
a pro-detente organization that seeks rethinking and public discussion of U.S. policy toward Russia.
Despite his impressive credentials and intimate knowledge of Russia and its history, you will
rarely hear Cohen's voice in the mainstream press. And it is not for a lack of trying; his views,
and those of others like him, are simply shut out of the media, which, along with almost every U.S.
politician, has decided to vilify Russian and Putin, irrationally equating Putin with such tyrants
as Adolf Hitler. As Cohen explains:
Even Henry Kissinger -- I think it was in March 2014 in the Washington Post -- wrote
this line: "The demonization of Putin is not a policy. It's an alibi for not having a policy."
And then I wrote in reply to that: That's right, but it's much worse than that, because it's also
that the demonization of Putin is an obstacle to thinking rationally, having a rational discourse
or debate about American national security. And it's not just this catastrophe in Ukraine and
the new Cold War; it's from there to Syria to Afghanistan, to the proliferation of nuclear weapons,
to fighting global terrorism. The demonization of Putin excludes a partner in the Kremlin that
the U.S. needs, no matter who sits there.
And Cohen reminds us that, quite contrary to the common, manufactured perception in this country,
we have a very willing and capable potential partner in Moscow right now. As Cohen explains, "Bill
Clinton said this not too long ago: To the extent that he knew and dealt with Putin directly, he
never knew him to say anything that he, Putin, didn't mean, or ever to go back on his word or break
a promise he made to Clinton."
What's more, as Cohen reminds us, when the 9/11 attacks happened, Putin was the very first international
leader to offer help to President Bush:
Putin called George Bush after 9/11 and said, "George, we're with you, whatever we can do,"
and in fact did more to help the Americans fight a land war in Afghanistan to oust the Taliban
from Kabul. ... Russia still had a lot of assets in Afghanistan, including a fighting force called
the Northern Alliance. It had probably better intelligence in and about Afghanistan than any country,
and it had air-route transport for American forces to fight in Afghanistan. He gave all this --
Putin gave all this -- to the Bush administration. Putin's Kremlin, not a member of NATO, did
more to help the American land war and save American lives, therefore, in Afghanistan, than any
NATO country.
However, as Cohen explains, Bush strangely repaid Putin by (1) unilaterally withdrawing from the
anti-ballistic (ABM) treaty, the "bedrock" of Russia's national security, and (2) launching the second
wave of NATO expansion toward Russia.
And, as Cohen points out, this was not the only case in which the U.S. quite brazenly betrayed
Russia in recent decades. Thus he notes that Presidents Clinton, Bush and Obama have all violated
the very clear agreement that, in return for Gorbachev's allowing the reunification of Germany, the
U.S. would not move NATO one inch further east. In addition, the U.S. undermined then-President Medvedev
(who we claim to prefer to Putin) by unseating Gaddafi in Libya -- with disastrous consequences --
despite our promise to Russia that we would do no such thing if Russia agreed to the Security Council
resolution approving the no-fly zone over Libya.
All of this history must be considered when we view the current crisis in Ukraine, which, Cohen
warns, is quickly leading to a hot war with Russia. As Cohen relates:
If you took even the short time frame of the Ukrainian crisis and you began it in November
2013, when the then-elected president of Ukraine, Yanukovych, didn't actually refuse to sign the
European Union's offer of a partnership with Europe. He asked for time to think about it. That
brought the protesters in the streets. That led to the illegal overthrow of Yanukovych, which,
by the way, Poroshenko, the current president, strangely now admits was illegal. ...
Then comes Putin's annexation or reunification of Crimea, as Russians call it. Then already
evolving now in Eastern Ukraine are protests against what's happening in Kiev, because Eastern
Ukraine was the electoral base of Yanukovych. Yanukovych was its president in a fundamental way.
Then comes the proxy war, with Russia helping the rebel fighters in Eastern Ukraine and the United
States and NATO helping the military forces of Kiev. ...
And so it went, on and on. Now, if you back up and ask who began the aggression, it's my argument
-- for which I'm called a "Putin apologist," which I am not -- ... but the reality is that Putin
has been mostly reactive. Let me say that again: reactive. If we had the time, I could explain
to you why the reportedly benign European Union offer to Kiev in 2013 was not benign at all. No
Ukrainian who wanted to survive could have accepted that. And by the way, it had clauses buried
below that would've obliged Kiev to adhere to NATO military security policy. ...
Ukraine had been on Washington's agenda for a very, very long time; it is a matter of public
record. It was to that that Putin reacted. It was to the fear that the new government in Kiev,
which overthrew the elected government, had NATO backing and its next move would be toward Crimea
and the Russian naval base there. ... But he was reacting, and as Kiev began an all-out war against
the East, calling it the "anti-terrorist operation," with Washington's blessing. ...
This was clearly meant to be a war of destruction. ... Meanwhile, NATO began escalating its
military presence. In each of these stages, a very close examination will show, as I'm sure historians
will when they look back, that Putin has been primarily reactive. Now maybe his reactions have
been wrong-headed. Maybe they've been too aggressive. That's something that could be discussed.
...
But this notion that this is all Putin's aggression, or Russia's aggression, is, if not 100-percent
false, let us say, for the sake of being balanced and ecumenical, it's 50-percent false. And if
Washington would admit that its narrative is 50-percent false, which means Russia's narrative
is 50-percent correct, that's where negotiations begin and succeed.
I can only hope that the policy makers in this country will hear the voices of people like Professor
Cohen and enter into rational negotiations with Russia in order that we may be spared what is shaping
up to be a disastrous war in Europe.
Joseph Skibinsky · Top Commenter · Las Vegas, Nevada
I understood some time ago that USA presidents are very fickle animals, nobody can trust
them and nobody is safe of them, they could turn from being a friend to be your enemy overnight,
starting from Bush - father, and those who followed him. For those who don't believe me about
Bush-father, I suggest to read Autobiography of Colin Powell who was a member of Bush's staff.
And what Pr Cohen tells us about Bush-son confirms what I stated about our Presidents/politicians.
Those who want to comment on my statement, please, stick to facts. I don't take easily personal
attacks and let me assure you, I will respond in kind.
Samuel Ramani · Contributor at The Huffington Post
I think that Professor Stephen Cohen is raising a valuable and vital point, that Russia's annexation
of Crimea and Ukraine was not just naked aggression. Russia acted impulsively due to a variety
of factors: the fear that it would lose great power status if NATO encroached onto its sphere
too much, the fear that the Maidan protests could be an inspiration for unrest in Russia, and
the concern that a Westward tilt for Ukraine would weaken his Eurasian Union project. Our perceptions
of what is rational differ markedly from Russia's as our regimes are different and climate in
which decision-making is made is different. Neoliberal_rationality/ is always contextual and the same should
apply to Russia.
To prevent this conflict, an incremental approach would have been best- we should have very clearly
delineated that EU association agreement would be strictly economic and not a gateway to immediate
NATO membership for Ukraine. Preserving Ukrainian neutrality in security matters, while revitalizing
its economy and broken political institutions was the optimal approach. I'm not excusing Russia's
conduct by any means or claiming that Russia was right in annexing Crimea, and violating the sovereignty
of Ukraine, but at the same time, we have to realize that Russia views this conflict from a very
different lens than the West. Russia views NATO expansion in the CIS with the same alarm as we
would if Russian missiles and equipment started appearing in Latin American countries with uncomfortable
proximity to America. Russia views sovereignty not as the inviolable rights of individual countries
but the inviolable integrity of the Russian sphere of influence (the CIS), as a zone that the
West cannot enter and intervene.
Donald Schellberg · Top Commenter · Universidad Tecnológica de Panamá
It seems like you are leaving the Ukrainian people out of this. I don't think it is between
the US and Russia. It is for them to decide. They should allow a referendum in Donbas, free an
open with international monitors. The same with Crimea. If the majority of the permanent residents
want to remain in Russia, that is fine, if not let them choose. If Crimea does formally become
part of Russia under this referendum than Russia should reimburse the Ukrainian government for
the businesses, bases and state institutions that were taken over. And Ukraine would guarantee
access via Maripol until they finish the bridge. Just my opinion.
John-Albert Eadie · Top Commenter · Stanford University
This is late. If you look in adjacent media you will see folks like Stephen Cohen and others
are not ignored, but looked to as being experts. WHAT YOU MUST DO IS LOOK TO ALTERNATIVE MEDIA.
BECAUSE Time, WSJ, and all else cannot be trusted. Then you would have first seen Stephen Cohen's
stuff, and many serious others. Try Facebook first, flimsy as it seems.
...Switching gears here, that rag of an information portal,
The Daily Beast, now jumps on Vladimir Putin again about a supposed "Witch Hunt"
for western spies in academia. Excuse me! My research so far indicates Putin should
be on a spy hunt. I'll get into that in a more in depth report later, but the CIA and
GCHQ, all the embassies and diplomatic corps of America, Britain, Germany, France and
the rest, are scurrying about Russia like idiotic Chief Inspector Jacques Clouseau of
the Pink Panther films, performing everything from sabotage to corporate espionage. I
mean, why wouldn't they be? Mr. Putin's Russia is as easy to mill around in as
California these days.
The latest "Beastly" piece from Newsweek's Moscow agent,
Anna
Nemtsova, is standard anti-Putin ritual with a Pulitzer Center protege flair for
sub-headlines:
"The Russian president's effort to stamp out Western influences is full of
dangerous contradictions for scientists, students, and the future of Russia."
Meanwhile the level head of Mr. Putin's press adjutant Dmitry Peskov is prevalent
again. He was quoted as saying; "I hope things will change at some point.
The trend of mixing politics and education is a dangerous one." and I add,
"Ain't it the damned truth?" Peskov, the smartest of the lot in my book, cut to
the bone with that one. Teachers have no business performing their proper propaganda
duties on young minds anywhere, much less in a Russia assailed on every corner. I
say; "What, do you think you are dealing with idiots?"
To round out this latest moron attack of mine, a news media outlet I've worked
with four or five years just discontinued overnight an entire blog/contributor
community on account of this writer's moderate stance on Russia. How's that for
Russian-American agents in the heat of a media war? Oh, and it's not just me. I've
got correspondence from dozens, a Forbes writer says he's tired of the "bullying" and
pressure to "adhere to the party line", and there's more, a lot more.
BBC pulling strings and things to alter opinion and polls, Reuters interested in
interesting vested interests, Newsweek and Daily Beast authors exuding quantitative
and qualitative analysis with no proof? What's a citizen journalist to do amid all
this? Nemtsova pulls a professor who was at St. Petersburg State University out of
the magic Russophobia hat. A Dr. Dmitry Dubrovsky who does double duty as a human
rights activist and Washington think tank plebeian. Fired back in March from the
university, the good doctor was Reagan Fascell Democracy Fellow in between
Jan 2015
– Jul 2015. That endowment is part of
the National Endowment for Democracy (NED), which is essentially a non-profit arm of
the United States government since its institutionalizing.
The President of the National Endowment for
Democracy, Carl Gershman (pictured, second from the left), presents an award to a
Tunisian leader of the Arab Spring in November 2011 (Wikipedia)
Dubrovsky is one of hundreds of "fellows" at
Woodrow Wilson Center's Kennan Institute who the US State Department and other
foreign policy instruments lean on for at best expert testimony, and at the
worst various forms of what I would call "light espionage". Of course I've not the
resources (yet) to ascertain Dr. Dubrovsky's role in any "questionable" activities,
I'll leave that to the powers in charge in Russia. My point here is the lack of any
real proof either journalists, or these supposed inured parties provide.
I'll tell you this much, if Vladimir Putin did not recognize the internal threat
to Russia via academia, I'd question his reputation as a KGB super-brain, or as a
Russian leader who cares about his people. In the end we are at war in this world. It
is not a world war like the one that ended in 1945, but the breadth and scope are not
far off impact wise. The weapons have changed some, tanks and bombs often replaced by
sanctions, economic "haircuts", the leveraging of debt onto an already burdened
society. In a very real way the big players in this game ignore the rest of us, save
to demonstrate to get our professor back, to buck majority systems, or two tweet our
the latest White House quasi-victory over an invisible foe who never harmed us.
Vladimir Putin is hunting down spies, as well he should be. Greece is telling the
Brussels puppets to go to hell, as well they should. And I am calling a tiny bit of
attention to western operatives, that really should be called attention to before
they become too dangerous. Oh my, I fear I am too late. Wait and read my "frustration
theory" of destroying good. It's a story about pitting friends against friends, and
shutting the mouths of all truth speakers.
If you think I am too harsh, read Dr. Dubrovsky's
"Undesirables"
piece from May of this year. Then march over to the
Department of Homeland Security to compare legislation and infringements of
freedoms in America. My vote is Mr. Putin's government gave fair warning based on
Russia's societal requirements. Remember, Moscow is not Washington. For me, warning
"agents" that acting contrary to what's good for the people is a more honest method
than hiding behind phantom terror. The truth of Russia's "desires" seems easy, while
The Daily Beast and Newsweek just contend at it.
"...The calling of the referendum was politically brilliant, because it defused the notion of
an extremist government standing irrationally against the Troika." . "...Greece would look to the US for help in vain, given that Obama's representative to the continent
is Victoria Nuland, the bearer of color revolutions and the reaping of ancient lands and cultures for
profit."
"What is at stake is a rather heroic rebellion by a very beleaguered people against a doctrine
which has been destroying their lives - the austerity doctrine and the whole neoliberal project.
For the rest of us, what is at stake is whether we have the moral courage in the sense of ethical
responsibility to stand up to it."
It is probably less an issue of ethical responsibility and more an act of self-interest for most.
Having come out of the Third World and working into the developed nations, why would anyone assume
that Greece would be sufficient for the maw of neoliberal greed.
The above interview with Galbraith
is worth reading. For one thing it contains the seed of the current spin that Tsipras called
the referendum in order to lose it, and to somehow save himself and betray the Greeks.
And for another you will be able to read what Jamie Galbraith really thinks, the parts that the friends
of the financial establishment have carefully excluded from their versions of the story.
The calling of the referendum was politically brilliant, because it defused the notion of
an extremist government standing irrationally against the Troika. This derailed the path
towards a scheme to stage a 'color revolution' backed by the oligarchs to take out these mad leftists
who were not speaking for the people.
Remember the economic decision involving Europe which provoked the recent coup d'état in the Ukraine?
In that case the government did not have the backing of the people, and it took hold, at least in
the Western portions of the country. Wash, rinse, repeat.
Of course the referendum was famously too close to predict when first called for Syriza, and surprisingly
late in the game for most everyone else as you may recall How soon some choose to forget.
But it changed the course of events in a dramatic way. As it was it did not help their bargaining
position, but as Galbraith relates they did not expect it to be.
But it put the field of play into better terms if you goal is playing for survival and time.
They are knocking down all the rationales and excuses to visit harsh terms on Greece that the Troika
and their enablers are using. They are exposing their opponents for what they really are.
Empires founded on unsustainable foundations are like financial bubbles and Ponzi schemes.
They are inherently non-productive and consuming, so they must continue to grow, or choke on their
own ideologically driven detritus. Transferring wealth as your major economic policy
requires a steady source of new supply.
Most of the American media has fallen into line with the neoliberal agenda. It might seem surprising,
but power has its attraction under corporatism, even for people who would ordinarily consider themselves
to be 'liberal.'
There are concerning things happening in the Western world, and a lack of traction towards individual
freedom amongst 'the great democracies,' above and beyond Germany's growing desire to bring their
version of order and efficient management of lands and people to the rest of Europe.
The growing militancy in Japan, and Abe's aggressive pushing aside of constitutional restraints,
is undernoted in the West, but of concern to those in Asia.
Greece would look to the US for help in vain, given that Obama's representative to the continent
is Victoria Nuland, the bearer of color revolutions and the reaping of ancient lands and cultures
for profit.
At least in this cycle of the will to power some, including the Pope thank God, are speaking out
early, publicly, and strongly against the rising tide of injustice, the senseless abuse of power,
and the impulse towards dehumanizing central rule and neo-totalitarianism. Silence is
complicity.
Behind Germany's refusal to grant Greece debt relief
Tomorrow's EU Summit will seal Greece's fate in the Eurozone. As these lines are being written,
Euclid Tsakalotos, my great friend, comrade and successor as Greece's Finance Ministry is heading
for a Eurogroup meeting that will determine whether a last ditch agreement between Greece and
our creditors is reached and whether this agreement contains the degree of debt relief that could
render the Greek economy viable within the Euro Area.
Euclid is taking with him a moderate, well-thought out debt restructuring plan that is undoubtedly
in the interests both of Greece and its creditors. (Details of it I intend to publish here on
Monday, once the dust has settled.) If these modest debt restructuring proposals are turned down,
as the German finance minister has foreshadowed, Sunday's EU Summit will be deciding between
kicking Greece out of the Eurozone now or keeping it in for a little while longer, in a state
of deepening destitution, until it leaves some time in the future.
The question is: Why is the German finance Minister, Dr Wolfgang Schäuble, resisting a sensible,
mild, mutually beneficial debt restructure? The following op-ed just published in today's
The Guardian offers my answer. [Please note that the Guardian's title was not of my choosing.
Mine read, as above: Behind Germany's refusal to grant Greece debt relief ). Click
here for the op-ed or…
Greece's
financial drama has dominated the headlines for five years for one reason: the stubborn refusal
of our creditors to offer essential debt relief. Why, against common sense, against the IMF's
verdict and against the everyday practices of bankers facing stressed debtors, do they
resist a debt restructure? The answer cannot be found in economics because it resides deep
in Europe's labyrinthine politics.
In 2010, the Greek state
became insolvent. Two options consistent with continuing membership of the eurozone presented
themselves: the sensible one, that any decent banker would recommend – restructuring the debt
and reforming the economy; and the toxic option – extending new loans to a bankrupt entity while
pretending that it remains solvent.
Official Europe
chose the second option, putting the bailing out of French and German banks exposed to Greek public
debt above Greece's socioeconomic viability. A debt restructure would have implied losses for
the bankers on their Greek debt holdings.Keen to avoid confessing to parliaments that taxpayers
would have to pay again for the banks by means of unsustainable new loans, EU officials presented
the Greek state's insolvency as a problem of illiquidity, and justified the "bailout" as a case
of "solidarity" with the Greeks.
To frame the cynical transfer of irretrievable private losses on to the shoulders of taxpayers
as an exercise in "tough love", record austerity was imposed on
Greece, whose national income,
in turn – from which new and old debts had to be repaid – diminished by more than a quarter. It
takes the mathematical expertise of a smart eight-year-old to know that this process could not
end well.
Once the sordid operation was complete, Europe had automatically acquired another reason for
refusing to discuss debt restructuring: it would now hit the pockets of European citizens! And
so increasing doses of austerity were administered while the debt grew larger, forcing creditors
to extend more loans in exchange for even more austerity.
Our government was elected on a mandate to end this doom loop; to demand debt restructuring
and an end to crippling austerity. Negotiations have reached their much publicised impasse for
a simple reason: our creditors continue to rule out any tangible debt restructuring while insisting
that our unpayable debt be repaid "parametrically" by the weakest of Greeks, their children and
their grandchildren.
In my first week as minister for finance I was visited by Jeroen Dijsselbloem, president of
the Eurogroup (the eurozone finance ministers), who put a stark choice to me: accept the bailout's
"logic" and drop any demands for debt restructuring or your loan agreement will "crash" – the
unsaid repercussion being that Greece's banks would be boarded up.
Five months of negotiations ensued under conditions of monetary asphyxiation and an induced
bank-run supervised and administered by the European Central Bank. The writing was on the wall:
unless we capitulated, we would soon be facing capital controls, quasi-functioning cash machines,
a prolonged bank holiday and, ultimately, Grexit.
The threat of Grexit has had a brief rollercoaster of a history. In 2010 it put the fear of
God in financiers' hearts and minds as their banks were replete with Greek debt. Even in 2012,
when Germany's finance minister, Wolfgang Schäuble, decided that
Grexit's costs were a worthwhile "investment" as a way of disciplining France et al, the prospect
continued to scare the living daylights out of almost everyone else.
By the time Syriza won power last January, and as if to confirm our claim that the "bailouts"
had nothing to do with rescuing Greece (and everything to do with ringfencing northern Europe),
a large majority within the Eurogroup – under the tutelage of Schäuble – had adopted Grexit either
as their preferred outcome or weapon of choice against our government.
Greeks, rightly, shiver at the thought of amputation from monetary union. Exiting a common
currency is nothing like severing a peg, as
Britain did in 1992, when Norman Lamont famously sang in the shower the morning sterling quit
the European exchange rate mechanism (ERM). Alas, Greece does not have a currency whose peg with
the euro can be cut. It has the euro – a foreign currency fully administered by a creditor inimical
to restructuring our nation's unsustainable debt.
To exit, we would have to create a new currency from scratch. In occupied Iraq, the introduction
of new paper money took almost a year, 20 or so Boeing 747s, the mobilisation of the US military's
might, three printing firms and hundreds of trucks. In the absence of such support, Grexit would
be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for
liquidating all Greek capital stock and transferring it abroad by any means available.
With Grexit reinforcing the ECB-induced bank run, our attempts to put debt restructuring back
on the negotiating table fell on deaf ears. Time and again we were told that this was a matter
for an unspecified future that would follow the "programme's successful completion" – a stupendous
Catch-22 since the "programme" could never succeed without a debt restructure.
This weekend brings the climax of the talks as
Euclid Tsakalotos, my successor, strives, again, to put the horse before the cart – to convince
a hostile Eurogroup that debt restructuring is a prerequisite of success for reforming Greece,
not an ex-post reward for it. Why is this so hard to get across? I see three reasons.
Europe did not know how to respond to the financial crisis. Should it prepare for an expulsion
(Grexit) or a federation?
One is that institutional inertia is hard to beat. A second, that unsustainable debt gives creditors
immense power over debtors – and power, as we know, corrupts even the finest. But it is the third
which seems to me more pertinent and, indeed, more interesting.
The euro is a hybrid of a fixed
exchange-rate regime, like the 1980s ERM, or the 1930s gold standard, and a state currency. The
former relies on the fear of expulsion to hold together, while state money involves mechanisms
for recycling surpluses between member states (for instance, a federal budget, common bonds).
The eurozone falls between these stools – it is more than an exchange-rate regime and less than
a state.
And there's the rub. After the crisis of 2008/9, Europe didn't know how to respond. Should
it prepare the ground for at least one expulsion (that is, Grexit) to strengthen discipline? Or
move to a federation? So far it has done neither, its existentialist angst forever rising. Schäuble
is convinced that as things stand, he needs a Grexit to clear the air, one way or another. Suddenly,
a permanently unsustainable Greek public debt, without which the risk of Grexit would fade, has
acquired a new usefulness for Schauble.
What do I mean by that? Based on months of negotiation, my conviction is that the German finance
minister wants Greece to be pushed out of the single currency to put the fear of God into the
French and have them accept his model of a disciplinarian eurozone.
"...He said he supported their efforts to obtain "so elementary and undeniably necessary a right
as that of the three "Ls": land, lodging and labour"."
"...he called the unfettered pursuit of money "the dung of the devil", and said poor countries
should not be reduced to being providers of raw material and cheap labour for developed countries.
"
"..."Let us not be afraid to say it: we want change, real change, structural change," the pope
said, decrying a system that "has imposed the mentality of profit at any price, with no concern for
social exclusion or the destruction of nature"."
"...The new colonialism takes on different faces. At times it appears as the anonymous influence
of mammon: corporations, loan agencies, certain 'free trade' treaties, and the imposition of measures
of 'austerity' which always tighten the belt of workers and the poor"
"...A lot of us are awaiting the 3rd WW, between Russia and the US, between China and the US, between
the West and the East, while the war is on. ... Is it work of Capitalism? I think that capitalism
in it's modern form lies near this war, and both are made by the same people."
"...Still, the subject of my comment was not the predominance of Christians, but how much poverty
exists in this predominantly Christian nation. They ignore the most fundamental teachings they
profess to believe--the admonitions of Jesus to feed, clothe, and generally help the poor."
"...There is a reason the US has over 900 bases across the world, and that is to insure its business
interests."
"...An economic system is not a matter of either-or. Those who profit from "Laissez Faire" capitalism
like to push the idea that the only alternative is communism. Pope Francis is obviously a proponent
of a "mixed economy" as most people in the US on the left are. He is attacking "unbridled capitalism"
not an adequately regulated free-market economy."
"...Animal farm is not about the failure of either Communism or Fascism....it is a commentary on
the corruption of power; not a uniquely Communist problem. The machinations of politics also feature
quite heavily...divide and rule, propaganda, double standards and the use of language to achieve
ones aims...these are abuses of power that both the left and the right have been guilty of. Hitler's
Germany was Fascist (right wing extremism), Stalin's Russia was Communist (left wing extremism)..."
Pope Francis has urged the downtrodden to change the world economic order, denouncing a
"new colonialism" by agencies that impose austerity programs and calling for the poor to have the
"sacred rights" of labor, lodging and land.
In one of the longest, most passionate and sweeping speeches of his pontificate, the Argentine-born
pope used his visit to Bolivia
to ask forgiveness for the sins committed by the Roman Catholic church in its treatment of native
Americans during what he called the "so-called conquest of America".
The pontiff also demanded an immediate end to what he called the "genocide" of Christians taking
place in the Middle East and beyond, describing it as a third world war.
"Today we are dismayed to see how in the Middle East and elsewhere in the world many of our
brothers and sisters are persecuted, tortured and killed for their faith in Jesus," Pope Francis
said.
"In this third world war, waged piecemeal, which we are now experiencing, a form of genocide
is taking place, and it must end."
Quoting a fourth century bishop, he called the unfettered pursuit of money "the dung of the
devil", and said poor countries should not be reduced to being providers of raw material and cheap
labour for developed countries.
Repeating some of the themes of his
landmark encyclical Laudato Si on the environment last month, Francis said time was running out
to save the planet from perhaps irreversible harm to the ecosystem.
Pope Francis shakes hands with a mining worker's leader watched by Bolivia's president
Evo Morales, right, in Santa Cruz, Bolivia. Photograph: Rodrigo Abd/AP
Francis made the address in the city of Santa Cruz to participants of the second
world meeting of popular movements, an international body that brings together organisations
of people on the margins of society, including the poor, the unemployed and peasants
who have lost their land. The Vatican hosted the first meeting last year.
He said he supported their efforts to obtain "so elementary and undeniably necessary a right
as that of the three "Ls": land, lodging and labour".
His speech was preceded by lengthy remarks from the left-wing Bolivian president
Evo Morales, who wore
a jacket adorned with the face of Argentine revolutionary Ernesto "Che" Guevara. He was executed
in Bolivia in 1967 by CIA-backed Bolivian troops.
"Let us not be afraid to say it: we want change, real change, structural change," the pope
said, decrying a system that "has imposed the mentality of profit at any price, with no concern
for social exclusion or the destruction of nature".
"This system is by now intolerable: farm workers find it intolerable, labourers find it intolerable,
communities find it intolerable, peoples find it intolerable. The earth itself – our sister, Mother
Earth, as Saint Francis would say – also finds it intolerable," he said in an hour-long speech
that was interrupted by applause and cheering dozens of times.
Since his election in 2013, the first pope from Latin America has often spoken out in defence
of the poor and against unbridled capitalism but the speech in Santa Cruz was the most comprehensive
to date on the issues he has championed.
Francis' previous attacks on capitalism have prompted stiff criticism from politicians and commentators
in the United States, where he is due to visit in September.
The pontiff appeared to take a swipe at international monetary organisations such as the IMF and
the development aid policies by some developed countries.
"No actual or established power has the right to deprive peoples of the full exercise of their
sovereignty. Whenever they do so, we see the rise of new forms of colonialism which seriously
prejudice the possibility of peace and justice," he said.
"The new colonialism takes on different faces. At times it appears as the anonymous influence
of mammon: corporations, loan agencies, certain 'free trade' treaties, and the imposition of measures
of 'austerity' which always tighten the belt of workers and the poor," he said.
Last week, Francis called on European authorities to keep human dignity at the centre of debate
for a solution to the economic crisis in Greece.
He defended labor unions and praised poor people who had formed cooperatives to create jobs where
previously "there were only crumbs of an idolatrous economy".
In one of the sections on colonialism, he said:
"I say this to you with regret: many grave sins were committed against the native peoples of
America in the name of God."
He added: "I humbly ask forgiveness, not only for the offences of the church herself, but
also for crimes committed against the native peoples during the so-called conquest of America.
"There was sin and an abundant amount of it."
The audience gave Francis a standing ovation when he put on a yellow miner's hat that was given
to him at the end of his speech.
The pope made his speech at the end of his first full day in Bolivia, where he arrived on Wednesday.
On Thursday morning he said a mass for hundreds of thousands of people and said that everyone had
a moral duty to help the poor, and that those with means could not wish they would just "go away".
Francis praised Bolivia's social reforms to spread wealth under Morales. On Friday, he will visit
Bolivia's notoriously violent Palmasola prison.
The pope
looked bemused on Wednesday night when Morales handed him one of the more unusual gifts he has
received: a sculpted wooden hammer and sickle – the symbol of communism – with a figure of a crucified
Christ resting on the hammer.
Francis leaves on Friday for Paraguay, the last stop on his "homecoming" trip.
The Pope didn't actually say "unbridled capitalism is the dung of the devil" did he?
So why is that the headline of this piece?
valeronfreza 10 Jul 2015 08:46
Actually, I find one of his thoughts really interesting. A lot of us are awaiting the 3rd WW,
between Russia and the US, between China and the US, between the West and the East, while the
war is on. The whole civilized world takes part in this mess, the thing is that this war looks
different from what we're used to see. I mean, we get information, made by those, who wants us
to see it different, like something, that happening far away, though it's dangerous as hell.
Is it work of Capitalism? I think that capitalism in it's modern form lies near this war,
and both are made by the same people.
cblyth79 10 Jul 2015 08:41
he called the unfettered pursuit of money "the dung of the devil"
He has hit the nail on the head. This is everything that is wrong with society. Every decision
is taken with regards to making as much money as possible. However, the great irony is that even
if people do make money, their constant desire for more means they are never happy or fulfilled.
Meanwhile, socially and environmentally we suffer greatly due to this ultimately fruitless pursuit
of as much money as possible.
PM782_ -> Greenshoots 10 Jul 2015 08:40
Generally speaking, you are right of course.
I have very little time for virgin men in silly hats & dresses, carrying crucifixes and expecting
everyone to take them seriously when history shows us they cannot be trusted to act in an ethical
way, and will (as always) be more concerned about amassing money and influence than doing any
good in the world.
The whole thing is ludicrous and you should be ashamed that you believe in it. It is really
astonishing.
Greenshoots -> Drew Layton 10 Jul 2015 08:39
Atheist trope. One could as easily say "Religion compels unreasonable people to do reasonable
things".
Westonboy -> pol098 10 Jul 2015 08:37
I'm happy to salute the personal contributions you make but, of course, the computer that you
will have used to write or test your software is a product of capitalism.
Also, most of the the goods you recycle or give away are no doubt the products of capitalism.
Anti-capitalists don't seem to have any alternative method of wealth creation.
EnglishChapin 10 Jul 2015 08:26
In the article:
Quoting a fourth century bishop, he called the unfettered pursuit of money "the dung of the
devil"
In the headline:
"Unbridled capitalism is the 'dung of the devil', says Pope Francis"
kycol1 -> natsirtguy 10 Jul 2015 08:24
As a Unitarian/Universalist I am equally, if not more, wary of that practice. Francis, however,
is a public figure who has the right to express his opinion. While he was definitely speaking
to a Catholic audience, he was not giving his words the weight of a Papal Encyclical. Also, it
is the accepted and expected belief of Catholics that the Pope directs their thinking as far as
faith goes. I do not see his words being a act of forcing his will on me, personally. All public
figures have the right to express their opinion on that subject. I also believe that regulation
should go further than dealing with "negative externalities" unless you view the financial crisis
of 2008 as a negative externality . While the causes of the crisis were complex and varied, lax
regulatory oversight during the Reagan and Clinton Administrations played a role in creating the
conditions for it.
Why do you want poor people to rise up? On what sense? Revolution to topple world governments,
what's next? What kind of governmental system will we apply to ensure law and order? Will it be
one world government by the Vatican?
I'm glad you set everyone straight on this. We were all thinking capitalism is an economic
and political system in which a country's trade and industry are controlled by private owners
for profit, rather than by the state. But clearly capitalism involves greed for money, exploitation
and environmental destruction. The very fact you've attempted to pick at this shows you're missing
the overarching point. The Pope is criticizing how our unregulated "socioeconomic system" - which
was capitalism the last time I looked - for being responsible for ruining society, enslaving men
and women and destroying human fraternity. All of which is pretty spot on. Excuse me for having
to clarify this for you.
citizen_1111 10 Jul 2015 07:48
Wouldn't it be great if newspapers like the Guardian printed the truth, rather than spin. The
pope did not say that "unbridled capitalism is the dung of devil". Here's the actual paragraph.
It's nothing like the Guardian's deceptive headline.
Today, the scientific community realizes what the poor have long told us: harm, perhaps irreversible
harm, is being done to the ecosystem. The earth, entire peoples and individual persons are being
brutally punished.
And behind all this pain, death and destruction there is the stench of what Basil of Caesarea
called "the dung of the devil". An unfettered pursuit of money rules.
The service of the common good is left behind. Once capital becomes an idol and guides people's
decisions, once greed for money presides over the entire socioeconomic system, it ruins society,
it condemns and enslaves men and women, it destroys human fraternity, it sets people against one
another and, as we clearly see, it even puts at risk our common home.
So he's actually referring to greed for money - a moral sin .... not capitalism, which is basically
meritocratic mechanism of funding businesses.
HobbesianWorld -> Drew Layton 10 Jul 2015 07:41
Wrong, it's a predominantly Christian nation. Christians don't own it. Under the Constitution,
all beliefs in matters of religion are equal.
Still, the subject of my comment was not the predominance of Christians, but how much poverty
exists in this predominantly Christian nation. They ignore the most fundamental teachings they
profess to believe--the admonitions of Jesus to feed, clothe, and generally help the poor.
Capitalism isn't a sacred arm of Christianity, yet many (most?) Christians tend to favor Wall
Street's gluttony and greed while millions of children live in poverty. Is that what we should
see in a "Christian" nation? It's the epitome of hypocrisy.
PM782_ 10 Jul 2015 07:33
The guy in charge of 1 billion plus devout catholics, with all the riches of the Vatican, preaches
to us about how excessive capitalism is a bad thing.
This pope seems more reasonable than his predecessors however until he actually DOES something
that makes the world a better place and in some way makes up for the history of atrocious behavior
that the Catholic church has engaged in, I'm simply not interested.
It is strange though, seeing how many people are hoodwinked by a few choice words, when the
organization he represents has been an utter blight on humanity since it began.
heretoeternity -> natsirtguy 10 Jul 2015 07:32
There is a reason the US has over 900 bases across the world, and that is to insure its business
interests.
Laurence W 10 Jul 2015 07:18
Devout capitalists/corporatists may not see the symmetry between John Paul II's defiance of
the bankruptcy of unbridled Communism and Francis's defiance of the bankruptcy of unfettered Capitalism.
They cling to their irrational faith (and that is what it is) in Adam Smith's "invisible hand."
The collapse of Communism does not somehow validate Capitalism. It seems Capitalism's true believers
must be dragged kicking and screaming into the 21st. Century.
ideation2020 -> PeterAB12 10 Jul 2015 07:11
In the West there is a marked reduction in family size since about 1965. There are also far
more women at work, the workforce has adapted to almost full attendance of female workers. We
generally have accommodated an increase of 70% by reducing family size and equally as important
is the accommodation and full attendance of single a and" won't marry" adults.
SmileyFace2 -> natsirtguy 10 Jul 2015 07:10
But Capitalism has resulted in a Plutocracy which leads to rule by the top 1%. So it is not
quite a simple as you seem to think hence the need for a mixed economy.
HobbesianWorld 10 Jul 2015 07:08
While I wouldn't put it that way, the Pope is correct that unfettered capitalism is the major
source of injustice, especially the injustice of poverty.
It's a source of dark humor for me to hear Christians call the U.S. a "Christian nation" even
as they fight to maintain and enhance the cause of poverty--unbridled corporatism; profit over
humanity, wealth over justice and selfishness over honor.
Brian Milne -> Kevin Lim 10 Jul 2015 06:59
How much time have you spent in South America? I spent 18 years going back and forth as part
of my job, must admit I have not spoken to a Liberation Theology priest (he was actually a Jesuit
originally) since October. So perhaps I am just a little bit out of synch.
Life paths include being allowed to express one's sexuality openly and not risk excommunication
and denunciation by the church, to be allowed to have abortions and use contraception without
being told that you will go to Hell, to be allowed to 'formally' leave the church (some countries
still require religion on official document) and to follow political streams that the church condemns
as unchristian to name but just a few. By using the pressure of condemnation in the afterlife
people are to this day controlled by fear.
Sure nobody is obliged to put money in the dish but too many still fear the stigma of not doing
so. If this man can end that then it would be a job well done, but he will not, will he?
cblyth79 -> Manjush 10 Jul 2015 06:51
I agree that overpopulation is a problem, but to me the real problem is the capitalist consumerism
of first-world countries and the damage this is causing to the planet. Even if the populations
of third-world countries doubled they would not get anywhere near the CO2 that we produce. And
that's not even to mention the fact that we have caused climate change and they haven't. To blame
overpopulation is to out the blame on third-world countries, when it should be squarely on us.
VivF -> dysro1 10 Jul 2015 06:50
Animal farm is not about the failure of either Communism or Fascism....it is a commentary on
the corruption of power; not a uniquely Communist problem. The machinations of politics also feature
quite heavily...divide and rule, propaganda, double standards and the use of language to achieve
ones aims...these are abuses of power that both the left and the right have been guilty of. Hitler's
Germany was Fascist (right wing extremism), Stalin's Russia was Communist (left wing extremism)...
"Power tends to corrupt and absolute power corrupts absolutely."
- Lord Acton
Drew -> Layton 10 Jul 2015 06:48
Yay! Religion has done something that isn't rape, muder, burning at the stake, ripping people's
breasts off, implement, beheading, shooting people on beaches, blowing things up, being homophobic,
sexist, racist or generally being a complete twat! Let's all jump up and down and burn a pilot!
YAY!
Kathy -> Foulds 10 Jul 2015 06:42
We are in very new times....Pope Francis is not afraid to challenge the status quo...Alleluia.
Tony Menezes 10 Jul 2015 06:24
The national interest of the unbridled capitalists has sidelined morality and justice. The
third world war has started albeit piecemeal.
This is a strong wake up call from someone that must be listened to.
Greenshoots -> rgrabman 10 Jul 2015 06:23
I can only speak for the UK where I have yet to find a Catholic friend who is not immensely
supportive of what the Pope has to say, whatever prominent Tory Catholics may have to say. Catholics
on the whole tend to vote Labour.
If you want to see a precursor to what the Pope is now saying, read the Catholic bishops document
"The common good" from 1996:
"As at the end of the 19th century, Catholic Social Teaching is concerned to protect the poor
and vulnerable from the chill winds of economic forces. The defeat of Communism should not mean
the triumph of unbridled capitalism."
"The Catholic doctrine of the common good is incompatible with unlimited freemarket, or laissez-faire,
capitalism ...".
Unconstituted -> natsirtguy 10 Jul 2015 06:22
Massively disagree with that bit about him being a non-scientist etc.
If skeptics are still unsure after all the science that has been thrown at them, then perhaps
they aren't influenced that way. They follow figures that they personally respect.
And the Pope has a huge following. I am certain that he will have given a lot of people pause
for thought recently.
Like many here, as an atheist, I'm no fan of the guy. But causes like social justice, climate
change etc need more than just reams of studies. It needs PR.
Greenshoots -> clogexpat 10 Jul 2015 06:17
Which is incorrect because the left is not, and never has been, an identifiable tribe in British
politics.
I agree that many people are not tribal about being left wing. They are willing to partner with
people whom they disagree with on some issues but where there is a common cause.
However, you just have to read many of the posts in this thread to see that, for many other people,
it is a form of tribal allegiance because they, in response to the Pope saying something they
probably do agree with, they cannot refrain from attacking him on unrelated issues. They are not
interested in supporting the common cause.
Longasyourarm -> MaximTS 10 Jul 2015 06:15
Well spotted but many here are in it for the opportunity to exercise their demons of hatred,
bigotry and racism. Most don't even read the article and jump right to the comments in their haste
to slag off Catholics, the Pope, Religion in general. I suppose it is still better than invasion
of other countries and stealing their stuff, isn't it Tony?
domrice 10 Jul 2015 06:13
Finally, a pontiff brave enough to enunciate the core values of Jesus Christ. Oh that the world
had political leaders who weren't shameless slaves to the moneylenders.
discreto -> SmileyFace2 10 Jul 2015 06:11
That is because the Free Trade is not Fair Trade, this is what Pope Francis is talking about.
Capitalism is Free Trade it is not Fair Trade with the People who work to ensure the Goods are
there to trade are not getting what is a Fair and Just Living wage, they are being used by the
Corporations who make Millions out of their hard work. I support Pope Francis and his Courage
in speaking up for the People in developing Countries who are made to depend on Capitalism against
their will. At last he is the Pope who is acknowledging the sins of the Church both past and present,
with a strong voice of Apology. It would be good if he could sit down with The First Nations of
America to take part in their native Ritual of Smudging from Smoke of burnt Herbs and grasses
for forgiveness and Peace. I pray for Pope Francis's Protection.
kycol1 -> natsirtguy 10 Jul 2015 06:02
An economic system is not a matter of either-or. Those who profit from "Laissez Faire" capitalism
like to push the idea that the only alternative is communism. Pope Francis is obviously a proponent
of a "mixed economy" as most people in the US on the left are. He is attacking "unbridled capitalism"
not an adequately regulated free-market economy.
ID1780902 10 Jul 2015 05:55
Why so many negative comments? Here we have an extremely high profile figure publicly rallying
people all over the world to help with climate change, and to oppose some of the excesses of capitalism.
Regardless of what you think of the Catholic church, many people will listen to what he says,
and take it very seriously. If he only changes the mind of a single climate-change denier that
would be enough, but I think he will do a lot more than that, particularly in the US.
In Saakashvili news:
Yesterday Saakashvili showed off for
President Porky's approval his 2 new assistants: his left-hand man, and his right-hand girl.
They will get important jobs at Saak's side, helping him to rule Odessa Province.
The man (let's
get him over with first, so we can concentrate on the girl) is Vladimir Zhmak. He is 51 years
old, an Afghan veteran and a businessman. He has no experience in government service which, according
to Saakashvili, makes him a perfect candidate for this government position.
Moving along to Saakashvili's "girl Friday", it's none other than 25-year-old Julia Marushevskaya,
who became famous during Maidan when a video clip of her went viral.
Marushevakaya is of Ukrainian origin (Odessa Province), but spent most of her student years in
the U.S., where she attended 2 prestigious American universities: Harvard and Stanford.
When Maidan happened, Julia became an international media star, with her interviews and video
clips about the protests. Her most famous video was entitled: "I am Ukrainian", in which Julia
called for people to revolt against the "tyrant" Yanukovych. The video gained around 7 million
views worldwide.
The video was meant to look fresh and spontaneous, but researchers back in March unrooted the
fact that it was produced by a professional British photographer named
Graham Mitchell, and
directed by a professional Hollywood director named
Ben Moses .
In other words, like everything else about Maidan, the video, and Julia herself, were produced
in the West.
[yalensis: and I would bet money that Julia was placed in this position by her American handlers,
in order to keep an eye on their erratic Gruzian Gauleiter. Julia may be aware that previous "young
things" in Saakashvili's cabinet in Gruzia were expected to sleep with him, as part of the job.
Which is why Saak's wife eventually left him. But if Julia is a true CIA pro, then she can keep
her natural revulsion down to a manageable level…]
"...And what were the boards, and risk and compliance committees of the lending banks, and the
regulators of Germany, France and the EU doing while the banks were lending hand over fist to a country
which plainly was over extended?
Hardly surprising that the number one priority of the ECB, EU, France, and Germany was to bail out their
banks, regardless of what happened to the feckless Greeks."
. "...Your point is valid if you believe the drug-pusher has no responsibility for the state of
the addict. A sensible economy is one where you keep the banksters on a leash - the free market agenda
beloved of the IMF put paid to that." . "... Monbiot is saying that 21st century neoliberalism is the same as 19th century laissez-faire." . "...To me, what the Europeans are doing to Greece is so transparent, if one knows a little about
the history of other parts of the world. But other parts of the world are periphery, in Europe's view,
and they are the center. Now they are treating even parts of the Eurozone as periphery. At some point
the center gets smaller and smaller and everything is periphery, the other, out there, those people,
and the European identity becomes a black hole rather than a beacon of light." . "...A very succinct article that hits some of the historical notes that explains how the elites
have controlled the masses to their advantage. All the financial laws, regulations that have been put
in place such as compound interest, the corporation as a 'person', and the takeover of the IMF and World
Bank by US and European elites are geared to keep the wealth in those few hands." . "...Great article. Particularly nails the canard that right wing IMF policies are "natural",
"objective" and "correct." All economics is politics in disguise, especially neo-liberal economics."" . "...The Greek people did not know that Goldman Sachs had cooked the books to allow them entry
into the Euro. They didn't know that Goldman Sachs was betting against them providing the final nail
in the coffin of their economy. They didn't know that sub prime mortgages were being re-packaged as
mortgage backed securities causing a GLOBAL financial crisis. Only the most informed would have been
able to see through their previous governments lies about spending levels. " . "...Agreed: the IMF is politicised and has operated as a means of enforcing market capitalism on
countries which were not in a position to make it work. Agreed: the EU project and the single currency
in particular were extremely ambitious projects which in some respects were based on a degree of utopia
and some pretty fundamental fallacies. None of which excuses successive Greek governments for being
complacently corrupt, economically incompetent and, in Syriza's case, deliberately inflammatory, of
course. Not that Greece is entirely alone in this, even within the EU, though as shambles go it takes
some beating. "
"
From laissez-faire economics in 18th-century India to neoliberalism in today's Europe the subordination
of human welfare to power is a brutal tradition
Greece may be financially bankrupt, but the
troika is politically bankrupt.
Those who persecute this nation wield
illegitimate, undemocratic powers, powers of the kind now afflicting us all. Consider the International
Monetary Fund. The distribution of power here was perfectly stitched up: IMF decisions require an
85% majority, and the US holds
17% of the votes.
The IMF is controlled by the rich, and governs the poor on their behalf. It's now doing to Greece
what it has done to one poor nation after another, from Argentina to Zambia. Its
structural adjustment programmes have forced scores of elected governments to dismantle public
spending, destroying health, education and all the means by which the wretched of the earth might
improve their lives.
The same programme is
imposed
regardless of circumstance: every country the IMF colonises must place the
control of inflation ahead of other economic objectives; immediately remove barriers
to trade and the flow of capital; liberalise its banking system; reduce government
spending on everything bar debt repayments; and privatise assets that can be sold
to foreign investors.
Using the threat of its self-fulfilling prophecy (it warns the financial markets that countries
that don't submit to its demands are doomed), it has forced governments to abandon progressive policies.
Almost single-handedly, it engineered the
1997 Asian financial crisis: by forcing governments to remove capital controls, it opened currencies
to attack by financial speculators. Only countries such as Malaysia and China, which refused to cave
in, escaped.
Consider the European Central Bank. Like most other central banks, it enjoys "political independence".
This does not mean that it is free from politics, only that it is free from democracy. It is ruled
instead by the financial sector, whose interests it is constitutionally obliged to champion through
its
inflation
target of around 2%. Ever mindful of where power lies, it has exceeded this mandate, inflicting
deflation and epic unemployment on poorer members of the eurozone.
The Maastricht treaty,
establishing the European Union and the euro, was built on a lethal delusion: a belief that the
ECB could provide the
only
common economic governance that monetary union required. It arose from an extreme version of
market fundamentalism: if inflation were kept low, its authors imagined, the magic of the markets
would resolve all other social and economic problems, making politics redundant. Those sober, suited,
serious people, who now pronounce themselves the
only adults in the room, turn out to be demented utopian fantasists, votaries of a fanatical
economic cult.
All this is but a recent chapter in the long tradition of subordinating human
welfare to financial power. The brutal austerity imposed on Greece is mild compared
with earlier versions. Take the 19th century Irish and Indian famines, both exacerbated
(in the second case caused) by the doctrine of
laissez-faire, which we now know as market fundamentalism or neoliberalism.
In Ireland's case, one eighth of the population was killed – one could almost say murdered– in
the late 1840s, partly by
the British
refusal to distribute food, to prohibit the export of grain or provide effective poor relief.
Such policies offended the holy doctrine of laissez-faire economics that nothing should stay the
market's invisible hand.
When drought struck India in 1877 and 1878, the British imperial government insisted on exporting
record amounts of grain,
precipitating a famine that killed millions. The
Anti-Charitable
Contributions Act of 1877 prohibited "at the pain of imprisonment private relief donations that
potentially interfered with the market fixing of grain prices". The only relief permitted was forced
work in labour camps, in which less food was provided than to the inmates of Buchenwald. Monthly
mortality in these camps in 1877 was equivalent to an annual rate of 94%.
As
Karl Polanyi argued in The Great Transformation, the gold standard – the self-regulating system
at the heart of laissez-faire economics – prevented governments in the 19th and early 20th centuries
from raising public spending or stimulating employment. It obliged them to keep the majority poor
while the rich enjoyed a gilded age. Few means of containing public discontent were available, other
than sucking wealth from the colonies and promoting aggressive nationalism. This was one of the factors
that contributed to the first world war. The resumption of the gold standard by many nations after
the war exacerbated the Great Depression, preventing central banks from increasing the money supply
and funding deficits. You might have hoped that European governments would remember the results.
Today equivalents to the gold standard – inflexible commitments to austerity – abound. In December
2011 the European Council
agreed a
new fiscal compact, imposing on all members of the eurozone a rule that "government budgets shall
be balanced or in surplus". This rule, which had to be transcribed into national law, would "contain
an automatic correction mechanism that shall be triggered in the event of deviation." This helps
to explain the seigneurial horror with which the troika's unelected technocrats have greeted the
resurgence of democracy in Greece. Hadn't they ensured that choice was illegal? Such diktats mean
the only possible democratic outcome in Europe is now the collapse of the euro: like it or not, all
else is slow-burning tyranny.
It is hard for those of us on the left to admit, but Margaret Thatcher saved the UK from this
despotism. European monetary union, she predicted, would
ensure that the poorer countries must not be bailed out, "which would devastate their inefficient
economies."
But only, it seems, for her party to supplant it with a homegrown tyranny. George Osborne's proposed
legal commitment to a budgetary surplus exceeds that of the eurozone rule.
Labour's promised budget responsibility lock, though milder, had a similar intent. In all cases
governments deny themselves the possibility of change. In other words, they pledge to thwart democracy.
So it has been for the past two centuries, with the exception of the 30-year
Keynesian respite.
The crushing of political choice is not a side-effect of this utopian belief system but a necessary
component. Neoliberalism is inherently incompatible with democracy, as people will always rebel against
the austerity and fiscal tyranny it prescribes. Something has to give, and it must be the people.
This is the true road to serfdom: disinventing democracy on behalf of the elite.
It really is a religion. It's fun sometimes to imagine certain twinings-- compare and contrast.
So one day I was sitting around thinking: US...and IS... what do they have in common?
Well,
1) they both pursue really totalitarian ideologies with every conviction of the religious fanatic.
2) Meaning they will subordinate their very humanity to the propagation, nay: perfection! of this
brand of 'Utopianism'.
3)They each of them want to completely wipe something out and feel they must do so in order for
their Creed to survive. The IS wants to destroy the Past ...as is evidenced by their historical
monuments destructions. But the US, they want to destroy the Future... Or, specifically: any future
where they are not practicing their own very self-interested brand of money-power religion and
are not on top of the world lording it over everyone else.
Both of these visions are so deranged as to be impossible to achieve, but like any ardent Totalitarians--
they will damn sure try and over the dead bodies Of Others, regardless of how many or how much
suffering need be inflicted to serve their 'God'...
Remco van Santen 9 Jul 2015 21:36
Conspiracist twaddle to argue the problem is external. Greece was corruptly managed for decades
with the less wealthy bearing the burden disguised by an on-going devaluation of the drachma that
devalued seven-fold in the two decades to joining the euro (http://www.economagic.com/em-cgi/data.exe/fedstl/exgrus).
The Europeans were naïve to expect the internal corruption to cease and the fixed exchange rate,
presented by the adopted euro, simply brought it out to the surface. Greece is the home of democracy,
but it is also became the home of those saying we might all be equal, but some are more entitled
than others. Adopting the euro exposed the rot and so this is an opportunity for Greece to get
its own house in order.
The Eurozone might like to think of helping the more vulnerable like the pensioners are protected
and not used by the Greek government for grandstanding. Greece, the sheep, is parasite-infested
and to be held just long enough under the sheep-dip pesticide to kill the parasites but not too
long to kill the sheep.
Go Tsipras, show you are a leader of a true democracy.
motram 9 Jul 2015 20:50
Looks like the Tsyriza government has surrendered to Eurozone and IMF austerity demand. The
game is over. The Rothsyz and the bilderbergys have carried the day in the end.
zolotoy -> peeptalk 9 Jul 2015 20:38
Only the little people pay taxes, as Mrs. Helmsley so trenchantly observed. That holds for
all countries, not just Greece.
Allykate mikebain 9 Jul 2015 17:38
Interesting comment Mike Bain, thank you. Only a couple of points the "hoi polloi" are the
lower classes not the elite (a common error!) and I dispute the notion that all humans are exploiters
and takers. History proves otherwise. The early banks and building societies in England were created
by non-conformists, Unitarians and Quakers etc, who did not spend their wealth on themselves but
lived sparingly, ploughed their money back into their businesses, and ultimately achieved amazing
reforms for the ordinary people here. If the rich, modern Greeks had the same selfless Christian
philosophy, the corrupt tax system and greedy loans may not have destroyed their economy.
Allykate 9 Jul 2015 17:20
The "true road to serfdom" or revolution. Don't blame me..... I made speeches in support of
the Referendum Party to oppose the signing of The Maastricht Treaty. John Major just would not
listen to the people.
Boghaunter mikebain 9 Jul 2015 17:00
Governments are not the people. Germans were not Hitler. He was elected but then assumed dictatorial
power. Look at the US - our government is made up of politicians bought by the 0.1%. The 0.1%
do a great job controlling what the average American is told.
As for Germany reaping the benefit of no military, we'd be A LOT better off if we made the choice
to invest in our country instead of in our ridiculously large military budget. We could choose
that benefit. General Butler famously said, "War is a racket," and he was right.
The Marshall Plan was enlightened self interest as the US feared the spread of communism in devastated
Europe. The UK received the most $. It also was disbursed with tight control over German politics/administration/economy
and required dismantling of much of Germany's remaining industry. It was not a simple handout.
NYbill13 9 Jul 2015 15:45
Why Did They Lend Mega-Billions to Greece?
I still can't figure out what 'Greece' needed so badly that a handful of men who ran its government
a decade ago took on these loans.
Was the money invested in public infrastructure? Does Greece now have a fabulous highway, airport
and rail systems?
Did the previous Greek government ('conservative,' perhaps?) build a dozen new public hospitals,
renovate the nation's schools or build networks of water and sewer treatment plants or desalination
stations?
If so, then the Greek people may indeed owe a great debt to European financiers.
If not, who spent all this money and on what? Did those who signed the loan agreements receive
any sort of commission for doing so?
Do those signatories now work for the IMF or perhaps Deutsche Bank?
All the press says is 'the Greeks' owe the Germans a ton of money. After 11,789 headlines and
articles, I definitely understand that much.
After that, it's just pompous quotes and dire speculation about the future of the damn euro.
How about some background information, fellas? I'll bet you could even find out who signed the
loan papers on both sides and talk to them.
Oh, but that would take, you know, research.
syenka CaptainGrey 9 Jul 2015 14:22
The point cap'n, is that the money isn't actually going to the Greeks. It's going to Greece's
creditors (the ECB et al) who made incredibly irresponsible loans to a tiny slice of the Greek
population. That irresponsibility should NOT be rewarded. The way out, of course -- oh horrors!
-- is to just let the creditors take a bath, i.e. wipe the debt off the books. Then, put some
money into the pockets of regular Greeks who will, of course, proceed to spend it and thereby
relaunch the economy. Would you or I or any European be hurt by such a move? If your answer is
yes, tell us how. And, the suffering of millions of Greeks would come to an end.
alpine1994 CaptainGrey 9 Jul 2015 13:22
It's true, the Greek government took the money. We all know about the Legarde List and the
rampant corruption of the previous government administrations. They've all got off scot free and
instead it's the Greek people who suffer through aggressive austerity. One might be so callous
to blame them too, but if the government decreed citizens could retire young with a fat pension,
most people would excitedly take up the offer. If the EU had any balls, it would authorize INTERPOL
or what ever agency to crack down on corrupt current and former Greek politicians and other financial
criminals to help recover money to satiate the debt. These fat cats get away with sinking whole
countries!
CollisColumbulus Patrick Moore 9 Jul 2015 09:43
The greatest landholders in Ireland were almost to a man absentees, living in comfortable houses
in Britain with wealth extracted from Irish peasants by their middlemen. Furthermore, they were
alien in religion, often language, and nationality (the landholders may have considered themselves
Irish - in some cases - by they were certainly 'British' in identity also, which cannot be said
of the mass of the population) from the peasantry who provided their wealth. The ethno-religious
land settlement in Ireland and the stranglehold on the Irish peasantry that resulted were the
direct result of British policy in Ireland from the sixteenth and especially the seventeenth century
onward and were maintained by the power of the British military. While the situation is too often
reduced to 'Irish good, English bad' - note the heroic relief efforts of many private British
individuals, especially the Quakers - it is impossible to excuse the British state from a large
dose of culpability for the Famine without resorting to historical dishonesty of the highest level.
and remember: "the ones who have no knowledge, should not express opinion" Plato 460bc
CollisColumbulus -> Patrick Moore 9 Jul 2015 09:37
"The potato famine was a tragedy, but it is a little reported fact that the only crop that
was blighted. During the time of the famine Ireland was an exporter of meat and grain. There was
no shortage of food in Ireland - but there was a shortage of potatoes, which was the staple of
the poor".
I am astonished that you use this to argue against British culpability in the Irish famine. The
actions of the British state and Anglo-Irish colonial landholding society both created the conditions
of dreadful rural poverty (and potato dependency) that were a sine qua non of the Famine and directly
exacerbated the situation through their adherence to laissez-faire economics. It might be noted
that many starving Irish farm labourer families emigrated to Britain to enter the workhouses there,
rather than the workhouses in Ireland, because they knew the poor would not be allowed to starve
to death in Britain.
Its called the GFC. To refresh your memory financial institutions had manufactured schemes
that made them lots of money from money that did not exist. When they eventually got caught out
the tower of cards collapsed and the world was left short of cash and economies everywhere shrank.
The financial institutions that caused the problem were bailed out by taxpayers because they were
too big to fail. This meant that a few thousand very wealthy kept there wealth and the institutions
could continue to play their game and make more money. The next collapse is not far away. The
Greek loans (and other bad and risky loans) were bought by the taxpayer as part of their bail
out package. It is shameful that governments refuse a similar bailout deal to the Greeks which
involves the misery of millions of people. It is even sicker that the condition they imposed have
been known and shown repeated not to work since the 1930 depression.
mikebain 9 Jul 2015 08:30
A great essay with a sad but true take-away point-humans are exploiters, takers. Humans can
see no other way forward than to take from the weak - it's the easiest thing to do. Wealth must
be protected at all costs. History is replete and is an unyielding witness to human exploitation
of anything exploitable, especially the defenseless.
There is one exception to this-the aftermath of WWII. It is interesting that Germany never
repaid its WWII debits (or those from WWI) and was the beneficiary of the Marshall Plan and U.S.
military protection during the Cold War. So as Germany had no real debt-after murdering millions-and
did not have the expense of maintaining a military, it was able to focus on growing it's economy
at the cost of the U.S. taxpayer, some who had family members killed by Germans in WWII.
Of course this does not enter into the reporting of the credit crisis in Greece, where Germany
is demanding austerity.
And so it goes: money talks, hoi polloi walks. True democracy will always be threatened by
the human exploiters, the takers of this world, many who we call "Leaders"-and unfortunately they
are legion and reborn on our planet every second; entering life with a mind fully open to and
waiting to be filled with Free Market, Libertarian hubris, avarice, and the right to self-righteous
exploitation of any and everything.
Michael Bain
Glorieta, New Mexico
Celtiberico 9 Jul 2015 08:27
the gold standard – the self-regulating system at the heart of laissez-faire economics –
prevented governments in the 19th and early 20th centuries from raising public spending or
stimulating employment. It obliged them to keep the majority poor while the rich enjoyed a
gilded age. Few means of containing public discontent were available, other than sucking wealth
from the colonies and promoting aggressive nationalism. This was one of the factors that contributed
to the first world war. The resumption of the gold standard by many nations after the war exacerbated
the Great Depression, preventing central banks from increasing the money supply and funding
deficits. You might have hoped that European governments would remember the results.
The worrying part is that a repeat performance today would quite possibly result in the destruction
of human civilisation, or even life on earth.
Cecelia O'brien 9 Jul 2015 05:22
there may be a few errors here but fundamentally this article is spot on! Good for you!
I'd add though we let this happen - we too were greedy and the managerial middle class stood by
as the unions were destroyed - we all took this 15% returns on dicey investments and did not question
how such high rates could be possible - we celebrated globalism while and we supported elected
officials who promised us deregulation was going to bring more prosperity.
Take your government back while you can.
JimGC athenajoseph 9 Jul 2015 04:58
And what were the boards, and risk and compliance committees of the lending banks, and
the regulators of Germany, France and the EU doing while the banks were lending hand over fist
to a country which plainly was over extended?
Hardly surprising that the number one priority of the ECB, EU, France, and Germany was to bail
out their banks, regardless of what happened to the feckless Greeks.
Cafael Skeffo 9 Jul 2015 04:34
Appeal to authority.
Capitalism destroyed feudalism? No, historical cataclysms and technological advances destroyed
feudalism, but after a period of flux which you call capitalism, power and wealth is again concentrated
at the top and new aristocracies emerge who move to guard their position and make it permanent;
we are seeing this now with the increase in inequality and the end of post-industrial revolution/post-war
social mobility in Western nations.
And you appear to subscribe to survival of the fittest approach of the extreme right wing: 'destroying
the inefficient'. Heard that before.
Skeffo Cafael 9 Jul 2015 03:51
Your thinking so extraordinarily confused that it almost impossible to confront all the contradictions
and inanities. You really need to do some philosophy courses, and focus on logic please.
Then start to learn some economic history: capitalism does not lead to feudalism, it destroyed
feudalism. (I mean, even a simple time line could help you there.)
Capitalism, through its creative destruction, is continuous revolution. Try to get your head
around it. It may take a few decades, or even the rest of your life, but you will understand if
you work at it seriously.
ThanksNeolibZombies athenajoseph 9 Jul 2015 03:48
"Has Monbiot lost it?" No, his article looks spot on to me. Forcing a country to adopt austerity
/ structural adjustement policies that have a long, proven track record of causing economic devastation
everywhere they have been tried is a form of persecution...and of course these policies have caused
economic devastation in Greece.
"Why should [Greece] be allowed to walk away from a debt of its own making?"
(Sigh.) I got tired of hearing this in the 1980s and 90s and the 2000s, the same argument was
used to justify beating African economies to a pulp.
Interesting that the rich people who made trillions out of throwing us all into unsustainable
debt in the decades leading up to the financial crash have been bailed out and have been "allowed
to walk away" with trillions of pounds, leaving us with the bill. It's one rule for the rich and
another rule for everyone else, so Greeks have to suffer big cuts in living standards.
Debt is a big stick with which the rich continually beat the poor, and it's always the fault of
the poor for some reason.
Benjamin Raivid Giannis Kalogeropoulos 9 Jul 2015 03:45
You don't need to be 'bailed out' - the money you own is fake - made from thin air by banks
who never had the money, but were allowed to metamorphosis it (i.e. just type the numbers they
wanted, but didn't have) onto a screen. This fake money is then charged at interest. The audacity!
It's 'legalised' counterfeiting and totally corrupt. Why should anyone have to pay back fake money,
let alone at interest?
The EU waged war against the Greeks - calling them lazy and saying they are in debt because they
don't pay their taxes (lol! Forget about being insulted, it reveals a total ignorance of the nature
of taxes: even buying clothes at a store, or fuel from a petrol station is taxed! We are always
paying taxes!). Brits seriously believe that Greeks are in debt because they don't pay taxes....(while,
of course, Britain itself is great at paying taxes, just ask Vodafone and Amazon and Boots and
Specsavers...)
Forget the bailout; do an Iceland. Or use the resources you have, land, fields, food - the basic
necessities of life, and live.
merlin2 pdre 9 Jul 2015 03:05
Agree with others here. The vast majority of the money (240B or so) went to servicing the debt
owed to German banks, laundered through the ECB agent). Another 40B went to Greek banks to stave
off bankruptcy and most of the rest was spent (by necessity and EU dictats) on various private/public
equities and entities. Much less than 10% of the original actually went towards internal social
programs, infrastructure and/or any stimulus activities that could help the country actually regrow
its economy.
With no funds for growth and a substantial reduction in tax receipts and economic activities
due to mandated austerity, a catch 22 was created as sure as night follows day. This result is
so obvious that one is left wondering - could the EU financial elitocrats be that clueless or
did they know and caused the Greek collapse deliberately? I see no other possibility. Not when
every economist worth their salt, from Krugman to de Long to Piketty and just about everyone (even
a few Austrians!) saw ihe crisi coming from miles away and issued warnings by the bushel for some
time now.
That leaves a major question unanswered - if the economic wizards of Europe are not entirely
incompetent/clueless - what does the alternative mean? if they knew what's going to happen, and
let it roll, what purpose did/does it serve?
athenajoseph 9 Jul 2015 02:46
Has Monbiot lost it? Those who persecute Greece he says....
Greece has been incompetent, corrupt and profligate and now owes more than it can pay. Why should
it be allowed to walk away from a debt of its own making?
An individual cannot. Did the Greek economists not read the fine print? Why did they not act when
the debt got to $100billion? Why wait until you have added another $270billion?
Sure the EU has played a part but the biggest part was played by Greece. The sooner it is out
of the EU the better.
athenajoseph 9 Jul 2015 02:44
One may well argue that there were flaws in the EU from the beginning, however, as an exercise
and experiment, sourced in a deep desire to unite Europe and perhaps avoid a third disastrous
war, it is to be commended and has offered much of value.
Given the Greek propensity for corruption and default it was perhaps singularly unwise for the
EU to ever admit Greece into their ranks. However, what was done is done. The Greeks may well
be better off outside of the EU or at least back to the drachma, but anyone who thinks that there
will be anything 'better' without Greece dealing with its endemic corruption and incompetence
is deluded.
You can lay perhaps 30% of the blame for this situation at the door of the EU and banks but the
rest is surely on the shoulders of Greece.
The Greek Government should have acted when the debt got to $100billion. It did not. It did not
when it got to $200billion or $300billion and it now sits at $370billion. And that is supposed
to be someone else's fault??
Tsipras has been playing childish games. Calling a referendum and then encouraging a no vote,
which he got, and then sacrificing his finance minister in the name of it, as was correct given
his appalling use of the term 'terrorism' applied to the EU, and then returning supposedly to
negotiate with the EU with nothing concrete in his hands.
The manipulative, cavalier, incompetent, childish and corrupt behaviour of the Greeks should have
them thrown out and the sooner, the better. Let them create their utopia themselves and put their
money where their very large mouth is.
A great description of their actions and the pain they cause. The reason they cut the army
is to ensure there could not be a popular uprising that it would support . Also a large number
of Greeks have done their military service. A popular uprising led by such a knowledgeable group
would preserve democracy and they don't want that.
AnonForNowThanks corstopitum 8 Jul 2015 23:25
But WHO really got the "haircut?"
Who got the commissions? Who set up the insurance products? Who is actually holding the note,
and what stream of income did they expect to get and what are they getting instead?
I don't think you understand modern "risk shifting," or how much money is made on such deals,
and I don't think that anyone does, frankly.
But like Socrates, at least I realize that I don't know -- because these are not regulated markets,
their actions are hidden from scrutiny yet have massive, global ramifications, and all we have
been fed are ridiculous, home-spun metaphors designed to stoke mindless rage. I'm sorry, but you've
fallen for it.
As John Lanchester pointed out in IOU: Why Everyone Owes Everyone and No One Can Pay, there
were a lot of things that "could" be done when the US and its sphere of influence had to "compete"
with the Soviets in a "beauty contest."
Thanks to Sputnik, little American children learned physical science and calculus in public schools,
thanks to the Cuban system of medicine the elderly got Medicare, thanks to the Red Army Germany
got debts forgiven, and thanks to the whole lot of them major appliances ran trouble-free for
20 years.
So you believe investment bankers have to be FORCED to set up bond auctions that will result
in commissions so large that they and their children and their children's children will be set
up for life?
They were screaming, "no, NO!" and trying to push the money back out of their pockets, but they
were forced.
In the case of Greece, the bonds were engineered by a right-wing government acting in collusion
with Goldman Sachs. And there will be complete idiots who will believe your tale, that the "leftists"
forced loans to be made to Greece.
The sad part is that although you do have to count on mass idiocy, a two-minute memory and an
even shorter attention span, you can.
Giannis Kalogeropoulos 8 Jul 2015 22:44
if they only could give us some time to breath ... Greece from 1994 till 2008 have pay for
loans 540 billions and everything was fine to the country and the loaners. we can pay 320 billion
we owe now (that was 190bn before EU run to "save" us) but they don't want to get the money! they
have made a trap! they turn the Goldman Sachs loans to EU loans, so ordinary EU people will have
to pay it! why? ask your governments ... who did it! (so it seems we are not the only ones with
corrupted governments) ... then, they come to tell us how to run the country (and sell all the
valuable to German France etc. private companies for a penny ) ... HOW WOLD YOU FEEL, if you get
a loan to buy a house and someone from the bank comes every day to your house, to tell you what
to eat, how to dress, how to use water and electricity ... to don't pay to educate your kids,
to sell your favorite leather chair, so he can make sure he will get his money back???? and all
that, while you were paying the debt on time!!!!!!!! how would you feel??? ... that's how we feel
... they did it to us, they will try it on you all too, sooner or later ... its harvest time and
banks don't know what is civil rights or democracy. they need assets, houses cars gold land for
to turn their worthless paper in to real value!!!! keep in mind that in Greece at 1998 it was
discovered one of the biggest oil reserves in Europe .... coincidence that after that Goldman
sachs "bomb" us with loans???? think again. ordinary people are in danger of loosing our freedom
today in Europe from banks who we owe some paper they type and tell us it has value ... but it
cost to them, some ink and paper ... Greek referendum scared them. they are afraid of little people
come together and form groups of common interests. cause that gives us power. we have power to
change our faith, as we Greeks are trying to do. we stopped them from stealing the valuable of
our country and to drink our blood just by choosing the right government and say no to fear! they
try to scare us by saying we become Zimbabwe (no offence to that country) that we die from hunger
with out money, they close our banks, they said we ll become fail state etc. still we vote no!
one and only reason. ENOUGHT IS ENOUGHT and when someone feed a desperate man to the wolfs, he
will return leading the wolfs!!! I think banks will not stop so we must all be suspicious and
supportive to each other. together we won the Huns, we won the Turks, we won the Nazis, we won
dark ages, we can win banks ... we want and we will pay back every penny of what we owe (even
if its with tricky interests) as we always did. but they have to let us to do so. how on earth,
they make us to close our factories and productive companies and they expect us to pay back??
they ask to double costs on touristic businesses. but if so Greece will become expensive for tourists
and they will go elsewhere! tourist industry produces 7% of Greek economy!!!! hmmm wait! German
companies last 10 years have bought great deal of hotels in turkey!!!! ... and they say they want
to save us... 5 years they did the worst they could to save us and the best they could for to
buy all the valuable assets here. so that is what its all about ... fortunately we have a strong
army (one of the best trained in world, and that because we have near war events with turkey all
time around), cause else they will threaten us even with army force. how accidental that 5 years
now, they cut 60% of money for the army, and they want to cut even more ... Germany France and
others last 20 years sold us weapons worth over 90bn euro. now they say we have very big army.
but we don't have neighbors Luxemburg or Belgium! we have aggressors like turkey (2 biggest army
in NATO), Syria's crisis Libya Albania's uck etc. why now they discover that we have to cut 50%
of our army??? they used it to all crisis but now is a danger ... also because we are the last
neighboring battle grounds like Syria etc we receive refugees and emigrants from all poor countries.
estimates say they are now over 30% of Greek population!!!! over 3million!!! EU offers advise
their respect but nothing else!!!
WE HAVE CRISIS! we have 1,5 million unemployed! how can we feed the poor emigrants who want
to go to England Germany France etc and we are forced by EU rools to keep them here??? why EU
acts like nothing is wrong? ... I hope you are wiser now about what is happening to a small but
proud country called Greece, last borders of EU with the "dangerous" out world ...
Tsipras should tell the latter day East India Companies to take a hike. Sadly, I think he'll back
down because socialists are just as bound by economic orthodoxy as Adam Smith, Thomas Malthus
and their descendants.
As Alfred Marshall argued, "man should be equally important as money, services are as important
as goods, and that there must be an emphasis on human welfare, instead of just wealth".
LostintheUS 8 Jul 2015 19:49
Excellent essay. Hear, hear!
I was just reading exactly this last night, that the famine was caused "partly by the British
refusal to distribute food, to prohibit the export of grain" in the "Chronicles of the Macedonian".
A ship that was the second ship captured by the American navy during the War of 1812. In the 1840s,
the "Macedonian" was borrowed by a private citizen/sea captain to take food to Ireland. He made
the observation that none of the other crops had failed and that people were starving by the hundreds
of thousands because the British government would not distribute these other crops that had been
extremely successful.
seaspan 8 Jul 2015 19:47
Predatory international finance is killing capitalism. Where austerity simply means shrinking
the private economy and making more and more working age people to be dependent on government,
but receiving less and less money driving them to poverty and penury, which kills capitalism even
more. This will surely lead to socialism (massive govt intervention and investment) or fascism
(economic slavery under authoritarian rule).
Rozina DavidRees 8 Jul 2015 19:45
Unfortunately, people didn't like the results of communism and it depended in the assumption
that humans like sharing and aren't greedy. We don't and we are.
That last sentence itself could also be an assumption. How much of the self-interest and greed,
that we are taught is innate, is actually inculcated into us by culture and becomes ingrained
habit hard to overcome and easy to indulge in an environment where we are constantly pushed to
acquire more possessions and pile up more debt?
There are other alternatives to capitalism and communism: you could try investigating
social credit as one alternative.
According to Douglas, the true purpose of production is consumption, and production must
serve the genuine, freely expressed interests of consumers. In order to accomplish this objective,
he believed that each citizen should have a beneficial, not direct, inheritance in the communal
capital conferred by complete access to consumer goods assured by the National Dividend and
Compensated Price.[6] Douglas thought that consumers, fully provided with adequate purchasing
power, will establish the policy of production through exercise of their monetary vote.[6]
In this view, the term economic democracy does not mean worker control of industry, but democratic
control of credit.[6] Removing the policy of production from banking institutions, government,
and industry, Social Credit envisages an "aristocracy of producers, serving and accredited
by a democracy of consumers."[6]
CodePink 8 Jul 2015 19:38
And yet, when the private banks (financial elite) needed bailing out to the tune of TRILLIONS
of dollars due to their own greedy practices, the taxpayer was forced into it.
Given most of Greece's debt was originally owed to private banks like Goldman Sachs who continued
to loan them money despite the fact they knew they couldn't pay it back, and they then somehow
managed to convince the ECB to take on the debt - the old socialise the losses, privatise the
profits scheme - perhaps the IMF should be looking to GS and the likes to contribute significantly
to paying down Greece's debt.
lifeloveroverall 8 Jul 2015 19:26
The order from and to the Brussels Donkeycrats : Attack and no mercy to Greece. Regardless:
we are the chosen, on a holy mission to keep safe our beloved money power. But here is my wish
to all Donkeycrats, may you all burn in Hell.
PS: my apologies to the poor donkeys
estragon11 8 Jul 2015 19:09
as far as that goes, who cares about the planet as long as there is money to be made?
Austerity, Merkel style, is just a modern version of Le droit du Seigneur, but writ large.
it's time for another version of 1932 when the Republicans were thrown out and men and women who
cared about the middle and lower classes took the reigns of government. Time for the Greeks to
start printing Drachmas and go forward. it has been said "better a horrible end than horrors with
no end"
goldstars 8 Jul 2015 18:25
More people need to know about the IMF's actions in the world, and how that affects all of
us. It won't get better unless people realise they can stand up to it. The Guardian is still vaguely
leftwing enough (or has that history) that it attracts those who already have sympathy or understanding.
We need to see Monbiot's articles, and similar information, spread far and wide in all mainstream
media.
RealWavelengths 8 Jul 2015 18:15
"The IMF is controlled by the rich, and governs the poor on their behalf. It's now doing to
Greece what it has done to one poor nation after another, from Argentina to Zambia. Its structural
adjustment programmes have forced scores of elected governments to dismantle public spending,
destroying health, education and all the means by which the wretched of the earth might improve
their lives."
Best synopsis of the IMF. However, I disagree that returning to the gold standard during the interwar
period was a factor in the Great Depression. Creative credit policy was the main culprit.
seaspan 8 Jul 2015 17:30
The Greek pension system has four aspects that should be considered. 1) demographics,,, 20%
of the population is aged 65 and over, 2) Govt layoffs by attrition (early retirement options),
3) no clear distinction between social security and welfare, 4) disability pensions. Officially,
the retirement age is 66 years old climbing from 57 in 2009. Where people get manipulated is the
malicious citing of individual cases as being the rule rather than the exception. Demand context
when reading these false statistics...
The notion that public spending didn't make a dent in the poverty rate is simply absurd, but
it's one of those invented facts repeated endlessly by right-wingers because it sounds like it
might be true.
In fact, there was a sharp decline in various indicators of poverty from the late 1960s until
the early 1980s, when the launch of Reaganomics took the American economy into a long, slow, steady
decline; and even in the three subsequent decades, by measurements like housing, medical care
and nutrition poor Americans are unquestionably better off than they were before the war on poverty.
Moreover, look at social spending over a greater span of time: the long-term success of Social
Security and Medicare at lifting America's elderly out of the direst ranks of poverty is just
unquestionable--except, of course, by reactionary propagandists who insist it can't possibly be
true because it's such an inconvenient truth.
Before Social Security, nearly half of America's elderly lived in poverty, many of them in dire
poverty. It was not unheard of for old people to starve to death in this country, and many were
forced out of their homes and into wretched existences in county homes and poor farms.
Today, thanks to social spending, the poverty rate among the elderly is down to about 10%--still
far too many, with income inequality worsened by Reaganism in this age cohort as in all others,
but an incredible improvement over the rate just a few generations ago nevertheless.
Public spending works.
Unfortunately, so do incessant right-wing mantras and lies.
Arjen Bootsma 8 Jul 2015 16:55
The world we live in values property rights over human rights.
AuntieMame Ykuos1 8 Jul 2015 16:53
73% of Greece's exports are mineral fuels, followed by salt, sulphur, stone and cement. And
don't forget Virgin Olive oil, the best in the world, since it is not mixed with inferior oils
the way Italian produce theirs mixed with normal imported oils.
Tourism is a large sector of the service industry in that absolutely stunningly beautiful country,
but by far not the largest.
Do a little research before spewing platitudes her about Greece, a country that you obviously
know nothing about.
seaspan shout_at_me 8 Jul 2015 16:35
Greece has the highest self employed sector in all of Europe. In any country that sector is
the most difficult for tax collection. It is a libertarian paradise...
AuntieMame shout_at_me 8 Jul 2015 16:06
Actually the Greek crisis was caused by prior conservative government, not the lefty coalition
of Tsipras which only became the majority five short month ago.
But I guess that you are one of those calling all of Europe as socialist haven, including the
conservative government with universal healthcare, free higher education, and strong safety nets
for the less fortunate among their citizens.
easterman FenlandBuddha 8 Jul 2015 15:15
Don't borrow from the IMF and none of this applies. Run a sensible economy and you never
need the IMF
Sounds logical - until you factor in the fact that the market's-know -best IMF was a cheerleader
for the de-regulation of the banks which led to the credit boom which led to the credit crunch
which led to taxpayer bailouts of the banks (and counter-cyclical fiscal policy by the G7 in order
to head of a global depression) which led to quadrupling of budget deficits in many countries
which led the weaker ones into the clutches of ...the IMF who then set about deflating them using
a dodgy estimate of the fiscal multiplier which grossly underestimated the damage this would do
to output and tax revenue which left them needing more bailouts to pay the interest on the loans
( created at the push of a button) and subject to even more deflation ...
Your point is valid if you believe the drug-pusher has no responsibility for the state of
the addict. A sensible economy is one where you keep the banksters on a leash - the free market
agenda beloved of the IMF put paid to that.
Henforthe SteB1 8 Jul 2015 14:48
The whole modern system is a gigantic Ponzi Scheme, I mean it literally.
I certainly get what you mean- I've always suspected it's more to do with our banking system though.
Interest rates are routinely manipulated specifically in order to encourage growth, and fractional
reserve systems can mean that this growth isn't based in anything of real value. Sure, growth
creates jobs and can lift communities out of poverty, but can it be sustained indefinitely? And
once a society becomes developed, does it really need further growth, at least enough to continue
to manipulate currencies to encourage it?
It's presumably possible for economic growth to decouple from physical resource use, although
it's not really happened yet. But I suspect there are still 'Limits to Growth' within the pure
economic realm. Growth seems to inevitably slow to a crawl as a society becomes developed and
its population stabilises: see Japan and much of Europe, and perhaps also look at China where
this week the government is desperately trying to keep markets rising in the face of a gradual
realisation that the actual demand just isn't there. Perhaps if we learnt to accept this, things
might be more stable in the long term.
I agree that we should look back at the Enclosures as a heinous crime perpetrated by the landed
elites. The Enclosures are doubly relevant here: in the event of market uncertainty, one can fall
back on savings or assets. But government economic policy makes that more difficult: interest
manipulation and capital controls mean savings become diminished or inaccessible. But also, in
some parts of the world people can still weather hard economic times by going 'back to the land'.
But in the West this is no longer possible, because the common land was stolen.
SocratesTheGooner -> Colin Chaplain 8 Jul 2015 14:17
Take the 19th century Irish and Indian famines, both exacerbated (in the second case
caused) by the doctrine of laissez-faire, which we now know as market fundamentalism or
neoliberalism.
Not a straw man. Monbiot is saying that 21st century neoliberalism is the same as 19th
century laissez-faire. How much more explicitly could he put it?
shaheeniqbal 8 Jul 2015 13:33
This Greek Tragedy highlights the interferences of IMF and World Bank into the democratic processes
of a country. From the collapse of Greek economy it is quite clear that "Confessions of a Hitman"
was not a conspiracy theory. Every day the third world is constantly suffering the IMF excesses...
Greece is lucky that it is in Europe otherwise it would have suffered the same fate as the African
and other third world countries indebted to IMF and World Bank and had their arms and legs twisted.
It is not only that IMF dictates the prices of Electricity and Gas and imposition of taxes ie
general sales taxes but they also interfere in the Democratic processes by backing their favorite
chosen corrupt and criminal political leaders who loot these countries with both hands and shift
the assets of the impoverished countries to foreign shores.
One hopes that with the establishment of Brics Bank the poor and deprived third world will
be able to shop around for cheaper loans and suffer less interference in the internal politics.
The events in Greece highlight the misery and suffering of the impoverished third world countries
at the hands of the unscrupulous lenders who once allowed into the country will keep thrusting
the indebted economies into further debt and ultimate ruination.
Piotr Szafrański -> hankwilliams 8 Jul 2015 12:51
Hank, you think that "40% [of enterprises] wouldn't have been lost and many Poles would not
have left if the austerity programme wasn't inflicted on the Poles.". You might be right, you
might be not right. The only way to decide was to check the other way.
Well, at least 51% of Poles did not want to check the other way. Our choice.
Of some interest here is that there WERE countries which tried "the other way" (no austerity).
Did not work so well for them. So this alternative might not had worked. But you are free to have
your opinion.
"get their rich to pay their share"??? Always those mystical "rich"... Used to be "rich Jews",
but after WWII this is somehow awkward, isn't it? But well, the Bolshevik revolution definitely
made the rich pay, didn't it? How well did it work for Russia? Wanna recommend this to the Greeks?
But sorry, this time we have "rich Germans". It is politically correct to call to take their money,
of course. Social justice and international justice in one package. They are all Nazi, I forgot.
Piotr Szafrański -> hankwilliams 8 Jul 2015 11:59
Hank, our "austerity programme" had started in 1989. And continues. Back then the country was
in such dire straights that even the ruling elite ("communists") had problems with buying basic
appliances. People's wages were below 100$/month.
Since then, supported by the international community (massive debt relief, massive investments)
we GRADUALLY progressed. But the said debt relief was ONLY at the very beginning of the reforms
(1989/90). We pay our dues on time since then.
Meanwhile, the price of reform was high. Whole cities had found over 50% of jobs disappearing.
Factories employing tens of thousands were being closed. Some of those jobs/enterprises maybe
could be saved (we estimate say 40% of the closed ones), but there were no lenders willing to
experiment. Axes were in full swing. Many people remember this today with revulsion, and in many
cases they are right. About 10% of population (i.e. over 3mln people) emigrated or are shuttling
between jobs elsewhere and families in Poland. Unemployment remains high (about 10%). Poles work,
on average, supposedly the longest hours worldwide, except for the Koreans.
But since 1991/92, Poland had an uninterrupted growth. Most Poles today earn money they would
not believe back in 1989. We slowly grow enterprises and industries competitive or even dominant
in their markets worldwide. And obviously, the more you eat, the bigger the appetite grows. Ask
average Pole - we are grumbling. Which is not bad - we still have way to go.
But maybe were we were "lucky" it was that 1989 was a clear break - we got suddenly full freedom
and responsibility, after 50 years. So it was obvious to most that we start low and we have to
keep belts tight for a long time. That precious 51% of people feeling less of entitlement and
more of duty was there.
sassafrasdog Gerbetticus 8 Jul 2015 11:57
Yes, I have the Shock Doctrine, and my professor of Latin American history required that we
view the documentary version of Shock Doctrine on a day when he was out of town at a conference
or something.
I sat there with my jaw dropped. Other students in the room, all much younger, were muttering
curses. As an older adult student, I remembered the day when Salvador Allende fell, and could
still picture the TV in my mother's kitchen where we had watched the coverage.
Shock Doctrine explained all, like the other shoe dropping.
To me, what the Europeans are doing to Greece is so transparent, if one knows a little about
the history of other parts of the world. But other parts of the world are periphery, in Europe's
view, and they are the center. Now they are treating even parts of the Eurozone as periphery.
At some point the center gets smaller and smaller and everything is periphery, the other, out
there, those people, and the European identity becomes a black hole rather than a beacon of light.
It is hard to look at oneself sometimes, but a wise teacher once told me that the characteristics
that we dislike in others, are the same characteristics that we ourselves contain. That is the
fear. The answer is that by facing the truth of that, we are able to attend to our own faults,
and become, humbly, more tolerant of the things that make us all human.
I hope that Europe can acquire some wisdom before it is too late.
BritCol 8 Jul 2015 11:27
A very succinct article that hits some of the historical notes that explains how the elites
have controlled the masses to their advantage. All the financial laws, regulations that have been
put in place such as compound interest, the corporation as a 'person', and the takeover of the
IMF and World Bank by US and European elites are geared to keep the wealth in those few hands.
What has been so worrying is how few people seem to realize that, and cheer on the status quo.
Have they such little self-respect that they believe these elites are better, smarter than them?
All they have is all the advantages of being born rich. Although certainly some entrepreneurs,
like artists, have natural advantages.
Gerbetticus 8 Jul 2015 11:06
Dr Karen Adler states in a letter to The Guardian today:
"The debt that the Greek government is attempting to negotiate on is around £237billion. Compare
that with the British government bailout which, at its peak, guaranteed £1,162 billion to the
banks. One bank alone (Deutsche Bank) got £226 billion......
So Dr Adler, , if you're on here, can you explain how, in the face of EU prohibition of State
Aid to private companies , a , no , The German bank, was bailed out by the British taxpayer to
a total sum only £11 billion less than the total owed by the entire Greek state? Forgive me, Im
not a practitioner of the dismal science!
bridgefergal -> BeTrueForAll 8 Jul 2015 11:05
Agreed. The general ignorance extant about how money is created - it's created from thin air,
for free and is essentially an unlimited resource - is truly breathtaking. The Bank of England
had a circular on money creation a short while back, which should have been required reading for
the usual "there's no money left" Tory trolls who infest CiF. But who needs the truth when comforting
untruths are far more reassuring viz. Labour spent all the money; benefits and welfare caused
the crash and the deficit; tax cuts for business and the wealthy trickle down to everyone; only
Labour raises taxes (it can't be said often enough that Tories hiked VAT by a third in 2010).
Etc. Etc.
Maria Pospotiki -> Extremophile 8 Jul 2015 11:01
Tsipras right after his election, was the first to open Lagarde's list, he asked Swiss bank's
collaboration to impose taxes on those who had sent their money abroad, he even dealt with media
corruption even though this could do harm to his party. And all these in five months. Us Greeks
are not proud about the corruption of our system, but this corruption was reinforced by foreign
forces all these years. Even recently, the ex minister of health has signed under much suspicion
a contract with a German company offering technical support which hasn't yet been delivered. All
these years this was exactly what was happening in Greece with the consistent opinion of the european
countries. Solidarity and democracy seem to be a utopia in our days.
Chenoa mickstephenson 8 Jul 2015 10:50
Yes, exactly.
I said before and I'll say it one more time:
Syriza aren't playing ball so they must be dealt with and used as an example in case Spain, Portugal,
Italy et al get any similar ideas.
A good question that many people ask is this: why does the current illegal and fascist government
in Ukraine get loans from the IMF straight away & 'no questions asked' yet the democratically-elected
government in Greece will only be allowed to receive loans if they meet with the harsh, inhumane
conditions attached? Double standards due to ineptitude etc etc or planned tactics by neoliberal
& neoconservative ideologues? I think I'll go with the latter. This is all about economic warfare
and the asset-stripping of countries (read books like 'The Shock Doctrine' by Naomi Klein and
'Confessions of an Economic Hitman' by John Perkins for more info) it's all been done before in
so-called 'developing countries' and they are currently doing it to the 'developed countries'.
Also, research shows that the US/Israel/Europe/NATO and allies (the actual planners are linked
to the BIS, CFR, Committee of 300, Trilateral Commission aka the corporatocracy) want global hegemony
and won't stand for any competition. The neocons/neolibs/zionists have even written books and
documents about these things themselves:
- 'The Grand Chessboard: American Primacy And Its Geostrategic Imperatives' by Zbigniew Brzezinski
- Project for a New American Century
- 'Crisis of Democracy' by the Trilateral Commission
- The Wolfowitz Doctrine:
"Our first objective is to prevent the re-emergence of a new rival, either on the territory
of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly
by the Soviet Union. This is a dominant consideration underlying the new regional defense strategy
and requires that we endeavor to prevent any hostile power from dominating a region whose resources
would, under consolidated control, be sufficient to generate global power."
Brollachain 8 Jul 2015 10:31
The Maastricht treaty, establishing the European Union and the euro, was built on a lethal
delusion: a belief that the ECB could provide the only common economic governance that monetary
union required. Those sober, suited, serious people...turn out to be demented utopian fantasists,
votaries of a fanatical economic cult.
Well, quite, because in Guardianland the basic delusion is to believe in a market system in
the ifrst place.
If, on the other hand, you do subscribe to the market - as just about everybody on the planet
outside the Guardian does - then one of the things you could do would be to link up with other
people of the same mind, and set some rules for the market. But then , as part of the price for
joining the club, you also have to keep to the rules.
Monbiot is quite right; ECB is not democratic in this sense. It's a game manager - in its way,
not unlike a moderator on CiF, for example. Democracy doesn't really come into it. As a participant,
you may like the rules, or not, but nobody forced you to join the club in the first place - the
joining part is where democracy comes in, and everyone gets to decide whether to join or not.
Now, Monbiot doesn't like this; but then, he doesn't believe in the system to start with. Like
many Guardian writers, he believes in a system where there is an inexhaustible pot of Scott Trust
money to support everyone's way of life, and no accountability whatsoever to produce a product
that anyone is actually prepared to pay for. Not unlike the Greeks, in fact, until about two days
ago.
So what exactly happened recently? In the first place, the Greeks were so keen to get into the
game that they lied their way in. Since then, Greek governments have lied repeatedly to stay in.
The last Greek Finance Minister was so contemptuous of the system that he openly declared his
determination to 'game the system' - to take it for all it was worth, and give nothing in return.
From his point of view, there was literally nothing to lose. If the system gave in, he could claim
victory. If the system failed, this would simply be an interesting academic demonstration of the
correctness of his own convictions. If Greece left, or was ejected from the system for ignoring
its rules, then there would always be the Monbiots of this world, with their Scott Trust mentalities,
to put the blame on everyone else.
Let's once and for all do away with the myth that all this is somehow to do with 'austerity'.
Were Monbiot's ecological pretensions ever to be realised, life in the West would be infinitely
more austere than anything the ECB has proposed. Monbiot is not against austerity, in fact he
is all for it, provided it is on his own terms; he is against 'the system'.
The system is the market system, which in its current incarnation defers to the not-so-invisible
hand of organisations such as the ECB. That is the way the game works , as played nowadays. Monboit
needs to be honest with himself. Democracy and markets are two sides of the same coin. If you
have a planned economy, democracy makes no sense, since the State invariably knows what is best
for the people anyway.
So, as a non-believer in democracy, why is he concerned about 'undemocratic powers' in the first
place? In his ideal, market-free State, democracy would not exist. Let the Greeks starve, should
be his war-cry - just as it seems to have been Varoufakis's. Let the whole of Europe starve, as
long as it brings 'the system' down! Who cares, as long as the game ends with the withering away
of democracy and the market he so heartily detests.
BeTrueForAll Rusty Richards 8 Jul 2015 10:29
The EU were as much a part of the lie to help Greece gain membership of the EU as the
Greeks were and must be held equally liable. An all round con job by the EU and the IMF.
Correct! The motive was the wealthy wanted the Greeks to join because they could "rent" out
their wealth to the Greek government in the form of Greek government bonds and at a higher interest
rate to boot than other Eurozone countries particularly Germany. Where there's greed there's always
miscalculation of risk!
JustsayNO1954 MightyDrunken 8 Jul 2015 10:28
"The UK doesn't need the IMF. We have Gideon Osborne."
That's just as well, because we have nothing left to sell!
Unlike the Greeks, we gave ours away without a fight, the only thing left are Public Services
and they go in the TTIP!
TTIP is the NWO next move, which will give Corporations control of each nations Sovereignty,
it's also a Slave Charter, which is why EU insist on Free Movement!
BeTrueForAll cambridgefergal 8 Jul 2015 10:20
Great article. Particularly nails the canard that right wing IMF policies are "natural",
"objective" and "correct." All economics is politics in disguise, especially neo-liberal economics."
Your comment really hits the nail on the head in regard to the Greek debt fiasco and indeed all
the Austerity War-Mongering politicians around the planet. The "politics" is really about a few
trying to get away with "dominating" the many!
Geoffrey Ingham, the Cambridge University Professor of Sociology, in the concluding remarks of
his truly excellent book "The Nature of Money" states the following:-
"...... the two sides of the economy - entrepreneurial (and consumer) debtors - struggle with
creditor capitalists over the real rate of interest."
I would add to this that in reality creditor capitalists prowl the planet like savage beasts always
looking to force societies to be as utterly dependent upon privately created money for sale as
possible and ignorant of sovereign governments ability to create public money debt and interest
free.
The Eurozone is a classic example of the war going on between public interest and private greed.
Likewise the war in the UK with the austerity promoting Conservative and Labour Parties trying
to pull the wool over individual's eyes that there is no such thing as a sovereign society being
able to create public money.
roninwarrior 8 Jul 2015 10:17
Nothing here many haven`t worked out long ago, but still good to see the truth being written.
This should lead people to the current trade agreements being negotiated secretly. TPP and TTIP
are completely nefarious items of legislation that will further destroy democracy, and people
need to enlighten themselves and start leaning on their local representatives to be the will of
the people.
I watched this recently, and although it`s not directly on topic of these trade agreements, what`s
said within it has extremely pertinent echoes to how these processes are being carried out, and
generally the entitlement attitude of these corrupted plutocrats.
Greece has once again taught the world a lesson in democracy, and the world needs to take careful
heed. It`s also worth
revisiting the words of Joseph Stiglitz, , recently published in these very pages.
Stiglitz said,
It is hard to advise Greeks how to vote on 5 July. Neither alternative – approval or rejection
of the troika's terms – will be easy, and both carry huge risks. A yes vote would mean depression
almost without end. Perhaps a depleted country – one that has sold off all of its assets, and
whose bright young people have emigrated – might finally get debt forgiveness; perhaps, having
shrivelled into a middle-income economy, Greece might finally be able to get assistance from
the World Bank. All of this might happen in the next decade, or perhaps in the decade after
that.
By contrast, a no vote would at least open the possibility that Greece, with its strong democratic
tradition, might grasp its destiny in its own hands. Greeks might gain the opportunity to shape
a future that, though perhaps not as prosperous as the past, is far more hopeful than the unconscionable
torture of the present.
I know how I would vote.
Youmadbrah 8 Jul 2015 10:14
Corruption at all levels and dysfunctional financial and legal systems are at the heart of
any developing economy crisis. Spending less on more vulnerable people in the society will do
nothing fix it. Governments usually go this route because the old and the children are less likely
to revolt, well they did in Greece so at the democracy works there. The way to fix the country
is by radical reform and debt relief. Austerity is just a patch on a dysfunctional system.
skinnywheels feliciafarrel 8 Jul 2015 10:09
This idea that the Greeks went and blew all the money on women, cars and drink is a convenient
argument for insisting that a nation of people are made to pay for reckless actions of others
that were largely out of their control.
The Greek people did not know that Goldman Sachs had cooked the books to allow them entry
into the Euro. They didn't know that Goldman Sachs was betting against them providing the final
nail in the coffin of their economy. They didn't know that sub prime mortgages were being re-packaged
as mortgage backed securities causing a GLOBAL financial crisis. Only the most informed would
have been able to see through their previous governments lies about spending levels.
There was asymmetric information, so when the huge amount of spin and marketing was used to get
people to take on these loans people were not aware of all the facts. These loans should not have
been made and there are far more factors involved then just Greeks partying all their money away.
So why should it just be the Greek people who pay? Why not the banks who were offering out loans
at a time when they must have known there was a high likelihood of default?
TruthseekerD 8 Jul 2015 09:54
Indeed, Sir!!
It beggars belief that anyone with a conscience and an open mind can defend the Troika/IMF. They
did this to African countries throughout the latter half of the 20th century, hence the problems
and instabilities that have continued to unfold there. People in the west didn't give a damn then
and stayed asleep, believing the victim-blaming propaganda that gets put about to create a perception
that 'the poor did this to themselves'.
Now, having run out of developing countries to pillage and plunder, they have turned their parasitic
gaze towards Southern Europe. Again, disingenuous bullshit is sold through their complicit media
wing of the vampire banking elites that buys into the right-wing nationalism and isolationist
mood that has been carefully cultivated, sowing seeds in the minds of the unquestioning that 'they
were profligate, it's their own fault and they should take their medicine'.
It's only when the shit hits the fan (and it will) in a major western economy that enough people
will suddenly wake up and smell the coffee, and realise that the banking elites are the ones controlling
bought and paid for puppet governments, leading the majority to hell in a handcart.
The much-vaunted sham of western democracy has been exposed - if a people elect a government that
doesn't fit in with the agenda of the parasitic banking elites, it is discredited and destabilised
so as to punish them for their temerity in not bending over for more virtual slavery. That's what
this is really about..........
PixieFrouFrou SocalAlex 8 Jul 2015 09:51
'And to think a decade and a half ago, Monbiot was one of the reasons why I paid for the (paper)
Graun every day. I am DONE with this paper!'
George has done sterling work in his reportage on environmental matters. I salute and support
him for this. Just don't read any of his articles on finance or economics.
Albert_Jacka_VC 8 Jul 2015 09:37
It should never be forgotten that economics of the Austrian School, as re-baptised by Friedman
& Co as economic rationalism, or neo-liberalism, was born of religious impulses -- by fat Calvinists
for whom Hell was for others, not for their own class.
And class warfare is what neo-liberalism is. Guilt and shame over sinful debt are the propaganda
weapons. But they grow blunt, when the fraud becomes exposed.
The Euro phase is war by the banker class, on everyone else. Only the One Percent are supposed
to benefit.
The Irish fell for the trap, Spain's Indignados appear to have been infiltrated by Soros shills,
but in Greece, they have run into a problem. SYRIZA is in touch with a desperatre people, whose
backs are against the wall, and who have nothing to lose.
The Eurogarchs had better beware. SYRIZA owns printing presses, and is perfectly able to begin
running off tewenty-euro notes. The next phase, now that the Troika has bared its bloody fangs,
is open and guerilla war against these vicious parasites. Harrying the Germans is not novel to
Greeks. They did it before, during the war. And Greece is not alone.
BeTrueForAll Bob adda 8 Jul 2015 09:44
It is hard for those of us on the left to admit, but Margaret Thatcher saved the UK from
this despotism.
I was never a fan of Margaret Thatcher's but on this issue she was spot on. I am so glad that
Britain is not part of the eurozone. It is an extremely destructive force that I think will
end up destroying the EU.
Unfortunately this is myth making due to a shallow understanding of money mechanics. Here is
Margaret Thatcher declaring there is no such thing as "public money":-
"One of the great debates of our time is about how much of your money should be spent by the State
and how much you should keep to spend on your family. Let us never forget this fundamental truth:
the State has no source of money other than money which people earn themselves. If the State wishes
to spend more it can do so only by borrowing your savings or by taxing you more. It is no good
thinking that someone else will pay-that "someone else" is you. There is no such thing as public
money; there is only taxpayers' money."
http://www.margaretthatcher.org/document/105454
Now see my above comment why free "public money" has to be created before "private money" for
sale can exist and why public money is essential to deal with crises and in particular crises
caused by the misuse of private money creation.
dedalus77uk 8 Jul 2015 09:16
Agreed: the IMF is politicised and has operated as a means of enforcing market capitalism
on countries which were not in a position to make it work. Agreed: the EU project and the single
currency in particular were extremely ambitious projects which in some respects were based on
a degree of utopia and some pretty fundamental fallacies. None of which excuses successive Greek
governments for being complacently corrupt, economically incompetent and, in Syriza's case, deliberately
inflammatory, of course. Not that Greece is entirely alone in this, even within the EU, though
as shambles go it takes some beating.
Two things strike me, though.
One is that, if the IMF's policies and strings are so obviously bad, severeign governments
can choose to not avail themselves of its funding and not enter into a Faustian pact. It's
not as easy as getting a big load of money upfront, of course, but if the implication is destroying
your economy and putting your country at the mercy of faceless international institutions and
its capitalist purse-strong holders, then that would seem to be the right choice, no? No-one
is being forced at gun-point to drink from the poisoned well, though I appreciate that much
pressure can be brought to bear, and it takes a strong government to resist that. But everyone's
still responsible for their own choices, at the end of the day: it's not IMF or bust.
Secondly, the concept of allowing countries access to money in return for certain reforms
is not in itself a bad thing, if those reforms are in fact the "right" ones. That doesn't mean
only economic reforms - in fact perhaps it shouldn't mean economic reforms at all. Perhaps
what these reforms should be more focused on is human rights: ie, ensure that there is a proper
and independent judiciary and a transparent legal process; ensure that national assets are
distributed equitably; ensure that there is proper participation in the democratic process,
etc - all things which are in the UDHR and which actually serve to make a country more stable,
more prosperous and - importantly - more attractive for investment. Is this perhaps the future
of international money-lending?
If so we need someone to either reform the IMF, or set up the "ethical" alternative to
the IMF - any takers?
MightyDrunken Stilts 8 Jul 2015 09:16
It is the obvious problem with the IMF, some countries contribute and other borrow. The ones
who contribute gets the votes which means the power is in the hands of the creditors.
Therefore if a country is unlucky enough to need an IMF loan they have to sign a deal which
is in the creditors interest and not their own. However the purported purpose of the IMF is not
to further the interest of the developed nations but to;
foster global growth and economic stability by providing policy, advice and financing to
members, by working with developing nations to help them achieve macroeconomic stability, and
by reducing poverty.
Terence Skill rathbaner 8 Jul 2015 08:57
As a German, I want to tell you two things. 1st: I totally agree with your point. 2nd: But
Wolfgang Schauble is everything but blind. He is one eager globalist using his power to the fullest
to reach his goals. To me, it all depends on the assault on his life in 1989 - he should never
had become the interior minister of Germany after that (set up several surveillance laws "to protect
the public from terrorism", but only achieved one thing: surveillance) nor the financial minister
of this country.
His view on the world and how things should be is just another one than ours might be - his
vision has always been a European super-state. unfortunately he is a psych, oder "damaged goods"
as I believe to call him. A politically motived criminal who shouldn´t be in disposal of more
than his own, barrier-free house.
onoway 8 Jul 2015 08:52
The thing is that the politicians who get in do not practice what they promise.
Nobody gets into power promising to make things worse for people, they spin things so that what
they say will do has the shiny promise of a better future. Politicians and businesses have learned
very well how to push the emotional buttons hard wired into humanity. Witness the way women were
brought to the idea that smoking was a symbol of independence and the implication that women who
did not smoke were dependent and servile. Nothing is said at the time about cancers and other
issues directly related.
Also, people have a very limited choice as to who they vote for, the only option to protest the
choices is to abstain, which accomplishes nothing but make it easier for the government to push
through things they would never otherwise be able to do.
Nobody rational would vote for total control of the world's food supply by 4 or 5 chemical companies,
possibly the most powerful being one for which the basis of their business is the development
and manufacturing of poisons, but that's now what we have, mandated and promoted by governments.
Perhaps a suggestion made on QI is the answer, instead of career politicians, all of whom are
in it for the power it gives them, governments should be run like jury duty, your turn comes up
you are part of the government for however long. Or as the Inuit and others did; nothing can become
law unless ALL the politicians agree, if they don't, then it simply doesn't happen. Then we might
get back to some form of democracy.
At the very least, it would take longer to get to the totalitarian state we are rapidly approaching
if not indeed already in. All we have now is the (very expensive) veneer, not democracy at all.
MrBlueberry DrChris 8 Jul 2015 08:41
The wealth of this world is owned by the Corporate companies not governments and the gap keeps
growing each year. For example Corporates take 900$ billion annually in tax avoidance from poor
countries while the poorest countries pay 600$ billion in debt each year to the rich corporations.
In all 2$ trillion goes from the poorest countries to bolster the wealth of the riches corporations.
The total wealth of the world is 223$ trillion.
8 out 6 people are poor. The richest 300 people (not governments) have the same wealth as the
poorest 3 billion. It's worth pondering over.
rathbaner 8 Jul 2015 08:40
I'v been struck many times by the similarity in attitude - and the blindness - shown by Wolfgang
Schauble and by Lord John Russell.
Russell to Parliament at the height of the famine: "Sir, I am obliged to say, therefore, that
while we attempt all that we think practicable, we must, in the first place, refuse to make promises
of that which is out of our power; and in the next place, we must call upon and expect those who
have local duties to perform in Ireland, to perform those duties, and to assist the Government
and Parliament in their arduous duty: and when I say that I expect this, I am quite sure that
many will perform it, because I know that in many, very many instances, the resident proprietors
in Ireland have been most ready with their money, with their time, and with their attendance,
in endeavouring to provide for the relief of their destitute countrymen."
Just like Schauble saying we've done everything we can and it is now up to the Greek govt to
rescue themselves and their country.
Both seem utterly blinded to the - utterly obvious - reality by their ideological beliefs.
And all this while Ireland was a net exporter of food (to the Empire) and German banks and the
ECB are making profits on the €bn from interest on the Greek loans.
halfdan Rahere2015 8 Jul 2015 08:39
Indeed. When one looks at the money lent to bail out a number of banks, e.g. $868 billion to
Barclays, why can it not be done to bailout a national economy. There could be conditions attached,
such as a caretaker financial advisory team to make sure it was spent correctly, the aim being
to get the Greek economy back into a position from which it could grow rather than fail. This
may have been done, but Greeks being Greeks, they won't look a gift horse in the mouth for fear
that it is a wooden one.
It's not Jeb Bush. It's Jeb Romney . "...Having grown up in an era when Americans had hope for the future, I was the one who walked away
angry, for her sake. People want to work – they just need real jobs." . "...this country has been abused by people who have no concept of working for a living, for way
too long Jeb has no concept of actually "working" for a living therefore it's not surprising that when
he opens his mouth stupidity falls out…."
The economic world is obsessed with growth - bigger revenues, more profits, broader markets (and
just not regulation). The bias came across today via Jeb Bush who, in answer to a question from the
Manchester, New Hampshire Union Leader, said the following:
My aspiration for the country and I believe we can achieve it, is 4 percent growth as far as
the eye can see. Which means we have to be a lot more productive, workforce participation has
to rise from its all-time modern lows. It means that people need to work longer hours" and, through
their productivity, gain more income for their families. That's the only way we're going to get
out of this rut that we're in.
I remember once getting into a discussion with a number of corporate executives from public
companies. I was giving a talk on some plain-English filing requirements. The executives were
complaining roundly about more regulations. "It's killing us - KILLING US!" one literally said.
I turned to him and asked, "Did you have higher revenues this year than last?" He said, "Yes."
I asked, "Did you have higher profits?" "Yes," he answered. "Then you're not getting killed,"
I said. Yes, there are costs of regulations and there are times legislators can overdo things
because they're either justifying their own existence or trying to position themselves for reelection.
However, costs *have* been reduced. Companies are generally far more profitable now than in the
past. Regulations are necessary as companies have proven that without being compelled, they will
often do things that are bad for the environment, bad for communities, and bad for the economy.
That's why we have environmental legislation, anti-bribery laws, labor laws like overtime requirements,
and a host of other things. If companies are finding it too tough, they can raise their prices
(and they do that anyway on a regular basis) or make their operations more efficient. If they
can't, maybe they shouldn't be in business. If you want to take a market view, then take a full
one.
Elarie Rose
Amazing. I never thought to see a business oriented publication like Forbes tell the truth
about employers. A few weeks ago I had a casual conversation with a young women that I met casually
at a lecture. She was really lovely, well-spoken and intelligent. She works for minimum wage at
a supermarket, is trying to afford a few classes at a time at a community college, never expects
to own a house and assumes that she will never have children. The most chilling thing about the
whole conversation was her calm acceptance that this is just the way the world is, with no expectations
that life in America should be any different. She wasn't angry because everyone else in her age
group was in the same situation and thought it was normal.
Having grown up in an era when Americans had hope for the future, I was the one who walked
away angry, for her sake. People want to work – they just need real jobs.
wigglwagon
The only reason America ever had the MOST PROSPEROUS economy was because America had the BEST
PAID employees and consequently, American businesses had the customers with the most money to
spend. American business owners are SO GREEDY that they are using free trade agreements, immigration,
and deregulation to drive down wages and destroy benefits. In their quest for short term profits,
employers are destroying their own customer base.
Gregory A. Peterson
most of the hourly laborers that I know are more than happy to work a "few" hours of overtime
for a few extra bucks….here's the problem….a fair number of employers absolutely refuse to pay
overtime and IF an employee happens to get some overtime they are promptly reprimanded or written
up (I have actually worked for a couple of those companies)…..
companies want all their income to go into their pockets they seem to have forgotten the old
saying that one has to spend money to make money…..
this country has been abused by people who have no concept of working for a living, for
way too long Jeb has no concept of actually "working" for a living therefore it's not surprising
that when he opens his mouth stupidity falls out….
apparently it's a genetic issue within the Bush family…..
The Greek referendum seemed to have given some push towards a compromise. But the powers that
rule the Euro did not agree. The European Central Bank continues to starve the Greek banks. In a
few days they will be toast and a Greek exit from the Euro will be inevitable. That seems to be what
the hardliners in Berlin around the psychopathic Finance Minister Schaeuble want to achieve.
The Greek Prime Minister Tzirpas managed to get the backing of the people and most other political
parties for a compromise offer. But the promises he made before the referendum already fall apart.
The banks did not reopen, a deal is not in sight and given the fast deterioration of the real economy
the situation will soon be immensely more difficult.
He will have to answer questions. Why can't he present a written proposal in Brussels today as
he promised to do? Why hasn't he anticipated the assault on the banks by the ECB and the powers behind
it? Why hasn't he prepared for an exit from the Euro? Why was there no scenario planning anticipating
the current situation?
The German media and politicians have villainized the Greek so much, based on crude propaganda
a denial of the on facts, that a Grexit seems to be the now favored public opinion in Germany. The
public opinion in other northern and eastern European countries is very much the same. People do
not want to "give more money to the Greek" even though hardly any money was given to them so far.
What was given in taxpayer guarantees was given to German and French banks. The consequences of a
Grexit seem to be beyond the realm of discussions.
Supporting some partial debt jubilee now, hardly noticeable when stretched over decades, and giving
the Greek economy the ability to grow out of debt would be much cheaper for European taxpayers than
a complete Greek default which will trigger the payment of hundreds of billions of guarantees. With
an exit from the Euro such a default is very likely. Greece would then have no debt at all. It could
again borrow from maybe Russia and other sources who would be happy to make some money lending to
a then nearly debt free country.
On top of the
catastrophic results of a five years austerity program the carnage in Greece from a hasty, unplanned
bankruptcy and exit from the Euro would be huge. But the example of other cases of state bankruptcy
show that the recovery is usually quite fast and the long term possibilities much more favorable
than the slow death a continued austerity program would guarantee.
(I am still under an unusual workload but the end is in sight.)
Posted by b at 12:19 PM
| Comments (161)
i enjoyed hoarsewhisperer's post on the last thread -
Interesting tweet over at Xymphora...
Shafik Mandhai
@ShafikFM
The money Greece owes, $370 billion, compared to the taxpayer-funded bailouts banks got...
Citigroup - Citigroup $2.513 Trillion
Morgan Stanley - $2.041 Trillion
Merrill Lynch - $1.949 Trillion
Bank of America - $1.344 Trilliom
Barclays PLC - $868 Billion
Bear Sterns - $853 B
Goldman Sachs - $814 B
Royal Bank of Scotland - $541 B
JP Morgan Chase $391 B
Deutche Bank - $354 B
UBS - $287 B
Credit Suisse - $262 B
Lehman Bros - $183 B
Bank of Scotland - $181 B
BNP Paribas - $175 B
Wells Fargo - $159 B
Dexia - $159 B
Wachovia - $142 B
Dresdner Bank - $135 B
Joseph Stiglitz usa today article from today.. "Most bailouts (for instance, the Mexican bailout)
are not bailouts of the country but of the Western banks who didn't do adequate due diligence. It
could be nice that the German and other European governments bailed out their banks (though whether
that is good policy is another matter); but the Greeks rightly asked, why it should be done so much
on their backs."
The German media and politicians have villainized the Greek so much, based on crude propaganda
a denial of the on facts, that a Grexit seems to be the now favored public opinion in Germany.
The public opinion in other northern and eastern European countries is very much the same.
Qui bono?
"The imposition of the euro had one true goal: To end the European welfare state." Maybe it needed
a push?
Yeah, kind of puts it into perspective doesn't it. The $370 billion the predatory-mob-owned-banks
suckered Greece for after the economic hit men sold them the Brooklyn Bridge that now got issued
back to them vs the upward of $10 Trillion the American regular joe taxpayer got hoodwinked for.
The Greeks hit back against the corporate welfare state. About time someone stood up to the international
syndicate.
Papandreou in 2011 wanted to program a referendum to refuse the bail-out. It was known (easy)
that the Greeks would vote OXI, clear as day. (As in the vote last week.) The 'institutions' convinced
Papandreou to not do it, or he capitulated, or was never serious about it, who knows.
BBC article, Nov 2011, Paul Mason, details the consequences of the referendum (had it taken place),
and actually outlines the future a bit. Yes, pretty much what did go down in 2015. The same arguments,
discussions points, themes.
Private debt was shunted to the public. The Guardian, for ex. (April 2015) lists the massive debts
and hides who the creditors are (except for some well know names like IMF) and hints that Greece
does not want to pay:
FYI, Yves Smith at nakedcapitalism.com claims that almost all of the debt is non-dischargeable
(because it is made under a legal regime that makes discharge virtually impossible). She also points
out that 'odious debt' is a term that has not yet been recognized by courts as a means of discharging
debts.
RBS did a study, however, that agrees with your assessment. They estimated that the cost to the
Eurozone of a GRexit is about 220bm Euro vs. 130bn to keep Greece in the Eurozone (writing down debt,
etc.).
Notably, EU countries that have not adopted the Euro are doing fine. And Greece deposits of natural
gas have reported to have been discovered in Greek waters (which doesn't seem to get talked about
much). With that and other commercial opportunities, I'd think that they would recover from a GRexit
fairly quickly.
U.S. common law may not recognize odious debts, but it does recognize the idea of
unconscionable contracts,
which a court may refuse to enforce:
Unconscionability (known as unconscionable dealing/conduct in Australia) is a doctrine in contract
law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of
the party who has the superior bargaining power, that they are contrary to good conscience. Typically,
an unconscionable contract is held to be unenforceable because no reasonable or informed person
would otherwise agree to it. The perpetrator of the conduct is not allowed to benefit, because
the consideration offered is lacking, or is so obviously inadequate, that to enforce the contract
would be unfair to the party seeking to escape the contract.
Unconscionability is determined by examining the circumstances of the parties when the contract
was made, such as their bargaining power, age, and mental capacity. Other issues might include
lack of choice, superior knowledge, and other obligations or circumstances surrounding the bargaining
process. Unconscionable conduct is also found in acts of fraud and deceit, where the deliberate
misrepresentation of fact deprives someone of a valuable possession. When a party takes unconscionable
advantage of another, the action may be treated as criminal fraud or the civil action of deceit.
Expressions like "Greek elite", "German elite" and "European elite" seem inappropriate for a class
of people who could care less about national or regional interests. Where they live is merely a matter
of convenience, habit or personal preference.
SingingSam | Jul 7, 2015 4:32:33 PM | 26
An important point that b makes in his post is the building momentum in Germany to not just hold
the line on austerity but actually crush Greece. Schauble now outpolls the sainted Merkel. This from
today's NYT:
That stance puts pressure on Ms. Merkel domestically, emboldening politicians who believe that
Germany has erred not by pushing too hard for austerity in Greece but by tolerating modest steps
toward softer terms. When German lawmakers were last called upon to vote on extending the Greek
bailout in February, 29 deputies from her center-right bloc broke ranks and opposed the government.
Since then, conservatives' fury at Greece has only mounted. Mr. Schäuble, who last week
for the first time bested the chancellor in a well-regarded political popularity poll, is
an essential partner for Ms. Merkel in keeping the anger under control.
Tsipras with that 61% "Oxi" under his belt is going to have to start issuing drachmas soon.
With the exception of Varoufakis and his follower Euclid Tsakalotos both of whom have PhDs in
economy, NONE of the EU debt negotiators are economists.....Schauble of Germany is a Lawyer, Christine
Lagarde of the IMF is a lawyer, and Jeroen Dijsselbloem of the Netherlands, the financial head of
the EU is an agricultural engineer(unelected) . Go figure! They are a group of clueless wonders with
demands. They have strong armed and looted Greece. Greece should have defaulted in 2010. Their debt
would be a whole lot less. But the ECB made a few billion on this racket, as did the banks.
Austria will have a referendum on whether to stay in the EU.....If Greece exits the EU, so will
Spain, Italy, Ireland and hopefully Austria and the Netherlands. This is the Soviet Union of Europe.
17 UNelected people running the Continent for the benefit of the elite. Democracy has gone. The pitchforks
are coming soon. People are fed up.
@43
One of us (Palast, an economist by training) has had long talks with the acknowledged "father"
of the euro, Professor Robert Mundell. It's important to mention the other little bastard spawned
by the late Prof. Mundell: "supply-side" economics, otherwise known as "Reaganomics," "Thatcherism"
– or, simply "voodoo" economics.
The imposition of the euro had one true goal: To end the European welfare state.
For Mundell and the politicians who seized on his currency concept, the euro itself would be
the vector infecting the European body politic with supply-side Reaganomics. Mundell saw a euro'd
Europe as free of trade unions and government regulations; a Europe in which the votes of parliaments
were meaningless. Each Eurozone nation, unable to control neither the value of its own currency,
nor its own budget, nor its own fiscal policy, could only compete for business by slashing regulations
and taxes. Mundell said, "[The euro] puts monetary policy out of the reach of politicians… Without
fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on
business."
"[All capital] is created by the state in one way or another." Nonsense. Capitalists make capital,
otherwise they wouldn't own it.
Mr Maloney @44:
Looks like Rifkin's diagnosis was mistaken:
According to Rifkin, the "European Dream" is one in which individuals find security not through
individual accumulation of wealth, but through connectivity and respect for human rights.
He missed the neoliberalizing component of EU crapitalism but he also missed the looming inter-crapitalist
warfare.He's kinds glitchy. Can you tell me how he got from "The End of Work: The Decline of the
Global Labor Force and the Dawn of the Post-Market Era" to "The Age of Access: The New Culture of
Hypercapitalism, Where all of Life is a Paid-For Experience"?
Black mansplains how fraudulent yields were a management tactic to goose their own income,
but neglects to note that this was endemic fraud, a virtual system of fraud. It is almost certain
some realized this system of fraud was ultimately backstopped by the government and that it could
be used in a neoliberal attack on government. Black, in his dotage, focuses blame on the Troika:
The troika, however, while purporting to be neoliberal, is actually an old-fashioned means of
bailing out German and French banks that make bad loans.
Is this in any way credible? He acknowledges widespread "control fraud", but instead of arguing that
this disease is exacerbated by neoliberalism he implies the rectification of "old fashioned means
of bailing out banks" with their commitment to neoliberalism was neglected.
First of all your age-ism sucks. Leave those thoughts unexpressed. Secondly, your
comment is nonsense. Black is probably the world's leading critic of systematic banking fraud, but
only when there is actual. French and German banks making unsecured loans to Greek banks was not
fraudulent. The investment bankers who sold mortgage-backed securities they knew were 'crap' were
engaging in fraud.
And your decontextualized quote needs to be remedied:
The neoliberal "modern finance" theories such as the "efficient market hypothesis" are premised
on lenders providing "private market discipline." That, in turn, is premised on the assumption
that when lenders make bad loans (whether for reasons of fraud or incompetence) they will suffer
the resultant losses rather than being bailed out. The troika, however, while purporting to be
neoliberal, is actually an old-fashioned means of bailing out German and French banks that make
bad loans.
The context of the preceding couple of sentences shows that obviously Black was exposing the hypocrisy
of 'neoliberals' who spout about 'the discipline of the market' and then use the government to bail
out well-connected, thoroughly corrupting corporations and banks whenever they get a chance.
Everybody knew what a fight would mean. The inner cabinet had discussed the details a week earlier
at a tense meeting after the European Central Bank refused to increase liquidity (ELA) to the
Greek banking system, forcing Syriza to impose capital controls.
It was a triple plan. They would "requisition" the Bank of Greece and sack the governor under
emergency national laws. The estimated €17bn of reserves still stashed away in various branches
of the central bank would be seized.
They would issue parallel liquidity and California-style IOUs denominated in euros to keep
the banking system afloat, backed by an appeal to the European Court of Justice to throw the other
side off balance, all the while asserting Greece's full legal rights as a member of the eurozone.
If the creditors forced Grexit, they - not Greece - would be acting illegally, with implications
for tort contracts in London, New York and even Frankfurt.
They would impose a haircut on €27bn of Greek bonds held by the ECB, and deemed "odious debt"
by some since the original purchases were undertaken by the ECB to save French and German banks,
forestalling a market debt restructuring that would otherwise have happened.
"They were trying to strangle us into submission, and this is how we would retaliate," said
one cabinet minister. Mr Tsipras rejected the plan. It was too dangerous. But a week later, that
is exactly what he may have to do, unless he prefers to accept a forced return to the drachma.
...
The two sides are talking past each other, clinging to long-entrenched narratives, no longer
willing to question their own assumptions. The result could be costly. RBS puts the direct financial
losses for the eurozone from a Greek default at €227bn, compared with €140bn if they bite the
bullet on an IMF-style debt restructuring.
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.
That progenitor is former University of Chicago economist Robert Mundell. The architect of
"supply-side economics" is now a professor at Columbia University, but I knew him through his
connection to my Chicago professor, Milton Friedman, back before Mundell's research on currencies
and exchange rates had produced the blueprint for European monetary union and a common European
currency.
Mundell, then, was more concerned with his bathroom arrangements. Professor Mundell, who has
both a Nobel Prize and an ancient villa in Tuscany, told me, incensed:
"They won't even let me have a toilet. They've got rules that tell me I can't have a toilet
in this room! Can you imagine?"
As it happens, I can't. But I don't have an Italian villa, so I can't imagine the frustrations
of bylaws governing commode placement.
But Mundell, a can-do Canadian-American, intended to do something about it: come up with a
weapon that would blow away government rules and labor regulations. (He really hated the union
plumbers who charged a bundle to move his throne.)
"It's very hard to fire workers in Europe," he complained. His answer: the euro.
The euro would really do its work when crises hit, Mundell explained. Removing a government's
control over currency would prevent nasty little elected officials from using Keynesian monetary
and fiscal juice to pull a nation out of recession.
"It puts monetary policy out of the reach of politicians," he said. "[And] without fiscal policy,
the only way nations can keep jobs is by the competitive reduction of rules on business."
He cited labor laws, environmental regulations and, of course, taxes. All would be flushed
away by the euro. Democracy would not be allowed to interfere with the marketplace – or the plumbing.
As another Nobelist, Paul Krugman, notes, the creation of the eurozone violated the basic economic
rule known as "optimum currency area". This was a rule devised by Bob Mundell.
That doesn't bother Mundell. For him, the euro wasn't about turning Europe into a powerful,
unified economic unit. It was about Reagan and Thatcher.
"Ronald Reagan would not have been elected president without Mundell's influence," once wrote
Jude Wanniski in the Wall Street Journal. The supply-side economics pioneered by Mundell became
the theoretical template for Reaganomics – or as George Bush the Elder called it, "voodoo economics":
the magical belief in free-market nostrums that also inspired the policies of Mrs Thatcher.
Mundell explained to me that, in fact, the euro is of a piece with Reaganomics:
"Monetary discipline forces fiscal discipline on the politicians as well."
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.
Thus, we see that (unelected) Prime Minister Mario Monti is demanding labor law "reform" in
Italy to make it easier for employers like Mundell to fire those Tuscan plumbers. Mario Draghi,
the (unelected) head of the European Central Bank, is calling for "structural reforms" – a euphemism
for worker-crushing schemes. They cite the nebulous theory that this "internal devaluation" of
each nation will make them all more competitive.
Monti and Draghi cannot credibly explain how, if every country in the Continent cheapens its
workforce, any can gain a competitive advantage.
But they don't have to explain their policies; they just have to let the markets go to work on
each nation's bonds. Hence, currency union is class war by other means.
The crisis in Europe and the flames of Greece have produced the warming glow of what the supply-siders'
philosopher-king Joseph Schumpeter called "creative destruction". Schumpeter acolyte and free-market
apologist Thomas Friedman flew to Athens to visit the "impromptu shrine" of the burnt-out bank
where three people died after it was fire-bombed by anarchist protesters, and used the occasion
to deliver a homily on globalization and Greek "irresponsibility".
The flames, the mass unemployment, the fire-sale of national assets, would bring about what
Friedman called a "regeneration" of Greece and, ultimately, the entire eurozone. So that Mundell
and those others with villas can put their toilets wherever they damn well want to.
Far from failing, the euro, which was Mundell's baby, has succeeded probably beyond its progenitor's
wildest dreams.
To neretva'43 @59: Yes, the authoritarians will always represent their domination as "winning".
The world is a contest, and we must win. Lenin's goal was the elimination of that fraudulent struggle.
Tsipras has said that he is going to the European High Court, which is his chosen way to challenge
an expulsion of Greece by bureaucratic fiat. And If the German government really is committed to
Grexit now; then there has to be a negotiation that signifies some kind of legal structure, if that
is to happen. Tsipras has neither disrespected Varoufakis, nor does he disrespect the mandate, the
"OXI". He has simply brought someone, the new FinMin, Euclid T. in whom he trusts to close the deal.
The new man is the right person for the next phase in this struggle.
Let's remember that on Friday
the Greek PM addressed the "OXI" gathering in Syntagma, where his obvious sympathy was communicated
to the Greeks. Tsipras got the mandate he wanted. The referendum was worded in such a way as to make
the choice crystal clear.
The world financial systems rely on a whole lot of faith to operate.
It is an understatement to say that the faith in the current Western financial system is being
challenged both internally and externally.
Will any of the machinations going on diminish the power and control of the global plutocrats
that own private finance? We can only hope so for the future of our species.
I am encouraged by the conscious movement of Greece toward the EU exit, however ugly that might
be. It won't happen overnight and will cause further global financial conflict but represents a serious
challenge to continued private Western financial hegemony. If the global plutocrats don't take us
to extinction over losing their control of global finance, the new, more inclusive agreements with
countries of the world will hopefully help form the basis for government/economic cooperation over
other global challenges like climate change.
Bless Greece for having the will to say no to the private gawds of Mammon. May they stay the course.
Jackrabbit and Psychohistorian- thanks for the posts on NC. I followed some of both of your back
and forth with Yves on their threads. Disregarding that I've lost a lot of respect for a blog I really
like -- it's kind of comical. I keep thinking she owns a crap load of Greek bonds...I know, she
does a lot of good work.
You're just misrepresenting Black as exactly the opposite of what his career over the last 20
years has been about. Leaving out the out of context quote, let's go back to your statements in comment
55:
"Black mansplains how fraudulent yields were a management tactic to goose their own income" ...
No, he doesn't indicate those yields were fraudulent but that, though the yields were real they also
came with a very high degree of risk, so investors in Greek bank bonds should've demanded collateral.
And what the h@ll does any of the preceding have to do with 'mansplaining'?
"but [Black] neglects to note that this was endemic fraud, a virtual system of fraud." For years
Black has been one of the leading 'sayers' that the phenomenon of investing in high yield, high risk
bonds with a certain bailout if things turn bad is endemic. It's the cornerstone of his entire output
over the last 10 years.
"It is almost certain some realized this system of fraud was ultimately backstopped by the government
and that it could be used in a neoliberal attack on government." Not sure what "it" means here, but
you're saying neoliberal bankers' secret motivation was to 'attack government' and not to make mountains
of money? I suppose that is a possible motive, but surely a very minor one compared to the greed
is good one.
"... [Black] acknowledges widespread "control fraud", but instead of arguing that this disease
is exacerbated by neoliberalism he implies the rectification of "old fashioned means of bailing out
banks" with their commitment to neoliberalism was neglected."
No, it's the opposite: he argues that the 'control fraud' disease is exacerbated by neoliberalism.
How can anyone not read that in Black? In response to the final two clauses of that long sentence,
and ignoring the problem you're having with the word 'rectification', Black is saying that two phenomena
are taking place: (1) when it serves the bureaucracy's masters, use of the neoliberal faith to close
off government regulation; (2) violation of supposed neoliberal principles and active government
whenever that serves a corrupt bureaucracy's benefactors. (2) is the fundamental obligation, and
a bureaucrat who doesn't realize that is a short-lived one.
The threat of Greek exit from the euro comes at a very delicate time when Europe needs the support
of both Greece and the US through Nato for assistance on myriad dangerous security issues it is
facing in the Mediterranean.
However, security co-operation between the US and EU members has been sliding for many years.
If Greece suddenly refused to work with the EU on issues such as refugees, it is not at all certain
that the US would come to the rescue. Germany in particular has been berating the Americans regularly
in recent months on issues such as the activities of the National Security Agency and on sending
weapons to Ukraine and troops to the Baltic.
Angered by the heavy insolvency payments which US taxpayers would incur if Greece defaults
on IMF loans, a European call for help from Nato might fall on deaf ears. The US could easily
tell the Europeans to take care of the Mediterranean by themselves. It no longer maintains a carrier
battle group in the area, for example. The vaunted sixth fleet has been shifted – to Asia, of
course.
Merkel is famous for taking herself out of the game till the very end and then changing track
quickly if necessary. Tsipras might win this by repeating the same stuff in an endless loop.
German - transatlantic - media have switched reporting dramatically the last few days. Tabloid
Bild covers Tsipras speech on the front page - and - at the same time - the refugee crisis in Greece.
She - and CDU conservatives - are in a tight spot as she seems to plan to stand for the next
elections - and basically this is an election campaign now threatening to split her party.
There is something else - Merkel backed the Bush Iraq war against Chancellor Schröder
and used to have best contacts (as her party) with US republicans. Austerity, non state intervention
used to be ideology of the German Conservative young guard. She had to tone it down, as German society
was not prepared to vote for it, despite of the toning down she needs coalition governments. German
conservatives have now given up on US republicans as hopeless and against the values of their voters,
the chemistry with the Obama administration is not good, though.
Wikileaks came out a few days ago with the content of a - relatively harmless - phone tap of Merkel.
I understand this as a threat to get out some real damaging stuff.
German Social Democrats are too stupid to profit. Germany will - again - have a right and left
field playing against the center. Though, luckily, German society has changed.
The US seem to have called the end of "Pax Americana" in Europe.
"... [Black] acknowledges widespread "control fraud", but instead of arguing that this disease
is exacerbated by neoliberalism he implies the rectification of "old fashioned means of bailing out
banks" with their commitment to neoliberalism was neglected."
No, it's the opposite: he argues that the 'control fraud' disease is exacerbated by neoliberalism.
How can anyone not read that in Black?
fairleft | Jul 8, 2015 3:53:18 AM | 84
Yeah
Kind of hard to take seriously anyone that could read something bill black wrote and come away
with the ridiculous totally-ass-backwards nonsense that X is trying to attribute to Bill Black
Why, by golly, it's almost as if ol comrade x there is talking out of his ass
First, though he came from the centre-left towards Syriza, Varoufakis ended up consistently taking
a harder line than many others in the Greek cabinet over the shape of the deal to be done, and
the kind of resistance they might have to unleash if the Germans refused a deal. Second, because
Varoufakis is an economist, not a politician. His entire career, and his academic qualifications
are built on the conviction that a) austerity does not work; b) the Eurozone will collapse unless
it becomes a union for recycling tax from rich countries to poor countries; c) Greece is insolvent
and its debts need to be cancelled. By those measures, any deal Greece can do this week will falls
short of what he thinks will work. On top of that, politicians are built for compromise. Tsipras
has to work the party machine, the government machine, the machine of parliament. Varoufakis'
machine is his own brain. If he wound up the creditors it was for a reason: they'd convinced themselves
that Tsipras was a Greek Tony Blair and would simply betray his promises and compromise on taking
office.
Back in June 2012, the ECB, whose head was the recently crowned Mario Draghi who had less than
a decade ago worked at none other than Goldman Sachs, was sued by Bloomberg's legendary Mark Pittman
under Freedom of Information rules demanding access to two internal papers drafted for the central
bank's six-member Executive Board.
They show how Greece used swaps to hide its borrowings, according to a March 3, 2010, note attached
to the papers and obtained by Bloomberg News.
The first document is entitled "The impact on government deficit and debt from off-market swaps:
the Greek case." The second reviews Titlos Plc, a securitization that allowed National Bank of Greece
SA, the country's biggest lender, to exchange swaps on Greek government debt for funding from the
ECB, the Executive Board said in the cover note. From Bloomberg:
In the largest derivative transaction disclosed so far, Greece borrowed €2.8 billion from Goldman
Sachs in 2001 through a derivative that swapped dollar- and yen-denominated debt issued by the
nation for euros using a historical exchange rate, a move that generated an implied reduction
in total borrowings.
"The Greek authorities had never informed Eurostat about this complex issue,
and no opinion on the accounting treatment had been requested," Eurostat, the Luxembourg-based
statistics agency, said in a statement. The watchdog had only "general" discussions with financial
institutions over its debt and deficit guidelines when the swap was executed in 2001. "It is possible
that Goldman Sachs asked us for general clarifications," Eurostat said, declining to elaborate
further.
The ECB's response: "the European Central Bank said it can't release files showing how Greece
may have used derivatives to hide its borrowings because disclosure could still inflame the crisis
threatening the future of the single currency."
Considering the crisis of the (not so) single currency is very much "inflamed" right now as it
is about to be proven it was never "irreversible", perhaps it is time for at least one aspiring,
true journalist, unafraid of disturbing the status quo of wealthy oligarchs and central planners,
to at least bring some closure to the Greek people as they are swept out of the Eurozone which has
so greatly benefited the very same Goldman Sachs whose former lackey is currently deciding the immediate
fate of over €100 billion in Greek savings.
Because something tells us the reason why Mario Draghi personally blocked Bloomberg's FOIA into
the circumstances surrounding Goldman's structuring, and hiding, of Greek debt that allowed not only
Goldman to receive a substantial fee on the transaction, but permitted Greece to enter the Eurozone
when it should never have been allowed there in the first place, is that the person who oversaw and
personally endorsed the perpetuation of the Greek lie is none other than Goldman's Vice Chairman
and Managing Director at Goldman Sachs International from 2002 to 2005. The man who is also now in
charge of the ECB. Mario Draghi.
Athens: Greece on Wednesday raised 1.6 billion euros ($1.8 billion) in a sale of 6-month treasury
bonds at a rate of 2.97 percent, unchanged from the last issue a month ago, the Greek Debt Agency
said.
Such sales occur every month in Greece as part of a rollover of treasury bonds. With further
issues to Thursday, the agency aims to raise a total two billion euros in 6-month bills as part
of the rollover.
fairleft @84: "You're just misrepresenting Black as exactly the opposite ..." You mean as a bad
guy instead of a good guy?
It is common for the CEOs of the lenders to agree to lending terms in which the interest rate
on the loan is higher than the banks' typical yield on a loan – and for that "spread" still
to be grotesquely inadequate relative to the true risks of making the loan. The resultant
paradox is that the worse the underwriting (and underwriting is the first foundation of prudent,
honest banking), the higher the (fictional) nominal yield, the higher the (falsely) reported profits,
and the greater the bonuses to the elite bankers in the near term.
Black's blames the lack of underwriting here, not collateral. The fraudsters used false risk evaluation
to set the yields. There is no paradox; it's fraud. He mansplains by complexifying his explanation
in order to deflect a more thorough representation. This is a technocratic disease sympathetic to
the fraudsters in this way: the fraudsters would claim their instruments were so complex that it
was difficult to evaluate the risk. In fact they complexified them in order to mask the risk.
It's not just that fraud is endemic, fraud is a business model. It is a key component of neoliberal
political economy. Black fails to represent that adequately, partly because he's busy mansplaining
finance.
You say "you're saying neoliberal bankers' secret motivation was to 'attack government'"; this
is not what I say. Is this inability to see the obvious akin to psychological denial? The manipulated
population do not all understand the objective, some perform their function unconsciously. Some perform
it collusively. In this case, the neoliberal attack on government was an outright agenda and, at
some level, the tool of fraudulent risk assessment was allied to the goal of drowning the government
in a bathtub. Can Black admit such a "conspiracy"?
I recently came upon a term used to describe how conservatives write about left topics, which
I don't have at my fingertips. In essence, they slyly denigrate the left criticism. Black's language
denigrates the EU bankers (for using old-fashioned mechanisms) when the blame should be laid on the
fraudsters, including US fraudsters. If he "argues that the 'control fraud' disease is exacerbated
by neoliberalism", he should be acknowledging that the EU was defrauded and that it's banking system
was attacked by fraudsters, not deploying bullshit, fair and balanced, technocratic mumbo-jumbo.
The avoidance of strategic analysis makes Black a gatekeeper.
The EU Parliament has been in the hands of the neocons for a long time.
.
"...Europe and the IMF are trying for regime change in Greece. If they don't get it at the ballot
box on Sunday, I wouldn't be surprised to learn that a military coup is in the works, aided as always
by the CIA"
.
"...This chronology of events is quite selective and somewhat inexact. However I would merely point
out the fact that it considers years of dreadfully wrong policies by the troika and the previous greek
governmentsp as equivalent to Syrizas six months in power, something that borders on the astonishing.
To consider Syriza's choices as irresponsable, inexperienced, etc., is to merely repeat, in a very medíocre
fashion Lagarde's imbecile observation about the need for adults in the room. It is therefore quite
below the Observer's standards."
That the EU and IMF want regime change in Greece is not in doubt: indeed it has been admitted.
But a military coup is extremely unlikely - they'll continue to use economic and ideological methods.
DarrellKavanagh -> Peter Locke 4 Jul 2015 23:44
Or a government, which was elected to oppose the quack economic medicine which is acknowledged
worldwide to have made things immeasurably worse over the last 5 years, draws some perfectly reasonable
conclusions when their supposed partners continue to force more of the same medicine down their
throats.
Your pseudo-historical claptrap says more about you than it does about Syriza.
SoberThirdThought -> Peter Locke 4 Jul 2015 23:41
I don't know about "enriching bankers," but the Versaille Treaty was pretty much designed to
keep Germany on its knees, humiliated and weak.
SoberThirdThought 4 Jul 2015 23:38
Europe and the IMF are trying for regime change in Greece. If they don't get it at the
ballot box on Sunday, I wouldn't be surprised to learn that a military coup is in the works, aided
as always by the CIA
• NO vote: Do you want to negotiate an agreement that allows at least some money to rebuild
our country, and then pay our debts with a meaningful fraction of our growth?
• YES vote: Or do you want to go back to EZ sponsored austerity, and hope that you will
outlive its severe damage to our country?
(That's if there is any country left after Brussels technocrats run our government and all
of our children and anyone with half a brain has emigrated.)
Nobody can force a country out of the EU, much less a pack of appointed bureaucrats. All
this IN-OR-OUT talk is a big lie to force a yes vote. Even the latest IMF report is timed to ease
Greece into a YES vote.
1. If Greece votes YES, they will put a noose around their own neck. They'll no longer be a
news item, "A population starves and freezes to death for the tenth straight year in a row,
(because they chose to)." Varoufakis will do something more interesting, and so will I.
2. If Greece votes a resounding NO, democracy is still alive in at least some part of the world.
Something will happen where a country picks itself up and starts to work. This is a moment to
celebrate and watch with fascination.
3. If Greece is scared and votes 50 - 50%, well that is the power of a democracy in all of
our nations, (powerless). Half the people are probably not suffering much from austerity. Some
weak agreement will come. At least IMF already called for debt relief, which is a referendum success.
Maybe 150 countries in the world run themselves is some kind of fashion. IS GREECE NUMBER
151? Evidently many writing comments here believe it cannot happen for Greece.
The EZ boys don't have a clue what that plan could be. So far it hasn't worked at gun point
for 5 years running. Maybe they could actually take up their guns and revert to the old German
plan that was abandoned. They could disassemble everything that can be detached from the earth
and send it back to Germany.
That is the effect of what they are doing anyway. The abandoned Greek factories have
turned into scrap-iron.
lucianospalleti2 4 Jul 2015 19:48
This chronology of events is quite selective and somewhat inexact. However I would merely point
out the fact that it considers years of dreadfully wrong policies by the troika and the previous
greek governmentsp as equivalent to Syrizas six months in power, something that borders on the
astonishing. To consider Syriza's choices as irresponsable, inexperienced, etc., is to merely
repeat, in a very medíocre fashion Lagarde's imbecile observation about the need for adults in
the room. It is therefore quite below the Observer's standards.
...Sunday's referendum will take place under a kind of financial warfare not seen in the history
of modern states. The Greek government was forced to close its banks after the European Central Bank,
whose job is technically to keep them open, refused to do so. The never-taxed and never-registered
broadcasters of Greece did
the rest, spreading panic, and intensifying it where it had already taken hold.
When the prime minister made an urgent statement live on the state broadcaster, some rival, private
news channels refused to cut to the live feed. Greek credit cards ceased to work abroad. Some airlines
cancelled all ticketing arrangements with the country. Some employers laid off their staff. One told
them they would be paid only if they turned up at an anti-government demonstration. Martin Schulz,
the socialist president of the European parliament, called for the far-left government to be replaced
by technocrats. And the Council of
Europe declared the referendum
undemocratic.
With ATM cash limited to €60 a day, one shopkeeper described the effect on her customers: on day
one, panic buying; day two, less buying; day three, terror; day four, frozen. The words you find
yourself using in reports, after looking into the eyes of pensioners and young mothers, make the
parallel with conflict entirely justified: terror, fear, flight, panic, uncertainty, sleeplessness,
anxiety, disorientation.
If the effect was to terrorise the population, it has only half worked. The pollsters are simply
finding what Greek political scientists already know: society is divided, deeply and psychologically,
between left and right.
The anthropologist David Graeber points out, in his history of debt and debt forgiveness
Debt: The First 5,000 Years,
that the transaction carries the implicit threat of violence. Debt gives you the power of rightful
coercion with all the blame attaching to the victim. But rarely has that power been used as Europe
used it against Greece last week. In the 2013 Cypriot crisis, where the EU enforced the seizure of
money in people's bank accounts, the government caved in at the first confrontation.
... ... ...
Germany's mistake, in this sense, since 2010, has been its failure to demand a modernised and
productive capitalism. It imposed European debt rules via parties who were never prepared to impose
the European norms of business and social equity. Indeed, the EU has relied on a local business elite
that is often physically absent: happier in Knightsbridge than in its Athenian equivalent.
When Angela Merkel and Nicolas Sarkozy overthrew first George Papandreou and then Silvio Berlusconi,
they could at least console themselves that it was a political mercy killing. Not many people rioted.
And as Sarkozy implied, when he slapped me down at a press conference, this was the European way.
After this week, the narrative of the EU as "imperialist" will blossom in Greece – but true imperialisms
imposed order. The outcome here is likely to be very different.
…James
K. Galbraith is right with his description of those leaders:
[T]he leaders of today's Europe are shallow, cloistered people, preoccupied with their local
politics and unequipped, morally or intellectually, to cope with a continental problem. This is
true of Angela Merkel in Germany, of François Hollande in France, and it is true also of Christine
Lagarde at the IMF. In particular North Europe's leaders have not felt the crisis and do not know
the economics, and in both respects they are the direct opposite of the Greeks…
####
As always, a voice of sanity and common sense. After bailing out West Germany in the 1960s,
when the boot is on the other foot, they seem to have a rather short memory…
Like any neoliberal country Greece is a divided country with 20% of population representing "fifth
column of globalization" and benefiting from it and 80% suffering from it. . "...Well that is the rub. Western banks effectively control the cost of credit globally. You either
fall into line or you're perpetually behind the curve until you sell all your goods of any value." . "...Are you even aware that this is not actually loans that the Greek people got? If I loan
money to your corrupt banker and than ask YOU to return it, will you be less offensive?
" . "...The 2010 bailout was the one that allowed private French, Dutch and German banks to transfer
their liabilities to the Greek public sector, and indirectly to the entire eurozone's public sector.
There was no debt restructuring in that deal." . "...The loans were made by a cabal of high-financiers in Europe to a cabal of corrupt finianciers
in Greece. The game of lending rules are: you bet that the party you lend money to will pay back the
loan with interest. Which is what the German banks did, making a profit on the interest for quite some
time. But now the high-financiers in Europe have lost the game, i.e. Greece/the-old-displaced-guard-in-Greece
can no longer pay them back. That's the financiers problem: not the problem of Greece's normal citizens
nor other EU taxpayers! Is that so difficult to understand? Class war for beginners... privatize the
profit, socialize the loss." . "...The banksters, multi-national corporations and their political lackeys, have engaged in
an extend and pretend fantasy which is passing their private debt onto taxpayers across Europe. Once
the shoulders of the Greek taxpayer have been broken, it will pass onto the shoulders of the taxpayers
from the rest of Europe. God, I want to shake the anti Greek/pro EU lobby to wake them up. Greece, please,
please, please vote NO, so we can begin the long process of getting control of Europe out of the hands
of these maniacs." . "...Without risking depositors' cash, governments had the ability to sit back ready to nationalise
any banks whose lending to Greece was so irresponsible that they were unsustainable. This would have
wiped out the shareholders and sent a clear message that lending as well as borrowing has to be responsible
and that shareholders need to earn their fat returns by exerting oversight.
" . "...Yanis Varoufakis has a point. The proposals put by the EU would cause the Greek economy to contract
further, this effectively would increase the debt ratio to GDP. Nowhere have I heard any talk on how
to build up the Greek economy, it has all been about collecting taxes.
I have also read commentators on here talk about how Greece lied to get into MU, this has a great deal
of truth in it, but one must remember the EU knew what a basket case Greece was financially, therefore
they are equally complicit in this debacle.
The question has to be why the EU is doing this to Greece, they know their actions will do nothing other
than cause more misery in the country. The reason this is happening is to protect German banks. Greece
is the domino that could bring the whole system down." . "...No, the original package lent to Greece was to bailout Greek and EU banks. The subsequent
bailout (to pay for the bailout) is 60% owned/facilitated by EFSF. It raised it through selling bonds,
no doubt to financial institutions. So now we're in the bizarre situation of banks befitting from the
bailout of banks with the Greek people carrying the can and Europeans (who are liable to honour EFSF
bonds+intererst) blaming Greece and defending the banks! "
Yes it should have been, by letting the banks go under as per Iceland. Or were too many people
(living in vacuums ?) unprepared to deal with the short term pain ? Now it seems the world of
people must suffer to service the Banks' bad debt.....what good slaves we are! The Emperor has
no clothes!
Duncan Frame -> Brasil13 4 Jul 2015 11:10
Well that is the rub. Western banks effectively control the cost of credit globally. You either
fall into line or you're perpetually behind the curve until you sell all your goods of any value.
W61212 -> Brasil13 4 Jul 2015 11:08
Careful what you wish for. From the EC
'In 2013 the EU recorded a trade surplus in goods (more than double the surplus registered in
2012). The EU also has a surplus in commercial services trade.
The EU is the biggest foreign investor in Brazil with investments in many sectors of the Brazilian
economy. Around 50% of the FDI flows received by Brazil during the last 5 years originated in
the EU.'
This debacle with Greece demonstrates the EU can't run itself and yet it has huge holdings with
Brazil and has recently reversed to a trade surplus in to Brazil, a nation with huge natural,
industrial and human resources of its own. Brazil exports mainly agricultural and mining products
to the EU and imports manufactured products. See the imbalance? Brazil exports primary products
and imports finished products made elsewhere and those jobs are elsewhere. See the problem?
There's only one letter difference but choice for the Greeks is to become either the new Ireland
(and suffer self-inflicted austerity for decades to come) or the new Iceland (by tearing up the
rule book and starting again).
Germans (for the most part) are not Nazis or terrorists, and should not have to take the blame
for this crisis. They are, however, dupes, like people living under capitalism everywhere. They
are willing to let the international banksters and their political cronies in the European parliament
run their lives and create whatever mischief they believe is in their interest.
ToddPalant -> Scaff1 4 Jul 2015 11:06
Tell us suckers then, about how Ukraine, a run down country that was just made worse by
regime change. From bad Yanukovich to much worse American puppet and idiot Poroshenko plus a catastrophic
war. Tell us about Lybia and bad Qaddafi, who in his life time killed 3-4000 people and the much
worse UK-France that caused at least a 100000 dead with their pet invasion at the behest of our
friends from across the Atlantic.
May be you need to dust your mirror.
Duncan Frame -> Laurelei 4 Jul 2015 11:05
Terrorists primary aim is to promote fear rather than harm. That's far more effective in getting
their way. You close the banks you show the public what you're capable of.
Saaywar Montana -> thisisafix 4 Jul 2015 11:04
Their economies are naff. Spain and Italy are the two countries most likely to join Greece
in a new union. Portugal and Ireland are too far gone but Ireland has been rebelling. Once people
see a progressive union to compete with the rubbish EU then these countries will gain support
for joining a new southern European union.
These countries are not out of the water and won't get out of it either. Austerity will do what
it does and the people will rise up. It's inevitable. The EU doesn't have a monopoly on unions
lol.
Greece, as did every other country, got left with the bill of the private banking sector.
Yes, it was their fault for running a deficit but a significant proportion of the debt owed by
the Greek gov is bank bailouts.
It's the same here. The UK paid £700bn to private banks to make sure they didn't fail. The
deficit has nothing to do with that. so around 50% of the debt is a mixture or deficit spending
and capital investments made by the government.
Robape Laurelei 4 Jul 2015 10:57
Financial terrorists, just interested in the bottom line, not countries.
elcomm W61212 4 Jul 2015 10:56
When fascist governments get in trouble at home they start wars to distract people. It's not
that far out.
Duncan Frame Laurelei 4 Jul 2015 10:56
Yes everything's exceptional. 2008 was the biggest economic collapse since the great depression.
And Greece was the most exposed country. No difference.
Alfie Silva karlmiltonkeynes 4 Jul 2015 10:55
My mistake, I thought you were intelligent.
It is common knowledge that only around 10% of bailout monies went to the real economy.
You are correct indeed in that creditors got a haircut, mainly hedgefunds and most foreign banks
by 2015 had reduced their exposure to Greece. The issue today is sovereign debt. Do you realise
that sovereign debt is the senior collatoral for Eurozone banks?
So we are back to banks again Mr Banker.
Duncan Frame ID13579 4 Jul 2015 10:53
I don't have to excuse giving voice to the victims of those in power to you or anyone else.
And it seems to me Tsipras is taking the same line. You confuse the Greek people with the people
who actually profited from that debt. Why should they be forced to starve on the back of decisions
over which they had influence?
usufruct -> HoorayHenrietta 4 Jul 2015 10:44
Like Americans and most other people around the globe, the German people have allowed the international
banks to pull the wool over their eyes. There is no reason for taxpayers to bail out the banks
as we are still doing here in the U.S. For the past six years my wife and I have been paying down
mortgages on real estate hoping to reestablish equity in properties whose value was gutted by
cavalier banksters on Wall Steet. A few clicks to gamble away the hard work of millions! These
people should be arrested and tried for their crimes. In a fair court they would be sent away
for life.
Chris Hindle 4 Jul 2015 10:42
'Yanis Varoufakis accuses creditors of terrorism.'
So what is wrong with that? Financial terrorism is a much more protracted and painful process
to the victims than sudden violence, but the end result is the same.
The Vermin Who Would Be Kings have discovered they no longer need the fuss and expense of maintaining
a standing army of occupation, far simpler to get countries/continents/ the world in deep debt
(via bent politicians making private bankster debt into sovereign debt - just like they did in
Greece ) and exert control through that.
BTW the UK has some £9 trillion in foreign debt (much of which is the bad debts of the
City - and the highest of any stand-alone country on earth) So now you know what next months austerity
drive is all about
InjunJoe -> degardiyen 4 Jul 2015 10:24
The "slovakian tax payer" will not be paying to maintain the Greek standard of living,
but to shore up the ECB, the IMF and the private lenders to Greek banks, as 90% of the "bail-out"
goes to serving interest. Haven't you been reading the news?
Duncan Frame -> karlmiltonkeynes 4 Jul 2015 10:20
That's weird because at the same time the banks collapsed in 2008 the deficit went up from
57% to 82%, lots of people lost their jobs or had to take pay cuts. I'm sure it was just a coincidence.
LeftToWrite -> ID6487190 4 Jul 2015 10:17
Yeah the EU has shown itself to want a compromise. All those nice compromised offers it made.
Yep we all remember those.
Compromise means both sides giving ground, not one side accepting everything the other demands.
Use a dictionary next time.
For once a nation is standing up to EU bullying and we have ignorant fools like you turning it
the other way in an attempt to change the narrative.
LeftToWrite 4 Jul 2015 10:11
How can the Troika have fucked up this badly? It seems they forgot that Greece is actually
a construct that represents the people who live there, and you can't just impose misery after
misery on a people without expecting them to finally have enough. Even if they vote yes, all it
does is postpone that that time when they will have had enough.
Honestly, this has shown the true greed at the hearts of Merkel et al, and by extension the people
they represent. Save the French and German banks, fuck over the Greek people. If people think
anti German rhetoric in Greece is extreme now, decades of resentment is about to follow.
שוקי גלילי Steve Collins 4 Jul 2015 10:09
You probably meant to say "when you ask for it back from someone ELSE, who didn't actually
get your money". Are you even aware that this is not actually loans that the Greek people
got? If I loan money to your corrupt banker and than ask YOU to return it, will you be less offensive?
email from Green Party Brussels office. TTIP and ISDS - Call to action by Keith Taylor MEP!
Breaking news! We've just been informed that the postponed vote on the European Parliament
resolution on TTIP has been put on the agenda for Wednesday 8th July.
MEPs will be voting on the resolution as a whole, but also on a whole array of amendments
to the text. Among these is a compromise amendment on the investor-state dispute mechanism, or ISDS.
The compromise amendment suggests replacing ISDS courts with some kind of 'new' system,
but there is no further explanation or details. As long as there is any system in place
for investors to sue governments, as the compromise calls for, it is still ISDS. The
fact that the Parliament's President is trying to spin this as something different by
giving it a new name does not change anything.
The compromise amendment has been agreed by the largest
groups in the European Parliament: the centre-left Socialists & Democrats (which includes
the UK's Labour MEPs), the centre-right European People's Party, and the European Conservatives
and Reformists group (which includes the UK's Conservative MEPs) and the Alliance of
Liberals and Democrats (which includes the UK's Liberal Democrat MEP).
On Wednesday, all MEPs will get a chance to vote on this amendment and the resolution
as a whole.
The Greens are calling on citizens, trade unions, NGOs,
towns and regions and businesses to speak out and contact their elected representatives
and hold them to account on this attempt to privatise justice and infringe democratic
rights.
How you can help This is our last chance to make sure that damaging ISDS provisions are not given the
green light by the European Parliament. MEPs need to know the full force of public opinion
on this threat to our national laws and our democratic rights. Contact your other MEPs before Wednesday asking them to oppose TTIP and the Investor
State Dispute Settlement (ISDS). - use Write To Them to email your MEPs directly with your own concerns - use the 38 Degrees campaign to send a quick template email - call your MEPs in Brussels to let them the reasons you're opposed - spread the word! Share your concerns on social media, tweet your MEPs, encourage your
friends and family to contact their MEPs, use Greens/EFA resources to campaign. Message from Keith
"I've been extremely heartened to receive so many emails from constituents voicing
their opposition to ISDS and the TTIP proposals in the last few weeks. It's clear that
there's a powerful and growing democratic movement to protect our laws, our public services
and our regulatory standards from potential devastation.
The decision to postpone the vote on TTIP earlier in
the month stinks of political parties running scared of the huge public opposition to
TTIP.
TTIP represents a monumental power grab by corporations and it must be stopped in its
tracks.
The sudden re-scheduling of this vote means we are now short on time to make our voices
heard. The Greens need all the help we can get to spread the word and put pressure on
other MEPs to do the right thing and represent the views and interests of their constituents." You can keep up-to-date with the Greens/EFA campaign and what the Greens are doing in
the European Parliament via their TTIP campaign website and their twitter feed.
Thank you for your support. Best wishes,
LeftToWrite ID105467 4 Jul 2015 10:14
To bail out German banks, get your facts straight before posting nonsense.
Kalandar 4 Jul 2015 10:14
Propoganda galore from the mainstream media but its fooling no one, except perhaps themselves.
ID345543 4 Jul 2015 10:04
This Is Why The Euro Is Finished
The 2010 bailout was the one that allowed private French, Dutch and German banks to
transfer their liabilities to the Greek public sector, and indirectly to the entire eurozone's
public sector. There was no debt restructuring in that deal.
The loans were made by a cabal of high-financiers in Europe to a cabal of corrupt finianciers
in Greece. The game of lending rules are: you bet that the party you lend money to will pay back
the loan with interest. Which is what the German banks did, making a profit on the interest for
quite some time. But now the high-financiers in Europe have lost the game, i.e. Greece/the-old-displaced-guard-in-Greece
can no longer pay them back. That's the financiers problem: not the problem of Greece's normal
citizens nor other EU taxpayers! Is that so difficult to understand? Class war for beginners...
privatize the profit, socialize the loss.
NeverNotHereTV gsxsure 4 Jul 2015 09:59
Syriza does not want "free money". They want a fraction put toward economic growth, and then
payments as a meaningful fraction of that growth. It is simple enough.
Alfie Silva 4 Jul 2015 09:50
Please can anyone explain to me why we are letting the bankster cabal turn European against
European?
The banksters, multi-national corporations and their political lackeys, have engaged in an
extend and pretend fantasy which is passing their private debt onto taxpayers across Europe. Once
the shoulders of the Greek taxpayer have been broken, it will pass onto the shoulders of the taxpayers
from the rest of Europe. God, I want to shake the anti Greek/pro EU lobby to wake them up. Greece,
please, please, please vote NO, so we can begin the long process of getting control of Europe
out of the hands of these maniacs.
Finnbolt 4 Jul 2015 09:49
"Debt relief was "politically highly toxic for many eurozone member states"."
Here you have the problem. The creditor state governments are responsible to their voters and
many have said that their taxpayers will not finance the Greeks and money lent will be paid back
in full.
Syriza says they have a mandate from the Greek people to force other euro countries to continue
financing them and take a haircut. In other words, lose most of the money lent to Greece.
EU is a collection of nation states with pretensions of a federation. One of the pretensions about
to be busted is a transfer union, meaning taxpayers in richer countries tranferring part of their
wealth to poorer countries.
APSAPS 4 Jul 2015 09:49
A $22.6 billion International Monetary Fund and World Bank financial package was approved on
13 July 1998 to support reforms and stabilize the Russian market. Despite the bailout, July 1998
monthly interest payments on Russia's debt rose to a figure 40 percent higher than its monthly
tax collections. Additionally, on 15 July 1998, the State Duma dominated by left-wing parties
refused to adopt most of the government anti-crisis plan so that the government was forced to
rely on presidential decrees. On 17 August 1998, the Russian government devalued the ruble, defaulted
on domestic debt, and declared a moratorium on payment to foreign creditors. It was later revealed
that about $5 billion of the international loans provided by the World Bank and International
Monetary Fund were stolen upon the funds' arrival in Russia on the eve of the meltdown.
Sounds very similar.
Oh, wait, maybe some referendum could have helped?
Insomnijazz hertsman 4 Jul 2015 09:48
Nah - these are just lies for the gullible to swallow.
Without risking depositors' cash, governments had the ability to sit back ready to nationalise
any banks whose lending to Greece was so irresponsible that they were unsustainable. This would
have wiped out the shareholders and sent a clear message that lending as well as borrowing has
to be responsible and that shareholders need to earn their fat returns by exerting oversight.
Instead they chose the worst option: bailing out the bank shareholders by assuming responsibility
for their risky lending, but refusing to then pay the price for their political cowardice and
shifting the blame onto a largely guiltless Greek population which has already suffered hugely
from the economic devastation.
Brent1023 4 Jul 2015 09:46
Debt relief not on the table.
It comes down to the Greek people or the banksters. Who needs a bailout more?
The EU has sided with the banksters.
Not just in Greece but in Ireland, Spain, Portugal.
Only Iceland was able to force banksters to swallow their losses.
Everywhere else bankster fraud was rewarded with a 100% bailout.
Should be renamed the European Bankster Union.
Surprising that the UK does not want it - it also bailed out its banksters.
NWObserver sunnytimes 4 Jul 2015 09:39
The creditors are not looking to get their money back. Debt is the leverage being used to destroy
the social and public infrastructure in the country.
So their worst nightmare is Greeks voting 'No', staying in default and surviving or prospering
while remaining in the Eurozone. Then they will not be able to use the same fear tactics against
another EZ country. They are psychopaths out to destroy, not creditors looking to get their money.
So if Greeks vote 'No' , they will spare no effort to destroy Greece, beginning with the continuation
of the liquidity freeze. However, there are some simple steps that Greece can take to end the
liquidity freeze and I think they have already taken them.
Albrecht Ritschl: During the past century alone, though, at least three times. After the first
default during the 1930s, the US gave Germany a "haircut" in 1953, reducing its debt problem to
practically nothing. Germany has been in a very good position ever since, even as other Europeans
were forced to endure the burdens of World War II and the consequences of the German occupation.
Germany even had a period of non-payment in 1990....but we were also extremely reckless -- and
our export industry has thrived on orders. The anti-Greek sentiment that is widespread in many
German media outlets is highly dangerous. And we are sitting in a glass house: Germany's resurgence
has only been possible through waiving extensive debt payments and stopping reparations to its
World War II victims.'
Don't worry. The nappy business is doing well in Brussels...
EU sources: possible extra Eurogroup on Monday and EU leaders Summit on Wednesday #Greferendum
via GR media http://www.dimokratiki.gr/04-07-2015/pithano-ektakto-eurogroup-ti-deftera-ke-sinodos-korifis-tin-tetarti/
…
They are pissing in their pants the lot of them...
rafela Bogoas81 4 Jul 2015 09:00
Austerity didnt work. In the last five years the economy shrinked by 19%. Unemployment rose
to 27%. Tsipras wanted more debt relief. The IMF report sustain that an improvement is impossible
without debt relief.
sunnytimes 4 Jul 2015 08:58
German people are industrious and inventive. They play by the rules. Unfortunately they are
also rather naive and believe generally what the state tells them. In history the role of such
people has always been to pay the bills.
GuillotinesRUs 4 Jul 2015 08:45
Yanis Varoufakis has a point. The proposals put by the EU would cause the Greek economy to
contract further, this effectively would increase the debt ratio to GDP. Nowhere have I heard
any talk on how to build up the Greek economy, it has all been about collecting taxes.
I have also read commentators on here talk about how Greece lied to get into MU, this has a great
deal of truth in it, but one must remember the EU knew what a basket case Greece was financially,
therefore they are equally complicit in this debacle.
The question has to be why the EU is doing this to Greece, they know their actions will do nothing
other than cause more misery in the country. The reason this is happening is to protect German
banks. Greece is the domino that could bring the whole system down.
U77777 -> CassiusClay 4 Jul 2015 08:40
Austerity isn't the answer - but when you have put yourself into the situation that the Greeks
have, it is part of the solution. A small part and nothing like the media like to portray, but
something has got to give.
As for electing Tsipras and varoufakis......Seriously, stop drinking. They're a bunch of cowboys
with some well intended principles and a load of rather deluded ideas. Worse still, neither of
them have actually come up with anything like a constructive plan how to stimulate the economy
and help Greece stand on its own 2 feet again
Dimitris Chloupis -> sylvester 4 Jul 2015 08:39
Any sensible Greek realizes without deep reforms no economy is going forward. This is not even
debatable in my country. We already reduced public sector by 500.000 employes thats a juicy 50%.
High pensions of the past are long gone. The result is that now it costs 6 billion to pay for
wages in public sector and another 5 billion to pay for pension, total 10 billion. But we need
another 10 billion for paying back loans each year. This year alone we paid back 25 billion !!!
Tax evasion should be our next focus, its not reasonable for an economy that makes 200 billions
per year to need loans . There is a will to fix all that, because the alternative is far worse.
Of course the same can be said about Germany , why a country that make 3.1 trillion euros per
year has a 80% debt ? Tax evasion of course ;) Time to open those swish bank accounts , but does
Germany want that ? How many vested Greek interest are connected with German vested interest ?
Denying corruption is to deny the foundation of modern economies.
W61212 -> RussBrown 4 Jul 2015 08:39
I made a point earlier about the birth of a new Brussels based dictatorship which controls
all EZ 'national governments', which are national governments by name only, ergo Syriza has to
go for straying from the script. Brussels has already proven it would rather deal with corrupt
Greek politicians by doing so in the past
Continent Renato -> Timotheus 4 Jul 2015 08:37
Inequality of opportunity in the Eurozone is now so great -- young people in Greece have
an unemployment level of 60% and the rate is 33% in the austerity "success story" of Portugal
The systems are different. Northern countries have the dual education system, i.e. only about
10 p.c. of the youth go to college/university, and 90 p.c. go through a 3 or 4 year education
"learning by doing".
In addition, the "dirty work" in Greece (farming/harvest/construction) is done by temporary migrants
from Macedonia, Albania, Romania, Bulgaria because the Greek parents wanted their children to
have a better life and sent them to universities without an employment market for so many acdemics.
Many of them land in a job with in the bloated govt.
sunnytimes 4 Jul 2015 08:36
The true parasites are the bond markets of London and New York. The create nothing. All they
do is swap pieces of paper with ech other all day long, skimming every transaction. The UK and
US have run trade deficits or decades, that is by definition they produce less than they consume.
Time to tear down this edifice of debt and get back to a capital-based economy.
LeftOrRightSameShite FOARP 4 Jul 2015 08:35
Greece already has been bailed out
No, the original package lent to Greece was to bailout Greek and EU banks. The subsequent
bailout (to pay for the bailout) is 60% owned/facilitated by EFSF. It raised it through selling
bonds, no doubt to financial institutions. So now we're in the bizarre situation of banks befitting
from the bailout of banks with the Greek people carrying the can and Europeans (who are liable
to honour EFSF bonds+intererst) blaming Greece and defending the banks!
Bit thick really innit!
RussBrown 4 Jul 2015 08:35
Myth 1 - Greece do nothing to solve the problem (they have had years of austerity)
Myth 2 - Germany is bailing out the Greeks. The money that goes to Greece goes straight back into
the German Banks. But by making it impossible for business to run in Greece the businesses move
their resources to Germany and pay taxes their in a massive transfer of wealth from a poor EU
country to the richest. This is a capitalist scam and all of lot on here shouting their propaganda
should be ashamed of yourselves. The rich bankers are using you to justify the destruction of
the poor!
Or to put it a bit differently, it's reasonable to fear the consequences of a "no" vote, because
nobody knows what would come next. But you should be even more afraid of the consequences of a
"yes," because in that case we do know what comes next - more austerity, more disasters and eventually
a crisis much worse than anything we've seen so far.
The usual narrative of the Greek economic tragedy is that the country is paying for its past
profligacy, but there is deeper back story of political repression fueled by major powers intervening
in Greece and contributing to a dysfunctional political system.
By William R. Polk
Focusing exclusively on the monetary aspects of the Greek crisis the media misses much of what
disturbs the Greeks and also what might make a solution possible.
For over half a century, Greeks have lived in perilous times. In the 1930s, they lived under
a brutal dictatorship that modeled itself on Nazi Germany, employing Gestapo-like secret police
and sending critics off to an island concentration camp. Then a curious thing happened: Benito
Mussolini invaded the country.
Challenged to protect their self-respect and their country, Greeks put aside their hatred of
the Metaxis dictatorship and rallied to fight the foreign invaders. The Greeks did such a good
job of defending their country that Adolf Hitler had to put off his invasion of Russia to rescue
the Italians. That move probably saved Josef Stalin since the delay forced the Wehrmacht to fight
in Russia's mud, snow and ice for which they had not prepared. But, ironically, it also saved
the Metaxis dictatorship and the monarchy. The king and all the senior Greek officials fled to
British-occupied Egypt and, as new allies, they were declared part of the "Free World."
Meanwhile, in Greece, the Germans looted much of the industry, shipping and food stuffs. The
Greeks began to starve. As Mussolini remarked, "the Germans have taken from the Greeks even their
shoelaces…"
Then, the Greeks began to fight back. In October 1942, they set up a resistance movement that
within two years became the largest in Europe. When France could claim less than 20,000 partisans,
the Greek resistance movement had enrolled about 2 million and was holding down at least two divisions
of German soldiers. And they did it without outside help.
As the war's outcome became apparent, British Prime Minister Winston Churchill was determined
to return Greece to the prewar rule of the monarchy and the old regime. He was motivated by fear
of Communist influence within the resistance movement.
Churchill tried to get the Anglo-American army that was getting ready to invade Italy to attack
Greece instead. Indeed, he tried so hard to change the war plan that he almost broke up the Allied
military alliance; when he failed, he threw all the soldiers he still controlled into Greece and
precipitated a civil war that tore the country apart. The Underground leaders were outsmarted
and their movement was smashed. The bureaucracy, police and programs of the prewar dictatorship
resumed control.
After the war, with Britain out of money and no longer able to sustain its policy, London turned
Greece over to the Americans who announced the "Truman Doctrine" and poured in money to prevent
a leftist victory. American money temporarily won the day, but the heavy hand of the former regime
created a new generation of would-be democrats who challenged the dictatorship.
This is the theme beautifully evoked in Costa Gavras' film "Z," starring Yves Montagne. As
the film shows, the liberal movement of the early 1960s was overwhelmed by a new military dictatorship,
"the rule of the colonels."
When the military junta was overthrown in 1974, Greece enjoyed a brief period of "normality,"
but none of the deep fissures in the society had been healed. Regardless of what political party
chose the ministers, the self-perpetuating bureaucracy was still in control. Corruption was rife.
And, most important of all, Greece had become a political system that Aristotle would have called
an oligarchy.
The very rich used their money to create for themselves a virtual state within the state. They
extended their power into every niche of the economy and so arranged the banking system that it
became essentially extra-territorialized. Piraeus harbor was filled with mega-yachts owned by
people who paid no taxes and London was partly owned by people who fattened off the Greek economy.
The "smart money" of Greece was stashed abroad.
The Current Crisis
This state of affairs might have lasted many more years, but when Greece joined the European
Union in 1981, European (mainly German) bankers saw an opportunity: they flocked into Greece to
offer loans. Even those Greeks who had insufficient income to justify loans grabbed them. Then,
the lenders began to demand repayment. Shocked, businesses began to cut back. Unemployment increased.
Opportunities vanished.
There is really no chance that the loans will be repaid. They should never have been offered
and never should have been accepted. To stay afloat, the government has cut back on public services
(except for the military) and the people have suffered. In the 2004 elections, the Greeks had
not yet suffered enough to vote for the radical coalition led by the "Unity" (SYRIZA) party. Only
3.3 percent of the voters did.
Then, after the 2008 financial crash came years of worsening hardship, disapproval of all politicians
and anger. It was popular anger, feeling misled by the bankers and by their own foolishness. There
was also hopelessness as Greeks realized that they had no way out and began to turn to SYRIZA.
After a series of failed attempts to secure a mandate, SYRIZA won the 2015 election with 36.3
percent of the vote and 249 out of 300 members of Parliament.
Today, the conditions that impelled that vote are even more urgent: the national income of
Greece is down about 25 percent and unemployment among younger workers is over 50 percent. So
where does that leave the negotiators?
Faced with German and EU demands for more austerity, the Greeks are angry. They have deep memories
of hatred against the Germans (this time, not soldiers but bankers). They have been, time after
time, traduced by their own politicians. Prime Minister Alexis Tsipras must know that if he is
charged with a "sell-out," his career is finished.
And the bail-out package offered by the International Monetary Fund and the European Central
Bank is heavily weighted against Greece. Greeks also see their option of exiting the Euro as similar
to stances taken by Britain and Sweden in not joining in the first place – although a painful
adjustment for the Greek economy would be expected if Greece undertakes an unprecedented departure
from the European currency.
However, unless the IMF and ECB offer a real chance for a better life for Greeks by forgiving
most of the debts, I believe that the Greeks might well vote on Sunday to reject the austerity
demands and leave the Euro.
William R. Polk is a professor who taught Middle Eastern studies at Harvard. President John
F. Kennedy appointed Polk to the State Department's Policy Planning Council.
Congress Weighs in on Holding IMF Accountable for Damage Caused by Failed Policies in Greece
By Mark Weisbrot
The battle over the future of Greece will not end on Sunday, no matter how the vote goes or
-- if the Greek people vote "no" -- how the European authorities respond to their choice. This
is a fight over the future of Europe, and the people who are currently strangling the Greek economy
in a transparent attempt to intimidate the Greek electorate understand this very well. That is
why they are being especially aggressive and ruthless at this moment: trying to convince Greeks
that a "no" vote means leaving the euro, claiming that such a decision would have calamitous consequences,
and giving them a taste of the financial crisis and economic disruption that they will suffer
through if they refuse to do as they are told.
Last Sunday, the European Central Bank (ECB) made a deliberate decision to limit Emergency
Liquidity Assistance to the Greek banking system. The limit was set low enough to force -- for
the first time in the six years of depression that the ECB has deepened and prolonged -- the closure
of Greek banks.
It is not surprising that the very idea of a referendum would provoke the ire of the eurozone
authorities. Unlike the European Union, which has a different history, the eurozone project has
become a fundamentally anti-democratic project. It has to be; the people currently running it
want to reverse, as much as possible, decades of social progress on issues that are vital to Europeans.
But you don't have to take my word for it: there is a paper trail of thousands of pages that spell
out their political agenda. The International Monetary Fund conducts regular consultations with
member governments under Article IV of its charter, and these result in papers which contain policy
recommendations. There were 67 such consultations for EU countries during the four years of 2008
to 2011, and the pattern was striking: budget tightening was recommended in all 27 countries,
with spending cuts generally favored over tax increases. Cutting health care and pension spending,
reducing eligibility for disability and unemployment compensation, raising retirement ages and
increasing labor supply were also overwhelmingly common recommendations.
The European authorities took advantage of the crisis and post-crisis years to impose parts
of this agenda on the weaker eurozone economies: Spain, Italy, Portugal, Ireland and most brutally
of all, Greece. More than 20 governments fell as a result, until finally, in Greece on January
25, a government was elected that said no. The goal of the European authorities, therefore, is
to topple this government. This has been apparent since the ECB cut off itsmain line of credit
to Greece on February 4.
Now comes a group of U.S. members of Congress warning the IMF that it could -- perhaps for
the first time in decades -- be held accountable for the economic destruction that it's helping
to implement. The letter objects to the IMF "taking a hard line with respect to demands that Greece
implement further reforms" and notes:
Greece has already reduced its national public sector work force by 19 percent and carried
out many of the reforms demanded by the IMF and its creditors. It has gone through an enormous
fiscal adjustment, achieving the largest cyclically adjusted primary budget surplus in the euro
area last year; and a very large current account adjustment (with a 36 percent reduction in imports).
At the same time, as even the IMF has acknowledged in its own research, the austerity imposed
by Greece's creditors over the past five years turned out to be far more devastating to the economy
than they had predicted.
Senator Bernie Sanders, who joined House members in signing the letter, issued his own blistering
statement yesterday. "At a time of grotesque wealth inequality, the pensions of the people in
Greece should not be cut even further to pay back some of the largest banks and wealthiest financiers
in the world," said Sanders. Among the House signers were the co-chairs of the Congressional Progressive
Caucus, Representatives Keith Ellison and Raul Grijalva, and the Dean of the House and Ranking
Member of the Judiciary Committee, Rep. John Conyers.
Unlike many letters from Congress that are ignored by the executive branch, this one might
be taken more seriously by the IMF and the U.S. Treasury department -- which is the IMF's most
powerful overseer. One reason is that the IMF has been trying for five years to enact reforms
in its governance structure that are very important to the Fund and Treasury -- reforms that can't
be enacted unless they are approved by Congress. These reforms would make some small changes in
voting representation. They wouldn't shift the balance of power at the Fund, with the U.S. and
its allies still likely to maintain a comfortable majority. But the U.S. government and the Fund
have lost a lot of credibility in recent years by unilaterally holding up even these largely symbolic
changes. They see this hold-up as encouraging developing countries to opt for creating new institutions
such as the BRICS Development Bank and Currency Reserve Arrangement. More recently, the Obama
administration suffered an embarrassing setback after the U.K., Germany and France ignored their
pleas and became founding members of China's new $100 billion initiative to create an Asian Infrastructure
Investment Bank.
From the congressional letter:
"As members of the U.S. Congress, we must also note the unprecedented difficulty that the IMF's
proposed quota and governance reform has faced in the U.S. Congress since 2010. As you know, this
also has global implications, as some governments in developing countries have begun to lose confidence
in this effort to make the IMF's voting structure more representative of its member countries
in the twenty-first century and are seeking institutional alternatives. It will be difficult to
get a majority of the U.S. Congress on board for these important reforms if the IMF is seen as
responsible for further damage to the Greek economy, as well as the currently unforeseeable consequences
of any financial collapse."
The IMF will need all the votes it can get for this legislation to pass through Congress. It
can choose to ignore this warning at its own institutional risk.
Eurozone leaders
have insisted that if Greece votes no, it will be saying goodbye to the euro. Two former Greek prime
ministers, Kostas Karamanlis and Antonis Samaras, both of the centre-right New Democracy party, are
urging a yes vote, saying that a return to the drachma would kill the Greek economy.
So how do top economists say they would vote - and why?
Joseph Stiglitz - NO
Nobel laureate in economics and professor at Columbia University
Stiglitz has decried the economics behind the international creditors' programme for Greece as
"abysmal". "I can think of no depression, ever, that has been so deliberate and had such catastrophic
consequences," he
wrote this week.
He says it is hard to advise Greeks how to vote on 5 July, given both options carry "huge risks".
But it is clear the Nobel laureate himself would vote no:
A no vote would at least open the possibility that Greece, with its strong democratic tradition,
might grasp its destiny in its own hands. Greeks might gain the opportunity to
shape a future that, though perhaps not as prosperous as the past, is far more hopeful than
the unconscionable torture of the present.
Firstly, thinks Krugman, the troika of international lenders – the entity consisting of the European
commission, the
European Central
Bank and the International Monetary Fund – is effectively demanding that the policy regime of
the past five years be continued indefinitely: "Where is the hope in that?"
Secondly, the political implications of a yes vote would be "deeply troubling", he says.
The troika clearly did a reverse Corleone – they made Tsipras an offer he can't accept, and presumably
did this knowingly. So the ultimatum was, in effect, a move to replace the Greek government. And
even if you don't like Syriza, that has to be disturbing for anyone who believes in European ideals.
Thomas Piketty - NO
Professor at the Paris School of Economics and author of Capital in the Twenty-First Century
Piketty has joined other economists in calling for Greece's heavy debt burden to be restructured
and says Greeks should vote no. In an interview with the
French broadcaster BFMTV he described the deal proposed by creditors as "bad". He also warned
that expelling Greece from Europe would push it into the arms of Russia.
It's a complicated choice. The question being asked is whether the plan from the creditors is
good or not. If that is the question being asked, the answer for me is clear: it is a bad plan.
Jeffrey Sachs - NO
Director of the Earth Institute at Columbia University and author of The Price of Civilization
Sachs sees a way out of the crisis if Greece's debt burden is eased while keeping the country
in the eurozone. For that to happen Greece and Germany need to come to a "rapprochement" soon after
the referendum and agree to a package of economic reforms and debt relief, he
wrote on Project Syndicate. But first Greeks must vote against international creditors' proposals
.
I recommend that the Greek people give a resounding "No" to the creditors in the referendum on
their demands this weekend.
... ... ...
Professors of economics at Greek universities - YES
In an
open letter, 246 professors at economics schools and universities in Greece urged people to vote
yes on Sunday or risk leaving the EU.
Taking into account that the proposals of our creditors and the Greek government were converging
until last Friday, we believe that what is really at stake in the coming referendum, irrespective
of the precise formulation of the question, is whether
Greece will remain, or not,
in the eurozone and, possibly, whether it will remain in the EU itself...
Leaving the eurozone,
especially in this chaotic and superficial way, would likely lead to a process of leaving the
EU too, with unpredictable and disastrous consequences for the national security and the democratic
stability of our country.
"...The Greek comprador class supported the Nazis in the Second World War, fought against the United
Front in the civil war, made the neo-fascist 1970s regime, and today they support EU/NATO integration
and austerity. They are an integral part of the European ruling class that is holding the working and
middle classes of across the whole continent by the balls. The ruling class which has divided Europe,
once again as they did in the 1930s, into "Germans" and "Greeks" instead of the reality - of workers
and rulers. So, there is not one "more dangerous" than the other. They are the same."
"...Initially, the IMF predicated their support on Ukraine reaching a deal with its private
creditors to restructure its debt to reduce its payments by $15 billion over four years. This has not
proven easy, however, and the IMF now says it may release funds to Kiev even if it defaults on its private
creditors. "
"..."This is a very dark moment for Europe. They have closed our banks for the sole purpose
of blackmailing what? Getting a 'Yes' vote on a non-sustainable solution that would be ad for Europe.""
"...I have to say that I totally didn't get that point so far. Of course they're going nuts about
a short-noticed referendum, because usually in these cases the public gets brainwashed for months in
advance. Can't believe I didn't notice that right away. It's the essence of western democracy: let people
vote, but only the things you want them to choose from. Nice move by Syriza btw! Now that I think about
it, it's obvious that they planfully came up with the referendum as suprise! Kudos!"
"...After the hell of World War II, the Federal Republic of Germany – commonly known as West
Germany – got massive help with its debt from former foes. Among its creditors then? Greece. The 1953
agreement, in which Greece and about 20 other countries effectively wrote off a large chunk of Germany's
loans and restructured the rest, is a landmark case that shows how effective debt relief can be. It
helped spark what became known as the German economic miracle."
"...We are witnessing a black swan event. The Greek banks have run out of cash. Either the EU seizes
Greece or a failed state in Europe has been born with Ukraine soon to follow. All of the Greek debts
are void and trillions in derivative payments will be due. This is 2008 all over again with the collapse
of the western financial system possible. This is why everyone is so desperate. Yet, for pennies on
the total cost of the default, Greece could be saved. Magnanimity may yet win out but it would mean
the end of the current rule of extinction capitalism in the West."
The Greeks have to make their decision as to what they are going to do. This is not a vote
about staying in the EU. If the Greeks are kicked out, there is no one to blame for that decision
except the EU masters. The Greeks are making only one decision - wether or not to agree to the
terms of the EU for the repayment of the debt - and thereby wether the debt was incurred legally.
All those who claim that this is a referendum on the EU are liars who are not being honest
with the Greek people. Those who are trotting out the endless stream of confusion as to what this
referendum is about - like the BBC, the New York Times, and even Greek parties like Potomi, etc
- are clearly no friends of the Greek people. Because to be a friend is to speak honestly.
"Your mention of compradors is important because the internal enemies of the Greek people
may be more dangerous than the external Troika."
The internal and external enemies of the Greek people are one in the same. The Greeks are paying
the Troika who gives the money to prop up Greek banking oligarchs. There is no difference between
a banker in Athens, a banker in Frankfurt, or a hedge fund vulture in New York City holding Greek
debt. All are ghouls who are profiting from the destruction of Greece.
The Greek comprador
class supported the Nazis in the Second World War, fought against the United Front in the civil
war, made the neo-fascist 1970s regime, and today they support EU/NATO integration and austerity.
They are an integral part of the European ruling class that is holding the working and middle
classes of across the whole continent by the balls. The ruling class which has divided Europe,
once again as they did in the 1930s, into "Germans" and "Greeks" instead of the reality - of workers
and rulers. So, there is not one "more dangerous" than the other. They are the same.
To add to the anti-Syriza noise machine, wether from a reactionary stance or a "ultra-leftist"
stance, is to do the people of Europe a disservice. Syriza is the only left-wing, anti-austerity
party with power inside the EU. It is unique. It fought the Golden Dawn on the streets of Athens.
It engaged the Greek people and asked for their vote, and it is living up to their mandate without
- and this is key - claiming more of one than they earned.
The referendum vote will be their true mandate. The Greek people have had a chance to see Syriza
in action, the referendum will be the Greek people's chance to show or deny their trust in Syriza
before embarking on a long struggle for independence, or maintaining the constant drain of austerity.The
stakes are clear: Syriza's success means a stake in the heart of the EU debt vampires who are
feeding off of not just Greece, but on all of those nations deemed "the periphery". Success for
Syriza is success for the very idea of democracy in the 21st Century. It is that cut-and-dried.
If Syriza fails, then the last good hope for European democracy vanishes until, perhaps, the
next escalation of crisis, whenever that might be a year or two years down the road. Or perhaps
for the foreseeable future. Because this is the simplest question of the referendum: do a people
have the right to say "no" to those whom wish them ill, to say "no" to those who, by whatever
"legal" power, are seeking to oppress them? As Martin Luther King, Jr stated: "One has a moral
responsibility to disobey unjust laws." And clearly this debt - and the refusal of those who imposed
it to make any compromise, even for the sickest and the poorest - is unjust. So which is worse
- to face the morse losses for ones shattered economy, or the loss of ones national will and democracy?
Because after Syriza, there is the abyss. There is no one offering to speak for the Greek people
if Syriza falls.
If Syriza succeeds, though, then all over Europe, we could see these sham technocratic, ruling
class regimes fall. These regimes whose only reason for staying in power is naked fear. This is
a good time to recall the words of Franklin Roosevelt, when the US found itself crushed between
a failed economy on one side, and a nest of powerful oligarchs on the other who refused to offer
any support to the citizens of the country:
This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor
need we shrink from honestly facing conditions in our country today. This great Nation will
endure as it has endured, will revive and will prosper. So, first of all, let me assert my
firm belief that the only
thing we have to fear is fear itself-nameless, unreasoning, unjustified terror which
paralyzes needed efforts to convert retreat into advance. In every dark hour of our national
life a leadership of frankness and vigor has met with that understanding and support of the
people themselves which is essential to victory. I am convinced that you will again give that
support to leadership in these critical days.
The Greeks are facing a moment of truth as stark and as clear as any in human history. As stark
as any 20th Century war for independence. They can choose to continue down their current path,
only to have to face the same choice in a year or two years from now with conditions far, far
worse (there is no one arguing that there is any hope for their recovery - no one). So it is either
continued depression under the "guiding hand" of those who seek only one thing from Greece: the
transfer of its wealth. Or they can say "No" and take their destiny, again, into their own hands.
Only once they have made their collective will known will Europe decide what course of action
to take: compromise, or split Europe. And if it is a split, then the only party responsible
will be the masters of the EU.
You know, the whole name-calling thing, Comrade X, escapes me. Why people feel like it enhances
their persona I don't know. To repeat: the troika has already won this contest because Syriza
capitulated. You quote me incorrectly.
I think failure for the troika is if they get the Yes vote they want and then refuse to offer
concessions, which will push Tsipras and Varoufakis to resign. Without a deal shortly the ECB
will have to step in and expand emergency liquidity assistance to make sure all those retirees
who don't use debit cards have enough cash to buy food.
xxx
As this isn't a vote about EU membership, then the Greek people should have no fear. They should
vote as their conscience dictates.
Who knows what form the EU Masters want the Union to take? The Greek people won't have a say
in this and they should recognize that. The Greeks should recognize their limits - they do not
have the power to vote to stay or leave the EU, they have only the power to vote on to wether
or not to pay this odious debt. Europe will do with them, after that, as it will. So they should
be clear that they are voting only on the debt, and ignore all those who are trying to cloud the
issue.
The real danger, as always, is that we know the USA is busy manipulating every European political
system. And we know that US geopolitics will insist on Greece remaining in the EU and in NATO
no matter what it means for the Greeks. So the Greek people must be extremely wary of all those
going onto the streets, EuroMaidan-style, for "Pro-EU" rallies... they're dishonest at best, and
more likely they are pawns of the only power even less interested in the welfare of the Greek
people than even the EU - Washington Imperialsim.
A, Yes vote would mean that the Syriza government must resign since the implication is that the
Greek people have voted a motion of no confidence.
A, No vote would mean the ball is in the
Troika court. They can a) choose not to fund the Greek banks anymore which would imply that the
banks would collapse immediately and no more pension payments under the current Euro system; b)
Choose to give Greece an ultimatum of accept or reject whatever their offer will be. Non acceptance
would mean once again they can cause Greek banks to collapse.
The Greek people are caught between a rock & a hard place. Risk the collapse of their banks
and a new unknown future in a non-Euro currency system or accept whatever terms the Troika is
willing to provide to keep their banks afloat. There is a decent probability that there is a "civil
war" in Greece between those that would prefer to be in the Euro currency bloc under whatever
terms the Troika offers and those wanting out of the Euro currency system.
The real danger, as always, is that we know the USA is busy manipulating every European political
system. And we know that US geopolitics will insist on Greece remaining in the EU and in NATO
no matter what it means for the Greeks. So the Greek people must be extremely wary of all those
going onto the streets, EuroMaidan-style, for "Pro-EU" rallies... they're dishonest at best, and
more likely they are pawns of the only power even less interested in the welfare of the Greek
people than even the EU - Washington Imperialsim.
Very emphatic and stirring, guest77 @26. This is another moment of truth for non-Greek capitalist
slaves as well. They are discouraged from seeing the Greek whip as their own.
In every dark hour of our national life a leadership of frankness and vigor has met with that
understanding and support of the people themselves which is essential to victory.
Oh. Pray I may ask, President Roosevelt, "Why do we not need a leadership of frankness and vigor
in good hour?" Perhaps this is why we don't get one in the dark ones?
"Those who claim that
this is a referendum on the EU" are propagandists and sowers of confusion and discord. All vigorous
capitalist systems need them, good times and bad.
Compradors are distinguished by their divided loyalties and false allegiances. Oligarchs cannot
be mistaken for compradors. Compradors are an integral part of capitalist political economy and
their false allegiance is more dangerous because it disarms. We could speak as well of German
compradors, those who would vote to continue the immiseration of Greece though the bankers and
brokers fraudulently saddled German and European taxpayer with their losses. Compradors don the
hypocritical morality their oligarchs so affordably produce. They love playing the fools, because
it so well pays.
Do the ultra-leftists who critique Syriza do only disservice? I doubt it. Even if "Syriza is
the only left-wing, anti-austerity party with power inside the EU", that is not enough. Even Syriza
would confirm that they and their pragmatism is not enough to achieve their ends. I agree that
"ultra-left" critics risk being confused with dissemblers, but they should not silence themselves
for that reason. KKE asks of Greeks, instead of yah or nay, to demand:
* NO TO THE PROPOSAL OF THE EU-IMF-ECB
* NO TO THE PROPOSAL OF THE GOVERNMENT
* DISENGAGEMENT FROM THE EU, WITH THE PEOPLE IN POWER
Is it not clear what Syriza should do with these "votes"? I have seen a Syriza supporter dissemble
on KKE's position; that's bigotry.
Can Syriza mobilize the electorate against their oppressors? Have they propagandized enough?
This referendum is not on whether "people have the right to say "no" to those whom wish them ill",
i.e. a vote for their own oppression, but whether they have mobilized the Greeks, beyond Syriza's
election, for the coming fracas.
Syriza cannot bring "these sham technocratic, ruling class regimes" to fall. We must fight
on, whether they fail or no.
Yves Smith et al may not be as loony as you think. Check out this piece by William Engdahl,
in which he has identified Varifoukas as a modern version of a Trojan horse, but in this instance,
acting in the interest of the Greek oligarchs. It is this particular segment of the Greek population
which has in large part been shielded from public view, most because of all the focus on the evil
troika. Engdahl quite rightly put much of the blame for the current Greek crisis on a long established
practice by the corrupt Greek political class, that has not only plundered and looted the country
for the past 70 years (he actually sees that this is a centuries old practice), but has willfully
subjected their fellow country folk to never-ending debt enslavement.
An interesting point, and this is on reason that NC could be cut some slack, is that Tsiprias
and Varifoukas played nothing other than a game of brinkmanship that was a sure loser. Given that
they had no plan-B to fall back on, and that they refused Putin's offer of assistance, it is hard
to argue against Engdahls' conclusion that this was a rigged game all the way - one rigged by
the Greek oligarchs, with Tsiprias and Varifoukas acting as their proxies.
I was always suspicious of the smile that never ceases to leave Varifoukas' face.
RT IMF and Ukraine agree on terms for release of $1.7 bn in bailout funds
The International
Monetary Fund and Kiev's representatives have agreed on a set of measures to be taken by Ukraine
in order to receive $1.7 billion in bailout money, according to the IMF press service. The much
needed 2nd tranche of a promised $17.5 billion support package will be released when the IMF's
Ukrainian mission determines that the requirements of the agreement have been met, though the
press release did not specify what those conditions might be. The IMF's management and board will
also have to approve the final release of funds.
Initially, the IMF predicated their support on Ukraine reaching a deal with its private
creditors to restructure its debt to reduce its payments by $15 billion over four years. This
has not proven easy, however, and the IMF now says it may release funds to Kiev even if it defaults
on its private creditors.
Presuming the referendum occurs, the range of outcomes can be distilled thus:
A> Greece votes "Yes": Tsipras resigns (as Energy Minister Panagiotis Lafazanis has already
hinted), EU rejoices but unless a technocratic government can be rustled up in Parliament, the
ensuing election campaign will waste valuable weeks and add to uncertainty and instability. Any
subsequent negotiations will see Greece economically immolated by its unrepentant lenders.
B> Greece votes No:
Technically referenda are considered consultative and need a 40 percent turnout to be deemed
relevant.
With Greece in default on its IMF loans, the concept that a strong 'no' vote strengthens its
hand in negotiations is a dubious assertion verging on folly. There is no negotiation, thus no
strengthened position. Egos may be soothed but that won't feed Greek pensioners.
~~~
Neither vote enables a simple resolution. No delivers a poisoned chalice. A petulant EU, rattled
by Greece's refusal to be supplicant to the superpower of delusion, won't receive Alexis Tsipras
back into the fold prodigal son-style.
2) Greece maintains the euro: Syriza's apparent (self-defeating) choice. Athens must release
the currency pressure valve to rebalance Greece, enabling future export and tourist growth fuelled
by a cheaper New Drachma.
(Incidentally, this default is Greece's sixth since 1826).
~~~
4) Greece introduces parallel currency to pay bills. Thus a New Drachma will emerge and Greece
will de facto exit the eurozone. By this stage the EU will be too preoccupied with its own credibility
gap to hold Greece within the eurozone's structures.
~~~
6) Third party motivated regime change cannot be discounted: Some angry creditors are likely pushing
for Syriza to be ousted. However a No vote gives Syriza a mandate to govern, albeit against a
very volatile, probably quite chaotic, background.
8) Greece abandons the euro and adopts bitcoin - a lovely idea which would at least guarantee
citizens could no longer be subject to summary devaluation at the knee. Alas only slightly more
plausible than lenders accepting a No vote is a basis for debt relief.
And what of the eurozone?
The EU has egg on its face and a sickly currency whose sanctity is being undermined. Economically,
Greek GDP is barely 1.8 percent of the 335 million citizen eurozone. However contagion risks will
be a huge worry. Europe has delayed vital structural reforms and will pay a greater price than
the 'mere' high unemployment relative stagnation of recent years where Asia rose and Europe froze.
Investors will be spooked to realize the euro is not merely perishable, it is in mortal danger.
Greece is a small but debt-laden Mediterranean nation, behind the narcissistic political hubris,
the EU remains an, albeit fading, giant of global influence.
Sure, they played this lose lose, that is the part
that really worries me. You cannot trust politicians who enter that type of game. And this is
all the EU.
"smart people now benefit in contraction", sure, as
the fire sales concentrate ownership to the very few. This model has been tested and proven politically
unsustainable before, it leads to war, where "smart
people" are bound to benefit, too.
bjmaclac | Jul 3, 2015 2:43:06 AM | 63
Engdahl certainly is right in that Syriza is made an example of to disencourage (Southern)
European national politicians from challenging the system. The result, however, is very much the
end of Europe, as there is no way now to sell European initiatives to the - very diverse - national
publics. The discussion in Germany has been framed in a way that makes it virtually impossible
to transfer any more billions to creditors or agree to a debt cut meaning the billions granted
before on saving German and international banks have to be written off.
European politicians got themselves in such a quandary that they depend on the IMF to solve
the crisis whilst making the solution more and more expensive themselves. By defaulting on the
IMF Greece presumably has taken that option from the table. The BRICS will not pay for the "European
problem".
The earlier declaration from the Monarchs of the European voting commission was telling. They
demanded a two week delay to allow their minions to browbeat and propagandize the poor Greeks
before a 'fair', read controlled, referendum could take place. Wayoutwest | Jul 2, 2015 1:51:47
PM | 7
I have to say that I totally didn't get that point so far. Of course they're going nuts about
a short-noticed referendum, because usually in these cases the public gets brainwashed for months
in advance. Can't believe I didn't notice that right away.
It's the essence of western democracy: let people vote, but only the things you want them to
choose from. Nice move by Syriza btw! Now that I think about it, it's obvious that they planfully
came up with the referendum as suprise! Kudos!
China may help Greece directly through its new financial instruments, director of the Quantitative
Finance Department at China's Institute of Quantitative and Technical Economics told Sputnik
China.
"The Greek crisis has an undoubtedly seriously influence on China's trade with Greece
and investment into the country. But I think that European countries together with China can
help Greece overcome the problems that arose," Fan Mingtao said.
"I believe there are two ways to give Greece Chinese aid. First, within the framework of
the international aid through EU countries. Second, China could aid Greece directly. Especially
considering the Silk Road Economic Belt and the Asian Infrastructure Investment Bank. China
has this ability," Fan added
A 'YES' vote is capitulation. A 'NO' vote means negotiation backed by the possibility of GRexit.
GRexit has not been an option so far because Syriza had no democratic authority to contemplate
such a move. Allowing for the possibility of GRexit gives the Greek side a much stronger hand.
Both sides are playing games. You can't take what they say at face value. The Greeks are pro-Europe
until the are not. Tsipras says that a 'NO' vote is not a vote for GRexit. But a 'NO' allows for
GRexit if negotiations fail.
If a GRexit occurs, the Greek side will blame the Troika, pointing to how determined Syriza
has been to stay in Europe. This political blame game is meant to raise the stakes.
I think Greece would issue a parallel currency like Tax Anticipation Notes (TANs) during a
transition period (maybe starting right after a 'NO' vote). If Greece exits, they will likely
get support (loans, trade deals) from BRICS. Russia has an incentive to see that Greece does not
fail, while the Troika has an incentive to see that Greece does fail.
=
I think there will be a 'NO' vote and, armed with the recently released IMF report on the sustainability
of Greek debt, Greece will get a favorable agreement. The BIG question in my mind is whether the
Troika will insist on Greece to agree to support tighter EU integration. That would then also
be asked of other PIGS that seek debt relief.
So this Greek crisis could represent the beginning of the end for the EZ or an significant
advance for those that want to see a "United States of Europe".
A new poll by the Anti-Defamation League found that the majority of Greeks continue to hold
anti-Semitic views about Jewish control over finance and the global economy, despite a recent
drop in anti-Jewish attitudes in other parts of Europe.
They are desperate! The Greeks are NAZIs! Wow! It is amusing to see them going insane, breaking
down right on stage before the audience ... roaring with laughter? I know I am. If you lose your
money, good god don't you lose your mind!
Come on Greeks! You've got 'em on the run! As that
great stateswoman Nancy Reagan once said with regard to drug dealers - "Just say NO!"
German Finance Minister Wolfgang Schäuble has a clear negotiating strategy, aimed at getting
Greece to agree to leave the eurozone. Unfortunately for him, Greece does not want to exit,
and it cannot be forced to do so under the treaties governing the European Union. What Greece
wants is to remain in the eurozone, with a lower debt burden – a position that is both economically
astute and protected by treaty.
... ... ...
There are plenty of precedents for such a course. Sovereign debts have been restructured
hundreds, perhaps thousands, of times – including for Germany. In fact, hardline demands by
the country's US government creditors after World War I contributed to deep financial instability
in Germany and other parts of Europe, and indirectly to the rise of Adolf Hitler in 1933. After
World War II, however, Germany was the recipient of vastly wiser concessions by the US government,
culminating in consensual debt relief in 1953, an action that greatly benefitted Germany and
the world. Yet Germany has failed to learn the lessons of its own history.
I propose a four-step path out of the Greek crisis. First, I recommend that the Greek people
give a resounding "No" to the creditors in the referendum on their demands this weekend.
Second, Greece should continue to withhold service on its external debts to official creditors
in advance of a consensual debt restructuring later this year. Given its great depression,
Greece should use its savings to pay pensioners, provide food relief, make crucial infrastructure
repairs, and direct liquidity toward the banking system.
Third, Prime Minister Alexis Tsipras must use his persuasive powers to convince the public,
in the style of US President Franklin D. Roosevelt, that the only thing they have to fear is
fear itself. Specifically, the government should make clear to all Greeks that their euro deposits
are safe; that the country will remain within the eurozone (despite the false claims by some
members of the Eurogroup that a no vote means a Greek exit); and that its banks will reopen
immediately after the referendum.
Finally, Greece and Germany need to come to a rapprochement soon after the referendum and
agree to a package of economic reforms and debt relief. No country – including Greece – should
expect to be offered debt relief on a silver platter; relief must be earned and justified by
real reforms that restore growth, to the benefit of both debtor and creditor. And yet, a corpse
cannot carry out reforms. That is why debt relief and reforms must be offered together, not
reforms "first" with some vague promises that debt relief will come in some unspecified amount
at some unspecified time in the future (as some in Europe have said to Greece).
Greece is sliding into a full-blown national crisis as the final cash reserves of the banking
system evaporate by the hour and swathes of industry start to shut down, precipitating the
near disintegration of the ruling coalition. Business leaders have been locked in talks with
the Bank of Greece, pleading for the immediate release of emergency liquidity funds (ELA) to
cover food imports and pharmaceutical goods before the tourist sector hits a brick wall. Officials
say the central bank will release the funds as soon as Friday, but this is a stop-gap measure
at best. "We are on a war footing in this country," said Yanis Varoufakis, the Greek finance
minister. The daily allowance of cash from many ATM machines has already dropped from €60 to
€50, purportedly because €20 notes are running out.
Large numbers are empty. The financial contagion is spreading fast as petrol stations and
small businesses stop accepting credit cards. Constantine Michalos, head of the Hellenic Chambers
of Commerce, said lenders are simply running out of money. "We are reliably informed that the
cash reserves of the banks are down to €500m. Anybody who thinks they are going to open again
on Tuesday is day-dreaming. The cash would not last an hour," he said. "We are in an extremely
dangerous situation. Greek companies have been excluded from the electronic transfers of Europe's
Target2 system. The entire Greek business community is unable to import anything, and without
raw materials they can't produce anything," he said.
Troika Maneuvering to Rig Greek Referendum (Martin Armstrong)
In a TV interview, Mr. Varoufakis said very clearly,
"This is a very dark moment for Europe. They have closed our banks for the sole purpose
of blackmailing what? Getting a 'Yes' vote on a non-sustainable solution that would be bad
for Europe."
I must admit, most politicians do not come even close to the truth, but Varoufakis seems to
be the ONLY finance minister who understands the demands of the Troika are not plausible for any
nation. Merkel has tried to skirt any responsibility by saying this is a Troika decision. One
must seriously ask, are those in the Troika just totally brain-dead? Their blackmail and economic
war against Greece will be evidence to ensure that Britain leaves the EU. The ONLY thing that
saved Britain was Maggie Thatcher's effort to keep Britain out of the euro for she knew far too
well where it would lead.
The view in Poland is also now anti-euro. Any Brit who now does not vote to get out of the
EU and the grips of the Troika is ignorant of world events and the political power play going
on. The EU leaders will not travel to Athens until after the referendum. Suddenly they realize
that their powers are so off the wall that they dare not expose their own schemes. Hollande of
France wants a resolution for he fears a Frexit is gaining momentum. Obama wants a resolution,
fearing Greece will be forced into the arms of Russia, breaking down NATO. Yet through all of
this, there is no hope because those in power are clueless. The Troika refuses to solve the euro
crisis because they only see their own self-interest and assume they can force their will upon
all the people.
The Troika is doing everything in their power to rig the Greek referendum to make it appear
that the Greek people want Brussels. The Troika deliberately closed the banks to punish the people
of Greece, and to show them what exiting the euro means. This appears to be their only way of
diverting the crisis with orchestrating a fake "YES" vote to economic suicide. The Troika will
attempt to rig the referendum as they did with the Scottish elections. So expect biased vote
counting in favor of a "YES" vote to stay in the euro. As Stalin said, "Those who vote decide
nothing. Those who count the vote decide everything." http://www.armstrongeconomics.com/archives/34268
So, do you think the large banks in the US have any loans still in their vaults or did they sell
them all to the FED when it was buying 85 BILLION per month? I mean, most of the real estate loans
are FHA, so never show up anyway. And the banks received dollar for dollar value on the exchange
of bad and marginal loans and even, why not, good loans?
After
the hell of World War II, the Federal Republic of Germany – commonly known as West Germany – got
massive help with its debt from former foes. Among its creditors then? Greece. The 1953 agreement,
in which Greece and about 20 other countries effectively wrote off a large chunk of Germany's
loans and restructured the rest, is a landmark case that shows how effective debt relief can be.
It helped spark what became known as the German economic miracle.
So it's perhaps ironic that Germany is now among the countries resisting Greece's requests
for debt relief. Greek Finance Minister Yanis Varoufakis claims debt relief is the key issue that
held up a deal with creditors last week and says he'd rather cut off his arm than sign a deal
that does not tackle the country's borrowings. The IMF backed the call to make Greece's debt manageable
with a wide-ranging report on Thursday that also blames the Greek government for being slow with
reforms. Despite years of budget cuts, Greece's debt burden is higher than when its bailout began
in 2010 – more than €300 billion, or 180% of annual GDP – because the economy has shrunk by a
quarter.
The social fabric in Greece is likely to unravel completely providing the fascist
New Dawn an even larger opening. Those that want to accept whatever terms the EU/IMF offer to
insure their banks get the emergency funding to stay open and will vote Yes in the referendum
are neck and neck with the No vote group.
Syriza knows that at the end of the day they have a Hobbesian choice. The majority of Greeks
want to be in the Euro. If Syriza want their banks open under the Euro system they have to agree
to whatever the EU offers, otherwise they'll have to go against the wishes of the majority of
Greeks and move to another currency. They have no other choice.
jfl @73, have ADL acknowledged Israel's reassurances from Ukranian NAZI's?
ADL condemns Greeks
for thinking Jews exercise inordinate control over finance and the global economy (implying their
resistance arises out of antisemitism). Israel supports fascists where they commit to "oppose
all [racist] phenomena, especially anti-Semitism, with all legitimate means." If ADL does not
request such commitment from Syriza (which is obviously unnecessary), is that because they don't
want it? Do they not want it because the Greeks are right?
Re somebody @74: Sachs, ever this schmuck-comprador, concludes "No country – including Greece
– should expect to be offered debt relief on a silver platter; relief must be earned and justified
by real reforms that restore growth, to the benefit of both debtor and creditor." Why does he
neglect the issue of odious debt, you may ask:
[SNOWDEN] do you see 'odious debt' as a workable concept?
[SACHS] That's a tough question.
I am sympathetic to the idea but I have taken a
somewhat different view. I of course agree with Michael Kremer that cer-
tain debts need to be forgiven, and his view is that certain debts ought not
to be enforceable at all. There are two aspects that concern me with his
approach. First, even non-odious debt should be forgiven in many circum-
stances. So I don't think that the answer to sub-Saharan Africa's debt prob-
lem depends so much on where the debt came from, as opposed to what
the current implications are of the accumulated debt. Some countries get
themselves into a mess through bad luck or bad governance and in my
view these countries need help. Societies should not be trapped by debt
when it is a life and death issue. Second, I am not sure that we know, or can
define what 'odious' means in a clear-cut, unambiguous way. Tastes vary a
lot about what is or what is not good governance. I worry that rich and pow-
erful countries are likely to manipulate decisions on which debts are to be
defined as odious. I would not want to see the Pentagon deciding whose debts
are odious and whose are not. So the applicability of the concept worries
me. However, there is something particularly troubling about a brutal dic-
tatorship that takes on debt by mortgaging national assets and then the cit-
izens of that country, for decades to come, having to pay for that debt. After
all, in most countries private citizens are not responsible for the repayment
of debt incurred in their name by fraudsters. So I sympathise with the
idea, but have a problem seeing how the idea can be put into operation.
Forgive me, I cannot waste any more time deconstructing that obvious bullshit. SACHS is a legendary
good cop. The "NO" possibility must be bracketed and so his "approval" is unsurprising.
To okie farmer @76; Armstrong is hysterical: e.g. "One must seriously ask, are those in the
Troika just totally brain-dead?" and "there is no hope because those in power are clueless."
Blimey, 'e sounds like a fooking war correspondent. 'E must like war.
:-)) Chomsky should have known better. The information
in the approval is that there is a transatlantic economist establishment party supporting the
"no",
apart from Syriza, Beppe Grillo, Podemos - and British media. Looks like the regime change plot
is a German one.
PM Tsipras said that Euro members will never allow Greece to exit, because it would be too
expensive. But what is, really, the cost of Grexit?
We estimate the minimum direct cost of Grexit at around €239bn or 2.4% of Eurozone GDP.
Is
Greece too big to fail for the Eurozone, as Tsipras argues? No. Grexit costs are manageable
for creditors. Yet, Grexit is twice more expensive than keeping Greece within the Eurozone
(even with debt relief). Making Greek debt sustainable again by restructuring it and bringing
close to 100% of GDP, would cost roughly half that (€140bn, or 1.4% of Eurozone GDP). The real
issue, of course, would be moral hazard for other countries, which may be incentivised to ask
for debt relief as well. This issue may be avoided with a conditional form of debt restructuring...
... ... ... According to the RBS analysis, it makes financial sense for the Troika to help Greece
instead of risk GRexit. Its only that other countries might seek debt relief that prevents them
from doing so (plus their dislike of the Tsipras government).
And, we now know that the IMF
agrees: Greek debt should be restructured.
Tusk refused to get drawn out on what this alternative solution might look like. "If you imagine
too much, you get self-fulfilling prophesies," he said, adding that it was above all necessary
to "avoid this dramatic scenario: the breakup of the eurozone."
He added that the stakes in Greece go well beyond the debt or future of the euro, and are
at heart geopolitical: "Greece and the Balkans are the traditional soft underbelly of Europe,"
and the EU needs to move "very, very cautiously."
Let Greece go bankrupt within the Euro. ECB control capital
flows. Foreign banks to take over bankrupt Greek national banks. Personal hardship to be softened
by humanitarian EU programme.
Mr. Tsipras's unexpected decision to call the referendum was the equivalent
of a frustrated chess player trying to break open a match with a daring last-minute move that
his opponent considered to be against the rules.
We are witnessing a black swan event. The Greek banks have run out of cash. Either the EU
seizes Greece or a failed state in Europe has been born with Ukraine soon to follow. All of the
Greek debts are void and trillions in derivative payments will be due. This is 2008 all over again
with the collapse of the western financial system possible. This is why everyone is so desperate.
Yet, for pennies on the total cost of the default, Greece could be saved. Magnanimity may yet
win out but it would mean the end of the current rule of extinction capitalism in the West.
"...So, to recap: corrupt German companies bribed corrupt Greek politicians to buy German weapons.
And then a German chancellor presses for austerity on the Greek people to pay back the loans they took
out (with Germans banks) at massive interest, for the weapons they bought off them in the first place.
"
"...Debt and war are constant partners."
"...And the reason the USA dominated the world after WW2 was they had stayed out of both wars
for the first 2 years and made fortunes lending and selling arms to Britain (and some to the Axis).
It was the Jewish moneylenders of the Middle Ages who financed the various internal European wars, created
the first banks, and along with a Scot formed the Bank of England."
omewhere in a Greek jail, the former defence minister, Akis Tsochatzopoulos, watches the financial
crisis unfold. I wonder how partly responsible he feels? In 2013, Akis (as he is popularly known)
went down for 20 years, finally succumbing to the waves of financial scandal to which his name had
long been associated. For alongside the lavish spending, the houses and the dodgy tax returns, there
was bribery, and it was the €8m appreciation he received from the German arms dealer, Ferrostaal,
for the Greek government's purchase of Type 214 submarines, that sent him to prison.
There is this idea that the Greeks got themselves into this current mess because they paid themselves
too much for doing too little. Well, maybe. But it's not the complete picture. For the Greeks also
got themselves into debt for the oldest reason in the book – one might even argue, for the very reason
that public debt itself was first invented – to raise and support an army. The state's need for quick
money to raise an army is how industrial-scale money lending comes into business (in the face of
the church's historic opposition to usury). Indeed, in the west, one might even stretch to say that
large-scale public debt began as a way to finance military intervention in the Middle East – ie the
crusades. And just as rescuing Jerusalem from the Turks was the justification for massive military
spending in the middle ages, so the fear of Turkey has been the reason given for recent Greek spending.
Along with German subs, the Greeks have bought French frigates, US F16s and German Leopard 2 tanks.
In the 1980s, for example, the Greeks spent an average of 6.2% of their GDP on defence compared with
a European average of 2.9%. In the years following their EU entry, the Greeks were the world's fourth-highest
spenders on conventional weaponry.
So, to recap: corrupt German companies bribed corrupt Greek politicians to buy German weapons.
And then a German chancellor presses for austerity on the Greek people to pay back the loans
they took out (with Germans banks) at massive interest, for the weapons they bought off them in the
first place. Is this an unfair characterisation? A bit. It wasn't just Germany. And there were
many other factors at play in the escalation of Greek debt. But the postwar difference between the
Germans and the Greeks is not the tired stereotype that the former are hardworking and the latter
are lazy, but rather that, among other things, the Germans have, for obvious reasons, been restricted
in their military spending. And they have benefited massively from that.
Debt and war are constant partners. "The global financial crisis was due, at least in part,
to the war," wrote Nobel prize-winning economist Joseph Stiglitz, calculating the cost of the US
intervention in Afghanistan and Iraq, pre-financial crash, to have been $3tn. Indeed, it was only
this year, back in March, that the UK taxpayer finally paid off the money we borrowed to fight the
first world war. "This is a moment for Britain to be proud of," said George Osborne, as he paid the
final instalment of £1.9bn. Really?
The phrase "military-industrial complex" is one of those cliches of 70s leftwing radicalism, but
it was Dwight D Eisenhower, a five-star general no less, who warned against its creeping power in
his final speech as president. "This conjunction of an immense military establishment and a large
arms industry is new in the American experience. The total influence – economic, political, even
spiritual – is felt in every city, every state house, every office of the federal government … we
must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved;
so is the very structure of our society." Ike was right.
Speaking to reporters in Washington on Tuesday, Yiannis Bournous, the head of international
affairs for Greece's ruling Syriza party, heartily endorsed defense cuts as a way to meet
the fiscal targets of Greece's international creditors.
"We already proposed a 200 million euro cut in the defense budget," Bournous said at
an event hosted by the Center for Economic Policy and Research and the Rosa Luxemburg Foundation,
referring to cuts in Syriza's most recent proposal to its creditors. "We are willing to
make it even bigger -- it is a pleasure for us."
If the report is correct, ideology is playing just as much of a role as arithmetic in
preventing a resolution. The IMF's refusal to consider a plan that would lessen pension
cuts is consistent with itshistorically neoliberal political philosophy.
Giftedbutlazee 3 Jul 2015 11:52
we must guard against the acquisition of unwarranted influence, whether sought or unsought,
by the military–industrial complex.
Still as relevant now, 54 years after Eisenhower said it.
BritCol 3 Jul 2015 11:39
And the reason the USA dominated the world after WW2 was they had stayed out of both wars
for the first 2 years and made fortunes lending and selling arms to Britain (and some to the Axis).
It was the Jewish moneylenders of the Middle Ages who financed the various internal European wars,
created the first banks, and along with a Scot formed the Bank of England.
The moral? War makes money for profiteers, and puts those of us not killed or displaced in
debt for generations. Yet we morons keep waving flags every time a prime minister wants to send
us into another conflict.
barry1947brewster 3 Jul 2015 11:39
28 May 2014 The Royal United Services Institute estimated that since the Berlin Wall fell the
UK has spent £35 billion on wars. Now it is suggested that we bomb IS in Syria. Instead of printing
"Paid for by the Taxpayer" on medicines provided by the NHS we should have a daily costing of
our expenditure on bombs etc used in anger.
real tic 3 Jul 2015 11:23
Finally someone at Graun looks at this obvious contradiction present in the Greek governments
opposition to cut in defense spending (when they apparently accept cuts to pensions, healthcare
and other social services)! Well done Giles, but what's wrong with your colleagues in CIF, or
even in the glass bubbled editorial offices? Why has it taken so long to examine this aspect of
Greek debt?
Defense expenditure is also one reason some actors in creditor nations are content to keep
Greece in debt, even as far as to see its debts deepen, as long as it keeps on buying. while within
Greece, nationalism within the military has long been a way of containing far right tendencies.
It is notable but unsurprising that the current Minister of Defense in Greece is a far right
politician, allied to Tsipiras in the Syriza coalition.
Pollik 3 Jul 2015 11:03
"Throughout history, debt and war have been constant partners"
"...Neoliberal politicians are well-paid traitors to their own countries and peoples - how much
empathy can be expected of them for anyone else?"
"...When I see expressions like "hard-working" and "sustainable", I stop reading. It is as Orwell
said: ready made plastic expressions rushing in to smother all possibility of an original individual
thought. All this dolt needed to include were "inclusive", "sensitive", "globalised", "aspirational",
"stakeholders", and he would be done."
"...You are quite right about Golden Dawn but I don't think the Troika actually care about
that so much. Its beyond obvious that the Troika care nothing for the Greek population and I think they
would be content with a fascist dictatorship as long as it signs up to austerity."
"...That would not be a bad thing, but I don't think the Euro is seen as an error or a mistake
at all. As Germany has discovered, it is an extremely useful tool in assuring the triumph of greed:
keeping populations poor, unemployed and fearful, so they are more willing to accept the lash of the
markets and agree to bank bailouts, low wages, a diminished social safety-net, trade treaties, etc.,
etc."
The possibility of a Greek exit from the eurozone has never been more likely. We shouldn't be
under any illusions – this would be a catastrophe for Greece's eurozone creditors, the Greek state
and the European Union.
Like it or not, we are all in this together. If we continue on our current trajectory, everyone
stands to lose from what now resembles a reckless, self-destructive standoff. The Greek economy is
on the verge of complete collapse. This would not only be devastating for the people of Greece, it
will guarantee that creditors never see their money again. We must remember that Germany has lent
approximately €80bn. This is an astonishing figure, close to a quarter of Greece's budget for 2016.
Yet the sad irony is, the longer the current impasse continues, the greater pressure Angela Merkel
will face within her own party to reject any solution that is accepted by the Greek government.
But much more is at stake than euros. The world will consider a "Grexit" as a devastating blow
for EU monetary cooperation and the European project. A destabilising Grexit will only be welcomed
by the likes of China, Russia and those who are most threatened by a strong, united European Union.
If Greece is to stay within the eurozone, we need to secure a massive de-escalation of the tensions,
rhetoric and threats from both sides – and fast. It is time for Greece's finance minister Yanis Varoufakis
and the political leaders of the eurozone to come to their senses and bring this crisis back from
the brink.
Prodisestab -> HolyInsurgent 3 Jul 2015 18:26
Neoliberal politicians are well-paid traitors to their own countries and peoples - how
much empathy can be expected of them for anyone else?
Agreed to a good extent. However, when the discussions broke off Friday night, the two sides
were very close regarding the measures that were needed. I believe that they were off by 60 million
euros only. Their differences were mostly about the types of measures to be taken with the Greek
government wanting more taxes on businesses and the creditors wanting more to be paid by ordinary
people. The problem that I have and that a lot of observers have with that is the fact that the
Greek government did compromize quite a lot while the creditors refused to budge from their inflexible
position despite the fact that implementation of their policies during the last five years has
put the country into a depression. A basic premise of "negotiation" is that both sides make compromises
in order to arrive at a mutually beneficial solution. In this case the creditors demonstrated
total lack of flexibility, which clearly indicates alterior motives at least on the part of some
of the creditors. In Germany they have fed their people with all the hate against "lazy Greeks"
etc that clearly shows up in these messages and in that sense they have themselves created a very
negative environment. I believe that about 90% or so of all the loans that have been given to
Greece went back to the creditors. Greece is not looking for handouts here. This must be understood.
This is a debt crisis that has been mishandled and that has span out of control as a result.
Economic terrorism is not justified under any conditions and particularly within the EZ.
LiveitOut 3 Jul 2015 21:45
When I see expressions like "hard-working" and "sustainable", I stop reading.
It is as Orwell said: ready made plastic expressions rushing in to smother all possibility of
an original individual thought.
All this dolt needed to include were "inclusive", "sensitive", "globalised", "aspirational", "stakeholders",
and he would be done.
How odd all this stuff about hardworking families when we are all being screwed to kingdom come
by hard whoring banking gangsters who have never done a second of useful work in their effing
lives --
The Greek economy is on the verge of complete collapse. This would not only be devastating
for the people of Greece, it will guarantee that creditors never see their money again.
The debt has been known to be unpayable for a long time. It has nothing to do with current events
in Greece. It should have been written off.
No one believes anything Alexis Tsipras says anymore, and this is why a yes vote on Sunday
is crucial. But it's also clear eurozone leaders have made mistakes with Greece.
But despite their nonsenses the latter group somehow, mysteriously, retain credibility. It was
not the antics of Tsiparis that brought about this mess but the behaviour of his 'credible' opponents.
Greece and its creditors agree a three-month window to develop a long-term reform programme
combined with an investment package to turn Greece's ailing economy around.
Now you are getting close to the Syriza position.
Let us use this crisis to deliver real, sustainable change by drawing up a settlement in
the next three months in which the Greek state, its government and its administration are paying
back the debts, instead of forcing hard-working citizens to pay the bill.
Is that before or after the twenty-year moratorium on debt implied by the IMF?
From the burning embers of two world wars, we have created a single market with free movement
of people, goods, services and capital.
And the freedom to avoid taxes.
PaleMan -> jonbryce 3 Jul 2015 12:59
You are quite right about Golden Dawn but I don't think the Troika actually care about
that so much.
Its beyond obvious that the Troika care nothing for the Greek population and I think they would
be content with a fascist dictatorship as long as it signs up to austerity.
Danny Sheahan 3 Jul 2015 12:59
No one believes the ECB or the EU leadership anymore.
If they were serious about the Euro as a strong functional currency this mess would not be
so big.
They would not have had to flush out private German and French bad debt in the 2nd bailout
by putting it on the tax payer, or those countries would have had to step in to hep their banks
and political careers would have been over.
The ECB has become a political football and it cannot maintain stability in its currency region.
It is a failed central bank.
Vilos_Cohaagen 3 Jul 2015 12:58
"The Greek economy is on the verge of complete collapse. This would not only be devastating
for the people of Greece, it will guarantee that creditors never see their money again."
The problem is that there's no scenario where the creditors do get paid back. So, why (for
a start) "lend" them 60 billion more Euros? Wiping the debt completely out just means that the
Greeks can start accumulating new "debt" they'll have no intention to re-pay and will be defaulting
on a few years down the line.
BusinessWriter 3 Jul 2015 12:52
it will guarantee that creditors never see their money again.
Crazy - this Guy actually thinks the creditors have any chance of seeing their money again
- what planet is he on.
As for his idea that the Greek state (or any state for that matter that doesn't control its own
currency) can pay of its debt independent of the taxpaying public - it's deluded nonsense.
Where is the Greek state supposed to get the billions of euro from? The only source of revenue
it has is taxes or selling assets that it holds on behalf of the citizens of Greece.
Equally, the idea that the clientelist state is somehow a separate thing to the majority of
the Greek people is nonsense. So many of them are either employed by the state or in professions
protected from competition by the state or in companies that only serve the state. Identifying
anyone who doesn't benefit in some way from the current clientelist state would be like looking
for an ATM in Athens with cash in it on Monday morning.
This Guy is just another symptom of the problem - he offers no sustainable solution - and what
he does offer is incoherent and too late.
fullgrill -> elliot2511 3 Jul 2015 12:51
That would not be a bad thing, but I don't think the Euro is seen as an error or a mistake
at all. As Germany has discovered, it is an extremely useful tool in assuring the triumph of greed:
keeping populations poor, unemployed and fearful, so they are more willing to accept the lash
of the markets and agree to bank bailouts, low wages, a diminished social safety-net, trade treaties,
etc., etc.
whichone 3 Jul 2015 12:50
"Syriza's game is up. No one believes anything Alexis Tsipras says anymore"
well 1) it looks like 50% of the Greeks believe him
2) The IMF (and Merkel in leaked notes) have acknowledged that the debt is unsustainable even
if Greece accept all conditions imposed by the Troika.
Varoufakis has been saying this since the start. So lets no longer pretend that this is all
about getting the money back or that Greece wants to avoid its responsibility to its creditors
: again will say Varoufakis has said the Greek government does not want to do this. The point
is he and many other knowledgeable people (not politicians) know that it can not be paid back
, but with the conditions in place to allow the economy to start to grow then Greece has a chance
to pay some of it back. This is about bringing a Government to heel. I wish the Guardian , having
continually reported on this crisis and knows what has been said allows a contributor to use the
paper as propaganda.
And I hope that all those people who purposely said that a 'NO' vote means a no to Greece in
the Euro and EU after a 'NO' result and surprise surprise Greece is still in the Euro, get thrown
to the Wolves.
The same is goes with the comments about Varoufakis playing Game theory. He denied this basically
saying that those who say this obviously don't know the first thing about Game Theory.
badluc TheSighingDutchman 3 Jul 2015 12:48
Genuine question: correct me if I'm wrong, but haven't the electorates of Germany, Netherlands,
Finland etc been consistently fed by most of their politicians (and newspapers) a completely mistaken
"morality tale" about what the root causes of the problems are, blaming inefficient and corrupt
governments who borrowed too much, without mentioning either the reckless lenders (mainly German,
French, Dutch etc banks), were silent about the shifting of the burden of bad lending from the
banks to the EU taxpayers (did they ever acknowledge that clearly?!?), describing the solution
as a punitive austerity which would somehow bring moribund economies back from the abyss, etc?
Politicians have a duty to be frank and sincere with their electorate, sharing with them all the
relevant data they have on a given problem. If they have been feeding them misguided rhetoric,
they have only themselves to blame if the chickens now come home to roost. In other words, if
the electorate would now revolt against the inevitable, don't the politicians of those countries
who have most strongly supported and advocated austerity have only themselves to blame?
SouthSeas 3 Jul 2015 12:48
Germany has lent 80bn to Greece to pay back loans from German banks
RudolphS 3 Jul 2015 12:47
While Verhofstadt calls for a cooling-off period he at the same time claims 'Syriza's game
is up' and is urging the Greek people to vote 'yes' next sunday. With the latter he shows his
true colours as just another Brussels eurocrat, and is only fuelling debate instead of cooling-off.
Dear Mr. Verhofstadt, why the hell do you think the Greek voted en masse for a party like Syriza?
Because they are sick and tired of people like you.
And yes, there much more at stake than a debt. Putin must be watching this whole spectacle
with total bewilderment how the EU is crippling itself from the inside.
Rainborough 3 Jul 2015 12:47
Anyone who is in danger of being impressed by conservative politician Guy Verhofstadt's perspective
on Greek problems might like to bear in mknd that among his numerous other highly lucrative financial
interests is his position on the board of the multi-billion Belgian investment company Sofina,
whose interests include a stake in the highly controversial planned privatization of the Thessaloniki
water utility.
hatewarmongers OscarD 3 Jul 2015 12:46
The neoliberal elite don't
SHappens 3 Jul 2015 12:17
In a democracy people can chose their fate by voting or through referendum. That's the way
it goes but not in Europe where referendum are seen as a danger to the establishment. Tsipras,
as soon as he came to power through a democratic vote was seen as a danger. He was ostracized
and considered a pariah, Greece became a pariah state and they can as well die from hunger.
The EU, and institutions have behaved like the little bullies they are, just like they did
with Switzerland after the vote on immigration, they threat, blackmail everyone who dare think
different.
For the sake of democracy, the Greeks have to vote no, there is no other decent alternatives
especially after all the bashing and disrespect they have been under. Nobody in EU and US (since
they have their say in european affairs) want to see Greece walking away, nor Russia or China
for that matter. But Tsipras had the opportunity to see where his real allies stand, and it is
not within Europe. He might not forget this in the future.
mfederighi 3 Jul 2015 12:09
You are entirely right in suggesting that the only sustainable solution is a far-reaching reform
programme for the Greek state and the reek economy. However, when you say that:
Greece's people must be at the centre of such a settlement. They did not cause this crisis
and remain the victims of successive Greek governments, who have protected vested interests
and the Greek clientelist system at their expense.
You seem to think that vested interest and the reek clientelist system are distinct from the
Greek people. There is, I am afraid, a substantial overlap - that is, quite a few people benefit
from clientelism and are part of vested interests. Not recognising this is disingenuous.
After all, corrupt and inefficient governments have been elected again and again - by whom?
jimmywalter 3 Jul 2015 12:06
The Banks solution is no solution - it means poverty and no taxes to pay to repay. The Banks
want a Treaty of Versailles. We all know of a certain Austrian that rose up to end the German
economic collapse. We all know how that ended. I don't want that again. People revolt over economics.
Spain, Italy, and Greece have huge numbers of unemployeed who did nothing to create this crisis.
The Banks did. Who should pay? Anyway, leave the Euro, stay in the EU!
Here are my thoughts on options for handling Greece's debt.
Let me begin with the following question: if someone makes a new loan to the Greek government,
are they ever going to get paid back? Let's start by being clear about what we mean by "paid back."
There's nothing fundamentally unsound about the consols that the British government sometimes used
historically to borrow. These bonds were intended to pay interest forever but never repay the principal.
In practical terms it's not really that different from a 30-year bond, nor for that matter from a
one-year bond that creditors always roll over. As long as the interest payments always get made,
the buyer can consider himself fully "paid back" in the present-value sense for the consol he purchased,
even if the principal itself is never repaid.
But the question is, where will the Greek government get the funds with which to make future interest
payments? If they always just borrow new sums with which to make interest payments as they come due,
it's obviously not a good deal for the creditors. The debt just grows over time, and creditors are
only being paid back with their own money. If you followed the cash flow over time, you'd find it's
always a one-way street from creditors to borrowers, and amounts to an outright gift from creditors,
not a loan that is ever paid back in any sense.
One way to keep track of this is by looking at the government's primary budget surplus, which
is calculated by taking the usual budget surplus and adding to it the government's annual interest
payments. If the interest payments are large, the normally calculated budget might be in deficit
(defined here as a negative surplus). But when you add interest payments to that negative number,
it could come out to be a positive number.
If the normal budget is in deficit but the primary budget is in surplus, it means that the debt
is going to grow over time, but at least some of the interest payments are being made with real funds
instead of with new borrowing. If you work through the math, it turns out that as long as the primary
budget surplus is equal to annual interest expense, creditors are being fully repaid in present-value
sense, even though the debt itself is never retired.
But if the primary surplus is less than the annual interest expense, the debt will be growing,
and repaying in present value requires continual revenue increases or budget cuts. The question anyone
lending new sums to Greece must contemplate is whether that's a plausible scenario.
What are the numbers for Greece's primary surplus? It turns out it's harder to find a straight
answer to that question than it should be. The graph below plots the figures from the
IMF World Economic
Outlook database. These claim that after years of big deficits, Greece finally ran a primary
surplus of 1.2% of GDP in 2013.
But the ECB claims instead that
Greece ran a primary deficit of 8.3% of GDP rather than a surplus in 2013. What's the controversy?
Based on
this report from the Wall Street Journal, it appears that the IMF must be excluding one-time
expenditures in support of the Greek banking system, which amounted to 10.8% of GDP. In terms of
the calculus of whether external creditors on net were getting repaid anything in 2013, the ECB concept
appears to be the correct one– Greece was still running a big primary deficit in 2013 in the sense
that any interest payments they made that year, along with much of their spending, were paid for
with newly borrowed money.
For 2015 the IMF is anticipating a primary surplus of 3% of GDP. But
Daniel Gros attributes the
surplus so far in 2015 to factors such as the government not having made cash payments yet for goods
and services already ordered or provided– otherwise known as new government borrowing not recorded
in the official measures of government debt.
This is why creditors are asking for more progress from Greece on the primary surplus before extending
additional funds. But here's the response of Greek finance minister
Yanis Varoufakis:
Greece's drama is often misunderstood in northern climes because past profligacy has overshadowed
the exceptional adjustment of the past five years. Since 2009 the Greek state's deficit has been
reduced, in cyclically adjusted terms, by a whopping 20 per cent, turning a large deficit into
a large structural primary surplus. Wages contracted by 37 per cent, pensions by up to 48 per
cent, state employment by 30 per cent, consumer spending by 33 per cent and even the current account
deficit by 16 per cent.
Alas, the adjustment was so drastic that economic activity was choked, total income fell by
27 per cent, unemployment skyrocketed to 27 per cent, undeclared labour scaled 34 per cent, public
debt rose to 180 per cent of the nation's rapidly dwindling GDP, investment and credit evaporated
and young Greeks, just as their Irish counterparts, left for distant shores, taking with them
huge quantities of human capital that the Greek state had invested in them.
What Greece needs now is not more cutbacks that push an impoverished populace into greater
indignity, or higher tax rates and charges that crush what is left of economic activity. These
"parametric" measures, as the institutions call them, have been excessive, the result now being
a nation on its knees.
No, what Greece now needs desperately is serious, proper reforms. We need a new tax system
that helps defeat evasion and curtail political or corporate interference, a corruption-free procurement
system, business-friendly licensing procedures, judicial reforms, elimination of scandalous early
retirement practices, proper regulation of the media and of political party finances, etc.
Suppose we granted the claim that further tax increases or spending cuts would be crippling and
self-defeating. If true, doesn't that make a pretty good case that Greece does not have the capability
to make real interest payments on any new debt? And if it is as simple as implementing a few reasonable
reforms, why were these not instituted earlier, and how effective can they be expected to be? Why
wouldn't they also depress demand in an already depressed economy?
By now it should be clear to all that the only reason why Germany has been so steadfast in its
negotiating stance with Greece is because it knows very well that if it concedes to a public debt
reduction (as opposed to haircut on debt held mostly by private entities such as hedge funds which
already happened in 2012), then the rest of the PIIGS will come pouring in: first Italy, then Spain,
then Portugal, then Ireland.
The problem is that while it took Europe some 5 years to transfer a little over €200 billion in
Greek private debt exposure to the public balance sheet (by way of the ECB, EFSF, ESM and countless
other ad hoc acronyms) at a cost of countless summits and endless negotiations, which may or may
not result with the first casualty of the common currency which may prove to be reversible
as soon as next week, nobody in Europe harbors any doubt that the same exercise can be repeated
with Italy, or Spain, or even Portugal. They are just too big (and their nonperforming loans are
in the hundreds of billions).
And yet, today, in a stunning display of the schism within the Troika, it was the IMF itself which
explicitly stated that Greece is no longer viable unless there is both additional funding
provided to the country, which can only happen if there is another massive debt haircut.
Even with concessional financing through 2018, debt would remain very high for decades
and highly vulnerable to shocks. Assuming official (concessional) financing through end–2018,
the debt-to-GDP ratio is projected at about 150 percent in 2020, and close to 140 percent in 2022
(see Figure 4ii). Using the thresholds agreed in November 2012, a haircut that yields
a reduction in debt of over 30 percent of GDP would be required to meet the November 2012 debt
targets. With debt remaining very high, any further deterioration in growth rates or
in the mediumterm primary surplus relative to the revised baseline scenario discussed here would
result in significant increases in debt and gross financing needs (see robustness tests in the
next section below). This points to the high vulnerability of the debt dynamics.
And the kicker:
"these new financing needs render the debt dynamics unsustainable."
Bingo, because that is, in a nutshell, precisely what Tsipras and Varoufakis have been claiming
since day one. As expected, a Greek government spokesman promptly said that the IMF report
is in line with the Greek government's view on debt.
What makes the IMF report even more odd, is not so much its content and position which have been
largely known for quite some time now, but its timing: just three days before the Sunday referendum,
Tsipras now has prima facie evidence to wave in front of the Greek people and say "see,
we were right all along."
It is exactly the case that only a "No" vote at this point would allow
Greece to continue a negotiation which has already seen one of the three Troika members side with
the Greek position. Should Greece vote "Yes", it will make any future negotiation with the Troika
impossible, and while the country will get a few months respite the resultant bank run after the
bank reopen with the ECB's blessing will mean that all Greece will do is buy itself a few months
time. Only this time all the debt will still be due.
And, should hey vote "Yes", this time the Greeks will only have themselves to blame for all the
future pain, pain which will continue
well after the mid-point of this century.
But ignoring Greece for a minute, what the IMF's "debt
sustainability analysis" has just done is open the door for every single other comparably
insolvent peripheral European nation to knock on Christine Lagarde's door and politely ask:
"Mme Lagarde, if Greece is unsustainable, then why aren't we?"
Because as the chart below shows, the debt situations of all the other peripheral European nations
is just as "unsustainable."
In this way, while the outcome of the Greek situation is currently unknown, it has also become
moot, because at this very moment, politicians from Spain's Podemos to Italy's Five Star
movement are drafting memos demanding that the IMF evaluate their own debt sustainability.
Or rather unsustainability.
Perhaps more importantly, these same politicians will now dangle the prospect of an IMF admission
that they, too, deserve a haircut as the catalyst to be elected into power. After all who can refuse
that their life would be made so much better if only the country was permitted to selectively "default"
on €50, €100, €200 billion or more in debt? Just elect this politician, or that, and watch your living
standard soar...
And since the IMF has no choice but to agree that just like Greece all these nations are accordingly
drowning in debt, Syriza's sacrifice (assuming Tsipras fails to outnegotiate Merkel) will not have
been in vain. In fact, it may very well end up that today the IMF opened up the Pandora's box, one
which, more than a Grexit, will destroy Merkel's "united Europe" legacy.
Looks like US is using IMF to mess around a bit with German (and russian) ambitions.
i_call_you_my_base
Was thinking the same. The US is trying to foul things up for Europe here.
Pool Shark
Just like the 'Dread Pirate Roberts,' Central Banksters must leave no survivors. Otherwise
word gets out that they've gone soft, and then it's nothing but 'work, work, work...'
disabledvet
Smith and Wesson sure looks good here.
"You can keep the Ouzo." And the "Ginsu 2" apparently.
The IMF is just a repository for US dollar funding. If the entire Continent of Europe cannot
cough up a single US dollar to pay for "Greece" then that is the ECB's problem...not the IMF's
problem.
Those dollar sure look pretty expensive right now...on that I would agree.
Tall Tom
Can I draft a memo to the IMF requesting if the United States can pay its debts?
Do you think that I'd be taken seriously?
Our arrears are worse than Greece's ever were. The Debt is unpayable.
This is laughable.
weburke
I predict 3 countries out of the eu, and the greek guy gets big billing with the pope talking
us into the nwo.
greenskeeper carl's picture
Hahaha I fucking called this shit this morning as soon as I saw that first article. We don't
need no water let the motherfucker burn... The house of cards is getting flimsy.
One of these is...
+1 for the firewater burn reference.
boogerbently
Contagion from NOT throwing Greece under the bus. The rest want THEIR "write downs" now.
Haus-Targaryen
Interesting.
This pits the IMF against Rainbowland. Their actions here imply they want the system to blow
up (free shit for Greece (which is affordable) also means free shit for Italy and Spain (which
isn't affordable)) however, Greece is now in formal default, and ClG could write her letter and
deliver it tomorrow, blowing up Greece beyond recognition tomorrow.
The EU is pretty steadfast in what they desire -- Greece to bend over and keep the system going.
Greece is pretty obviously willing to play kamikaze economics.
What I don't get is the IMF. Some of their actions imply they want the system to explode, while
their other actions imply they don't. Given Greece and the EU kinda off-set each other right now
-- the player at this point to watch is the IMF. ECB can wreck havoc with their collateral requirements,
but apart from that this pig is stuffed until 6 PM CST on Sunday.
Crtrvlt
1) the IMF (US) realizes Greece can't fail for strategic geographic reasons
2) they are trying to save face for Merkel
Bankster Kibble
1) the IMF (US) realizes Greece can't fail for strategic geographic reasons
1.1) Greece must stay inside the EU because it is easier to block Russian gas lines that way,
and the EU is too divided to decide how to pay for a gas line through Greece by itself
disabledvet
Greek "euro-debt" WAS paying 18% just last week.
"Ruble MONEY" pays about 14%...give or take.
Brazilian REALES look like the best deal on actual MONEY right now would appear...there just
aren't many of those either though.
two hoots
This debt juggernaut is the planet's most serious threat. World leaders must get a grip on
all lending institutions that can place irresponsible/shortsighted/corrupt countries in Greece
situations.
We know the cause, symptoms and prognosis but fail to find a cure other than continuous talk,
talk and more talk and more debt and we even know why we do this.
The US, G7, G20, UN someone, somewhere must take lead and cure the world of this bankers disease.
The bankers caused it; keep them away from the patient.
I totally get the naivity of my comment, but this fixing it with what caused it is ...well.
James_Cole
Greece is now in formal default. Are they though? What I don't get is the IMF. Some of their
actions imply they want the system to explode, while their other actions imply they don't.
Considering Germany and France have competing interests to the US this would make sense.
All I know is watching this has been a lot more interesting than last seasons game of thrones.
i_call_you_my_base
I agree with you again. I'll throw this out there: if the US rattles Europe here, and then
even pushes China's markets over, the US would have effectively kneecapped every major economy
(inc Russia), all of northern Africa, and the ME in a decade and a half.
Captain Debtcrash
But nothing on Japan. It's amazing how they can look at one, Greece and say it is unsustainable,
but just because Japan, who is in much worse shape, can print money they don't see a problem.
A solvency crisis can not be solved with money printing, and most developed nations are insolvent.
When the collective world realizes a printing press makes no difference there will be fireworks,
and that realization will happen in the blink of an eye.
itstippy
Japan does not owe the Troika any money. Japan is not part of the European Union. Madames LeGarde
and Merkel don't give a shit about Japan. I agree Japan is hopelessly insolvent, and the fact
that JGBs (denominated in Yen) are seen as a "safe haven" in times of global turmoil is insane.
Someday soon they are going to melt down into a pool of toxic crap.
F0ster
Exactly, if you "fuck the EU" and make them so poor they buy less energy products, you inadvertently
kill one of Russia's preferred revenue streams. So the US is using the IMF to fuck the EU in its
war with Russia.
falak pema
Hahaha, the "jack in the box flavour of truth"... the IMF now caught in its own cross hairs.
DSK made that statement a few days ago that the chief economist of the IMF has now set in stone
like a potential time bomb.
And Lady LAgarde, the scheming Milady of Status Quo, (she said no debt restructuring UNTIL
they implement full austerity in Greece and kill all those pensioners), is now made to look like
what she truly is : A creature of Pax Americana power cabal. The woman who said to Sarkozy; another
Neo-con fellow traveller; fais ce que tu voudrais de moi Nicolas...back in 2007 when he got elected
to President. And he did!
Now the IMF has turned the tables; probably to follow suit in echoing the declarations of its
ex and humbled CEO; DSK. Is this the work of Olivier Blanchard who leaves the IMF or is it the
work of his successor? In any case this is a psychological time bomb as the IMF mask comes off!
Rainman
Pretty clever ...this is where Lew gets a demand for a declaration of unlimited credit to the
IMF; then the cycle of destruction moves to the next phase.
overqualified
Meet the new Mutually Assured Destruction
N57Mike
"Pandora was a woman who lived with her husband in a paradise and was given a beautiful box
for safekeeping with the caution that she ought not to ever, ever open it. For a time she remembered
and kept her promise to not open the box but eventually succumbed to the temptation and decided
to have a peek. The lid flew open as soon as she raised it and a swarm of imprisoned evils flew
up and out into the world inflicting pain, greed, envy and manner of suffering on all they found.
Pandora and her husband Epimetheus were also the victims of all these ills, knew they were
responsible for the suffering and were grieving their part in it while sitting near the box. In
the midst of their lamenting, they heard a small voice crying out from the box, "Open, open, and
I will heal your wounds! Please let me out!" and while at first they were afraid to open it and
possibly release even more troubles, they eventually decided to see who the plaintive voice came
from.
They fearfully opened the box and found a small bright-winged beautiful creature. It was well
for Pandora that she opened the box a second thim, for the gods, with a sudden impulse of compassion,
had concealed among the evil spirits one kindly creature, Hope, whose mission was to heal the
wounds inflicted by her fellow prisoners"
Can't someone just print a $1 trillion Euro bill and hand it to the Greek government to pay
everything off and start anew.
NotApplicable
I think you mean SDR.
Long story short, the choices left are but two. Endure the pain of a global collapse, or enslave
the planet with all of this unpayable debt rolled up into the next global monetary system.
With a few wars along the way to grease the skids.
Cyring "Uncle!" yet?
Lea
The IMF is backtracking because the new Chinese-led bank has opened. It is not the only option
anymore.
The Chinese could step in any minute, and that would mean the end for the IMF's plundering
tactics - worldwide. So, letting go of some of its demented demands on Greece is only cautious.
"Germany is king when it comes to debt. Calculated based on the amount of losses compared to
economic performance, Germany was the biggest debt transgressor of the 20th century."
How many haircuts?
"That depends on how you do the math. During the past century alone, though, at least three
times. After the first default during the 1930s, the US gave Germany a "haircut" in 1953, reducing
its debt problem to practically nothing. Germany has been in a very good position ever since,
even as other Europeans were forced to endure the burdens of World War II and the consequences
of the German occupation. Germany even had a period of non-payment in 1990."
More:
Ritschl: That's what it looks like, but we were also extremely reckless --
and our export industry has thrived on orders. The anti-Greek sentiment that is
widespread in many German media outlets is highly dangerous. And we are sitting in a glass
house: Germany's resurgence has only been possible through waiving extensive debt payments and
stopping reparations to its World War II victims.
SPIEGEL ONLINE: You're saying that Germany should back down?
Ritschl: In the 20th century, Germany started two world wars, the second of
which was conducted as a war of annihilation and extermination, and subsequently its enemies waived
its reparations payments completely or to a considerable extent. No one in Greece has forgotten
that Germany owes its economic prosperity to the grace of other nations.
tom a taxpayer
The Greek referendum is a revolutionary action. It will spread like wildfire across Europe
and around the world whereever debt slaves yearn to be free. Over the coming days and weeks it
will drag the IMF, ECB and other world-class bankstas to their days of reckoning.
Hopefully, the Greek government will follow the referendum with the arrest and trial of Goldman
Sachs and other international bankstas. Justice cries out for a mass trial in the style of the
Maxiprocesso (Maxi Trials) of the Mafia in Sicily during the 1980s that resulted in hundreds of
defendants convicted.
Wouldn't it just be easier to drone all the Rothschilds and their central banks out of existence,
could be done in 24 hours.
Never_Put_Down
Hardly, they own the drones and the drone operators.
Jack Burton
I don't claim any great knowledge of high finance, though I have some basic understanding,
but, many here on ZH and ZH in general has been miles ahead of all the Media Mouthpieces, all
the IMF spokesmen, all the finance ministers of Europe combined.
" "these new financing needs render the debt dynamics unsustainable."
Who in the fuck did not know 3 years ago that the above was true?
And, Greece is the little boy with his finger in the dike. If the default hole begins to leak,
the supporting structures will be eaten away very fast, and the leak will become a flood. Allowing
haircuts and reducing austerity in one place will call forth the floods of demands for similar
treatment.
An Estonian finance minster summed it up. "We have not had years of austerity, cuts in
wages, health, retirements, education for years, ONLY in order for Greece to keep their benefits!
Play this same thought pattern out across the big problem children SPAIN, ITALY and IRELAND. Spain
for example is totally too big to be bailed out, and is too big to fail, Should IT fail, the EU
project melts away.
Over in Russia, a nation with NATO massing on it's borders, claiming to be defending against
a Russian invasion threat. A Russia under strict sanctions in finance, banking, energy and import
export trade. Russia is doing just what they should do. Take all the threats, the lies, the propaganda
and accusations from the West, stay mostly silent, stay behind their protected borders and wait.
As the EU mounts attack after attack, threat after threat, sanction after sanction, for no good
reaon other than Washington wants it, Russia is waiting. They may look to be outnumbered and out
gunned by the military and financial powers under Washington's direct control. But holding the
line and waiting is their best bet. They have surpluses of well over 300 billion, minimal debts,
a fast modernizing military, tens of billions in new gold holdings added to the already large
supply. They have energy independence totally. Sanctions have allowed Russian domestic agriculture
and manufacturing to instantly be competitive again, with imports being shut down.
The EU and Washington are right now at the very peak of their power to bully and threaten.
They look invincible! But a tiny nation like Greece, shows just how rotten the foundations are.
Washington, the giant power that also seems totally invincible, is really more rotten than Greece,
if you look at the scale of debts and obligations. To top it all off, Washington has declared
open war on China, the world's largest economy, and richest nation in terms of Real Money. \
The rot has set in, how fast it spreads is not something I can know, but I do know it will
spread!
"...Make no mistake: Sunday's referendum will mark a defining moment in Greece's modern history
and a decisive turn for Europe's neoliberal project."
Those who accuse the Greeks of "recklessness" are mistaken: the creditors' utter contempt
for democracy left them with no other choice but a rupture.
The announcement struck like
a bombshell.
Tsipras' spectacular decision late on Friday to fly back to Athens and put the Eurogroup's final
bailout offer to a referendum - with the government advising voters to reject the deal - has stunned
friends and foes alike.
Now, with depositors lining up at ATMs to withdraw cash, the Eurogroup refusing to extend the
current bailout program, the ECB capping its emergency liquidity assistance for Greek banks, and
Greece set to miss a €1.5 billion IMF payment on Tuesday, the long-awaited endgame is finally upon
us. After five long and exhausting years, the euro crisis has exploded into its dramatic climax.
Those who now lambast the Greek government for its supposed "recklessness" in calling the referendum
are profoundly mistaken. Yes, as I have argued many times before, Tsipras' and Varoufakis' belief
that they could somehow extract an "honorable compromise" from the creditors was always extremely
naive. But in the end it was the creditors' utter contempt for democracy that pushed Tsipras with
his back against the wall, forcing him to sign up to an agreement that they knew would split
his ruling party and government.
Deliberately tabling one outrageous proposal after another, the creditors' intention was clear
from the very start: they were never even remotely interested in any positive "deal"; the only thing
they would settle for was Syriza's complete and total surrender - ideally followed by technocratic
regime change inside Greece. Paul Krugman was therefore entirely right when
he referred to the creditors' ultimatum as "an act of monstrous folly."
Backed into a corner by the virulent moves of the Eurogroup and the IMF, Tsipras responded in
the only sensible way: he rejected the absurd proposal that the creditors had put on the table, took
the decision to his people, and advised them to vote against the creditors' disastrous ultimatum.
What is surprising is not that he made this move per se - but that it took him so long to
do it.
For five months, the creditors suffocated Greece, depriving it of all liquidity in a brazen attempt
to force Tsipras to sign up to humiliating concessions that would have condemned the Greeks to years
- if not decades - of extreme austerity. For five months, they doubled down on their cynicism and
steadfastly refused to make even the most minimal concessions. For five months, they publicly belittled
and degraded the democratically-elected representatives of millions of Greeks who had already suffered
untold hardship.
If Tsipras had signed up to this unacceptable deal, it would not only have meant political suicide
for him and his party; it would also have spelt an unmitigated disaster for the Greek people - not
to mention the lasting damage it would have inflicted upon the political prospects of the European
Left more generally. If there's anything reckless about Tsipras' approach, it's that he even let
the creditors get this far to begin with.
It was high time for the Big No - the resounding OXI!
For five years, European leaders and Greek elites sacrificed this beautiful country and
its exceptional people at the altar of the financial markets to save a handful of reckless speculators
inside the European banks and to convince international investors that the monetary union was irreversible.
For five years, they punished the Greeks for a deep-rooted structural crisis they had no
part in creating. For five years, they kicked the can down the road, hoping that the fundamental
contradictions of financialized capitalism and the European monetary union would somehow magically
disappear if only the inevitable moment of reckoning could be indefinitely pushed into the future.
This approach has now been exposed as a catastrophic but utterly predictable failure. Doubling
down on their extreme positions with the malicious intent of forcing the Greeks into a self-defeating
deal or disorderly exit, it was the creditors themselves who brought the Eurozone to the brink. Of
course they will boast that Greece has long since been "ring-fenced" and that the fallout of a Greek
default can now be contained, but investors will draw their own conclusions when they see a full-fledged
member of the Eurozone descending into chaos. It is no surprise that the euro is already tanking
in the Asian markets.
The gravest irony is that, all this time, there was a very straightforward and socially acceptable
way out of the deadlock. The sensible solution would have been to write off a significant chunk of
Greece's debt. But, as even the IMF has since
officially admitted, this option was politically unpalatable to Greece's "partners" from the
very start. In the early years, the Europeans feared that a debt write-down would lead to the collapse
of some of their biggest private banks. Now that Greece's debt has effectively been socialized, these
same European leaders fear an electoral backlash from their Euroskeptical taxpayers, who now stand
to bear the brunt of the impending Greek default.
In other words, it was the very intransigence of the creditors, the utter unwillingness to tell
their own voters the truth about the Greek bailout and their stubborn refusal to even contemplate
a sustainable and socially just resolution of the crisis, that led us to this dramatic apotheosis.
Greece and Europe now find themselves on the eve of a rancorous rupture. At the start of a week
that will undoubtedly go down in history as a make-it-or-break-it moment for Europe's ill-fated neoliberal
project, the skies over Greece are already darkening. A full-fledged bank run over the weekend forced
the government to keep the banks closed on Monday and to impose an ATM withdrawal limit of 60 euros
per day. The knock-on effects on the economy and society will make it very difficult for the Greeks
to vote in peace.
In this respect, the creditors' intentions are once again crystal clear: shocked and outraged
by Tsipras' unexpected move, they will do everything within their power to obstruct the democratic
process and influence the outcome of the vote. Their goal won't even be to keep Greece inside the
Eurozone anymore; their number one priority right now is simply to prevent Syriza from being able
to publicly claim a victory - for that would risk emboldening other anti-austerity forces across
the continent, most significantly Podemos in Spain. They would rather see Greece go down in flames
than cut Syriza some slack.
This is why the Eurogroup refused to extend Greece's current bailout program, not even for a few
days: they knew the ECB would not be able to maintain its emergency support of the Greek
banks without such a program, and they knew that without this support the Greek banks would
not be able to open on Monday. This, in turn, would force the Greeks to vote under conditions of
extreme financial uncertainty, emboldening the terror-campaign of the neoliberal opposition and possibly
skewing the vote in favor of a fear-induced yes.
Meanwhile, the unelected wing of the Troika technocracy has taken the trolling to a whole new
level. IMF chief Christine Lagarde argued that, since the creditor offer expires on Tuesday, Tsipras
is technically asking his people to vote on a deal that no longer exists anyway. European Commission
chief Jean-Claude Juncker added on to this by releasing a new proposal that was supposedly
in the works before the Greeks "unilaterally" walked out of the negotiations. Both moves are clear
attempts to destabilize popular expectations ahead of the vote and confuse the electorate about the
clarity, legality and historic significance of the choice that now lies ahead of them.
Make no mistake: Sunday's referendum will mark a defining moment in Greece's modern history and
a decisive turn for Europe's neoliberal project. The choice is very clear. Five years after the people
of Greece first rose up against the anti-democratic imposition of the Troika's austerity measures,
they have finally been given the chance to decide upon their own destiny: either they will vote yes
to a lifetime of austerity within the eurozone, or they will roar back at the creditors' inhumane
demands with a proud and resounding "NO!" - thereby opening the way for a thousand yeses to a new,
democratic and socially just Europe, freed from the shackles of debt servitude, the noose of a deflationary
single currency, and the tyranny of an unaccountable financial technocracy.
"...But it has nothing to do with morality and everything to do with a dysfunctional currency
union, a destructive neoliberal economic model enforced by treaty and an austerity regime maintained
to ensure a return to profitability on corporate terms."
.
"...No, I think Berlin and Brussels are behaving abominably, not so much in terms of what is decided,
but, as Pope Francis implied (there you are) without any consideration for the dignity of the Greek
people. Shaming, blaming, demonizing, threatening, giving the cold shoulder, to a small marginal country
who is supposedly part of your union."
.
"...I am against Syriza mate, but many commentors ignore the socioeconomic impact on the Greek population
and simplify or generalize things. Syriza is in power the past 3 or 5 months. The previous gov were
in power since 1974. Two parties, two families. Nepotism in politics is strong. "
.
"...Seamus is correct in his analysis. What is happening in Greece is akin to Democratic asphyxiation
by financial means. And those of us that believe in basic Democracy should be standing with Syriza and
the Greek people at this time. Neo-liberal dogma was always ugly. It's practical application is even
uglier. This will have serious implications for the Left in Europe as a whole but more imminently for
the British referendum vote due pretty soon."
.
"...After all, based on a leak of series of emails , Greek government was strictly following the instructions
of Troika during the past 5 years. "
.
"...we wouldn't be having this conversation if the private companies that lent money to Greece had
been made to eat their own losses.
But then neoliberalism isn't capitalism, not in the traditional sense. As has been proven beyond
reasonable doubt, neoliberals magically turn into socialists at the drop of a hat. Gains privatised,
losses socialised. In other words, they use the power of the state to collect economic rents. To call
this sure thing investing or risk-taking is pure propaganda.
"
.
"...I agree the EU élites are out to topple Syriza. The invective against Tsipras and ruthless shut
down of bank support to strike fear in the population show that clearly enough. Syriza is a mortal threat
to the noe-liberal order. I don't agree that Syriza is innocent in this drama, though. Its crisis management
has been abysmal. They know, or should, what is coming. when they threaten the EU élites."
.
"...This is a clash of ideologies. It's obvious if you listen to the spokepersons of Syriza and
the Left compared with the clapped out so-called politicians of ND and the Right. The Greeks and the
Spanish are the only countries where there's a popular moblisation against the robber barons who created
the crisis and are continuing to profit from the consequences. The left have been emasculated throughout
Europe "
.
"...My fear is that Syriza has lost the momentum, they have been unable to make the subject what
it should be, Neoliberal ideological economics. The fear mongering and the bank run neatly engineered
by Draghi and now the threat of shutting down the entire banking system - I'd be scared too. That's
hardball politics - but the main thing is people obey authority and the EU has authority as far as the
Greek people are concerned and they will back them into their very own graves."
.
"...Don't forget they are beyond the Great Depression now in terms of the economic catastrophe.
Population has been sliding since 2010."
.
"...Greeks elected Syriza out of desperation. The rest is just the usual anti-left cliches, not that
there's anything wrong with anti-left, however your understanding of the situation would be greatly
enhanced if you spent a minute Googling origins of this crisis. Perhaps EU/EZ is a bit complex for you."
.
"...The reason why the Troika objected to increases in certain taxes as part of Greece's economic
plans is twofold: (i) due to this historical lack of tax collection, increased revenue projections based
on increased taxes would be almost entirely illusory, and (ii) they targeted weak industries that Greece
needs to prosper and grow, and risked making Greece's economic situation worse. Many of the larger and
stronger of these multinational industries also had the capability of simply leaving Greece. Tsipras
refused to discuss sources of real and easy tax revenue, like tourism on the Greek islands. "
.
"...This is another round of banking bailouts using public money, cynically misnamed as bailing
out Greece. The troika need to launder the money through Greece to give to the banks. Greece get to
keep a very small percent for their troubles and taking more blame than they should."
.
"..."Europe is not under obligation to Greece" is nonsense. If Greece is a member state then EU
is indeed under obligation to support it, and it should do this effectively. It should not carry out
a policy that undermines its economy. Even if EU officials do not do this out of principles, they should
to do it to avoid loosing the support of the EU project."
.
"...The preliminary report of the Greek debt investigation (yes, there is one) will be out shortly.
From what I've read, much of the debt went to Greek banks and their foreign partners that indulged in
an aggressive loaning orgy and created a debt bubble inside the Greek economy. The banks were recapitalised
during the bailout with €80bn of state money that ended up as sovereign debt."
.
"...I had thought that Angie, Wolfie and Christine were perhaps just inept, but now I'm afraid they
may be executing a well laid plan. Perhaps they want to form a new entity: The People's Neo-liberal
Puppy Republic Of Greece. The steps: Blame all others; extort impossible amounts of invented "debts";people
who oppose you are labeled as traitors; prioritize German and French banks so they can be saved from
their own shitstorm and nationalize (i.e. charge the ordinary punter) all the fantasy cash that no-one's
ever seen; call a national emergency and impose martial law. Next is destroy all opposition and hand
everything over to private industry. A week ago, this would be very far-fetched, but now??"
It's now clear that Germany and Europe's powers that be don't just want the Greek government to
bend the knee. They want regime change. Not by military force, of course – this operation is being
directed from Berlin and Brussels, rather than Washington.
But that the German chancellor Angela Merkel and the troika of Greece's European and International
Monetary Fund creditors are out to remove the elected government in Athens
now seems beyond serious doubt. . Everything they have done in recent weeks in relation to the
leftist Syriza administraton, elected to turn the tide of austerity, appears designed to divide or
discredit Alexis Tsipras's government.
They were at it again today, when Tsipras offered what looked like almost complete acceptance
of the austerity package he had called a referendum on this Sunday. There could be no talks, Merkel
responded, until the ballot had taken place.
There's no suggestion of genuine compromise. The aim is apparently to humiliate Tsipras and his
government in preparation for its early replacement with a more pliable administration. We know from
the IMF documents prepared for last week's "final proposals" and
reported in the Guardian that the creditors were fully aware they meant unsustainable levels
of debt and self-defeating austerity for Greece until at least 2030, even on the most fancifully
optimistic scenario.
That's because, just as the
bailouts went to the banks not the country, and troika-imposed austerity has brought penury and
a debt explosion, these demands are really about power, not money. If they are successful in forcing
Tsipras out of office, a slightly less destructive package could then be offered to a more house-trained
Greek leader who replaced him.
Hence the European Central Bank's decision to switch off emergency funding of Greece's banks after
Tsipras called the referendum on an austerity scheme he had described as blackmail. That was what
triggered the bank closures and capital controls, which have taken Greece's crisis to a new level
this week as it became the first developed country to default on an IMF loan.
The EU authorities have a deep aversion to referendums, and countries are routinely persuaded
to hold them again if they give the wrong answer. The vote planned in Greece is no exception. A barrage
of threats and scaremongering was unleashed as soon as it was called.
One European leader after another warned Greeks to ignore their government and vote yes – or be
forced out of the eurozone, with dire consequences. Already the class nature of the divide between
the the
wealthier yes and more working-class no camps is stark. The troika's hope seems to be that if
Tsipras is defeated by fear of chaos, Syriza will split or be forced from office in short order.
The euro elite insists it is representing the interests of Portuguese or Irish taxpayers who have
to pick up the bill for bailing out the feckless Greeks – or will be enraged by any debt forgiveness
when they have been forced to swallow similar medicine. The reality is the other way round.
But Syriza insiders say there is little preparation for what anyway may be forced on them. The
relentless pressure of the EU bureaucracy demands a strong and clear-headed response. Right now,
for example, that means the Athens government immediately taking control of its banks, currently
shutting down all transactions.
The worst outcome of this crisis would be for Syriza to implement the austerity it was elected
to end. A yes vote in
next weekend's referendum, , if it goes ahead, would probably lead to the government's fall,
and almost certainly new elections.
Papistpal rredge 1 Jul 2015 21:21
"Implicit in your argument"
Always a ploy of course, when you find implicit, tacit, implied arguments in someone else's
thought, and then argue with it. No, I am not saying anything about the money. No, I think Berlin and Brussels are behaving abominably, not so much in terms of what is decided,
but, as Pope Francis implied (there you are) without any consideration for the dignity of the
Greek people. Shaming, blaming, demonizing, threatening, giving the cold shoulder, to a small
marginal country who is supposedly part of your union. There is NO excuse for your behavior
Ritoras Tijger 1 Jul 2015 20:57
I am against Syriza mate, but many commentors ignore the socioeconomic impact on the Greek
population and simplify or generalize things. Syriza is in power the past 3 or 5 months. The previous
gov were in power since 1974. Two parties, two families. Nepotism in politics is strong.
As said, because none answers your question that doesn't mean no is the answer.
Be open minded and less emotional. Few of the questions you ask you can google them and share
the findings with us. That will be more convincing!
peekaboo -> summicron 1 Jul 2015 20:54
The public in the 18 countries have not been consulted. Critical decisions affecting all other
members need direct approval. In fact referendums have almost never been held for EU membership
in candidate countries.
ineluctable2u -> tsimshatsui 1 Jul 2015 20:50
That's naive. Merkel is only making the Greek people suffer now in the hope that they will
lose their will and vote yes. This is ruthless politics by the troika and Merkel in particular.
martyc73 -> Gearóid Ó Loingsigh 1 Jul 2015 20:49
The North is a diversion - it cant raise taxes and relies on subvention from the British State
etc and you know this so don't be using that as an argument. The bank guarantee was also sold
in a totally different way to what was rolled out subsequently. And you know this too. Hums and
Haws???
Seamus is correct in his analysis. What is happening in Greece is akin to Democratic asphyxiation
by financial means. And those of us that believe in basic Democracy should be standing with Syriza
and the Greek people at this time. Neo-liberal dogma was always ugly. It's practical application
is even uglier. This will have serious implications for the Left in Europe as a whole but more
imminently for the British referendum vote due pretty soon.
Ritoras Tijger 1 Jul 2015 20:46
Bud, first of all you repeat you you you, it is very instructional, chill. Bravo to you as
well for making so focussed comments. I mean it even though you put all the fault on the Greek
gov.. Don't see you challenging yourself enough? Are the rest of stakeholders here perfect?
But, how do you know what Greece has done and what not?
Why the Troika have not reacted the same and with the same persistence as it does now during
the last 5 years to correct the direction of travel? You're 100% right about the Lagarde list.
The ministers who did not do nothing are in trials now.. However, I was in fact hoping that the
Troika could play a more active role in this and exercise influence to clear corruption. After
all, based on a leak of series of emails , Greek government was strictly following the instructions
of Troika during the past 5 years.
About the military expenses. I like defense and the military in fact. But! In a recession,
the Troika should have first said, save money there to invest in sectors like healthcare, education
etc. After all, Greece is very well equipped and supposedly is backed up by NATO allies.
calsation miceonparade 1 Jul 2015 20:43
I must say I enjoyed your takedown of oldships immensely. It seems he doesn't realise we
wouldn't be having this conversation if the private companies that lent money to Greece had been
made to eat their own losses.
But then neoliberalism isn't capitalism, not in the traditional sense. As has been proven beyond
reasonable doubt, neoliberals magically turn into socialists at the drop of a hat. Gains privatised,
losses socialised. In other words, they use the power of the state to collect economic rents.
To call this sure thing investing or risk-taking is pure propaganda.
Papistpal 1 Jul 2015 20:40
Never thought I'd agree with you, but I have to say, from this American capitalist perspective,
Berlin and Brussels have no sense of fair play and no respect for democracy. How can the EU call
itself a democracy if Germany has a veto because it has the big bucks. The US, I admit, would
like to do something similar, but we are constrained by maintaining at least some vestige of democratic
practice and sensibility. What is with the moralism, anyway. "Greece is wrong, so we get to do
whatever we want to them." Moralistic platitudes are not policy statements. Damn Merkel to hell
I agree the EU élites are out to topple Syriza. The invective against Tsipras and ruthless
shut down of bank support to strike fear in the population show that clearly enough. Syriza is
a mortal threat to the noe-liberal order.
I don't agree that Syriza is innocent in this drama, though. Its crisis management has been
abysmal. They know, or should, what is coming. when they threaten the EU élites. Why for
instance did they not impose capital controls the very first weekend after coming to power?? The
the country could have put up its defenses at a time of its own choosing, husbanded its resources
while negotiating - paid the IMF, keep banks open during this crucial referendum week. You don't
negotiate with 17 adversaries who all want to crush you, with one hand tied behind your back and
€ billions flowing out weekly. In three months you are on the floor.
castalla 1 Jul 2015 20:17
This is a clash of ideologies. It's obvious if you listen to the spokepersons of Syriza
and the Left compared with the clapped out so-called politicians of ND and the Right. The Greeks
and the Spanish are the only countries where there's a popular moblisation against the robber
barons who created the crisis and are continuing to profit from the consequences. The left have
been emasculated throughout Europe ... let's hope the OXI vote wins the day and Syriza gets
a mandate to argue for a restructure of the debt programme.
someoneionceknew -> FactPatrol 1 Jul 2015 20:10
The – European Social Model – is built on the fundamental principles built into Treaty establishing
the European Community (TEC):
… promotion of employment, improved living and working conditions … proper social protection,
dialogue between management and labour, the development of human resources with a view to lasting
high employment and the combating of exclusion.
It combines with the EU Charter of Fundamental Rights to define an "underlying principle is
one of solidarity and cohesion: that economic growth must serve to boost overall social wellbeing,
and not take place at the expense of any section of society".
The ILO book says that while "there is no official definition of the European Social Model"
there is a long history of practice and dialogue that allows one to map out the main characteristics.
The ILO define "six main pillars":
1. "Increased Minimum Rights on Working Conditions".
2. "Universal and Sustainable Social Protection Systems".
3. "Inclusive Labour Markets".
4. "Strong and Well-Functioning Social Dialogue".
5. "Public Services and Services of General Interest".
6. "Social Inclusion and Social Cohesion".
miceonparade -> Exodus20 1 Jul 2015 20:08
Remember what Greece were like before joining the euro, in the 1990's?
Greece in the 1990s did not have 30% unemployment or 60% youth unemployment or a depression.
Things can only begin to get better after exiting the euro and reclaiming fiscal sovereignty which
can be used to put Greek people back to work.
while the European Social Model may have been called into question here and there before
the crisis, the list of changes in most elements and pillars of the European Social Model since
the crisis is formidable. While there are a few exceptions … all other trends show a general
withdrawal of the state from social policy, first through massive cuts in social expenditure
and reduced funding of education, health care and other public services, and second through
radical reforms in a number of areas, such as social dialogue, social protection, pensions,
labour market and social cohesion in general …
the changes are particularly severe in those countries that implemented an austerity package
under the direct influence of the Troika …
Hill0fBeans sjorsnotmine 1 Jul 2015 20:05
There are no poor Greeks in Greece any more...
You're a disgrace. Instead of trolling, read some facts every now and then.
- like the 4 out of 10 Greek children living beneath the poverty line
- or 44.8% of pensioners living on less than 665 euros/month
- or the 27% unemployed
Go crawl back underneath your bridge. This is not a place for trolls.
camerashy 1 Jul 2015 19:56
The closet fascists are all out in force to get rid of a democratically elected government!
Rule by corporations and banks is what you deserve and is what you are going to get in next 5
years ... so enjoy it.
deskandchair -> Danny Sheahan 1 Jul 2015 19:56
It can't go any other way, fiscal control means political control. The tragedy is that the
EZ was formed in the first place.
Lafcadio1944 1 Jul 2015 19:52
My fear is that Syriza has lost the momentum, they have been unable to make the subject
what it should be, Neoliberal ideological economics. The fear mongering and the bank run neatly
engineered by Draghi and now the threat of shutting down the entire banking system - I'd be scared
too. That's hardball politics - but the main thing is people obey authority and the EU has authority
as far as the Greek people are concerned and they will back them into their very own graves.
xsyfer John Smith 1 Jul 2015 19:51
It has that already. Don't forget they are beyond the Great Depression now in terms of
the economic catastrophe. Population has been sliding since 2010. There will be friends.
I reckon UK, us and Sweden might do something bilateral after the mess to keep Greece away from
Russia.
Might be too late then though
deskandchair Markdoug1 1 Jul 2015 19:51
You don't live in EZ or EU (although superficial thinking isn't exclusive to those outside
EZ) however you're correct, Greeks elected Syriza out of desperation. The rest is just the
usual anti-left cliches, not that there's anything wrong with anti-left, however your understanding
of the situation would be greatly enhanced if you spent a minute Googling origins of this crisis.
Perhaps EU/EZ is a bit complex for you.
Eleutheros 1 Jul 2015 19:46
But it has nothing to do with morality and everything to do with a dysfunctional currency
union, a destructive neoliberal economic model enforced by treaty and an austerity regime maintained
to ensure a return to profitability on corporate terms.
And that's the essence of the current situation, not just in the EU, but most "western" societies,
including Australia, where I live; our present government follows the policies of Thatcher and
Reagan and is trying to bring austerity to a rich and prosperous country.
Excellent article Seumas Milne, thank you.
Oscarinho 1 Jul 2015 19:43
Yes, there is a potential danger of a right-wing, if not neo-nazi, turn in Greece (and maybe,
only maybe in other places, too). But just tell me why does the author doesn't mention that without
the support of the right-wingers and neo-nazis called Anel and Golden Dawn Syriza would not have
a majority in their own country??? Syriza does not represent a European leftist alternative (ask
Renzi) but mere 2 million Greek voters supported by the far right that are taking their own society
hostage playing the nationalistic card.
Yes, we need another haircut and, yes, this radical austerity policies needs to be changed.
It's just not sustainable as we learned the hard way- But Syriza is looking for a system change
by any means with any partners (Golden Dawn, Putin's Russia, and even Erdogan). No thanks.
Forthestate ID5590609 1 Jul 2015 19:40
you and others believe that Greeks are now somehow inherently entitled to this new and vastly
improved standard of living...
Just more bollocks! How do you square "this new and vastly improved standard of living" with
the reality since the crisis hit? Most analysts agree that the decline has seen Greece lose everything
that it acquired during the years you refer to, and more, and I repeat, it is a decline probably
unparalleled in peacetime. Where is the recognition of the catastrophe that has hit the Greek
people in your ridiculous assertion that they are enjoying a new and vastly improved standard
of living?
John Smith 1 Jul 2015 19:32
Looking at the headline photo of Merkel, the caption: Who will rid me of this troublesome Greek
popped into my head.
Then I read the article above.
Nothing would please the Euromeddlers more than a military coup, or a revolt by the coalition
partners.
Because what this crisis is exposing is how after five fruitless years, the geniuses at the
heart of the EU, couldn't grasp that among their many errors of judgement, it's no good loaning
a bankrupt money to pay off debt, the Euro has actually worked against the economic expansion
of the Eurozone both before and after the crash, and by failing to spot the dishonesty of previous
Greek administrations or act, it has shown the world that their system is weak, cannot tackle
a crisis, and despite years of rhetoric will have to do the one thing it said would never ever
happen, expel a member state and write off tens of billions of wasted euros.
In my earlier analysis I have already explained why the Euro was a currency launched half cocked,
and that without taking into account the needs of individual nations, it is doomed in the long
term, to fall to pieces.
I fear that whatever happens now, Greece is going to find itself with few friends, and at least
five years of pain and emigration of its youth.
ID5590609 Forthestate 1 Jul 2015 19:26
The level of Greek tax collection from all sectors and classes in Greek society is abysmal.
Tspiras and Varoufakis do not deny this is a problem, and other than pride or foolishness, I question
why you do. Some economists suggests that as much as 39% of the Greek economy is effectively underground.
The other purported statistics are simply red herrings to confuse this simple fact (and also avoid
dealing with the rampant other corruption and incompetence inherent in the Greek economy).
The reason why the Troika objected to increases in certain taxes as part of Greece's economic
plans is twofold: (i) due to this historical lack of tax collection, increased revenue projections
based on increased taxes would be almost entirely illusory, and (ii) they targeted weak industries
that Greece needs to prosper and grow, and risked making Greece's economic situation worse. Many
of the larger and stronger of these multinational industries also had the capability of simply
leaving Greece. Tsipras refused to discuss sources of real and easy tax revenue, like tourism
on the Greek islands.
The fact that Greece's economy has contracted over 25% is also not particularly relevant. The
larger GDP since joining the Euro represented a tremendously bloated bubble based on irresponsible
public and private debt. The current GPD still has ample room to decrease before it accurately
reflects the true size, scope and productivity of the Greek economy (and even reflects Greece's
pre-Euro GDP). Also noteworthy is the fact that Greek incomes nearly tripled since it joined the
Euro Apparently, you and others believe that Greeks are now somehow inherently entitled to this
new and vastly improved standard of living (more impressive than some other Eurozone members who
are poorer and helped fund Greece's bailout) despite the fact that it was entirely unearned and
based on fraud and the largesse of the taxpayers of other nations.
Exodus20 Tijger 1 Jul 2015 19:26
This is another round of banking bailouts using public money, cynically misnamed as bailing
out Greece. The troika need to launder the money through Greece to give to the banks. Greece get
to keep a very small percent for their troubles and taking more blame than they should.
JordiLlull neilmack 1 Jul 2015 19:24
Who are "Most people"? I dont think there are polls, but few people in Europe believe that
the fault lies exclusively on a government who has been there for 6 months, and is trying to prevent
the policies that have led to a 25% loss of GDP. Particularly since the troika has made it damn
clear that it does not plan to accept ANY plan. Sure, some have bought Daily Mirror arguments
that the Greeks spent the bailouts on Ouzo, but informed people know that the vast majority was
used to pay back interests, and that Greek retirement pensions are around 300 euro/month. I would
rather argue that "most people" in Europe who have traditionally supported EU are starting to
raise questions about what EU's role in this crisis.
"Europe is not under obligation to Greece" is nonsense. If Greece is a member state then
EU is indeed under obligation to support it, and it should do this effectively. It should not
carry out a policy that undermines its economy. Even if EU officials do not do this out of principles,
they should to do it to avoid loosing the support of the EU project.
deskandchair truecomrade 1 Jul 2015 19:22
Fiscal control = political control, it can be no other way.
FourtyTwo sjorsnotmine 1 Jul 2015 19:21
More than 30% of the population are officially below the poverty line.
The preliminary report of the Greek debt investigation (yes, there is one) will be out
shortly. From what I've read, much of the debt went to Greek banks and their foreign partners
that indulged in an aggressive loaning orgy and created a debt bubble inside the Greek economy.
The banks were recapitalised during the bailout with €80bn of state money that ended up as sovereign
debt.
MTSK87 privateindustry44 1 Jul 2015 19:13
You are an ignorant piece of work aren't you Sir? Look at the facts before spreading lies.
The Greeks work (the ones still in employment that is) work more hours than any other EU citizen
( http://www.bbc.co.uk/news/magazine-17155304
), the rich and powerful did not pay taxes no, but your average 20-30 something year old with
a wage of 400 euros a month that has to go back to living with his/her parents can barely afford
coffee never mind pay taxes. And free money? Please the "creditors" have NEVER given anyone "free"
money. Germany never gave away anything for free (see treaties imposed on Greece to buy old German
weapons). Greece was manipulated and suffered for that "free money".
emordnilap Mark Riggle 1 Jul 2015 19:10
I had thought that Angie, Wolfie and Christine were perhaps just inept, but now I'm afraid
they may be executing a well laid plan. Perhaps they want to form a new entity: The People's Neo-liberal
Puppy Republic Of Greece. The steps: Blame all others; extort impossible amounts of invented "debts";people
who oppose you are labeled as traitors; prioritize German and French banks so they can be saved
from their own shitstorm and nationalize (i.e. charge the ordinary punter) all the fantasy cash
that no-one's ever seen; call a national emergency and impose martial law. Next is destroy all
opposition and hand everything over to private industry. A week ago, this would be very far-fetched,
but now??
How many austerity plans do the Greek people have to suffer through? How much unemployment? Half
the young population? Is the plan to to cut living standards in half?
And for what? To repay a debt that the Greek people had nothing do with! To reimburse usurious
interest rates that cut the economy in a trap by the banks!
What a bunch of predators!
djb said in reply to Ellis...
i like how the advocates of austerity get all pissed off at the greek people as if they are
just being obstinate
its like someone is trying to punch someone else in the face and they
are getting all pissed off at the other guy because he keeps lifting his hands to block the
punches
"come cut it out, just let me get good shots in at you , whats a matter with you"
And Greece will not go to the drachma - Greeks are now demanding paper Euro notes, and everyone
outside Greece shipping into Greece is demanding paper Euro notes up front. Greeks are now not
able to get food and medicine and fuel if they don't have Euro currency.
But let's be clear - the Greeks are to blame because they refuse to pay Greeks to work by buying
only Greek production, or by trading Greek produced goods for imported goods.
Charles Carlstrom said...
Strikes at first glance don't seem rational. But they occur. Somestimes you swerve too late to
avoid ruin.
But even now it appears Greece is starting to swerve.
DrDick said in reply to Charles Carlstrom...
Only if you are a member of management. For the workers they are the only logical recourse. When
management will not provide safe/decent working conditions or pay you what you are worth, your
best recourse is to withhold your labor.
Tsipras Accepts Most Creditor Terms as Merkel Insists on Referendum
By Yves Smith
Post-bailout expiration dynamics are likely to produce even worse outcomes for Greece than
it had on offer from the creditors last month. It isn't just that the bailout funds of €7.2 billion
are gone; it's that Greece has gone over an event horizon with stringent capital controls on and
the European Central Bank ready and able to push the Greek banking system over the brink.
Greece's weak negotiating position is even weaker now. Even with a boost via a "no" vote on
the referendum this Sunday, if the Greek government were to take a firmer stance, the creditors
have the means and the incentives to keep crushing the economy via financial strangulation. The
ruling coalition would not be able to hold on to power for more than a month or two as the economy
continued to decay at an accelerating rate.
This is a ruthless, brutal power play in progress. Too many key actors are driven by their
own narrow imperatives, most important of all, their domestic politics, as well as institutional
rigidities. Those constraints work against taking a broader view and recognizing that the immolation
of Greece will blow back and damage the European project and their own economies. But that would
require much bolder, visionary thinking and action. The current crop of leaders has instead become
habituated to incremental patches even though it is widely recognized that the architecture of
the Eurozone is incomplete and wobbly. But no one is willing to move to a higher level of integration,
in large measure because, particularly for Germany, that entails the loss of power and privilege
at the national level.
Tsipras has recognized the weakness of his position too late. Yesterday, he tried making a
desperate, last-minute deal to ward off an IMF default and secure the bailout funds before the
program expired. But that clearly could never happen. It would require approval from all of the
other 18 states in the Eurozone, including parliamentary approval in Germany. There was no way
that would occur without German legislators having had Greece pass legislation before they voted
on the release of funds; the Greek government had been told that that was a requirement and that
needed to be done by the end of last weekend, June 28. *
Moreover, Germany wasn't even the most hardline country; Portugal, Spain, and Latvia are more
hostile to cutting Greece any slack since their leaders had their citizens wear the austerity
hairshirt. Given that it was obviously impossible at that late juncture for the other Eurogroup
members to release the bailout funds before they went poof (at a bare minimum, there was no way
the Germany MPs would approve it), the Tsipras appeal was a sign of utter desperation or delusion.
And that in turn was an admission of tremendous weakness. Less than two days of capital controls
and a bank holiday, and the ruling coalition was folding....
* Some pundits have depicted these deadlines as artificial. They weren't. There are many areas
where the lenders' conduct can correctly be called unreasonable, but the hard deadlines were the
result of past agreements and Eurozone procedures make them extremely difficult to change. This
is one reason for the current creditor hostility. Greece consumed an enormous amount of time,
running up against deadlines in what the other side saw as brinksmanship, which was a bizarre
strategy given that Greece had a weak bargaining position. But the lenders felt compelled to accommodate
Greece on that front as much as possible because the optics would be terrible if they didn't,
particularly if the situation were to devolve into a Grexit. Compounding that problem, an lawyer
with considerable knowledge of European practice pointed out by e-mail: "Europeans have a very
hidebound and literal view about their EU rules and documents. Americans see a contract as a basis
for negotiation."
Fred C. Dobbs said in reply to anne...
'Germany wasn't even the most hardline country; Portugal, Spain, and Latvia are more hostile to
cutting Greece any slack since their leaders had their citizens wear the austerity hairshirt.'
Every country in the EU is angry with Greece.
In Greece's bailout talks, why it's 18 eurozone countries versus one
http://on.wsj.com/1B7hOIy via @WSJ
... Some eurozone governments-Ireland, Portugal, Spain and the Baltic states-see themselves
as having swallowed tough, politically costly but ultimately successful medicine and see no reason
why Greece should be spared such rigor. Some, like Slovakia and the Baltic states, are poorer
than Greece and pay their workers a lower minimum wage.
Another element is that further debt relief for Greece in whatever form means losses for governments-Athens
owes other eurozone governments €195 billion ($212 billion)-and therefore for eurozone taxpayers.
Germany is owed the largest sum-more than €60 billion-followed by France and Italy. But, as a
percentage of their gross domestic product, other countries have more on the line than Germany.
According to a Bloomberg Brief analysis, Greece's debts to Slovenia exceed 3% of Slovenian GDP,
compared with 2.4% for Germany. ...
DeDude said in reply to Fred C. Dobbs...
"see no reason why Greece should be spared such rigor"
Yes their rulers have convinced them
that the depression they threw Greece into is no big deal compared to what they themselves have
suffered. As long as your corporate media hide the facts from people, you can convince them of
all kinds of stuff.
"debt relief for Greece in whatever form means losses for governments"
Yes - and the real story there is that almost all the debt that was held by private banks and
plutocrats back when this problem surfaced (and the debt should have been written down) is now
owned by governments. But that is not the debate in the corporate media - instead it is about
how terribly irresponsible the Greek government is (I guess you can fool the fools every time).
Nathanael said in reply to anne...
Yves has been mis-analyzing the Greek crisis from beginning to end. It's seriously lowered my
opinion of her, and I think she's a complete idiot at this point.
Syriza has played this out
exactly right, whether intentionally or not.
Given that the Troika will never, ever make a functional offer of major fiscal stransfers to
Greece, and has as much as said so, default was inevitable.
Greece doesn't have to leave the euro, of course; Greece could unilaterally print euros (in
violation of the Troika's insane deflationary policies) and wait for Germany to leave the euro.
But it has the same effect.
GIVEN that default is inevitable, Syriza needs to be seen as:
(1) Trying as hard as it can to offer a deal
(2) Not knuckling under to the foreign powers
They've done this.
The referendum will either go "yes" or "no".
If it's "yes", then Syriza will resign. The new government of Greece will implement stupid
policies forced by the Troika which will make their situation even WORSE; they will be blamed
for it and will be thrown out. Syriza survives.
If it's "no", Syriza can exit and allow the economy to recover through devaluation.
The worst case scenario for Syriza was that the Troika accepted one of Syriza's overly generous
offers of surrender; the economy continued to get worse; Syriza was blamed for this and thrown
out of office; and Golden Dawn was elected.
Golden Dawn would, of course, immediately leave the euro and revive the economy. By pressganging,
if necessary. :-P Having a glowing example of successful fascist economic management in Europe
is the LAST thing the world needs. Thank goodness we seem to be avoiding that.
anne said in reply to anne...
Yves Smith has from my perspective been remarkably sensitive to the needs of the Greek people,
thorough in reporting and analysis, and evidently, however sadly, all too correct in analysis
compared with other Greek-sympathetic economists.
I am aware that the analysis of Smith has
been criticized, but I am also aware and impressed that even leaders of liberal Podemos in Spain
have shared in criticisms of Syriza.
paine said in reply to anne...
Just a side comment
The private greek banks can go to hell in a chariot for all I care
The greek government should worry about small dipositors only
paine said in reply to paine...
Eichenberry seems poorly briefed
On the negotiations here
Eichengreen seems poorly briefed
On the negotiations here
Syriza has not acted incompetently
The troika is out for regime change
[ Understood as to what the European leadership is after, but Syriza has puzzled me. ]
ilsm said in reply to paine...
ecb the usa of the europa.
troika deals like nukes.
widespread drone strikes without deflation.....
Chris Herbert said...
I have a problem with the exit=disaster scenario. As a monetary sovereign and with a central bank,
both recapitalization and devaluation can be accomplished without the armageddon stuff. China's
currency, for example, is not traded on Forex. China's central bank pegs its value by fixing what
it will pay in its currency for another currency--and its currency is the only one that can be
used in China. Once Greece goes back to the drachma and once they've got a central banker and
a currency that is exclusive to domestic commerce (no Forex speculative trading) I think a good
central banker can do a lot to help Greece maintain its balance. Even better, said recapitalization
can be debt free. I'm not saying it won't cost anything, I'm just saying a monetary sovereign
need not issue debt. Greece could put people to work doing infrastructure improvements, which
build assets not liabilities. Without issuing debt. Greece has to learn how to collect taxes,
obviously. And some reforms to government size is probably in order. But the 'end of days' scare
is just that, a scare.
pgl said in reply to Chris Herbert...
I have a similar problem with the criticism is Grexit. Let's roll the tape back to 1967 when Prime
Minister Harold Wilson decided to devalue the UK pound:
The UK did not suffer a financial crisis. It did manage to raise its net exports. So why can't
the Greeks do the same?
am said in reply to pgl...
Fine, so why do the Greek people want to keep the euro as the official currency. Professor Krugman
mentioned as a reason that people like to have a strong currency. They have had the drachma before
and it was never very good and neither was the economy. I suggest the reason they want to keep
the euro is it is strong in the sense of a stable currency and inflation is kept low in Greece
as most of their imports are in euros. With a weak drachma they just get inflation on imports.
With the euro they get steady prices. Add in to that payment of salaries and pensions in euros
and then you have the advantage of earning in the currency of import purchases. Hohum, I'm probably
wrong.
Leaving the euro is not cost free. The dollar/drachma after Grexit is set by the central bank.
Maybe Greece needs to become more efficient in their use of energy. Maybe Russia will sell oil
to them at advantageous prices. A central bank can price the drachma advantageously between different
suppliers. And don't forget the Greeks have a primary surplus right now and Grexit will eject
its creditors, which is what I think Greece needs to to. The collapse scenarios are scare stories
aimed at the Greeks. They should reject them and become independent. Only by being a monetary
sovereign can Greece regain control of its economy. Right now they are in debtors prison.
Peter K. said in reply to am...
with the Euro they get humanitarian disaster. You know the economic stats, don't you?
am said in reply to Peter K....
Yes but why do they want to keep the euro, as is reported. They may suddenly change that in the
referendum vote but it is reported that the euro is what they want.
foofootos said in reply to am...
easy, the depositors want to keep the euro because they don't have a lender of last resort. They
will loose their deposits. That's all, that and scare tactics.
Paine said in reply to foofootos...
Yes that's a good part of it
But I'd like to know the value of euros held on deposit now
by the bottom three quarters of the population
I don't think it's really entirely economic. They view the euro symbolically as a special European
club membership, and don't want to be excluded from that club.
The Washington Post ran a map * showing which countries in Europe use the euro and which use
other currencies. The map is wrong. It shows Montenegro and Kosovo as using currencies other than
the euro. This is not accurate, both countries do use the euro as their official currency although
they are not have been accepted into the euro zone.
This is important in the context of the discussions on Greece because it illustrates the point
that Greece cannot be forced off the euro. The European Commission and the European Central Bank
can impose incredibly onerous conditions on Greece, but they cannot prevent the country from using
the euro if it so chooses. The decision to leave the euro could only be made by the Greek government,
not its creditors.
I never saw the "big" Greece problem before the Euro. The problem is the credit bubble starting
in 73 creating a redic surge in consumer products that really took hold in the 80's/90's for the
US and spread after that. It created the "look" of growing personal wealth via personal assets,
but it was a bubble. Without this borrowing, the US economy probably would have struggled to grow
much in the 80's as inflation fighters went on a rampage(which is what partially triggered the
bubble to grow faster). They still maintain much of the growth from the bubble, only thanks to
the market being scared to live without it. About the only thing it did, was force Russia away
from the Stalin era Soviet fast, but now, they are stepping back while no one is watching. This
is late capitalism.
The 80's and 90's would have been a lot more Escape from New York rather than Morning in America.
Nathanael said in reply to Anonymous...
Argentina's main problems were US-backed military coups and fascism. Argentina has quite impressively
managed to get itself out from under both of those problems -- seemingly permanently.
foofootos said in reply to Anonymous...
Greece only got to comparable trouble after the Balkan wars (they defaulted), during the second
world war, and then during civil war. Hardly a counter-example of "drachma troubles". Many a time
I see Greece described as a serial defaulter. And then I read the History of the Greek state after
it's independence from the Ottoman empire, and I see a war happening every 15-20 years or so.
It seems this way of looking the Greek economy just goes with the Greek stereotype.
ilsm said in reply to foofootos...
Greece seems to spend about 150% of the NATO standard war spending for GDP. While the rest of
the EU spends <75% of NATO standard.
Still only 3% compared to US' 5 to 7% according to how
you count.
US spends more in VA than total of Russia, China and UK for their military.
Darrell in Phoenix said in reply to anne...
Pegging to the Euro will not counter trade imbalances, which is the real source of Greece's troubles.
They need a currency that floats. They need to decrease imports and increase exports (or more
likely tourism) to eliminate their trade imbalance, which is the root cause of their debt.
pgl said in reply to Darrell in Phoenix...
Exactly!
foofootos said in reply to Darrell in Phoenix...
Greece currently has a balanced current account.
pgl said in reply to foofootos...
Link? Evidence? Even if this is true, it is mainly because of the imposed austerity and weak economy.
pgl said in reply to foofootos...
Darrell in Phoenix notes:
"Check the CIA world factbook for Greece.
Exports $35B. Imports $62B.
Trade imbalance of $27B compared to GDP of $290B = 9.5%!"
Your source?
am said in reply to anne...
In Simbabwe which has no currency of its own apart from small coins for change shop goods are
priced in US dollars. So consumers can buy a basket of goods and then pay the value of the us
dollars in us dollars, south African rand, Botswanan pula, euro or pound. These are all calculated
up by a routine in the software system operating at the checkout. The tax which is vat is then
sent up to the government. The government staff are paid in us dollars. But the government can't
do stimulus because they can't print any of these currencies and they don't have one of their
own. But for an interim solution it is workable.
Darrell in Phoenix said in reply to am...
And the dollars flow out of the country, and them when there are no dollars left, the economy
collapses.
What you need is exactly what Ben Franklin argued for nearly 300 years ago. A government
issued script currency that can be used to pay your taxes, and taxes high enough to create sufficient
demand for the script to give it value. You then let the value of that government issued script
currency to float on the international exchange markets to balance trade.
OH, and NEVER take on debt denominated in a foreign currency.
Nathanael said in reply to Darrell in Phoenix...
That's even a good rule for households, frankly. I never take debt denominated in a currency I
can't print. :-)
Peter K. said in reply to Chris Herbert...
What the critics of the Greek fail to mention is that before the Troika began bringing the hammer
down on Syriza and refused to negotiate with them, the Greeks were running a primary surplus.
Krugman pointed to this. That is, they were in the black without interest payments. With default
and saying no to the bailout packages they are free of the interest payments and free of the onerous
austerity measures which killed their economy.
What the critics of defaults say is that the defaulters will never be able to borrow again,
but in the real world that hasn't been the case. They're just blowing smoke to bully the Greeks
into more, fruitless austerity measures.
Agreed. There will always be attractive economic opportunities in Greece. Even if Greece defaults,
there will be new investors willing to gamble that they wont default again.
pgl said...
"Instead, the creditors first calculated the size of the primary budget surpluses that Greece
would have to run in order to hypothetically repay its debt. They then required the government
to raise taxes and cut spending sufficiently to produce those surpluses.They ignored the fact
that, in so doing, they consigned the country to an even deeper depression. By privileging their
own balance sheets, they got the Greek government and the outcome they deserved."
This is precisely
the problem Keynes warned about after WWI when the French demanded too much from the Germans.
Of course the Germans never really did pay all of those cursed repatriations. Modern day European
leaders have forgotten everything Keynes tried to teach us.
Darrell in Phoenix said in reply to pgl...
The austerity proponents are following the typical NeoCon mind-set of ignoring macroeconomic principles.
"Keynesian hokum" is their preferred name for macroeconomics I believe.
DrDick said in reply to pgl...
This is exactly why Eichengreen's piece is pure garbage. Greece made lots of compromises, too
many in fact. It was the creditors who refused to compromise. Every bank that had made irresponsible
loans (and their were huge numbers of these) in Greece should have been forced to eat all their
losses. After all, they had charged a risk premium to cover this already. Instead the Troika has
decided that they should be fully indemnified and only the Greeks should suffer.
Peter K. said in reply to DrDick...
Yeah it's almost as if he criticizes the Greeks so he can criticize the Troika even more.
"Still,
this incompetence pales in comparison with that of the European Commission, the ECB and the IMF."
Nonetheless I agree with you and disagree with Yves Smith and the like. Syriza and the Greeks
did the best they could under impossible circumstances.
The Troika's plan didn't work and they refused to negotiate. The problem is Greeks want to
stay in the Eurozone nonetheless. Sunday we'll find out if they still do no matter what.
pgl said in reply to DrDick...
This is why I prefer what Krugman wrote.
DrDick said in reply to pgl...
Likewise, and the same for Stiglitz, who is quite good on this.
Paine said in reply to pgl...
Running these nakedly in humane pub sec pruning exercises was the entire project
The debt
A pretext
Let that be a lesson to you long run fiscal space fuss budgets
Paine said in reply to Paine ...
A yes on Sunday simply means
Go back and get the best deal you can
Darrell in Phoenix said...
Exchange rates fluctuate to counter trade imbalances. The concept of a common currency, without
controls to ensure no trade imbalances exist, is fundamentally flawed.
Money flows out of Greece.
THE ONLY way money can get back into Greece is debt.
Trade imbalances cannot be persisted indefinitely. They result in the buildup of debt on the
side with the deficit, and interest on the debt just widens the trade imbalance until the debt
collapses.
Either Europe needs to take MAJOR steps to reverse existing trade imbalances, or the Euro is
ultimately doomed to collapse under unrepayable debt.
RGC said in reply to Darrell in Phoenix...
"Either Europe needs to take MAJOR steps to reverse existing trade imbalances, or the Euro is
ultimately doomed to collapse under unrepayable debt."
Yep. Varoufakis had a "Modest Proposal"
to fix this:
4. THE MODEST PROPOSAL – Four crises, four policies
The Modest Proposal introduces no new EU institutions and violates no existing treaty. Instead,
we propose that existing institutions be used in ways that remain within the letter of European
legislation but allow for new functions and policies.
These institutions are:
· The European Central Bank – ECB
· The European Investment Bank – EIB
· The European Investment Fund – EIF
· The European Stability Mechanism – ESM
Here are the four policies that will re-deploy the above institutions in a manner that deals
a decisive blow at, respectively, (1) the banking crisis, (2) the public debt crisis, (3) the
under-investment and internal imbalances crisis, and (4) the social emergency crisis afflicting
countries were absolute poverty is becoming a major issue...
Chris Herbert said in reply to Darrell in Phoenix...
Darell writes "Money flows out of Greece. THE ONLY way money can get back into Greece is debt."
Not so with a monetary sovereign. Euros are worth what the Greek central banks says they are worth,
in drachmas. And only drachmas can be used in domestic commerce. You have squirreled away euros
in Swiss bank accounts? Fine. Spend them anywhere but in Greece. If you have cheated on taxes,
and for sure you have if you are Greek and rich, then face extradition for crimes in Greece. A
monetary sovereign does not have to issue debt. It can recapitalize without debt. Look at China,
which has used this banking system successfully for more than two decades! China understand the
difference between liabilities and assets. It's not the debt that matters it's what you build
that matters.
Darrell in Phoenix said in reply to Chris Herbert...
Chris, I was saying now... With Greece on the Euro and unable to print their own currency.
Yes,
if they return to drachma, they can issue money. Until then, the only way they have been able
to make their economy liquid in the face of large trade deficit is with debt.
Darrell in Phoenix said...
Check the CIA world factbook for Greece.
Exports $35B. Imports $62B.
Trade imbalance of $27B compared to GDP of $290B = 9.5%!
Of, Germany LOVED loaning Greece money so they could buy German products.... but the problem is
that the debt can't possibly be repaid unless the trade imbalance is reversed. Germans have the
money that Greece needs to repay the debt!
This echos the problems in the USA. The poor go into debt, creating money that they spend, which
then flows through into the economy into the hands of billionaires. It is mathematically impossible
for the poor to repay the debt unless the rich first spend the money! Oh, we say it is a legal,
moral and social obligation to repay the debt, but suggest it is a moral and social obligation
(and should be a legal obligation through a steeply progressive income tax code with deductions
for most spending and capital investments) and OH HOW THE RICH SCREAM!
I struggle to understand the path forward from the referendum. Putting aside the obvious question
of "what exactly are they voting on", there are some serious logistical challenges.
It will
likely take a day or two (or three) for the votes to be counted and the result certified. Assuming
a best case scenario of a YES vote, Tsipras will likely resign, a snap election will be called,
and a new government will have to form. How long will this take? What if Syriza is re-elected?
What if there is no clear winner and we're back to having to form a coalition government, which
may or may not happen?
Time is one thing this situation does not have. There are significant upcoming dates:
-July 10 €2B Rollover of treasury bills
-July 13 €452M IMF
-July 14 €73M in Japanese Samurai bonds due
-July 17 €1B Rollover of treasury bills
-July 20 €2.1B ECB
-July 20 €1.4B National central banks
-July 20 €25M European Investment Bank
I can't imagine any scenario under which the ECB can avoid having to yank the ELA if the July
20 payments are missed. But there are plenty of opportunities for an accident before then. It
is assumed that the treasury bill rollovers will not be an issue since they are almost entirely
held by Greek banks. Is it really safe to assume that? I might be thinking about a switch into
safer, more liquid assets if I were a Greek banker. Or are they just going to avoid an auction
altogether and deem the bills rolled over by fiat? The Samurai bonds are tiny, but they are still
a commercial obligation, will require money the Greek government likely will not have, and a default
will not be able to be brushed aside as easily as the missed IMF payment. Speaking of which, the
IMF will be unable to assist in any way throughout this period, unless the arrears are cleared.
But wait, there's more. With the previous programme having expired, there will need to be a
new MoU, a vote by the Greek Parliament, a vote by other European parliaments, including Germany.
This is no longer something Finance Ministers can decide at a late night meeting.
Yet, the official position is no more talks until after the referendum.
I think the Germans think that if things get bad enough in Greece, they'll kick out Tsipras
and elect a government more willing to deal.
A vote of NO to the "Should we accept these terms?" means the Greek people support Tsipras's
hardline demand for write downs. This puts the Germans in the position of having to accept his
terms or face Greece leaving.
In short, the referendum may take the "well just wait until the Greeks replace you, then deal
with the new guy" threat off the table.
My point is that regardless of which way the vote goes on Sunday, by the time the results are
in there simply may not be enough time left to avoid a default. Note well that default does not
automatically imply Grexit, but it certainly ratchets things up a notch.
It's all up to the ECB and Troika. The money involved is small to them. It's all political. Looks
like they want a regime change in Greece. Either that will happen or there will be Grexit.
Syriza
caved on austerity but wanted more taxes and less spending cuts. The Troika said no. And the Troika
spins it like the Greeks left the negotiation table. The Troika said no and then the ECB refused
to back Greek banks as the "deadline" passed causing the bank holiday.
Oh, I think default is inevitable. All the referendum does is clarify the options AFTER that.
If it fails, and the Greeks vote that they want to accept the Eurozone offer, then there will
be a change in Greek government, a new round of austerity, and a delay of another year before
the crisis explodes again.
If it passes with a resounding vote of "NO, we're not paying" then Eurozone will have to take
major cuts in the debt or accept Greece leaving the Eurozone.
Nathanael said in reply to Darrell in Phoenix...
Darrell has the analysis correct.
The political key here is that SOME party is going to either
leave the euro. (Or massively and permanently default and start printing euros. If they simply
ignore all the ECB rules entirely, they may be able to stay in the euro. Same thing; in this case,
Germany is the one who leaves the euro.)
If it's Syriza and they do it with public support, there are good things in the future.
If it's Golden Dawn and they do it with public support, there are bad things in the future.
If Syriza does it without public support, Golden Dawn benefits, and there are bad things
in the future.
If Golden Dawn does it without public support, they'll just cancel elections to avoid losing
power, so they'll again benefit and there will be bad things in the future.
In a sense, the democratic parties are handcuffed in their options relative to the fascist
parties, so it's harder for Syriza to succeed than for Golden Dawn.
And it's really REALLY bad if Golden Dawn becomes a big economic success by defaulting or leaving
the euro!!!
The results of the "standard run" (or "base case") scenario of "The Limits to Growth" 1972 study.
Could it be that the ongoing Greek collapse is a symptom of the more general collapse that the model
generates for the first two decades of the 21st century?
So, we have arrived to an interesting point, to be intended in the Chinese sense of a curse. It is
the point where the people of Greece are being asked to choose between starvation and slavery and
this is supposed to be a triumph of democracy
As the tragedy unfolds, people take sides, aiming their impotent rage at this or that target; the
Euro, the bureaucrats of Brussels, the Greek government, Mr. Tsipras, some international conspiracy,
and even Mr. Putin, the usual bugaboo of everything.
But, could it be that all the financial circus that we are seeing dancing in and around Greece is
just the effect of much deeper causes? The effect of something that gnaws at the very foundations
not only of Greece, but of the whole Western World?
Let's take a step back, and take a look at the 1972 study titled "The Limits to Growth" (LTG). Look
at the "base case" scenario, the one which used as input the data that seemed to be the most reliable
at the time. Here it is, in the 2004 version of the study, with updated data in input.
I can only imagine the intensity of "consultations" between Washington and Berlin now... . "...The present circumstances in Greece were inherited by the current government from the previous
right-wing government, which managed to bring them out by faithfully following the austerity prescriptions
of the Troika. However both left and right-wing governments of the past, who created and hid the enormous
debt, are also to blame." . "...The documents show that the IMF's baseline estimate – the most likely outcome – is that
Greece's debt would still be 118% of GDP in 2030, even if it signs up to the package of tax and spending
reforms demanded. " . "...This is nothing more than a large-scale payday loan scam. Greece will never get past the
loan sharks and will constantly have to borrow just to pay off the interest. I'd rather default and
eat beans for a year while starting fresh than eat beans for 20 years paying off old debt. You can call
them lazy, you can call them thieves but - if they play their cards right - you can also call them "debt
free"." . "...The public debt of Greece existed BEFORE the recent election. The cruel conditions inflicted
upon Greece by its "partners" existed BEFORE the recent election. The crisis existed BEFORE the recent
election." . "...Lending more billions to Greece so they can repay the interest on previous billions loand and
those new loans repayed by cuts to pensions and more privatisation of public assets...blatant transference
of cash from those who can't afford it to those who don't need it. Hopefully the Greek people
give a resounding middle finger to the EU/IMF. And if I hear another muppet crack on about 'the Greeks
ought to pay their taxes' I'll bloody lose my temper. D some reading for gawds sake. It really isn't
that hard." . "...I would have thought that a "senior german conservative politician" telling the Times that
whatever happens Tsipras must be forced from office is an historic blow to the EU. Now, at least, people
know what it is and who it is for." . "...If they actually wanted payment, they'd be reasonable. But payment isn't their priority, these
organisations want power over Greece."
The Greek banks and former conservative governments, you mean.
You and plenty of other brainwashed idiots around here seem to think that individual, working
class Greeks had something to do with this. Of course, as always, the banks and politicians who
actually caused this got off scott free, with taxpayer money, to cause the next big financial
crisis.
HaroldP -> Nottodaymate 30 Jun 2015 21:29
Banksters, what did you expect, honesty, morality, humanity, financial expertise? Bailouts
from citizens, that's what you expected? The poor darlings can't even run a bank when they can
print money. Incompetant scum. Regards, Harry.
Jazzfunk23 -> workingclass2 30 Jun 2015 21:28
In recent years most of this mess was presided over by liberal conservatives...
Germania offers a regime of permanent debt servitude to pay for its failed banks:
The documents, drawn up by the so-called troika of lenders, support Greece's argument that
it needs substantial debt relief for a lasting economic recovery.
The documents show that the IMF's baseline estimate – the most likely outcome – is that
Greece's debt would still be 118% of GDP in 2030, even if it signs up to the package of tax
and spending reforms demanded.
clematlee Danny Sheahan 30 Jun 2015 21:25
What you have in the USA is TENS of millions of people who don't have any US dollars while
in Manhattan flats sell for millions.
AlamoSexual 30 Jun 2015 21:20
This is nothing more than a large-scale payday loan scam. Greece will never get past the
loan sharks and will constantly have to borrow just to pay off the interest. I'd rather default
and eat beans for a year while starting fresh than eat beans for 20 years paying off old debt.
You can call them lazy, you can call them thieves but - if they play their cards right - you can
also call them "debt free".
UnevenSurface Danny Sheahan 30 Jun 2015 21:12
Greece will still be here. There will of course be enormous poverty (in various forms) in the
short term - but even the FT says that the GDP will bounce up 6% quite quickly. After that, they'll
be the cheapest holiday destination in Europe, exporting the cheapest wine and olive oil. The
GDP could expand by 25%, up to pre-austerity levels. Excluding macro economic factors out of our
control, I would be truly surprised if they aren't better off - overall - within five years.
HaroldP -> owl905 30 Jun 2015 21:12
The public debt of Greece existed BEFORE the recent election. The cruel conditions inflicted
upon Greece by its "partners" existed BEFORE the recent election. The crisis existed BEFORE the
recent election. Obviously Tsipras did not "wreck his country." His fellow citizens elected
his party to fix an existing crisis. He won the election with a proposal of how to do that. He
has deviated only slightly from his promises. I find him to be a "hero" in that he could teach
the political class of Europe the importance of keeping the agreement between the state and the
citizens. It is heroic indeed to be the honest politician of Europe. He has my respect. Regards,
Harry.
Paul Collins 30 Jun 2015 21:12
Lending more billions to Greece so they can repay the interest on previous billions loand
and those new loans repayed by cuts to pensions and more privatisation of public assets...blatant
transference of cash from those who can't afford it to those who don't need it. Hopefully
the Greek people give a resounding middle finger to the EU/IMF.
And if I hear another muppet crack on about 'the Greeks ought to pay their taxes' I'll bloody
lose my temper. D some reading for gawds sake. It really isn't that hard.
malenkylitso -> owl905 30 Jun 2015 21:08
Greece was forced into a corner, then took a bailout which less than 10% went to the Greeks. The
rest went to the banks.
Sounds like a protection racket.
SystemD 30 Jun 2015 21:07
This is not just about Greece; the impact of a Greek default go much wider. The IMF (and the
Troika) has to be seen to be taking a hard line. If they don't, then their credibility with the
rest of the world diminishes, particularly in Africa. The Germans are worried about the Euro as
a currency; the Deutchmark was given up on the promise of stability, and the 1920's are still
- just - within living memory. There is a lot of fear behind their stance. Stock markets generally
are worried about the instability the situation is causing. They don't want Greece crushed - they
just want a stable situation with predictable outcomes. Volatility is not in their interest. And
Greece needs money and help to try to cure the cancer of corruption in its economy.
Greece cannot pay back its debt. Unless the creditors agree to a very long term of repayment (at
least 50 years) at reasonable rates, the only real options are for Greece to leave the Euro zone
and go back to the drachma, or the debt must be written off, with the proviso that there will
be no new loans, and Greece will have to rebuild and finance its economy from its own resources.
Stanley Wallings 30 Jun 2015 21:06
I feel sorry for the Greek people - they've had 5 hard years and for nothing. Grexit will be
horrible for those who have to stay in Greece. The 'haves' have already moved their money and
can just hop on a flight out. I hope Tsipras isn't driving the bus over a cliff for no reason
other than to piss off the Troika. I hope he has a plan C
medicynic RobWilson73 30 Jun 2015 21:06
What a great idea! Let's get rid of pensions worldwide, then no one has any cause for complaint.
I'm pleased to see that you are one of those who, when pensions in the UK increase say: "No thanks.
I don't need it and don't deserve it. It only makes me fat anyway".
In my experience in British industry, workforces are rife with 'tax-dodging, CSA dodging, mendacious,
lazy wankers', a lot of who deserve a cut in wages never mind a pension.
Monkeybus 30 Jun 2015 21:06
SQUEEZE THE GREEKS, WRING THEM OUT, RINSE THEM. Other xenophobic pronouncements are available.
SHIFTLESS, LAZY, FECKLESS. Can't they print their own money like more advanced nations?
We are all in this together, err, hang on.
Imagine if Gordon Brown had taken us into the Euro after all?
clematlee FakeyWilson 30 Jun 2015 21:06
and the west arms heart eating loonies in North Africa and invades and kills millions of people
in the process, Vietnam, Iraq, Libya, Grenada, Korea, Panama, Syria and the list goes on. Watch
the EX USA secetary of state on youtube saying the starvation of 500,000 children was a price
worth paying, by the west imposed on Iraq. It was starvation to death. Her name was Madalin Allbrite.
Don't worry about losing some so called freedoms to stop Allbite and her ilk.
Tappert Heintz 30 Jun 2015 21:03
"Greek failure to make IMF payment deals historic blow to eurozone"
Sounds like the Daily Mail. Nonsense.
owl905 Iheartbill 30 Jun 2015 21:02
They're not barred from international trade, but it's really scewed to cash and barter. There
simply isn't the mechanism to manage the exchange rates. No one outside the country will want
rapidly devaluating and 'only-good-in-Greece' drachmas. Greeks don't realize what's coming after
15 years of Euro stability.
One big surprise from them is that pipeline deal with Russia. That needs a lot of capital -
Russia is walking into even more problems if it starts forwarding debt financing to Greece to
get the pipeline built.
The tourist industry won't be hit by it (except for foreign import items that are part of the
industry) - it will be hit by the drachma, that has the profit from the industry shrink to nothing.
Danny Sheahan Justitiadroit 30 Jun 2015 21:01
Look at the Eurozone growth rates for the last 5 years, its a basket case.
The Greeks have messed up over the years but the Euroland is no case study in growth.
rberger ArundelXVI 30 Jun 2015 21:00
Actually there is very little debt servicing involved. The 29 billion actually includes debt
repayments (principal, not interest). Greece is not paying any interest for most of its bailout
money until after 2020, but of course needs to pay interest on the bonds that it has issued itself.
ScanDiscNow Danny Sheahan 30 Jun 2015 21:00
Pre Euro Greek total production increased by some 600% between 1960 and 2001 while German total
production increased by a mere 255%. However, throw in the Euro and the subsequent 15 years has
German total production up 20% while Greece total production is down 26%
ZeroHedge.
Anthony Apergis owl905 30 Jun 2015 20:57
And herein lies the issue my friend! The strictly monetary considerations that underpin your
rationale betray the disintegration of what started in Rome as a visionary peace project for the
peoples of Europe to an economic, neoliberal construct whose only concern is %s and profits. Surely,
you must be able to see this. I would strongly advise you to read the preamble to the Treaty of
Rome (1957).
MonsieurBoombastic FilthyRichBanker 30 Jun 2015 20:54
The capital controls in Greece apply to cash withdrawals and overseas transfers so this won't
affect things like internet banking where cash is transferred within the system. The things you
mention are probably still going on in most cases.
moderatextremist 30 Jun 2015 20:51
When Greece joined the EU, the corrupt government went on a spending spree of EU money, and
used Goldman Sachs to cover it up. It is those politicians and Goldman Sachs, the vampire squid
on the face of the world, that should be put on trial. I fear this development will be hurtful
to an awful lot of good people, while the arseholes that created the mess will get away with it......
yet again.
sefertzi7 30 Jun 2015 20:48
The worst possible outcome. Now the crooks who caused the debt mountain in the first place
(Papandreou x2, Simitis, Karamanlis, Samaras et al) will come back to power, reluctantly do what
they are told with the quid pro quo of a blind eye turned while they carry on in their corrupt
old ways.
Call that a revolution? More like crash and burn to me.
raymundlully -> Kaiama 30 Jun 2015 20:45
If the debt is forgiven and goes away.
Greece has in arrears to private pharma companies ,I doubt they'll extend credit orwant paying
in toy Drachmas.
Cash-strapped Greece has racked up mounting debts with international drugmakers and now owes the
industry more than 1.1 billion euros ($1.2 billion), a leading industry official said on Wednesday.
The rising unpaid bill reflects the growing struggle by the nearly bankrupt country to muster
cash, and creates a dilemma for companies under moral pressure not to cut off supplies of life-saving
medicines.
Richard Bergstrom, director general of the European Federation of Pharmaceutical Industries and
Associations, told Reuters his members had not been paid by Greece since December 2014. They are
owed money by both hospitals and state-run health insurer EOPYY.
MalleusSacerdotum 30 Jun 2015 20:45
If Greece were a private or public company and continued to 're-finance' in the manner proposed
by the IMF, its directors would be charged with insolvent trading.
They are getting a lot of stick for admitting that they are effectively bankrupt.
It is at least an honest admission of the state of play.
Omniscience Jazzfunk23 30 Jun 2015 20:42
They turned a primary deficit into a surplus within the last 5 years
Right wing conservative neo-libs corrupt elitists. The Troika is refusing to allow Greece to
tax the wealthy corrupt tax avoider thieves, while forcing more of the workers into poverty.
Vee1984 30 Jun 2015 20:40
It is a well known fact that many Greeks like to avoid paying taxes just as there are many
other European countries who avoid paying tax whether on an individual or on a company basis.
The European Union has created this problem over a long period of time by allowing countries
to borrow more than required and funds being used to build eg airports in Spain which are unused
and unnecessary due ro their geographical location and many speculative projects undertaken throughout
the EU. The reason for lending such sums, with a total disregard as to how interest payments can
be repaid, never mind repaying the loans, has been done to enrich the lenders who, as we all know,
love to gamble on how much money can be made. A risk game, played out every day, and, I suspect,
some bets even being placed on the odds of Greece defaulting in some hedge fund offices somewhere
in Europe. It should be noted that Spain and Italy have loaned money to Greece. How can this be
when both countries have loans via the EU etc? Again, investors after interest on the loans with
a total disregard as to their own countries finances. Greece is a democracy and should not give
in to the rhetoric coming from the IMF or ECB. Why not? Neither can afford to and neither can
Germany. Interesting days ahead. I truly hope that in the name of Democracy, the Greek people
will vote NO in the referendum no matter the increasing hardship this will bring. The EU really
need to be extremely mindful of the fact that abject poverty and the continuation of austerity
gives rise to discontent and a surge in popularity to right-wing extremist views.
Anthony Apergis Justitiadroit 30 Jun 2015 20:39
Indeed, the EU has mutated from a union of the peoples of Europe, into a market-driven transnational
institution governed by bankers and solely concerned with GDP growth rates (and I mean this in
a strictly non-communist/leftist way).
Dannybald DavidRees 30 Jun 2015 20:36
As a German voter I would never vote for the right wing neo-lib corporatist Fascist scum in
government. The hypocrisy of this regime is turning millions of Europeans against Germany and
rightly so. The London conference of 1953 halved German debt owed for destroying Europe. Greek
debt was 100% of GDP in 2008 and that had nothing to do with Tspiras.
Euro zone countries have already extended the maturities of their loans to Greece from 15 to 30
years and reduced the interest rates on some to just 0.5 basis points above their borrowing cost.
They also granted Greece a 10-year moratorium on interest payments on the second bailout loan
from the euro zone rescue fund.
FlashRat 30 Jun 2015 20:35
I would have thought that a "senior german conservative politician" telling the Times that
whatever happens Tsipras must be forced from office is an historic blow to the EU. Now, at least,
people know what it is and who it is for.
PennyForYourComment DavidRees 30 Jun 2015 20:35
Which is why the Eurozone concept is fundamentally broken.
Imagine if every time one US went into a bad recession, all the other states had to vote on whether
to send them money, with all the governors having to agree... and then trying to post their own
conditions on how that States economy be run before the money were delivered. It would be an unworkable
mess, especially given acrimony and resentment between states and regions (North vs. Deep south
vs. midwest, vs. west coast, etc)... The country would sooner or later fall apart as States started
rebelling and quitting. It would be absurd.
But somehow Europe is supposed to run on exactly this system. If you are going to have a single
currency, then you need common fiscal mechanism binding the areas together, because these act
as automatic financial stabilizers when there's a regional crash. If Florida's economy crashes,
money automatically pours in from everywhere else to cover unemployment insurance, etc, via the
Federal government. No similar thing happens with Greece in Europe.
BunyipBluegum theoldgreyfox 30 Jun 2015 20:34
The default you are referring to is a recent one (2014) - I was referring to the previous default
in 2001, which was followed by a significant period of economic growth and recovery. I am not
suggesting that a default is always the best solution in such circumstances, nor that the immediate
fallout won't be problematic. However in any case the example of Iceland clearly demonstrates
that a default can be the best option economically in some circumstances.
It's the same principle as bankruptcy: if your debts reach a level that can never be paid back,
it's better to wipe the slate clean and start again, even though the cost of doing this may be
to slide back down the snake to the bottom of the board.
Anthony Apergis 30 Jun 2015 20:33
To sum up:
Roughly €170b initial Greek debt +
Roughly €150b financial aid to Greece aimed at repaying initial creditors (NOT the restructuring
of the Greek economy) + austerity measures while doubling an already unsustainable debt = EU solidarity
to a member- state.
And the above does not even take into account whose economy did the initial debt prop up. I cannot
believe that the people of Europe cannot see what the REAL problem is.
The EU - and by extension Europe - is truly in trouble.
raymundlully Franco87 30 Jun 2015 20:32
UK had third world inflation in the 1970s it took the IMF medicine broke the unions in the
80s and created a home fit for bankers.
What about economic slums like Portugal and Italy.
They are much worse off now than Greece was at the start of its crisis. It will not take much
to have Italy in crisis.
Portugal is heading for an abandoned state after its crisis so its not much of a threat now, how
it will pay its debt in the future is anyone's guess. Though it is safe to presume that a country
in such decline will have less people paying tax.
They'll want more than billion.
RGBargie 30 Jun 2015 20:31
It looks like Greece might soon be sailing into uncharted waters.
I can just imagine what the consequences will be for the EZ if Greece goes alone, and then
makes a success of their new found freedom. I imagine there might well be others ready to abandon
ship if that happens.
Westmorlandia BunyipBluegum 30 Jun 2015 20:31
Point taken, but whatever the Greeks don't pay back to the EFSF will have to be paid by other
Eurozone countries, as that's how the EFSF guarantees work. So it isn't just about whether it's
fair for Greeks to pay for what their government borrowed, but whether it's more fair for Greeks
to pay or for everyone else in the Eurozone to pay for what elected Greek governments borrowed.
Reality has said for some time that Greece can't pay, and therefore some of it should have
been written off. But that's more about pragmatism than fairness.
FilthyRichBanker Wily Ways 30 Jun 2015 20:30
He could do what the rest of Europe does and make paying taxes compulsory rather than voluntary
for a start.
Cut the bloated Public sector and halve the defence budget in line with the rest of Europe - and
sell off the $50bn of assets they previously agreed to.
Bardamux Michael Richard Allen 30 Jun 2015 20:29
Ignorant it is then. So i'll explain it to you step by step.
1) If you deposit money in a bank, you are loaning the bank your money. And in many countries
you will get a small interest rate for it.
2) it is considered a short term loan, because you can withdraw it at (almost) any time.
3) Remember Icesave in the UK ? That bank did not pay its depositors
4) Other banks received hundreds of billions of euro's / pounds / dollars
5) Banks could loan money at almost 0% even with terrible collateral to help them survive
6) Greece will pay its debt if they receive half or even less help than the Dutch and UK banks
did.
Get it now or do you need more steps to help you out ?
Euro zone countries have already extended the maturities of their loans to Greece from 15 to 30
years and reduced the interest rates on some to just 0.5 basis points above their borrowing cost.
They also granted Greece a 10-year moratorium on interest payments on the second bailout loan
from the euro zone rescue fund.
Omniscience 30 Jun 2015 20:27
To be fair, they have only been lying about reform since joining the Euro.
2005 : Greece faces up to taxing times
Greece plans to offset a projected shortfall this year in tax revenues with a €2bn securitisation
deal, in spite of European Commission strictures against the use of one-off measures to reduce
the budget deficit. George Alogoskoufis, finance minister, said in an interview with the Financial
Times that the transaction would enable Greece to achieve this year's budget deficit target. He
also stressed securitisation was "a temporary measure that will give us time to bring about permanent
structural corrections".
Joaquin Almunia, the European Union's budget commissioner, signalled acceptance of this year's
planned transaction during a visit to Athens last week but urged Greece to accelerate structural
reforms next year.
The problems of Greece haven't happened since "a radical populist party" was elected. On the
contrary, the present government was elected because of the problems.
Danny Sheahan outsiderwithinsight 30 Jun 2015 20:23
Not at all, it means that Italy and Portugal are next.
If Greece leaves and its hard to see how they will not at this stage then the Euro has become
a non-permanent currency arrangement that the EU or ECB will not defend its integrity.
That marks it out as different from every other currency in the world. Only currencies that have
allowed that in the past went on to be all failed entities.
CambridgeAfterDark 30 Jun 2015 20:25
Splendid, send a message to all banker gangsters everywhere.
Best way to deal with a bully, is hit them back.
Guess the right-wing trolls on here look pretty silly now, all saying last week the FTSE would
rally upwards upon a Grexit!
BunyipBluegum robbyevans 30 Jun 2015 20:20
The present circumstances in Greece were inherited by the current government from the previous
right-wing government, which managed to bring them out by faithfully following the austerity prescriptions
of the Troika.
However both left and right-wing governments of the past, who created and hid the enormous debt,
are also to blame.
coxinutant 30 Jun 2015 20:16
A continued austerity programme makes it unlikely that Greece will be able to grow economically.
Continued economic pain-> lower ability to repay debt. So all those people who get on their hig
horse and demand that Greece repay its debts should keep in mind that debt cannot be repaid when
you have 25% unemployment, when wages plummet and people cannot spend to make the economy grow.
If austerity had been the miracle cure, it would have worked years ago. So stop bandying about
terms like 'communist' and 'marxist' and all that BS. The current government in Greece did not
create the crisis, the austerity, the 25% unemployment. The crisis was created by an irresponsible
banking sector, which was then bailed out by your money (yeah ordinary Joe, looking at you). Austerity
was hatched by The IMF, against the advice of sensible economists...
And it hasn't worked. And I am sure the 'marxist' policies of Syriza did not create the enormous
unemployment that Greece faces. Last time that occured in Europe, fascist governments came to
power, aided by pro-fascist symptahies in France and the UK...
BunyipBluegum -> peter nelson 30 Jun 2015 20:14
It was the Greek governments of the mid 2000s, who were corrupt and nepotistic. If it was them
and their wealthy friends who were going to carry the can for this, then I'd say well deserved.
But the whole reason why Syriza is against the austerity program is that it doesn't greatly affect
these people, but it DOES greatly affect ordinary Greeks, especially the working class, elderly
and vulnerable.
Also it hasn't worked. If you were prescribed a foul medicine by your doctor that made you feel
sick and weak, and then failed to cure your problem, would you be inclined to go back for another
dose?
AtomsNest -> echoniner 30 Jun 2015 20:14
If they actually wanted payment, they'd be reasonable. But payment isn't their priority, these
organisations want power over Greece.
World
Oil Energy Consumption by Sector, 1973-2010Oil can be put to a variety of uses,
with transportation accounting for a growing share of the oil consumed. While the transport sector
consumed 42% of the oil in in 1973 this share climbed to 61.5% in 2010. The growing level of global
motorization is a core component behind this relative growth, particularly the growth of international
trade. Non-energy uses mostly relate to the petrochemical industry where petroleum is used to manufacture
products such as plastics or fertilizers. Other sectors concern agriculture (powering farm equipment),
commercial and public services (power generation) and residential (heating oil).
"...Alexis Tsipras must be stopped: the underlying message of Europe's leaders. Germany's vice-chancellor
has become the first senior EU politician to voice the private views of many - that the Greek PM is
a threat to the European order
By Ian Traynor - Guardian" . "...Tsipras is only a symbol of what must be stopped. What must be stopped is democratic interference
in the affairs of finance capital. What do "the people" know about such important matters? Besides,
they might favor their own interests over those of the system (meaning those of the oligarchs)." . "...For finance capital, the stakes in Greece are high. They must make the Greeks pay a very high
price for defiance. If not, Spain, Portugal, etc. will try the same thing.
What good is the "will of the people" and democracy when it goes up against the banks?"
. "...Finance capital now MUST take untenable speculative risks. The state now MUST bail out finance
capital when their bubbles burst. The international institutions now MUST enforce draconian austerity
to pay for the bailouts. ...because otherwise there wouldn't be enough value produced for the finance
sector to appropriate and accumulate. This is the END GAME a perpetual smash-and-grab operation by the
plutocrats. "
Joseph Stiglitz
to Greece's Creditors: Abandon Austerity Or Face Global Fallout: ... "They have criminal responsibility,"
he says of the so-called troika of financial institutions that bailed out the Greek economy in
2010, namely the International Monetary Fund, the European Commission and the European Central
Bank. "It's a kind of criminal responsibility for causing a major recession," Stiglitz tells TIME
in a phone interview.
Along with a
growing number of the world's most influential economists, Stiglitz has begun to urge the
troika to forgive Greece's debt – estimated to be worth close to $300 billion in bailouts – and
to offer the stimulus money that two successive Greek governments have been requesting.
Failure to do so, Stiglitz argues, would not only worsen the recession in Greece – already deeper
and more prolonged than the Great Depression in the U.S. – it would also wreck the credibility
of Europe's common currency, the euro, and put the global economy at risk of contagion. ...
"Of course, the economics behind the program that the "troika" (the European Commission, the
European Central Bank, and the International Monetary Fund) foisted on Greece five years ago has
been abysmal, resulting in a 25% decline in the country's GDP. I can think of no depression, ever,
that has been so deliberate and had such catastrophic consequences: Greece's rate of youth unemployment,
for example, now exceeds 60%."
The troika economics he is condemning was the refusal of the ECB to do QE earlier. Troika's
bad economics is exactly what you have been advocating for the US for a long time. Just in case
you missed this.
And yet economists have been extremely slow to react to this massive economic derailment with
anything close to the kinds of bold emergency recovery plans they would be ginning up if the same
disaster was taking place in their own countries.
Why aren't the kinds of figures Stiglitz just cited the headlines here? Why has the Great Greek
Depression been treated by the media, and most economists, as though it is fundamentally just
a disagreement between Greece and its creditors?
What is the plan for putting the 20% of the Greek over-15 population that is not working, but
should be working, back to work?
Maybe people think that millions and millions of Greek people without jobs is just Greece being
Greece? That profound economic dysfunction and failure is a case of "well, what do you expect
from those people?"
Economists seem to have been so zombified by the inscrutable bureaucratic rhetoric and psychopathic
insanity of the Eurocrats, and the bumbling incoherence of the Greek government, that most of
them aren't able to think clearly. The Euros have convinced them all that any outside-the-narrow-box
thinking will cause chaos, panic, unraveling, The Unthinkable, the Complete End of Europe as We
Know It and the Return of the Satanic Hordes. So they sit on sidelines hoping that someone will
make some deal that allows Greece to keep paying forever, grindingly, in a way that isn't too,
too, too, too painful.
Part of the problem maybe is that mainstream economists have too many buddies in the Eurocracy.
They can't believe that all those nice people they went to graduate school with have gone so bonkers.
The situation with the Eurocrats reminds me a little bit of Alec Guinness in The Bridge on
the River Kwai. A noble project (in this case, the Europe project) evolves over time into a demented
and fanatical religion whose ultimate purpose is forgotten by its architects, who lose the capacity
to adapt to evolving circumstances with common sense.
It's not surprising. European governments own most of the debt now and want to get paid; and
they don't want any special deals that weren't available to them.
And the Greeks themselves are in denial. They haven't yet come to grips with what it's going
to take to rebuild their collapsed economy.
His column today on crippling austerity is pretty good though. The problem, as he says, is
the grip of the notion that leaving the Euro is "unthinkable".
A lot of Europeans have gotten too tied to the idea that one country leaving the Euro is some
kind of continental catastrophe. To read some of the hysteria - such as a recent Guardian piece
- Greeks first leave the euro and then its back to Bolsheviks, Nazis, trench warfare slaughter
or Mongol invasions or something.
But the euro isn't the UN Charter or the Magna Carta or the Treaty of Versailles. It's just
money. The unity of Europe does not stand or fall on whether a country decides to use a particular
form of money. There are several EU members, in perfectly good standing, who do not use the euro.
Big deal.
I understand that most of the Greeks themselves cannot wrap their heads around this idea. But
economists can easily.
Anyway, Greece and the rest of the world have gotten themselve so tangled up in the obsessive
attention to the secondary matter of the Greek "debt crisis" that they don't seem to have time
to think about the primary crisis - the Nobody has a Job and Our National Output is in the Toilet
Crisis.
QE? Oh nonsense. The Euro banks knew Goldman had washed Greece's books, and that Greece was
not a suitable candidate for the initial loans, much less the subsequent ones. This is onerous
debt, and is simply uncollectible. Banks must relearn to live and die by their ability to make
good loans. And if the elites get burned in the process? Maybe they'll learn to stop staffing
their banks with assclowns.
JohnH said in reply to pgl...
The Troika won't allow Greece to use Aegean gas as collateral precisely because Greece is supposed
to hand over its wealth without much if any compensation...
pgl said in reply to JohnH...
I despise this Troika. Whether they are evil or whether they are dumbass liquidionists like
you are - it does not matter. They are being very destructive. OK, you are not evil but you are
stupid with your fear of using aggregate demand stimulus. Same horrific results.
"Europe is at a crossroads. The institutions of the Troika are not only trying to destroy Greece;
they are trying to destroy us all. Now is the time to raise our voices against this blackmail
by the European elites.
"Next Sunday the Greek people will be able to vote to reject the blackmail that is austerity
and vote for dignity – with hope for another Europe. This historic moment requires everyone in
Europe to speak up and take a stand.
"We all say NO to austerity, pension cuts, and VAT increases; We all say NO to poverty and
privileges; We all say NO to blackmailing and to the dismantling of social rights; We all say
NO to fear and the destruction of democracy.
"We all say YES to dignity, sovereignty, democracy, and solidarity with the citizens of Greece.
"This is not a conflict between Greece and Europe. It is about two antagonist visions of Europe:
our Europe of solidarity and democracy, created from below and without closed borders; and their
vision, which denies social justice, dismantles democracy, opposes the protection of the weakest
and the taxation of the wealthy."
He certainly nailed this one. The Troika are demanding that the Greek people protect the plutocrats
(mostly foreign) for paying any price for their reckless and feckless action and democracy (and
the "little people" be damned.
If the Greek economy collapses without the euro, "you have on the edge of Europe a failed state,"
Stiglitz says. "That's when the geopolitics become very ugly."
By providing financial aid, Russia and China would then be able to undermine Greece's allegiance
to the E.U. and its foreign policy decisions, creating what Stiglitz calls "an enemy within."
[ This is xenophobic rubbish, showing a mean-spirited and wrong-headed disdain for China and
Russia. ]
Alexis Tsipras must be stopped: the underlying message of Europe's leaders. Germany's vice-chancellor
has become the first senior EU politician to voice the private views of many - that the Greek
PM is a threat to the European order
By Ian Traynor - Guardian
Except that Tsipras is only a symbol of what must be stopped. What must be stopped is democratic
interference in the affairs of finance capital. What do "the people" know about such important
matters? Besides, they might favor their own interests over those of the system (meaning those
of the oligarchs).
You are saying "yes, the Greece and Puerto Rico can drain my retirement savings because Stiglitz
says its democratic"?
I speak as someone who had lots of savings in BofA which bought the bank that bought my local
bank listening to people calling for BofA to be liquidated and all the debt it held written off.
Jeffrey Stewart said...
It never ceases to amaze the number of human lives must be destroyed through unemployment and
poverty due to "austerity" so that financial capitalists are repaid in full.
JohnH said in reply to Jeffrey Stewart...
It's how they keep the rest of the world under their thumbs...
Ellis said...
For finance capital, the stakes in Greece are high. They must make the Greeks pay a very
high price for defiance. If not, Spain, Portugal, etc. will try the same thing.
What good is the "will of the people" and democracy when it goes up against the banks?
"For finance capital, the stakes in Greece are high."
Yes, the stakes are high for finance capital. The choice is between euthanasia of the rentier
and suicide-bomber-style financial terrorism. Finance capital opts for the latter.
We should all be clear on what the choices are and why finance capital chooses the reckless
strategy it does. Finance capital CANNOT win this fight to the death. There is no win-win compromise
that will enable the continuation of business-as-usual to be sustainable.
'Tis the final conflict. Greece is only an episode but there will be episode after episode
based on the same scenario. The "wages-rut system" no longer has the "beautiful" capacity of ensuring
the continued accumulation of capital merely through an imbalance in the economic power of labor
and capital.
Finance capital now MUST take untenable speculative risks. The state now MUST bail out finance
capital when their bubbles burst. The international institutions now MUST enforce draconian austerity
to pay for the bailouts.
...because otherwise there wouldn't be enough value produced for the finance sector to appropriate
and accumulate.
This is the END GAME a perpetual smash-and-grab operation by the plutocrats.
Glen said in reply to Ellis...
It's well understood in modern economics that when banks and ultra rich speculators make horrible
investments that wreck the world economy, then the innocent must pay. That whole capitalism risk/reward
thing is so passe.
Ellis said in reply to Glen...
What's behind the debt? In 2004, the government paid through the nose to host the Summer Olympics.
The Greek military sucks up 3 or 4 per cent of GDP buying expensive weapons and ammo from the
U.S. Germany and France. When Greece entered the EU, it employed the services of Goldman Sachs
to hide their debt -- paying a pretty penny for their services. And when the crisis hit in 2008,
the fear that Greece might default boosted interest rates for the Greek government to usurious
levels. In other words, it's pillage pure and simple.
And now, the IMF figures that the best way forward is to starve the population even more.
"...Actually 90% of the money went off to pay the private creditors (French and German banks
who had invested in Greece). Only 10% amount of the loan ever went into the Greek economy but that
was more than balanced by the the damage that austerity politics did to the country." . "...So the IMF and the Eurozone have in effect been playing debt collectors for French and
German banks, and have attempted to bestow the costs on Greece. Is there any way that could possibly
ever have worked?" . "... Lagarde, is getting smacked and rightly so; she, Merkel et al, all thought they could
dictate to and bully Greece, and Greece would roll over, well it hasn't." . "...Only because the banks were too big to fail and therefore letting them crash would have
crashed the entire economy. If you ignore that, in theory holding the banks responsible for the
crisis they created and making them insolvent instead of using QE to bail them out could
theoretically have been something that held the right people to blame, and didn't punish ordinary
people with austerity.
It's pretty smart of the banks as they got themselves into a position where, when they screw up,
other people have to pay the price." . "...Tsipras called them "criminals". I guess it is more close to the truth." . "...Greece cannot pay, but no one can say that as it undermines the whole financial system,
which is based on confidence. We can't 'write off Greek debt' (as Jeremy Corbyn helpfully suggests)
as no indebted countries would feel the need to pay off debts again - they'd just wait for the
'Greece' solution."
The big problem right now in Greece is lack of liquidity to operate the economy. There
simply is not enough money in circulation.
If newly issued Greek euros are not traded on international markets and they are legal
tender in Greece and the Greek government accepts them as tax payments, there is no market
value. You have an assigned value, like in other controlled systems. So you can have a high
velocity of circulation as people spend them quickly, but no problem of devaluation - unless
the Greek government would issue Greek euros to total excess.
Suppose you are a shopkeeper in Greece and your pensioner customers pay you in Greek euros.
And suppose, the Greek law says you can pay your suppliers in Greek euros and the supplier can
pay his taxes in Greek euros. In that case, the Greek government will need capital controls to
ration the supplier's euros to buy imports. But that's likely to stimulate local production
and be a plus for the Greek economy.
Local fiat currencies do work.
It is a rather different and probably not very acceptable example, but the Cuban 'CUC', is
not backed at 1:1 against the US dollar in an open market. Its value is the fiat of the Cuban
government. No open market trading means no devaluation by market forces.
Trumbledon 30 Jun 2015 10:03
We never had an advanced economy actually asking for that kind of thing, delayed
payment
They still haven't - Greece is no more an advanced economy than a person who buys a
houseful of luxury items using credit cards is a wealthy person.
Greece has virtually no industry worth mentioning and virtually no agriculture; the Greek
economy is almost entirely reliant on tourism.
Greece has a smaller GDP than Thailand or Argentina, Greece's economy is roughly half the size
of Vietnam's. How on earth can Greece be considered an 'Advanced economy'? That's claptrap.
mikeyk1 Omniscience 30 Jun 2015 10:03
Actually 90% of the money went off to pay the private creditors (French and German
banks who had invested in Greece). Only 10% amount of the loan ever went into the Greek
economy but that was more than balanced by the the damage that austerity politics did to the
country.
Adam Fo 30 Jun 2015 09:57
It's probably worth adding here that Argentina did pay off it's IMF loans in full as well
as the modest amount of interest charged. One of the reasons they could do that is they are a
more resource based economy than Greece. Increasing commodity prices during that period helped
them.
Like Greece holders of Governments bonds saw massive haircuts. 50% (100 billion euro) in the
case of Greece in 2012.
Thalia01 ThinBanker 30 Jun 2015 09:55
Only because the banks were too big to fail and therefore letting them crash would have
crashed the entire economy.
If you ignore that, in theory holding the banks responsible for the crisis they created and
making them insolvent instead of using QE to bail them out could theoretically have been
something that held the right people to blame, and didn't punish ordinary people with
austerity.
It's pretty smart of the banks as they got themselves into a position where, when they screw
up, other people have to pay the price.
Hottentot 30 Jun 2015 09:40
Sorry, but the Guardian can't compare Argentina, Zimbabwe, Somalia and Sudan, to Greece, as
none of them were / are in the Euro. Lagarde, is getting smacked and rightly so; she,
Merkel et al, all thought they could dictate to and bully Greece, and Greece would roll over,
well it hasn't. It's about time others started telling the IMF (interesting that it's
referred to as the Washington-based organisation) and the EU who are all about 'protecting'
their interests, to sod off.
So the IMF and the Eurozone have in effect been playing debt collectors for French and
German banks, and have attempted to bestow the costs on Greece. Is there any way that could
possibly ever have worked?
bonkthebonk -> Adam Fo 30 Jun 2015 09:50
True, but how many of them are in a flawed currency union that actively contributed to
their demise, saw their mainly foreign reckless, speculative lenders' liabilities socialised
and how many of these poorer countries have been lent ever more money just to service the
their debts and nothing more?
CaptainGrey -> colin2d 30 Jun 2015 09:26
Calling it a Greek Euro as opposed to a new Drachma won't make any difference. It will
crash overnight. Greece has no reserves to prop it up.
optimist99 30 Jun 2015 09:24
The Greeks need to look hard at Argentina - once one of the richest countries in the
world....
"By 1908 it had surpassed Denmark, Canada and The Netherlands to reach 7th place-behind
Switzerland, New Zealand, Australia, the United States, the United Kingdom and Belgium.
Argentina's per capita income was 70% higher than Italy's, 90% higher than Spain's, 180%
higher than Japan's and 400% higher than Brazil's". (Bolt & Van Zanden 2013)
Now it is number 55....
(At the moment Greece is at 44 - similar to Portugal).
CaptainGrey -> EricthePenguin 30 Jun 2015 09:24
Mexico didn't default, it devalued. Completely different. As I note above/below (depending
on your settings)
Argentina was shut out for a decade, but was able to get through it thanks to it's
vast natural reserves of mining, farming and forestry, plus strict financial discipline.
Greece has none of those things.
Default could be a disaster for a generation of more.
Actually, nobody knows for certain how bad a default will be. But it will not be a walk in
the park
ThinBanker -> Gelion 30 Jun 2015 09:24
"But of course that's not debt, that's just a way of lowering currency values to keep your
exports competitive and put your citizens into Austerity"
Huh? Without QE, 'austerity' would have been all the greater ...
PeterHG 30 Jun 2015 08:50
It seems inconceivable to me that Greece will leave the Euro. The loss of face to the
Brussels European Union bureaucracy would be too great for them to bear . Such a happening is
beyond their imagination so they will find some means to keep Greece in. The Greek politicians
sense this and that knowledge dictates their actions.
ApfelD -> Johanes 30 Jun 2015 09:13
Tsipras called them "criminals". I guess it is more close to the truth.
optimist99 -> sandywinder 30 Jun 2015 09:15
"is that borrowing and spending too much will always get you in the end. In case
people have forgotten, the UK has a £1.5 trillion national debt."
But the folk who lend money to the UK are perfectly happy to continue to do this... So it's
not "borrowing and spending too much" in the UK... (HMG can borrow money over 30 years at less
than 3% interest...).
kentspur 30 Jun 2015 08:36
It's a default.
This semantic dancing on a pinhead just shows the absurdity of the situation. Greece
cannot pay, but no one can say that as it undermines the whole financial system, which is
based on confidence. We can't 'write off Greek debt' (as Jeremy Corbyn helpfully suggests) as
no indebted countries would feel the need to pay off debts again - they'd just wait for the
'Greece' solution.
"...From a macroeconomic viewpoint, the Greek saga is one of austere budget polices imposed
on the Greek government by the "troika" of the International Monetary Fund, the European Commission
and the European Central Bank in an attempt to collect payment on the government's debt. "
.
"...The debt/GDP level, which was supposed to fall to about 155% by 2013, actually rose to 170% because
of the severity of the contraction in output. The
IMF subsequently
published a report criticizing its participation in the 2010 program, including overly optimistic
macroeconomic assumptions."
.
"...Moreover, government pensions are important to a wide number of people. The
old-age dependency ratio is around 30%,
one of the highest in Europe. The contraction in the Greek economy means that
the pension is sometimes the sole income payment received by a family. It is hardly surprising,
therefore, that the pension system is seen as a "red line" which can not be crossed any further in Greece."
.
"...... if the European governments insist that Greece must also pay back all its outstanding debt,
then there is only one possible ending for this saga, and it will not be a happy one."
No matter what new twist the Greek debt crisis takes, there can be no question that it has been
a catastrophe for that country and for the entire Eurozone. The
Greek economy contracted by over a quarter during the period of 2007 to 2013, the largest decline
of any advanced economy since 1950.
The Greek unemployment rate last year was 26.5%, and its youth unemployment rate of 52.4% was
matched only by Spain's. But who is responsible for these conditions depends very much on which perspective
you take.
From a macroeconomic viewpoint, the Greek saga is one of austere budget polices imposed on
the Greek government by the "troika" of the International Monetary Fund, the European Commission
and the European Central Bank in an attempt to collect payment on the government's debt. The
first program, enacted in 2010 in response to Greece's escalating budget deficits, called for fiscal
consolidation to be achieved through cuts in government spending and higher taxes. The improvement
in the primary budget position (which excludes interest payments) between 2010-11 was 8% of GDP,
above its target. But real GDP, which was expected to drop between 2009 and 2012 by 5.5%, actually
declined by 17%. The debt/GDP level, which was supposed to fall to about 155% by 2013, actually
rose to 170% because of the severity of the contraction in output. The
IMF subsequently
published a report criticizing its participation in the 2010 program, including overly optimistic
macroeconomic assumptions.
To address the continuing rise in the debt ratio,
a new
adjustment program was inaugurated in 2012, which included a writedown of Greek debt by 75%.
Further cuts in public spending were to be made, as well as improvements in tax collection. But economic
conditions continued to deteriorate, which hindered the country's ability to meet the fiscal goals.
The Greek economy began to expand in 2014, and registered growth for the year of 0.8%. The public's
disenchantment with the country's economic and political status, however, turned it against the usual
ruling parties. The left-wing Syriza party took the lead position in the parliamentary elections
held this past January, and the new Prime Minister, Alexis Tsipras, pledged to undo the policies
of the troika. He and Finance Minister Yanis Varoufakis have been negotiating with the IMF, the ECB
and the other member governments of the Eurozone in an attempt to obtain more debt reduction in return
for implementing new adjustment measures.
The macroeconomic record, therefore, seems to support the position of those who view the Greek
situation as one of imposed austerity to force payment of debt incurred in the past. But because
of the continuing declines in GDP, the improvement in the debt/GDP ratio has remained an elusive
(if not unattainable) goal. (For detailed comments on the impact of the macroeconomic policies
undertaken in the 2010 and 2012 programs see
Krugman
here and Wren-Lewis
here.) Another perspective, however, brings an additional dimension to the analysis. From a public
finance point of view, the successive Greek governments have been unable and/or unwilling to deal
with budget positions-and in particular expenditures through the pension system-that are unsustainable.
Pension expenditures as a proportion of GDP have been relatively high when compared to other
European countries, and under the pre-2010 system were
projected to reach almost 25% of GDP by 2050. Workers were able to receive full benefits after
35 years of contributions, rather than 40 as in most other countries. Those in "strenuous occupations,"
which were broadly defined, could retire after 25 years with full benefits. The amount that a retiree
received was based on the last year of salary rather than career earnings, and there were extra monthly
payments at Christmas and Easter. The administration of the system, split among over 100 agencies,
was a bureaucratic nightmare.
Much of this has been changed. The minimum retirement age has been raised, the number of years
needed for full benefits is now 40, and the calculation of benefits changed so as to be less generous.
But some fear that the changes have not been sufficient, particularly if
older workers are "sheltered" from the changes.
Moreover, government pensions are important to a wide number of people. The
old-age dependency ratio is around 30%,
one of the highest in Europe. The contraction in the Greek economy means that
the pension is sometimes the sole income payment received by a family. It is hardly surprising,
therefore, that the pension system is seen as a "red line" which can not be crossed any further in
Greece.
The challenge, therefore, is for the government to establish its finances on a sound footing without
further damaging the fragile economy. This will call for some compromises on both sides.
... if the European governments insist that Greece must also pay back all its outstanding debt,
then there is only one possible ending for this saga, and it will not be a happy one.
The Last but not LeastTechnology is dominated by
two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt.
Ph.D
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