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

Case study of neoliberal enslavement of the country

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

Neocons

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

Introduction

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

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

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

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

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

Nobody is forcing these reforms on Greece.

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

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

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

luella zarf  -> TheHighRoad 14 Jul 2015 13:30

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

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

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

ID0241799, 14 Jul 2015 10:23

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

The basic mechanism of debt enslavement

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

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

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

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

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

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

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

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

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

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

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

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

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

European neoliberals as vindictive bullies

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

The whole situation is labyrinthine because of the fateful collision between

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

I am not German by the way. 

The role of  Schaeuble

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

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

Fstephens56 Fstephens56 18 Jul 2015 07:28

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Euro And Greek debt

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

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

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

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

Enter Schauble

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

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

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

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

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

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

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

Who spawned this cruel little bastard coin?

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

That’s horseshit.

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

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

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

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

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

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

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

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

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

As Palast pointed out in the Guardian:

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

***

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

***

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

***

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

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

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

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

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

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

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

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

 

Rich vs poor: class war in a new form

nilssondergard SuzyLeC 14 Jul 2015 15:54

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

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

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

Vulture  funds are ready  for default

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

windwheel  -> talkingblues 14 Jul 2015 12:25

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

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

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

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

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

Yanis Varoufakis: Neoliberalim as Global Minotaur

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

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

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

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

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

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

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

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


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

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

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

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

... ... ...

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

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

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

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

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


ID9492736 9 Jul 2015 01:56

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

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

JHobgood deNovo1 9 Jul 2015 01:35

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

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

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

JHobgood HorseCart 9 Jul 2015 01:22

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

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

JHobgood HorseCart 9 Jul 2015 01:17

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

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

JHobgood john4108 9 Jul 2015 01:01

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

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

msewelldesign Carl King 8 Jul 2015 23:20

The Global Minotaur is available online, and is free.

 
Vulpes7 8 Jul 2015 20:23

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

Keep up the good work Syriza against financial dictatorship.

john4108 8 Jul 2015 18:49

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

HorseCart  -> pointsman 8 Jul 2015 18:32

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


HorseCart Okasis 8 Jul 2015 18:26

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

 
Plankconstanth deNovo1 8 Jul 2015 16:06

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


pointsman 8 Jul 2015 13:00

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


Vladimir Makarenko GCAT 8 Jul 2015 12:27

Disclosure: I am very biased.

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

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

deNovo1 zoominu 8 Jul 2015 11:55

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

zoominu 8 Jul 2015 11:26

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

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

deNovo1 8 Jul 2015 10:14

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

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

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

 
eelolondon gibtardo 8 Jul 2015 07:22

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

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

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

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

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

 
penniless53 Iron Fist 8 Jul 2015 05:55

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

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

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

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


stopaganda Iron Fist 8 Jul 2015 04:03

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


Jurriaan Plesman ID6487190 8 Jul 2015 03:42

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


Iron Fist EightEyedSpy 8 Jul 2015 03:34

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

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

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


capitalismsucks1 8 Jul 2015 02:29

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


medic927 msalahm 8 Jul 2015 01:31

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

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


Simon William Kitt todder 7 Jul 2015 19:36

Seriously good stuff from Zizek!

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

James1403 Dick Eastman 7 Jul 2015 19:30

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

Why Debt Sustains Corruption and Vice Versa

July 21, 2015 by  

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

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

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

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

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

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

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

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

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

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

Table 1 Corruption Perception Index (CPI)

Tsoukalas-table
 

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

Why Cooperation Among Political Parties Matters for Reform Implementation

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

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

What Causes the Corruption-Debt Trap in Greece?

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

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

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

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

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

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

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

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

Basic Things About Transparency First

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

A Careful ‘Name and Shame’ Transparency Act

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

Conclusion

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

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

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

See orignal post for references


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[Feb 14, 2020] From the very beginning conscious plan to destroy Greece! Defend Democracy Press

Feb 14, 2020 | www.defenddemocracy.press

From the very beginning: Α conscious plan to destroy Greece! 10/02/2020

Seven years of demanding the impossible in Greece

By Yiannis Mouzakis
16/02/2017

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.

. @PaulBlustein : in 2010, @ojblanchard1 warned austerity cld go awry,even if done to plan. DSK broached debt restructuring: Trichet said "no!" pic.twitter.com/1cFFPsKszf

-- Trineesh Biswas (@TrineeshB) January 31, 2017

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

-- Olivier Blanchard (@ojblanchard1) February 14, 2017

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.

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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.

Published at http://www.macropolis.gr/?i=portal.en.the-agora.5256

[Feb 14, 2020] Paul Thomsen, the Danish hitman who destroyed Greece Defend Democracy Press

Feb 14, 2020 | www.defenddemocracy.press

Paul Thomsen, the Danish hitman who destroyed Greece 10/02/2020

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.
DK Wikileaks: 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.

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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 "

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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%.

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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).

You may find the original post here

Published at https://thepressproject.gr/wikileaks-thomsenvelkouleskou-greek-default-and-brexit-is-going-to-be-a-disaster/

SOURCE thepressproject.gr

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

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

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

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

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

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

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

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

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

Malakia123 , 8 Jun 2013 11:15

LOGIC 101: Introductory Course of Study

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

Possible Answers :

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

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

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

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


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

petercs , 8 Jun 2013 10:44

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

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

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

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

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

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

Feb 05, 2018 | www.moonofalabama.org

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

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

EU Imposes Anti-Union Law On Greece

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

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

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

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

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

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

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

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

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

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

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

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

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

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

D.K.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

-- -

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

globinfo freexchange

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

As Temin states, among other things:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Read also:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Michael Hudson is the author of Killing the Host (published in e-format by CounterPunch Books and in print by Islet ). His new book is J is For Junk Economics . He can be reached at [email protected]

[Mar 03, 2017] Bad Lenders Make Bad Loans

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

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

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

Thank you so much for joining us today, Michael.

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

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

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

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

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

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

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

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

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

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

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

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

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

ORDER IT NOW

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

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

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

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

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

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

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

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

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

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

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

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

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

monzer7 19 Sep 2015 22:28

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

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

What remains, is your problem!

====

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

The moral catastrophe this EU promoted...

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

rberger -> Sehome 19 Sep 2015 21:47

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

Xenkar -> Mackname 19 Sep 2015 21:42

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

rberger -> Pannie321 19 Sep 2015 21:40

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

Mackname 19 Sep 2015 21:27

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

Those people need a renaissance.

slipangle -> Shizam13 19 Sep 2015 21:25

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

randomguydeaustralie -> Sehome 19 Sep 2015 21:19

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

Pannie321 -> rberger 19 Sep 2015 21:14

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

DogsLivesMatter -> TheRuthlessTruth 19 Sep 2015 21:10

The World Bank and the IMF.

deskandchair 19 Sep 2015 20:56

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

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

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

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

Sehome 19 Sep 2015 20:26

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

OXIOXI20 -> TheRuthlessTruth 19 Sep 2015 20:22

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

Scrotalyser 19 Sep 2015 19:46

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

Captain_Tibbets 19 Sep 2015 19:41

Tell the EU to shove their debts.

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

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

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

"...We all know that neoliberal economics is the driver of grotesque mal-distribution of wealth as a privileged nomenclature gorges on resources it has commandeered through insider dealing. The predations of this ideology over recent years mimic the violent reaction of Europe's other great Union – the Soviet Union – to any challenge to the privileges of the nomenclature."
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"...As this story demonstrates yet again, the Troika never meant to negotiate in good faith with the Greek government, but simply imposed its own destructive austerity and privatization program on it. It's also clear that the EU per se has very little independent existence, being mainly administrative scaffolding for the German government to pursue its own essentially predatory policies directed at the subjugation of the rest of Europe."
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"...Mr. Varoufakis also ignores the role that clientelism has played in making a bad situation even worse. He also ignores Greece's excessive debt and runaway fiscal spending. This has been going on since 1980. "
.
"...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. "
Sep 08, 2015 | The New York Times

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


DaveG, Manhattan

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

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

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

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

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

Grouch, Toronto

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

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

Yoda, DC

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

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

Robert Jennings, Lithuania/Ireland

A remarkable article.

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

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

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

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

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

serban, is a trusted commenter Miller Place

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

Bill, Boston 8 hours ago

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

Uzi Nogueira, Florianopolis, SC 5 hours ago

Mr. Varoufakis: How Europe Crushed Greece. Really?

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

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

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

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

Richard Luettgen, New Jersey

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

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

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

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

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

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

bob karp, new Jersey 5 hours ago

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

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

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

Michael Boyajian, Fishkill

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

Dr. MB, Irvine, CA

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

mr. mxyzptlk, Woolwich South Jersey 8 hours ago

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

LG Phillips, California 5 hours ago

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

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

An interesting take on the future of Greece banks

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

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

Mean Squared Errors: Schäuble's ticking clock

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Certainly rearrange their banking arrangements.

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

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

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

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

Excerpt on centralization of monetary control:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

=

Is there any hope? Maybe.

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

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

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

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

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

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

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

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

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

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

@ 15

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

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

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

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

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

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

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

Stefania Vitali, James B. Glattfelder, and Stefano Battiston

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Fractional reserve banking explained

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

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

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

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

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

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

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

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

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

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

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

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

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

[to be contd]

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

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

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

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

[…]

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

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

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

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

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

In response to Tom's @61

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

They just aren't that into us.

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

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

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

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

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

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

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

Krugman to Lietaer…don't touch the money system

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

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

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

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

MRW and the loaves and fishes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Jul 24, 2015 | nakedcapitalism.com

Ping July 24, 2015 at 11:04 am

Article does great service cutting thru the 'noise'.

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

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

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

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

Synoia July 24, 2015 at 12:49 pm

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

This is unlikely:

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

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

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

nullify them all

paulmeli July 24, 2015 at 4:01 pm

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

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

IsabelPS July 24, 2015 at 11:21 am

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

I've stopped reading here.

salvo July 24, 2015 at 1:45 pm

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

IsabelPS July 24, 2015 at 3:13 pm

And?

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

salvo July 24, 2015 at 3:59 pm

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

IsabelPS July 24, 2015 at 6:54 pm

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

Windsock said it well:

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

I would say it more bluntly: useful idiots.

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

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

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

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

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

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

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

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

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

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

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

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

IsabelPS July 25, 2015 at 6:37 pm

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

There is a lot of noise and little information.

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

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

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

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

Ishmael July 24, 2015 at 11:30 am

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

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

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

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

FedUpPleb July 24, 2015 at 12:26 pm

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

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

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

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

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

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

*Sigh*

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

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

Synoia July 24, 2015 at 1:36 pm

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

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

paulmeli July 24, 2015 at 4:08 pm

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

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

TheCatSaid July 24, 2015 at 4:32 pm

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

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

Ishmael July 24, 2015 at 5:18 pm

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

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

JTMcPhee July 25, 2015 at 9:18 am

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

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

Moneta July 24, 2015 at 10:23 pm

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

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

windsock July 24, 2015 at 11:35 am

Any excuse to avoid getting on with it?

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

MyLessThanPrimeBeef July 24, 2015 at 1:04 pm

Maybe they can meet inside a NATO base?

windsock July 24, 2015 at 11:49 am

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

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

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

William C July 24, 2015 at 1:12 pm

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

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

Windsock July 24, 2015 at 2:03 pm

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

Linus Huber July 24, 2015 at 8:31 pm

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

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

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

Synoia July 24, 2015 at 1:37 pm

The Road to Hell is Paved with Good Intentions.

MyLessThanPrimeBeef July 24, 2015 at 6:26 pm

The other road to Hell is paved with bad intentions.

At times, it seems all roads lead to Hell.

Jim July 24, 2015 at 12:45 pm

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

c wenn July 24, 2015 at 4:25 pm

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

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

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

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

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

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

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

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

MyLessThanPrimeBeef July 24, 2015 at 6:44 pm

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

But as you say, not everyone is the same.

Take, for example, Bilbo Baggins.

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

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

Jim July 24, 2015 at 7:01 pm

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

Hans Suter July 25, 2015 at 2:30 am

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

Linus Huber July 25, 2015 at 4:17 pm

@ Hans

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

Jim July 24, 2015 at 6:51 pm

"Culture" is the epiphenomenal shadow of polynucleotides.

Barry Fay July 25, 2015 at 9:05 am

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

JTMcPhee July 24, 2015 at 12:46 pm

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

TheCatSaid July 24, 2015 at 4:36 pm

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

Linus Huber July 25, 2015 at 4:24 pm

@ JTMcPhee

An excellent question.

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

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

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

Synoia July 24, 2015 at 1:47 pm

Two points:

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

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

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

salvo July 24, 2015 at 1:56 pm

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

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c wenn July 24, 2015 at 4:28 pm

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

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

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

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

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

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Brian M July 24, 2015 at 2:08 pm

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

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

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vidimi July 24, 2015 at 2:25 pm

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

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Jim July 24, 2015 at 2:47 pm

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

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OpenThePodBayDoorsHAL July 24, 2015 at 5:23 pm

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

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MyLessThanPrimeBeef July 24, 2015 at 6:49 pm

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

Non-violence* kills.

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

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craazyman July 24, 2015 at 5:35 pm

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

It must be the wind . . . .

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VietnamVet July 24, 2015 at 2:15 pm

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

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

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paulmeli July 24, 2015 at 4:13 pm

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

Same as it ever was.

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EmilianoZ July 24, 2015 at 3:04 pm

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

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

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

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

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

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

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Dean Plassaras July 24, 2015 at 3:20 pm

Well written and formulated.

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

Deutschland raus! This ought to be the marching slogan of every truly democratically minded citizen in Europe, no matter how strange the ideological alliances. It has been remarked by many economists over the years, most recently by that former IMF guy, that having Germany leave the Euro and return to the DM would be the cleanest, least disruptive and fairest way to resolve the Euro-crisis.

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Steve H. July 24, 2015 at 5:27 pm

Excellent comments about implicit racism, nationalism, ismism. Not necessarily mutually exclusive.

What is the degree of homogeneity in a culture? Is it in the DNA, like lactose intolerance? Is it a product of circumstance, sea-farers in antithesis to mountain dwellers? Does it scale with size?

In smaller groups with a survival mentality, non-compliance may be ruthlessly selected out, with compliance being actions we might consider superstitious or abhorrent. Urban living requires a skill set which starts to look like a global culture, as long as the three billion people cooking on three-stone fires are peripheralized.

Here's what I know. When I hear or read about what America is doing in the world, I remember that a quarter of a million people were in a single protest march against the wars in 2003 and it didn't mean shit. That our government routinely does actions that over 2/3 of the population does not support. That corporations are both not people and 'not people'.

There is a difference between homogeneity and agency. When those with agency in Germany attempted to create a master race, they created a cultural identity that those looking at Germans can never forget.

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craazyman July 24, 2015 at 5:45 pm

A little FDI would solve the whole problem. Where is it?

Wasn't it supposed to have been here by now? This is like JEB Stuart at Gettysburg. Where is he? (Sorry for the Civil War allusion, it's too abstract, since he did show up. Evidently he liked to roam around the countryside.).

Where is FDI? Where is it roaming? Where is it? It must be sitting in a pile somewhere, like baseballs, or tennis balls. Is it at the ECB? Is it in Germany? Where the hell is it? it must be a big pile by now. Can't somebody see it protruding above a horizon like the Matterhorn? Oh! maybe it's in Switzerland! maybe it's in a Swiss Bank! No. There's too much of it. It wouldn't fit. It has to be somewhere - or maybe it's spread out all over the place. Maybe it's so spread out it's lost it "congealiality". Oh man. That's a property of FDI. It doesn't work if it's only a euro or two. It has to congeal. Evidently it can't be too spred out or all in one place. If it's all in one place, it's a big pile and it's useless, since it congeals and hardens like glue. If it's too spread out, it loses all congealiality. This sounds like a chemistry problem. It may be.

Where the hell is it? I've not seen one macroeconomics article on the interet that says where the FDI is. Not one. (Although maybe I haven't looked hard enough. That's certainly a possibility).

Maybe it's coming "soon".

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BEast July 24, 2015 at 9:37 pm

Very interesting article. I would like more background on the campaign of condemnation of Gutmenschen - on what basis were they condemned? "Impracticality"? Failure to get on board with various Eurozone proposals? EU skepticism? General lack of sociopathy?

How was the campaign orchestrated, and by whom?

(This is obviously the first I've heard of it.)

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mesfern July 25, 2015 at 5:28 am

I believe Rose is referring to a controversy about the possible origin of the expression "Gutmenschen" in Nazi lingo. It became popular in the late 90s after the publication of a "Dictionary of the Gutmenschen", by satirist Klaus Bittermann, which mocked many instances of self-righteousness in Germany's public life. With time, however, it came to target the Left and "Political Correctness" in particular; thus, a "Gutmensch" would be a do-gooder who supported all kinds of progressive causes, from feminism to environmentalism, but had no knowledge of the hard facts of life (that is, the business world). Eventually, a journalism association traced the expression back to a few Nazi leaflets; it was hardly conclusive evidence, but enough to blow things out of proportion and start another culture battle. At its most erudite, it was related to the Weberian opposition between the Gutmensch's ethics of conviction and the ethics of responsibility; at its most tribal, the "Gutmensch" became an umbrella term for everything inimical to the methods and the aims of the Right. Hence, one can have "Gutmenschen issues", "Gutmenschen arguments", "Gutmenschen politics". When used by the Right, it is a strongly derogatory expression, very hostile and openly dismissive.

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German native speaker July 25, 2015 at 2:09 pm

There was no campaign ever.

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salvo July 25, 2015 at 3:47 am

I don't understand what the problem is about: saying Germans are racists would be a generalization if the sentence means each individual german is a racist, but I think it points to a structural fact, that the mainstream public discourse in germany, and certainly in many other countries, is driven by the need to constitute a collective identity where the german is somewhat superior to the other. You just need to live here in Germany and listen to the everyday discourse, most people are not explicit racists, but they tend to assign positive attributes to themselves in constituting that collective identity while at the same time assigning the opposite negative attribute to another collective identity, we are diligent, trustworthy, thrifty and so on because some other, i.e. the Greek, are exactly the opposite, lazy, untrustworthy, profligate. The people who constitute themselves this way don't think as themselves as racists, because being racist is a negative trait in the public discourse. It is simply a fact that the mainstream public discourse in Germany is full of such stereotypes, positive for themselves and negative for the other (not only in tabloids like bild but in the so-called Qualitätspresse, even in the fee-financed state media.) This process is amplified by the fact that Germany has become the hegemonic power in Europe. Projecting one's power needs an ideological discourse which legitimates the unavoidable violence linked to this process, so if the Greeks are impoverished, disenfranchised in the process of power projection, then this has to be morally justified, usually by ascribing inferiority.

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Windsock July 25, 2015 at 4:24 am

I think my issue with this is that someone who is not German is heavily insinuating that the German nation is "reverting to type". Phrases like " a primordial fear" suggest there is a fixed reference in the very nature of those who speak German that is incapable of change or challenge. I would dispute that.

But then the very existence of the nation state is defined by those cultural commons that others do not share – language, religion, governance etc – and who is ever going to define themselves as inferior to anyone else?

Much of the early EU history was built on predicating the subsidiarity of the nation state to the continental whole. It has morphed, in my view, into a tool for the trans/multi-national globalist wealthy and the result is the playing off of nation states against each other, in both economic and cultural terms. I think this article is complicit in that.

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James Miller July 25, 2015 at 1:51 pm

During my university studies in Sociology, I was always amazed at the endless pressure to refrain from judging culture-only record it, dissect it (in a non judgmental way, of course), and teach the fragments left over to the next crop of undergrads. A museum of culture, poorly displayed and heavily redacted.
Judgement is required, or it's all useless.
There are such things as sick cultures, and it's not very difficult to find reasonable criteria to identify them.
One cannot, for the purposes of solving problems of the sort that we debate here, ignore this fact.
Tax theft as a cultural norm is a reality in Greece, and it cannot be the basis of an accusation of racism to point this out.
Greek culture, no matter how rich in history, literature and art, contains elements that make it non-viable in even the medium run, and the national sport of tax theft is only one of many of them.
It is equally clear, now, that the same is true of the "European Union".

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German native speaker July 25, 2015 at 1:59 pm

It is interesting to me that Mr. Rose wanted the comments open. He lives in Berlin, and has been described as an investigative journalist (http://www.spiegel.de/kultur/gesellschaft/mathew-d-rose-der-investigator-von-berlin-a-321596.html). I don't see much investigative journalism in the above piece. In his books, Rose's career consists of mainly criticizing the country that he chose as his residence. Yet some commenters claim that there is no "freedom" in Germany – go figure. Would be interesting to know if he collected money from the state that he loathes.
Lving in Berlin, there is ample possibility to talk to Polish people and other Eastern Europeans. Not done in above article, and this should be easy, living there. There are so many yuppy-like people who used illegal Polish laborers to fix up their Prenzlauer Berg/ Kreuzberg properties – this comes to mind.

Not sure what Mr. Rose's agenda is – sounds as if he wants to elicit emotional responses from foreigners, about the awfulness of Germans as such. Sorry you have to live amongst them.

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Gaylord July 25, 2015 at 5:41 pm

This is not merely Germany vs. Greece, but rather the Western Banking Cabal asserting heightened control over the economies of the world, particularly those nations which depend on the dollar and the euro for trade. The reason for the austerity policy, aside from unbridled greed (class war), is the fact of Peak Resources which means increasing scarcity into the future - energy, raw materials, food, water. The oligarchs are also preparing for Climate Chaos which they anticipate will be infinitely costly. They expect record-breaking losses and repair costs from storm damage, drought, wildfires, floods and sea level rise, crop losses, fishery collapses, and health care costs resulting from Fukushima's poisons that have been spreading through oceans and the air during the last four + years. The cost of disposing of all the dead human remains will also be a challenge, as the Great Extinction event proceeds.

[Jul 26, 2015]Greece, [yet another] the Sacrificial Lamb

"...these policy debates are really about ideology and power."
.
"...special interests, in and out of the country, are using the troika to get what they could not have obtained by more democratic processes."
.
"...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."
JOSEPH E. STIGLITZ
Jul 25, 2015 | The New York Times

As I read the details, I had a sense of déjà vu. As chief economist of the World Bank in the late 1990s, I saw firsthand in East Asia the devastating effects of the programs imposed on the countries that had turned to the I.M.F. for help. This resulted not just from austerity but also from so-called structural reforms, where too often the I.M.F. was duped into imposing demands that favored one special interest relative to others. There were hundreds of conditions, some little, some big, many irrelevant, some good, some outright wrong, and most missing the big changes that were really required.

Back in 1998 in Indonesia, I saw how the I.M.F. ruined that country's banking system. I recall the picture of Michel Camdessus, the managing director of the I.M.F. at the time, standing over President Suharto as Indonesia surrendered its economic sovereignty. At a meeting in Kuala Lumpur in December 1997, I warned that there would be bloodshed in the streets within six months; the riots broke out five months later in Jakarta and elsewhere in Indonesia. Both before and after the crisis in East Asia, and those in Africa and in Latin America (most recently, in Argentina), these programs failed, turning downturns into recessions, recessions into depressions. I had thought that the lesson from these failures had been well learned, so it came as a surprise that Europe, beginning a half-decade ago, would impose this same stiff and ineffective program on one of its own.

Whether or not the program is well implemented, it will lead to unsustainable levels of debt, just as a similar approach did in Argentina: The macro-policies demanded by the troika will lead to a deeper Greek depression. That's why the I.M.F.'s current managing director, Christine Lagarde, said that there needs to be what is euphemistically called "debt restructuring" - that is, in one way or another, a write-off of a significant portion of the debt. The troika program is thus incoherent: The Germans say there is to be no debt write-off and that the I.M.F. must be part of the program. But the I.M.F. cannot participate in a program in which debt levels are unsustainable, and Greece's debts are unsustainable.

Austerity is largely to blame for Greece's current depression - a decline of gross domestic product of 25 percent since 2008, an unemployment rate of 25 percent and a youth unemployment rate twice that. But this new program ratchets the pressure up still further: a target of 3.5 percent primary budget surplus by 2018 (up from around 1 percent this year). Now, if the targets are not met, as they almost surely won't be because of the design of the program itself, additional doses of austerity become automatic. It's a built-in destabilizer. The high unemployment rate will drive down wages, but the troika does not seem satisfied by the pace of the lowering of Greeks' standard of living. The third memorandum also demands the "modernization" of collective bargaining, which means weakening unions by replacing industry-level bargaining.

None of this makes sense even from the perspective of the creditors. It's like a 19th-century debtors' prison. Just as imprisoned debtors could not make the income to repay, the deepening depression in Greece will make it less and less able to repay.

Structural reforms are needed, just as they were in Indonesia, but too many that are being demanded have little to do with attacking the real problems Greece faces. The rationale behind many of the key structural reforms has not been explained well, either to the Greek public or to economists trying to understand them. In the absence of such an explanation, there is a widespread belief here in Greece that special interests, in and out of the country, are using the troika to get what they could not have obtained by more democratic processes.

Consider the case of milk. Greeks enjoy their fresh milk, produced locally and delivered quickly. But Dutch and other European milk producers would like to increase sales by having their milk, transported over long distances and far less fresh, appear to be just as fresh as the local product. In 2014 the troika forced Greece to drop the label "fresh" on its truly fresh milk and extend allowable shelf life. Now it is demanding the removal of the five-day shelf-life rule for pasteurized milk altogether. Under these conditions, large-scale producers believe they can trounce Greece's small-scale producers.

In theory, Greek consumers would benefit from the lower prices, even if they suffered from lower quality. In practice, the new retail market is far from competitive, and early indications are that the lower prices were largely not passed on to consumers. My own research has long focused on the importance of information and how firms often try to take advantage of the lack of information. This is just another instance.

One underlying problem in Greece, in both its economy and its politics, is the role of a group of wealthy people who control key sectors, including banks and the media, collectively referred to as the Greek oligarchs. They are the ones who resisted the changes that George Papandreou, the former prime minister, tried to introduce to increase transparency and to force greater compliance with a more progressive tax structure. The important reforms that would curb the Greek oligarchs are largely left off the agenda - not a surprise since the troika has at times in the past seemed to have been on their side.

As it became clear early on in the crisis that the Greek banks would have to be recapitalized, it made sense to demand voting shares for the Greek government. This was necessary to ensure that politically influenced lending, including to the oligarchic media, be stopped. When such connected lending resumed - even to media companies that on strictly commercial terms should not have gotten loans - the troika turned a blind eye. It has also been quiescent as proposals were put forward to roll back the important initiatives of the Papandreou government on transparency and e-government, which dramatically lowered drug prices and put a damper on nepotism.

Normally, the I.M.F. warns of the dangers of high taxation. Yet in Greece, the troika has insisted on high effective tax rates even at very low income levels. All recent Greek governments have recognized the importance of increasing tax revenues, but mistaken tax policy can help destroy an economy. In an economy where the financial system is not functioning well, where small- and medium-size enterprises can't get access to credit, the troika is demanding that Greek firms, including mom and pop stores, pay all of their taxes ahead of time, at the beginning of the year, before they have earned it, before they even know what their income is going to be. The requirement is intended to reduce tax evasion, but in the circumstances in which Greece finds itself, it destroys small business and increases resentment of both the government and the troika.

This requirement seems at odds, too, with another of the demands with which Greece has been confronted: that it eliminate its cross-border withholding tax, which is the withholding tax on money sent from Greece to foreign investors. Such withholding taxes are a feature of good tax systems in countries like Canada and are a critical part of tax collection. Evidently, it is less important to ensure that foreigners pay their taxes than that Greeks do.

There are many other strange features of the troika bailout packages, in part because each member of the troika has its favorite medicine. As doctors warn, there can be dangerous interactions. The battle, however, is not just about Greece. It's not even just about the money, although special interests in the rest of Europe and some within Greece itself have taken advantage of the troika to push their own interests at the expense of ordinary Greek citizens and the country's overall economy. This is something I saw repeatedly firsthand when I was at the World Bank, most noticeably in Indonesia. When a country is down, there is all manner of mischief that can be done.

But these policy debates are really about ideology and power. We all know that. And we understand that this is not just an academic debate between the left and the right. Some on the right focus on the political battle: the harsh conditions imposed on the left-wing Syriza government should be a warning to any in Europe about what might happen to them should they push back. Some focus on the economic battle: the opportunity to impose on Greece an economic framework that could not have been adopted any other way.

I believe strongly that the policies being imposed will not work, that they will result in depression without end, unacceptable levels of unemployment and ever growing inequality. But I also believe strongly in democratic processes - that the way to achieve whatever framework one thinks is good for the economy is through persuasion, not compulsion. The force of ideas is so much against what is being inflicted on and demanded of Greece. Austerity is contractionary; inclusive capitalism - the antithesis of what the troika is creating - is the only way to create shared and sustainable prosperity.

For now, the Greek government has capitulated. Perhaps, as the lost half decade becomes the lost decade, as the politics get uglier, as the evidence mounts that these policies have failed, the troika will come to its senses. Greece needs debt restructuring, better structural reforms and more reasonable primary budget surplus targets. More likely than not, though, the troika will do what it has done for the last five years: Blame the victim.

Joseph E. Stiglitz is a Nobel laureate in economics, a professor at Columbia and the author, most recently, of "The Great Divide: Unequal Societies and What We Can Do About Them."

Follow The New York Times Opinion section on Facebook and Twitter, and sign up for the Opinion Today newsletter.


pieceofcake -> konstanz germany 3 hours ago

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

Thank you - as it was the Oligarchic system which ruined Greece and perhaps it could have been mentioned in this article - how much money these Oligarchs moved out of the country into foreign bank accounts - and if you have been in Athens you probably had Greeks telling you, that with this money in Greece there would be no need for another bailout.

And for sure the debt - which is more or less the main 'incentive' for Greece to reform - should be forgiven - and the other European nations will agree to another 'haircut' AFTER the reforms are implemented - and you might be able to trust such a prediction - as all our predictions about the Greece Crisis -(documented by the published comments in the NYT) have come true.

And it is a very welcome change of the narrative by progressive US economists - that at least the distructive role of the Greek Oligarchs is recognized. It comes up late in the article and the suggestion - the troika seemed to be at times on their side is probably as unfair as the idea that progressive US economists have been on the Oligrachs side.

As from the beginning of the crisis it was rarely mentioned by US economists. They built a narrative all about 'austerity' insted of 'money for reforms' or a working taxation system for Greece!

[Jul 26, 2015]The great Greece fire sale

"... "Privatisation in Greece right now means a fire sale," political economist Jens Bastian said."
.
"...The Guardian is not the paper you think it is... or would like it to be.
Even if its support for the previous Coalition government wasn't clear enough, the nature of its coverage of Russia, Greece, and lately the Corbyn candidacy, very obviously reveals its true loyalties."

.
"... Privatization will make the Greek economy look like Russia. Mafia State 2.0. The cost of everything will rise as the profiteers stripmine any assets left after the sellout of the Greek people. Those assets deemed unprofitable will be dumped onto the bankrupt state government. Your last paragraph is neocon boilerplate and simply doesn't apply in a situation where pirates move in to clean the bones of their victims. "
July 24, 2015 | The Guardian

Greece needs to sell off €50bn worth of state assets such as airports and marinas quickly as part of its third bailout deal. But is such a plan realistic?

In the early days of the Greek debt crisis, two German politicians came up with a radical solution: Greece should sell off some of its uninhabited islands and property to pay back its creditors. "Sell your islands you bankrupt Greeks! And sell the Acropolis too!" was how the German tabloid Bild summed up their idea.

While selling off ancient monuments was never a serious idea, the privatisation of state assets has always been an integral feature of Greece's international bailouts. Over the past five years, Greece has faltered on promises to sell vital parts of its infrastructure – ports, airports, marinas and waterworks – in exchange for billions of euros in loans.

Privatisation remains a vital element of Greece's latest bailout deal. Under threat of being forced out of the eurozone, Athens agreed to transfer "valuable assets" to an independent fund, with the aim of raising €50bn (£35bn). Half the proceeds will be used to shore up capital reserves at Greek banks; a quarter will be used to repay Greece's creditors, and the remainder will be spent on unspecified investments.

The privatisation fund was the issue that almost forced a Grexit at the marathon 17-hour, all-night summit of European leaders in Brussels earlier this month. "It was the only thing discussed at the summit," recalls one diplomat.

At 6am, as Greece teetered on the brink of leaving the euro, the Greek prime minister, Alexis Tsipras, was still haggling over privatisation details with his counterparts, Angela Merkel and François Hollande.

The idea of the privatisation fund first emerged in a leaked German government paper which argued Greece should leave the eurozone if it did not agree to put €50bn in a Luxembourg fund as collateral for its debts. Although drafted in Berlin, the plan soon found support among Greece's hardline creditors in central Europe and the Baltics.

Tsipras wrung two concessions: the fund would be run from Athens, not Luxembourg, and a tranche of the cash would be earmarked for investments in Greece.

The privatisation fund is likely to remain one of the most contentious issues as Greece and its creditors strive to conclude bailout talks by mid-August.

From the creditors' perspective, Greek privatisation has been failure heaped upon failure. In 2011, international creditors decreed that Athens would raise €50bn by the end of 2015 from selling state assets. By early 2015, only €3.2bn had been raised; none of the most sensitive aspects – airports, ports, railways – had been sold. Neither officials at the European commission nor the International Monetary Fund are taking the €50bn target remotely seriously.

In a devastating analysis of Greece's debt burden published in July, the IMF said it was realistic to assume asset sales would be worth no more than €500m a year – meaning it could take 100 years to raise €50bn.

Gabriel Sterne at Oxford Economics argues that the IMF has failed to learn from its recent history that "less is more" when it comes to setting numerical targets. "It is economics versus faith – 'Somehow we will make this work even if it doesn't add up' – but the economics really doesn't add up."

When Syriza swept to power in January, one of its first actions was to sack the people in charge of Greece's privatisation agency and cancel plans to sell Greece's electricity transmission operator (ADMIE). The sale of other assets – most notably regional airports and the port of Piraeus – had almost been completed, but was thrown into doubt. The government is expected to put up little resistance to the sales now being concluded. Venues purpose-built for the 2004 Athens Olympic games, which have sat derelict and rotting for the past decade, will also be among the assets moved to the fund, alongside state utilities, including the water board and ADMIE.

Both Russia and China have expressed interest in snapping up the state-run railway network, one of the biggest encumbrances on public finances before the debt crisis erupted in late 2009. The Greek state is also rich in buildings bequeathed by individuals to municipalities and the Orthodox Church – properties that are also expected to be included in the fund. Contrary to popular perception, the public sector owns very few islands. The sale last week to Hollywood star Johnny Depp of the Aegean islet of Stroggilo, for a reputed €4.2m, was conducted privately.

While Tsipras has been forced into a humiliating climbdown over the sale of state assets, he has repeatedly branded the entire bailout plan as a bad deal that he doesn't believe in.

Unions with ties to the governing party have already vowed to "wage war" to stop the sale of docks in Piraeus, where the Chinese conglomerate, Cosco, currently manages three piers. With the debt-stricken country on its knees, officials have stressed that the prime minister will fight to ensure the denationalisations are not seen as a fire sale.

However, independent observers fear just that. "Privatisation in Greece right now means a fire sale," political economist Jens Bastian said.

Bastian was one of the officials responsible for privatisation under the European commission's Taskforce for Greece, a body of experts distinct from the troika. He thinks it was a "political mistake" to set a target to raise €50bn from asset sales, in the absence of support from Greek politicians across the political spectrum, from the centre-right New Democracy party, to Pasok on the centre-left and Syriza on the left.

"We have never had a political majority to embrace the idea of privatisation. How are you going to create the political momentum that has been absent in the past years under more difficult conditions today?" he asks.

Greece's creditors share such scepticism. Their answer is tighter controls. The privatisation fund will be managed by Greeks under the close watch of creditors.

The privatisation fund has few precedents, although it has been compared to the Treuhandanstalt, the German agency created in the dying days of the GDR to privatise East German assets shortly before reunification. Greece's former finance minister, Yanis Varoufakis, was one of the first to draw the parallel, although others offer the comparison unprompted. Peter Doyle, a former IMF economist, says the Treuhand offers the closest parallels: the agency had full control over government ministries to sell assets quickly. "The principal task was to sell these things to somebody for cash."

Greek government officials and opposition politicians said it was too early to know how the Greek fund would operate.

"We've got a long way to go before we have a clear picture of what this fund and the privatisation scheme will entail," Anna Asimakopoulou, shadow finance minister with the main opposition New Democracy party, told the Guardian. "But the entire privatisation process will feature large in negotiations because Tsipras is so opposed to them and creditors see them as a good way to raise revenues."

Greece has an urgent need for cash: although the eurozone bailout is meant to be worth up to €86bn, only €50bn is on the table, via the eurozone's bailout fund, the European Stability Mechanism.

Doyle thinks Greece's bailout is underfunded. "The Europeans just don't have enough cash ... and a major way to fill that gap is through privatisation." Officials at the Greek privatisation agency are "going to find their arms very strongly twisted to provide needed cash", he says.

"The privatisation agency is facing a trade off between doing something that is fair and open and following judicial procedures, or something that is going to deliver needed cash."


He fears Greece could be heading down the path taken by Russia in the 1990s, when valuable state assets were sold at knockdown prices to raise urgently-needed cash, creating a new oligarch class in the process.


"The very thing we all think that Greece needs – to get rid of its oligarchy – will in fact be entrenched by privatisation done this way," argues Doyle, who worked on privatisations in the Czech Republic, Slovakia and Poland in the 1990s. The difference between those countries and Greece, he thinks, is that the population and political class in central Europe accepted the idea of privatisation, despite the short-term hardships.

He is convinced the current privatisation plan for Greece is doomed to fail. "The programme was set up to encourage Greece to leave the euro and that plan didn't work, so now we are stuck with the privatisation arrangement that nobody, not even the original creditors, ever intended to happen."

Up for sale

Helliniko Olympic complex

Ports of Piraeus and Thessaloniki

14 regional airports

PPC power company, including ADMIE, the electricity transmission operator

DEPA natural gas company

Hellenic Petroleum
Hellenic Post
Athens Water Supply and Sewerage Company
Xenia Hotels in Rhodes
Marinas of Chios, Pylos and other locations

Source: Hellenic Republic Asset Development Fund


MrShigemitsu -> Byron73 26 Jul 2015 15:49

surely a newspaper like the Guardian

Woah, back up now.... you see, there's your problem right there.

The Guardian is not the paper you think it is... or would like it to be.

Even if its support for the previous Coalition government wasn't clear enough, the nature of its coverage of Russia, Greece, and lately the Corbyn candidacy, very obviously reveals its true loyalties.

It supports the neoliberal status quo - don't kid yourself otherwise.


JaneThomas 25 Jul 2015 22:07

"It's neither more moral nor a matter of just desserts to call for that internal devaluation, that austerity, than it is to call for the currency devaluation. Indeed, I would argue entirely the other way: the currency devaluation will cause a lot less human pain so that's the way the problem should be solved. Thus Greece must leave the euro because that's the way to solve the problem with the least pain."

http://www.forbes.com/sites/timworstall/2015/07/25/greece-really-should-leave-the-euro-the-economics-is-entirely-clear-here/


delaxo kimdriver 25 Jul 2015 17:34

How many Greeks really want Eurozone at any cost can only be seen through a referendum.
Remember that prior to the last referendum of 61-39, the same opinion poll companies were predicting a 50-50 result.
Are they more trustworthy on the Eurozone question?

someoneionceknew Drosophilasrule 25 Jul 2015 17:24

Capital's motivation is to accumulate financial assets i.e. supplying the least possible service/product for the greatest possible return.

delaxo kimdriver 25 Jul 2015 16:32

"the Greek political establishment was held to account by its electorate":
Excuse me but his sounds like a joke, when 61% of the electorate expressed a will that was summarily rejected by the true rulers of the colony.


Alfie Silva kimdriver 25 Jul 2015 16:11

Al well and good in principle and I agree with most of what you say.

However, privatisations are not always the nirvana you make them out to be.

You see it everywhere across Europe; the privatisation of EDP, PT, REN for example in Portugal; customer service is now appalling in these former nationalized industries.

I experienced it first hand in the UK; NORWEB and North West Water becoming United Utilities; service to the public again is appalling.

In the rush to privatise, the need for an ombudsman and guaranteed standards by statute is as necessary as making a return to shareholders.


Moniq Vervoort 25 Jul 2015 12:43

The list of Oligarch Greeks that don t pay tax in Greece should be plastered all over the internet , newspapers , tv , etc

Out of the 100 richest people on Earth right now 8 are Greek , one lady and 7 gents that ought to get a BBC camera and a competent interviewer asking their take on the situation ' back Home'!

That would make more sense that simply flogging the place off to Tom Dick and Harry (IMO)


Ryleigh RedCoat4Ever 25 Jul 2015 09:48

Except they are a nation state, not a household or a company. The ability of one country to intervene in another and seize assets smells of imperialism and colonialism.


deskandchair -> Winhoering 25 Jul 2015 09:20

Another corporatist fantasist:
"Spain and Ireland are reporting good growth rates"
AND soaring poverty and unemployment and mass emigration, really great EZ success stories there NOT.


deskandchair -> whitewolfe 25 Jul 2015 09:17

"Smaller the state less corruption"
More corporatist lies, small state = large corporate power and in which fairy-tale lala land do you imagine there's no corruption in private companies? Indeed, corruption is even MORE COVERT in private companies you dunce.


LibertineUSA 25 Jul 2015 09:06

Making Greece poorer one step at a time. What a triumph of neoliberal economics...for at least the beneficiaries of neoliberal economics. Who just happen to be the same people who own everything and don't want to pay their taxes.


FourtyTwo Drosophilasrule 25 Jul 2015 09:01

Germany already owns fully the Greek telecom company (Deutsche Telekom) and is preparing to secure the purchase of all Greek regional airports (Fraport AG). There are also rumours that Sofina, based in Brussels is after Thessaloniki's water company EYATH (ΕΥΑΘ). Interestingly enough Guy Verhofstadt sits on this company's board. So I grant you it is not just "Germany" but Germany's sphere of influence out to buy Greece. ;)

But even if some Greek oligarchs manage to get a piece of that cake, do you really think that would be anything to be proud of? I hear that Greece's "national contractor" George Bobolas is collaborating with Sofina to get a piece of EYATH. What do you have to say about that?

Everybody knows that the non-paper regarding the Greece Treuhand (let's call a spade a spade, shall we?) was circulated by Schaeuble even before the beginning of the summit meeting and that originally the fund would be based in Luxembourg, be run by non-Greeks and all the money from the privatisations would go to creditors to service the debt. The summit almost collapsed because of this aggressive move as Tsipras abandoned the negotiations in dismay and several more moderate people had to intervene to get him back to the negotiation table. Later we found that the non-paper was known and endorsed by both Merkel and the SPD. So yes, pretty much all of "Germany" was behind that caper.

Joint control of assets (Greek state and private companies) has already been proposed by the Greek government, namely Varoufakis himself, but that was deemed unsatisfactory. And even a neoliberal has to agree that selling off assets at a time of a big depression and uncertainty will effect in their being sold for peanuts with a great loss to the seller and a humongous gain for the buyer. Especially if the assets are monopolies of basic commodities like water which means they are totally risk-free, or related to the country's basic means of revenue, tourism.


Kompe75 hungrycocky 25 Jul 2015 07:59

We knew that Germans and reason coincide....but now with Schaueble everything is possible...they have tradition in electing paranoid leaders


MacNara -> whitewolfe 25 Jul 2015 06:31

You are clearly an ultra-capitalist, while I am not, so it's difficult to talk with you. But like many with a religious belief in capitalism, you don't seem to have much idea how it works.

Let's take your point 1:


Selling them contributes to the government, cash. Cash that the country desperately needs.

No: all this money is going abroad; the Greek government won't see any of it. From the point of view of the Greek government, the sale alone (assuming nothing else happened) would be purely an accounting change with no effect in the real world. So, from their point of view, if they were capitalists it would be best to carry on as is, or declare bankruptcy and have a pre-arranged buyer for the bankrupt company (i.e. themselves).


As long as trains run and electricity is deliver[ed] who cares who owns it?

Well, shareholders seem to, otherwise why would there be stockmarkets? And the reverse is true from the customers' point of view. That is to say, if the company became profitable and the profits went to the Greek state rather than others, then it would make a big difference to the citizens.

And so on for your other three points, which I had also already answered in my original post.

John Bennetts -> whitewolfe 25 Jul 2015 06:02

Total BS, Whitewolf. I expect that putting others down makes you feel bigger.

Name examples of "smaller state less corruption". Where has this worked?

The foreign banks made bad deals, lost the gamble and then pressured their governments, led by Germany, to extract penalties far i n excess of the supposed crime. The whole nation is being pauperised.

But that doesn't matter... they're only olive-sucking Greeks, after all. Not German or French banks. So that's OK.

MacNara 25 Jul 2015 00:02

I don't understand why the idea of management contracts for Greek state-owned industries has not been given an airing.

For example, Deutsche Bahn (German government) could be given a ten or twenty year contract to make the railways profitable, and EDF (French government) could do the same for the power system. And this could be done without privatisation (after all, the German and French equivalents are state-owned).

This would surely have several benefits:

1. When the companies were profitable, they could contribute to Greek government finances.

2. Alternatively, once profit-making, they could be sold off, but not at fire-sale prices as looks likely at the moment.

3. This would be a clear example of the German and French (and other governments') desire to help Greece improve, and not to asset-strip, so it would be a PR win, and a plus for all sides (especially if these contracts were 'at cost' and non-profit).

4. Making these businesses profitable will probably initially involve job losses, wage cuts, and price rises. Keeping them in state ownership would mean that the benefits of these sacrifices by Greeks would be kept in-house (i.e. go to the government and not foreign capitalists or Greek oligarchs) and therefore make it more likely that they would get social acceptance.

Has such a plan really never been discussed? Or is my logic faulty?


deskandchair 24 Jul 2015 23:52

". It is a necessary component of a healthy economy because it ensures private sector efficiency and productivity"

Straight from the '90's handbook and absolute RUBBISH. Look at for example public transport systems privatised in Australia. They're now less efficient (schedules are a joke) rolling stock is older and shoddy and private companies STILL DEPEND on state governments for injections of hundreds of millions of dollars to maintain infrastructure.

Then there's electricity supplies in Aus states that have privatised, over-investment in infrastructure (so they can pump the cost of electricity so while households are using less power, costs far exceed inflation). The same with water, gas etc.

I have yet to see ONE example of privatisation of public assets in Aus that resulted in better service, efficiencies etc etc etc. Privatisation of assets is simply a cash-cow for certain companies to bleed the public dry and am happy to consider any REAL example where this is not so.


Alto Cumulus 24 Jul 2015 22:56

Multinational corporations hire battalions of lawyers precisely to AVOID paying taxes. And foreign governments collude, allowing multinationals and Greek oligarchs to park their money in the Luxemburg, Netherlands, or other tax havens.

So selling of Greece's water utilities or ports does NOT mean the corporate buyers will be compelled to pay taxes in Greece. The burden of tax payment will continue to fall to Greek small businesses and Greek families.

The little taxes the new corporate overlords may pay will be immediately sucked up by Greece's creditors.

Marty Wolf -> psygone 24 Jul 2015 15:30

Privatization will make the Greek economy look like Russia. Mafia State 2.0. The cost of everything will rise as the profiteers stripmine any assets left after the sellout of the Greek people. Those assets deemed unprofitable will be dumped onto the bankrupt state government. Your last paragraph is neocon boilerplate and simply doesn't apply in a situation where pirates move in to clean the bones of their victims.

Olastakarvouna 24 Jul 2015 15:12

Helliniko Olympic complex, and 14 regional airports have already been sold (with only bureaucratic hurdles remaining). So has DEPA the natural gas company, but its sale is being held up by EU regulators. The PPC power company will NEVER be sold (unless you believe that Britain will sell its NHS). The Athens Water Supply and Sewerage Company will also NEVER be sold, as its sale (and that of Thessaloniki water supply co) was deemed unconstitutional a year ago by Greece's highest court. Helena Smith, please try refining your reporting a little bit more.

[Jul 26, 2015] Mathew D. Rose The Crisis In Europe Has Only Just Begun naked capitalism

Posted on July 24, 2015 by
By Mathew D. Rose, a freelance journalist in Berlin

Five months ago I attempted to explain why the conflict between Germany and Greece was destined culminate as it has:

Following the recent elections in Greece, Germany and its EU compradors are making it clear who is in charge. The Germans are currently not offering any compromise, but iterate the same blunt demand: Greece has to accept what is being dictated; in other words, capitulate or be annihilated. This time it will not be the Wehrmacht und Luftwaffe that are to force the Greek nation into submission, but a weapon just as lethal: national bankruptcy.

This conflict has nothing to do with Greek debt or finances. Syriza's strategy was based upon the rational assumption that the nation's debt and recovery are being stifled by austerity. As we know from most any respected economist, Greece's debt can never and will never be repaid. On the continent that prides itself as the cradle of the enlightenment, there should have been an amicable, lasting solution to Greece's untenable financial situation. Greece has had to learn the hard way, that the EU is no longer a European project for peace, democracy and prosperity, but a German tool for hegemony.

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

In past postings I have also attempted to explain the German mindset leading to this – and there is no other word for it – disaster. The negotiations have been surprisingly linear. Syriza's main goal was debt relief. They always saw Chancellor Merkel as the lone decision maker in the negotiations. Ms Merkel on the other hand has unremittingly demanded unconditional capitulation. The rest has been spectacle. There is a saying: "Clowns entertain in the intervals between the acts. The circus director runs the show". Dijsselbloem, Juncker and the rest may have had a lot to say to the media, but little to say in negotiations. Finland, Slovakia and Slovenia are irrelevant. The only other player of any importance besides Merkel was ECB president Mario Draghi, who assisted Germany's financial blitzkrieg by questionably terminating the ECB's support of Greek banks. Schäuble was Merkel's executioner.

The intervention of France's President Francois Hollande was uncannily reminiscent of Neville Chamberlain. The only thing lacking was his arrival at Charles de Gaulle Airport brandishing a letter from Chancellor Merkel. The conclusion of "negotiations" was reminiscent of the Munich Dictate. Greece has been "saved", much as Czechoslovakia 77 years ago.

The humanitarian disaster had reached dimensions that defy any definition of a "United Europe". With the media's obsession with the pseudo negotiations the fact that this was an existential decision for millions of Greeks was forgotten, many of whom stood at the edge of an abyss. This became clear as affected Greeks were asking how they were to pay for their insulin and if it would soon become unavailable due to the financial embargo that was being created. This was the terrorism that Yanis Varoufakis denounced.

The reaction of what I would term "enlightened Germans" to Varoufakis's claim was what one expects. For them, they were being compared to ISIS. Even though the fear emanating from much of Greece's population was palpable, there was little reflection by many of those Germans capable of doing so, with regard to the aggression conducted in the name of Germany. In the phase immediately before Syriza's capitulation there was an increasing awareness among some Germans that something was going terribly wrong, but it was too little and too late.

This brings me to the first main point of this posting. The history of the "good Germans" has always been one of ineffectuality. In the course of history there have been many Germans who believed in the enlightenment, be it Martin Luther, Immanuel Kant or Wolfgang Goethe. These however never questioned the authoritative role of the state against the will of the people. The class of "enlightened" Germans always regret what their nation is doing, but more often than not, in the end participate in the very actions they deplore. As A.J.P. Taylor wrote: "There were, and I daresay are, many millions of well-meaning kindly Germans; but what have they added up to politically?" In the case of Greece, this has occurred still again.

Not that the ethical Germans have had an easy time of it lately. A few years ago there was a massive campaign in commentaries and politics condemning so called Gutmenschen (literally translated: good people), who were defined by their critics as persons following their moral conscience – regardless of being leftist, moderate or conservative. In a nation that is responsible for the holocaust, this is a very worrying development. Thus the transition of Germany's hegemonic role in Europe, among many internal transitions such as the unjust redistribution of wealth, has been thoroughly ideologically prepared.

It is worth mentioning a sort of landmark book written by the German historian Heinrich August Winkler, "The Long Journey to the West", which appeared in the year 2000. It traces the purported progress of Germany becoming a responsible member of Western Europe's democratic tradition and intellectual enlightenment. Winkler may have been too quick with his conclusion. Under German hegemony we are seeing heads of state removed by financial pressure (Italy and Greece), nations forced to take over debts from reckless private banks (Ireland and Spain) and Greece being pounded into submission and having its autonomy reduced to passing legislation dictated by Berlin. The Germany of today has little to do with Western European democracy, resembling more traditional German anti-democratic authoritarianism.

The second point I wash to make is that the real losers with regard to the disaster in Greece are not even aware of their plight: the Eastern Europeans. What the Germans have done to Greece has its basis in racism, but the Germans have a primordial fear and hate of eastern Europeans, resulting in a commensurate brutality. When the opportunity arrives to subjugate these peoples, the process will not be as gentle as in Greece. Ukraine could already be the first example of this.

The only exception might be Poland, which throughout history has been invaded and occupied by the Germans. Not only have the Germans always considered Poland a colony, but after the Second World War German territory was added to Poland. This is something that Germans resent to this day. Willy Brandt falling to his knees in Warsaw was an important gesture, but in Germany these days Willy Brandt numbers among the derogated "Gutmenschen". The Poles are fortunately highly distrustful of the Germans – with good reason – and are still not members of the eurozone . They surely have been following the developments in Greece and hopefully comprehended the writing on the wall.

Lastly, no one seems to have really thought through what the "reforms" forced upon Greece will mean in practice. Up to now Greeks apparently were reluctant to pay taxes because hardly any one, especially the oligarchs, did so. To alter a nation's attitude to taxation is a herculean task for a government at the best of times, a process that Yanis Varoufakis interestingly had initiated very early on. The imposition of a ridiculously high value added tax increase by Germany is nothing more than taxation without representation. Not paying ones taxes in Greece will become a patriotic act of resistance against the Germans and the troika. There can be no crdible political discourse from a politically disgraced Syriza, leaving coercion as the only alternative (Varoufakis knew why he resigned as finance minister and has voted against the German dictate). The Greek people clearly rejected the dictate that has been foisted upon them. They will not be supporting the so called "reforms", especially as they simply cannot afford to do so.

The crisis in Greece and in Europe is not over, it is only just beginning.


John Jones, July 25, 2015 at 2:36 am

Yeah and Greeks and eastern Europeans and other minorities etc also live the experience of been on the end of the racism by Germans, English and other northern Europeans. And it is not 'some people' in their experience.
And it is always satire and funny when you are not the one on the other end of the joke.

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

Stereotypes which most of the German population has had no problem believing and spouting off towards Greeks. Preconceived notions that not only the Germans have but England and northern Europe.


Skippy, July 24, 2015 at 11:45 am

The strange thing is the Germans were late to the colonization party, tho at that time there was some funky stuff happening in German philosophy and spiritualism.

Skippy…. and at the end of the day all the other anglophone nations history is white washed and Germany was left holding the bag as the bad guy.


vidimi, July 24, 2015 at 12:05 pm

yup. i would say the english probably qualify as history's greatest all-time villains…or should i say "some english people".


flora, July 24, 2015 at 12:49 pm

Yes. " A few years ago there was a massive campaign in commentaries and politics condemning so called Gutmenschen (literally translated: good people), who were defined by their critics as persons following their moral conscience – regardless of being leftist, moderate or conservative."

This remark makes me wonder if Hegel is still the guiding philosophy in Germany.

"Since the state is mind objectified, it is only as one of its members that the individual has objectivity, genuine individuality, and an ethical life…" Hegel

Hegel gives the state the primacy, not the family or community or individual conscience.

dk, July 24, 2015 at 11:47 am

The reality is that oligarchs use proxies of many kinds, from nations to individuals. They gain resources and profit from the products and byproducts of elaborately manufactured scenarios, pitting groups against each other to produce illusions of demand, debt, etc. Germany and Greece are no more than proxies in this gambit.

Beware the kayfabe.

DJG, July 24, 2015 at 11:06 am

The Anglo-German media have steeped in racism. Are you forgetting the acronym PIIGS? Do you think that is referring to hams on the hoof in Finland?

I'll write it again: The DJG rule. The Anglophone world (and the Germans and Dutch) prefer their Romans and Greeks dead. The current ones are too "excitable."

MyLessThanPrimeBeef, July 24, 2015 at 12:15 pm

Brown people, little people, poor people, desert people don't do too well either in that world.

hemeantwell, July 24, 2015 at 11:35 am

To add: the more I think about this, the more off target this post is. Precisely at a time when it is necessary to consider features of the current crisis like, in no particular order, falling German productivity, the dwindling of Chinese demand that fueled Germany's economy, growing difficulties in finding investment options for surplus capital >>> bubble investment, how a NATO that is dominated by the US is fostering a crisis in the Ukraine, Rose focuses on the diffuse sentimental templates that can regressively steer a crisis response, especially when elites want to play the nationalism card. Rose does next to nothing to draw our attention back to crisis drivers, he just forecasts how it can be misinterpreted.

German native speaker, July 25, 2015 at 5:43 pm

For years, after starting an illegal war in Iraq, after the US caused the banking/ derivatives crisis, and after the truth about NSA/Snowdon, whenever someone in Germany talked bad about the "Amis" (short for Americans) because of the way the US behave, I have reminded them that not all Americans are 'behind' and supportive of the 'system'.
I guess I can now follow your reasoning and encourage all Germans to pile it on about how bad Americans are, and unless all of them are called ruthless imperialists, the US won't change (according to your logic).


OpenThePodBayDoorsHAL, July 24, 2015 at 4:56 pm

The "most successful" in recent memory gets to dictate the narrative because their view is seen as "right". Germany gets to crow about their "economic miracle", founded on running surpluses, exchange rate suppression that would never have been possible under the deutschemark, and the inconvenient truth of the massive debt forgiveness and restructuring they were afforded in 1953. America benefits similarly from their long-in-the-tooth supremacy after WW II, a victory of excellent river systems, large protective oceans, bounteous agricultural acres, and skillful realpolitik at Bretton Woods. Of course there's no possible chance that a 23% VAT on tourism will remedy Greece's predicament, but the ultimate failure of the program will be whitewashed because the "right" countries in the dominant narrative du jour did their best. We used to have a few politicians who understood at least a tiny bit about history and economics, but that era is long gone indeed, they're either ignorant (Reagan, Bush, Trump) or utterly corrupt (Clinton, Obama, Clinton).

Jim, July 24, 2015 at 7:19 pm

"excellent river systems, large protective oceans, bounteous agricultural acres" – these are all things that Brazil or for that matter the Congo Republic has. Going by natural resources and geographical advantages the Congo Republic should be vastly richer than remote mountainous Japan with it's earthquakes, almost total lack of natural resources and with only 3% of it's surface area suitable for agriculture.Japan has only one thing going for it – the Japanese people. But that makes all the difference in comparison with that treasure house of natural resources – the Congo.

Tinky, July 25, 2015 at 6:16 am

Did you really not understand that HAL was referring to aggregate advantages, and that isolating one in comparison is not at all useful?

Or should we also list the countless island nations that enjoy "large protective oceans", yet somehow fail to threaten the economic dominance of the U.S.?

mesfern, July 25, 2015 at 7:25 am

Believe it or not, the relative amount of agricultural land is the same in Japan and the Congo (~12%; the US have 45%). It may not be the first impression one has from the Congo, but its terrain is rather mountainous and rocky; as one nears the eastern provinces, one might even be tempted to say they are the African Himalaya. Add in the rainforests, and it becomes obvious why it is so difficult to build and maintain the necessary infrastructures.

praedor, July 24, 2015 at 2:21 pm

Clear political correctness corrupting your vision. The German people (by and large, the majority, the bulk, the CULTURE) label the Greeks as lazy and deserving of what they are getting. They label the GREEKS as LAZY and deserving of their plight. They don't deserve aid, succor, etc, because they're Greeks and Greeks are…Greek (lazy leeches). That is an objective fact of the coverage and the overall conceit of the German people en bank. It is racist. I don't give a flying crap if you can find one or two coffee shop teenager Germans who disagree, they aren't the ones running the show, propping up the show, supporting the show, creating the show, kowtowing to the show (though they too are kowtowing). The German machine as a whole, in focus, by design, by preference, is racist and hegemonic. The Troika IS the German establishment, the German heart, the German soul as it is run and supported, directly and indirectly, actively and passively, by Germans. Virtually all of them.

FedUpPleb, July 24, 2015 at 12:19 pm

Shill harder Jesper. What was done to Greece cannot be explained by any rational political policy. It has its roots in emotion, domination, nationalism and yes, racism. You can call the latter "cultural differences" if you like, but it only puts a euphemism on the shocking behaviour seen over the last two months.

Europe has been cast back into the 1950s by this euro crisis. A large portion of the blame now lies with German intransigence in the face of the reality of both bank and soverign bankruptcies. This German intransigence is, at its heart, motivated by national interest, which by casting us back into the 1950s, makes many nervous.

I have been watching commentary and coverage from across the world closely since the end of May on these issues. I can assure anyone still in doubt that the opinions in this post are representative of a very wide and indeed deep shift in mood following what was done to Greece. Europe has lost the cafe-latte front and one must understand the points being made in this post to realise it.

Or one can remain in terminal denial and wait for the market to come along and make things better. In any case, please have the graces not to simply stand around shilling.

salvo, July 24, 2015 at 1:50 pm

well, I live in Germany and am formally German myself and I can assure you the main narrative repeated in German mainstream discourse by the mass media is that the Greeks are somewhat inferior, lazy, profligate, untrustworthy and so on, something most people tend to believe. Indeed most of them feel that the German politics is way too soft towards them. I could start linking to a few articles by German mainstream media to underwrite my point


Gabriel, July 24, 2015 at 10:59 am

One of the few bright spots for me in how the Greece has played out is that in Poland people seem indeed to have picked up that joining the Euro might be something besides a badge of honor of being "Western" and European.

http://fortruss.blogspot.com/2015/07/germanys-policies-pose-danger-to-europe.html

My partner Polish and is currently stuck there for preposterous reasons, and she's confirmed that "sensible," cosmopolitan, Warsaw, pro-EU people are taking a hard look at what actually adopting the Euro might expose them to.

I was gloomy about the chance of this happening, because the pattern I remember from Argentina in the 90s is that the lackeys who aren't being punished by the hegemon think they'll score points by sounding even more punitive than the hegemon (Slovakia seems to have played that role in this crisis), and far too many intelligent people don't understand that adopting a currency cannot be considered in purely symbolic terms. Perhaps Poles' not altogether delightful history with German-run international systems has made them more alert about this kind of thing.

PS. Apropos well-meaning Germans, I linked to a couple of vids by some of their contemporary equivalents here.


susan the other, July 24, 2015 at 11:19 am

I was surprised by the Fortruss post because there is so much censorship here we don't get any idea about the manipulations of our State Department until they fail or succeed. It made me think that we and Germany/France are truly on opposite sides when it comes to the future of Europe. Without "Old Europe" on our side to manipulate eastern Europe it is doubtful we will succeed in drawing them in (and keeping them) into the neoliberal model we seem so determined to export. Hopefully the crisis in neoliberalism has just begun.


Jim Haygood, July 24, 2015 at 11:03 am

Change one word; here's how it reads:

'The class of "enlightened" Americans always regret what their nation is doing, but more often than not, in the end participate in the very actions they deplore.'


nobody, July 24, 2015 at 11:26 am

Mark Ames:

I really started with the idea that in every age, there is some awful oppression that is not yet recognized and therefore doesn't exist, but later seems horribly obvious. This became clear to me working in Moscow in the '90s. No one in the "liberal" Western press corps, academia, world financial aid organizations or Clinton Administration had a shred of sympathy for the millions of Russians suffering from so-called "privatization" programs that we rammed down their throats.

Literally millions of Russians went to their graves early in the '90s, yet many respectable Westerners openly said that the old generation would "have to die off" before the proper mindset set in to allow full Westernization in Russia. Those millions of deaths are still not seen as part of something larger and evil.

http://www.alternet.org/story/24796/a_brief_history_of_rage,_murder_and_rebellion


Gabriel, July 24, 2015 at 11:52 am


Excellent quote. Thanks for posting it. And today's crop of "respectable Westerners" wonder why Putin seems to have Svengali-high approval ratings when facing down the full disapproval of DC and the EU.

Our Western elite really has gone one-up on the Bourbons. Latter remembered everything and learned nothing; ours does away with the remembering bit.

Eric Patton, July 24, 2015 at 11:27 am

Germany has money, industry, resources, brains, and will. They think strategically, and they plan well. You have to admire it.

Inverness, July 24, 2015 at 4:10 pm

Germany has benefited tremendously from both debt forgiveness and cheap Turkish labour.

Jim, July 24, 2015 at 7:30 pm

Oh get real! Germany has been devastated numerous times in history. Almost totally destroyed by the Thirty Years War, again almost totally destroyed, occupied and divided at the end of WWII, devastated both by the Napoleonic Wars as well as WWI. It always recovers to become the strongest state in Western Europe.

YankeeFrank, July 25, 2015 at 4:04 pm

And you say that as if its a good thing. The 20th century would beg to differ. I'd "admire" Germany a bit more perhaps if they managed to build a strong nation without it always seeming to be built on a sneering arrogance and racist hatred of those not "German", meaning specifically Prussian or Bavarian, and it not always winding up with the total domination and ruin of other nations. I guess its easy for them to get up and engineer every day when motivated by an overweening pride.

To me they have a singular inability to do anything other than engineer other peoples' ideas and start wars that make the world cringe in horror at their monstrous deeds. Some cultural things never change I guess.

And no, I'm not letting the US off the hook for its misdeeds, but there is something fundamentally vicious and yes, I'll say it, evil, about the German culture that not only justifies the suffering of "others" at their hands but actually revels in it, as the OP and some commenters who are actually German have made clear here.

MyLessThanPrimeBeef, July 24, 2015 at 12:25 pm

It's interesting how often we exclude ourselves in our analyses of events abroad, or fail to include the international dimension of our domestic policies.

It's the hegemonic-power projection cartographic map you mentioned a few days ago.


[Jul 24, 2015] Mario Draghi: The ECB Has No Mandate To Ensure Checks Clear Or Credit Cards Work

July 23, 2015 | nakedcapitalism.com

By Nathan Tankus, a writer from New York City. Follow him on Twitter at @NathanTankus

Last week Mario Draghi held a press conference following the decision to raise ELA a paltry 900 million dollars for Greek banks. In that press conference he said many things but I'd like to focus on one passage that has gotten no attention:

There is an article in the Treaty that says that basically the ECB has the responsibility to promote the smooth functioning of the payment system. But this has to do with the functioning of TARGET2, the distribution of notes, coins. So not with the provision of liquidity, which actually is regulated by a different provision, in Article 18.1 in the ECB Statute: "In order to achieve the objectives of the ESCB, the ECB and the national central banks may conduct credit operations with credit institutions and other market participants, with lending based on adequate collateral." This is the Treaty provision. But our operations were not monetary policy operations, but ELA operations, and so they are regulated by a separate agreement, which makes explicit reference to the necessity to have sufficient collateral. So, all in all, liquidity provision has never been unconditional and unlimited.

This is a truly shocking statement. To understand why, we need to go back to the basics of central banking. Banks have accounts at the central bank (I'm going to call the balances in these accounts "settlement balances" in line with non U.S. Conventions) which are primarily used to settle payments with other banks. When you use a debit card issued by one bank to pay someone with a bank account in another bank, your bank has to in turn send a payment using settlement balances to make that payment.

As should be obvious from that description, in order to make that payment your bank has to have sufficient settlement balances in its account at the central bank or the central bank must provide an overdraft. Thus, if the smooth functioning of the payments system is defined as the ability of depository institutions to clear payments, the central bank must ensure that settlement balances are available at some price.

The Federal Reserve explicitly recognizes this in its "Policy on Payment System Risk" by stating that "the Board recognizes that the Federal Reserve has an important role in providing intraday balances and credit to foster the smooth operation of the payment system". Draghi is arguing that the ECB's mandate to "promote the smooth functioning of the payments system" is defined differently than the Federal Reserve's mandate and (as far as I can tell) every other Central Bank's payment system mandate around the world. I can't over-emphasize how radical a departure Draghi's position is from the norms of central banking. Whatever else we may want to criticize the Federal Reserve's and the government's response to the financial crisis, they did preserve the the smooth functioning of the payments system with their alphabet soup of lending facilities and ultimately an FDIC guarantee on interbank lending. The problem was that they didn't put Too Big To Fail banks in a form of receivership and didn't prosecute bank executives, not that they made sure payments continued to take place.

As disturbing as the European Central Bank position already is, it becomes more frightening when we analyze why the Greek banking system has been cut off in detail. First, remember that the ECB's official position has been that the Greek banking system is solvent as long as Greek government bonds preserve a certain value. Second, the ECB judges the value of those government bonds not be their market price but by their view of the Greek government's "compliance" with the dictates of the EU and the IMF. As Vice President Constâncio said during the press conference:

when a country has a rating which is below the investment grade which is the minimum, then to access monetary policy operations, it has to have a waiver. And the waiver is granted if there are two conditions. The first condition is that the country must be under a programme with the EU and IMF; and second, we have to assess that there is credible compliance with such a programme.

The bigger picture here is that under this interpretation of the ECB's operating mandates the European Central Bank can, at any time choose to exclude a particular country's bonds from its monetary policy operations, watch its credit rating fall and eventually, force the country to choose between an IMF program and having a frozen banking system and no ability to borrow. Not only must that country enter an IMF program but it must be judged to be in "credible compliance" by the ECB at all times.

Being in credible compliance is a necessary not sufficient condition for borrowing. Recall that the statute Draghi quoted said that it "may", not must, "conduct credit operations". This is how they've justified keeping the Greek banking system on such a tight leash despite claiming that the Greek Government was in "credible compliance" up until recently and how they can justify not extending ELA by enough to restore normal operations in the current situation. The ECB is like an abusive spouse who believes marriage means they can beat their significant other for any reason and that previous beatings justify beatings in the future.

Even worse, if the Greek banking system is insolvent because of defaults from the private sector in Greece (very likely), the Troika has made the reduction in value of deposits (a bail-in) the preferred tool (along with privatization) to return solvency to the banking system. In other words, there is not only no guarantee of orderly clearing of payments but also no guarantee that depositors will eventually be made whole. It is official policy that at any time the value of a deposit in one bank does not equal the value of a deposit in another bank. Cyprus was not a fluke. It would be foolish for depositors in other countries to feel safe, except perhaps those in Germany and France. Their political leaders would likely suddenly discover the need for depositors to be fully protected in the Eurozone if they were ever forced to recognize insolvency.

Putting all this together, Europe now has a system where liquidity and insolvency problems can occur and can be deliberately generated (at least in part) by the central bank. Then the Troika can force that country into an "IMF program" if it wants to continue having a functioning banking system. Alternatively, the central bank can choose to simply "suspend convertibility" to the unit of account and force the write down of deposits until the banks are solvent again. During this drawn out period payments grind to a halt and mass business disruptions and failures can and will be generated. In other words Europe has created a system where you either comply with the dictates of unelected bureaucrats or you accept a more disorderly version of the United States banking system before the Civil War. The bottom line is that if you feel inclined to visit Europe remember that the payments system can fail you at any time. Plan accordingly.

[Jul 23, 2015] Greece, Iran, and the Rules of the Game

Jul 23, 2015 | LobeLog

Alexis Tsipras had a choice. As the leader of the fledgling Syriza government in Greece, he could have told the European Union to stuff its austerity plan. He could have taken the risk that the EU would offer a better deal to keep Greece in the Eurozone. Or, failing that, he could have navigated his country into the uncharted waters of economic independence.

But he chose to "follow the rules" by accepting the EU plan. Greece is getting its financial bailout, Greeks are tightening their belts, and the Eurozone will survive more-or-less intact. Tsipras learned what happens when you challenge the rules of an elite club. Once in a while, the club changes the rules. Most of the time, the club issues an ultimatum: suck it up or move on.

Hassan Rouhani had a choice. As the leader of a new reformist government in Iran, he could have told the international community to keep its nose out of his country's business. He could have kept adding to Iran's civilian nuclear program, arguing all the time that it was not in violation of any international agreements. He could have tried to chip away at the international sanctions regime by concluding economic agreements with willing countries.

But he chose to negotiate with the permanent five members of the UN Security Council - plus Germany - and bring Iran into full compliance with International Atomic Energy Agency requirements. By "following the rules" in this way, Rouhani is hoping that the windfall that comes from the lifting of sanctions will provide enough capital to turn around the Iranian economy and boost the prospects of his political cohort.

In Hollywood movies and on TV, the rule breakers usually triumph. I can't begin to count how many films and shows feature CIA operatives, FBI agents, and police officers that must defy the chain of command in order to do the right thing and collar the bad guys.

But in the real world, breaking the rules usually comes with big penalties. Of course, it all depends on who sets the rules and who dares to defy them. Sometimes the outlaws face a lifetime behind bars. And sometimes they not only break the rules with impunity but win the proverbial jackpot as well.

... ... ...

Iran, a larger country that plays a strategic role in the Middle East, has considerably more room for maneuver than does Greece. But it too cannot unilaterally remake the rules of the game. It can only negotiate the best deal it can. In the end, it must open itself up to the kind of inspection regime that more powerful countries would never tolerate. It is, of course, the height of hypocrisy for Israel, which refuses to disclose whether it has a nuclear program at all - much less permit access to its secret sites - to insist that Iran open up virtually every corner of the country to a highly intrusive verification regime.

But the rules of the game are changing. The model of "international community" that we've been driving is more than 65 years old, and its engine is starting to conk out.

All the major rule-setting institutions reflect the balance of power that reigned in the immediate aftermath of World War II. The World Bank was founded in 1944, the IMF and United Nations in 1945, and the European Coal and Steel Community (which served as the cornerstone of the future European Union) in 1951. But what will happen as Germany and France exert less control within the EU, as China builds new international financial institutions, as the UN finally tackles the problem of reforming the Security Council? What will happen as U.S. relative power in the world continues to decline?

New rule-makers mean new rules. Get ready: A new world is not only possible, it's just around the corner.

John Feffer is the the editor of LobeLog and the director of Foreign Policy In Focus at the Institute for Policy Studies. He is also the author, most recently, of Crusade 2.0. He is a former Open Society fellow, PanTech fellow, and Scoville fellow, and his articles have appeared in The New York Times, Washington Post, Los Angeles Review of Books, Salon, and many other publications.

[Jul 22, 2015] This is What Economists do not Understand About the Euro Crisis – or the U.S. Dollar

Jul 22, 2015 | Economist's View

bakho

The powers are not stupid but they are incredibly naive and misinformed. The idea of the Eurozone was to subsume nationalist fever into a multicultural Eurozone. The Germans in their Nationalist Pride have made this a failure of Greece instead of the failure of the Eurozone. The rhetoric is one of nationalism, not one of unity. The economics is Nationalist, not Post-Nationalist.

DrDick said in reply to bakho...

The German economic policy is, and long has been, deutschland über alles.

pgl

Is Merkel related to Jeb! I was looking for what the term Club Med nations really means - and it seems to be a put down for nations like Italy and Greece. But check this out. Merkel's "solution" is for the Italians and Greeks to work more:

http://blogs.wsj.com/source/2011/05/19/merkel-club-med-countries-must-work-more/

Of course they want to work more but the stupid fiscal austerity that Merkel is cramming down their throats is leading to massive unemployment. And guess what? Jeb! wants to impose annually balanced budgets for the US through spending cuts. Wow - the US may indeed become the next Greece if Jeb! becomes President.

pgl said in reply to pgl...


OK - I had to post this:

http://econospeak.blogspot.com/2015/07/is-jeb-related-to-angela-merkel.html

RC AKA Darryl, Ron said...

Kathleen McNamara actually believes the cover story for why elites pushed the Euro zone. Yes a great peace keeping mission this has been :<)

Economic elites in Europe have used the Euro to roll back democratic socialism and increase the global reach of European based multi-national corporations. The Euro is about the Davos economic elite and their goals. The Davos economic elite did not want fiscal union, they wanted fiscal disintegration of the welfare state. They have institutionalized fuss budgetry and inflationphobia for 19 of the 28 EU states.

Eclectic Obsvr

Gee, I don't think any of the critiquing economists doubt that the Euro was created as a political matter in the EU. It's just that they thought it economically unwise and to that extent economics matters to politics. It is the same thing about preaching austerity with the idea that exports will make up for lost domestic demand. At some point it's not logical to believe that all Eurozone countries have have a current account surplus. Appears to me that this is something coming out of a perhaps arrogance of foreign policy "experts".

Kenneth Thomas said in reply to Eclectic Obsvr...

Yes, although I believe France actually got the idea after its policy about-face in 1984. They dreamed of a multinationally controlled ECB replacing the Bundesbank, but let austerity and deficit mania get written into the ECB's mandate.

Michael Derry

Sometimes people overlook the easiest of things. The problem in Europe is the same as the U. S. faced under the Articles of Confederation. The Constitutional Convention was originally called to address the economic problems of the Confederation by strengthening the then existing Congress. The solution involved a fiscal union and it still took a few years to get the monetary and trade imbalances settled. You would figure a political scientist would know this.

Barkley Rosser said...

At the end here we have some people talking about the realities of the politics of this in the 80s, particularly regarding France. It also occurs to me that most of the commentators here are Americans, where all the people now getting their backs patted (Feldstein, Krugman, Friedman, etc.) while now able to crow about the current problems were all massively dead wrong back in the 90s and after when pretty much all of them declared loudly that the Europeans would not even be able to get the euro established at all. All along they totally under rated the political push behind this, which was arguably seriously flawed and well beyond plots by Davos elites, although that crowd clearly has done well under this at the expense of others. In that regard, this article serves a useful purpose.

The political strength of the euro in face of its now obvious and glaring economic problems is seen both by the fact that we have recently seen more countries joining, the Baltic nations, clearly for political/security reasons (join Europe! Get away from Russia!), but the fact that after all this stuff this spring, here is Greece accepting this horrible deal because their leaders recognize that the overwhelming majority of Greeks want to stay in the euro. Greece should probably never have joined, and it looks to me that they would probably be better off to obey the desires of the horrible Wolfgang Schauble, but there they are, hanging on in there.

Let us also keep in mind that these current problems have arisen due to the depths of the Great Recession, which basically none of us foresaw how bad it would be. Indeed, it has been a tough test, and the critics have been able to see their forecasts of problems be fulfilled.

likbez said in reply to Barkley Rosser...

Economically all three Baltic nations now are basket case. Latvia is probably in worst condition.

They lost most of the trade with Russia and nobody else wants what they can produce. Emigration is rampant. Especially among young people, who see no perspectives in their home country.

They also destroyed most of their manufacturing base (the same is true for Poland).

While partially inevitable with the independence, Baltic's version of Russophobia has its economic and political costs.

Jesse said...

Her central hypothesis seems to be that money is power, and that the deployment of the euro is an exercise in the centralization of power over a heterogeneous collection of nations and economies. And that the US dollar is similar.

How fitting that she teaches at Carroll Quigley's old university.

She *could* be correct. And if so, then we are in for interesting times.

http://jessescrossroadscafe.blogspot.com/2015/07/comex-registered-deliverable-gold.html

DrDick said in reply to Jesse...

It is the German's wet dream. Their economic policies have long focused on artificially suppressing the prices of their manufactures to keep their exports competitive. Now everyone's currency is pegged to their economy and they control the system.

[Jul 22, 2015] The Courage of Hopelessness by Slavoj Zizek

This article described well what damage Syriza might have done to the neoliberal paradigm which seems to be entrenched everywhere these days
.
Very interesting comparison in there between EU government and the Chinese Communist Party which I hadn't heard before. "It should shamelessly flirt with Russia and China, playing with the idea of giving an island to Russia as its Mediterranean military base, just to scare the shit out of Nato strategists. To paraphrase Dostoyevsky, now that the EU God has failed, everything is permitted." And while he does mention Golden Dawn and other euro- right wing parties he isn't especially critical of them. Not all that familiar with Zizek's overarching philosophy but one wonders if he shouldn't be careful what he wishes for in terms of allies in the struggle against neoliberalism. Anyway, other than that lots to chew on here.
.
"...However, statements like those from IMF demonstrate that the true problem lies elsewhere: does EU really believe in their own bailout plan? Does it really believe that the brutally imposed measures will set in motion economic growth and thus enable the payment of debts? Or is it that the ultimate motivation for the brutal extortionist pressure on Greece is not purely economic (since it is obviously irrational in economic terms) but politico-ideological – or, as Paul Krugman put it in the New York Times, "substantive surrender isn't enough for Germany, which wants regime change and total humiliation - and there's a substantial faction that just wants to push Greece out, and would more or less welcome a failed state as a caution for the rest." One should always bear in mind what a horror Syriza is for the European establishment – a Conservative Polish member of the European parliament even directly appealed to the Greek army to make a coup d'etat in order to save the country."
.
"...At a deeper level, however, one cannot avoid a suspicion that the true goal is not to give Greece a chance but to change it into an economically colonised semi-state kept in permanent poverty and dependency, as a warning to others. But at an even deeper level, there is again a failure – not of Greece, but of Europe itself, of the emancipatory core of European legacy."
.
"...Sounds familiar? Yes, to anyone who knows how Chinese power functions today, after Deng Xiaoping set in action a unique dual system: the state apparatus and legal system are redoubled by the Party institutions which are literally illegal - or, as He Weifang, a law professor from Beijing, put it succinctly: "As an organisation, the Party sits outside, and above the law. It should have a legal identity, in other words, a person to sue, but it is not even registered as an organization. The Party exists outside the legal system altogether." (Richard McGregor, The Party, London: Allen Lane 2010, p. 22) It is as if, in McGregor's words, the state-founding violence remain present, embodied in an organisation with an unclear legal status:"
.
"...And it is crucial to note how the obverse of this non-transparency of power is false humanitarianism: after the Greek defeat, there is, of course, time for humanitarian concerns. Jean-Claude Juncker immediately stated in an interview that he was so glad about the bailout deal because it would immediately ease the suffering of the Greek people which worried him very much. Classic scenario: after a political crack-down, humanitarian concern and help… even postponing debt payments."
.
"...In the guise of Syriza "contradictions", the EU establishment is merely getting back its own message in its true form. And this is what Syriza should be doing now. With a ruthless pragmatism and cold calculation, it should exploit the tiniest cracks in the opponent's armour. It should use all those who resist the predominant EU politics, from British conservatives to Ukip in the UK. It should shamelessly flirt with Russia and China, playing with the idea of giving an island to Russia as its Mediterranean military base, just to scare the shit out of Nato strategists. To paraphrase Dostoyevsky, now that the EU God has failed, everything is permitted."
.
"...The ultimate problem is a much more basic one. The recurrent story of the contemporary Left is that of a leader or party elected with universal enthusiasm, promising a "new world" (Mandela, Lula) – but, then, sooner or later, usually after a couple of years, they stumble upon the key dilemma: does one dare to touch the capitalist mechanisms, or does one decide to "play the game"? If one disturbs the mechanisms, one is very swiftly "punished" by market perturbations, economic chaos and the rest."

Greece is not being asked to swallow many bitter pills in exchange for a realistic plan of economic revival, they are asked to suffer so that others in the European Union can go on dreaming their dream undisturbed.

The Italian philosopher Giorgio Agamben said in an interview that "thought is the courage of hopelessness" - an insight which is especially pertinent for our historical moment when even the most pessimist diagnostics as a rule finishes with an uplifting hint at some version of the proverbial light at the end of the tunnel. The true courage is not to imagine an alternative, but to accept the consequences of the fact that there is no clearly discernible alternative: the dream of an alternative is a sign of theoretical cowardice, it functions as a fetish which prevents us thinking to the end the deadlock of our predicament. In short, the true courage is to admit that the light at the end of the tunnel is most likely the headlight of another train approaching us from the opposite direction. There is no better example of the need for such courage than Greece today.

The double U-turn that took the Greek crisis in July 2015 cannot but appear as a step not just from tragedy to comedy but, as Stathis Kouvelakis noted in Jacobin magazine, from tragedy full of comic reversals directly into a theatre of the absurd – is there any other way to characterize the extraordinary reversal of one extreme into its opposite that would bedazzle even the most speculative Hegelian philosopher? Tired of the endless negotiations with the EU executives in which one humiliation followed another, Syriza called for a referendum on Sunday July 5 asking the Greek people if they support or reject the EU proposal of new austerity measures. Although the government itself clearly stated that it supported No, the result was a surprise: the overwhelming majority of more than 61 per cent voted No to European blackmail. Rumors began to circulate that the result – victory for the government – was a bad surprise for Alexis Tsipras himself who secretly hope that the government would lose, so that a defeat will allow him to save face in surrendering to the EU demands ("we have to respect the voters' voice"). However, literally the morning after, Tsipras announced that Greece was ready to resume the negotiations, and days later Greece negotiated a EU proposal which is basically the same as what the voters rejected (in some details even harsher) – in short, he acted as if the government has lost, not won, the referendum. As Kouvelakis wrote:

"How is it possible for a devastating 'no' to memorandum austerity policies to be interpreted as a green light for a new memorandum? … The sense of the absurd is not just a product of this unexpected reversal. It stems above all from the fact that all of this is unfolding before our eyes as if nothing has happened, as if the referendum were something like a collective hallucination that suddenly ends, leaving us to continue freely what we were doing before. But because we have not all become lotus-eaters, let us at least give a brief résumé of what has taken place over the past few days. … From Monday morning, before the victory cries in the country's public squares had even fully died away, the theater of the absurd began. …

The public, still in the joyful haze of Sunday, watches as the representative of the 62 percent subordinated to the 38 percent in the immediate aftermath of a resounding victory for democracy and popular sovereignty. … But the referendum happened. It wasn't a hallucination from which everyone has now recovered. On the contrary, the hallucination is the attempt to downgrade it to a temporary 'letting off of steam,' prior to resuming the downhill course towards a third memorandum."

And things went on in this direction. On the night of July 10, the Greek Parliament gave Alexis Tsipras the authority to negotiate a new bailout by 250 votes to 32, but 17 government MPs didn't back the plan, which means he got more support from the opposition parties than from his own. Days later, the Syriza Political Secretariat dominated by the left wing of the party concluded that EU's latest proposals are "absurd" and "exceed the limits of Greek society's endurance" – Leftist extremism?

But IMF itself (in this case a voice of minimally rational capitalism) made exactly the same point: an IMF study published a day earlier showed that Greece needs far more debt relief than European governments have been willing to contemplate so far - European countries would have to give Greece a 30-year grace period on servicing all its European debt, including new loans, and a dramatic maturity extension…

No wonder that Tsipras himself publicly stated his doubt about the bailout plan: "We don't believe in the measures that were imposed upon us," he said during a TV interview, making it clear that he supports it out of pure despair, to avoid a total economic and financial collapse. The eurocrats use such confessions with breathtaking perfidity: now that the Greek government accepted their the tough conditions, they doubt the sincerity and seriousness of their commitment. How can Tsipras really fight for a program he doesn't believe in? How can the Greek government be really committed to the agreement when it opposes the referendum result?

However, statements like those from IMF demonstrate that the true problem lies elsewhere: does EU really believe in their own bailout plan? Does it really believe that the brutally imposed measures will set in motion economic growth and thus enable the payment of debts? Or is it that the ultimate motivation for the brutal extortionist pressure on Greece is not purely economic (since it is obviously irrational in economic terms) but politico-ideological – or, as Paul Krugman put it in the New York Times, "substantive surrender isn't enough for Germany, which wants regime change and total humiliation - and there's a substantial faction that just wants to push Greece out, and would more or less welcome a failed state as a caution for the rest." One should always bear in mind what a horror Syriza is for the European establishment – a Conservative Polish member of the European parliament even directly appealed to the Greek army to make a coup d'etat in order to save the country.

Why this horror? Greeks are now asked to pay the high price, but not for a realist perspective of growth. The price they are asked to pay is for the continuation of the "extend and pretend" fantasy. They are asked to ascend to their actual suffering in order to sustain another's (eurocrats') dream. Gilles Deleuze said decades ago: Si vous etez pris dans le reve de l'autre, vous etez foutus. ("if you are caught into another's dream, you are fucked"), and this is the situation in which Greece finds itself now. Greeks are not asked to swallow many bitter pills for a realistic plan of economic revival, they are asked to suffer so that others can go on dreaming their dream undisturbed.

The one who now needs awakening is not Greece but Europe. Everyone who is not caught in this dream knows what awaits us if the bailout plan is enacted: another 90 or so billions will be thrown into the Greek basket, raising the Greek debt to 400 or so billion euros (and most of them will quickly return back to Western Europe - the true bailout is the bailout of German and French banks, not of Greece), and we can expect the same crisis to explode in a couple of years.

But is such an outcome really a failure? At an immediate level, if one compares the plan with its actual outcome, obviously yes. At a deeper level, however, one cannot avoid a suspicion that the true goal is not to give Greece a chance but to change it into an economically colonised semi-state kept in permanent poverty and dependency, as a warning to others. But at an even deeper level, there is again a failure – not of Greece, but of Europe itself, of the emancipatory core of European legacy.

The No of the referendum was undoubtedly a great ethico-political act: against a well-coordinated enemy propaganda spreading fears and lies, with no clear prospect of what lies ahead, against all pragmatic and "realist" odds, the Greek people heroically rejected the brutal pressure of the EU. The Greek No was an authentic gesture of freedom and autonomy, but the big question is, of course, what happens the day after, when we have to return from the ecstatic negation to the everyday dirty business – and here, another unity emerged, the unity of the "pragmatic" forces (Syriza and the big opposition parties) against the Syriza Left and Golden Dawn. But does this mean that the long struggle of Syriza was in vain, that the No of the referendum was just a sentimental empty gesture destined to make the capitulation more palpable?

The really catastrophic thing about the Greek crisis is that the moment the choice appeared as the choice between Grexit and the capitulation to Brussels, the battle was already lost. Both terms of this choice move within the predominant eurocratic vision (remember that the German anti-Greek hardliners like Wolfgang Schauble also prefer Grexit!). The Syriza government was not fighting just for a greater debt relief and for more new money within the same overall coordinates, but for the awakening of Europe from its dogmatic slumber.

Therein resides the authentic greatness of Syriza: insofar as the icon of the popular unrest in Greece were the protests on the Syntagma (Constitution) Square, Syriza engaged in a Herculean labor of enacting the shift from syntagm to paradigm, in the long and patient work of translating the energy of rebellion into concrete measures that would change everyday life of the people. We have to be very precise here: the No of the Greek referendum was not a No to "austerity" in the sense of necessary sacrifices and hard work, but a No to the the EU dream of just going on with the business as usual.

The country's former finance minister, Yanis Varoufakis, repeatedly made this point clear: no more borrowing but an overall rehaul needed to give the Greek economy a chance to rebound. The first step in this direction should be an increase in the democratic transparency of our power mechanisms. Our democratically elected state apparatuses are thus more and more redoubled by a thick network of "agreements" and non-elected "expert" bodies which yield the real economic (and military) power. Here is Varoufakis's report on an extraordinary moment in his dealings with EU negotiator Jeroen Dijsselbloem:

"There was a moment when the President of the Eurogroup decided to move against us and effectively shut us out, and made it known that Greece was essentially on its way out of the Eurozone. /…/ There is a convention that communiqués must be unanimous, and the President can't just convene a meeting of the Eurozone and exclude a member state. And he said, 'Oh I'm sure I can do that.' So I asked for a legal opinion. It created a bit of a kerfuffle.

For about 5-10 minutes the meeting stopped, clerks, officials were talking to one another, on their phone, and eventually some official, some legal expert addressed me, and said the following words: 'Well, the Eurogroup does not exist in law, there is no treaty which has convened this group.' So what we have is a non-existent group that has the greatest power to determine the lives of Europeans. It's not answerable to anyone, given it doesn't exist in law; no minutes are kept; and it's confidential. So no citizen ever knows what is said within… These are decisions of almost life and death, and no member has to answer to anybody."

Sounds familiar? Yes, to anyone who knows how Chinese power functions today, after Deng Xiaoping set in action a unique dual system: the state apparatus and legal system are redoubled by the Party institutions which are literally illegal - or, as He Weifang, a law professor from Beijing, put it succinctly: "As an organisation, the Party sits outside, and above the law. It should have a legal identity, in other words, a person to sue, but it is not even registered as an organization. The Party exists outside the legal system altogether." (Richard McGregor, The Party, London: Allen Lane 2010, p. 22) It is as if, in McGregor's words, the state-founding violence remain present, embodied in an organisation with an unclear legal status:

"It would seem difficult to hide an organization as large as the Chinese Communist Party, but it cultivates its backstage role with care. The big party departments controlling personnel and the media keep a purposely low public profile. The party committees (known as 'leading small groups') which guide and dictate policy to ministries, which in turn have the job of executing them, work out of sight. The make-up of all these committees, and in many cases even their existence, is rarely referred to in the state-controlled media, let alone any discussion of how they arrive at decisions."

No wonder that exactly the same thing happened to Varoufakis as to a Chinese dissident who, some years ago, formally brought to court and charged the Chinese Communist Party for being guilty of the Tienanmien massacre. After a couple of months, he got a reply from the ministry of justice: they cannot pursue his charge since there is no organization called "Chinese Communist Party" officially registered in China.

And it is crucial to note how the obverse of this non-transparency of power is false humanitarianism: after the Greek defeat, there is, of course, time for humanitarian concerns. Jean-Claude Juncker immediately stated in an interview that he was so glad about the bailout deal because it would immediately ease the suffering of the Greek people which worried him very much. Classic scenario: after a political crack-down, humanitarian concern and help… even postponing debt payments.

What should one do in such a hopeless situation? One should especially resist the temptation of Grexit as a great heroic act of rejecting further humiliations and stepping outside - into what? What new positive order are we stepping into? The Grexit option appears as the "real-impossible", as something that would lead to an immediate social disintegration. Krugman writes: "Tsipras apparently allowed himself to be convinced, some time ago, that euro exit was completely impossible. It appears that Syriza didn't even do any contingency planning for a parallel currency (I hope to find out that this is wrong). This left him in a hopeless bargaining position."

Krugman's point is that Grexit is also an "impossible-real" which can happen with unpredictable consequences and which, as such, can be risked.

"All the wise heads saying that Grexit is impossible, that it would lead to a complete implosion, don't know what they are talking about. When I say that, I don't mean that they're necessarily wrong - I believe they are, but anyone who is confident about anything here is deluding himself. What I mean instead is that nobody has any experience with what we're looking at."

While in principle this is true, there are nonetheless too many indications that a sudden Grexit now would lead to utter economic and social catastrophe. Syriza economic strategists are well aware that such a gesture would cause an immediate further fall of the standard of living for an additional (minimum) 30 per cent, bringing misery to a new unbearable level, with the threat of popular unrest and even military dictatorship. The prospect of such heroic acts is thus a temptation to be resisted.

Then there are calls for Syriza to return to its roots: Syriza should not become just another governing parliamentary party, the true change can only come from grassroots, from the people themselves, from their self-organization, not from the state apparatuses… another case of empty posturing, since it avoids the crucial problem which is how to deal with the international pressure concerning debt, or, more generally, how to exert power and run a state. Grassroots self-organization cannot replace the state, and the question is how to reorganize the state apparatus to make it function differently.

It's nonetheless not enough to say that Syriza put a heroic fight, testing what is possible - the fight goes on, it has just began. Instead of dwelling on the "contradictions" of Syriza policy (after a triumphant No one accepts the very program that was rejected by the people), and of getting caught in mutual recriminations about who is guilty (did the Syriza majority commit an opportunistic "treason", or was the Left irresponsible in its preference for Grexit), one should rather focus on what the enemy is doing: the "contradictions" of Syriza are a mirror image of the "contradictions" of the EU establishment gradually undermining the very foundations of united Europe.

In the guise of Syriza "contradictions", the EU establishment is merely getting back its own message in its true form. And this is what Syriza should be doing now. With a ruthless pragmatism and cold calculation, it should exploit the tiniest cracks in the opponent's armour. It should use all those who resist the predominant EU politics, from British conservatives to Ukip in the UK. It should shamelessly flirt with Russia and China, playing with the idea of giving an island to Russia as its Mediterranean military base, just to scare the shit out of Nato strategists. To paraphrase Dostoyevsky, now that the EU God has failed, everything is permitted.

When one hears the complaints that the EU administration brutally ignores the plight of the Greek people in their blind obsession with humiliating and disciplining the Greeks, that even Southern-European countries like Italy or Spain didn't show any solidarity with Greece, our reaction should be: but is there any surprise in all this? What did the critics expect? That the EU administration will magically understand the Syriza argumentation and act in compliance with it? The EU administration is simply doing what it was always doing. Then there is the reproach that Greece is looking for help in Russia and China – as if Europe itself is not pushing Greece in that direction with its humiliating pressure.

Then there is the claim that phenomena like Syriza demonstrate how the traditional Left/Right dichotomy is outlived. Syriza in Greece is called extreme Left, and Marine le Pen in France extreme Right, but these two parties have effectively a lot in common: they both fight for state sovereignty, against multinational corporations. It is therefore quite logical that in Greece itself, Syriza is in coalition with a small Rightist pro-sovereignty party. On April 22, 2015, Francois Hollande said on TV that Marine le Pen today sounds like George Marchais (a French Communist leader) in 1970s – the same patriotic advocacy of the plight of ordinary French people exploited by international capital – no wonder Marine le Pen supports Syriza . . . a weird claim which doesn't say a lot more than the old Liberal wisdom than Fascism is also a kind of Socialism. The moment we bring into the picture the topic of immigrant workers, this whole parallel falls apart.

The ultimate problem is a much more basic one. The recurrent story of the contemporary Left is that of a leader or party elected with universal enthusiasm, promising a "new world" (Mandela, Lula) – but, then, sooner or later, usually after a couple of years, they stumble upon the key dilemma: does one dare to touch the capitalist mechanisms, or does one decide to "play the game"? If one disturbs the mechanisms, one is very swiftly "punished" by market perturbations, economic chaos and the rest.

The heroism of Syriza was that, after winning the democratic political battle, they risked a step further into disturbing the smooth run of the Capital. The lesson of the Greek crisis is that Capital, though ultimately a symbolic fiction, is our Real. That is to say, today's protests and revolts are sustained by the combination (overlapping) of different levels, and this combination accounts for their strength: they fight for ("normal" parliamentary) democracy against authoritarian regimes; against racism and sexism, especially the hatred directed at immigrants and refugees; for welfare-state against neoliberalism; against corruption in politics and economy (companies polluting environment, etc.); for new forms of democracy that reach beyond multi-party rituals (participation, etc.); and, finally, questioning the global capitalist system as such and trying to keep alive the idea of a non-capitalist society. Both traps are to be avoided here: the false radicalism ("what really matters is the abolition of liberal-parliamentary capitalism, all other fights are secondary"), as well as the false gradualism ("now we fight against military dictatorship and for simple democracy, forget your Socialist dreams, this comes later – maybe…").

When we have to deal with a specific struggle, the key question is: how will our engagement in it or disengagement from it affect other struggles? The general rule is that, when a revolt begins against an oppressive half-democratic regime, as was the case in the Middle East in 2011, it is easy to mobilize large crowds with slogans which one cannot but characterise as crowd pleasers – for democracy, against corruption, etc. But then we gradually approach more difficult choices: when our revolt succeeds in its direct goal, we come to realize that what really bothered us (our un-freedom, humiliation, social corruption, lack of prospect of a decent life) goes on in a new guise. In Egypt, protesters succeeded in getting rid of the oppressive Mubarak regime, but corruption remained, and the prospect of a decent life moved even further away. After the overthrow of an authoritarian regime, the last vestiges of patriarchal care for the poor can fall away, so that the newly gained freedom is de facto reduced to the freedom to choose the preferred form of one's misery – the majority not only remains poor, but, to add insult to injury, it is being told that, since they are now free, poverty is their own responsibility. In such a predicament, we have to admit that there was flaw in our goal itself, that this goal was not specific enough - say, that standard political democracy can also serve as the very form of un-freedom: political freedom can easily provide the legal frame for economic slavery, with the underprivileged "freely" selling themselves into servitude. We are thus brought to demand more than just political democracy – democratization also of social and economic life. In short, we have to admit that what we first took as the failure to fully realize a noble principle (of democratic freedom) is a failure inherent to this principle itself – to learn this move from the distortion of a notion, its incomplete realization, to the distortion immanent to this notion is the big step of political pedagogy.

The ruling ideology mobilises here its entire arsenal to prevent us from reaching this radical conclusion. They start to tell us that democratic freedom brings its own responsibility, that it comes at a price, that we are not yet mature if we expect too much from democracy. In this way, they blame us for our failure: in a free society, so we are told, we are all capitalist investing in our lives, deciding to put more into our education than into having fun if we want to succeed, etc. At a more directly political level, the US foreign policy elaborated a detailed strategy of how to exert damage control by way of re-channeling a popular uprising into acceptable parliamentary-capitalist constraints – as was done successfully in South Africa after the fall of apartheid regime, in Philippines after the fall of Marcos, in Indonesia after the fall of Suharto, etc. At this precise conjuncture, radical emancipatory politics faces its greatest challenge: how to push things further after the first enthusiastic stage is over, how to make the next step without succumbing to the catastrophe of the "totalitarian" temptation – in short, how to move further from Mandela without becoming Mugabe.

The courage of hopelessness is crucial at this point.

[Jul 21, 2015] Greece: plea for unity as banks reopen

"...Well, they found out how hard it is when you have no leverage to put up a strong fight. "
.
"...The whole premise that the EU would crumble if Greece left the EU was pushed by Yanis V....and he was 2 years to late to the party... the markets had priced in the Grexit over the last 3 years and it showed in the lack of volatility during the leadup to the Vote."
Jul 20, 2015 | The Guardian

KateShade -> curious3 21 Jul 2015 10:49

Curious3, here is the direct quote from the July 12th Proposal (downloaded from BBC)

"to develop a significantly scaled up privatisation programme with improved governance; valuable Greek assets will be transferred to an independent fund that will monetize the assets through privatisations and other means. The monetization of the assets will be one source to make the scheduled repayment of the new loan of ESM and generate over the life of the new loan a targeted total of EUR 50bn of which EUR 25bn will be used for the repayment of recapitalization of banks and other assets and 50 % of every remaining euro (i.e. 50% of EUR 25bn) will be used for decreasing the debt to GDP ratio and the remaining 50 % will be used for investments."

thecatspyjamas2 -> picar52 21 Jul 2015 10:21

As Paul Krugman said yesterday " I find it hard to believe they didn't have a plan B" ...That was the worst thing they did...not just the stupid promises they made..but the fact they had no leverage AND they did not have the common sense to even try to create some fake leverage during the negotiations. Syriza must have thought the previous Greeks in charge just did not put up any fight against the Austerity.

Well, they found out how hard it is when you have no leverage to put up a strong fight.

The whole premise that the EU would crumble if Greece left the EU was pushed by Yanis V....and he was 2 years to late to the party... the markets had priced in the Grexit over the last 3 years and it showed in the lack of volatility during the leadup to the Vote.

KateShade -> curious3 21 Jul 2015 09:41

Dear curious, according to July 12 summit proposal 50% of money is to go on recapitalizing banks, 25% on bringing down debt to GDP ratio and 25% on investment.
So the answer to the question how much of money raised is to go on interest is "none".
Does that clarify things?

picar52 -> TokyoJones 21 Jul 2015 06:55

I appreciate your comments and will reply in as few words as possible. My dismay is not solely with the present government but with the whole political establishment that has ever since the beginning of the crisis, in 2009, consistently avoided doing their bit with regard to each and every agreement they signed with the troika, etc. As a result they all lost international credibility, as the only game they ever knew how to play was that of populist rhetoric vis-a-vis the local electorate. In fact George Papandreou, who was in power for three years (2009-11), did absolutely nothing in terms of reforms. The opposition parties, conservative New Democracy and left Syriza attacked the PASOK government in every possible way. Meanwhile, in other southern European countries, the opposition parties took a more responsible approach and thus measures were introduced that ensured that their crises quickly ended. In Greece however, things took a different turn. And the end result is there for all to see.

I shall give you another example of populist misleading rhetoric. Andreas Papandreou, who first gained power in 1981, got elected on slogans such as

EEC and NATO, the same syndicate! (EOK kai NATO to idio syndikato!)

or

Out with the (US military) bases of death! (Exo oi vaseis tou thanatou!)

Papandreou had promised (in 1981) to hold a referendum for Greeks to decide to on membership of the EEC. When elected, he never held it. He promised to close down the US military bases. He never did - instead the US stopped operating them because they no longer served their purpose.

So please understand, Greek politicians are a special breed. Their cynical streak as regards the implementation of measures required to gain power is probably unmatched in any other European democracy.

Europeans who have not experienced this at close hand cannot appreciate the level of lying and hypocrisy we have had to put up with.


bally38 -> areianos 21 Jul 2015 06:43

1. Please Stop shouting.
2. Credit Default Swaps were triggered. Here's the story in Reuters (march 2012)
3. "WHY ARE YOU PEOPLE SUCH MEDIA MUPPETS" As they say, when you point the finger, three fingers are pointing back at you.


areianos Grishnakh 21 Jul 2015 06:21

This is the last of it, after 2015 debt is highly manageable.

http://graphics.wsj.com/greece-debt-timeline/

Varoufakis is an intelligent and honourable man and fought for the people very well

Tsipras had to make the most difficult executive decision of his life.

By January 2016 the Greek crisis will be over.

I don't blame Germany for protecting its own unregulated and gambling interests I just find it somewhat unique that Americans have more concern about the Greeks in Greece than Germans.

[Jul 21, 2015] Pro&Con Greeks rightly stymied Europe's attempt to force regime change

"...that despite a massive propaganda campaign by what The New York Times described as "the oligarch-dominated news organizations," they were not easily fooled, either: They knew who was to blame for their suffering in the run-up to the vote."

southcoasttoday.com - New Bedford, MA

...Second, that despite a massive propaganda campaign by what The New York Times described as "the oligarch-dominated news organizations," they were not easily fooled, either: They knew who was to blame for their suffering in the run-up to the vote.
Third, they understood who was responsible for the never-ending depression, and that the European authorities were not offering a way out of it. The European authorities had severely underestimated Greek national pride and solidarity, and the Greek people's understanding of basic economics.
With no sense of irony, the creditors are now trying to blame the Greek government for the serious damage to the Greek economy caused by the ECB's forced closure of the banking system.
But this is a continuation of what the European authorities have been doing for more than five years.
The reason that the Greeks need so much debt relief is because the European authorities have shrunk the economy by more than 25 percent and drastically reduced Greece's ability to pay.
Now that the European authorities - not the Greek government - have pushed the economy back into recession, it will make Greece's debt situation even worse. The IMF just published a paper showing that the Greek debt is not sustainable, yet the European authorities have refused to discuss debt relief.
The European authorities are demanding more pension cuts and regressive tax increases, as well as primary - excluding interest - budget surpluses that would make it difficult, if not impossible, for the Greek economy to have a recovery any time soon that would be strong enough to make a serious dent in Greece's 26 percent unemployment rate.
In short, they are not offering Greeks any light at the end of a long tunnel. This is more evidence, if any were needed, that they are not bargaining in good faith.
The Greek government is in a tough spot. Since they are committed to remaining within the eurozone, their only option is to change Europe.
But the eurozone officials have their own vision for a new Europe, and it is one with less of a social safety net, with lower pensions, less spending on health care, weaker unions and a smaller welfare state. Hence the collision: Greece is an obstacle on their path to a new Europe. But it is proving to be a stubborn one.
Mark Weisbrot is co-director of the Center for Economic and Policy Research (cepr.net), a think tank dedicated to promoting debate on vital economic and social issues. He holds a doctorate in economics from the University of Michigan. Readers may write him at CEPR, 1611 Connecticut Avenue NW, Suite 400, Washington, DC 20009. Distributed by Tribune Content Agency LLC.

[Jul 19, 2015] Negotiating with Germany is a Waste of Time

"...Germany is a loanshark with a gang of Northern countries and they just kneecapped Greece to get the word out in the neighborhood, aka Eurozone. This isn't about moral hazard, it's Germany saying to the periphery if you don't submit we will pound you into the ground."
.
"...Since Prof. Varoufakis is an expert in Game Theory, I'm surprised that he didn't realize that BEFORE he started negotiations. If the Eurozone hardliners gave in to Greece, they would have to give the same deal to everyone who asked for it.
I wonder if he's going to use this experience in his classes."

.
"..."Ireland, Spain and Portugal endured the pain associated with their bailouts and emerged economically stronger." Lies. Europe is sinking into economic weakness because of Germany's insane ideas about economics."
.
"...The euro is essentially the successor to the Deutsche mark, whatever other Europeans might think of it. Germany's currency had far more global weight than those of the other members before the monetary union was created, and Germany's exit would destroy the euro immediately."
.
"...I do not hate Germans, my family are of German descent and I have German friends. What I hate are destructive neoliberal policies like those imposed by the German government. Let us be clear, from all reports the people who refuse to negotiate here are the Germans. The French, Italians, and others have shown some flexibility, but the Germans have not, and as the dominant economy in the ECU, they pretty much get their way."
.
"...Germany and the UK have been fighting for decades (really since Bismark) over who should politically run Europe. That is why the so called UK "exit" from the EU is a real joke. More like hurt feelings of being the loser. "
.
"...Let's not waste time with wishful thoughts about the foresight of the German elites. As they so often say, "We Germans reject Keynesian economics." Indeed. They reject not only deficit spending in a liquidity trap but, more fundamentally, the paradox of thrift, and not just as the paradox applies to households but also as it applies to sovereign nations.
.
So the German elites announce, over and over again, their dictum for the rest of Europe. "Imitate Germany! Be more competitive!" That is to say, always run a large current-account surplus.
"
.
"...
"We Germans reject Keynesian economics." Should we call this MerkelNomics? Sort of like Herbert Hoover economics. Or Cameron-Osborne economics. The kind of stupidity that JohnH apparently hearts. Of course this is also the economics of the modern Republican Party. We are ruled by morons. "
.
"...The historic way a weaker economy became more competitive was to have a weaker currency and to protect its developing industry with various protections against imports. That route is not available to the periphery nations."
.
"...Stripped of ambitions for a political and economic union, the bloc changes into a utilitarian project
.
A few things that many of us took for granted, and that some of us believed in, ended in a single weekend. By forcing Alexis Tsipras into a humiliating defeat, Greece's creditors have done a lot more than bring about regime change in Greece or endanger its relations with the eurozone. They have destroyed the eurozone as we know it and demolished the idea of a monetary union as a step towards a democratic political union.
.
In doing so they reverted to the nationalist European power struggles of the 19th and early 20th century. They demoted the eurozone into a toxic fixed exchange-rate system, with a shared single currency, run in the interests of Germany, held together by the threat of absolute destitution for those who challenge the prevailing order. The best thing that can be said of the weekend is the brutal honesty of those perpetrating this regime change."
Jul 13, 2015 | Economist's View

David

Germany is a loanshark with a gang of Northern countries and they just kneecapped Greece to get the word out in the neighborhood, aka Eurozone. This isn't about moral hazard, it's Germany saying to the periphery if you don't submit we will pound you into the ground.

What a great democratic experiment. And what a model of solidarity and social cohesion. What a joke.

anne -> Peter K....

http://research.stlouisfed.org/fred2/graph/?g=11bD

January 15, 2015

Government debt and balance of trade as shares of Gross Domestic Product for France, 2000-2012

(Percent)

[ President Hollande has been shockingly conservative or a staunch conservative wearing socialist clothes. ]

DrDick -> anne...

It has been pretty obviously the latter from the outset. He is a socialist in name only, much like the British Labour Party these days.

MacAuley -> Peter K....

Since Prof. Varoufakis is an expert in Game Theory, I'm surprised that he didn't realize that BEFORE he started negotiations. If the Eurozone hardliners gave in to Greece, they would have to give the same deal to everyone who asked for it.
I wonder if he's going to use this experience in his classes.

pgl

"be willing to act unilaterally, be willing to default unilaterally, have a plan for achieving primary surplus if you haven't already achieved it, have a hard default and euro exit (now possible, thanks to the Germans) option in your back pocket, and be willing to use it at the first sign of hassle from the ECB."

YES! Only edit to this comes from the fact that Greece already has a large primary surplus. Exit the Euro Zone and say the heck with the Germans.

Fred C. Dobbs

(Many hold that Germany should have given
in to Greece, not the other way around.
That was not to be. Go figure.)

The Greek Deal Is a Disaster for Greece, and Maybe
for Europe http://nyti.ms/1UUXCHl via @UpshotNYT
NYT - Neil Irwin - July 13

For years, Greece's negotiations with its European creditors have featured moments in which all parties stare into the abyss, fear what they see, and step back to reach a deal.

On Monday, there was yet another deal. But this time it is one that pushes Greece into the abyss, even if financial markets don't acknowledge it just yet and even if what happens next is deeply uncertain.

Greece already has 26 percent unemployment, a tourism industry that is suffering as would-be visitors stay away, and banks and a stock market that have been closed going on three weeks. Just a week ago, its voters overwhelmingly rejected a bailout offer that was less punitive than the one its leaders just accepted.

Yet the deal that Greek leaders and their creditors reached Monday morning after a brutal series of overnight talks promise to deepen political and economic strains in a country already in depression.

It was a momentous weekend for Europe, and not in a good way. The deal will keep Greece in the eurozone at least a while longer, at great cost, and with little certainty about the future of either Greece or Europe in the not too distant future.

In exchange for a cash lifeline, the country has agreed to much greater concessions than those that were under discussion a few weeks ago. Among them: higher taxes, cuts to government pensions and a sell-off of $55 billion worth of state assets in order to recapitalize banks and make debt payments. That last strategy is a little like a family selling off its furniture to make its mortgage payment; you can do it, but it does not exactly amount to a long-term solution.

A week ago, thousands of Greeks crowded Syntagma Square, in front of the nation's parliament, celebrating their country's emphatic "No" vote on a proposed financial rescue. Right and left, old and young, the Greek people were united: They would not accept the further austerity that Germany and other European countries were demanding as a condition of further bailout money. ...

(The new harsh scheme can only work if Greece corrects
a lot of 'systemic problems', and - unfortunately -
maybe not even then.)
Monday, July 13, 2015 at 12:24 PM

Fred C. Dobbs -> Fred C. Dobbs...

The Eurozone's Damaging Deal for Greece
http://nyti.ms/1JeyJgO
NYT - editorial - July 13

In the end, after trying every possible tactic, Prime Minister Alexis Tsipras of Greece threw in the towel and accepted the toughest demands yet made by creditors to extend life support for Greece and keep it in the eurozone. That may avert an immediate catastrophe, but there is little to celebrate since it will do little to address, much less repair, the slow-moving disaster of the Greek economy.

The Greek Parliament has to approve the main portions of the package by Wednesday just to start negotiations on a new three-year bailout of up to 86 billion euros ($96 billion). Despite pleas from the Greeks for debt relief, the creditors gave only vague indications that they might consider easing terms on Greece's total debt of more than 300 billion euros, which it cannot possibly repay.

Mr. Tsipras certainly didn't help his cause with the European leaders by calling for a confusing last-minute referendum, in which Greek voters rejected an earlier bailout deal. And now his capitulation has enraged members of his left-wing Syriza party, raising the possibility of another national election, with the attendant unknowns, or at least a thorough reshuffling of the government.

The guiding notion behind the creation of the European Union was to resolve problems like this through consensus and cooperation. Instead, the final 17-hour negotiating session was marked by acrimony not only between Greece and the European leaders, but also between Germany and France; between the German finance minister and the head of the European Central Bank; between north and south, east and west.

So the tragedy is not only that the Greek debt crisis has no end in sight, but that instead of the one-for-all-and-all-for-one ethic that was supposed to govern Europe, the rancorous talks showed a roomful of national leaders with sharply differing conceptions of what to do about a bankrupt fellow member.

The Greek Parliament is likely to accept the deal, if only because there is no choice. Austerity will remain firmly in place, and the increased taxes and reduced pension payments imposed in the package will only further erode the demand that the Greek economy needs to avoid a deepening depression. The deal also requires that a fund be created to sell off public assets worth 50 billion euros to repay debts and recapitalize banks, a condition hard for a socialist government to swallow, and continued monitoring of Greece's adherence to bailout terms by the International Monetary Fund. ...
Monday, July 13, 2015 at 05:16 PM

Eric

there is only one problem with this plan, there is no popular support for it.

Some of you probably think that if the economy in some countries continues to stagnate, this attitude will change. But popular support for the euro in those countries is not about macro-economics, but because they don't trust their own politicians to handle their own currencies properly.

I think there is a higher chance that the Northern countries exit the eurozone than the troubled countries, even when it would be wise from a macro economic perspective.

David -> Eric...

Actually there are lot of problems with it as others have posted.

Odd note. when did the Finns become jerks? I have known a few who were super cool. I get there's a politics thing but I expected this out of Germany, not the Finns.

Peter K. -> Eric...

"but because they don't trust their own politicians to handle their own currencies properly."

You have no evidence of this and just are making things up out of thin air.

pgl -> Peter K....

Eric does not even know the difference between the overall surplus/deficit versus the primary surplus. Dumb? Dishonest? Either way - he is a troll.

am -> pgl...

I thought also that the ps had disappeared since the start of the year.

But the mystery in all of the crisis has been the wish to retain the euro by the Greek people. It may be some sense of belonging to the euro group that they desire. But it is more like knowing the history of the drachma. His point that Peter copied in is not all unreasonable.

They don't want the drachma because monetary and fiscal policy may revert to drachma like figures of the past, including devaluation.

I posted up a link before on the recent history of the drachma. From ww2 to the collapse of the Bretton Wood institutions it was good: called the golden period. From 1972 or thereabouts until the attempt at convergence to join the euro it was very poor. During the convergence period it was good. I think the people can remember the bad period with devaluations. It was one of the reasons they wanted to join the euro.

Eric

''Want the Euro? Be More Like the Germans''

...

The euro is essentially the successor to the Deutsche mark, whatever other Europeans might think of it. Germany's currency had far more global weight than those of the other members before the monetary union was created, and Germany's exit would destroy the euro immediately. By contrast, the common currency could feasibly survive the exit of any other member, probably even France. If you want to use an essentially German currency, you have to be a little German. That means low or nonexistent budget deficits, extreme tax discipline (tax dodging in Germany is not just a crime -- it causes genuine moral outrage), and a rule-based approach to government and economic life.

Europeans like the euro, and most of them make an honest attempt at German-ness. Ireland, Spain and Portugal endured the pain associated with their bailouts and emerged economically stronger. Their political landscape also became more German: The center left and the center right, increasingly indistinguishable from one another, alternate in power or even share it, and the extreme right and extreme left have been marginalized. In Greece, the extreme left won. That was extremely un-German. The result is politically -- and probably economically -- disastrous for Greece.

The message for other euro countries is that if they want to enjoy the trade, convenience and interest-rate benefits of the common currency, they cannot afford to elect the far left and far right. The German-led currency union will fight back and make it painful. If Podemos wins in Spain, or if the Finns Party triumphs in Finland, they will need to take their countries out of the euro area to escape Greece's fate.
...

http://www.bloombergview.com/articles/2015-07-13/want-the-euro-be-more-like-the-germans

David -> Eric...

How rule based were the Germans after WW2 when their debt was forgiven and they were gifted the Marshall plan after they started the worst war in human history, genocide etc. This was the greatest crime foriveness in human history.

DrDick -> David ...

Also after WW I, when they defaulted on their debts.

Peter K. -> Eric...

Wow what a horrible piece. Not surprising coming from Eric.

"Ireland, Spain and Portugal endured the pain associated with their bailouts and emerged economically stronger."

Lies. Europe is sinking into economic weakness because of Germany's insane ideas about economics.

Peter K. -> Eric...

"Leonid Bershidsky is a Bloomberg View columnist. He is a Berlin-based writer, author of three novels and two nonfiction books."

The Germans are reverting to form.

Just saw Brad Pitt's movie Fury. Good movie. Pitt kills a lot of Nazis as the Americans invade Germany.

Peter K. -> Peter K....

Pitt likes to kill Nazis.

https://www.youtube.com/watch?v=grq0rhtbtAw

Peter K.

Feckless as Syriza? What other choice did they have?

One. Default and exit. But the Greeks don't want to do that, so why have a backup plan? I don't really go along with these criticisms of Tsipras and Syriza. Nobody could have done better. Being "nice" to the Germans wouldn't have mattered at all. The Greeks were nice for 5 years and just gave them a broken economy.

The Greeks recognized it wasn't working and elected Syriza to get a better deal. They couldn't. They held a referendum and the Greeks voted No to the austerity deal. But they don't want to leave the Eurozone so they have to accept the bailout terms. They're in a no win situaion.

I agree with Krugman and Dean Baker that default and getting your own monetary policy is the way to go, but the Greeks don't want to leave Europe.

John Cummings -> Eric...

I suspect there is a bunch of pro-anglo sentiment in secret. Basically progressives and Margie Thatcher are crying together at the diminished anglo role....

pgl -> Eric...

We don't hate Germans. We hate horrific economic policies. We also don't like trolls - like you.

Eric -> Eric...

actually it was Germany that proposed a possible better way out for Greece this weekend: a time out from the euro zone for at least five years, debt restructuring, humanitarian aid and growth enhancing measures:

http://www.focus.de/finanzen/news/staatsverschuldung/finanzministerium-verschickt-papier-schaeuble-schlaegt-grexit-auf-zeit-vor_id_4810445.html

This German plan was ridiculed and dismissed by other eurozone countries, in particular France. I wonder why.

John Cummings -> Eric...

That was only by "select" Germans and only if Greece didn't capitulate. It may still happen if Greece doesn't follow their edict.

DrDick -> Eric...

I do not hate Germans, my family are of German descent and I have German friends. What I hate are destructive neoliberal policies like those imposed by the German government. Let us be clear, from all reports the people who refuse to negotiate here are the Germans. The French, Italians, and others have shown some flexibility, but the Germans have not, and as the dominant economy in the ECU, they pretty much get their way.

Peter K. -> Eric...

My family is of German descent. My father's father had German parents, one of whom came over on a boat. My grandfather fought the Japanese in World War II while some of his cousins were drafted by the Nazis late in the war and sent to the Eastern Front never to be heard from again.

Your lack of concern over the well-being of the Greeks is shameful. You're a stupid troll.

John Cummings

Germany and the UK have been fighting for decades (really since Bismark) over who should politically run Europe. That is why the so called UK "exit" from the EU is a real joke. More like hurt feelings of being the loser.

btg -> John Cummings...

The Brits kept out of Europe and have never seen themselves as being fully part of Europe - the EU was always a French/German thing.

Britain/England is an island and as such it never needed a large standing army and instead became a maritime power with an empire larger than its European neighbors.

Britian sees the defeat of Germany as a highpoint but even then it was largely overtaken by the US since then as the US forced it to dismember the empire.

Peter K.

http://macromarketmusings blogspot.com/2015/07/did-monetary-policy-really-offset.html

Monday, July 13, 2015

Did Monetary Policy Really Offset Fiscal Austerity in Canada?
by David Beckworth

The blogosphere is once again talking about Canada's successful fiscal austerity in the mid-to-late 1990s. Paul Krugman rekindled the conversation with this statement:

"[L]ook at everyone's favorite example of successful austerity, Canada in the 1990s. Canada came in with gross debt of roughly 100 percent of GDP, roughly comparable to Greece on the eve of the financial crisis. It then proceeded to do a pretty big fiscal adjustment -- 6 percent of GDP according to the IMF's measure of the structural balance, which is about a third of what Greece has done but comparable to other European debtors. But unemployment fell steadily. What was Canada's secret?"

Ramesh Ponnuru and I have argued numerous times that Canada's secret was a monetary policy offset. That is, monetary policy eased to offset the drag of fiscal tightening. Paul Krugman agrees in the above post. The evidence that we and others have pointed to in support of this view is the Bank of Canada cutting its target interest rate more than 500 basis points between 1995 and 1997.

Some of our conservative and libertarian friends, however, are not convinced by this evidence. David Henderson and Robert Murphy, in particular, have pushed back against this view. They contend there was no monetary offset. Henderson questions how much influence the Bank of Canada actually has over interests rates. Murphy goes further and provides a list of data points that he claims show the Canadian success story did not rely on loose money. So are Henderson and Murphy's skepticism of the monetary offset warranted?

The answer is no.....

....

Note that nominal GDP follows its trend path rather closely during the period of fiscal austerity. The Bank of Canada, in other words, did what was necessary to keep aggregate demand on a stable growth path during this time. Given the evidence shown above, the Bank of Canada offset the fiscal tightening via lower interest rates and a permanently higher monetary base path. This story is completely missed by Murphy's cursory look at nominal GDP growth rates over a few years. So yes, monetary policy did offset fiscal austerity in Canada in the mid-to-late 1990s.

The policy implications from this experience are clear. Economies undertaking fiscal austerity are best served by expansionary monetary policy. It provides a viable path to obtaining a more sustainable debt level. The ECB, however, tightened monetary policy twice during the Eurozone crisis. Given the one-size-fits-all approach problems, this tightening proved excessive for the periphery countries and helped spawn the soveriegn debt crisis. Just imagine how different the Eurozone would be today had the ECB began its QE program back in 2008.

------------------

Obviously JohnH and other critics of monetary policy and QE don't agree. The banks had enough liquidity and QE wouldn't help. How wrong they are. They're just like conservatives.

Reply Monday, July 13, 2015 at 01:56 PM
John Cummings -> Peter K....

Debt expanded due to the corporate debt bubble(that financed Y2K overhaul) of the 1990's which gave the illusions that "austerity" worked. "Monetary" Policy became looser as would expect during that time of disinflation (which was the point). Glibers don't want to give the BoC any credit, but that is their way. In the end the BoC didn't really offset anything. The debt market is the debt market.

pgl -> John Cummings...

What a bunch of irrelevant babble. Read what Krugman wrote and learn. Duh!

John Cummings -> pgl...

Krugman ignored the debt expansion of corporate balance sheets in the mid-late 90's. That was the key driver. Overrating central banks is a classic sign of neo-classical/new keynesian garble.

A debt expansion is a debt expansion. It will drive growth. Always have. Since the 1600's.

pgl -> John Cummings...

Are you talking about US corporate balance sheets in 1995. How the F is this relevant to the current Greek crisis? Krugman has noted Greece's debt before the crisis. So pardon my French but what the FUCK are you babbling about now?

Bert Schlitz -> John Cummings...

"Some of our conservative and libertarian friends, however, are not convinced by this evidence. David Henderson and Robert Murphy, in particular, have pushed back against this view. They contend there was no monetary offset. Henderson questions how much influence the Bank of Canada actually has over interests rates. Murphy goes further and provides a list of data points that he claims show the Canadian success story did not rely on loose money. So are Henderson and Murphy's skepticism of the monetary offset warranted?"

1.Libertarian/Austrian types don't believe in the nation state. Any function, even if run privately by a monopoly is considered bad when connected to the nation state. Their ideal is more of a Wealth/Propertarian run global syndicate that handles wealth tranfers via what true conservatives would call a degenerated imperial state of capitalists/merchants. Very non-democratic.

2.They believe capitalism can survive without debt expansion. This silly notion is what separates them from neo-liberals who quite understandably, know this is not true. Debt is what makes capitalism go. Without it, it is not sustainable. That is why the economic contraction from a libertarian regime would eventually drive them from power and enable conservatives and socialists to unite, much like it did in the late 19th century during what was the closest to the last libertarian period.

pgl -> Peter K....

"Some of our conservative and libertarian friends, however, are not convinced by this evidence."

These conservatives and libertarians may be his friends but they know nothing about economics. Just check out the devaluation of the C$ and you'll see what Krugman was talking about.

anne -> Peter K....

http://krugman.blogs.nytimes.com/2010/06/18/fiscal-fantasies-2/

June 18, 2010

Fiscal Fantasies
By Paul Krugman

It's really amazing to see how quickly the notion that contractionary fiscal policy is actually expansionary is spreading. As I noted yesterday, * the Panglossian view has now become official doctrine at the European Central Bank.

So what does this view rest on? Partly on vague ideas about credibility and confidence; but largely on the supposed lessons of experience, of countries that saw economic expansion after major austerity programs.

Yet if you look at these cases, every one turns out to involve key elements that make it useless as a precedent for our current situation.

Here's a list of fiscal turnarounds, ** which are supposed to serve as role models. What can we say about them?

  • Canada 1994-1998: Fiscal contraction took place as a strong recovery was already underway, as exports were booming, and as the Bank of Canada was cutting interest rates. As Stephen Gordon explains, *** all of this means that the experience offers few lessons for policy when the whole world is depressed and interest rates are already as low as they can go.
  • Denmark 1982-86: Yes, private spending rose - mainly thanks to a 10-percentage-point drop in long-term interest rates, hard to manage when rates in major economies are currently 2-3 percent.
  • Finland 1992-2000: Yes, you can have sharp fiscal contraction with an expanding economy if you also see a swing toward current account surplus of more than 12 percent of GDP. So if everyone in the world can move into massive trade surplus, we'll all be fine.
  • Ireland, 1987-89: Been there, done that. **** Let's all devalue! Also, an interest rate story something like Denmark's.
  • Sweden, 1992-2000: Again, a large swing toward trade surplus.

So every one of these stories says that you can have fiscal contraction without depressing the economy IF the depressing effects are offset by huge moves into trade surplus and/or sharp declines in interest rates. Since the world as a whole can't move into surplus, and since major economies already have very low interest rates, none of this is relevant to our current situation.

Yet these cases are being cited as reasons not to worry as austerity becomes the rule.

You know what? I'm worried.

* http://krugman.blogs.nytimes.com/2010/06/17/magical-thinking-at-the-ecb/

** http://www.scribd.com/doc/27294711/Fiscal-Turnarounds

*** http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/06/on-the-lessons-to-be-learned-from-the-elimination-of-the-canadian-federal-deficit-in-the-1990s.html

**** http://krugman.blogs.nytimes.com/2010/06/15/magical-foreigners-austerity-edition/

Reply Monday, July 13, 2015 at 04:22 PM
anne -> Peter K....

http://krugman.blogs.nytimes.com/2015/07/08/policy-lessons-from-the-eurodebacle/

July 8, 2015

Policy Lessons From the Eurodebacle
By Paul Krugman

[Graph]

It's now clear, or should be clear, that the Greek program was doomed to failure without major debt relief; no matter how hard the Greeks tried, austerity would shrink GDP faster than it reduced debt relative to the baseline, so that the debt situation was bound to worsen even as the attempt to balance the budget imposed vast suffering.

And there was no good, or even non-terrible, answer given Greece's membership in the euro.

But there's a broader lesson from Greece that is relevant to all of us - and it's not the usual one about mending our free-spending ways lest we become Greece, Greece I tell you. What we learn, instead, is that fiscal austerity plus hard money is a deeply toxic mix. The fiscal austerity depresses the economy, and pushes it toward deflation; if it's accompanied by hard money (in Greece's case the euro, but a fixed exchange rate, a gold standard, or any kind of obsessive fear of inflation would do the trick), the result is not just a depression and deflation, but quite likely a failure even to reduce the debt ratio.

For comparison, look at everyone's favorite example of successful austerity, Canada in the 1990s. Canada came in with gross debt of roughly 100 percent of GDP, roughly comparable to Greece on the eve of the financial crisis. It then proceeded to do a pretty big fiscal adjustment - 6 percent of GDP according to the International Monetary Fund's measure of the structural balance, which is about a third of what Greece has done but comparable to other European debtors. But unemployment fell steadily. What was Canada's secret?

The answer was, easy money and a large currency depreciation. * These offset the drag from austerity, allowing growth to continue.

So, how does this play into U.S. policy debates? Well, Republicans love to warn that America might turn into Greece any day now. ** But look at the policy mix that is now de facto GOP orthodoxy: sharp cuts in government spending (maybe offset by tax cuts for the rich, but these won't provide much stimulus), combined with a monetary policy obsessed with fears of dollar "debasement". That is, the conservative side of the US political spectrum, while holding up Greece as a cautionary tale, is actually demanding that we emulate the policy mix that turned Greek debt into a complete disaster.

* https://research.stlouisfed.org/fred2/graph/?g=1m1K

** http://www.washingtonpost.com/posteverything/wp/2015/07/06/the-only-lesson-the-united-states-should-draw-from-greece/

anne -> Peter K....

http://research.stlouisfed.org/fred2/graph/?g=147Z

Price of an American Dollar in Canadian Dollars, 1990-2000

Canadian Dollars

1990 ( 1.17)
1991 ( 1.15)
1992 ( 1.21)
1993 ( 1.29) Clinton
1994 ( 1.37)

1995 ( 1.37)
1996 ( 1.36)
1997 ( 1.39)
1998 ( 1.48)
1999 ( 1.49)

2000 ( 1.49)

anne -> Peter K....

https://research.stlouisfed.org/fred2/graph/?g=1rjx

January 4, 2015

Interest Rate on 10-Year Canadian Government Bonds, 1990-2000

Reply Monday, July 13, 2015 at 04:31 PM
anne -> anne...

The value of the Canadian dollar fell by 27% against the American dollar through the 1990s. The interest rate on 10-year Canadian government bonds fell 33% during the 1990s.

pgl -> anne...

Yep - very big drop in interest rates and large devaluation of the C$. So fiscal austerity was offset by more investment demand and higher net exports.

Reply Monday, July 13, 2015 at 05:57 PM
am

The poster should have noted that no other government is in the Greece position. The Podemos leader, likely to be the next Spanish PM, said there was a big difference between Greece and Spain and in debt numbers that is very true.

Reply Monday, July 13, 2015 at 01:59 PM
anne -> am...

http://research.stlouisfed.org/fred2/graph/?g=ZaL

January 15, 2015

Central government debt as a share of Gross Domestic Product for Ireland, Portugal, Spain, Italy and Greece, 2007-2012

[ Central government debt as a share of GDP was above 120% for Ireland, Portugal, Italy and Greece by 2012. Spain alone had a reasonably low debt ratio at 65%. ]

Reply Monday, July 13, 2015 at 04:40 PM
anne -> am...

Spain maintained a relatively and reasonably debt ratio in the wake of the recession at the expense of a searing loss of employment:

https://research.stlouisfed.org/fred2/graph/?g=1rjU

January 4, 2015

Spain Employment-Population Ratio, * 2007-2014

* Employment age 25-54

Reply Monday, July 13, 2015 at 05:06 PM
anne -> am...

Correcting:

Spain maintained a relatively and reasonably low debt ratio in the wake of the recession at the expense of a searing loss of employment, with the employment-population ratio for men and women 25-54 falling from 77.2 to 65.6 between 2007 and 2013:

https://research.stlouisfed.org/fred2/graph/?g=1rjU

January 4, 2015

Spain Employment-Population Ratio, * 2007-2014

* Employment age 25-54

Reply Monday, July 13, 2015 at 05:08 PM
anne -> anne...

By contrast, when the Spanish employment-population ratio for men and women 25-54 was 65.6 in 2013, the German employment-population ratio was 83.5 for a shocking difference:

https://research.stlouisfed.org/fred2/graph/?g=1rjX .

Jan

Let's not waste time with wishful thoughts about the foresight of the German elites. As they so often say, "We Germans reject Keynesian economics." Indeed. They reject not only deficit spending in a liquidity trap but, more fundamentally, the paradox of thrift, and not just as the paradox applies to households but also as it applies to sovereign nations.

So the German elites announce, over and over again, their dictum for the rest of Europe. "Imitate Germany! Be more competitive!" That is to say, always run a large current-account surplus.

Of course, this dictum would first impoverish laggard European nations, including the UK, then Latin American nations, then Russia and the USA.

Therefore, a German-dominated Europe would in the future find itself surrounded by mortal enemies, which would have no choice but to destroy it again.

Reply Monday, July 13, 2015 at 02:21 PM
pgl -> Jan...

"We Germans reject Keynesian economics."

Should we call this MerkelNomics? Sort of like Herbert Hoover economics. Or Cameron-Osborne economics. The kind of stupidity that JohnH apparently hearts. Of course this is also the economics of the modern Republican Party. We are ruled by morons.

Eric -> Jan...

Hoe does becoming more competitive impoverish your country?

RGC -> Eric...

The historic way a weaker economy became more competitive was to have a weaker currency and to protect its developing industry with various protections against imports. That route is not available to the periphery nations.

The Germans would be wise to recognize that it is in their long-term interest to help those nations become more competitive and thereby create a balanced, stable trading zone where everyone can succeed.

The best way to do that is via some sort of development fund that is targeted at the most urgent projects wherever they may be. To do that the Germans are going to have to be magnanimous ala the Marshall Plan, although it is also in their self-interest. The current situation may also require some purely cash transfers to bridge a ramp-up period.

The Germans need to think like true Europeans, ditch the "lazy Greeks" talk and think of the periphery nations somewhat like East Germany. Either that or forget about united Europe and go back to the dangers of nationalism.

Eric -> RGC ...

Thanks. But don't you think the Germans want convergence, that is help the weaker nations become more competitive? They do understand that there is no future for the eurozone without convergence.

There are and have been loads of subsidies in the EU. If you travel through poorer parts of Europe, you see the EU signs that projects have been paid with EU money. Infrastructure is pretty good in countries like Spain, Portugal and Greece, partly thanks to EU funds, now the same is happening to Eastern Europe. But this has not made a country like Greece more competitive.

The Germans don't believe it's (just) about the money, they believe in reforms.

The thing is that reforms have been ridiculed by the likes of Krugman, it's all about fiscal stimulus in their world, something the Germans are skeptical about.

Eastern Europe is actually a good example, but the problem is they could run this program at home, but can't in a country like Greece. In the end only the Greek can help themselves.

Eric -> Eric...

I meant East Germany is a good example

RGC -> Eric...

IIRC, some from the West said similar things about their East brothers before reunification.

I've read a lot of Varoufakis' papers and I think he was on the right track. He has been very critical of Greece's corruption and lack of administrative competence. His economics is socialist/Keynesian. He proposed a solution similar to my prior post:

http://yanisvaroufakis.eu/euro-crisis/modest-proposal/

Of course there are plutocrats, self-serving politicians, banksters and dummkopfs in all countries. I think all the larger economies, except maybe China, suffer right now from neo-liberal or just incompetent governments.

Bert Schlitz -> Eric...

All capitalism is unsustainable eventually. I always viewed the "horrible" East Germany not so horrible indeed when visiting their and exploring its inner bowels. They had a better work ethic and weren't so concerned about materialistic obsession.

Having the Russians completely leaving them alone by the 1990's without unification would have been interesting. There was indeed quite a bit of leftover national socialism embedded over there.

Western Germany on the other hand was binging on debt expansion like all other OCD countries in the 1980's and its economic situation "appeared" to improve rapidly. Like all capitalist music boxes, that story has to end. Once debt expansion ends and the state can't hold up the carcass anymore, the situation in 1980's East Germany would seem like a paradise.

pgl -> Eric...

East Germany is a good example of how NOT to do this. Do you know anything? It appears not.

pgl -> Eric...

It depends on how one does the more competitive part. The right way to do this is to devalue the currency but Greece can't do this as long as they are this Euro and the Germans don't help. Have you read ANY part of this discussion? Seriously - you are like the 3 year old who just fell off the turnip truck.

Peter K. -> Eric...

Wolfgang Munchau:

"We will soon be asking ourselves whether this new eurozone, in which the strong push around the weak, can be sustainable. "

Eric likes it when the strong push around the weak. He identifies with the bully.

Jan -> Eric...

"Competitive" does mean productive. It means a regular current account surplus. Germany achieved a regular surplus not by upgrading labor or capital but by thrift (shifting income from consumption to production)-- repressing wages/benefits and acquiring a quasi-pegged currency.

A regular surplus benefits the nation which runs it at the expense of other nations. Latin American economists have been saying in recent years that the German surplus has been "hollowing out" their economies and at least one prominent German economist has agreed with them.

The EU is a huge economy. If it were to run a surplus as large as Germany now runs, the USA and Russia would soon become friends again.

am

The Euro group negotiators are reported to be pleased with the package on offer. It would seem probable that the Greek government or parliament will not approve the deal. This will mean grexit. The Euro group negotiators are reported to be pleased with the package on offer.

cogitoman

What is wrong to being made to stick to the rules?

RGC -> cogitoman...

Rules are necessary and good. The next question is "do we have the right rules?". IMO the Eurozone has unworkable rules.

anne

http://www.theguardian.com/business/2015/jul/13/athens-and-eurozone-agree-bailout-deal-for-greece

July 13, 2015

Tsipras faces clash with Syriza radicals opposed to eurozone bailout for Greece

After marathon talks to secure third bailout, Greek prime minister prepares for showdown with MPs opposed to deal described as harsher than Versailles treaty
By Phillip Inman and Jennifer Rankin - Guardian

Brussels

[ So a Greek legislator would have to be a "radical" to vote against a "deal described as harsher than Versailles treaty." ]

gordon

I have a suspicion that many Greeks fear that leaving the Eurozone would mean they would no longer be able to leave Greece to work in Eurozone countries and send remittances home. The bulk of remittances to Greece appear to come from Germany:
http://www.pewsocialtrends.org/2014/02/20/remittance-map/

anne -> gordon...

I have a suspicion that many Greeks fear that leaving the Eurozone would mean they would no longer be able to leave Greece to work in Eurozone countries and send remittances home....

[ Would there be migration limits if Greece simply remained in the European Union? ]

David

There is a modern meme I hate, the idea that everything has to be a "brand".

But if the Eurozone falls apart it will be the German brand that suffers. No one likes a bully.

Reply Monday, July 13, 2015 at 05:26 PM
Peter K. -> David ...

Yes and the idea of Europe as a symbol of progress.

http://www.ft.com/intl/cms/s/0/e38a452e-26f2-11e5-bd83-71cb60e8f08c.html#axzz3fpG5IsRy

July 13, 2015 10:45 am

Greece's brutal creditors have demolished the eurozone project

by Wolfgang Munchau

Stripped of ambitions for a political and economic union, the bloc changes into a utilitarian project

A few things that many of us took for granted, and that some of us believed in, ended in a single weekend. By forcing Alexis Tsipras into a humiliating defeat, Greece's creditors have done a lot more than bring about regime change in Greece or endanger its relations with the eurozone. They have destroyed the eurozone as we know it and demolished the idea of a monetary union as a step towards a democratic political union.

In doing so they reverted to the nationalist European power struggles of the 19th and early 20th century. They demoted the eurozone into a toxic fixed exchange-rate system, with a shared single currency, run in the interests of Germany, held together by the threat of absolute destitution for those who challenge the prevailing order. The best thing that can be said of the weekend is the brutal honesty of those perpetrating this regime change.

[clipped]

nor even the total capitulation of Greece. The material shift is that Germany has formally proposed an exit mechanism. On Saturday, Wolfgang Schäuble, finance minister, insisted on a time-limited exit - a "timeout" as he called it.

I have heard quite a few crazy proposals in my time, and this one is right up there. A member state pushed for the expulsion of another. This was the real coup over the weekend: not only regime change in Greece, but also regime change in the eurozone.

The fact that a formal Grexit may have been avoided for the moment is immaterial. Grexit will be back on the table when you have the slightest political accident - and there are still many things that could go wrong, both in Greece and in other eurozone parliaments. Any other country that in future might challenge German economic orthodoxy will face similar problems.

This brings us back to a more toxic version of the old exchange-rate mechanism of the 1990s that left countries trapped in a system run primarily for the benefit of Germany, which led to the exit of the British pound and the temporary departure of the Italian lira. What was left was a coalition of countries willing to adjust their economies to Germany's. Britain had to leave because it was not.

What should the Greeks do now? Forget for a moment the economic debate of the past few months, over issues such as the impact of austerity or economic reforms on growth. Instead ask yourself this simple question: do you really think that an economic reform programme, for which a government has no political mandate, which has been explicitly rejected in a referendum, that has been forced through by sheer political blackmail, can conceivably work?

The implications for the rest of the eurozone are at least as troubling. We will soon be asking ourselves whether this new eurozone, in which the strong push around the weak, can be sustainable. Previously, the strongest argument against any forecasts of break-up has been the strong political commitment of all its members. If you ask Italians why they are in the eurozone, few have ever pointed to the economic benefits. They wanted to be part of the most ambitious project of European integration undertaken so far.
We will soon be asking ourselves whether this new eurozone, in which the strong push around the weak, can be sustainable

But if you take away the political aspiration, you may end up with a different judgment. From a pure economic point of view, we know that the euro has worked well for Germany. It worked moderately well for The Netherlands and Austria, although it produced quite a degree of financial instability in both.

But for Italy, it has been an unmitigated economic disaster. The country has seen virtually no productivity growth since the start of the euro in 1999. If you want to blame the lack of structural reforms, then you have to explain how Italy managed decent growth rates before then. Can we be sure that a majority of Italians will support the single currency in three years' time?

The euro has not worked out for Finland either. While the country is considered the world champion of structural reforms, its economy has slumped ever since Nokia lost the plot as the world's erstwhile premier mobile phone maker. Whether the euro is sustainable for Spain and Portugal is not clear. France has performed relatively well during the euro's early years, but it, too, is now running persistent current account deficits. It is not only Greece where the euro is not optimal.
Once you strip the eurozone of any ambitions for a political and economic union, it changes into a utilitarian project in which member states will coldly weigh the benefits and costs, just as Britain is currently assessing the relative advantages or disadvantages of EU membership. In such a system, someone, somewhere, will want to leave sometime. And the strong political commitment to save it will no longer be there

anne

https://twitter.com/TIME/status/620723673675251712

TIME.com @TIME

Greece may have to sell islands and ruins under its bailout deal http://ti.me/1CCqn5s

3:37 PM - 13 Jul 2015

Reply Monday, July 13, 2015 at 06:03 PM
anne -> anne...

We could do a time share on Corfu, I mean the whole island.

Sign here ...

anne

https://research.stlouisfed.org/fred2/graph/?g=1paT

August 4, 2014

Real per capita Gross Domestic Product for Ireland, Portugal, Spain,
Italy and Greece, 2007-2014

(Indexed to 2007)

[ Real per capita GDP has failed to recover in each of these 5 countries. ]

Reply Monday, July 13, 2015 at 06:50 PM
anne

https://research.stlouisfed.org/fred2/graph/?g=1r1K

August 4, 2014

Real per capita Gross Domestic Product for Sweden, Denmark, Norway,
Finland and Iceland, 2007-2014

(Indexed to 2007)

[ Real per capita GDP has only recovered in Sweden and that barely. ]

Reply Monday, July 13, 2015 at 06:52 PM
anne

https://research.stlouisfed.org/fred2/graph/?g=1rkL

August 4, 2014

Real per capita Gross Domestic Product for United Kingdom, Germany,
France and Netherlands, 2007-2014

(Indexed to 2007)

[ Real per capita GDP has recovered only in Germany which had recovered by 2010. ]

Reply Monday, July 13, 2015 at 06:55 PM
MacAuley

Greece was not ready to join the Eurozone in 1999 and it was pretty clear by 2011 that Greece would be better off outside the Eurozone.
By 2013 it was obvious that the only reason to delay Grexit (and to continue Greek austerity) was to prepare for the inevitable. The Eurozone is now prepared for Grexit, and it's time. In five years the Greeks will be grateful.

[Jul 19, 2015] Paul Craig Roberts Greece's Lesson For Russia

"...The Wolfowitz doctrine, the basis of US foreign and military policy, declares that the rise of Russia or any other country cannot be permitted, because the US is the Uni-power and cannot tolerate any constraint on its unilateral actions. As long as this doctrine reigns in Washington, neither Russia, China, nor Iran, the nuclear agreement not withstanding, are safe. As long as Iran has an independent foreign policy, the nuclear agreement does not protect Iran, because any significant policy conflict with Washington can produce new justifications for sanctions."
"...If Obama were to dismiss Victoria Nuland, Susan Rice, and Samantha Power and replace these neoconservatives with sane diplomats, the outlook would improve. Then Russia, China, and Iran would have a better possibility of reaching accommodation with the US on terms other than vassalage."
"...With the deregulation that began in the Clinton regime, Western capitalism has become socially dysfunctional. In the US and throughout the West capitalism no longer serves the people. Capitalism serves the owners and managers of capital and no one else."
"...The "globalism" that is hyped in the West is inconsistent with Washington's unilateralism. No country with assets inside the Western system can afford to have policy differences with Washington. The French bank paid the $9 billion fine for disobeying Washington's dictate of its lending practices, because the alternative was the close down of its operations in the United States. The French government was unable to protect the French bank from being looted by Washington."

Jul 19, 2015 | Zero Hedge
Submitted by Paul Craig Roberts,

"Greece's debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far." - International Monetary Fund

Greece's lesson for Russia, and for China and Iran, is to avoid all financial relationships with the West. The West simply cannot be trusted. Washington is committed to economic and political hegemony over every other country and uses the Western financial system for asset freezes, confiscations, and sanctions. Countries that have independent foreign policies and also have assets in the West cannot expect Washington to respect their property rights or their ownership. Washington freezes or steals countries' assets, or in the case of France imposes multi-billion dollar fines, in order to force compliance with Washington's policies. Iran, for example, lost the use of $100 billion, approximately one-fourth of the Iranian GDP, for years simply because Iran insisted on its rights under the Non-Proliferation Treaty.

Russian journalists are asking me if Obama's willingness to reach a deal with Iran means there is hope a deal can be reached over Ukraine. The answer is No. Moreover, as I will later explain, the deal with Iran doesn't mean much as far as Washington is concerned.

Three days ago (July 14) a high ranking military officer, Gen. Paul Selva, the third in about as many days, told the US Senate that Russia is "an existential threat to this nation (the US)." Only a few days prior the Senate had heard the same thing from US Marine commander Joseph Dunford and from the Secretary of the Air Force. A few days before that, the Chairman of the US Joint Chiefs of Staff warned of a Russian "hybrid threat."

Washington is invested heavily in using Ukraine against Russia. All the conflict there originates with Washington's puppet government in Kiev. Russia is blamed for everything, including the destruction of the Malaysian airliner. Washington has used false charges to coerce the EU into sanctions against Russia that are not in the EU's interest. As Washington has succeeded in coercing all of Europe to harm Europe's political and economic relationships with Russia and to enter into a state of conflict with Russia, certainly Washington is not going to agree to an Ukrainian settlement. Even if Washington wanted to do so, as Washington's entire position rests on nothing but propaganda, Washington would have to disavow itself in order to come to an agreement.

Despite everything, Russia's president and foreign minister continue to speak of the US and Washington's EU vassal states as "our partners." Perhaps Putin and Lavrov are being sarcastic. The most certain thing of our time is that Washington and its vassals are not partners of Russia.

The Wolfowitz doctrine, the basis of US foreign and military policy, declares that the rise of Russia or any other country cannot be permitted, because the US is the Uni-power and cannot tolerate any constraint on its unilateral actions.

As long as this doctrine reigns in Washington, neither Russia, China, nor Iran, the nuclear agreement not withstanding, are safe. As long as Iran has an independent foreign policy, the nuclear agreement does not protect Iran, because any significant policy conflict with Washington can produce new justifications for sanctions.

With the nuclear agreement with Iran comes the release of Iran's $100 billion in frozen Western balances. I heard yesterday a member of the Council for Foreign Relations say that Iran should invest its released $100 billion in US and Europe companies. If Iran does this, the Iranian government is setting itself up for further blackmail. Investing anywhere in the West means that Iran's assets can be frozen or confiscated at any time.

If Obama were to dismiss Victoria Nuland, Susan Rice, and Samantha Power and replace these neoconservatives with sane diplomats, the outlook would improve. Then Russia, China, and Iran would have a better possibility of reaching accommodation with the US on terms other than vassalage.

Russia and China, having emerged from a poorly functioning communist economic system, naturally regard the West as a model. It seems China has fallen for Western capitalism head over heels. Russia perhaps less so, but the economists in these two countries are the same as the West's neoliberal economists, which means that they are unwitting servants of Western financial imperialism. Thinking mistakenly that they are being true to economics, they are being true to Washington's hegemony.

With the deregulation that began in the Clinton regime, Western capitalism has become socially dysfunctional. In the US and throughout the West capitalism no longer serves the people. Capitalism serves the owners and managers of capital and no one else.

This is why US income inequality is now as bad or worse than during the "robber baron" era of the 1920s. The 1930s regulation that made capitalism a functioning economic system has been repealed. Today in the Western world capitalism is a looting mechanism. Capitalism not only loots labor, capitalism loots entire countries, such as Greece which is being forced by the EU to sell of Greece's national assets to foreign purchasers.

Before Putin and Lavrov again refer to their "American partners," they should reflect on the EU's lack of good will toward Greece. When a member of the EU itself is being looted and driven into the ground by its compatriots, how can Russia, China, and Iran expect better treatment? If the West has no good will toward Greece, where is the West's good will toward Russia?

The Greek government was forced to capitulate to the EU, despite the support it received from the referendum, because the Greeks relied on the good will of their European partners and underestimated the mendacity of the One Percent. The Greek government did not expect the merciless attitude of its fellow EU member governments. The Greek government actually thought that its expert analysis of the Greek debt situation and economy would carry weight in the negotiations. This expectation left the Greek government without a backup plan. The Greek government gave no thought to how to go about leaving the euro and putting in place a monetary and banking system independent of the euro. The lack of preparation for exit left the government with no alternative to the EU's demands.

The termination of Greece's fiscal sovereignty is what is in store for Italy, Spain, and Portugal, and eventually for France and Germany. As Jean-Claude Trichet, the former head of the European Central Bank said, the sovereign debt crisis signaled that it is time to bring Europe beyond a "strict concept of nationhood." The next step in the centralization of Europe is political centralization. The Greek debt crisis is being used to establish the principle that being a member of the EU means that the country has lost its sovereignty.

The notion, prevalent in the Western financial media, that a solution has been imposed on the Greeks is nonsense. Nothing has been solved. The conditions to which the Greek government submitted make the debt even less payable. In a short time the issue will again be before us. As John Maynard Keynes made clear in 1936 and as every economist knows, driving down consumer incomes by cutting pensions, employment, wages, and social services, reduces consumer and investment demand, and thereby GDP, and results in large budget deficits that have to be covered by borrowing. Selling pubic assets to foreigners transfers the revenue flows out of the Greek economy into foreign hands.

Unregulated naked capitalism, has proven in the 21st century to be unable to produce economic growth anywhere in the West. Consequently, median family incomes are declining. Governments cover up the decline by underestimating inflation and by not counting as unemployed discouraged workers who, unable to find jobs, have ceased looking. By not counting discouraged workers the US is able to report a 5.2 percent rate of unemployment. Including discouraged workers brings the unemployment rate to 23.1 percent. A 23 percent rate of unemployment has nothing in common with economic recovery.

Even the language used in the West is deceptive. The Greek "bailout" does not bail out Greece. The bailout bails out the holders of Greek debt. Many of these holders are not Greece's original creditors. What the "bailout" does is to make the New York hedge funds' bet on the Greek debt pay off for the hedge funds. The bailout money goes not to Greece but to those who speculated on the debt being paid. According to news reports, Quantitative Easing by the ECB has been used to purchase Greek debt from the troubled banks that made the loans, so the debt issue is no longer a creditor issue.

China seems unaware of the risk of investing in the US. China's new rich are buying up residential communities in California, forgetting the experience of Japanese-Americans who were herded into detention camps during Washington's war with Japan. Chinese companies are buying US companies and ore deposits in the US. These acquisitions make China susceptible to blackmail over foreign policy differences.

The "globalism" that is hyped in the West is inconsistent with Washington's unilateralism. No country with assets inside the Western system can afford to have policy differences with Washington. The French bank paid the $9 billion fine for disobeying Washington's dictate of its lending practices, because the alternative was the close down of its operations in the United States. The French government was unable to protect the French bank from being looted by Washington.

It is testimony to the insouciance of our time that the stark inconsistency of globalism with American unilateralism has passed unnoticed.

[Jul 18, 2015] M of A - Billmon The Eurosystem's (Monetary) Control of Europe's Politics

"...The "Eurosystem", the network of national central banks governed by the European Central Bank, gives central bankers unprecedented ability to squeeze and manipulate national governments in a coordinated way. It is as if every government in the Eurozone ALREADY has a colonial entity watching it like the Troika's agents are supposed to watch Syriza in Athens. And, since the ECB Governing Council (like other EU institutions) tries to operate by a non-transparent "consensus" (i.e. the votes are not revealed), the degree to which national central bank heads are representing the ECB in their countries, rather than the other way around, is often not clear."
.
"...IMO these 'lessons' miss the biggest one for the left: the loss of independent media. What good is protesting neolib control via banks if no one is listening?
.
Governments easily manipulate corporate controlled media via access journalism. Thus we get factual truths intermixed with propaganda spin that is relentlessly pro-business, pro-establishment.
.
Greece is a case in point. As described in Greek Government Insider Lifts the Lid on Five Months of 'Humiliation' and 'Blackmail', the Troika was gradually increasing pressure on Greece to do what the Troika demanded. They withheld billions of euro to Greece and cut off liquidity to the Greek government. Then they waited as the financial pressure on Greece grew. But along with those measures was a caustic media that painted Syriza as incompetent, then undemocratic (because most greeks wanted to remain in the euro), then irresponsible (for calling a referendum), etc.
"
.
"... Following, a link to a German documentary about the various mechanisms of the EU [Troika, Eurogroup, European Commission, Council, etc] which are being used as devastating tools to beat down and extract wealth, vampire style, from Greece [and Cyprus], in order to revive comatose banks and line the pockets of investors, through privatization of public property.
.
This documentary does a good job of demonstrating just how the power of technocratic branches of the EU is being rolled out to pillage Greek, Portuguese, Cyprus economies, plunging the respective populations into ever greater misery.
.
The Trail of the Troika [1:29:22]
Jul 18, 2015 | Moon of Alabama

Billmon: The Eurosystem's (Monetary) Control of Europe's Politics

Note: This post was composed from a Twitteressay by Billmon.

J.W. Mason lists some Lessons from the Greek Crisis:

Before the crisis no one even knew that national central banks still existed - I certainly didn't. But now it's clear that the creditors' unchallenged control of this commanding high ground was decisive to the outcome in Greece. Next time an elected government challenges the EU authorities, their first order of business must be getting control or cooperation of their national central bank.

The quote says "control or cooperation," but I can guarantee the latter is never going to happen.

It is nearly impossible to exaggerate the degree to which the campaign for central bank "independence" has made them the enemies within for any left governments.

The central bankers waged a 50-60 year political war to wrest back the monetary flexibility that the break down of Bretton Woods gave to national governments. Having won that war across most of the developed world in the 70s and 80s, they extended the battlefield to the emerging markets in '90s and '00s.

The autonomy of central banks (meaning the political allegiance to Wall Street/London City/Frankfurt etc.) was maybe the biggest neoliberal victory of all. If rightwing political victories (Reagan, Thatcher et. al.) were the beachheads of the Great Counterattack on social democracy then "independent" central banks became the citadels of the occupation forces: Neoliberalism's "Republican Guard."

Ironically, the ECB was originally conceived - or at least was sold to the European left - as a way for governments to regain monetary flexibility at a higher level. As a way to a) escape US dollar hegemony and to b) outflank the Bundesbank by formalizing the joint political control of European monetary policy. I do not know if the hack establishment Social Democrats who sold that vision ever believed it, but if so, more fool them. Because what the European Monetary Union became, obvious now, was a way to turn the vision on its head: formalize joint MONETARY control of Europe's politics.

The "Eurosystem", the network of national central banks governed by the European Central Bank, gives central bankers unprecedented ability to squeeze and manipulate national governments in a coordinated way. It is as if every government in the Eurozone ALREADY has a colonial entity watching it like the Troika's agents are supposed to watch Syriza in Athens. And, since the ECB Governing Council (like other EU institutions) tries to operate by a non-transparent "consensus" (i.e. the votes are not revealed), the degree to which national central bank heads are representing the ECB in their countries, rather than the other way around, is often not clear.

As long as the cozy comprador system tied peripheral governments to the core (i.e. Berlin), the role of the ECB and the Eurosystem could be obscured. Peripheral governments appointed "made guys" (i.e. banksters and/or their technicians) to national central bank boards and pretended to govern. Core politicians and their local comprador politicians let the Eurosystem technicians in Frankfurt tell them what "structural reforms" they should push to make the EMU "work."

But the moment an outsider government like Syriza came to power, the role of the Eurosystem and the national central banks in it could no longer be hidden. The fact that the Greek National Bank was an instrument of the ECB in Frankfurt, not of the Greek government in Athens, became obvious to everybody. The ECB's role as the muscle behind the Eurogroup's (Berlin's) diktats put the Greek National Bank in the position of helping to choke its own banks and terrorize its own citizens. And under the rules of EMU the Greek government was completely powerless to do anything about it. A defining moment.

The inescapable conclusion is that the allegedly "independent" Eurosystem now operates not as a network of central banks but as a parallel government.

The role of the Eurosystem within the half-hidden political order of the eurozone really is comparable to the Soviet or Chinese Communist Party. Like the Communist Party, the Eurosystem is now the "leading organ" of the neoliberal order, operating at all levels of the EU structure and providing "guidance" to elected political structures which are not formally under its legal control, but in reality are dominated by it. And behind the administrative apparatus of the party (Eurosystem) is the Central Committee (Eurogroup) and the Politburo (the key creditor government officials). And behind THEM is the real locus of the party's centralized power: the General Secretary (Germany/Merkel).

So J.W. Mason is quite right: it is impossible for any left government to attack the dictatorship of finance unless it controls its national central bank. But while control of the national central bank is necessary, it is hardly sufficient. As long as the EMU exit is off the table, verboten, so to speak, control of the national central banks only eliminates the "near enemy."

Ultimately it comes down to political will, which in parliamentary democracies, comes down to public support. As long as the majority (of all voters or of propertied influentials, depending on the system) is more loyal to the Euro than to national sovereignty an effective challenge to the dictatorship of finance is impossible - no matter how many national central banks the left controls.

Posted by b at 06:57 AM | Comments (90)
Selected Skeptical Comments
Posted by: nmb | Jul 16, 2015 7:20:43 AM | 1

Greece capitulates with the euro-dictatorship ... until the next battle

Posted by: jfl | Jul 16, 2015 7:33:14 AM | 2

You know this 'independent' central bank as tool of the neolibraconian consensus is the most salient point drummed home about Russia : the central bank as 5th column.

And the Russian central bank preceded the ECB, didn't it? When the boys from Harvard went to Russia to 'straighten' things out they conducted an experiment ... and discovered it worked just great : rinse and repeat. Russia was the archetype of the gelded European nation to come.

So the next time says Russia is not a part of Europe I'll say ... not only of Europe, but the first European nation subverted by the gnomes of neolibraconia.

The Europeans who still have a pulse ought to note now just who their real enemy is : hint, the one that's occupying Europe. And who is their fellow European victim. And ban together to defeat their common enemy ... well run him out of town on a rail, at any rate.

Certainly rearrange their banking arrangements.

Posted by: Timon | Jul 16, 2015 8:48:21 AM | 5

One of the key reasons that Wall St/City/Frankfurt want universal "austerity" is not just that they want people to be frightened, impoverished and insecure; but in particular, because it has the desirable effect of suppressing the political participation of people who must continuously walk the edge, just to get by - and by now this is about half the population -and who might otherwise participate in the political process with decisive effect.

Rise like lions after slumber
In unfathomable number
Shake your chains to earth like dew
That in sleep have fallen on you
Ye are many, they are few.

H.L. Mencken is also very good on this subject - the need of the self-appointed elite to distract and render impotent the average person, and how greatly the big shots hate and fear the "mob".

why would a small country like Greece need to be the second biggest spender in nato after the USA. ...

Posted by: mcohen | Jul 16, 2015 8:57:04 AM | 6

According to an editorial published by the Greek conservative newspaperKathimerini, after the removal of the right-wing military junta in 1974, Greek governments wanted to bring disenfranchised left-leaning portions of the population into the economic mainstream[28] and so ran large deficits to finance enormous military expenditure, public sector jobs, pensions and other social benefits.

Greece is, as a percentage of GDP, the second-biggest defense spender[29] in NATO, the highest being the United States, according to NATO statistics.

The US is the major supplier of Greek arms, with the Americans supplying 42 per cent of its arms, Germany supplying 22.7 per cent, and France 12.5 per cent of Greece's arms purchases.[30]

Everybody and I mean everybody is king fu fighting
those bankers are as fast as lightning

Posted by: ab initio | Jul 16, 2015 10:32:40 AM | 12

It should be obvious with how the ECB structure was formed that any country that uses the euro as its currency is dependent on the ECB for liquidity if there is deposit flight from the banks in that country.

There is only two ways for a country to retain full sovereignty. One have a national currency with a national monetary authority that controls it and second a government that if it runs a deficit has the ability to borrow in private markets and maintains a currency board (e.g: Ecuador which uses the US dollar).

Ecuador is a good example where its government debt became untenable. It defaulted on the debt and so was for all intents shut out from private debt markets, so the government could not run a deficit. It continued to use the US dollar as its currency.

Greece had to make a choice. Continue in the eurosystem and accept the hegemony of the eurogroup or exit. It's parliament accepted the former. One can blame Schauble and Merkel all you want but the bottom line is that the Greek government and parliament acquiesced to its loss of sovereignty. The Greek people have the power to change it if they want. They just have to decide to exit the eurosystem and elect a government that does that.

In France, Marine Le Pen is clear. She will take France out of the eurosystem if elected. Of course we'll have to see if she honors her campaign promise but at least she is categorical about it. Syriza got elected promising they'll be able to get a better deal compared to the center-right party before them. In this case the Left in Greece delivered an even worse result for the average Greek citizen.

Posted by: Jackrabbit | Jul 16, 2015 12:52:58 PM | 18

IMO these 'lessons' miss the biggest one for the left: the loss of independent media. What good is protesting neolib control via banks if no one is listening?

Governments easily manipulate corporate controlled media via access journalism. Thus we get factual truths intermixed with propaganda spin that is relentlessly pro-business, pro-establishment.

Greece is a case in point. As described in Greek Government Insider Lifts the Lid on Five Months of 'Humiliation' and 'Blackmail', the Troika was gradually increasing pressure on Greece to do what the Troika demanded. They withheld billions of euro to Greece and cut off liquidity to the Greek government. Then they waited as the financial pressure on Greece grew. But along with those measures was a caustic media that painted Syriza as incompetent, then undemocratic (because most greeks wanted to remain in the euro), then irresponsible (for calling a referendum), etc.

Too often we give the media a pass when it has been well documented that business and government tries to control MSM (and increasingly other media as well) via access journalism, advertising revenue (a few industries dominate) writing stories that cite in-the-tank 'experts' from establishment-friendly think-tanks and controlled opposition.

Even within Greece, Syriza had trouble getting their message out because oligarchs own virtually all of the media! And many blogs also fell for the spin - even those that have been critical of the media in the past like Yves Smith at nakedcapitalism.com - despite the fact that the delay in Greece putting forth a proposal before the April 30th deadline could be logically attributed to the 2-step process that the Troika had forced (describing how they would service the debt would severely undermine Greece's position in future debt restructuring talks).

A Left that is not in touch with the people - and whose message is undermined by establishment-friendly media - is a disaster far greater than the loss of control of the financial system. The Left's greatest strength should be its connection with the people that it fights for. Yet, instead the Left has allowed itself to be marginalized by a corporate media that has strengthened the centrist 'faux Left' at the expense of the progressive Left. So much so that many people today identify THE LEFT with the identity politics that forms 'the base' for the fauxLeft. In short, people of the 'Left' are viewed as selfishly wanting something for themselves at the expense of others. (It should come as no surprise that reporting about Greece often fell in line with this line of thinking.)

For activists that are outside the centrist political establishment - anti-war, climate change, the environment (fracking, nuclear energy, etc.), inequality, constitutional and civil rights, etc. - it is very difficult to reach a wide audience. All 'change' is channeled into the pro-business, pro-establishment centrist political system. Anyone who is not a centrist is suspect.

Greece's coherent arguments quickly fell off media radar as sniping about their incompetence and their oh-so-strange Finance Minister took center stage. This put even more pressure on the Greeks and deterred potential allies. And the spinning continues. The understanding of most people still does not go much beyond this: the Greeks don't want to pay their bills and Syriza are incompetent radicals that made the problems worse and can't be trusted. In the face of this onslaught by the Troika and Troika-friendly media, Syriza's resistance is all but ignored in favor of trumpeting Greece's defeat (a warning to others?).

=

Is there any hope? Maybe.

1) Syriza formed a government with nationalists (ANEL). Why the Left is depicted as unpatriotic is beyond me, but the left may be getting its patriotic mojo back as WAR and trade deals are increasingly understood as benefiting an international elite. I could see similar political alliances forming in other countries. (In the US, I think the establishment had feared a potential Tea Party - Occupy alliance.)

2) Media reform (or the threat of it). The Greek government has begun investigations into media bias during the referendum (there was very little coverage of government rallies and government positions, etc.). If the Syriza-led government falls, any media reforms are probably less likely.

Ron Paul's "audit the Fed" movement got some traction which caused the Fed to take notice. "Truth in media" efforts should probably be re-doubled.

3) Education. We need to retain humanities education. Higher education is turning into vocational training. For example, IMO it's difficult to appreciate the myriad issues and import of the neolib consumer-oriented approach to government vs. the democratic citizen-oriented approach, without a humanities education.

Also, people don't usually react until it is too late - partly because few have enough learning to understand the impact that new policies will have. They try to make up for their lack of understanding by relying on trusted representatives like Obama. TTIP is a case in point. Look for demonstrations about Obamatrade in a few years when it is too late.

Posted by: dana | Jul 16, 2015 1:25:52 PM | 19

Following, a link to a German documentary about the various mechanisms of the EU [Troika, Eurogroup, European Commission, Council, etc] which are being used as devastating tools to beat down and extract wealth, vampire style, from Greece [and Cyprus], in order to revive comatose banks and line the pockets of investors, through privatization of public property.

This documentary does a good job of demonstrating just how the power of technocratic branches of the EU is being rolled out to pillage Greek, Portuguese, Cyprus economies, plunging the respective populations into ever greater misery.

The Trail of the Troika [1:29:22]

Posted by: psychohistorian | Jul 16, 2015 1:34:37 PM | 20

@ 15

james, If you read the Shock Doctrine by Naomi Kline you can follow the same financial rape of South American countries in the 70's that the financial mafia are doing now to the middle east.

The world needs to have a discussion about the world of private finance that exists now and what could be if all finance were sovereign.

Posted by: Thrasyboulos | Jul 16, 2015 2:26:43 PM | 22

The role of the European Central Bank and their buttler, Stournaras, at the Greek Central Bank in this fiasco needs this kind of discussion, and more, since it lies at the heart of German blackmail and coup attempt of the Greek government. Thank you b for this post.

@5

One reason that there have been inordinate arms purchase by Greece is that the Greek elite -- media, oligarchy, politicians (especially the latter) are up to their armpits in corruption, and one of the vehicles for corruption is arms deals.

The all powerful "socialist" minister of defence under Papandreou and minister of development under Simitis is now in jail, almost prime minister, now serving 20 years in the hoosgow, for being bribed by German arms dealers (Siemens, among others). It is widely believed that the previous governments went after this easy and obvious target to cut off investigations of others, a lot of others.

The nationalist minister of defence under the Tsipras government, Panos Kammenos is sending document after document to prosecutors involving a bewildering array of bribery, thievery, fraud, and so on in the Greek armed forces. Submarines that lean, helicopters that can't fly, because of onerous service after purchase contracts. The list is huge.

One reason why both German and Greek corruptos hate him so much, and tried to bring down the Tsipras government. It remains to be seen if he keeps his post, after Tsipras's deal with the Germans.

The other, of course, is the Turkey threat, also used to justify military procurement.

Posted by: Thrasyboulos | Jul 16, 2015 3:31:55 PM | 24

Quote from Jacobin from an article titled The End of Europe.

http://tinyurl.com/nt2g8g3

The discussions with Greece are thus a formal process designed to politically defeat Greece's left forces, burying any prospects of meaningful political change across the continent. This is the only explanation for the creditors' inflexibility despite Tsipras crossing all Syriza's red lines in terms of pensions reforms, tax policy, privatizations, and market liberalization. This punitive stance was made crystal clear by late June, when the ECB actively incited a bank run, warning of an "uncontrollable crisis," and abruptly capped its emergency loans to the banking sector, triggering bank holidays and capital controls.

Also in the site, an informative behind the scenes interview with Left Platform Syriza MP, Stathis Kouvelakis.

Posted by: Jackrabbit | Jul 16, 2015 3:34:47 PM | 25

Here's another lesson: Resistance works.

The Troika was willing to 'punch' Syriza's ticket ("Welcome to the Club"!) with minor concessions. But Tspiras/Varoufakis did not simply accept what the Troika demanded.

As bad as the deal is, Greece managed to get the debt restructuring that the Troika had refused to talk about. They had even refused to put their promises of a future debt restructuring in writing.

Many are saying that Greece should've prepared for GRexit; critizing Syriza/Tspiras as too establishment and too europhile to contemplate that path. But they have bought time to prepare for the next round. And in the next round, it may be that a GERexit is on the table as well.

Euro QE is not a magic elixir; just more extend and pretend. It'll exacerbate core vs. periphery problems as much as it exacerbates inequality (as it has in the USA). And political and fiscal integration is hard to do when people feel that they are not treated fairly.

Posted by: tom | Jul 16, 2015 3:45:06 PM | 26

This $50 billion Greek asset theft fund that was willingly handed over by Syriza traitors, as well as other politicians responsible, Is exactly the collateral needed for a independent Greek central bank to create, let's say for eg, a fractional reserve base of 10% to create $500 billion.

With that now $500 billion, the Greek government could pay off all the debt, including the criminally induced ones, and it's based on those $50 billion worth of assets.
And That's only if you agree to the idea of paying off all your criminally in deuced debts.

An independent and sovereignly principled government or parliament would do exactly that.
And there's more fractional reserves using National assets that can be used to grow the economy and serve the people.

Syriza knows this, but since they are unprincipled, Ideologically weak, cowardly towards their aggressors and more interested in power than public service, means you're never get that from these freaks.
Obvious from day one. Judge them on their actions, not on their whingeing on how they've been mistreated and violated.

How the fuck is it accepted, that private banks can print as much national currencies as they like, but the owners of the those national currencies - the people and the government - cannot do with fractional reserves and money printing, like what the private banks do.

Posted by: juliania | Jul 16, 2015 4:45:18 PM | 31

jackrabbit@17, I would like to point out that the Greek populace ignored the media when they voted in the referendum, so I think the importance of such propagandistic power is overblown. Once you lose faith in that source of information, it's gone; it doesn't come back. Russia under the Soviets is a case in point, and currently also there is an erosion in US confidence that what they see and hear is trustworthy. What happened after the referendum confused the public, and that was a huge mistake.

Back a ways, in support of Tsipras, I wanted him to do as Putin has done and shore up that public confidence because then you can make decisions in the moment and the support will grow. Immense popularity is a powerful weapon. Varoufakis was correct in seeing that as an important pivotal moment, when the people supported the 'no' vote that Tsipras had also supported. The course he chose confused his supporters. Paramount should have been the dictum that the people could not bear further austerity and that was that - the austerity they would face at that point would be the prideful kind that can see a brave future beyond.

Tsipras had embraced the New Deal outlook, but he forgot Roosevelt's famous saying, 'You have nothing to fear but fear itself.' Varoufakis welcomed, FDR style, the banksters' hatred. It's too bad Tsipras could not do the same. Long lines of grateful poor people stood by the tracks as FDR's funeral train passed. Will that happen for Tsipras? There's a Greek saying that one should count no man happy until after his death. Roosevelt, loved by his people and by history, was a happy man. I hope there's time for Tsipras to become one as well.

Posted by: jfl | Jul 16, 2015 7:50:55 PM | 33

PPS/23: Review of Current Trends in U.S. Foreign Policy, 1948 CE


Furthermore, we have about 50% of the world's wealth but only 6.3% of its population. This disparity is particularly great as between ourselves and the peoples of Asia. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world-benefaction.

For these reasons, we must observe great restraint in our attitude toward the Far Eastern areas. The peoples of Asia and of the Pacific area are going to go ahead, whatever we do, with the development of their political forms and mutual interrelationships in their own way. This process cannot be a liberal or peaceful one. The greatest of the Asiatic peoples-the Chinese and the Indians-have not yet even made a beginning at the solution of the basic demographic problem involved in the relationship between their food supply and their birth rate. Until they find some solution to this problem, further hunger, distress, and violence are inevitable. All of the Asiatic peoples are faced with the necessity for evolving new forms of life to conform to the impact of modern technology. This process of adaptation will also be long and violent. It is not only possible, but probable, that in the course of this process many peoples will fall, for varying periods, under the influence of Moscow, whose ideology has a greater lure for such peoples, and probably greater reality, than anything we could oppose to it. All this, too, is probably unavoidable; and we could not hope to combat it without the diversion of a far greater portion of our national effort than our people would ever willingly concede to such a purpose.

Between Berlin and a Hard Place: Greece and the German Strategy to Dominate Europe, 2012 CE


As Chancellor Merkel and other German leaders would frequently remind the rest of Europe and the world, with 7% of the world population, 25% of global GDP and 50% of world social spending, Europe's economic system was unsustainable and uncompetitive in a globalized economy. Germany's vision for Europe was aimed at introducing "rules to force Europe's economies to become more competitive." But competitiveness was defined by Germany, and thus, "the rest of Europe needs to become more like Germany."

I nearly choked when I read Timothy Geithner quoted at the beginning of dana's link ... but it makes perfect sense. None of this is about 'economics' - that chimerical, dismal 'science' - all of it is about politics, and power politics, and imperial politics.

The Germans - like everyone else - can see the US has had its run and is headed for its fall. But they also know that Germany by itself is not of a size to pick up where the US leaves off, when the US leaves off. So Germany needs to take over Europe.

I think I've heard this before.


Between 2008 and 2013, the Greek government cut 40% of its budget, healthcare costs soared, tens of thousands of doctors, nurses and other healthcare workers were fired, drug costs rose, as did drug use with HIV infections doubling and a malaria outbreak was reported for the first time since the 1970s, while suicide rates increased by 60%. ... Unemployment has grown to 26% (and over 50% for youth), wages dropped by 33%, pensions were cut by 45%, and 40% of retired Greeks now live below the poverty line.

Cleanliness is next to Godliness. The Germans are cleaning up Greece, and Europe.

The IMF's latest move - fake debt reduction for Greece, the kind of stuff that flows out of Geither's pie-hole in dana's link above - seems to be overt recognition of this fact, bringing it into play.

So they new dynamic will be the US on one side and Russia on the other, containing Germany's New Europe?

Makes sense, really. (None of this makes any sense ... only to the zero-summers playing games with our world). China surely has its eyes on all that Lebensraum in eastern Russia. The US and Russia can team up to defeat the NAZIs who have 'stolen' the Ukrainian revolution (to contain both Europe and China). (And then the US can double-cross Russia when the time is ripe).

Hey, looks like it's 'working' with our new, soon to be 'best friends' in Iran.

Arghhhh. Makes me want to stop reading the news, stop watching the movie. Or do something to help change it.

Posted by: jfl | Jul 16, 2015 10:29:16 PM | 34

More on the reaction to Germany's power plays, from Fort Russ ...

"Germany's policies pose a danger to Europe for the first time since 1945"--A View From Poland

... and the US' possible doubly convoluted play as hypothesized by Joaquin Flores last September ...

Pravy Sektor Coup as ISIS Scenario: NATO to Feign a 'Unilateral' Alliance With Russia

... just substitute the US for NATO. Germany has certainly knocked the scales from some eyes. I can't imagine Russia will be drawn in.

Greed and geopolitics do make strange bedfellows though. Nations don't have friends they have interests. And it's hard to see any of these 'nation' that have identified its citizens' interests with its own. Of the big ones ... maybe Russia under Putin? All he has is the support of the Russian people.

Posted by: guest77 | Jul 17, 2015 12:48:32 AM | 36

Excellent thread.

Syriza has shown, I suppose, that gaining access to power isn't enough. The party has to be involved with its members and those they hope to make members. Helping people get access to food, medicine, security, and anything else the state is refusing to help with. The left cannot just win elections, it must be threatening to those in power. It must be prepared to take control of those things the people demand they control (and it must be willing to relax when the people demand this). People must look to the organization in Latin America, that is all I can say. There, under the harshest repression, democracy is thriving.

The story of Greece I suppose is a lesson for the rest of the left parties though, who of them has a chance outside of Podemos - and what of Podemos anyway. They don't seem particularly able sadly.

The world- but especially the west - in the last 30 years, has changed so fundamentally that democracy is nowhere to be found. Nor democratic forms of social organization are even gone for the most part. And now they are turning the screws on whatever remains. Even the middle classes live under turn-key totalitarianism, as it was said by someone, (as opposed to before, where it was just the lower classes) and everyone knows this. And it is proved more and more with each passing event it seems. The people are thoroughly boxed in and controlled, but unlike juliania I think the media has so much to do with it. The massive media conglomeration is a keystone of the changes over the last 30 years, as well as the emergence of the internet - brought to a great many people by those media conglomerates.

The oligarchs of the west are determined to return to their royal status and complete political power they had before WW1. This is really a hopeless feeling attached to this, their seemingly complete victory over democracy. And I imagine that is much of the point...

Posted by: guest77 | Jul 17, 2015 12:52:57 AM | 37

I haven't read this all, but looks very applicable to our times...

The network of global corporate control - https://archive.org/details/TheNetworkOfGlobalControl

Stefania Vitali, James B. Glattfelder, and Stefano Battiston

Abstract
The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions.

This core can be seen as an economic "super-entity" that raises new important issues both for researchers and policy makers.

Posted by: Jackrabbit | Jul 17, 2015 1:33:03 AM | 38

juliania @30

Yes, Tsipras seems to have been ambivalent. The referendum was a bold move that actually worked in his favor but then turned cautious. Maybe he worried that if he threatened GRexit Schauble and the Troika would call his bluff?

In an earlier thread, I likened Tsipras to Chamberlain, who had the best intentions but is remembered as an appeaser. This may seem like a dramatic comparison but Michael Hudson has made the point that economics is now war by other means.

Chamberlain satisfied the public's overwhelming desire for peace just as Tspiras satisfied his public's desire to stay in the Euro. Each one had misgivings about the deal that they signed. Chamberlain began to rearm - especially building up British air power. Tsipras may also prepare for a future confrontation with the Troika.

Posted by: MRW | Jul 17, 2015 2:05:22 AM | 40

The role of the Eurosystem within the half-hidden political order of the eurozone really is comparable to the Soviet or Chinese Communist Party.


No, it's not. Billmon doesn't understand the structure. He's not seeing it clearly, and is not getting to the root of the problem.

The individual EU countries that use the Euro cannot create their own currency. They GAVE UP their sovereign currency for a foreign one, the euro, when they agreed to make themselves subservient to the Maastricht Treaty.

The Maastricht Treaty did/does not allow for a 'federal government of Europe'. It ONLY concerned itself with a monetary union, and it set down strict rules for entry (for instance, a nation's deficits could be no more than 3%--an insanity). It allowed for the creation of a central bank, the European Central Bank (ECB), whose operating rules were dictated by the Maastricht Treaty (and subsequent revisions).

But crucial to understand is this: a central bank CAN ONLY SET MONETARY POLICY. You need a 'federal government' to SET FISCAL POLICY. The EU doesn't have that. Sure, it has the EU parliament, and it has a bunch of unelected officials running the ECB. But it has no overlord, no elected oversight, that can rule in conditions like Greece is going through to ease sectoral pain, and stop the bleeding of ordinary citizens. That requires fiscal policy. The only way that fiscal policy can be changed in the EU is by a change to the treaties. Or the blessing of Angela Merkel, because Germany has captured the ECB.

Let me try to put this in perspective. The US has a federal government AND a central bank. Despite what all the Federal Reserve haters and the 'get rid of the IRS' people claim (inaccurately), the US central bank is a creature of Congress and must answer, by law, to the federal government twice a year. It is the US Treasury's banker, and must, again by law, return all profits each year to the US Treasury.

The US federal government creates fiscal policy. This is the direction for the country that the central must follow and support trhough monetary polices. Fiscal policy is Congress' job although they haven't done it properly for 30 years. For example, if one of the 50 states is in trouble-let's be hyperbolic: devastating earthquake, massive drought, asteroid hits--Congress can authorize ("appropriate") funds--creating them 'out of thin air'-to help the state. With no debt to children or grandchildren.

Why? Because the US federal government issues the currency, the 50 states only use them. The 50 states cannot create their own currency, just like the countries that use the euro. But the 50 states have the protection of the US federal government.

The formerly sovereign countries in the EU that use the Euro are like the 50 US states now. They cannot create their own currency, which would give them the policy space to pay their own citizens and denominate all the debts incurred in their own currency. They are dependent on the ECB, a goddam central bank that has no fiscal authority, to help them. EVEN THOUGH, in Europe, the ECB issues the Euro 'out of thin air'. The ECB is a collection of central banks. And right now Germany's central bank is dominant because it has climbed to the top-Germany was deeply in debt before the euro took over-on the backs of the other nations.

You will not begin to understand what is going on until you realize that the euro was designed by the famous French economist, François Perroux, in 1942 in anticipation of Hitler winning WWII, which was expected then. The plan was that they (the Nazi Pétain government wanted to be aligned with the German hegemon) would introduce a pan-Eurpoean currency and force adoption by the southern and eastern European countries to control and impoverish them. Mitterand, aligned with the Nazi/fascist Cagoulard in the late 1930 and 40s, was a Pétain enthusiast; this only came out in 1990. It was Mitterand who pushed through the euro, if you will check history. Perroux's monetary replacement was the blueprint for the Maastricht Treaty and the subsequent treaties.

Posted by: MRW | Jul 17, 2015 2:46:03 AM | 42

@tom | Jul 16, 2015 3:45:06 PM | 25

How the fuck is it accepted, that private banks can print as much national currencies as they like, but the owners of the those national currencies - the people and the government - cannot do with fractional reserves and money printing, like what the private banks do.

1. Private banks cannot "print as much national currencies as they like."

2. Fractional reserve banking does not exist. It died 80 years ago in most modern economies. I think only Hong Kong and Bulgaria (I think) use it now. The US doesn't' use it. Neither does any single country in the EU or Europe. Fractional reserve banking can only exist in countries that have a gold standard.

3. The only entity that prints the euro is the ECB, although the national central banks do it for the ECB under contract. BUT. BUT. BUT. These national central banks do it by keystroke. They don't control the physical printing presses. Besides, physical currency is such a small part of the currency.

4.

but the owners of the those national currencies - the people and the government
any country using the euro is not using a "national" currency. They are using a foreign currency.
Posted by: james | Jul 17, 2015 3:06:57 AM | 43

@19/20 psychohistorian.. i like where you are coming from, but people are slow to change and always looking for leadership.. many think that because someone is rich or has a type of power that comes with money, that they will be good enough to lead.. that is a mixed bag to me personally.. there are just as many losers with money as not..

@28 Laguerre.. thanks.. you've given a specific example to my more generalized observations already posted.. indeed - visa and mastercard are a part of the same ponzi scheme run by the same kleptomaniacs under the guise of whatever they want to pass themselves off as.. playing with the bank of international settlements is only a step away..

@35 guest77 quote.. "The world- but especially the west - in the last 30 years, has changed so fundamentally that democracy is nowhere to be found." i think that is very true..

@39 mrw.. good post, but you are not addressing the issue directly either.. making a comparison to what was a country like greece to one of the states in the usa, cheapens the idea of what a country is.. the euro has done this too.. doesn't mean we have to go along with it, but in terms of drawing a parallel, it isn't a bad one to make. and of course the big difference here is now that greece has given up it's control of monetary policy, as have all the other countries gobbled up in this insane idea of an european community - greece is an opportunity for everyone within the stupid structure to see it for what it is - a complete rip off of any shred of democracy that might have remained...

mrw - we've had these conversations before.. you appear to think the fed reserve is some sort of good two shoes neutral structure that follows a mandate and is not beholden to malevolent interests.. i see it as just the opposite.. the euro was another way to diversify the ponzi scheme by duping a lot of ignorant people into something they would have been better knowing more about.. i would be curious to hear a response from you that provides an answer as to the solution here.. mine would be greece to say fuck you to the euro currency and go back on it's own...

Posted by: psychohistorian | Jul 17, 2015 3:29:02 AM | 44

@jackrabbit.....you said that us "lower class" folk rely on the "upper class" folk to keep the world running

In the 66 years of my life I have seen untold potential waiting/begging for opportunity and I think your neck might break watching the momentary vacuum be filled getting rid of the top 50K social parasites and their attendant sociopaths. It is a myth that us poor 99% can't make it without the 1%. It is a myth that has been around for centuries and never has been true. The 1% are and have been an impediment to that advancement of humanity for quite some time. In most major ways we stopped evolving during the Enlightenment period when faith didn't become deprecated but instead became one of the tenets of the Western form of social organization, others being private property/finance, inheritance and "rule of law".

If all that were to change by neutering inheritance and ongoing ownership of private property (yeah, neuter public policy influence of religions too)
With Capital being returned to the global Commons, public education regains its priority and is a right for all but at the higher levels; and private education disappears. With those of faith no longer being in control of public policy, population control can be discussed, managed and alternatives like birth control researched/provided. We have answers for many of our pressing social problems, but we do not have the will to break out of the anthropological mold we are in.

Would the 99% agree to develop and use a technology that burdened the next thousand generations of humans to manange the potentially extinction causing effluent (i.e. Fukushima)? We live according to a very sick, no longer defensible and currently committing war crimes against humanity form of social organization, who's administrators we used to prosecute at the Hague 70 years ago. American empire is now the tool of the global plutocrats and the odds of the 99% wresting control away and changing the course of our species and world look slim.......but creating textual white noise on the intertubes is cathartic.

Posted by: chris m | Jul 17, 2015 6:06:08 AM | 47

Regarding events of past 6 months between Greece and the EU
(and Greek membership of the euro).
Following the recent Greek capitulation,it is clear to almost everyone now that the fuse has been lit beneath the euro.(and possibly even the entire European project.

Eurosceptism is starting to break out (and its only just starting) throughout the entire EU.
We can now all see politicians such as Marine Le Pen getting elected in next French Presidential Election on a purely "leave the euro now" ticket.

PS the entire Europe project was always predicated on a "lets destroy individual National Sovereignty" premise (a sort of EUSSR).

I never did understand why when Communism officially died around 1990
that it seemed to make an almost simultaneous and miraculous rebirth, but then Europe is the land of Dracula
and various other 19th century horror stories.

Posted by: Noirette | Jul 17, 2015 11:00:23 AM | 51

Syriza has shown, I suppose, that gaining access to power isn't enough. The party has to be involved with its members and those they hope to make members. guest77 at 35.

I agree, also pretty much with the rest of the post. What happened is that there was a power vacuum in Greece (when PASOK threw in the towel and the old structure crumbled) and the only ones willing to enter the breach were Syriza. One might also say that in Greece the political power structure does not match the real power structures in a good or efficient way. This democratic hoopla is all peachy cool when it is Swiss burghers discussin' and votin' on the color of the trams, or property tax, while being faithful to their 'radical' or 'socialist' -whatever- roots. In Greece, in its present form, it does not work. See for ex. the fantastical abyss between the OXI vote and the acceptance by the elected representatives of even harsher austerity.

Ideally, in a hypothetical genuine, true? democratic system, after the OXI vote a unitary or even technocatic Gvmt should have been formed (ironically, Tsipras did just that in a way ..) behind the OXI vote, to collectively resist and bargain (doubt any positive result would have been forthcoming but who knows), but naturally that was not possible.

One argument is that the 'Left' must be 'more in touch', 'must reform', must be 'more grass roots' etc. (Sounds a bit like what they say about the EU, heh? And in Greece that argument is made, plenty) - true, but imho it won't be enough. No way.

So some other avenues have to be explored, sought, implemented.. One imperative (under the present cirucumstances) is national sovereignity, see in Greece, New Democracy being say 'for austerity', 'for the euro' and so on because they are tied up in comprador not to say Mafia circles linked to the EU, big capital, banks, instituted corrupt structures, tax evasions, etc.

Anyway this debacle has shown that parliamentary democracy is not to be afforded to small powerless countries that have been taken for a ride. I think ppl are seeing that now, that facade is cracking.

Overall the EU is in deep sh*t. It won't survive for very long in its present shape.

Posted by: Jackrabbit | Jul 17, 2015 11:16:30 AM | 53

camelotkidd

This article fails to note the 'eurosclerosis' that plagued Europe in the 70's and 80's. Uncompetitive economies with large social obligations and clientist political systems that still exist in some areas.

The 'evil genious' moniker doesn't really fit. I doubt he is the only economist that would've offered such a solution. And he is certainly not the only guy that found European labor laws of the time to be a costly headace. I think he just got there first. And his demeanor is grandfatherly not menacing.

And he is not unmindful of how his work can be misused. When I took his advanced economics class in the early 90's I argued against the excesses of supply-side economics while others in the class seemed to be eager to show their support of what they assumed Mundell believed in. I got an A-.

=

There are problems with the Euro - the disparate economies, the lack of political and fiscal union, the uneven benefits, etc. - but blaming it on the academics seems like scape-goating, and nearly as bad as blaming it on the victims. Should we blame Marx for the fall of the Soviet Union?

Posted by: tom | Jul 17, 2015 4:34:48 PM | 59

MRW @42

How do you reconcile the contradiction between your points 1 and 2.

If Private banks "cannot" print as much money as they like ( point 1 ), then how can fractional reserve banking Not exist in most of the world ? ( point 2 ) . If fractional reserves do not exist then they free to print as much as they like.

Of course whem I say they can "print as much as they like" , that is not a children's imagination interpretation where the private banks are free to print infinitelt, that's of course the private banks have been unlinked from previously acceptable amount of printing/keyboard strokes, to create money.

And your 3rd doesn't make any sense at all. How does a gold standard have any restrictions on having a 10% fractional reserve, 1000%, or 1,000,000% of gold holdings ? Gold doesn't make decisions, regulations and enforcement are the decision-makers. Whether it's gold or fiat.

And your point 4 is right. It is my argument to why no country should join a single currency like the euro, and nations should always have their own sovreign national currencies

Posted by: juliania | Jul 18, 2015 1:08:20 AM | 66

Jackrabbit@38

Sorry to be late on here. The Chamberlain comparison is an interesting one, and Tsipras' tragic flaw may be his devotion to the Eurozone - I think it is his, not really any perceived mandate, because surely he knows a good leader makes choices as events change - to go back to my example, that's what FDR did, and very risky choices they were. Some of FDR's didn't work, so he did other things. He was making it up as he went along, and I think that's very similar to what would be needed in exiting the eurozone. You would have to bring the people along with you, with the confidence and trust that something needed to happen, charting a new course. Tsipras doesn't seem to have been willing to do that, and consequently he runs the risk of being just one more in the line of leaders who have caved under pressure.

I think it has a lot to do with lack of faith in the people themselves on the part of such leadership. Obama showed this when he didn't take public financing but already was turning to the banksters. He didn't need to do that, and he probably would have even had a bigger vote tally if he'd stayed with the people. I wonder why this new leadership seems so divorced from sympathy with those who elect them and whom they presumably serve? I don't think Tsipras is as two-faced as Obama, but he's starting to wear the same shoes. The tragedy is the Greek people so much need him to step up - the way a tennis player steps up if he's really a champion. I think there's still time but it's getting late. If he keeps on with this deal, history will take note. That's a huge price to pay.

Posted by: jfl | Jul 18, 2015 1:24:02 AM | 67

Tsipras ... he messed up. If 'his' deal goes through Greece suffers the full catastrophe. The thing to do is to prevent that happening. Tsipras is a lame duck. It makes little difference why he messed up ... character flaw, bribery, incompetence, all the usual failings of the political class.

The point is he has set Greece up for more lethal loans and so his 'program' must be repudiated. The only way I can imagine that happening is via the direct participation of the Greek people in their government. If there is a majority NO! on the new' program, good. Make a counter offer ... when (if, I suppose, to be inclusive) it's rejected, exit the euro - there's life at the end of the tunnel. If not ... well, they're done for, aren't they?

Debt-slaves of the German-dominated EU : deprived of their remaining assets and their own government.

Posted by: fairleft | Jul 18, 2015 2:58:03 AM | 68

Lapavitsas Calls for Exit as the Only Strategy for Greek People (the video, audio and transcript):

Why this capitulation? Why have we come to this after all the enthusiasm of six months ago? After the surge of grassroots support in this country and in Europe? The answer is clear to me. And it has to do with the wrong strategy, that was good enough to win elections, but proved disastrous in government. What is this wrong strategy? It's very simple, expressed openly time and time again. We will achieve radical change in Greece, radical change in Europe, and we will do it within the Eurozone. That was the strategy. Well, that's not possible, period.

As far as I'm concerned, the Greek left has found its leader. Lapavitsas says it all, clearly and brilliantly: Grexit and nationalize the banks.

You can't advance if you do not understand that Syriza has failed, if you keep making excuses for their failure, or try to pretend it was anything but failure. Greece must leave the euro. This has been obvious for several years, but unreasoning, 'no matter what' Eurozone love, especially prevalent within Syriza and generally among the middle-class European left and pseudo-left (Podemos, I'm looking at you!), MUST be abandoned. The euro doesn't love you; it's time to stop loving it back.

The MAIN task for the European left, if it wants to be left rather than neoliberal, is to abandon the euro. It's easy: listen and be persuaded by Lapavitsas.

Posted by: okie farmer | Jul 18, 2015 4:10:39 AM | 69

More from Lapavitsas:
Finally, the deal is quite clearly neocolonial. The government of the left has signed up Greece to a neocolonial agreement.

And it is--it is neocolonial for many reasons. I will mention three. First, the deal proposes the establishment of a privatization fund of 50 billion Euros which will basically sell public property under foreign management. 25 billion of that, the first 25 billion, will go to the banks by the agreement. If there's anything left, and there won't be anything left because they'll never make 50 billion, it might go to repaying the debt and possibly to investment. Essentially, then, this fund will sell what it can of public property to recapitalize the banks. We've just agreed the deal that sells the family silver to recapitalize the failed Greek banks.
~~~
The real winner of this deal is obvious. It's staring you in the face. The real winner is the Greek oligarchy expressed in the mass media. That's why the mass media are thriving and celebrating [a win].
~~~
Because the monetary union in which, to which Greece belongs, is not ideological. I mean, it is, but it isn't just ideology. And it isn't just a balance of forces. It is an institutional mechanism. The sooner the Greeks understand this, the better for all of us. It is an institutional mechanism, it is a monetary union that's, it's a hierarchical body that works in the interests of big business and in the interests of a few countries within it. That's what the EMU is.
~~~
Now, what do we do, then? What we need to do is to withdraw our consent to this agreement. To withdraw our consent to this agreement. And to redesign a radical program that is consistent with our values, our aims, and what we've told to the Greek people all this time, all these years. And that radical program is impossible without Euro exit. The only thing that we really need to do is focus on developing a plan for Euro exit that will allow us to implement our program. It is so obvious I'm amazed that people still don't see it after five months of failed negotiations.

Posted by: okie farmer | Jul 18, 2015 4:23:57 AM | 70

http://www.bbc.com/news/world-europe-33578778
The former Greek finance minster has said his country's economic reforms are "going to fail", just as formal talks on a huge bailout are set to begin.

In a BBC interview, Yanis Varoufakis said Greece was subject to a programme that will "go down in history as the greatest disaster of macroeconomic management ever".
~~~
I may disagree with [PM Tsipras] and I declared that by resigning my post
~~~
The bailout could total €86bn (£60bn) in exchange for austerity measures.

In a damning assessment, Mr Varoufakis said: "This programme is going to fail whoever undertakes its implementation."

Asked how long that would take, he replied: "It has failed already."

Posted by: fairleft | Jul 18, 2015 4:51:18 AM | 71

Varoufakis is just whining. He doesn't provide a solution to the immediate and staggeringly important problem, imposition of worse austerity on Greece's people. He sounds not dissimilar to Tsipras, who also says he's unhappy/pessimistic yada yada. They're like old men complaining about the weather. Whining and whinging, Tsipras has signed up to carry out the police state repression that's the only way his new legislation can be carried out.

Even though the solution/escape is clear, as Lapavitsas points out. It's almost as if the Syriza apologists are incapable of saying/thinking the word 'Grexit'. Who is holding their tongues?

Posted by: mcohen | Jul 18, 2015 6:59:22 AM | 72

parking weapons like f-16 and submarines in countries is a good idea...they are maintained and serviced and kept ready for active service...this all under the cover of arms deals etc etc.

there is only one flaw..the government of that country must be trusted....they cannot change sides...greece is in a unique position.opposite north africa,on the med, so it is well positioned for launching of attacks,on countries like libya or tunisia or even egypt.

discrete crete sounds like a good name.

Posted by: paulmeli | Jul 18, 2015 8:15:45 AM | 73

"Varoufakis is just whining. He doesn't provide a solution…"

Exactly. There is no solution that doesn't include leaving the Euro and reclaiming monetary sovereignty (although that alone won't do it…they need astute, competent leadership too). A solution that presumes changing the fundamental Euro structure to include a fiscal component is never going to happen, the big guns (Germany) would leave before that would happen.

Playing long shots works in the movies, in real life not so much.

Most of the billions of words that have been written on this subject have been little more than wailing and gnashing of teeth. Denial.

There are several stages to go before there is any viable solution that citizens will sign on to, that won't be co-opted by TPTB.

Posted by: honest! | Jul 18, 2015 9:28:16 AM | 74

I'm not saying Syriza made all of the right mover, but neither do I think they can be considered "the Greek People's enemy". Not at all. They appear to be being honest.

Posted by: guest77 | Jul 17, 2015 7:52:02 PM | 64

What a load of utter nonsense.

Honest?

They demanded the right to seek a mandate from the people before proceeding. They then got exactly the mandate they claimed to have sought . . . . . .

. . . And then, promptly ignored it entirely.

=======

There's nothing "honest" in that. Cynical? Absolutely. Manipulative? Certainly

Threacherous? Most definitely

But "honest"? . . . . GTFO!.

Posted by: jfl | Jul 18, 2015 10:06:29 AM | 75

@71, @73

And you guys are just endlessly whining about the whiners ... the political class has chosen its preferred 'solution'. They're all done. If there is to be a real solution it has got to come from the Greek people.

@37

That's quite an article. I cut and pasted the picture of the 'bow-tie' graph and made the table of the 50 top controllers from page 33 sortable below it.

page 33 of The network of global corporate control

I'll try to summarize the significance of the bow-tie graph and its abbreviated labels tomorrow, for those who don't want to read the full article themselves.

Twenty-four of the top 50 controllers are nominally American.

Forty-four are financial.

Posted by: Noirette | Jul 18, 2015 11:43:49 AM | 76

Posted some time back about the ESM (etc.) Here some info that give OK descriptions.

Eric Zuesse, global research

http://tinyurl.com/pqwbvqa

> a link in that article to the Treaty (automatic download)

then this, from the Corporate Europe Observatory

http://tinyurl.com/o3eyg25

> a link to a leaked text explaining the Troikas plans for the privatization fund (that 50 bn) pdf

http://corporateeurope.org/sites/default/files/esm_report_to_greece_0.pdf

for some extra financial info (the only available to the public?) one must go to their site and click through and through - all automatic downloads.

http://www.esm.europa.eu

As MRW writes, at 40, there is no resemblance between EU financial and pol. structures those of the Soviet, Chinese Communist Parties.

MRW maybe you are hyping the Nazi past? Mitterand and Thatcher particularly were against the re-unification of Germany. Mitterand wanted to lock Germany down in the Euro in an 'alliance' (or because he was a bankster's man, in fact laws prohibiting speculation were lifted in France well before Billy C's annulment of Glass-Steagall, the US played catch-up) and Germany made the trade, with difficulty (attachment to the mark, independence, etc.) Controlling countries through their currency and banking system is not an original or particularly Nazi idea. For ex it works right now in parts of Africa with the CFA and nobody talks about it. The French didn't borrow that idea from the Nazis.

Posted by: rufus magister | Jul 18, 2015 12:09:41 PM | 77

Jackrabbit at 38, juliania at 66, jfl & fairleft >67

Like many, I've been waiting for the longest running drama on the Athens stage to finally get to the last act before attempting to make sense of the staging, plot and characters.

I still don't think we're quite there yet; probably a little more political fall-out still, but not much, see e.g., a majority of the Syriza Central Committee opposed the austerity deal.

The question of the political leadership of the left, however, is always an interesting topic. Also from the 17 July "Links" page at - dare I mention the name? - Naked Capitalism, John Pilger at Alternet argues thatThe Leaders of Greece Are Some of the Phoniest Idealists You'll Ever See. It seems hard to disagree.

Having set aside the mandate of the Greek electorate, the Syriza government has willfully ignored last week's landslide "No" vote and secretly agreed a raft of repressive, impoverishing measures....

The leaders of Syriza are revolutionaries of a kind – but their revolution is the perverse, familiar appropriation of social democratic and parliamentary movements by liberals groomed to comply with neo-liberal drivel and a social engineering whose authentic face is that of Wolfgang Schauble, Germany's finance minister, an imperial thug. Like the Labour Party in Britain and its equivalents among former social democratic parties such as the Labor Party in Australia, still describing themselves as "liberal" or even "left", Syriza is the product of an affluent, highly privileged, educated middle class, "schooled in postmodernism", as Alex Lantier wrote. [I could not immediately find whatever Pilger is quoting, he is affiliated with the "wsws" website; such sad sloppiness at a major site in these days of html coding...]

For them, class is the unmentionable, let alone an enduring struggle, regardless of the reality of the lives of most human beings. Syriza's luminaries are well-groomed; they lead not the resistance that ordinary people crave, as the Greek electorate has so bravely demonstrated, but "better terms" of a venal status quo that corrals and punishes the poor. When merged with "identity politics" and its insidious distractions, the consequence is not resistance, but subservience. "Mainstream" political life in Britain exemplifies this.

This is not inevitable, a done deal, if we wake up from the long, postmodern coma and reject the myths and deceptions of those who claim to represent us, and fight.

How then do democratic movements ensure that their leaders views and priorities accord with their own, and can be held responsible and be replaced? What sort of leadership is needed for industrial as well as political democracy?

Posted by: rufus magister | Jul 18, 2015 12:18:48 PM | 78

ps to 77 -- Amongst the parties affected by the Munich Agreement, I think Edvard Beneš, the Czechoslovakian President, is a better fit for poor Tsipras.

Posted by: paulmeli | Jul 18, 2015 12:54:19 PM | 79

"the political class has chosen its preferred 'solution'. They're all done. If there is to be a real solution it has got to come from the Greek people."

No kidding?

I don't know what's worse, repeating the obvious ad nauseam or whining.

Posted by: Noirette | Jul 18, 2015 2:00:07 PM | 80

Having set aside the mandate of the Greek electorate, the Syriza government has willfully ignored last week's landslide "No" vote and secretly agreed a raft of repressive, impoverishing measures…. a quote by rufus at 77

NO. Syriza was elected on a platform of 'staying in the EU-Euro' and at the same time 'reducing /abolishing austerity.'

This mandate might be considered contradictory or ridiculous, illusory, doomed to fail, etc. (Yes I agree.)

Also Syriza has a slim voter support and thus had to form a coalition Gvmt.

Well in function of that contradictory mandate they managed (at terrible cost and perhaps misguidely) half of it. Staying in the Euro.

What is surprising? Nothing.

Why they chose the one above the other is abundantly clear.

Posted by: Wayoutwest | Jul 18, 2015 2:24:51 PM | 81

RM@77

I enjoy good discussion and criticism but this carping and sniping about Syriza from the US Left says more about writers such as JP and the weaklings of the Left, that have attained a new level of meaninglessness, and has allowed someone like Bernie Sanders to claim to be a Socialist without any real blowback, is trying.

Posted by: MRW | Jul 18, 2015 7:29:54 PM | 85

paulmeli at @63 has got it exactly right. In all modern economies on a fiat currency, loans create deposits.

Bankers, as a result, create 'credit money', NOT new interest-free money. (Credit money also means that one person's asset is another person's liability. At the commercial banking level within the real economy that includes collateral, timed repayment schedule, and interest owed, which is income to the issuing bank. Everything nets to zero at this level across the macroeconomy.)

The US federal government, on the other hand, adds new money into the economy. Only entity that can. Only the US federal government can introduce new, interest-free money into the economy, and it does it via congressional spending based on the needs of its citizens, and where it wants the economy to grow (giving 40% of it to the financial institutions is NOT GROWTH). Which the mo-fos we've elected do not understand.

One small quibble, Paul. The amount of physical currency, physical cash and coin, is around 11.5% to12% of the available money. The rest are treasury securities. Don't forget that countries like Ecuador are pegged to the USD and need US cash for their citizens. Ecuador's central bank orders them from the US Treasury (Bureau of Printing and Engraving) and puts up 100% of the demanded amount in assets (treasury securities) to pay for them.

Posted by: MRW | Jul 18, 2015 7:31:15 PM | 86

Tom @61

Sorry for the delay. I'm traveling. Good questions, btw.

First, let's clear up what fractional reserve banking is. This is a lousy simplistic example, but it will work. And let's imagine a small western town with one bank, which I will call Bank Buckeroo. Introducing a second bank in the town mean I would have to explain how interbank reserves work, and it doesn't matter in this explanation. [BTW, US banks DO NOT LEND their reserves; reserves serve another purpose in the US banking system; namely to help the Federal Reserve retain the overnight interest rate target that banks charge each other. Canada, for example, doesn't even have a reserve requirement for their commercial banks.]

Fractional reserve banking explained

OK. Johnny Schwartzburger sidles into his Bank Buckeroo and deposits 100 bucks in cash in his savings account.

Now Bank Buckeroo has got $100 more than it had yesterday.

Because the reserve requirement is, say, 10%-the FRACTION of the loan that the bank must retain under "fractional reserve banking"--Bank Buckeroo holds onto $10 and can loan out $90.

Sally Sweetpea needs $90 for her beauty shop and she borrows $90 from Bank Buckeroo, and deposits that in her checking account.

Now Bank Buckeroo holds onto $9 (10% of $90) and can loan out $81.

Old Ray Saddleback needs $81 to buy supplies for the only café in town, so he hits up Bank Buckeroo for an $81 loan.

Bank Buckeroo holds onto $8.10 (10% of $81) and can loan out $72.90.

Paddy O'Gilligan needs $72.90 to top off his supply of whiskey at the only bar in town (and this banker likes his whiskey), so he borrows $72.90 from Bank Buckeroo.

Bank Buckeroo holds onto $7.29 (10% of $72.90) and can loan out $65.61

You see where I'm going with this. Eventually, Bank Buckeroo will have reserved all $100, but will have extended credit against that $100 to customers that he knows are good to pay back their loans. Under the gold standard system before 1933, each dollar had a statement on it that you could exchange 20 of the one-dollar bills for one ounce of gold (not exactly the statement but that's what it meant). It was a "fixed exchange rate." The value of a dollar (US) was fixed to the value of gold. So Bank Buckeroo has Johnny Schwartzburger's original $100 in cash that guarantees it can trade-in the cash for $100 in gold anytime it wants. It's protected against that loss. The only thing the banker has to worry about is whether his customers can pay back the new loans, and he knows their creditworthiness intimately.

That all changed in 1933-no more gold standard in the US

We went off the gold standard. The value of the USD was no longer pegged to the value of gold, the supply of which the US federal government could not control globally except for certain US mines. Each new goldmine find globally affected the value of the dollar before 1913 and led to extraordinary panics and busts in the last half of the 1800s. More gold available meant the value of the dollar dropped, and that affected international trade, and whether people exchanged their dollars for gold stateside and hoarded it, further diminishing the amount of money available in the real economy. It was the National Gold Something-or-Other Act in 1900 that pegged the USD at $20/ounce.

Interestingly enough, it was Marriner Eccles, whom FDR made the first chairman of the Federal Reserve three years later, a Republican Mormon banker from Provo UT who appeared before the Senate and House of Representatives in 1932/33 to make the case for dropping the gold standard (he wasn't the only one however). Eccles became more popular than Miley Cyrus. Eccles had seen the devastation that the banking system was doing to his municipal and rural customers. Eccles was 22 when he made his first million after his father died and he had to take over the family businesses, which included a bank. He was a financial genius who could speak plain English to commoners about banking and esoteric financial concepts. His ideas predated John Maynard Keynes by three years. (BTW, Keynes was never taught in American universities, so anyone sneeringly invoking Keynes doesn't know what they are talking about. The first Nobel Laureate in Economics, Paul Samuelson, is supposed to be the explainer and keeper of Keynes ideas, but Samuelson admitted in 1989 in a video interview that he never read more than half the book, and that he never understood Keynes' ideas to begin with.)

[to be contd]

Correction: Each new goldmine find globally affected the value of the dollar before 1913

Should read: Each new goldmine find globally affected the value of the dollar before 1900

Posted by: MRW | Jul 18, 2015 7:34:22 PM | 87

Tom @61 [contd.]

If Private banks "cannot" print as much money as they like ( point 1 ), then how can fractional reserve banking Not exist in most of the world ? ( point 2 ) . If fractional reserves do not exist then they free to print as much as they like.

[…]

And your 3rd doesn't make any sense at all. How does a gold standard have any restrictions on having a 10% fractional reserve, 1000%, or 1,000,000% of gold holdings ? Gold doesn't make decisions, regulations and enforcement are the decision-makers. Whether it's gold or fiat.

Loans create deposits. Yes, 'out of thin air'. Bankers can say 'Yay' or 'Nay' based on the cut of your jib, or the color of your skin, although they are not allowed to.
Banks don't print money. They issue credit, i.e. 'credit money'. They mark up the customer's bank account with computer keystrokes in the amount of the loan. Banks issue credit money based on two things: (1) customer creditworthiness, (2) customer income. They also require collateral.
Banks have to maintain reserves in their banks accounts at the Federal Reserve on all the loans they make.It is a percentage of the loan, and banks cannot loan out this money. If the bank doesn't have enough reserves in their Fed account, they have to borrow from other banks at the Fed Funds Rate, or overnight interest rate, set by the Fed. (The Fed uses this overnight interest rate to promote or demote bank lending in the economy, among other things.)
If the bank has been making bad loans or is overextended-this goes to your Point 1 about banks being free to issue as much credit money as they like-and other banks know that, the other banks might not loan it any reserves.
In that case, the solvency-suspect bank has to slink to the Fed's Discount Window where they can borrow the required reserves, but the interest rate is punitive, and it usually alerts bank examiners that there's a problem at the bank. So having to go to the Discount Window is not something a bank wants to broadcast.
By law, the Federal Reserve must supply reserves to banks within the federally chartered banking system, or declare the overextended bank insolvent.
A 'check and balance' on a bank loaning out as "as much as they like" is meeting its reserves requirement.

About gold. When you have a gold standard, you're on a fixed exchange rate: X amount of currency for each ounce of gold. That's when fractional reserve banking makes sense because the bank only wants to loan out X amount of money based on the amount of gold in the kitty. It's up to the banker to make intelligent and safe decisions about who he loans to by doing his due diligence.

On a gold standard, he who owns the gold, owns the country. When we got rid of the gold standard, goldminers and gold owners stopped owning this country, including Mr. Rothschild. We fucked him up the ass. Our money is based on the 'full faith and credit of the US federal government' and we issue our own currency. To boot, we are the reserve currency worldwide.

Posted by: MRW | Jul 18, 2015 7:36:21 PM | 88

The thread didn't take my formatting in @88. Here is the first half presented in a clearer format:
----------------------------------------------

In response to Tom's @61

  • Loans create deposits. Yes, 'out of thin air'. Bankers can say 'Yay' or 'Nay' based on the cut of your jib, or the color of your skin, although they are not allowed to.
  • Banks don't print money. They issue credit, i.e. 'credit money'. They mark up the customer's bank account with computer keystrokes in the amount of the loan. Banks issue credit money based on two things: (1) customer creditworthiness, (2) customer income. They also require collateral.
  • Banks have to maintain reserves in their banks accounts at the Federal Reserve on all the loans they make.It is a percentage of the loan, and banks cannot loan out this money. If the bank doesn't have enough reserves in their Fed account, they have to borrow from other banks at the Fed Funds Rate, or overnight interest rate, set by the Fed. (The Fed uses this overnight interest rate to promote or demote bank lending in the economy, among other things.)
  • If the bank has been making bad loans or is overextended-this goes to your Point 1 about banks being free to issue as much credit money as they like-and other banks know that, the other banks might not loan it any reserves.
  • In that case, the solvency-suspect bank has to slink to the Fed's Discount Window where they can borrow the required reserves, but the interest rate is punitive, and it usually alerts bank examiners that there's a problem at the bank. So having to go to the Discount Window is not something a bank wants to broadcast.
  • By law, the Federal Reserve must supply reserves to banks within the federally chartered banking system, or declare the overextended bank insolvent.
  • A 'check and balance' on a bank loaning out as "as much as they like" is meeting its reserves requirement.

Posted by: MRW | Jul 18, 2015 7:41:19 PM | 89

Some reporters are finally beginning to understand what I have been yammering on here over the past 18 months:

Why America Is Not The Next Greece
The key difference is that the United States has its own central bank -- the most powerful one in the world.

http://www.huffingtonpost.com/entry/why-america-is-not-the-next-greece_55a814c5e4b04740a3df6b11?

Posted by: MRW | Jul 18, 2015 7:45:47 PM | 90

[Jul 18, 2015] Disaster In Europe

Paul Krugman:

Disaster In Europe: ...all the wise heads saying that Grexit is impossible, that it would lead to a complete implosion, don't know what they are talking about. When I say that, I don't mean that they're necessarily wrong - I believe they are, but anyone who is confident about anything here is deluding himself. What I mean instead is that nobody has any experience with what we're looking at. It's striking that the conventional wisdom here completely misreads the closest parallel, Argentina 2002. The usual narrative is completely wrong: de-dollarization did *not* cause economic collapse, but rather followed it, and recovery began quite soon.

There are only terrible alternatives at this point, thanks to the fecklessness of the Greek government and, far more important, the utterly irresponsible campaign of financial intimidation waged by Germany and its allies. And I guess I have to say it: unless Merkel miraculously finds a way to offer a much less destructive plan than anything we're hearing, Grexit, terrifying as it is, would be better.

[Jul 18, 2015] Greece bailout revives image of the 'cruel German'

Jul 18, 2015 | The Washington Post

A divided Germany rose from the ashes of the Nazi defeat in World War II, weathering the Cold War to transform into one of the good guys. Modern Germany quickly molded itself into the standard-bearer of global pacifism, a hotbed of youth culture and the tree-hugging Lorax of nations in the fight against climate change.

But, just like that, the image of the "cruel German" is back.

Germany - more specifically, its chancellor, Angela Merkel - has faced years of derision for driving a hard bargain with financially broken Greece, which has received billions in bailouts since 2010. But for both Germany and Merkel, the concessions extracted this week from Athens appear to have struck a global nerve. By insisting on years more of tough cuts and making other demands that critics have billed as humiliating, Berlin is wiping out decades of hard-won goodwill.

In the aftermath of the deal with Greece, the hashtag #Boycottgermany - calling on users not to buy German products - has started trending on Twitter. Evoking Hannibal Lecter, the cannibal from "The Silence of the Lambs," some are sharing caricatures depicting Merkel as an E.U.-eating "Angela Lecter." A cartoon portraying Wolfgang Schäuble - Merkel's even-harder-line finance minister - as a knife-wielding killer from the Islamic State militant group has gone viral.

Germany was one of more than a dozen nations that insisted on a tough deal with Greece. But Britain's Daily Mail singled out Germany, saying Greece had surrendered to austerity "with a German gun at his head."

In the United States, New York Times columnist Paul Krugman this week noted the hate mail he had received from Germany for repeatedly criticizing its tough line on fiscal reforms. The Germans, he wrote, had suggested that as a Jew, he should know "the dangers of demonizing a people." To that, Krugman responded with sarcasm: "Because criticizing a nation's economic ideology is just like declaring its people subhuman."

In Greece, those actively supporting the austerity deal are being heckled by their countrymen as "Nazi collaborators." Another image making the rounds on social media shows a doctored version of the European Union flag, its circle of gold stars against a blue background reshaped into a swastika.

French daily Le Figaro declared that "conditions were imposed on a small member state that would have previously required arms." In a commentary that sneered at Merkel's "half smile" after the deal was reached, Britain's Guardian newspaper argued that rather than being cruel to be kind, the terms of the bailout were simply "cruel to be cruel."

In its online edition, even Germany's own Der Spiegel magazine decried the Berlin-led demands as "the catalogue of cruelties."

In a country that can be highly sensitive about its brutal past, some Germans are beside themselves. On Friday, the German parliament is set to vote on whether to green-light rescue talks under the onerous new terms. It is expected to vote yes. In any case, some argue, the damage to Germany's image has been done.

"Merkel, Schäuble and [Vice Chancellor Sigmar] Gabriel in two and a half days burned the trust that had been built over 25 years," Reinhard Bütikofer, a German politician from the progressive Green Party, declared during an emotional outburst on local television. "The heartless, dictatorial and ugly Germany again has a face, and that is Schäuble."

He finished by saying, "I am upset, as you can see, very upset."

... ... ...


[Jul 18, 2015] Billmon The Eurosystem's (Monetary) Control of Europe's Politics

"...The "Eurosystem", the network of national central banks governed by the European Central Bank, gives central bankers unprecedented ability to squeeze and manipulate national governments in a coordinated way. It is as if every government in the Eurozone ALREADY has a colonial entity watching it like the Troika's agents are supposed to watch Syriza in Athens. And, since the ECB Governing Council (like other EU institutions) tries to operate by a non-transparent "consensus" (i.e. the votes are not revealed), the degree to which national central bank heads are representing the ECB in their countries, rather than the other way around, is often not clear."
"...IMO these 'lessons' miss the biggest one for the left: the loss of independent media. What good is protesting neolib control via banks if no one is listening?
Governments easily manipulate corporate controlled media via access journalism. Thus we get factual truths intermixed with propaganda spin that is relentlessly pro-business, pro-establishment.
Greece is a case in point. As described in Greek Government Insider Lifts the Lid on Five Months of 'Humiliation' and 'Blackmail', the Troika was gradually increasing pressure on Greece to do what the Troika demanded. They withheld billions of euro to Greece and cut off liquidity to the Greek government. Then they waited as the financial pressure on Greece grew. But along with those measures was a caustic media that painted Syriza as incompetent, then undemocratic (because most greeks wanted to remain in the euro), then irresponsible (for calling a referendum), etc."
"... Following, a link to a German documentary about the various mechanisms of the EU [Troika, Eurogroup, European Commission, Council, etc] which are being used as devastating tools to beat down and extract wealth, vampire style, from Greece [and Cyprus], in order to revive comatose banks and line the pockets of investors, through privatization of public property.
This documentary does a good job of demonstrating just how the power of technocratic branches of the EU is being rolled out to pillage Greek, Portuguese, Cyprus economies, plunging the respective populations into ever greater misery.
"...None of this is about 'economics' - that chimerical, dismal 'science' - all of it is about politics, and power politics, and imperial politics."
The Trail of the Troika [1:29:22]
Jul 18, 2015 | Moon of Alabama

Billmon: The Eurosystem's (Monetary) Control of Europe's Politics

Note: This post was composed from a Twitteressay by Billmon.

J.W. Mason lists some Lessons from the Greek Crisis:

Before the crisis no one even knew that national central banks still existed - I certainly didn't. But now it's clear that the creditors' unchallenged control of this commanding high ground was decisive to the outcome in Greece. Next time an elected government challenges the EU authorities, their first order of business must be getting control or cooperation of their national central bank.

The quote says "control or cooperation," but I can guarantee the latter is never going to happen.

It is nearly impossible to exaggerate the degree to which the campaign for central bank "independence" has made them the enemies within for any left governments.

The central bankers waged a 50-60 year political war to wrest back the monetary flexibility that the break down of Bretton Woods gave to national governments. Having won that war across most of the developed world in the 70s and 80s, they extended the battlefield to the emerging markets in '90s and '00s.

The autonomy of central banks (meaning the political allegiance to Wall Street/London City/Frankfurt etc.) was maybe the biggest neoliberal victory of all. If rightwing political victories (Reagan, Thatcher et. al.) were the beachheads of the Great Counterattack on social democracy then "independent" central banks became the citadels of the occupation forces: Neoliberalism's "Republican Guard."

Ironically, the ECB was originally conceived - or at least was sold to the European left - as a way for governments to regain monetary flexibility at a higher level. As a way to a) escape US dollar hegemony and to b) outflank the Bundesbank by formalizing the joint political control of European monetary policy. I do not know if the hack establishment Social Democrats who sold that vision ever believed it, but if so, more fool them. Because what the European Monetary Union became, obvious now, was a way to turn the vision on its head: formalize joint MONETARY control of Europe's politics.

The "Eurosystem", the network of national central banks governed by the European Central Bank, gives central bankers unprecedented ability to squeeze and manipulate national governments in a coordinated way. It is as if every government in the Eurozone ALREADY has a colonial entity watching it like the Troika's agents are supposed to watch Syriza in Athens. And, since the ECB Governing Council (like other EU institutions) tries to operate by a non-transparent "consensus" (i.e. the votes are not revealed), the degree to which national central bank heads are representing the ECB in their countries, rather than the other way around, is often not clear.

As long as the cozy comprador system tied peripheral governments to the core (i.e. Berlin), the role of the ECB and the Eurosystem could be obscured. Peripheral governments appointed "made guys" (i.e. banksters and/or their technicians) to national central bank boards and pretended to govern. Core politicians and their local comprador politicians let the Eurosystem technicians in Frankfurt tell them what "structural reforms" they should push to make the EMU "work."

But the moment an outsider government like Syriza came to power, the role of the Eurosystem and the national central banks in it could no longer be hidden. The fact that the Greek National Bank was an instrument of the ECB in Frankfurt, not of the Greek government in Athens, became obvious to everybody. The ECB's role as the muscle behind the Eurogroup's (Berlin's) diktats put the Greek National Bank in the position of helping to choke its own banks and terrorize its own citizens. And under the rules of EMU the Greek government was completely powerless to do anything about it. A defining moment.

The inescapable conclusion is that the allegedly "independent" Eurosystem now operates not as a network of central banks but as a parallel government.

The role of the Eurosystem within the half-hidden political order of the eurozone really is comparable to the Soviet or Chinese Communist Party. Like the Communist Party, the Eurosystem is now the "leading organ" of the neoliberal order, operating at all levels of the EU structure and providing "guidance" to elected political structures which are not formally under its legal control, but in reality are dominated by it. And behind the administrative apparatus of the party (Eurosystem) is the Central Committee (Eurogroup) and the Politburo (the key creditor government officials). And behind THEM is the real locus of the party's centralized power: the General Secretary (Germany/Merkel).

So J.W. Mason is quite right: it is impossible for any left government to attack the dictatorship of finance unless it controls its national central bank. But while control of the national central bank is necessary, it is hardly sufficient. As long as the EMU exit is off the table, verboten, so to speak, control of the national central banks only eliminates the "near enemy."

Ultimately it comes down to political will, which in parliamentary democracies, comes down to public support. As long as the majority (of all voters or of propertied influentials, depending on the system) is more loyal to the Euro than to national sovereignty an effective challenge to the dictatorship of finance is impossible - no matter how many national central banks the left controls.

Posted by b at 06:57 AM | Comments (90)
Selected Skeptical Comments
nmb | Jul 16, 2015 7:20:43 AM | 1

Greece capitulates with the euro-dictatorship ... until the next battle

jfl | Jul 16, 2015 7:33:14 AM | 2

You know this 'independent' central bank as tool of the neolibraconian consensus is the most salient point drummed home about Russia : the central bank as 5th column.

And the Russian central bank preceded the ECB, didn't it? When the boys from Harvard went to Russia to 'straighten' things out they conducted an experiment ... and discovered it worked just great : rinse and repeat. Russia was the archetype of the gelded European nation to come.

So the next time says Russia is not a part of Europe I'll say ... not only of Europe, but the first European nation subverted by the gnomes of neolibraconia.

The Europeans who still have a pulse ought to note now just who their real enemy is : hint, the one that's occupying Europe. And who is their fellow European victim. And ban together to defeat their common enemy ... well run him out of town on a rail, at any rate.

Certainly rearrange their banking arrangements.

Timon | Jul 16, 2015 8:48:21 AM | 5

One of the key reasons that Wall St/City/Frankfurt want universal "austerity" is not just that they want people to be frightened, impoverished and insecure; but in particular, because it has the desirable effect of suppressing the political participation of people who must continuously walk the edge, just to get by - and by now this is about half the population -and who might otherwise participate in the political process with decisive effect.

Rise like lions after slumber
In unfathomable number
Shake your chains to earth like dew
That in sleep have fallen on you
Ye are many, they are few.

H.L. Mencken is also very good on this subject - the need of the self-appointed elite to distract and render impotent the average person, and how greatly the big shots hate and fear the "mob".

why would a small country like Greece need to be the second biggest spender in nato after the USA. ...

mcohen | Jul 16, 2015 8:57:04 AM | 6

According to an editorial published by the Greek conservative newspaper Kathimerini, after the removal of the right-wing military junta in 1974, Greek governments wanted to bring disenfranchised left-leaning portions of the population into the economic mainstream[28] and so ran large deficits to finance enormous military expenditure, public sector jobs, pensions and other social benefits.

Greece is, as a percentage of GDP, the second-biggest defense spender[29] in NATO, the highest being the United States, according to NATO statistics.

The US is the major supplier of Greek arms, with the Americans supplying 42 per cent of its arms, Germany supplying 22.7 per cent, and France 12.5 per cent of Greece's arms purchases.[30]

Everybody and I mean everybody is king fu fighting. And those bankers are as fast as lightning

ab initio | Jul 16, 2015 10:32:40 AM | 12

It should be obvious with how the ECB structure was formed that any country that uses the euro as its currency is dependent on the ECB for liquidity if there is deposit flight from the banks in that country.

There is only two ways for a country to retain full sovereignty. One have a national currency with a national monetary authority that controls it and second a government that if it runs a deficit has the ability to borrow in private markets and maintains a currency board (e.g: Ecuador which uses the US dollar).

Ecuador is a good example where its government debt became untenable. It defaulted on the debt and so was for all intents shut out from private debt markets, so the government could not run a deficit. It continued to use the US dollar as its currency.

Greece had to make a choice. Continue in the eurosystem and accept the hegemony of the eurogroup or exit. It's parliament accepted the former. One can blame Schauble and Merkel all you want but the bottom line is that the Greek government and parliament acquiesced to its loss of sovereignty. The Greek people have the power to change it if they want. They just have to decide to exit the eurosystem and elect a government that does that.

In France, Marine Le Pen is clear. She will take France out of the eurosystem if elected. Of course we'll have to see if she honors her campaign promise but at least she is categorical about it. Syriza got elected promising they'll be able to get a better deal compared to the center-right party before them. In this case the Left in Greece delivered an even worse result for the average Greek citizen.

Jackrabbit | Jul 16, 2015 12:52:58 PM | 18

IMO these 'lessons' miss the biggest one for the left: the loss of independent media. What good is protesting neolib control via banks if no one is listening?

Governments easily manipulate corporate controlled media via access journalism. Thus we get factual truths intermixed with propaganda spin that is relentlessly pro-business, pro-establishment.

Greece is a case in point. As described in Greek Government Insider Lifts the Lid on Five Months of 'Humiliation' and 'Blackmail', the Troika was gradually increasing pressure on Greece to do what the Troika demanded. They withheld billions of euro to Greece and cut off liquidity to the Greek government. Then they waited as the financial pressure on Greece grew. But along with those measures was a caustic media that painted Syriza as incompetent, then undemocratic (because most greeks wanted to remain in the euro), then irresponsible (for calling a referendum), etc.

Too often we give the media a pass when it has been well documented that business and government tries to control MSM (and increasingly other media as well) via access journalism, advertising revenue (a few industries dominate) writing stories that cite in-the-tank 'experts' from establishment-friendly think-tanks and controlled opposition.

Even within Greece, Syriza had trouble getting their message out because oligarchs own virtually all of the media! And many blogs also fell for the spin - even those that have been critical of the media in the past like Yves Smith at nakedcapitalism.com - despite the fact that the delay in Greece putting forth a proposal before the April 30th deadline could be logically attributed to the 2-step process that the Troika had forced (describing how they would service the debt would severely undermine Greece's position in future debt restructuring talks).

A Left that is not in touch with the people - and whose message is undermined by establishment-friendly media - is a disaster far greater than the loss of control of the financial system. The Left's greatest strength should be its connection with the people that it fights for. Yet, instead the Left has allowed itself to be marginalized by a corporate media that has strengthened the centrist 'faux Left' at the expense of the progressive Left. So much so that many people today identify THE LEFT with the identity politics that forms 'the base' for the fauxLeft. In short, people of the 'Left' are viewed as selfishly wanting something for themselves at the expense of others. (It should come as no surprise that reporting about Greece often fell in line with this line of thinking.)

For activists that are outside the centrist political establishment - anti-war, climate change, the environment (fracking, nuclear energy, etc.), inequality, constitutional and civil rights, etc. - it is very difficult to reach a wide audience. All 'change' is channeled into the pro-business, pro-establishment centrist political system. Anyone who is not a centrist is suspect.

Greece's coherent arguments quickly fell off media radar as sniping about their incompetence and their oh-so-strange Finance Minister took center stage. This put even more pressure on the Greeks and deterred potential allies. And the spinning continues. The understanding of most people still does not go much beyond this: the Greeks don't want to pay their bills and Syriza are incompetent radicals that made the problems worse and can't be trusted. In the face of this onslaught by the Troika and Troika-friendly media, Syriza's resistance is all but ignored in favor of trumpeting Greece's defeat (a warning to others?).

=

Is there any hope? Maybe.

1) Syriza formed a government with nationalists (ANEL). Why the Left is depicted as unpatriotic is beyond me, but the left may be getting its patriotic mojo back as WAR and trade deals are increasingly understood as benefiting an international elite. I could see similar political alliances forming in other countries. (In the US, I think the establishment had feared a potential Tea Party - Occupy alliance.)

2) Media reform (or the threat of it). The Greek government has begun investigations into media bias during the referendum (there was very little coverage of government rallies and government positions, etc.). If the Syriza-led government falls, any media reforms are probably less likely.

Ron Paul's "audit the Fed" movement got some traction which caused the Fed to take notice. "Truth in media" efforts should probably be re-doubled.

3) Education. We need to retain humanities education. Higher education is turning into vocational training. For example, IMO it's difficult to appreciate the myriad issues and import of the neolib consumer-oriented approach to government vs. the democratic citizen-oriented approach, without a humanities education.

Also, people don't usually react until it is too late - partly because few have enough learning to understand the impact that new policies will have. They try to make up for their lack of understanding by relying on trusted representatives like Obama. TTIP is a case in point. Look for demonstrations about Obamatrade in a few years when it is too late.

dana | Jul 16, 2015 1:25:52 PM | 19

Following, a link to a German documentary about the various mechanisms of the EU [Troika, Eurogroup, European Commission, Council, etc] which are being used as devastating tools to beat down and extract wealth, vampire style, from Greece [and Cyprus], in order to revive comatose banks and line the pockets of investors, through privatization of public property.

This documentary does a good job of demonstrating just how the power of technocratic branches of the EU is being rolled out to pillage Greek, Portuguese, Cyprus economies, plunging the respective populations into ever greater misery.

The Trail of the Troika [1:29:22]

psychohistorian | Jul 16, 2015 1:34:37 PM | 20

@ 15

james, If you read the Shock Doctrine by Naomi Kline you can follow the same financial rape of South American countries in the 70's that the financial mafia are doing now to the middle east.

The world needs to have a discussion about the world of private finance that exists now and what could be if all finance were sovereign.

Thrasyboulos | Jul 16, 2015 2:26:43 PM | 22

The role of the European Central Bank and their buttler, Stournaras, at the Greek Central Bank in this fiasco needs this kind of discussion, and more, since it lies at the heart of German blackmail and coup attempt of the Greek government. Thank you b for this post.

@5

One reason that there have been inordinate arms purchase by Greece is that the Greek elite -- media, oligarchy, politicians (especially the latter) are up to their armpits in corruption, and one of the vehicles for corruption is arms deals.

The all powerful "socialist" minister of defence under Papandreou and minister of development under Simitis is now in jail, almost prime minister, now serving 20 years in the hoosgow, for being bribed by German arms dealers (Siemens, among others). It is widely believed that the previous governments went after this easy and obvious target to cut off investigations of others, a lot of others.

The nationalist minister of defence under the Tsipras government, Panos Kammenos is sending document after document to prosecutors involving a bewildering array of bribery, thievery, fraud, and so on in the Greek armed forces. Submarines that leak, helicopters that can't fly, because of onerous service after purchase contracts. The list is huge.

One reason why both German and Greek corruptos hate him so much, and tried to bring down the Tsipras government. It remains to be seen if he keeps his post, after Tsipras's deal with the Germans.

The other, of course, is the Turkey threat, also used to justify military procurement.

Thrasyboulos | Jul 16, 2015 3:31:55 PM | 24

Quote from Jacobin from an article titled The End of Europe.

http://tinyurl.com/nt2g8g3

The discussions with Greece are thus a formal process designed to politically defeat Greece's left forces, burying any prospects of meaningful political change across the continent. This is the only explanation for the creditors' inflexibility despite Tsipras crossing all Syriza's red lines in terms of pensions reforms, tax policy, privatizations, and market liberalization. This punitive stance was made crystal clear by late June, when the ECB actively incited a bank run, warning of an "uncontrollable crisis," and abruptly capped its emergency loans to the banking sector, triggering bank holidays and capital controls.

Also in the site, an informative behind the scenes interview with Left Platform Syriza MP, Stathis Kouvelakis.

Jackrabbit | Jul 16, 2015 3:34:47 PM | 25

Here's another lesson: Resistance works.

The Troika was willing to 'punch' Syriza's ticket ("Welcome to the Club"!) with minor concessions. But Tspiras/Varoufakis did not simply accept what the Troika demanded.

As bad as the deal is, Greece managed to get the debt restructuring that the Troika had refused to talk about. They had even refused to put their promises of a future debt restructuring in writing.

Many are saying that Greece should've prepared for GRexit; critizing Syriza/Tspiras as too establishment and too europhile to contemplate that path. But they have bought time to prepare for the next round. And in the next round, it may be that a GERexit is on the table as well.

Euro QE is not a magic elixir; just more extend and pretend. It'll exacerbate core vs. periphery problems as much as it exacerbates inequality (as it has in the USA). And political and fiscal integration is hard to do when people feel that they are not treated fairly.

tom | Jul 16, 2015 3:45:06 PM | 26

This $50 billion Greek asset theft fund that was willingly handed over by Syriza traitors, as well as other politicians responsible, Is exactly the collateral needed for a independent Greek central bank to create, let's say for eg, a fractional reserve base of 10% to create $500 billion.

With that now $500 billion, the Greek government could pay off all the debt, including the criminally induced ones, and it's based on those $50 billion worth of assets.
And That's only if you agree to the idea of paying off all your criminally in deuced debts.

An independent and sovereignly principled government or parliament would do exactly that.
And there's more fractional reserves using National assets that can be used to grow the economy and serve the people.

Syriza knows this, but since they are unprincipled, Ideologically weak, cowardly towards their aggressors and more interested in power than public service, means you're never get that from these freaks.
Obvious from day one. Judge them on their actions, not on their whingeing on how they've been mistreated and violated.

How the fuck is it accepted, that private banks can print as much national currencies as they like, but the owners of the those national currencies - the people and the government - cannot do with fractional reserves and money printing, like what the private banks do.

juliania | Jul 16, 2015 4:45:18 PM | 31

jackrabbit@17, I would like to point out that the Greek populace ignored the media when they voted in the referendum, so I think the importance of such propagandistic power is overblown. Once you lose faith in that source of information, it's gone; it doesn't come back. Russia under the Soviets is a case in point, and currently also there is an erosion in US confidence that what they see and hear is trustworthy. What happened after the referendum confused the public, and that was a huge mistake.

Back a ways, in support of Tsipras, I wanted him to do as Putin has done and shore up that public confidence because then you can make decisions in the moment and the support will grow. Immense popularity is a powerful weapon. Varoufakis was correct in seeing that as an important pivotal moment, when the people supported the 'no' vote that Tsipras had also supported. The course he chose confused his supporters. Paramount should have been the dictum that the people could not bear further austerity and that was that - the austerity they would face at that point would be the prideful kind that can see a brave future beyond.

Tsipras had embraced the New Deal outlook, but he forgot Roosevelt's famous saying, 'You have nothing to fear but fear itself.' Varoufakis welcomed, FDR style, the banksters' hatred. It's too bad Tsipras could not do the same. Long lines of grateful poor people stood by the tracks as FDR's funeral train passed. Will that happen for Tsipras? There's a Greek saying that one should count no man happy until after his death. Roosevelt, loved by his people and by history, was a happy man. I hope there's time for Tsipras to become one as well.

jfl | Jul 16, 2015 7:50:55 PM | 33

PPS/23: Review of Current Trends in U.S. Foreign Policy, 1948 CE

Furthermore, we have about 50% of the world's wealth but only 6.3% of its population. This disparity is particularly great as between ourselves and the peoples of Asia. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world-benefaction.

For these reasons, we must observe great restraint in our attitude toward the Far Eastern areas. The peoples of Asia and of the Pacific area are going to go ahead, whatever we do, with the development of their political forms and mutual interrelationships in their own way. This process cannot be a liberal or peaceful one. The greatest of the Asiatic peoples-the Chinese and the Indians-have not yet even made a beginning at the solution of the basic demographic problem involved in the relationship between their food supply and their birth rate. Until they find some solution to this problem, further hunger, distress, and violence are inevitable. All of the Asiatic peoples are faced with the necessity for evolving new forms of life to conform to the impact of modern technology. This process of adaptation will also be long and violent. It is not only possible, but probable, that in the course of this process many peoples will fall, for varying periods, under the influence of Moscow, whose ideology has a greater lure for such peoples, and probably greater reality, than anything we could oppose to it. All this, too, is probably unavoidable; and we could not hope to combat it without the diversion of a far greater portion of our national effort than our people would ever willingly concede to such a purpose.

Between Berlin and a Hard Place: Greece and the German Strategy to Dominate Europe, 2012 CE

As Chancellor Merkel and other German leaders would frequently remind the rest of Europe and the world, with 7% of the world population, 25% of global GDP and 50% of world social spending, Europe's economic system was unsustainable and uncompetitive in a globalized economy. Germany's vision for Europe was aimed at introducing "rules to force Europe's economies to become more competitive." But competitiveness was defined by Germany, and thus, "the rest of Europe needs to become more like Germany."
I nearly choked when I read Timothy Geithner quoted at the beginning of dana's link ... but it makes perfect sense. None of this is about 'economics' - that chimerical, dismal 'science' - all of it is about politics, and power politics, and imperial politics.

The Germans - like everyone else - can see the US has had its run and is headed for its fall. But they also know that Germany by itself is not of a size to pick up where the US leaves off, when the US leaves off. So Germany needs to take over Europe.

I think I've heard this before.


Between 2008 and 2013, the Greek government cut 40% of its budget, healthcare costs soared, tens of thousands of doctors, nurses and other healthcare workers were fired, drug costs rose, as did drug use with HIV infections doubling and a malaria outbreak was reported for the first time since the 1970s, while suicide rates increased by 60%. ... Unemployment has grown to 26% (and over 50% for youth), wages dropped by 33%, pensions were cut by 45%, and 40% of retired Greeks now live below the poverty line.

Cleanliness is next to Godliness. The Germans are cleaning up Greece, and Europe.

The IMF's latest move - fake debt reduction for Greece, the kind of stuff that flows out of Geither's pie-hole in dana's link above - seems to be overt recognition of this fact, bringing it into play.

So they new dynamic will be the US on one side and Russia on the other, containing Germany's New Europe?

Makes sense, really. (None of this makes any sense ... only to the zero-summers playing games with our world). China surely has its eyes on all that Lebensraum in eastern Russia. The US and Russia can team up to defeat the NAZIs who have 'stolen' the Ukrainian revolution (to contain both Europe and China). (And then the US can double-cross Russia when the time is ripe).

Hey, looks like it's 'working' with our new, soon to be 'best friends' in Iran.

Arghhhh. Makes me want to stop reading the news, stop watching the movie. Or do something to help change it.

jfl | Jul 16, 2015 10:29:16 PM | 34

More on the reaction to Germany's power plays, from Fort Russ ...

"Germany's policies pose a danger to Europe for the first time since 1945"--A View From Poland

... and the US' possible doubly convoluted play as hypothesized by Joaquin Flores last September ...

Pravy Sektor Coup as ISIS Scenario: NATO to Feign a 'Unilateral' Alliance With Russia

... just substitute the US for NATO. Germany has certainly knocked the scales from some eyes. I can't imagine Russia will be drawn in.

Greed and geopolitics do make strange bedfellows though. Nations don't have friends they have interests. And it's hard to see any of these 'nation' that have identified its citizens' interests with its own. Of the big ones ... maybe Russia under Putin? All he has is the support of the Russian people.

guest77 | Jul 17, 2015 12:48:32 AM | 36

Excellent thread.

Syriza has shown, I suppose, that gaining access to power isn't enough. The party has to be involved with its members and those they hope to make members. Helping people get access to food, medicine, security, and anything else the state is refusing to help with. The left cannot just win elections, it must be threatening to those in power. It must be prepared to take control of those things the people demand they control (and it must be willing to relax when the people demand this). People must look to the organization in Latin America, that is all I can say. There, under the harshest repression, democracy is thriving.

The story of Greece I suppose is a lesson for the rest of the left parties though, who of them has a chance outside of Podemos - and what of Podemos anyway. They don't seem particularly able sadly.

The world- but especially the west - in the last 30 years, has changed so fundamentally that democracy is nowhere to be found. Nor democratic forms of social organization are even gone for the most part. And now they are turning the screws on whatever remains. Even the middle classes live under turn-key totalitarianism, as it was said by someone, (as opposed to before, where it was just the lower classes) and everyone knows this. And it is proved more and more with each passing event it seems. The people are thoroughly boxed in and controlled, but unlike juliania I think the media has so much to do with it. The massive media conglomeration is a keystone of the changes over the last 30 years, as well as the emergence of the internet - brought to a great many people by those media conglomerates.

The oligarchs of the west are determined to return to their royal status and complete political power they had before WW1. This is really a hopeless feeling attached to this, their seemingly complete victory over democracy. And I imagine that is much of the point...

guest77 | Jul 17, 2015 12:52:57 AM | 37

I haven't read this all, but looks very applicable to our times...

The network of global corporate control - https://archive.org/details/TheNetworkOfGlobalControl

Stefania Vitali, James B. Glattfelder, and Stefano Battiston

Abstract
The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions.

This core can be seen as an economic "super-entity" that raises new important issues both for researchers and policy makers.

Jackrabbit | Jul 17, 2015 1:33:03 AM | 38

juliania @30

Yes, Tsipras seems to have been ambivalent. The referendum was a bold move that actually worked in his favor but then turned cautious. Maybe he worried that if he threatened GRexit Schauble and the Troika would call his bluff?

In an earlier thread, I likened Tsipras to Chamberlain, who had the best intentions but is remembered as an appeaser. This may seem like a dramatic comparison but Michael Hudson has made the point that economics is now war by other means.

Chamberlain satisfied the public's overwhelming desire for peace just as Tspiras satisfied his public's desire to stay in the Euro. Each one had misgivings about the deal that they signed. Chamberlain began to rearm - especially building up British air power. Tsipras may also prepare for a future confrontation with the Troika.

MRW | Jul 17, 2015 2:05:22 AM | 40

The role of the Eurosystem within the half-hidden political order of the eurozone really is comparable to the Soviet or Chinese Communist Party.


No, it's not. Billmon doesn't understand the structure. He's not seeing it clearly, and is not getting to the root of the problem.

The individual EU countries that use the Euro cannot create their own currency. They GAVE UP their sovereign currency for a foreign one, the euro, when they agreed to make themselves subservient to the Maastricht Treaty.

The Maastricht Treaty did/does not allow for a 'federal government of Europe'. It ONLY concerned itself with a monetary union, and it set down strict rules for entry (for instance, a nation's deficits could be no more than 3%--an insanity). It allowed for the creation of a central bank, the European Central Bank (ECB), whose operating rules were dictated by the Maastricht Treaty (and subsequent revisions).

But crucial to understand is this: a central bank CAN ONLY SET MONETARY POLICY. You need a 'federal government' to SET FISCAL POLICY. The EU doesn't have that. Sure, it has the EU parliament, and it has a bunch of unelected officials running the ECB. But it has no overlord, no elected oversight, that can rule in conditions like Greece is going through to ease sectoral pain, and stop the bleeding of ordinary citizens. That requires fiscal policy. The only way that fiscal policy can be changed in the EU is by a change to the treaties. Or the blessing of Angela Merkel, because Germany has captured the ECB.

Let me try to put this in perspective. The US has a federal government AND a central bank. Despite what all the Federal Reserve haters and the 'get rid of the IRS' people claim (inaccurately), the US central bank is a creature of Congress and must answer, by law, to the federal government twice a year. It is the US Treasury's banker, and must, again by law, return all profits each year to the US Treasury.

The US federal government creates fiscal policy. This is the direction for the country that the central must follow and support trhough monetary polices. Fiscal policy is Congress' job although they haven't done it properly for 30 years. For example, if one of the 50 states is in trouble-let's be hyperbolic: devastating earthquake, massive drought, asteroid hits--Congress can authorize ("appropriate") funds--creating them 'out of thin air'-to help the state. With no debt to children or grandchildren.

Why? Because the US federal government issues the currency, the 50 states only use them. The 50 states cannot create their own currency, just like the countries that use the euro. But the 50 states have the protection of the US federal government.

The formerly sovereign countries in the EU that use the Euro are like the 50 US states now. They cannot create their own currency, which would give them the policy space to pay their own citizens and denominate all the debts incurred in their own currency. They are dependent on the ECB, a goddam central bank that has no fiscal authority, to help them. EVEN THOUGH, in Europe, the ECB issues the Euro 'out of thin air'. The ECB is a collection of central banks. And right now Germany's central bank is dominant because it has climbed to the top-Germany was deeply in debt before the euro took over-on the backs of the other nations.

You will not begin to understand what is going on until you realize that the euro was designed by the famous French economist, François Perroux, in 1942 in anticipation of Hitler winning WWII, which was expected then. The plan was that they (the Nazi Pétain government wanted to be aligned with the German hegemon) would introduce a pan-Eurpoean currency and force adoption by the southern and eastern European countries to control and impoverish them. Mitterand, aligned with the Nazi/fascist Cagoulard in the late 1930 and 40s, was a Pétain enthusiast; this only came out in 1990. It was Mitterand who pushed through the euro, if you will check history. Perroux's monetary replacement was the blueprint for the Maastricht Treaty and the subsequent treaties.

MRW | Jul 17, 2015 2:46:03 AM | 42

@tom | Jul 16, 2015 3:45:06 PM | 25

How the fuck is it accepted, that private banks can print as much national currencies as they like, but the owners of the those national currencies - the people and the government - cannot do with fractional reserves and money printing, like what the private banks do.

1. Private banks cannot "print as much national currencies as they like."

2. Fractional reserve banking does not exist. It died 80 years ago in most modern economies. I think only Hong Kong and Bulgaria (I think) use it now. The US doesn't' use it. Neither does any single country in the EU or Europe. Fractional reserve banking can only exist in countries that have a gold standard.

3. The only entity that prints the euro is the ECB, although the national central banks do it for the ECB under contract. BUT. BUT. BUT. These national central banks do it by keystroke. They don't control the physical printing presses. Besides, physical currency is such a small part of the currency.

4.

but the owners of the those national currencies - the people and the government
any country using the euro is not using a "national" currency. They are using a foreign currency.
james | Jul 17, 2015 3:06:57 AM | 43

@19/20 psychohistorian.. i like where you are coming from, but people are slow to change and always looking for leadership.. many think that because someone is rich or has a type of power that comes with money, that they will be good enough to lead.. that is a mixed bag to me personally.. there are just as many losers with money as not..

@28 Laguerre.. thanks.. you've given a specific example to my more generalized observations already posted.. indeed - visa and mastercard are a part of the same ponzi scheme run by the same kleptomaniacs under the guise of whatever they want to pass themselves off as.. playing with the bank of international settlements is only a step away..

@35 guest77 quote.. "The world- but especially the west - in the last 30 years, has changed so fundamentally that democracy is nowhere to be found." i think that is very true..

@39 mrw.. good post, but you are not addressing the issue directly either.. making a comparison to what was a country like greece to one of the states in the usa, cheapens the idea of what a country is.. the euro has done this too.. doesn't mean we have to go along with it, but in terms of drawing a parallel, it isn't a bad one to make. and of course the big difference here is now that greece has given up it's control of monetary policy, as have all the other countries gobbled up in this insane idea of an european community - greece is an opportunity for everyone within the stupid structure to see it for what it is - a complete rip off of any shred of democracy that might have remained...

mrw - we've had these conversations before.. you appear to think the fed reserve is some sort of good two shoes neutral structure that follows a mandate and is not beholden to malevolent interests.. i see it as just the opposite.. the euro was another way to diversify the ponzi scheme by duping a lot of ignorant people into something they would have been better knowing more about.. i would be curious to hear a response from you that provides an answer as to the solution here.. mine would be greece to say fuck you to the euro currency and go back on it's own...

psychohistorian | Jul 17, 2015 3:29:02 AM | 44

@jackrabbit.....you said that us "lower class" folk rely on the "upper class" folk to keep the world running

In the 66 years of my life I have seen untold potential waiting/begging for opportunity and I think your neck might break watching the momentary vacuum be filled getting rid of the top 50K social parasites and their attendant sociopaths. It is a myth that us poor 99% can't make it without the 1%. It is a myth that has been around for centuries and never has been true. The 1% are and have been an impediment to that advancement of humanity for quite some time. In most major ways we stopped evolving during the Enlightenment period when faith didn't become deprecated but instead became one of the tenets of the Western form of social organization, others being private property/finance, inheritance and "rule of law".

If all that were to change by neutering inheritance and ongoing ownership of private property (yeah, neuter public policy influence of religions too)
With Capital being returned to the global Commons, public education regains its priority and is a right for all but at the higher levels; and private education disappears. With those of faith no longer being in control of public policy, population control can be discussed, managed and alternatives like birth control researched/provided. We have answers for many of our pressing social problems, but we do not have the will to break out of the anthropological mold we are in.

Would the 99% agree to develop and use a technology that burdened the next thousand generations of humans to manange the potentially extinction causing effluent (i.e. Fukushima)? We live according to a very sick, no longer defensible and currently committing war crimes against humanity form of social organization, who's administrators we used to prosecute at the Hague 70 years ago. American empire is now the tool of the global plutocrats and the odds of the 99% wresting control away and changing the course of our species and world look slim.......but creating textual white noise on the intertubes is cathartic.

chris m | Jul 17, 2015 6:06:08 AM | 47

Regarding events of past 6 months between Greece and the EU
(and Greek membership of the euro).
Following the recent Greek capitulation,it is clear to almost everyone now that the fuse has been lit beneath the euro.(and possibly even the entire European project.

Eurosceptism is starting to break out (and its only just starting) throughout the entire EU.
We can now all see politicians such as Marine Le Pen getting elected in next French Presidential Election on a purely "leave the euro now" ticket.

PS the entire Europe project was always predicated on a "lets destroy individual National Sovereignty" premise (a sort of EUSSR).

I never did understand why when Communism officially died around 1990
that it seemed to make an almost simultaneous and miraculous rebirth, but then Europe is the land of Dracula
and various other 19th century horror stories.

Noirette | Jul 17, 2015 11:00:23 AM | 51

Syriza has shown, I suppose, that gaining access to power isn't enough. The party has to be involved with its members and those they hope to make members. guest77 at 35.

I agree, also pretty much with the rest of the post. What happened is that there was a power vacuum in Greece (when PASOK threw in the towel and the old structure crumbled) and the only ones willing to enter the breach were Syriza. One might also say that in Greece the political power structure does not match the real power structures in a good or efficient way. This democratic hoopla is all peachy cool when it is Swiss burghers discussin' and votin' on the color of the trams, or property tax, while being faithful to their 'radical' or 'socialist' -whatever- roots. In Greece, in its present form, it does not work. See for ex. the fantastical abyss between the OXI vote and the acceptance by the elected representatives of even harsher austerity.

Ideally, in a hypothetical genuine, true? democratic system, after the OXI vote a unitary or even technocatic Gvmt should have been formed (ironically, Tsipras did just that in a way ..) behind the OXI vote, to collectively resist and bargain (doubt any positive result would have been forthcoming but who knows), but naturally that was not possible.

One argument is that the 'Left' must be 'more in touch', 'must reform', must be 'more grass roots' etc. (Sounds a bit like what they say about the EU, heh? And in Greece that argument is made, plenty) - true, but imho it won't be enough. No way.

So some other avenues have to be explored, sought, implemented.. One imperative (under the present cirucumstances) is national sovereignity, see in Greece, New Democracy being say 'for austerity', 'for the euro' and so on because they are tied up in comprador not to say Mafia circles linked to the EU, big capital, banks, instituted corrupt structures, tax evasions, etc.

Anyway this debacle has shown that parliamentary democracy is not to be afforded to small powerless countries that have been taken for a ride. I think ppl are seeing that now, that facade is cracking.

Overall the EU is in deep sh*t. It won't survive for very long in its present shape.

Jackrabbit | Jul 17, 2015 11:16:30 AM | 53

camelotkidd

This article fails to note the 'eurosclerosis' that plagued Europe in the 70's and 80's. Uncompetitive economies with large social obligations and clientist political systems that still exist in some areas.

The 'evil genious' moniker doesn't really fit. I doubt he is the only economist that would've offered such a solution. And he is certainly not the only guy that found European labor laws of the time to be a costly headace. I think he just got there first. And his demeanor is grandfatherly not menacing.

And he is not unmindful of how his work can be misused. When I took his advanced economics class in the early 90's I argued against the excesses of supply-side economics while others in the class seemed to be eager to show their support of what they assumed Mundell believed in. I got an A-.

=

There are problems with the Euro - the disparate economies, the lack of political and fiscal union, the uneven benefits, etc. - but blaming it on the academics seems like scape-goating, and nearly as bad as blaming it on the victims. Should we blame Marx for the fall of the Soviet Union?

tom | Jul 17, 2015 4:34:48 PM | 59

MRW @42

How do you reconcile the contradiction between your points 1 and 2.

If Private banks "cannot" print as much money as they like ( point 1 ), then how can fractional reserve banking Not exist in most of the world ? ( point 2 ) . If fractional reserves do not exist then they free to print as much as they like.

Of course whem I say they can "print as much as they like" , that is not a children's imagination interpretation where the private banks are free to print infinitelt, that's of course the private banks have been unlinked from previously acceptable amount of printing/keyboard strokes, to create money.

And your 3rd doesn't make any sense at all. How does a gold standard have any restrictions on having a 10% fractional reserve, 1000%, or 1,000,000% of gold holdings ? Gold doesn't make decisions, regulations and enforcement are the decision-makers. Whether it's gold or fiat.

And your point 4 is right. It is my argument to why no country should join a single currency like the euro, and nations should always have their own sovreign national currencies

juliania | Jul 18, 2015 1:08:20 AM | 66

Jackrabbit@38

Sorry to be late on here. The Chamberlain comparison is an interesting one, and Tsipras' tragic flaw may be his devotion to the Eurozone - I think it is his, not really any perceived mandate, because surely he knows a good leader makes choices as events change - to go back to my example, that's what FDR did, and very risky choices they were. Some of FDR's didn't work, so he did other things. He was making it up as he went along, and I think that's very similar to what would be needed in exiting the eurozone. You would have to bring the people along with you, with the confidence and trust that something needed to happen, charting a new course. Tsipras doesn't seem to have been willing to do that, and consequently he runs the risk of being just one more in the line of leaders who have caved under pressure.

I think it has a lot to do with lack of faith in the people themselves on the part of such leadership. Obama showed this when he didn't take public financing but already was turning to the banksters. He didn't need to do that, and he probably would have even had a bigger vote tally if he'd stayed with the people. I wonder why this new leadership seems so divorced from sympathy with those who elect them and whom they presumably serve? I don't think Tsipras is as two-faced as Obama, but he's starting to wear the same shoes. The tragedy is the Greek people so much need him to step up - the way a tennis player steps up if he's really a champion. I think there's still time but it's getting late. If he keeps on with this deal, history will take note. That's a huge price to pay.

jfl | Jul 18, 2015 1:24:02 AM | 67

Tsipras ... he messed up. If 'his' deal goes through Greece suffers the full catastrophe. The thing to do is to prevent that happening. Tsipras is a lame duck. It makes little difference why he messed up ... character flaw, bribery, incompetence, all the usual failings of the political class.

The point is he has set Greece up for more lethal loans and so his 'program' must be repudiated. The only way I can imagine that happening is via the direct participation of the Greek people in their government. If there is a majority NO! on the new' program, good. Make a counter offer ... when (if, I suppose, to be inclusive) it's rejected, exit the euro - there's life at the end of the tunnel. If not ... well, they're done for, aren't they?

Debt-slaves of the German-dominated EU : deprived of their remaining assets and their own government.

fairleft | Jul 18, 2015 2:58:03 AM | 68

Lapavitsas Calls for Exit as the Only Strategy for Greek People (the video, audio and transcript):

Why this capitulation? Why have we come to this after all the enthusiasm of six months ago? After the surge of grassroots support in this country and in Europe? The answer is clear to me. And it has to do with the wrong strategy, that was good enough to win elections, but proved disastrous in government. What is this wrong strategy? It's very simple, expressed openly time and time again. We will achieve radical change in Greece, radical change in Europe, and we will do it within the Eurozone. That was the strategy. Well, that's not possible, period.

As far as I'm concerned, the Greek left has found its leader. Lapavitsas says it all, clearly and brilliantly: Grexit and nationalize the banks.

You can't advance if you do not understand that Syriza has failed, if you keep making excuses for their failure, or try to pretend it was anything but failure. Greece must leave the euro. This has been obvious for several years, but unreasoning, 'no matter what' Eurozone love, especially prevalent within Syriza and generally among the middle-class European left and pseudo-left (Podemos, I'm looking at you!), MUST be abandoned. The euro doesn't love you; it's time to stop loving it back.

The MAIN task for the European left, if it wants to be left rather than neoliberal, is to abandon the euro. It's easy: listen and be persuaded by Lapavitsas.

okie farmer | Jul 18, 2015 4:10:39 AM | 69

More from Lapavitsas:
Finally, the deal is quite clearly neocolonial. The government of the left has signed up Greece to a neocolonial agreement.

And it is--it is neocolonial for many reasons. I will mention three. First, the deal proposes the establishment of a privatization fund of 50 billion Euros which will basically sell public property under foreign management. 25 billion of that, the first 25 billion, will go to the banks by the agreement. If there's anything left, and there won't be anything left because they'll never make 50 billion, it might go to repaying the debt and possibly to investment. Essentially, then, this fund will sell what it can of public property to recapitalize the banks. We've just agreed the deal that sells the family silver to recapitalize the failed Greek banks.
~~~
The real winner of this deal is obvious. It's staring you in the face. The real winner is the Greek oligarchy expressed in the mass media. That's why the mass media are thriving and celebrating [a win].
~~~
Because the monetary union in which, to which Greece belongs, is not ideological. I mean, it is, but it isn't just ideology. And it isn't just a balance of forces. It is an institutional mechanism. The sooner the Greeks understand this, the better for all of us. It is an institutional mechanism, it is a monetary union that's, it's a hierarchical body that works in the interests of big business and in the interests of a few countries within it. That's what the EMU is.
~~~
Now, what do we do, then? What we need to do is to withdraw our consent to this agreement. To withdraw our consent to this agreement. And to redesign a radical program that is consistent with our values, our aims, and what we've told to the Greek people all this time, all these years. And that radical program is impossible without Euro exit. The only thing that we really need to do is focus on developing a plan for Euro exit that will allow us to implement our program. It is so obvious I'm amazed that people still don't see it after five months of failed negotiations.

okie farmer | Jul 18, 2015 4:23:57 AM | 70

http://www.bbc.com/news/world-europe-33578778
The former Greek finance minster has said his country's economic reforms are "going to fail", just as formal talks on a huge bailout are set to begin.

In a BBC interview, Yanis Varoufakis said Greece was subject to a programme that will "go down in history as the greatest disaster of macroeconomic management ever".
~~~
I may disagree with [PM Tsipras] and I declared that by resigning my post
~~~
The bailout could total €86bn (£60bn) in exchange for austerity measures.

In a damning assessment, Mr Varoufakis said: "This programme is going to fail whoever undertakes its implementation."

Asked how long that would take, he replied: "It has failed already."

fairleft | Jul 18, 2015 4:51:18 AM | 71

Varoufakis is just whining. He doesn't provide a solution to the immediate and staggeringly important problem, imposition of worse austerity on Greece's people. He sounds not dissimilar to Tsipras, who also says he's unhappy/pessimistic yada yada. They're like old men complaining about the weather. Whining and whinging, Tsipras has signed up to carry out the police state repression that's the only way his new legislation can be carried out.

Even though the solution/escape is clear, as Lapavitsas points out. It's almost as if the Syriza apologists are incapable of saying/thinking the word 'Grexit'. Who is holding their tongues?

mcohen | Jul 18, 2015 6:59:22 AM | 72

parking weapons like f-16 and submarines in countries is a good idea...they are maintained and serviced and kept ready for active service...this all under the cover of arms deals etc etc.

there is only one flaw..the government of that country must be trusted....they cannot change sides...greece is in a unique position.opposite north africa,on the med, so it is well positioned for launching of attacks,on countries like libya or tunisia or even egypt.

discrete crete sounds like a good name.

paulmeli | Jul 18, 2015 8:15:45 AM | 73

"Varoufakis is just whining. He doesn't provide a solution…"

Exactly. There is no solution that doesn't include leaving the Euro and reclaiming monetary sovereignty (although that alone won't do it…they need astute, competent leadership too). A solution that presumes changing the fundamental Euro structure to include a fiscal component is never going to happen, the big guns (Germany) would leave before that would happen.

Playing long shots works in the movies, in real life not so much.

Most of the billions of words that have been written on this subject have been little more than wailing and gnashing of teeth. Denial.

There are several stages to go before there is any viable solution that citizens will sign on to, that won't be co-opted by TPTB.

honest! | Jul 18, 2015 9:28:16 AM | 74

I'm not saying Syriza made all of the right mover, but neither do I think they can be considered "the Greek People's enemy". Not at all. They appear to be being honest.

guest77 | Jul 17, 2015 7:52:02 PM | 64

What a load of utter nonsense.

Honest?

They demanded the right to seek a mandate from the people before proceeding. They then got exactly the mandate they claimed to have sought . . . . . .

. . . And then, promptly ignored it entirely.

=======

There's nothing "honest" in that. Cynical? Absolutely. Manipulative? Certainly

Threacherous? Most definitely

But "honest"? . . . . GTFO!.

jfl | Jul 18, 2015 10:06:29 AM | 75

@71, @73

And you guys are just endlessly whining about the whiners ... the political class has chosen its preferred 'solution'. They're all done. If there is to be a real solution it has got to come from the Greek people.

@37

That's quite an article. I cut and pasted the picture of the 'bow-tie' graph and made the table of the 50 top controllers from page 33 sortable below it.

page 33 of The network of global corporate control

I'll try to summarize the significance of the bow-tie graph and its abbreviated labels tomorrow, for those who don't want to read the full article themselves.

Twenty-four of the top 50 controllers are nominally American.

Forty-four are financial.

Noirette | Jul 18, 2015 11:43:49 AM | 76

Posted some time back about the ESM (etc.) Here some info that give OK descriptions.

Eric Zuesse, global research

http://tinyurl.com/pqwbvqa

> a link in that article to the Treaty (automatic download)

then this, from the Corporate Europe Observatory

http://tinyurl.com/o3eyg25

> a link to a leaked text explaining the Troikas plans for the privatization fund (that 50 bn) pdf

http://corporateeurope.org/sites/default/files/esm_report_to_greece_0.pdf

for some extra financial info (the only available to the public?) one must go to their site and click through and through - all automatic downloads.

http://www.esm.europa.eu

As MRW writes, at 40, there is no resemblance between EU financial and pol. structures those of the Soviet, Chinese Communist Parties.

MRW maybe you are hyping the Nazi past? Mitterand and Thatcher particularly were against the re-unification of Germany. Mitterand wanted to lock Germany down in the Euro in an 'alliance' (or because he was a bankster's man, in fact laws prohibiting speculation were lifted in France well before Billy C's annulment of Glass-Steagall, the US played catch-up) and Germany made the trade, with difficulty (attachment to the mark, independence, etc.) Controlling countries through their currency and banking system is not an original or particularly Nazi idea. For ex it works right now in parts of Africa with the CFA and nobody talks about it. The French didn't borrow that idea from the Nazis.

rufus magister | Jul 18, 2015 12:09:41 PM | 77

Jackrabbit at 38, juliania at 66, jfl & fairleft >67

Like many, I've been waiting for the longest running drama on the Athens stage to finally get to the last act before attempting to make sense of the staging, plot and characters.

I still don't think we're quite there yet; probably a little more political fall-out still, but not much, see e.g., a majority of the Syriza Central Committee opposed the austerity deal.

The question of the political leadership of the left, however, is always an interesting topic. Also from the 17 July "Links" page at - dare I mention the name? - Naked Capitalism, John Pilger at Alternet argues thatThe Leaders of Greece Are Some of the Phoniest Idealists You'll Ever See. It seems hard to disagree.

Having set aside the mandate of the Greek electorate, the Syriza government has willfully ignored last week's landslide "No" vote and secretly agreed a raft of repressive, impoverishing measures....

The leaders of Syriza are revolutionaries of a kind – but their revolution is the perverse, familiar appropriation of social democratic and parliamentary movements by liberals groomed to comply with neo-liberal drivel and a social engineering whose authentic face is that of Wolfgang Schauble, Germany's finance minister, an imperial thug. Like the Labour Party in Britain and its equivalents among former social democratic parties such as the Labor Party in Australia, still describing themselves as "liberal" or even "left", Syriza is the product of an affluent, highly privileged, educated middle class, "schooled in postmodernism", as Alex Lantier wrote. [I could not immediately find whatever Pilger is quoting, he is affiliated with the "wsws" website; such sad sloppiness at a major site in these days of html coding...]

For them, class is the unmentionable, let alone an enduring struggle, regardless of the reality of the lives of most human beings. Syriza's luminaries are well-groomed; they lead not the resistance that ordinary people crave, as the Greek electorate has so bravely demonstrated, but "better terms" of a venal status quo that corrals and punishes the poor. When merged with "identity politics" and its insidious distractions, the consequence is not resistance, but subservience. "Mainstream" political life in Britain exemplifies this.

This is not inevitable, a done deal, if we wake up from the long, postmodern coma and reject the myths and deceptions of those who claim to represent us, and fight.

How then do democratic movements ensure that their leaders views and priorities accord with their own, and can be held responsible and be replaced? What sort of leadership is needed for industrial as well as political democracy?

rufus magister | Jul 18, 2015 12:18:48 PM | 78

ps to 77 -- Amongst the parties affected by the Munich Agreement, I think Edvard Beneš, the Czechoslovakian President, is a better fit for poor Tsipras.

paulmeli | Jul 18, 2015 12:54:19 PM | 79

"the political class has chosen its preferred 'solution'. They're all done. If there is to be a real solution it has got to come from the Greek people."

No kidding?

I don't know what's worse, repeating the obvious ad nauseam or whining.

Noirette | Jul 18, 2015 2:00:07 PM | 80

Having set aside the mandate of the Greek electorate, the Syriza government has willfully ignored last week's landslide "No" vote and secretly agreed a raft of repressive, impoverishing measures…. a quote by rufus at 77

NO. Syriza was elected on a platform of 'staying in the EU-Euro' and at the same time 'reducing /abolishing austerity.'

This mandate might be considered contradictory or ridiculous, illusory, doomed to fail, etc. (Yes I agree.)

Also Syriza has a slim voter support and thus had to form a coalition Gvmt.

Well in function of that contradictory mandate they managed (at terrible cost and perhaps misguidely) half of it. Staying in the Euro.

What is surprising? Nothing.

Why they chose the one above the other is abundantly clear.

Wayoutwest | Jul 18, 2015 2:24:51 PM | 81

RM@77

I enjoy good discussion and criticism but this carping and sniping about Syriza from the US Left says more about writers such as JP and the weaklings of the Left, that have attained a new level of meaninglessness, and has allowed someone like Bernie Sanders to claim to be a Socialist without any real blowback, is trying.

MRW | Jul 18, 2015 7:29:54 PM | 85

paulmeli at @63 has got it exactly right. In all modern economies on a fiat currency, loans create deposits.

Bankers, as a result, create 'credit money', NOT new interest-free money. (Credit money also means that one person's asset is another person's liability. At the commercial banking level within the real economy that includes collateral, timed repayment schedule, and interest owed, which is income to the issuing bank. Everything nets to zero at this level across the macroeconomy.)

The US federal government, on the other hand, adds new money into the economy. Only entity that can. Only the US federal government can introduce new, interest-free money into the economy, and it does it via congressional spending based on the needs of its citizens, and where it wants the economy to grow (giving 40% of it to the financial institutions is NOT GROWTH). Which the mo-fos we've elected do not understand.

One small quibble, Paul. The amount of physical currency, physical cash and coin, is around 11.5% to12% of the available money. The rest are treasury securities. Don't forget that countries like Ecuador are pegged to the USD and need US cash for their citizens. Ecuador's central bank orders them from the US Treasury (Bureau of Printing and Engraving) and puts up 100% of the demanded amount in assets (treasury securities) to pay for them.

MRW | Jul 18, 2015 7:31:15 PM | 86

Tom @61

Sorry for the delay. I'm traveling. Good questions, btw.

First, let's clear up what fractional reserve banking is. This is a lousy simplistic example, but it will work. And let's imagine a small western town with one bank, which I will call Bank Buckeroo. Introducing a second bank in the town mean I would have to explain how interbank reserves work, and it doesn't matter in this explanation. [BTW, US banks DO NOT LEND their reserves; reserves serve another purpose in the US banking system; namely to help the Federal Reserve retain the overnight interest rate target that banks charge each other. Canada, for example, doesn't even have a reserve requirement for their commercial banks.]

Fractional reserve banking explained

OK. Johnny Schwartzburger sidles into his Bank Buckeroo and deposits 100 bucks in cash in his savings account.

Now Bank Buckeroo has got $100 more than it had yesterday.

Because the reserve requirement is, say, 10%-the FRACTION of the loan that the bank must retain under "fractional reserve banking"--Bank Buckeroo holds onto $10 and can loan out $90.

Sally Sweetpea needs $90 for her beauty shop and she borrows $90 from Bank Buckeroo, and deposits that in her checking account.

Now Bank Buckeroo holds onto $9 (10% of $90) and can loan out $81.

Old Ray Saddleback needs $81 to buy supplies for the only café in town, so he hits up Bank Buckeroo for an $81 loan.

Bank Buckeroo holds onto $8.10 (10% of $81) and can loan out $72.90.

Paddy O'Gilligan needs $72.90 to top off his supply of whiskey at the only bar in town (and this banker likes his whiskey), so he borrows $72.90 from Bank Buckeroo.

Bank Buckeroo holds onto $7.29 (10% of $72.90) and can loan out $65.61

You see where I'm going with this. Eventually, Bank Buckeroo will have reserved all $100, but will have extended credit against that $100 to customers that he knows are good to pay back their loans. Under the gold standard system before 1933, each dollar had a statement on it that you could exchange 20 of the one-dollar bills for one ounce of gold (not exactly the statement but that's what it meant). It was a "fixed exchange rate." The value of a dollar (US) was fixed to the value of gold. So Bank Buckeroo has Johnny Schwartzburger's original $100 in cash that guarantees it can trade-in the cash for $100 in gold anytime it wants. It's protected against that loss. The only thing the banker has to worry about is whether his customers can pay back the new loans, and he knows their creditworthiness intimately.

That all changed in 1933-no more gold standard in the US

We went off the gold standard. The value of the USD was no longer pegged to the value of gold, the supply of which the US federal government could not control globally except for certain US mines. Each new goldmine find globally affected the value of the dollar before 1913 and led to extraordinary panics and busts in the last half of the 1800s. More gold available meant the value of the dollar dropped, and that affected international trade, and whether people exchanged their dollars for gold stateside and hoarded it, further diminishing the amount of money available in the real economy. It was the National Gold Something-or-Other Act in 1900 that pegged the USD at $20/ounce.

Interestingly enough, it was Marriner Eccles, whom FDR made the first chairman of the Federal Reserve three years later, a Republican Mormon banker from Provo UT who appeared before the Senate and House of Representatives in 1932/33 to make the case for dropping the gold standard (he wasn't the only one however). Eccles became more popular than Miley Cyrus. Eccles had seen the devastation that the banking system was doing to his municipal and rural customers. Eccles was 22 when he made his first million after his father died and he had to take over the family businesses, which included a bank. He was a financial genius who could speak plain English to commoners about banking and esoteric financial concepts. His ideas predated John Maynard Keynes by three years. (BTW, Keynes was never taught in American universities, so anyone sneeringly invoking Keynes doesn't know what they are talking about. The first Nobel Laureate in Economics, Paul Samuelson, is supposed to be the explainer and keeper of Keynes ideas, but Samuelson admitted in 1989 in a video interview that he never read more than half the book, and that he never understood Keynes' ideas to begin with.)

[to be contd]

Correction: Each new goldmine find globally affected the value of the dollar before 1913

Should read: Each new goldmine find globally affected the value of the dollar before 1900

MRW | Jul 18, 2015 7:34:22 PM | 87

Tom @61 [contd.]

If Private banks "cannot" print as much money as they like ( point 1 ), then how can fractional reserve banking Not exist in most of the world ? ( point 2 ) . If fractional reserves do not exist then they free to print as much as they like.

[…]

And your 3rd doesn't make any sense at all. How does a gold standard have any restrictions on having a 10% fractional reserve, 1000%, or 1,000,000% of gold holdings ? Gold doesn't make decisions, regulations and enforcement are the decision-makers. Whether it's gold or fiat.

Loans create deposits. Yes, 'out of thin air'. Bankers can say 'Yay' or 'Nay' based on the cut of your jib, or the color of your skin, although they are not allowed to.
Banks don't print money. They issue credit, i.e. 'credit money'. They mark up the customer's bank account with computer keystrokes in the amount of the loan. Banks issue credit money based on two things: (1) customer creditworthiness, (2) customer income. They also require collateral.
Banks have to maintain reserves in their banks accounts at the Federal Reserve on all the loans they make.It is a percentage of the loan, and banks cannot loan out this money. If the bank doesn't have enough reserves in their Fed account, they have to borrow from other banks at the Fed Funds Rate, or overnight interest rate, set by the Fed. (The Fed uses this overnight interest rate to promote or demote bank lending in the economy, among other things.)
If the bank has been making bad loans or is overextended-this goes to your Point 1 about banks being free to issue as much credit money as they like-and other banks know that, the other banks might not loan it any reserves.
In that case, the solvency-suspect bank has to slink to the Fed's Discount Window where they can borrow the required reserves, but the interest rate is punitive, and it usually alerts bank examiners that there's a problem at the bank. So having to go to the Discount Window is not something a bank wants to broadcast.
By law, the Federal Reserve must supply reserves to banks within the federally chartered banking system, or declare the overextended bank insolvent.
A 'check and balance' on a bank loaning out as "as much as they like" is meeting its reserves requirement.

About gold. When you have a gold standard, you're on a fixed exchange rate: X amount of currency for each ounce of gold. That's when fractional reserve banking makes sense because the bank only wants to loan out X amount of money based on the amount of gold in the kitty. It's up to the banker to make intelligent and safe decisions about who he loans to by doing his due diligence.

On a gold standard, he who owns the gold, owns the country. When we got rid of the gold standard, goldminers and gold owners stopped owning this country, including Mr. Rothschild. We fucked him up the ass. Our money is based on the 'full faith and credit of the US federal government' and we issue our own currency. To boot, we are the reserve currency worldwide.

MRW | Jul 18, 2015 7:36:21 PM | 88

The thread didn't take my formatting in @88. Here is the first half presented in a clearer format:
----------------------------------------------

In response to Tom's @61

  • Loans create deposits. Yes, 'out of thin air'. Bankers can say 'Yay' or 'Nay' based on the cut of your jib, or the color of your skin, although they are not allowed to.
  • Banks don't print money. They issue credit, i.e. 'credit money'. They mark up the customer's bank account with computer keystrokes in the amount of the loan. Banks issue credit money based on two things: (1) customer creditworthiness, (2) customer income. They also require collateral.
  • Banks have to maintain reserves in their banks accounts at the Federal Reserve on all the loans they make.It is a percentage of the loan, and banks cannot loan out this money. If the bank doesn't have enough reserves in their Fed account, they have to borrow from other banks at the Fed Funds Rate, or overnight interest rate, set by the Fed. (The Fed uses this overnight interest rate to promote or demote bank lending in the economy, among other things.)
  • If the bank has been making bad loans or is overextended-this goes to your Point 1 about banks being free to issue as much credit money as they like-and other banks know that, the other banks might not loan it any reserves.
  • In that case, the solvency-suspect bank has to slink to the Fed's Discount Window where they can borrow the required reserves, but the interest rate is punitive, and it usually alerts bank examiners that there's a problem at the bank. So having to go to the Discount Window is not something a bank wants to broadcast.
  • By law, the Federal Reserve must supply reserves to banks within the federally chartered banking system, or declare the overextended bank insolvent.
  • A 'check and balance' on a bank loaning out as "as much as they like" is meeting its reserves requirement.

MRW | Jul 18, 2015 7:41:19 PM | 89

Some reporters are finally beginning to understand what I have been yammering on here over the past 18 months:

Why America Is Not The Next Greece
The key difference is that the United States has its own central bank -- the most powerful one in the world.

http://www.huffingtonpost.com/entry/why-america-is-not-the-next-greece_55a814c5e4b04740a3df6b11?

MRW | Jul 18, 2015 7:45:47 PM | 90

[Jul 18, 2015] Show Some Mercy

"..."The euro has turned into an economic liability that has exacerbated political tensions. For this, the European elites who pushed for the currency union bear some responsibility."
"Some responsibility" must be the understatement of the year.
They also bear the responsibility for ECB's deflationary policy and for encouraging private lenders to treat Greek sovereign debt like German sovereign debt. Those are acts of stupidity over and above the foresight of Friedman and Feldstein and Krugman. [The British should be lighting candles to George Soros for keeping them out of the EMU.] "
"...Greece story is not so much about economics (pseudoscience often called dismal science). It is mainly about politics, and first of imperial politics within EU (think Forth Reich)."
Jul 18, 2015 | Economist's View '
anne:

http://research.stlouisfed.org/fred2/graph/?g=10O8

January 15, 2015

Government debt and balance as shares of Gross Domestic Product for Greece, 2000-2012

(Percent)

likbez:

Austerity is far from being a mistake. This is quintessential neoliberal policy. Greece is just yet another country that got into permanent debt slavery. As simple as that.

ThomasH:

"The euro has turned into an economic liability that has exacerbated political tensions. For this, the European elites who pushed for the currency union bear some responsibility."

"Some responsibility" must be the understatement of the year.

They also bear the responsibility for ECB's deflationary policy and for encouraging private lenders to treat Greek sovereign debt like German sovereign debt. Those are acts of stupidity over and above the foresight of Friedman and Feldstein and Krugman. [The British should be lighting candles to George Soros for keeping them out of the EMU.]

And then to compound the errors, those elites cooked up a "bailout" that prevented Greece from simply defaulting in 2010. If that would have caused some banks to go under, that is a feature, not a bug. The ECB could have dealt with systemic effects.

Yes, Greek governments deserves blame for not investing the borrowed money well, for accepting the poisoned chalice in 2010, and for clinging to the Euro even now.

paine:

The people of greece were victims
of decades of pro europe bally hoo

gordon -> paine...

I commented earlier (on another thread) that large remittances by Greeks working abroad might be imperiled by Grexit. I don't know this for a fact (what if Greece left the Eurozone but not the EU?) but if it is it could explain the apparent death-grip the Euro seems to have on Greek politics.

http://www.pewsocialtrends.org/2014/02/20/remittance-map/

The remittance map shows that Germany is the biggest source of Greek remittances!

likbez:

Greece story is not so much about economics (pseudoscience often called dismal science). It is mainly about politics, and first of imperial politics within EU (think Forth Reich).

Cruelty of lenders was about beating left-leaning government into full submission, to make a lesson for Spain and other countries with similar parties.

From the speech by Dr. Goebbells to Czech Intellectuals and journalists, Berlin 1940.

You gentlemen have now seen something of the Reich, and I made a point of allowing you to make this journey before I addressed you. You have seen the Reich in Wartime, and you will have formed some idea of what it can be in peace. Out great nation with its large population, together with Italy, will in practice take over the leadership of Europe. There are no two ways about that. What it means for you is that you are already members of a great Reich which is preparing to reorganize Europe, tearing down the barriers that still separate the European peoples and making it easier for them to come together. Germany intends to put an end to a situation which quite clearly cannot satisfy mankind for long. We are performing here a work of reform which I am convinced will one day be recorded in large letters in the book of European history. Can you imagine what the Reich will actually be like after the war? (…)

[Jul 18, 2015] Variable Geometry Bites Back: Schäuble's Motives

Fabio Ghironi in Vox EU:

Variable geometry bites back: Schäuble's motives, by Fabio Ghironi: Success of the German-inspired solution for the latest Greek crisis is far from assured. If it fails, the Eurozone may be changed forever. This column argues that the failure would lead to an outcome that has been favoured for decades by Germany's Finance Minister, Wolfgang Schäuble. Perhaps the package the Eurozone agreed is just a backdoor way of getting to the 'variable geometry' and monetary unification for the core that the Maastricht criteria had failed to achieve.

The Greek crisis risks shattering the Eurozone as we know it. Germany's Finance Minister Wolfgang Schäuble has been leading a coalition of hawks who appear determined to make Grexit an unavoidable outcome. If not immediately then at least once it becomes clear (or clearer) that it is impossible for Greece to satisfy the conditions it is being asked to meet.

As one ponders Mr. Schäuble's possible motives for insisting on such demanding (many would say infeasible) targets, it is instructive to recall his political and intellectual history in the run-up to the euro.

How Schäuble viewed the Eurozone

Mr. Schäuble was Minister of the Interior of the Federal Republic of Germany between 1989 and 1991. In this capacity, he played a central role in the negotiations that led to German reunification. The same period saw the negotiations leading up to the Maastricht Treaty, which established the foundation for the Eurozone.

A widely held view at the time was that Germany agreeing to give up the deutschmark and to participate in a European monetary union was the quid pro quo for British and French acquiescence to German reunification – an event of monumental implications, given Europe's history.[1]

Germans were understandably reluctant to give up a very successful currency for the uncertainty of monetary union with less rigorous partners. Thus, at their insistence, the Maastricht Treaty included convergence criteria that would have to be fulfilled for euro membership. In effect, those conditions were intended to keep unreliable Southern European countries out of the monetary union.

In those years, Mr. Schäuble – heir apparent to Chancellor Helmut Kohl at the time – championed a 'variable geometry' approach to the Eurozone. A key implication of this 'variable geometry' was that that monetary unification should be restricted to a set of 'core' countries that shared Germany's preference for austerity.

Mr. Schäuble originally made his argument explicit in a blueprint for the Eurozone co-authored with Karl Lamers and released by Germany's Christian Democratic Union in the late summer of 1994 (Lamers and Schäuble 2014). Responding to critics less than two weeks later, Mr. Schäuble stated that "We cannot set the pace of European integration according to the slowest ship in the convoy."[2] Speed was clearly defined relative to the German benchmark, as enshrined in the Maastricht convergence criteria. Chancellor Kohl described the Schäuble-Lamers document as a 'discussion paper,' but he did not explicitly distance himself from it, and he defended the plan of a 'core' Europe.[3]

Schäuble after German and France flouted the Maastricht criteria

In August of 2014, Mr. Schäuble and Mr. Lamers reiterated their plea for 'variable geometry' in a Financial Times article 20 years after their original paper (Lamers and Schäuble 2014). They conclude: "In order to make progress […], we should keep using the approach that proved its mettle back in 1994: to establish cores of co-operation within the EU that enable smaller, willing groups of member states to forge ahead." Importantly, the article acknowledges the crucial role of Germany (and France) in scuttling the credibility of the Stability Pact's fiscal policy rules in 2003.

Mr. Schäuble's commitment to European integration is unquestioned, and no better description can be found than the remarks by IMF Managing Director Christine Lagarde when Mr. Schäuble was awarded the Charlemagne Prize in 2012 (Lagarde 2012). But Mr Schäuble's history shows that his commitment to 'variable geometry' is just as strong -- to the point that his most recent statements on support for Grexit within the German government are creating a rift with Chancellor Angela Merkel.[4]

As it turned out, the Maastricht criteria that were meant to implement Mr Schäuble's vision failed to keep Southern European countries out of the euro, and through steps that we all became more or less familiar with, we have gotten to the start of the crisis in 2010, and the current situation.

The cost of Schäuble's strategy

If Greece exits the euro it will become evident to everyone that irreversibility of euro membership is an illusion as long as the countries involved retain their essential sovereignty.

  • Markets will likely test the resolve of countries' governments to stay in the euro, and costly trade-offs will provide additional fuel for populism and nationalism.

While government commitment and ECB firepower may prevent a domino effect, the balance of market and political forces may well result in other Mediterranean countries leaving the euro.

At that point, Germany would be left in a Eurozone that would consist of Mr Schäuble's early 1990s 'core,' plus partners to the East and Baltic countries who have been renewing their historical economic ties with Germany since joining the EU.

Concluding remarks

All this raises the following question: Is Mr Schäuble's position simply intended to find a backdoor way to return to the 'variable geometry' and monetary unification for the 'core' that the Maastricht criteria had failed to achieve?

History will be the judge, but if this was the way to revive 'variable geometry,' it was better to leave it resting. ...

Posted by Mark Thoma on Saturday, July 18, 2015 at 09:47 AM in Economics, Politics | Permalink Comments (1)

An Unsustainable Position

Paul Krugman:
An Unsustainable Position: Everyone is talking about the IMF's new update to its debt sustainability analysis, which says that Greece's attempt to surrender is doomed to failure without massive debt relief. That's surely the right conclusion.
However, it's hard to accept the document's claim that this is a new development...
The point, surely, is that the plan for Greece was never feasible. No matter how willing a nation is to suffer, no matter how willing to run primary surpluses on a scale that is very rare in history, trying to pay off high debt through austerity without any kind of monetary offset is basically a recipe for debt deflation and failure. This is, in fact, what the IMF's own research has said. ...
So it's good to see the IMF being realistic here, but the institution remains unwilling to face up fully to past errors - which matters, because these past errors are prologue to the doom that faces any attempt to stay the course.

Posted by Mark Thoma on Wednesday, July 15, 2015 at 10:11 AM in Economics, International Finance, Politics | Permalink Comments (75)

[Jul 18, 2015] Faithocrats

Paul Krugman:
One of the ideas floating around in the aftermath of the sack of Athens has been that of, in effect, deposing Syriza from outside and installing a "technocratic" government. It wouldn't be the first time in this dismal saga, and I won't be surprised if it happens, for a few months anyway.
But let me note, as I have before, that what Europe calls technocrats aren't people who know how the world works; they're people who subscribe to the approved fantasies, and never change their minds no matter how badly wrong things go. Despite the overwhelming evidence that austerity has exactly the dire effects basic textbook macro says it will, they cling to belief in the confidence fairy. Despite a striking lack of evidence that "structural reform" delivers much of a growth boost, especially in an economy suffering from a huge output gap, they continue to present structural reform - mainly in the form of disempowering workers - as a sovereign remedy for all ills. Despite a clear record of past failure, they continue to push for asset sales as a supposed answer to debt overhang.
In short, what Europe usually means by a "technocrat" is a Very Serious Person, someone distinguished by his faith in received orthodoxy no matter the evidence. ...

Posted by Mark Thoma on Tuesday, July 14, 2015 at 09:01 AM in Economics | Permalink Comments (19)

[Jul 18, 2015] Negotiating with Germany is a Waste of Time

Kevin O'Rourke:

...I don't suppose that any other left wing party that may come to power in the future seeking to challenge the current European economic policy mix will be as feckless as Syriza. The lesson that they will draw from this debacle is: negotiating with Germany is a waste of time; be willing to act unilaterally, be willing to default unilaterally, have a plan for achieving primary surplus if you haven't already achieved it, have a hard default and euro exit (now possible, thanks to the Germans) option in your back pocket, and be willing to use it at the first sign of hassle from the ECB. A deal could have been done today that would have strengthened the Eurozone, but instead it has just become a lot more fragile.

Posted by Mark Thoma on Monday, July 13, 2015 at 11:09 AM in Economics, International Finance, Politics | Permalink Comments (129)

[Jul 18, 2015] Little-Known History of the Euro Crisis Was Baked In from the Start

Jul 18, 2015 | Zero Hedge
windcatcher

Communism definition: A political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs.

Central banksters are not advocating communism. Indeed, the totalitarian fascist financial criminals advocate no publically owned property. They are buying public lands for pennies on the dollar as they enslave the population via representative debt.

The banksters are plundering criminals that want all that is valuable and to hell with the population, there are too many people anyway, let them starve. The criminal fascist central banksters hate any public support of the people. That is not a communist or a socialist and certainly not a democratic concept; it is a totalitarian criminal bankster cartel fascist concept.

Benito Mussolini in his book titled "The Doctrine of Fascism" defined fascist form of government as the merger of corporate monopoly with government. The bankster modern fascist should be branded as fascist, and no other, to distinguish them from representative democracy (government of, for and by the People.

windcatcher

The European Union before the Eurozone, was designed and implemented by the bankster financed and controlled Council on Foreign Relations and the Trilateral Commission. Goldman Sachs is but one tentacle of the criminal bankster world financial octopus of the New World Order Empire.

Our American Constitution has not been destroyed (same for Greece Constitution); it has been overthrown by bankster fascist (government of, for and by multinational corporate monopoly). The American Constitution and our Bill of Rights, as authored primarily by James Madison and explained in the Federalist Papers, are still intact today.

Our Founding Fathers had to deal with the same problems we are facing today: domination by corporate monopoly over the American economy and obeying foreign laws.

We fought the American Revolution to be free from the corporate monopoly and domination of the American economy by the British Empire.

After we won the war, our Founding Fathers along with economist Adam Smith's "Free Enterprise" economy, the American Constitution was written to guarantee the American People that the government function was for and by the People--- not government of, for and by the criminal corporate monopoly. The Age of Enlightenment of constitutional democratic republics began.

To paraphrase Thomas Jefferson, the Constitution, if not vigilantly guarded against criminal corporate monopoly corruption, the people will have to refreash our Constitution with revolution. Indeed, our nation was founded on revolution in rejection of corporate monopoly and domination by totalitarian criminal banksters.

Enough is enough! Nationalize the banks and requisition them to serve the People to restart our American Free Enterprise economy, throw the fascist totalitarian bankster criminals in prison!

If the criminal banksters were prosecuted for American mortgage fraud back in 2000 the criminals would have been in prison instead of destroying the economies of the world with their fascist totalitarian New World Order Empire.

Radical Marijuana

I did not previously know those historical details presented in the article above, however, those do not surprise me! The European Union and its Euro were projects of the international bankers, within which context almost all of the successful national politicians were the banksters' puppets, voted for by enough of the people who have become the banksters' muppets, while the European politicians, and those that voted for them, became mostly even more so...

The EU and Euro were stepping stones.

Tragedy and Hope by Carroll Quigley:

"powers of financial capitalism
had another far-reaching goal,
nothing less than to create a
world system of financial
control in private hands
able to dominate the
political system of
each country and
the economy of
the world as
a whole ..."

That has already been mostly achieved, to make:

WONDERLAND MATRIX BIZARRO MIRROR WORLD,

where everything appears absurdly backwards!

[Jul 18, 2015] Why is Germany so tough on Greece? Look back 25 years

"...The lesson Schäuble learned – and which is likely to influence his decision-making now – is that if you act the pure-hearted neoliberal you can still get away with decisions that don't make perfect economic sense."
.
"...But Schäuble should have learned from history that the Treuhand gamble had catastrophic psychological consequences. Even though the agency was run by Germans, who spoke German, still it was seen by many in the east as an occupying force."
.
"...Schäuble's idea of foreign countries controlling Greek assets and moving them abroad is an even more humiliating concept for any country. Schäuble comes across as a tough and sober accountant. In fact he is just an ordinary politician repeating old mistakes. "
.
"...The assault on his life, who forced him to a wheel-chair, made Schaeuble, who always was an arrogant, egocentric, right-wing conservative, a vengeful and bitter arrogant egocentric conservative, who hates everything even remotely socialist."
.
"...And the whole Greece thing just shows how idiotic neoliberalism actually is..."
.
"...This talk of nation vs nation is a distraction. It's better to follow the money. It quickly becomes clear that those who have profited from Greece joining the Euro are keeping their money and the rest are having to suffer the consequences. Goldman Sacks have made billions as have investors in Europe. Meanwhile the people of Greece, Germany or the broader EU are being told they have been reckless and will have to suffer the consequences."
.
"...It's enough to be in the wider neoliberal EU to go under. Being in the eurozone just adds extra pain, waterboarding and rectal feeding. As EU apparatchiks admitted themselves. Maybe the US can now shut down Gitmo by sending the inmates to Greece, where conditions are just as harsh."
.
"...Whilst national governments are printing money in gay abandon to bail out their banker backers... Simultaneously fleecing their taxpayers under the the moral pretence of 'Austerity', we have witnessed an unelected cartel eviscerate a sovereign nation. The Greek Balance Sheet of Misery is deep in the red! Apparently, people no longer matter - Politicians and Bankers have a free rein. Greece fell for the EU dream... It was a political sucker to be exploited for the benefit of the Project. Post 2008, it has been treated like dirt. Its neighbours should take note - this Union is a nasty creature."
.
"...Many many people these on both sides of the former border are living in a way where 1990 GDR living standards would just about be an upgrade."
.
"...The nepotism and clientelism of the ruling class has been a problem since independence from Turkey and successive Greek governments have promised and failed to rectify it but that doesn't excuse humiliating an entire nation and pushing it to the point of economic and civil collapse because 'they deserve to reap what they sow' regardless of the consequences for the entire region with IS just a few hundred kilometres away. This is the worst case of being unable to see the wood for the trees that we have seen since the 'allies' invaded Iraq on the pretext of saving the West from nuclear weapons that did not exist.

The vindictive behaviour towards Greece marshalled by Germany last weekend has lost it a lot of friends and reminded us where its mindset comes from and where it leads to if more civilised nations do not step in to reel it in. Habermas in particular is particularly cognisant of this."

Jul 18, 2015 | The Guardian
Every drama needs a great baddie, and in the latest act of the Greek crisis Wolfgang Schäuble, the 72-year-old German finance minister, has emerged as the standout villain: critics see him as a ruthless technocrat who strong-armed an entire country and now plans to strip it of its assets. One part of the bailout deal in particular has scandalised many Europeans: the proposed creation of a fund designated to cherrypick €50bn (£35bn) worth of Greek public assets and privatise them to pay the country's debts. But the key to understanding Germany's strategy is that for Schäuble there is nothing new about any of this.

It was 25 years ago, during the summer of 1990, that Schäuble led the West German delegation negotiating the terms of the unification with formerly communist East Germany. A doctor of law, he was West Germany's interior minister and one of Chancellor Helmut Kohl's closest advisers, the go-to guy whenever things got tricky.

The situation in the former GDR was not too dissimilar from that in Greece when Syriza swept to power: East Germans had just held their first free elections in history, only months after the Berlin Wall fell, and some of the delegates from East Berlin dreamed of a new political system, a "third way" between the west's market economy and the east's socialist system – while also having no idea how to pay the bills anymore.

The West Germans, on the other side of the table, had the momentum, the money and a plan: everything the state of East Germany owned was to be absorbed by the West German system and then quickly sold to private investors to recoup some of the money East Germany would need in the coming years. In other words: Schäuble and his team wanted collateral.

At that time almost every former communist company, shop or petrol station was owned by the Treuhand, or trust agency – an institution originally thought up by a handful of East German dissidents to stop state-run firms from being sold to West German banks and companies by corrupt communist cadres. The Treuhand's mission: to turn all the big conglomerates, companies and tiny shops into private firms, so they could be part of a market economy.

Schäuble and his team didn't care that the dissidents had planned to hand out shares of companies to the East Germans, issued by the Treuhand – a concept that incidentally led to the rise of the oligarchs in Russia. But they liked the idea of a trust fund because it operated outside the government: while technically overseen by the finance ministry, it was publicly perceived as an independent agency. Even before Germany merged into a single state in October 1990, the Treuhand was firmly in West German hands.

Their aim was to privatise as many companies as possible, as soon as possible – and if you were to ask most Germans about the Treuhand today they would say it achieved that objective. It didn't do so in a way that was popular with the people of East Germany, where the Treuhand quickly became known as the ugly face of capitalism. It did a horrible job in explaining the transformation to shellshocked East Germans who felt overpowered by this strange new agency. To make matters worse, the Treuhand became a hotbed of corruption.

The agency took all the blame for the bleak situation in East Germany. Kohl and Schäuble's party, the conservative CDU, was re-elected for years to come, while others paid the price: one of the Treuhand's presidents, Detlev Karsten Rohwedder, was shot and killed by leftwing terrorists. (Schäuble too became the victim of an attack that left him permanently in a wheelchair, only days after German reunification – but his paranoid attacker's motives were unrelated to the political events)

But the reality of what the Treuhand did is different from the popular perception – and that should be a warning for both Schäuble and the rest of Europe. Selling East Germany's assets for maximum profit turned out to be more difficult than imagined. Almost all assets of real value – the banks, the energy sector – had already been snapped up by West German companies. Within days of the introduction of the West German mark, the economy in the east completely broke down. Like Greece, it required a massive bailout programme organised by Schäuble's government, but in secret: they set aside 100bn marks (£35bn) to keep the old East German economy afloat, a figure that became public only years later.

With prices for labour and supplies going through the roof, the already stressed East Germany economy went into freefall and the Treuhand had no chance to sell many of its businesses. After a couple of months it started to close down entire companies, firing thousands of workers. In the end the Treuhand didn't make any money for the German government at all: it took in a mere €34bn for all the companies in the east combined, losing €105bn.

What the Treuhand did should be a warning for Schäuble and Europe: the economy in East Germany completely broke down

In reality, the Treuhand became not just a tool for privatisation but a quasi-socialist holding company. It lost billions of marks because it went on paying the wages of many workers in the east and kept some unviable factories alive – a positive aspect usually drowned out in the vilifications of the agency. Because Kohl and, during the summer of 1990, Schäuble weren't Chicago economists keen on radical experiments but politicians who wanted to be re-elected, they pumped millions into a failing economy. This is where parallels with Greece end: there were political limits to the austerity a government could impose on its own people.

The lesson Schäuble learned – and which is likely to influence his decision-making now – is that if you act the pure-hearted neoliberal you can still get away with decisions that don't make perfect economic sense. If Schäuble is acting tough with Greece right now, it is because his electorate wants him to act that way; it's not just that he doesn't care about the Greek people, he wants people to believe he doesn't care, because he sees the political advantage in it.

But Schäuble should have learned from history that the Treuhand gamble had catastrophic psychological consequences. Even though the agency was run by Germans, who spoke German, still it was seen by many in the east as an occupying force.

Schäuble's idea of foreign countries controlling Greek assets and moving them abroad is an even more humiliating concept for any country. Schäuble comes across as a tough and sober accountant. In fact he is just an ordinary politician repeating old mistakes.

Related: Greece's debt can be written off –whatever Wolfgang Schäuble says | Philip Inman


DerFremde 18 Jul 2015 07:48

If Schäuble is acting tough with Greece right now, it is because his electorate wants him to act that way;

Yes, after they were programmed to feel that way by the well-orchestrated media campaign that's gone on for 5 years now.

Zabka 18 Jul 2015 07:42

Schäuble is a nasty sociopath and Europe is paying for the fourth time Germany's folly and Imperial ambitions


sacco ThinkingAustralian 18 Jul 2015 07:41

How could the Greek MPs have voted against the package ? The unelected euro institutions deliberately crippled their banking system just prior to the referendum. The unelected euro institutions have had an ongoing police of regime change in Greece. For that alone they need to be abolished.

You appear to be confusing several things. The governance of the Eurozone is largely in the hands of the so-called Eurogroup of EZ finance ministers, and what you describe as the "unelected euro institutions" are, for the most part, as mortified by the situation as you or I but do not have a role in which they can exercise significant control.

Their influence is (one might even say "unfortunately" in the light of events) rather limited. In particular, as regards the ferocious arguments over the release of €7.2bn which have dominated the headlines for the last six months with its endless arbitrary deadlines, the European Commission team of civil servants who provide the secretariat which performs technical work and assessments for the Eurogroup concluded that Greece had satisfied the conditions set for release of the funds, and this outcome was communicated by the "unelected" Commissioner for Economic and Financial Affairs -Pierre Moscovici- at their meeting last December!

The Eurogroup ministers decided, however, (possibly together with the influence of the IMF) that they had other reasons not to release the funds. Why? Many observers concluded that they did so mainly in order to retain a powerful political lever to prevent any incoming Greek government after the elections from taking any decisions of which they, the Eurogroup, might not approve.

it's worth remembering, though, that the weighting of Germany's vote alone is sufficient to impose a blocking veto, and that this is also the group with most political power over the European Central Bank. Although the ECB has some nominal independence, in practice the current conditions are far beyond what can be dealt with using the instruments and policies that it has been given, so it is constantly beholden to its political masters for permission to take necessary action: in these urgent circumstances, a veto is almost as effective as absolute control, as the only actions that can be proposed are those which won't be vetoed.

Fstephens56 Fstephens56 18 Jul 2015 07:28

In the end Treuhand sold out 95% of the Eastern German economy to Westerners, who in turn didn't even have to present a feasible plan (or money to back the investment). It's easy to suppose that anybody who handed over a few bills to the right hands was able to snatch up a bit of value. Usually the Eastern companies "sold" for 1 Mark.

However, Western German "investors" were not really interested in another automobile manufacturer in the East, or another innovative company that produces household goods. They saw these companies a competition and their only interest was in seeing them closed down or reduced to a minor subsidiary.
If you have any doubts about it, just look up the "Foron" scandal. It is a perfect example on how the Eastern German economy was systematically and deliberately ruined by competitors, who wouldn't even shy away from threats and illegal activities to ensure their position.

Only 5% of former GDR companies were sold to Eastern German investors, interested in carrying on. However, since Treuhand favored Western German buyers over Eastern German investors, these 5% were more or less either "left-overs", that nobody else wanted, or rare examples of factories, where the workers managed to buy out their own company and run it themselves after other investors failed to present themselves.

So in short Treuhand failed in all but 1 thing: filling the pockets of their associates. They stole from the poor and used it to bolster the profits of the rich.

But back to Schaeuble! He was Kohl's favored minister by the time and it's save to assume that he was more or less involved in (or at least aware of) the proceedings. Schaeuble is a neo-liberal, law-and-order, right-wing nationalist, who thinks of political office not as a service to the nation, but as a business meant to make money for the one who runs it. (Just listen to some of his former speeches if you have any doubts about that)

The assault on his life, who forced him to a wheel-chair, made Schaeuble, who always was an arrogant, egocentric, right-wing conservative, a vengeful and bitter arrogant egocentric conservative, who hates everything even remotely socialist.

Over the years his speeches as minister for inner affairs grew more and more disturbing. Making it evident, that Schaeuble thought of common people as nothing more than a violent, incompetent mob, that had to be educated and controlled by a superior political cast. (Just listen to one of his later speeches as minister for inner affairs in Merkel's government concerning his thoughts about public opposition against his political ideas.)

Schaeuble was then by believed by many Germans (including some media) to be an overly bitter and possibly dangerous "lunatic", unfit for political office. Upon Merkel's reelection, Schaeuble was then removed from office and instituted as finance minister. Possibly a step to "ship him off" to a position where he could do less harm.

That said: the second thing to know is that the crisis in Greece is nothing by another crisis of the financial sector. Private investors invested money into Greece, that Greece is unable to pay back. Unfortunate - but such are the risks of the stock market, right?

Not quite! Because what actually happened was that Germany (and other European) countries used tax-payer's money to bail-out European banks a second time, by backing up the already defaulted Greek loans with public money.

So the money "given" to Greece is not really helping the Greek people. It is meant to use public money to support private investors and European banks.

And as always: where big money is moving through many hands, those who would like to hold a sum of it, aren't far removed.
As an example, it is said that Schaeuble talked about an "investment plan" that would see a substantial sum put in an institution run by one of his relatives.

A "mere coincidence" of course, but one that explains more precisely what is going on than the article above. It's all about clever ways to turn public money into private money, while keeping public eyes and public discussion fixed on "hard but necessary" austerity measures. Measures that were never meant to help Greece, let alone end the crisis! All of this maneuvering is just meant to help the private investors and keep them from losing money.
Investors, that were never interested in a strong Greek economy. But only in an opportunity to snatch up some valuable pieces of Greek property for a bargain and either gut and sell them for a short-term profit, or to rid themselves of possible competition.

So in the end, the only relevance the historical context has at this point is one that we have already known and is true for ANY historical context: people are doing gruesome thing for personal gain and few ever care about the consequences their actions impose unto other people.

Fstephens56 18 Jul 2015 07:27

The article couldn't be any more dead wrong, if it told us that Schaeuble did it because he was a reptilian overlord from another dimension.

First thing to know about him: he was close friends with former chancellor Kohl and his minister for inner affairs. Now Kohl is a man as corrupt as they come. Kohl had close ties to the media via his dear friend Leo Kirch (a media-mogul) and various companies. And if you doubt that Kohl ran his office like a business: the GDR secret service had surveillance tapes of Kohl accepting bribes. I say "had" because Kohl used the power of his office to see them destroyed.

After which he made it a habit of using his money and influence to sue people who dared to openly oppose his version of the truth. A habit that he hasn't given up until today: he recently sued a ghost-writer, that he fired over "differences of opinion" for publishing some of the less favorable things he had learned during his interviews with the former chancellor.

Schaeuble and Kohl were then involved in the "Leuna" affair. Where several French officials, Kohl as the then-chancellor of Germany and probably some of his ministers where allegedly taking bribes for one of the most obvious heists ever! The most grotesque scandal yet in German history.

"Leuna" was the name of a former GDR chemistry empire worth billions and billions of pounds and the beating heart of the Eastern German economy. High-quality plastics, artificial fabrics and pharmaceutical products were amongst the key export products and fed a whole region bigger than Wales.

Kohl used the power of his office to personally take control over the "Leuna" asset, snatching it away from under the nose of Treuhand. And gifted it to French company Total for the symbolic price of 1 Mark (about a quarter of a British Pound).

With this "deal" French "Total" took sole control of ALL gas-stations throughout Eastern Germany, THE ONLY petrol refinery in Eastern German able to produce gasoline, a long-running fixed-price deal with Russia for deliverance of finest Siberian oil reserves paid in Ruble at a bargain price, control over SEVERAL PIPELINES was included for free, and ALL of the chemistry production of Eastern Germany combined in an industrial complex the size of the City of London complete with its own railroad system, able to produce plastics and high-quality pharmaceutical products 24/7.

And like this wasn't enough, the Kohl-Schaeuble-duo than "gifted" Millions of German tax-payers money to the company. Because it was quite obvious that Total got more out of that heist than they could possibly chew.

This "Leuna" heist affected roughly 500.000 workers in Eastern Germany. It cost the job of tens of thousands of people. The result of which were angry protests against Kohl and people throwing eggs and foul vegetables at the man, as he later visited the region.

However, this is not even the end of it. The article states that the banks had already been sold before the Treuhand came to be, but fails to mention "how" exactly that happened. It was Kohl himself who oversaw the process and gave them away on a bargain due to a little "accounting error" that "miscalculated" the value of these banks much to the advantage of the buyers. With this deal Kohl effectively gifting billions to Western German banks, circumventing any public control of what is happening.

Meanwhile the Treuhand had some shady dealings of its own. The article mentions that one of the heads of "Treuhand" was assassinated. What the article fails to mention however is, that the man killed was believed to be the first (and only) ever not to be part of a government-friendly group of individual and he was killed right BEFORE he to get a good look at the books. He was quickly replaced by another, more agreeable individual.

In other words: the reunification was a mess and a huge scandal, where most people involved were doing their very best to siphon as much money and personal gain out of the process as possible, before proper order could be established.

The price for this corruption was paid by those, unable to fight back:

  • - pensioners were denied money from their private pension plans (a result of the bank-deal)
  • - millions of people lost their jobs
  • - nearly all small businesses went bankrupt, breaking the back of what remained of Eastern German economy
  • - highly educated and young people fled the country in hundreds of thousands, leaving behind ghost cities (some cities like Halle-Neustadt lost up to half of their population)
  • - real-estate values plummeted, leaving people with nothing

ItsAnOutrage2 cpp4ever 18 Jul 2015 07:02

...the creditors should have done their due diligence better and never lent to Greece in the first place, and at some point they will have to accept some lose.

They have already accepted a loss of over €100billion. The argument over further lending to Greece is, in essence, about paying Greece not to devalue the Euro and damage the political and economic structure of the EU. Some people think it's worth the hit, and others think we should let Greece go. I am in the latter camp; I've nothing against the Greeks, but their government is only interested in getting re-elected. Greece is toast in either event, so let them start rebuilding sooner rather than later.

AndrewDavidBoyle Paidenoughalready 18 Jul 2015 06:52

'Other peoples money?!' The crisis was manfactured from 2008 by banks and institutions. This video is the confession of an economic hitman. It shows how financial crisis are manufactured. It was his job.

https://m.youtube.com/watch?v=XWuAct1BxHU

tichchurch t1m0thy1 18 Jul 2015 06:51

The bankers don't just have a lot to answer for, they have it ALL to answer for. This is ALL their mess. Their corruption,and their greed. They should be the ones to pay, not the innocent citizens of Greece who, on top of suffering the high unemployment and hardships imposed on them by austerity, are also having to put up with the unfair accusations, insults and vilification, that the wrongly informed general public from the rest of the EU is directing at them.

AndrewDavidBoyle 18 Jul 2015 06:36

The Investment For Greece Fund

KFW is led by a six-member Managing Board headed by Ulrich Schröder, which in turn reports to a 37-member Supervisory Board. The chair of the Supervisory Board changes annually between the German Federal Ministers of Finance and Economic Affairs; the chairman for 2015 is Wolfgang Schäuble.
The KfW will contribute financially to the fund and provide it with technical assistance. Whatever that means.

The Investment For Greece fund was a bilateral agreement between KMF and the Greek government. Interesting that Tsipras was keen to avoid this fund and instead create another one!

Up to €50bn (£35bn) worth of Greek assets will be transferred to a new fund, which will contribute to the recapitalisation of the country's banks. The fund will be based in Athens, not Luxembourg as Germany had originally demanded.

The location of the fund was a key sticking point in the marathon overnight talks. Transferring the assets out of Greece would have meant "liquidity asphyxiation", Tsipras said.

We will see what happens here...

johnbig SenseCir 18 Jul 2015 06:29

Very interesting article giving information not generally known, at least by me.

However the lesson I take from this is that the reunification of Germany on a 1 D mark for 1 Ost mark basis was a political decision of the highest order probably made by Kohl himself. The economics then had just to follow as best possible without negating or modifying the main decision. Schauble was obliged to follow Kohl's policy decision

In Greece it seems to be the economics leads all other considerations and the political aim of helping back to its feet a small economy and thus keeping a healthy European Union takes a back seat. Unless the political decision being applied is to do anti-Keynes economics for all always. Markel is obliged to follow Schauble"s policy.

EcoNasty huzar30 18 Jul 2015 05:26

If they were stupid and greedy enough to throw money at me if I'm a high risk then they shouldnt be surprised when I don't pay them back...

After all, we wouldn't have had the crash would we if it hadn't been for stupid greedy moneymen making crap decisions ??

And the whole Greece thing just shows how idiotic neoliberalism actually is...

I mean, I actually think Tsipras is playing a blinder. He knows that Greece may have been pushed into a corner I'm the short term, but in the long game Greece has Merkel et al over a barrel ..they can't (despite the tub thumping last week) allow Greece to leave because the disastrous impact this would have on the EZ and wider global economy and they'd have to write down hundreds of billions - yet their austerity measures will make it far less likely that Greece can meet its next payment deadline meaning they'll be back here again in a few months ...

...of course there's no more room for more restructuring or austerity after this bailout so they're stuffed essentially...either they let Greece leave with the huge risks that poses or they have to lose face and write down Greece's debts.

Tsipras ..the man who broke neoliberalism. He'll get statues erected ;

Peter Gentoo 18 Jul 2015 05:25

Why the British Empire ruined the world part II:

Scramble of Africa:

During the final twenty years of the nineenth century, Britain occupied or annexed territories which accounted for more than thirty-two percent of Africa's population, making the British the most dominant Europeans on the continent.By 1965, Britain had lost its stranglehold on the continent-but the consequences of imperialism were immense. Firstly, the settler states of Kenya, Rhodesia, and South Africa saw many episodes of violence before African nationalists could forge a return to stability, after the departure of the colonial governments. Corrupt African "strongmen," or dictators, often gained power-despite ignoring the social needs of the people. Economic dependence on the West, coupled with political corruption, crippled attempts to diversify.Even today, Africa is the least developed region in the world, with poverty and malnutrition running rampant. The idea that Europeans wanted to "civilize" Africa was an utter lie, and a means to justify the exploitation of the continent.

Palestine:

After defeating the Ottoman Empire in World War One, Great Britain did not liberate their Arab allies but instead colonized them. The British received Palestine, Jordan, and Iraq. After centuries of anti-Semitism, many Jews began migrating to their original homeland of Palestine (ancient Judaea), and after the War, these migrations greatly increased. Many British officials, some of whom were also anti-Semitic, wanted to establish a Jewish homeland in the Middle East in order to kick the Jews out of Europe altogether.The British announced in 1947 their intention to withdraw from Palestine in 1948. On November 1947 the United Nations General Assembly passed a plan to partition Palestine into two separate states-one Arab, and one Jewish. The Jews accepted, but the Arabs rejected the partition. The British officially left on May 14, 1948, without providing a resolution to the situation; that same day the Jews proclaimed the state of Israel. Arab countries immediately attacked the new Jewish state, but the Israelis drove off the invaders and conquered more territory. Roughly nine hundred thousand Arab refugees fled-or were expelled from-old Palestine.This war left an enormous legacy of Arab bitterness towards Israel and its political allies, Great Britain and the United States. The Arab-Palestinian conflict has provided a deep divide between East and West, and between Christianity and Judaism on the one hand and Islam on the other hand. The modern "War on Terror" stems from the American and Western support of Israel. In addition, Israel has been accused of atrocities ranging from bulldozing Palestinian homes, to acts of terror committed by Mossad, the Israeli CIA

Partition of India:

After two centuries of colonialism in India, the British Labour government agreed to a speedy independence of India after 1945. But conflict between Hindu and Muslim nationalists led to murderous clashes between the two communities in 1946. When it became clear that the Muslim League would accept nothing less than an independent Pakistan, India's last viceroy, Lord Louis Mountbatten, proposed partition. Both sides accepted, and at the "stroke of midnight" on August 14, 1947, one fifth of humanity gained political independence.Yet independence through partition brought tragedy. In the weeks afterwards, communal strife exploded into an orgy of massacres and mass expulsions. Hundreds of thousands of Hindus and Muslims were slaughtered, and an estimated five million made refugees. Indian Congress Party leaders were completely powerless to stop the violence. "What is there to celebrate?" exclaimed Gandhi in reference to the much-sought independence; "I see nothing but rivers of blood." In January 1948, Gandhi himself was gunned down by a Hindu fanatic who believed that he was too lenient on Muslims.After the ordeal of independence, relations between India and Pakistan remain tense to this day. Fighting over the disputed area of Kashmir continued until 1949, and broke out again in 1965-1966, 1971, and 1999. What makes the Indo-Pakistani conflict even more dangerous is that both sides contain nuclear weapons. With the possibility that Pakistan might become a failed state, there is a good chance of a major genocide erupting in the twenty-first century.

Peter Gentoo 18 Jul 2015 05:23

Why the British Empire ruined the world:

Apartheid:

Apartheid was a system of racial segregation enforced through legislation by the National Party governments, the ruling party in South Africa from 1948 to 1994. The rights of the nation's black majority were curtailed, and white supremacy and Afrikaner-minority rule was maintained. After one hundred years of wars, and having gained complete political control, the British made a decision that doomed many South Africans. They gave Boer republics the green light to disenfranchise all non-whites. The apartheid system was entrenched in the Union constitution, which was drawn and approved by the British government. In 1913, the Native Land Act was brought into force; it pushed black people off the land on which they were either owners or tenants, and relocated them to shantytowns in the cities.

Irish Potato Famine:

During the summer of 1845, a "blight of unusual character" devastated Ireland's potato crop-the staple of the Irish diet. A few days after potatoes were dug up from the ground, they began to rot. Over the next ten years more than 750,000 Irish died from the ensuing famine, and another two million left their homeland for Great Britain, Canada and the United States. Within five years, the Irish population was reduced by a quarter.

Invention of the machine gun:

In 1879, the Gardner Machine Gun was demonstrated for the first time. It could fire ten thousand rounds in twenty-seven minutes, and its accuracy was superior to that of the Gatling gun. This impressed military leaders from Britain, and the following year the British Army purchased the gun.In 1881, the American inventor Hiram Maxim visited the Paris Electrical Exhibition. While he was at the exhibition a man he met told him "if you wanted to make a lot of money, invent something that will enable the Europeans to cut each other's throats with greater facility." Maxim decided to move to London, and began working on a more effective machine-gun. The British Army adopted the Maxim Machine Gun in 1889. The following year, Austria, Germany, Italy, and Russia also purchased the gun, causing an arms race on the European continent. The machine gun would haunt the British during the Battle of the Somme, when the British suffered 60,000 casualties on the first day. Since its introduction, the machine gun has caused countless fatalities across the world, and has allowed for more people to be killed within a shorter time span.

Atlantic slave trade:

The British did not start the slave trade or even import the most slaves (both of these dubious distinctions belong to the Portuguese). In the beginning, British traders merely supplied slaves for the Spanish and the Portuguese colonies; but eventually, British slave traders began supplying slaves to the new English colonies in North America. The first record of enslaved Africans landing in British North America occurred in 1619, in the colony of Virginia.In the 1660s, the number of slaves taken from Africa in British ships averaged 6,700 per year. By the 1760s, Britain was the foremost European country engaged in the slave trade, owning more than fifty percent of the Africans transported from Africa to the Americas. The British involvement in the slave trade lasted from 1562 to until the abolishment of slavery in 180-a period of 245 years. History Professor David Richardson has calculated that British ships carried more than 3.4 million enslaved Africans to the Americas during this time. In addition to being a major player in the slave trade, the British supported the pro-slavery Confederates during the Civil War. The British needed cotton to fuel their machines; this caused the demand for cotton to skyrocket, which in turn demanded slave labor. If the Confederates had won at the battle of Antietam, the British would have given full support to the rebels, and may even have tipped the Civil War in favor of the Confederates. And although Great Britain was one of the first nations to abolish slavery, they quickly made up for the loss of human labor by extracting Africa's raw materials and resources.

DeeDee99 18 Jul 2015 05:18

"Look at what he inflicted on his own country."

Yes. HIS OWN COUNTRY.

Now he's doing it to another country: and both he, the President of the other country, the IMF and the ECB all know it isn't going to work.

So he is destroying another country for what ........... ? So the EU can continue to build an anti-democratic and increasingly dictatorial United States of Europe where national democracies are irrelevant (unless they happen to be Germany).

ZankFrappa 18 Jul 2015 05:12

This talk of nation vs nation is a distraction. It's better to follow the money. It quickly becomes clear that those who have profited from Greece joining the Euro are keeping their money and the rest are having to suffer the consequences. Goldman Sacks have made billions as have investors in Europe. Meanwhile the people of Greece, Germany or the broader EU are being told they have been reckless and will have to suffer the consequences.

anita66 18 Jul 2015 05:05

Maybe worth noting, that Schäuble's readon to make Greece fail is also related to the vast oil resources in the Aegean sea. And his generally corrupt manner. In the past he accepted bribes and bribed for weapon deals and other operations. and thats who most deals in Greece were agreed.

bloomday Budanevey 18 Jul 2015 05:03

Greece's economic performance from the mid-90's to the beginning of 2010 was better than the EU average (3.9% vs 2.4%). Once the European financial crisis began to make itself felt in Greece, in 2010, they followed the Troika's austerity instructions to the letter, slashing expenditures and increasing taxes. A 25% decline in GDP and 25% unemployment, with youth unemployment twice that was the result. This economic downturn happened because they followed and implemented creditor demands for austerity, measures that are now seen not to work for Greece. What is more, It is a fiction that all the bailout money loaned to Greece is at it's disposal to use as it pleases, most has been recycled back to the creditors in loan repayments - Joseph Stiglitz estimates that 90% of the money loaned Greece has been paid straight back to the Creditors, leaving Greece with insufficient sums to invest to create growth. Austerity is an anti-growth economic policy and the sooner the leadership of the German CDU wake up to the fact the better it will be for the Eurozone.

lundberg 18 Jul 2015 04:53

The link between the early 1990's and now (2008 till forever?) is that Germany and Schäuble caused all-European recessions. The 1990's recession was very bad in for example Sweden and Finland. One reason for this German behaviour is a myth that inflation (as of 1923) is the only thing to be avoided. Others have noted that other bad things have happened in Germany even after 1923. Tight Money, high interest rates is the perpetual formula, though exactly that brought Hitler into power.

The reunification was performed in a stupid way (1 West Mark= 1 East Mark, overnight, when market value was 7:1 or so). This stupidity was repeated, and worse, with the Maastrich treaty in 1992. All Europe had to pay for it, which led to a first wave of rightwing populism rather than European unity. We are now living through the second wave.

Germany was eventually essentially reunited, though it took much longer time and inflicted a lot more pain than was necessary, in Germany and abroad.
Europe remains broken, because you cannot have a single currency without a single government. This has been known all along, though the smart-alecs in Brussels, Berlin and Paris thought that they would solve that problem by stepwise federalization. Not likely.

bootayjam grumpyoldman 18 Jul 2015 04:34

Well said. I find it amazing that the Guardian is only now waking up to the fact that maybe, just maybe, the EU is bought and paid for and part of the global corporate banking system that has a stranglehold on us all.

Look at the IMF, which acts as a member of the Troika.
But it has has no elected position, and cannot be removed from power.
The second unelected member is Mario Draghi of the ECB. The same Mario Draghi who worked for Goldman Sachs and helped Greece hide it's true debt in order to join the Euro. How do you get rid of him? And more importantly, how did he get the job?
And finally, the head of Europe, Juncker, is also unelected by the people. And he was responsible for introducing corporate tax dodging in Luxembourg when he was PM there.

The entire government design is totally un-Democratic and therein lies the crisis, but not just in the EU, but across the world. Can you vote out the IMF or World Bank?

But in terms of the EU, not a single member of the Troika ever needs to worry about polls since they do not have to worry about elections.

This is authoritarian government if we have ever seen one, and Tony Benn's 5 awkward questions to ask those in power seem more relevant every day.

laSaya TomHalpin 18 Jul 2015 04:32

Reparations and exploitation
Further information: German reparations for World War II
Contrary to common myth, the US did in fact take "reparations"; parts of it by John Gimbel called "plunder and exploitation", directly from Germany. The US for instance took an 8.9% share of dismantled Western German industry.
The Allies also confiscated large amounts of German intellectual property (patents and copyrights, but also trademarks). Beginning immediately after the German surrender and continuing for the next two years the US pursued a vigorous program to harvest all technological and scientific know-how as well as all patents in Germany. John Gimbel comes to the conclusion, in his book "Science Technology and Reparations: Exploitation and Plunder in Postwar Germany", that the "intellectual reparations" taken by the US (and the UK) amounted to close to $10 billion. The US competitors of German firms were encouraged by the occupation authorities to access all records and facilities. l Law No. 25) for fear of the research directly profiting their competitors.
The patents, drawings and physical equipment taken in Germany included such items (or drawings for) as electron microscopes, cosmetics, textile machinery, tape recorders, insecticides, ... and other technologies - almost all of which were either new to American industry or 'far superior' to anything in use in the United States."
The British took commercial secrets too, by abducting German scientists and technicians, or simply by interning German businessmen if they refused to reveal trade secrets.
Konrad Adenauer stated: "According to a statement made by an American expert, the patents formerly belonging to IG Farben have given the American chemical industry a lead of at least 10 years.
In JCS 1067 there were provisions allowing German scientists be detained for intelligence purposes as required. Although the original focus on the exploitation was towards military means, much of the information collected by FIAT was quickly adapted commercially to the degree that the office of the Assistant Secretary of State for Occupied Areas requested that the peace treaty with Germany be redacted to protect US industry from lawsuits.
The US made no attempt to evaluate the value of what was taken from Germany, and in the contracts that led to sovereignty for West Germany in 1955 the West Germans had to formally renounce all claims to possible compensation for all types of assets taken, including scientific and technical know-how.
The property taken in Germany was without regard to the rules of the Hague Convention, which prohibits the seizure of enemy private property "unless it is susceptible of direct military use",

German reparations for World War II

Division of Germany as of the Potsdam Conference.

After World War II, both West Germany and East Germany were obliged to pay war reparations to the Allied governments, according to the Potsdam Conference. Other Axis nations were obliged to pay war reparations according to the Paris Peace Treaties of 1947.

Contents
1 Early propositions
2 Recipients
2.1 Greece
2.2 Israel
2.3 The Netherlands
2.4 Poland
2.5 Yugoslavia
2.6 Soviet Union
3 Other forms of payment
3.1 Annexation of territories
3.2 Dismantling of industries
3.3 Intellectual property
3.4 Forced labour
4 See also
5 References

Other forms of payment
According to the Yalta Conference, no reparations to Allied countries would be paid in money. Instead, much of this value consisted of German industrial assets, as well as forced labour.

Annexation of territories
Poland and the Soviet Union annexed the German territories east of the Oder-Neisse, leading to the expulsion of 12 million Germans. These territories were incorporated into Poland and the Soviet Union respectively and resettled with citizens of these countries.
France controlled the Saar protectorate from 1947 to 1956, with the intention of using its coal deposits and possibly annexing the region to France permanently. The same mines had been under French control from the end of the First World War until 1935. Following the results of a plebiscite, France had to relinquish its control of the Saar region on January 1, 1957, however it continued to extract coal from the area's mines until 1981.

Dismantling of industries
Further information: Allied plans for German industry after World War II
At the beginning of the occupation, the Allies started dismantling the remnants of German industries. Later abandoned this plan in favour to the Marshall Plan.

Intellectual property
The Allies confiscated significant values of German patents, copyrights and trademarks.

Forced labour
See German prisoners of war in the Soviet Union, Forced labour of Germans in the Soviet Union and Forced labour of Germans after World War II.
-------------
For some ignorance is bliss.

Never led the facts get into the way of prejudice.

Prejudice is what fool use for reason.
Voltaire.

romantotale17 ID0958318 18 Jul 2015 04:28

With a Gini coefficient of 0.78, Germany has a high degree of wealth inequality compared to other countries and there is still a wide gap between western and eastern Germany, almost 25 years after unification. In 2012, the average net worth of eastern Germans was less than half that of western Germans.

Sounds like the country is well run, then. According to current definitions of a successful society: ie benefiting the wealthy, ability of the wealthy to conceal their gains, increasing inequality...

wilk 18 Jul 2015 04:20

Before reunification West Germany had a growth rate of aboaut 3.6%. and East Germany full employment . After - Schauble Germany managed to reach 2.2% the other year - the highest since reunification; eastern Germany has an double the unemployment rate of the west - over 10%. Workers rights in Germany have been decimated with most of those in work on zero- hour contracts or temporary work and the rich states are refusing to put more money into the failing eastern ones.
Like most of us the German people like to have a "Greece" so that we can feel well off and that our governments and big business are working for us - so the Merkels' and Schaubles' keep in power

phil49 -> probitase 18 Jul 2015 04:13

Rather simplistic. North America achieved its independence well before most Latin American countries and before rapacious 19th century capitalism had developed. By the time the Latin American countries achieved independence, European (mainly British) companies were ready to step in and siphon off vast amounts of the wealth generated, unlike in the United States, where most of the wealth was home-owned and reinvested, before the US was ready to take over from the European imperialists and do as they had done.

someoneionceknew -> Mister_T 18 Jul 2015 04:12

Cool story, bro. But completely untrue. Germany is being run for the benefit of its corporations and its banks i.e. neoliberal fundamentalism.

It's 'success' is arguable. Its future looks bleak.

laSaya smiley08 18 Jul 2015 03:46

When people bang on about what W. Germany got in Marshall plan aid after WWII they never look at the facts.
Read on.

The largest recipient of Marshall Plan money was the United Kingdom (receiving about 26% of the total), followed by France (18%) and West Germany (11%). Some 18 European countries received Plan benefits.

Criticism of the Marshall Plan became prominent among historians of the revisionist school, such as Walter LaFeber, during the 1960s and 1970s. They argued that the plan was American economic imperialism, and that it was an attempt to gain control over Western Europe just as the Soviets controlled Eastern Europe.

Henry Hazlitt criticized the Marshall Plan in his 1947 book Will Dollars Save the World?, arguing that economic recovery comes through savings, capital accumulation and private enterprise, and not through large cash subsidies. Ludwig von Mises criticized the Marshall Plan in 1951, believing that "the American subsidies make it possible for [Europe's] governments to conceal partially the disastrous effects of the various socialist measures they have adopted"

Hard luck story

We all know the easy British explanation for our cumulative export defeat in world markets from the 1950s onwards, especially at the hands of the Germans. This story tells us that lucky West Germany had all her industries and infrastructure bombed flat or removed as reparations, and then was able to re-equip herself from scratch with Marshall Aid dollars. Meanwhile, so this hard-luck story goes on, poor old Britain had to struggle on with worn-out and old-fashioned kit.

Britain actually received more than a third more Marshall Aid than West Germany ...

This is utter myth. Britain actually received more than a third more Marshall Aid than West Germany - $2.7 billion as against $1.7 billion. She in fact pocketed the largest share of any European nation. The truth is that the post-war Labour Government, advised by its resident economic pundits, freely chose not to make industrial modernisation the central theme in her use of Marshall Aid.

Successive governments squandered billions of Marshall Plan Aid to support British world power pretensions, and so jeopardised the economic future of Britain.

The sad irony is that it had been in vain that the Labour Government had sacrificed the modernisation of Britain as an industrial country for the sake of using Marshall Aid to support a world power role - strategic and financial.

What a monumental waste of a great and unrepeatable opportunity.

Refer http://www.bbc.co.uk/history/british/modern/marshall_01.shtml
The Wasting of Britain's Marshall Aid
By Correlli Barnett
Last updated 2011-03-03

As for the 1953 debt agreement, read on.

Germany, which up until the 1953 Debt agreement had to work on the assumption that all the Marshall plan aid was to be repaid, spent its funds very carefully. Payment for Marshall plan goods, "counterpart funds", were administered by the Reconstruction Credit Institute, which used the funds for loans inside Germany. In the 1953 Debt agreement the amount of Marshall plan aid that Germany was to repay was reduced to less than 1 billion USD.[85] This made the proportion of loans versus grants to Germany similar to that of France and the UK.[84] The final German loan repayment was made in 1971.

----------------------
Arguing that economic recovery comes through savings, capital accumulation and private enterprise, and not through large cash subsidies.

Greece please take note of this advice from Henry Hazlitt .

For those that claim that the 193 debt agreement was so instrumental in German economic recovery because it was " generous " read the above and think again.

Further lets look at what the aid was intended to be used for.
The Marshall Plan aid was mostly used for the purchase of goods from the United States.

Oh, such generosity.

NickFletcher19 18 Jul 2015 03:35

Can people please do referring to him and his ilk as "technocrats". These people aren't experts in economics, business, management, if anything other than politics.

diotima1 18 Jul 2015 03:33

It's nauseating that such proposals, disguised as "rational" are taken seriously by EU and set the agenda for finding a solution to the Greek tragedy. In this the Greek goverment is also to blame. Advised by flamboyant Varoufakis , who failed to table any serious proposal for the past five months, it wasted all credibility and played into the hands of Shauble and US think tanks ready to experiment with demise of euro at the expense of Greek people.


Thomas W. Gallant 18 Jul 2015 03:07

A full understanding of the relationship between Greece and Germany requires a longer-term historical perspective. See th following article (in English) from the Greek magazine 'Chronos.' http://chronosmag.eu/index.php/tw-gallant-greece-and-germany-the-last-tango.html


DefeatedParty benjaoming 18 Jul 2015 02:31

They may have an Onassis or two, but that certainly doesn't make them prosper that much. Had they built those ships you might have a point. We are talking heavy industry here and since tourism is hardly the high point of any really successful economy, your reply is just a lot of useless left-wing hot air. The idea that the whole economy even the size of the small Greek economy was somehow reduced to its present malaise by a few tax dodges is another simplistic answer to the troubles affecting Greece. Your answer is in effect a few scattered breadcrumbs which had no other effect than to make you look completely silly and irrelevant.

angiefay 18 Jul 2015 00:38

Schäuble and Merkel have split Europe. They are trying to force their ORDER on everyone.

Against them we have France, who, however naïvely, believes more in JUSTICE. Nothing about the New German Order is just, only about profit and control. The situation in Greece has exposed how much they are trying to take control of Europe though the banks.

Instead of trying to help Greece set up systems such as a Land Registry, local Tax Offices free from corruption etc, which would provide a more just tax system, they want to sell off/buy up any remaining assets the country has.


hfakos Ben McCarty 17 Jul 2015 20:00

So what are you proposing, exterminating the native cultures in Europe to create a new coherent one? I didn't say the U.S. reaching its current stage was a rosy process, but it's a fact they now have a coherent enough culture mostly speaking the same language. We cannot reach this stage in Europe, because civilization has advanced enough not to tolerate the forced engineering of a new culture from already thriving and existing ones. So, there always be very serious constraints on the cohesion of Europe. You just have to live with that.


seaspan Steve Sage 17 Jul 2015 19:42

The social/private structure of Greece is typically European, that isnt the problem. The problem started with euro integration, and the negative balance of trade in the private economy unable to devalue local currency, stimulate Exports, investment in local industry, etc. Imports vastly exceeded Exports, so the Govt floated bonds to buy back the difference (ballooning deficits), But also Pools of euro money in foreign banks recycled back to Greece as easy loans, which increased Imports accentuating the difference to Exports -- a downward spiral, and ever increasing govt debt. This structural flaw hasnt been addressed at all...


eastofthewall BeatonTheDonis 17 Jul 2015 19:35

That was the biggest surprise in this saga. That even the yanks had more sense than to pathologically stick to austerity. They had a stimulus program. When the U.S. is less cruel than you, it's time for self-reflection.

Have you been to America lately? Visit Baltimore for me, will you! After the dotcom bubble burst the U.S. had a stimulus program which helped building up the even bigger housing bubble. That is why we now live in the age of "The Second Great Depression". Do you really think another stimulus bubble will help you out of this mess?

be_kul 17 Jul 2015 19:25

Sorry, the parallels go far beyond that:

(1) Schäuble wants the new "Greek Treuhand" to be a part of the ESM. In the ESM – in case the author forgot about that – every person MUST and CAN NOT be put on juridical trial for his/her deeds. The same was true for the Treuhand in East Germany.

(2) Schäuble wants the new "Greek Treuhand" to be managed 'inside' the ESM by a little German bank which is part of the German governmental KfW – which is headed by Schäuble (and his minions).

(3) But the best is yet to come: While the new Greek Treuhand will be modelled after the East German Treuhand, the latter itself was modelled after another "Treuhand" in German history: That one which was established to plunder the "Generalgouvernement" i.e.: the occupied Poland under Hitler. It had the same legal structure as the East German Treuhand … and even the name was the same.

So, there you have it: Schäuble does not even try to hide that his plans for Greece are those of an occupier – he can just simply count on (the vast majority of) people who don't know history.

By the way: Did anyone mention that Greece in 1953 joined the creditors of Germany when they were cutting down Germany's depth from WW II by 60% and re-structured the rest so that Germany could come out of its own hell with the "Wirtschaftswunder" (economic wonder – which was not a wonder at all!)? And did anyone mention the credit Hitler's Germany stole from Greece during WW II and never paid back (except a very small part of it)?

If anyone now thinks that I would "pull a godwin" now … sorry, I won't.

Because I guess anyone can draw his/her own historical parallels and consequences in viewing Schäuble correctly.

Phil Porter Dritan Nikolla 17 Jul 2015 18:54

I'm just trying to change myself and become the heartless, soulless and cultureless husk the EU and it's citizens seemingly now aspire to.
The Euro symbol will become the new crucifix!


hfakos 17 Jul 2015 18:34

It's enough to be in the wider neoliberal EU to go under. Being in the eurozone just adds extra pain, waterboarding and rectal feeding. As EU apparatchiks admitted themselves. Maybe the US can now shut down Gitmo by sending the inmates to Greece, where conditions are just as harsh.


someoneionceknew 17 Jul 2015 18:28

If Schäuble is acting tough with Greece right now, it is because his electorate wants him to act that way; it's not just that he doesn't care about the Greek people, he wants people to believe he doesn't care, because he sees the political advantage in it.

That's possibly the most disturbing aspect of the analysis.


monzer7 17 Jul 2015 18:19

Whilst national governments are printing money in gay abandon to bail out their banker backers... Simultaneously fleecing their taxpayers under the the moral pretence of 'Austerity', we have witnessed an unelected cartel eviscerate a sovereign nation.

The Greek Balance Sheet of Misery is deep in the red!

Apparently, people no longer matter - Politicians and Bankers have a free rein.

Greece fell for the EU dream... It was a political sucker to be exploited for the benefit of the Project.

Post 2008, it has been treated like dirt. Its neighbours should take note - this Union is a nasty creature.


girlmostlikely sailorjeff 17 Jul 2015 18:15

It's also why German's are skeptical of transfer unions. They were promised by Kohl and Schäuble and Waigel, that Eastern Germany would just bloom and it would magically catch up to Western living standards on it's own merits. Those were Germans after all. None of that happened, the catching up has been the other way round. Many many people these on both sides of the former border are living in a way where 1990 GDR living standards would just about be an upgrade.


erpiu 17 Jul 2015 18:15

schäuble and his bunch of rightwing political hacks who pass as eurozone finance ministers are know-nothing frauds or if you prefer, fantasists --as p.krugman calls them.

schäuble himself is an opportunist par excellence, a now-aparatchick/political hack formerly a small-time lawyer with several one-week courses in "economics explained to homemakers" and a dissertation on "public accountants" as special qualifications for his current position as "supreme social-dumping master of western europe"('s rentier-subjugated economies) with distant adolfian resonances.

https://en.wikipedia.org/wiki/Wolfgang_Sch%C3%A4uble
======
Schäuble studied law and economics at the University of Freiburg and the University of Hamburg, which he completed in 1966 and 1970 by passing the First and Second State Examinations respectively, becoming a fully qualified lawyer.

In 1971 Schäuble obtained his doctorate in law, with a dissertation called "The public accountant's professional legal situation within accountancy firms".
======
https://en.wikipedia.org/wiki/Wolfgang_Sch%C3%A4uble


kcfussball -> DT48 17 Jul 2015 18:13

Agreed, it seems to be part of the neo - con agenda to create divides amongst ordinary people. I wonder what they are scared of.

hfakos -> Phil Porter 17 Jul 2015 17:53

It's the liberal "intellectuals" we. They know better what's good for you. In Eastern Europe they were called Bolsheviks.

Pharaoh9 MartinLunnon 17 Jul 2015 17:46

In the German mind the problem is always with you, never with the bank.

monzer7 17 Jul 2015 17:44

I admire Germany for the way in which it has rebuilt its country. Their products demonstrate an envious capability. Every German I have ever met has been easy going, and friendly - nice people.

Their politicians stink!

This rape of Greece was unnecessary... It portrays an unassailable bully humiliating a people.

The image has been tarnished. My admiration diluted.


monzer7 17 Jul 2015 17:44

I admire Germany for the way in which it has rebuilt its country. Their products demonstrate an envious capability. Every German I have ever met has been easy going, and friendly - nice people.

Their politicians stink!

This rape of Greece was unnecessary... It portrays an unassailable bully humiliating a people.

The image has been tarnished. My admiration diluted.


MartinLunnon RationalPlan 17 Jul 2015 17:34

This is clearly a relevant point. Perhaps it's been made by many previous BTL commentators, but I'm surprised that it wasn't brought out in the article.
The parallels with the situation in Greece are many: both East Germany then and Greece now are experiencing the pains of a fixed exchange rate with the strong (West) German economy. In both cases the fixed exchange rate (and thus strong currency while the fix holds) favours savers over borrowers - I suspect that many Germans instinctively believe this to be necessary ever since the inflation if the 1920s and 30s.

In Greece now the borrower is the government. In Germany shortly after reunification the burden fell on Treuhand-owned companies which had liabilities to pay wages in DM coverted from OstMarks at 1:1: "With prices for labour and supplies going through the roof, the already stressed East Germany economy went into freefall"

"When you owe the bank £1000 you have a problem: when you owe the bank £1,000 million the bank has a problem". In the CDU's image of the German mind the problem is always with you, never with the bank.

hfakos linesanddots 17 Jul 2015 17:33

These are all Cold War dinosaurs. Merkel included. With them at the helm a different, livable Europe has no chance.

paulc156 Christian Abel 17 Jul 2015 17:25

Frankly, though the IMF have been culpable in previous instances of crisis management both with Greece and others they have exhibited some capacity to learn from past mistakes. As for the EU and especially the German dominated ECB they have pushed half of Europe to the precipice based on an imbecilic policy prescription that hasn't been tried since the UK tried to stay on the gold standard after WW1. You seem to have sided with the cranks!

Lafcadio1944 Cerebral_Football 17 Jul 2015 17:24

I recommend you read Naomi Kline's well documented book Shock Doctrine which makes the case for what I said far better than I can.

As to your apparent view that the appropriate social behavior is to always and under all circumstances take every possible advantage available to enrich ourselves. I suggest you investigate that period in history known as the Enlightenment.


LiberteEgalite1 trickster5 17 Jul 2015 17:14

trickster, you are incorrect! At least 400 million people in India live in abject poverty in suffering as a direct result of England's plundering of India over 200 years, this is not counting the millions that it killed in the name of keeping order because the Indians dared to raise their heads against the British tyranny.

You need to read real history and not the blinkered one that you read in the glossy magazines glorifying the inhuman British empire.


hfakos probitase 17 Jul 2015 16:59

But there are many mini-jobs. Which is practically unemployment if that's the only thing you have. Statistics are easy to manipulate.


hfakos KrissCross 17 Jul 2015 16:56

What a success story, climbing all the way up to being the EU's poorest nation with an EUR300 monthly salary and loosing a million people who emigrated to the West, and it keeps counting. You have also become a much more sovereign nation, that's why you cancelled South Stream a nanosecond after McCain showed up in Sofia. I mean EUR300 is more than enough, let's not be greedy and try get more revenue in the EU's poorest country. Thanks but no thanks, I wouldn't like to emulate Bulgaria's "success".


FactsForFood Mevagissey 17 Jul 2015 16:55

Hmmm, in comparison the US killed at least 129,000 civilians in a few seconds when it dropped two nuclear bombs on Japan. And many more civilians were long-term disabled afterwards.

So you are saying that we should remember this terrible crime by the US and hold them accountable for it as well.


Cerebral_Football Fani Papas 17 Jul 2015 16:48

Here's a brilliant quote from yesterday's Atlantic:

By 2010 one of those countries-Greece-could no longer pay its bills. Over the prior decade Greece had built up massive debt, a result of too many people buying too many things, too few Greeks paying too few taxes, and too many promises made by too many corrupt politicians, all wrapped in questionable accounting. Yet despite clear problems, bankers had been eagerly lending to Greece all along.

Greece is made up of Greeks, you can't disassociate them. The Greek people borrowed that money when they were levering up and buying homes, not paying taxes, doling out public sector pensions and benefits like they had discovered the cure for cancer.

Greece owes money to Spain, Italy, Slovenia, Portugal and every other country in the Eurozone. But first and foremost, before all of that, they owed the money to the banks. Yes and the banks needed to be paid back.

If you think that's unfair, try telling your credit card/bank company that you won't pay them back.


Mevagissey Susan Dechancey 17 Jul 2015 16:47

The nepotism and clientelism of the ruling class has been a problem since independence from Turkey and successive Greek governments have promised and failed to rectify it but that doesn't excuse humiliating an entire nation and pushing it to the point of economic and civil collapse because 'they deserve to reap what they sow' regardless of the consequences for the entire region with IS just a few hundred kilometres away. This is the worst case of being unable to see the wood for the trees that we have seen since the 'allies' invaded Iraq on the pretext of saving the West from nuclear weapons that did not exist.

The vindictive behaviour towards Greece marshalled by Germany last weekend has lost it a lot of friends and reminded us where its mindset comes from and where it leads to if more civilised nations do not step in to reel it in. Habermas in particular is particularly cognisant of this.

hfakos -> jozef77 17 Jul 2015 16:46

Don't worry, you will see many other cents extracted from the periphery by German corporations. You know, such when I pay international rates calling my Deutsche Telekom customer parents in Hungary from my Deutsche Telekom line in Germany. Borderless Europe, ain't it great?


probitase -> DT48 17 Jul 2015 16:41

One of the rules of the Eurozone is that a country is not allowed to default on its debts. The EU is indeed designed to pull countries in until they find they cannot or do not have the power to extricate themselves.


hfakos -> angryboy 17 Jul 2015 16:38

Yes, the Greeks are like stupid kids. What a worn-out cliche. The only countries that matter here are Germany and maybe France. Lol, do you really believe that whatshisname FinMin of mighty Slovakia has any say in this crises? Germany is using the clowns of these midget EZ countries to deflect some blame. I have never seen that many Mickey Mouse politicians suffering from delusions of grandeur than during the Greek torture sessions. As if whatshername from the Baltic grand duchies has any weight behind her proclamations.

TomorrowsWorld Barry1858 17 Jul 2015 16:35

It's a hard battle getting people to realise just how much so-called wealth is predicated on the money market casino rather than goods and services. Perhaps because it makes all the effort of putting in your relatively honest 9 to 5 fairly irrelevant, most people would rather talk about lazy Greeks than face the fact that they're the living fuel for a casino lifestyle they will only get close to if they happen to buy a winning lottery ticket.


Susan Dechancey 17 Jul 2015 16:33

where are the insights into how Greece got here ? a contra to this :

http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-201010

In just the past decade the wage bill of the Greek public sector has doubled, in real terms-and that number doesn't take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece's rail passengers into taxicabs: it's still true. "We have a railroad company which is bankrupt beyond comprehension," Manos put it to me. "And yet there isn't a single private company in Greece with that kind of average pay."

So lets look a t Greece .. it like watching a magician ....


BeastNeedsMoreTorque papalibre 17 Jul 2015 16:32

But that argument doesn't put the banks lending the money in the clear does it? Even if we accept your argument about the stupid borrowers it doesn't exonerate the banks does it?
It's called fraud.
If I sell you a car that I know is unsafe but you're too stupid to check before I hand over the cash, its still fraud on my part.

Here's a quote that might persuade you:

Financial fraud can be broadly defined as an intentional act of deception involving financial transactions for purpose of personal gain. Fraud is a crime, and is also a civil law violation. Many fraud cases involve complicated financial transactions conducted by 'white collar criminals' such as business professionals with specialized knowledge and criminal intent.

[Jul 18, 2015] There's no end in sight to the Greco-European drama

"..."It is like a dysfunctional family where narcissistic parents believe a fantasy of their own perfection and scapegoat one of the children as the cause and epitome of all that is wrong." Nice analogy. This is the world that propaganda created. A completely parallel universe. But it's not exactly a new development. Look at the US, they are at their n-th invasion, and everybody still pretends that they are slaughtering people for 'humanitarian' reasons. Or the IMF, which has ruined the economies of pretty much every single state in the Third World and everybody pretends that 'we are helping them to escape poverty'."
.
"...It all started with the 2008 global financial meltdown caused by private banker greed. Since the rich cannot be paid for their mistakes--i.e. nationalize the banks--then the rest of us, the state, take over the debt."
.
"...Yes, what's happening to Greece is happening (or will happen) to us all. I will continue to vote however I've seen what happens to a fine government representing to the best of their ability the people & country - they got knocked around & overruled. What I thought was non-negotiable turns out some Hayek adoration readers in powerful positions decide now is time to dismantle social security provision, employment protections & public infrastructure is made over to privateers. Scary times. "
.
"...Warren Buffet said we are in a class warfare and we (the rich) are winning. Strong words since Americans don't believe in class or Marxism."
Jul 15, 2015 | The Guardian

The last act of the classical Greek tragedy ends with two outcomes: disaster and catharsis. In the current Greek debt drama, however, there has been no catharsis. The purification has failed to materialise.

It would have meant that both sides had seen the error of their ways and come to their senses. Instead, the madness continues: Greece will take on €86bn of debt in addition to the existing €317bn (not including the emergency loans from the ECB). From Angela Merkel through François Hollande to Alexis Tsipras, all eurozone government leaders assert that Greece will emerge from over-indebtedness more quickly this way and will be economically healed in three years. Europe pretends that the bailout will help. And Greece acts as if everything is fine now.

The Brussels summit was not a disaster, though. Greece does not fall into chaos and the euro remains stable. Maybe Walter Benjamin, who once said: "The real disaster is if everything stays as it is," was right. When it comes to classical drama, it seems we have not reached the final act after all. The fourth act, the "retardation", continues. The action is slowing down, with suspensory moments: the troika returns to Athens and monitors the situation, while the Greek authorities delay and tinker about again. Until the action moves into a phase of extreme tension towards the finale. When will that be? Merkel hopes it will be after the next parliamentary elections.

The troika is not operating as a trustee, but representing highly selfish interests

For the Greeks, there is more at stake in this drama than there is for the Germans. The Germans will lose a lot of money at the most. The Greeks, however, have long since come under the tutelage of the donors. What Tsipras signed on Monday is the permanent abandonment of Greek sovereignty. Athens will be told what budget surplus it must achieve and what taxes it should raise. Fiscal sovereignty is broken. The constitution will be interfered with to impose pension cuts. The administration and judiciary must be rebuilt according to the standards of the northerners. It is not about a bailout loan, but it is avowedly about nation building, as if Greece were a failed state. Even the IMF has condemned the deal as unworkable and said the levels of debt are unsustainable.

Greek culture is being encroached upon in every way. The Sunday opening of shops is being enforced, whether the still strongly religious population likes it or not. Consumption is more important than orthodox religion – that is the credo of the north. In international law the internal affairs of a nation are largely taboo; in the euro protectorate there are no taboos.


citizenJA -> Neil59 17 Jul 2015 08:58

If Greece was a corporation, would we be concerned about this "takeover"? What is happening now is no different than an administrator stepping in, only it is happening to a government.

Wrong. Greece is a sovereign nation, sovereign people, not a business full of employees. Greece's government is functional & democratically accountable. A nation isn't a corporation. A country isn't a business. I can't tell you how horrifying your post is to me.


citizenJA Johanes 17 Jul 2015 08:08

Tecup, I really hope it is opening a few eyes to the real state of affairs.

We are all Greece, and sadly, this is not a statement of solidarity. It is a metaphor for what our rulers are turning us into. And we vote for them ...

Yes, what's happening to Greece is happening (or will happen) to us all. I will continue to vote however I've seen what happens to a fine government representing to the best of their ability the people & country - they got knocked around & overruled. What I thought was non-negotiable turns out some Hayek adoration readers in powerful positions decide now is time to dismantle social security provision, employment protections & public infrastructure is made over to privateers. Scary times.


HauptmannGurski CjCanada 16 Jul 2015 20:49

The elephant in the room is NATO. They wanted to keep Greece in at all costs, and now they have all costs.


luella zarf CjCanada 16 Jul 2015 19:05

It is like a dysfunctional family where narcissistic parents believe a fantasy of their own perfection and scapegoat one of the children as the cause and epitome of all that is wrong.

Nice analogy. This is the world that propaganda created. A completely parallel universe.

But it's not exactly a new development. Look at the US, they are at their n-th invasion, and everybody still pretends that they are slaughtering people for 'humanitarian' reasons. Or the IMF, which has ruined the economies of pretty much every single state in the Third World and everybody pretends that 'we are helping them to escape poverty'.

The problem is that once the sociopaths have completed the capture of the developing world, they have nothing left to plunder but the developed world. No surprise there, capitalism is a Ponzi scheme, but imagine the shock of the Western middle classes when they finally realize that this is their future too.


luella zarf competentcrew 16 Jul 2015 18:47

The market structure has not changed from 100 years ago and is archaic, more Oriental than European. Something has to change.

The 'burden of the white man' reloaded. With this attitude, Germans will end up being again the most hated people in Europe, and rightly so. Nobody asked them to 'zivilise' us.


luella zarf DieSacheUndOderIch 16 Jul 2015 18:40

That is the point! Germany only subscribed to the Euro under its conditions, that included a stable currency.

In 10 years the European Union will either break up or we will have war again. People are not going to put up with enforced austerity and German colonialism forever. You can hide your head in sand or you can try to understand the macroeconomics of EU, which are a bit complicated but not beyond what the average intelligence can grasp.

But Germans, to quote the economist Heiner Flassbeck, suffers from 'a collective denial of the truth', when it comes to the 'failure of German economic and financial policies and their devastating consequences'.

http://www.flassbeck-economics.de/the-euro-crisis-and-germanys-collective-denial-of-the-truth/


Areal Person -> Johanes 16 Jul 2015 17:04

Yeah, although I'm with John Gray and his post-Marxist analyses of the cyclical nature of human civilization, and would if pushed say the outlook is bleak with a few rays of sunshine here and there. The UK is likely to move further to the right when things worsen - that's not a definite, but it's likely if the post-Thatcherite years are to be viewed as a legitimate litmus test.


competentcrew -> luella zarf 16 Jul 2015 12:27

53 small businesses go bankrupt every day in Greece. 1.5 million former private sector employees are unemployed. There's no time to romanticise about beauty and variety. We are talking about people scavenging bins for food. The market structure has not changed from 100 years ago and is archaic, more Oriental than European. Something has to change.


competentcrew -> kay_dee 16 Jul 2015 12:21

Excuse me? 200.000 skilled professionals emigrated from Greece (in the last 2 years and this is a low estimate) not because they were bored, but because the way the Greeks want to run their country left them with no jobs and no hope. The country is ruined and desperately needs growth, so Sunday trading might just help a fraction. Living in a time warp doesn't.


wheresrobinhood 16 Jul 2015 01:57

It all started with the 2008 global financial meltdown caused by private banker greed. Since the rich cannot be paid for their mistakes--i.e. nationalize the banks--then the rest of us, the state, take over the debt.

The author is projecting a finality when the state cannot take on the debts of the rich any longer.

Warren Buffet said we are in a class warfare and we (the rich) are winning. Strong words since Americans don't believe in class or Marxism.

[Jul 16, 2015] The crucifixion of Greece is killing the European project

"...Spot on. Greece's debts have now been made effectively unrepayable in order to send the deafening warning to the Spaniards, Portuguese, Italians, etc., not to dare elect anti-austerity governments. It's pretty desperate stuff."
.
"...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!"
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"...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."

The Guardian

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.


channelswimmer -> ChipsandCrisps 17 Jul 2015 07:15

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.

The full unpleasant story:

http://www.zerohedge.com/news/2015-07-03/good-you-greece-don%E2%80%99t-waver-now-part-2


DT48 FenlandBuddha 17 Jul 2015 03:06

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.

https://www.foreignaffairs.com/articles/greece/2015-07-07/pain-athens


Allen57 16 Jul 2015 19:44

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.

YouHaveComment -> soundofthesuburbs 16 Jul 2015 17:29

It's the new Osborne Consensus.

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

**Wolfgang Schaeuble: Germany's man with a Grexit plan - BBC News
http://www.bbc.com/news/world-europe-33511387


RocketSurgeon 16 Jul 2015 17:18

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 .

decisivemoment Wiseaftertheevent 16 Jul 2015 17:14

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.

ShiresofEngland TheMarxOfProgress 16 Jul 2015 16:14

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.


Some interesting graphics:

http://demonocracy.info/infographics/eu/debt_greek/debt_greek.html


AngrySkeptic 16 Jul 2015 15:51

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.

http://americasmarkets.usatoday.com/2015/04/21/three-little-piigs/


tomguard 16 Jul 2015 14:05

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? '

Try https://www.foreignaffairs.com/articles/greece/2015-07-07/pain-athens

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....


658176529539572 Roguing 16 Jul 2015 12:47

https://en.wikipedia.org/wiki/Josiah_Stamp,_1st_Baron_Stamp

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.

http://www.spiegel.de/international/germany/former-central-bank-head-karl-otto-poehl-bailout-plan-is-all-about-rescuing-banks-and-rich-greeks-a-695245.html


JohnHawkwood 16 Jul 2015 12:09

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.

[Jul 15, 2015] Greece was the only country with a democratic response to austerity, in other countries the right-wing populist euroskepticism, and even neo-Nazism florished

Northern Star, July 14, 2015 at 10:09 am

http://www.democracynow.org/2015/7/14/thisisacoup_greeks_denounce_bailout_deal_that
Excellent and illuminating commentary from Michalis Spourdalakis, professor of political science at Athens University.
If the Greek parliament refuses to ratify the "coup"…could Greece fall into serous social unrest, i.e revolt and/or civil war???

marknesop , July 14, 2015 at 12:09 pm

"…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.

[Jul 15, 2015] The Greek Deal From Germany - Reading Between the Lines - Darkness Over the Earth

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."

Francis I

[Jul 14, 2015] Many Greeks now think Tsipras is a traitor. But he will survive

"...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.


Sachaflashman -> a

http://www.irishtimes.com/opinion/tormenting-greece-is-about-sending-a-message-that-we-are-now-in-a-new-eu-1.2283593

vastariner -> Trumbledon 14 Jul 2015 10:33

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.

[Jul 14, 2015] Grexit may have been avoided, but divisions in Europe are growing

"...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 "
Jul 12, 2015 | The Guardian

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.

Financial Waterboarding is not the right tactic.

for a historical comparison:

https://radicaleconomicthought.wordpress.com/2015/06/18/how-to-get-repaid/


mattus TheVeggieBurgher 13 Jul 2015 18:59

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:

https://radicaleconomicthought.wordpress.com/2015/07/13/how-to-grexit-gracefully/


HumanTraffic bally38 13 Jul 2015 16:58

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.


ShakeyDave R. Sokol 13 Jul 2015 11:28

There's a BBC Newsnight report about it here, too: http://www.bbc.co.uk/news/world-europe-17108367


ShakeyDave taketheatrain 13 Jul 2015 11:26

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.

https://youtu.be/1paxMRddO0M

pwatson 13 Jul 2015 10:26

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.

[Jul 13, 2015] Germany is attempting to force Greece out of the common currency union as a lesson to France

Tim Owen , July 12, 2015 at 4:52 am

The EU is a sick joke:

"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."

http://www.washingtonsblog.com/2015/07/how-fascist-capitalism-functions-the-case-of-greece.html

marknesop July 12, 2015 at 11:18 am
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.

[Jul 13, 2015]Greece and eurozone reach agreement in bailout talks

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."
Jul 13, 2015 | The Guardian

Rabiesx15 -> elboberto 13 Jul 2015 10:03

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.

yuk!


mgtuzairodtiiasn -> greatapedescendant 13 Jul 2015 10:06

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.

mgtuzairodtiiasn Isanybodyouthere 13 Jul 2015 09:26

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!

http://www.economist.com/node/16792848

GordonLiddle drdirk 13 Jul 2015 09:18

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........


libbyliberal 13 Jul 2015 09:17

http://www.counterpunch.org/2015/07/13/whats-the-deal-syriza-the-troika-and-the-future-of-austerity-in-greece/

Peter Bohmer;

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.

http://www.newstatesman.com/world-affairs/2015/07/yanis-varoufakis-full-transcript-our-battle-save-greece

alemontree 13 Jul 2015 09:09

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.

[Jul 13, 2015] Greece Schaeuble's Track

"...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."
"
Jul 12, 2015 | M of A

okie farmer | Jul 12, 2015 12:33:40 PM | 3

http://www.notesonthenextbust.com/2015/07/a-union-of-deflation-and-unemployment.html

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.


Noirette | Jul 12, 2015 2:31:16 PM | 5

> ab initio at 1.

Finnish + other EU / Euro countries tax payers won't pay for greek debt. (See okie's post as well) but follow along..

A simple chart from le Figaro in F, 26 June, one of the better ones, top of Goog, comprehensible imho.

http://tinyurl.com/ona4gls

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.)

ESM site

http://www.esm.europa.eu/index.htm

:) click to see something you have never seen before on the internet (text 3 lines), the Disclaimer on the ESM site:

http://www.esm.europa.eu/investors/disclaimer.htm

an anti-ESM article (see also vid at top in German Eng subs)

http://tinyurl.com/7fl3po3

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.


okie farmer | Jul 12, 2015 3:04:36 PM | 6

b, Raúl Ilargi Meijer over at Automatic Earth agrees with you:

http://www.theautomaticearth.com/2015/07/tsipras-invites-schauble-to-fall-into-his-own-sword/

...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.


Comrade X | Jul 12, 2015 3:20:55 PM | 8

Re: okie farmer | Jul 12, 2015 12:33:40 PM | 3:

"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"?


paulmeli | Jul 12, 2015 3:25:56 PM | 9

re okie farmer @ 3

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.


Jackrabbit | Jul 12, 2015 4:18:39 PM | 10

Re: okie farmer | Jul 12, 2015 3:04:36 PM | 6

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.


tom | Jul 12, 2015 4:44:22 PM | 11

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.


karlof1 | Jul 12, 2015 5:11:54 PM | 12

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.


okie farmer | Jul 12, 2015 5:18:07 PM | 13

'This is a coup'
http://www.bbc.com/news/live/world-europe-33497309


Willy2 | Jul 12, 2015 5:27:29 PM | 14

@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.


tom | Jul 12, 2015 5:34:13 PM | 15

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.


Comrade X | Jul 12, 2015 6:03:52 PM | 16

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.


okie farmer | Jul 12, 2015 6:44:45 PM | 18

TRNN BRICS Development Bank, neoliberal, with a comment on Greece
https://youtu.be/2imOfILmxzg


okie farmer | Jul 12, 2015 6:50:39 PM | 19

Funny or Die, trade Florida for Greece

https://youtu.be/Ast52VeMvfw


Laguerre | Jul 12, 2015 7:10:57 PM | 20

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.


tom | Jul 12, 2015 7:44:09 PM | 21

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.

[Jul 12, 2015]Rethinking Russia A Conversation With Russia Scholar Stephen F. Cohen

"..."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"
Jul 07, 2015 | huffingtonpost.com

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.

[Jul 12, 2015] Putin, the Greeks, and Academic Spies by Phil Butler

July 9, 2015 | phillip-butler.com

...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.

But then, this is an opinion piece.

[Jul 11, 2015] Varoufakis: Behind Germany's Refusal to Grant Greece Debt Relief

"...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."
Jul 11, 2015 | jessescrossroadscafe.blogspot.com
"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."

Jamie Galbraith, Greek Revolt Threatens Entire Neoliberal Project

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

Posted on July 11, 2015 by yanisv

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.

[Jul 10, 2015] Unbridled capitalism is the 'dung of the devil', says Pope Francis

"...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)..."
Jul 10, 2015 | The Guardian

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.


Westonboy 10 Jul 2015 09:01

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.

lesmandalasdeniki -> hollyjadoon 10 Jul 2015 08:13

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?


GallopingGournmet -> citizen_1111 10 Jul 2015 08:09

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.

[Jul 10, 2015] The video was meant to look fresh and spontaneous, but researchers back in March unrooted the fact that it was produced by a professionals

yalensis, July 10, 2015 at 4:27 am

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…]

[Jul 10, 2015] Greece is the latest battleground in the financial elite's war on democracy

"...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. "
"

The Guardian

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.

• Twitter: @georgemonbiot. A fully referenced version of this article can be found at Monbiot.com

SaguaroRex 9 Jul 2015 22:30

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.


Giannis Kalogeropoulos athenajoseph 9 Jul 2015 09:40

you are not well informed. please read http://www.forbes.com/sites/johntharvey/2015/07/07/five-reasons-greeks-were-right/ https://en.wikipedia.org/wiki/Sectoral_balances

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.

Giannis Kalogeropoulos -> athenajoseph 9 Jul 2015 09:33

https://en.wikipedia.org/wiki/Debt-to-GDP_ratio see that map. Debt for countries is not like debt for people ... get informed before you blame ....


nottrue -> CitizenCarrier 9 Jul 2015 08:45

Something brought down Greece.

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.

http://www.vanityfair.com/.../10/greeks-bearing-bonds-201010


ID7678903 Giannis Kalogeropoulos 9 Jul 2015 02:13

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.


AnonForNowThanks BeastNeedsMoreTorque 8 Jul 2015 23:13

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.

Don't dismiss it. Read what he has to say.

http://www.nytimes.com/2010/01/06/books/06book.html?_r=0

In any event, that was then. This is now.


AnonForNowThanks iOpenerLo114Lat51 8 Jul 2015 22:52

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 ...


Naseer Ahmad 8 Jul 2015 20:40

The Bengal famines were engineered by the East India Company http://www.theguardian.com/world/2015/mar/04/east-india-company-original-corporate-raiders

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?

http://www.theguardian.com/environment/2015/jul/08/exxon-climate-change-1981-climate-denier-funding


blacksox666 8 Jul 2015 18:58

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...

oldamericanlady YouDidntBuildThat 8 Jul 2015 16:57

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.

[Jul 09, 2015] More Work Hours Jeb Bush, Try Talking to the Employers

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…."
Jul 09, 2015 | Forbes

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.

https://www.youtube.com/watch?feature=player_embedded&v=P5RERORKXNU

Erik Sherman,

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…..

[Jul 09, 2015] Countdown To Grexit

Moon of Alabama

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

Hoarsewhisperer | Jul 6, 2015 11:22:25 PM | 160

james | Jul 7, 2015 1:03:49 PM | 2


Why the Greek elite doesn't want Grexit

nmb | Jul 7, 2015 1:04:25 PM | 3


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."

james | Jul 7, 2015 1:17:28 PM | 4


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?

Comrade X | Jul 7, 2015 1:35:10 PM | 6


Thanks james #2 & Horsewhisperer,

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.

juannie | Jul 7, 2015 1:52:36 PM | 7


Recent History.

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.

Greek referendum is coin-flip on euro exit.

http://www.bbc.com/news/business-15539350

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:

http://tinyurl.com/pfed8wm

The Council on Foreign Relations (hardly to be taxed with a pro-Gr. or left attitude), July 2015:

Greece Fallout: Italy and Spain Have Funded a Massive Backdoor Bailout of French Banks one page.

http://blogs.cfr.org/geographics/2015/07/02/greecefallout/

> See the nos. for France and who holds Greek bonds today.

Grexit is now possible, or at least not as dangerous as in 2011. Which was all planned, of course.

Noirette | Jul 7, 2015 2:33:26 PM | 9


In 2011, because the EU had not yet prepared for Grexit, Greece would have had far more bargaining power after an OXI vote in a referendum.

lysias | Jul 7, 2015 2:40:03 PM | 10


b:

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.

Jackrabbit | Jul 7, 2015 2:40:28 PM | 11


Note: I say "Yves Smith ... claims..." because it's hard for me to trust what she writes with respect to Greece.

Jackrabbit | Jul 7, 2015 2:49:29 PM | 12


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.

Posted by: Mike Maloney | Jul 7, 2015 4:37:10 PM | 27

Gerry1211 | Jul 7, 2015 6:33:40 PM | 42

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.

Comrade X | Jul 7, 2015 7:08:45 PM | 52

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"?

Comrade X | Jul 7, 2015 7:29:15 PM | 53

@30

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.

Bullshit.

Comrade X | Jul 7, 2015 8:17:11 PM | 56

Comrade X at 55:

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.

fairleft | Jul 7, 2015 8:57:28 PM | 59

Some good description of the madness involved
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.

somebody | Jul 7, 2015 9:20:01 PM | 61

God...

This article was published 2012, wow how time fly. Nevertheless, it is mandatory reading.

By Greg Palast

http://www.theguardian.com/commentisfree/2012/jun/26/robert-mundell-evil-genius-euro

"Robert Mundell, evil genius of the euro"

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.

neretva'43 | Jul 7, 2015 10:03:35 PM | 67

Interesting article on Zero Hedge. It seems after all Merkel is the winner and Tsipras the loser
http://www.zerohedge.com/news/2015-07-07/greferendum-shocker-tsipras-intended-lose-and-now-trapped-his-success

Wullf | Jul 7, 2015 10:39:26 PM | 70

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.

Comrade X | Jul 7, 2015 10:49:38 PM | 71

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.

Posted by: Copeland | Jul 8, 2015 12:43:48 AM | 78

http://www.thenation.com/article/austerity-has-failed-an-open-letter-from-thomas-piketty-to-angela-merkel/

Austerity Has Failed: An Open Letter From Thomas Piketty to Angela Merkel

Five leading economists warn the German chancellor, "History will remember you for your actions this week."

By Thomas Piketty, Jeffrey Sachs, Heiner Flassbeck, Dani Rodrik and Simon Wren-Lewis

okie farmer | Jul 8, 2015 1:29:37 AM | 79

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.

Posted by: psychohistorian | Jul 8, 2015 1:35:56 AM | 80

jeffry sachs, the guy who advised russia to implement shock therapy writing letter to Merkel is rich

meofio | Jul 8, 2015 1:49:35 AM | 81

Wullf @74

Their comments are taken out of context and spun into a fact-free narrative that makes no sense.

Jackrabbit | Jul 8, 2015 1:54:42 AM | 82


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.

Nana 2007 | Jul 8, 2015 3:47:25 AM | 83


jeffry sachs, the guy who advised russia to implement shock therapy writing letter to Merkel is rich

I don't know why, but he has changed a lot since those days. Back then he was a supply side economist, wanted to privatize everything - not any more.

okie farmer | Jul 8, 2015 3:48:31 AM | 84


Comrade X at 65:

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.

fairleft | Jul 8, 2015 3:53:18 AM | 85

It didn't take long to realize Sachs' advice to Russia was a failure. Maybe that's why he changed.

okie farmer | Jul 8, 2015 4:07:33 AM | 86

The US are not amused - the guy writing this is former US ambassador to Berlin

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.

somebody | Jul 8, 2015 5:02:57 AM | 87


Greece: We need to talk about the debt

Merkel: You are radical left

Greece: We accept austerity! We want to pay!

Merkel: Germans won't pay for Greeks, not a cent

Greece: Debt restructuring is essential

Merkel: You need VAT at 23%

Greece: Austerity doesn't work the debt can't be repaid see the IMF we need to talk

Merkel: Varoufakis is a rude person

Greece: The debt has to addressed

Merkel: Greeks are lazy

Greece: bis repetita

Merkel: Nobody will pay for free riders, certainly not industrious thrifty Germans

Greece: bis repetita

Merkel: You have cartels you need reform

……………………….. :)

Noirette | Jul 8, 2015 5:27:34 AM | 88


Noirette | Jul 8, 2015 5:27:34 AM | 87

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.

somebody | Jul 8, 2015 5:56:16 AM | 89


"... [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

X Factoring | Jul 8, 2015 6:11:39 AM | 90


http://blogs.channel4.com/paul-mason-blog/yanis-varoufakis-economist-play-politics/4081

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.

okie farmer | Jul 8, 2015 6:23:10 AM | 91


http://www.zerohedge.com/news/2015-07-06/who-biggest-winner-greek-tragedy

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.

okie farmer | Jul 8, 2015 6:36:30 AM | 92


okie farmer | Jul 8, 2015 6:36:30 AM | 91

First Lagarde, then Merkel, now Draghi under attack ...

In other news Greece is still able to raise 1.6 billion in treasury bonds. Which incidentally is the sum they refused to pay to ECB.

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.

somebody | Jul 8, 2015 7:02:41 AM | 93


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.

Comrade X | Jul 8, 2015 7:29:23 AM | 94

[Jul 05, 2015]The Observer view on Greece's referendum

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."
Jul 05, 2015 | The Guardian

DarrellKavanagh -> SoberThirdThought 4 Jul 2015 23:49

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

SocialScienceCritic, 4 Jul 2015 22:48

The choices on the ballot are:

• 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.

[Jul 05, 2015] Greeces mass psychology of revolt will survive the financial carpet-bombing

Jul 05, 2015 | The Guardian

...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.

[Jul 04, 2015] Leaders of Europe are shallow people unequipped to cope with a continental problem

All of the are neoliberals. They just don't care... Hillary Clinton and Jeb bush belong to the same category
Jul 04, 2015 | marknesop.wordpress.com

et Al, July 4, 2015 at 9:27 am

Moon of Alabama: Greece: Sane Voices Call For A "No" Vote
http://www.moonofalabama.org/2015/07/greece-sane-voices-call-for-a-no-vote.html

…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…

[Jul 04, 2015] Yanis Varoufakis accuses creditors of terrorism ahead of Greek referendum

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! "

Jul 04, 2015 | The Guardian

Banksterdebtslave -> conor boyle 4 Jul 2015 11:15

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?

http://ec.europa.eu/trade/policy/countries-and-regions/countries/brazil/

GordonGecko 4 Jul 2015 11:07

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).

I hope they watch this before voting;

https://www.youtube.com/watch?v=xu5sTyAXyAo


usufruct -> Laurelei 4 Jul 2015 11:07

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?

-> dniviE 4 Jul 2015 10:06

01

Sorry: its Wednesday 8th, I wrote Tuesday ;-))

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.

http://www.zerohedge.com/news/2015-07-04/why-euro-finished

Ninetto owl905 4 Jul 2015 10:03

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.

Gottaloveit 4 Jul 2015 09:28

Read this article from 2010 by Michael Lewis and get a glimpse of what a mess Greece is
http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-201010
The people of Greece are not finished paying penance yet

W61212 Fritz72 4 Jul 2015 09:28

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.'

Enough said now?

W61212 hhnheim 4 Jul 2015 09:21

http://www.spiegel.de/international/germany/economic-historian-germany-was-biggest-debt-transgressor-of-20th-century-a-769703.html


North2011 kizbot 4 Jul 2015 09:04

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!

[Jul 04, 2015] Paul Krugman Europe's Many Economic Disasters

Jul 04, 2015 | Economist's View

Was the creation of the euro a mistake? Should it be eliminated?:

Europe's Many Economic Disasters, by Paul Krugman, Commentary, NY Times:

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.

anne said...

https://consortiumnews.com/2015/07/02/behind-the-greek-crisis/

July 2, 2015

Behind the Greek Crisis

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.

anne said...

http://www.cepr.net/publications/op-eds-columns/congress-weighs-in-on-holding-imf-accountable-for-damage-caused-by-failed-policies-in-greece

July 2, 2015

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.

[Jul 03, 2015] Greek referendum: how would top economists vote?

Jul 11, 2015 | theguardian.com

The Greek government is urging a no vote in Sunday's bailout referendum. Eurozone leaders say vote yes

Greeks go to the polls on Sunday to vote on whether to accept the bailout programme proposed by international lenders that would restart financial aid in exchange for further austerity and economic reform.

The government is urging people to vote no, with the finance minister, Yanis Varoufakis, saying it is time to end years of rolling over Greece's bailouts and "pretending" its debts can be repaid.

But 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.
Paul Krugman - NO

Nobel prize-winning US economist

"I would vote no, for two reasons," Krugman wrote in the New York Times.

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.

[Jul 03, 2015] Greece Sane Voices Call For A No Vote

"...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."
Jul 03, 2015 | M of A
guest77 | Jul 2, 2015 6:20:38 PM

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.

Mike Maloney | Jul 2, 2015 6:08:06 PM | 27
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.

ab initio | Jul 2, 2015 6:53:47 PM | 29

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.

BTW, this is not advocacy, only analysis.

Nana 2007 | Jul 2, 2015 7:04:24 PM | 30

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.

guest77 | Jul 2, 2015 6:20:38 PM


Well put. Thanks for your posts.

jo6pac | Jul 2, 2015 8:03:53 PM | 36

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.

okie farmer | Jul 3, 2015 3:03:15 AM | 64

#57

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.

http://journal-neo.org/2015/07/03/what-stinks-about-varoufakis-and-the-whole-greek-mess/

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.

bjmaclac | Jul 3, 2015 2:43:06 AM | 63
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.

okie farmer | Jul 3, 2015 3:12:42 AM | 65

http://rt.com/op-edge/271003-greece-bailout-default-scenarios/

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.

somebody | Jul 3, 2015 3:40:18 AM | 66
okie farmer | Jul 3, 2015 3:12:42 AM | 65

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.

somebody | Jul 3, 2015 4:50:22 AM | 67

Comrade X | Jul 3, 2015 2:22:41 AM | 62

"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".

radiator | Jul 3, 2015 5:21:07 AM | 68

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!

okie farmer | Jul 3, 2015 6:00:23 AM | 69

http://www.zerohedge.com/news/2015-07-02/china-state-official-hints-beijing-may-bailout-greece
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

Jackrabbit | Jul 3, 2015 8:24:26 AM | 71

okie @65

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".

okie farmer | Jul 3, 2015 9:13:28 AM | 72

Syriza had no democratic authority to contemplate such a move.
It's worse than that, there's no mechanism in Monetary Union itself for anyone in to exit.

ADL Poll: 85% of Greeks Believe the Jews Have Too Much Power Over Global Finance

jfl | Jul 3, 2015 9:17:19 AM | 73
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!"

somebody | Jul 3, 2015 9:24:17 AM | 74

And now it is Jeffrey D. Sachs coming out for a 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).

okie farmer | Jul 3, 2015 9:26:48 AM | 75

http://www.telegraph.co.uk/finance/economics/11714655/Greek-banks-down-to-500m-in-cash-reserves-as-economy-crashes.html

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.

okie farmer | Jul 3, 2015 9:48:31 AM | 76
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

rexl | Jul 3, 2015 9:53:17 AM | 77

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?

okie farmer | Jul 3, 2015 9:57:03 AM | 78

http://www.smh.com.au/world/when-greece-forgave-germanys-debt-20150703-gi43a0.html

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.

ab initio | Jul 3, 2015 10:40:39 AM | 84
okie farmer @75

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.

Comrade X | Jul 3, 2015 10:50:03 AM | 85

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?

Comrade X | Jul 3, 2015 11:17:38 AM | 86
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.
Comrade X | Jul 3, 2015 12:18:10 PM | 90
Comrade X | Jul 3, 2015 10:27:05 AM | 83

Very simple, because there is no such thing as rational agents.

Smart is different, if you take the - original - UK meaning.

somebody | Jul 3, 2015 11:24:22 AM | 87

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.

ben | Jul 3, 2015 12:50:19 PM | 91

From TRNN on Greece:

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=14132

somebody | Jul 3, 2015 12:56:55 PM | 92
Comrade X | Jul 3, 2015 12:18:10 PM | 90

:-)) 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.

Jackrabbit | Jul 3, 2015 2:04:15 PM | 93

Investment Bank RBS has done the math
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.

somebody | Jul 3, 2015 2:27:08 PM | 95

There seems to be an EU climbdown
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."

... Berlin dreaming - Gremain scenario - in German

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.

james | Jul 3, 2015 3:44:33 PM | 97

official stenographer's viewpoint ...

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.

VietnamVet | Jul 3, 2015 4:46:54 PM | 98
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.

[Jul 03, 2015] Throughout history, debt and war have been constant partners

"...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."
Jul 03, 2015 | The Guardian

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.

This week, Church House, C of E HQ, hosted a conference sponsored by the arms dealers Lockheed Martin and MBDA Missile Systems. We preach about turning swords into ploughs yet help normalise an industry that turns them back again. The archbishop of Canterbury has been pretty solid on Wonga and trying to put legal loan sharks out of business. Now the church needs to take this up a level. For the debts that cripple entire countries come mostly from spending on war, not on pensions. And we don't say this nearly enough.
@giles_fraser

marsCubed, 3 Jul 2015 12:21

Syriza's position has been stated in this Huffington Post article.

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."

Europe Offered Greece A Deal To Meet Its Obligations By Cutting Military Spending. The IMF Said No Way.

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"

...and someone always makes a profit.

[Jul 03, 2015] Europe's leaders must end this reckless standoff with Greece by Guy Verhofstadt, former prime minister of Belgium

"...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."
Jul 03, 2015 | The Guardian

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?


Panagiotis Theodoropoulos Gjenganger 3 Jul 2015 19:20

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 --

Optymystic, 3 Jul 2015 12:55

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!

[Jul 03, 2015] Renegotiating Greece's debt

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.

Greece_surplus_jun_15

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?

[Jul 02, 2015]Did The IMF Just Open Pandoras Box?

Jul 02, 2015 | |zerohedge.com

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.

This is what the IMF said:

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.

AlaricBalth

The domino theory of the fiat money age.

James_Cole

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"


The Delicate Genius

IMF's four steps to damnation -

http://www.theguardian.com/business/2001/apr/29/business.mbas

enloe creek

world government empire

banksters money machine

citizens of earth

somebody is going down or all are


insanelysane

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.

mefobills

Germany will take a haircut, especially with a Greek no vote on Sunday.

Germany will have to figure out how to stabilize some of its banks that will go under.

http://www.spiegel.de/international/germany/economic-historian-germany-w...

"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.

http://www.youtube.com/watch?v=_nPEgV1oqX0

steelrules

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!

[Jul 02, 2015] Greek Referendum Euro Crisis Explodes into Dramatic Climax

"...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.

The stakes have never been higher.

[Jul 01, 2015]Syriza can't just cave in. Europe's elites want regime change in Greece

"...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??"

Jul 01, 2015 | The Guardian

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.

... ... ...

Tsipras and Syriza's determination to stay in the eurozone come what may has seriously weakened Greece's hand. The economic dislocation of jumping off the euro train would doubtless be severe in the short term, though the costs of permanent austerity would almost certainly be greater thereafter.

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


TheNerveInstitute 1 Jul 2015 20:36

Greeks must not cave in. This is interesting !

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=14132

lawrenceab 1 Jul 2015 20:29

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.

someoneionceknew FactPatrol 1 Jul 2015 20:07

The European Social Model in Crisis: Is Europe losing its soul?

PDF 52 page precis.

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.

http://www.enetenglish.gr/?i=news.en.article&id=2040


FourtyTwo Exodus20 1 Jul 2015 19:17

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??

[Jul 01, 2015] Path to Grexit Tragedy Paved by Political Incompetence

"...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."
Jul 01, 2015 | Economist's View

Ellis said...

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.

anne said...

http://www.nakedcapitalism.com/2015/07/tsipras-accepts-most-terms-as-merkel-insists-on-referendum.html

July 1, 2015

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

Syriza has not acted incompetently

The troika is out for regime change

Reply Wednesday, July 01, 2015 at 02:24 PM

anne said in reply to paine...

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:

http://news.bbc.co.uk/onthisday/hi/dates/stories/november/19/newsid_3208000/3208396.stm

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.

Chris Herbert said in reply to mulp...

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

Dan Kervick said in reply to am...

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.

anne said in reply to Chris Herbert...

http://www.cepr.net/blogs/beat-the-press/who-uses-the-euro

July 1, 2015

Who Uses the Euro

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.

* https://www.washingtonpost.com/blogs/wonkblog/wp/2015/06/30/7-questions-about-greeces-huge-crisis-you-were-too-embarrassed-to-ask/

-- Dean Baker

John Cummings said in reply to Anonymous...

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.

Dan Kervick said in reply to Peter K....

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...

http://yanisvaroufakis.eu/euro-crisis/modest-proposal/4-the-modest-proposal-four-crises-four-policies/

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!

pgl said in reply to Darrell in Phoenix...

Good research - and analysis.

RueTheDay said...

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.

Darrell in Phoenix said in reply to RueTheDay...

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.

Reply Wednesday, July 01, 2015 at 11:53 AM

RueTheDay said in reply to Darrell in Phoenix...

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.

Reply Wednesday, July 01, 2015 at 11:59 AM

Peter K. said in reply to RueTheDay...

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.

Darrell in Phoenix said in reply to RueTheDay...

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!!!

Paine said in reply to RueTheDay...

Default is a label easily applied and un applied
In arrears delinquent these are objective terms
Use em instead of the Halloween word default

[Jun 30, 2015] The Limits to Growth and Greece Systemic or Financial collapse

Jun 30, 2015 | resilience.org

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.

[Jun 30, 2015] Greek failure to make IMF payment deals historic blow to eurozone

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."
Jun 30, 2015 | The Guardian

ShibbyUp -> peter nelson 30 Jun 2015 21:30

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...

https://en.wikipedia.org/wiki/New_Democracy_(Greece)


PeregrineSlim 30 Jun 2015 21:25

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

Greece have never run a primary surplus.
http://www.forbes.com/sites/timworstall/2015/02/16/greece-still-has-a-vast-problem-it-doesnt-have-a-primary-budget-surplus/


Dannybald George Purcell 30 Jun 2015 20:40

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.

The 'Eurogroup' only cares about a tiny elitist group of Europeans and not about the majority of it's people. Wake up DavidRees and the rest of you indoctrinated half wits.
http://www.theguardian.com/commentisfree/2013/feb/27/greece-spain-helped-germany-recover


Omniscience 30 Jun 2015 20:35

If the EU are the enemy now, imagine the bed wetting and howls of protest if Greece had to make real repayments.

http://uk.reuters.com/article/2015/06/28/uk-eurozone-greece-debt-factbox-idUKKCN0P80XU20150628

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.

www.whatsthecost.com/historic.cpi.aspx

1980, 18.00%. 1979, 13.40%. 1978, 8.30%. 1977, 15.80%. 1976, 16.50%. 1975, 24.20%. 1974, 16.00%. 1973, 9.20%. 1972, 7.10%. 1971, 9.40%. 1970, 6.40%

Danny Sheahan Omniscience 30 Jun 2015 20:31

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 ?

Omniscience Danny Sheahan 30 Jun 2015 20:29

Most of the Debt is dormant thanks to the EU

http://uk.reuters.com/article/2015/06/28/uk-eurozone-greece-debt-factbox-idUKKCN0P80XU20150628

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.

http://www.ft.com/intl/cms/s/0/0c99809c-3abd-11da-b0d3-00000e2511c8.html


TerryChandler OnTheRobertELee 30 Jun 2015 20:26

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, 1973-2010

World Oil Energy Consumption by Sector, 1973-2010

Oil 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).

[Jun 30, 2015] Stiglitz: Troika has Kind of Criminal Responsibility

"...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. "

Jun 30, 2015 | economistsview.typepad.com

From Time:

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. ...
JohnH said...

Some background on the stakes in Greece AKA why Greece must be made to heel--Aegean gas, banking and oil company profits, and, yes, the Clintons.
http://seekingalpha.com/article/782961-the-u-s-looks-to-exploit-the-greek-re-default

pgl said in reply to JohnH...

Note when Stiglitz writes this:

"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.

mulp said in reply to pgl...

Should Congress give Puerto Rico $150 billion to get it out of debt?

Or should Puerto Rico be forced out of the dollar zone and thus face drastic spending cuts.

Larry said in reply to pgl...

Agree on QE. But even that would not have fixed Greece. It doesn't belong in the EZ and never did.

pgl said in reply to Larry...

I agree. Cyprus made a mistake by entering the EZ as well.

Dan Kervick said in reply to pgl...

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.

Larry said in reply to Dan Kervick...

McArdle notes today that US pundits have been more supportive of Greece than the Europeans. Proximity breeds contempt?

Dan Kervick said in reply to Larry...

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.

Dan Kervick said in reply to pgl...

Krugman has been better than most in calling out some of the bad actors, but what is Krugman's plan for ending Greece's depression?

Is it the same plan he would recommend to American leaders if America were in Greece's position?

Would Krugman, an expert on depressions, advocate that the US run a surplus in a depression - just not a very big one - so it can pay its creditors?

Dan Kervick said in reply to Dan Kervick...

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.

Benedict@Large said in reply to pgl...

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.

Sandwichman said...

Joe! Joe! Joe!

(and as for "Chief Economist" Blanchard: M-I-T... I-M-F... M-O... U-S-E: Mickey Mouse).

http://econospeak.blogspot.com/2015/06/m-i-teee-squeeze-you-next-week-i-m-f.html

Sandwichman said in reply to Sandwichman...

No to austerity! Yes to democracy!

http://www.altersummit.eu/accueil/article/no-to-austerity-yes-to-democracy?lang=en

"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."

Basta -- Enough -- Another Europe is possible !

DrDick said in reply to Sandwichman...

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.

mulp said in reply to DrDick...

We should not have expected debt repayment from Mexico in 1994?

More important, all the debt of Puerto Rico should be forgiven and then we should give them all the money they ask for to keep the country afloat?

DrDick said in reply to mulp...

People who cannot pay their debts will not pay them. Everything else is a pipe dream. You cannot privilege capital over human welfare.

Peter K. said in reply to Sandwichman...

Agreed. The IMF research dept had been looking good. (And the IMF asked the Fed not to raise rates this year).

But their behavior regarding Greece is criminal.

anne said in reply to Paine ...

http://time.com/3939621/stiglitz-greece/?xid=tcoshare

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. ]

anne said in reply to anne...

http://www.theguardian.com/world/2015/jun/29/alexis-tsipras-must-be-stopped-the-underlying-message-of-europes-leaders

June 29, 2015

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

Sandwichman said in reply to anne...

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).

mulp said in reply to Sandwichman...

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?

Sandwichman said in reply to Ellis...

"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.

Sandwichman said in reply to Sandwichman...

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.

[Jun 30, 2015]Joseph Stiglitz: how I would vote in the Greek referendum

"...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."
Jun 30, 2015 | The Guardian

colin2d -> colin2d 30 Jun 2015 10:10

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.

[Jun 29, 2015] Greek Tale(s)

"...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."
June 27, 2015 | Angry Bear

by Joseph Joyce

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.

cross posted with Capital Ebbs and Flows

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Vol 25, No.12 (December, 2013) Rational Fools vs. Efficient Crooks The efficient markets hypothesis : Political Skeptic Bulletin, 2013 : Unemployment Bulletin, 2010 :  Vol 23, No.10 (October, 2011) An observation about corporate security departments : Slightly Skeptical Euromaydan Chronicles, June 2014 : Greenspan legacy bulletin, 2008 : Vol 25, No.10 (October, 2013) Cryptolocker Trojan (Win32/Crilock.A) : Vol 25, No.08 (August, 2013) Cloud providers as intelligence collection hubs : Financial Humor Bulletin, 2010 : Inequality Bulletin, 2009 : Financial Humor Bulletin, 2008 : Copyleft Problems Bulletin, 2004 : Financial Humor Bulletin, 2011 : Energy Bulletin, 2010 : Malware Protection Bulletin, 2010 : Vol 26, No.1 (January, 2013) Object-Oriented Cult : Political Skeptic Bulletin, 2011 : Vol 23, No.11 (November, 2011) Softpanorama classification of sysadmin horror stories : Vol 25, No.05 (May, 2013) Corporate bullshit as a communication method  : Vol 25, No.06 (June, 2013) A Note on the Relationship of Brooks Law and Conway Law

History:

Fifty glorious years (1950-2000): the triumph of the US computer engineering : Donald Knuth : TAoCP and its Influence of Computer Science : Richard Stallman : Linus Torvalds  : Larry Wall  : John K. Ousterhout : CTSS : Multix OS Unix History : Unix shell history : VI editor : History of pipes concept : Solaris : MS DOSProgramming Languages History : PL/1 : Simula 67 : C : History of GCC developmentScripting Languages : Perl history   : OS History : Mail : DNS : SSH : CPU Instruction Sets : SPARC systems 1987-2006 : Norton Commander : Norton Utilities : Norton Ghost : Frontpage history : Malware Defense History : GNU Screen : OSS early history

Classic books:

The Peter Principle : Parkinson Law : 1984 : The Mythical Man-MonthHow to Solve It by George Polya : The Art of Computer Programming : The Elements of Programming Style : The Unix Hater’s Handbook : The Jargon file : The True Believer : Programming Pearls : The Good Soldier Svejk : The Power Elite

Most popular humor pages:

Manifest of the Softpanorama IT Slacker Society : Ten Commandments of the IT Slackers Society : Computer Humor Collection : BSD Logo Story : The Cuckoo's Egg : IT Slang : C++ Humor : ARE YOU A BBS ADDICT? : The Perl Purity Test : Object oriented programmers of all nations : Financial Humor : Financial Humor Bulletin, 2008 : Financial Humor Bulletin, 2010 : The Most Comprehensive Collection of Editor-related Humor : Programming Language Humor : Goldman Sachs related humor : Greenspan humor : C Humor : Scripting Humor : Real Programmers Humor : Web Humor : GPL-related Humor : OFM Humor : Politically Incorrect Humor : IDS Humor : "Linux Sucks" Humor : Russian Musical Humor : Best Russian Programmer Humor : Microsoft plans to buy Catholic Church : Richard Stallman Related Humor : Admin Humor : Perl-related Humor : Linus Torvalds Related humor : PseudoScience Related Humor : Networking Humor : Shell Humor : Financial Humor Bulletin, 2011 : Financial Humor Bulletin, 2012 : Financial Humor Bulletin, 2013 : Java Humor : Software Engineering Humor : Sun Solaris Related Humor : Education Humor : IBM Humor : Assembler-related Humor : VIM Humor : Computer Viruses Humor : Bright tomorrow is rescheduled to a day after tomorrow : Classic Computer Humor

The Last but not Least Technology 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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Last modified: March, 03, 2020