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Yanis Varoufakis: The Greek Crisis and the Threat to Political Liberalism: A cautionary tale for Ireland, Portugal, the whole of Europe
If 1929 has taught us anything, it is that a major (capital `c') Crisis poses a lethal threat to (a) currency unions (e.g. the Gold Standard then, the euro today) and (b) political liberalism. The latter threat has, so far, featured only as a projection (see here for a relevant argument), rather than an observed reality. In a recent post I argued that the EU's recent demand that Greece's assets be privatised by a junta of foreign officials was the first step toward the dismantling of the EU's basic democratic principles. Today, in this post, I  warn about an even more radical threat, this time to basic liberal tenets about the rights of private citizens. My warning will take the form of a true story, to which I am an eyewitness. It should, I submit, send shivers down the spine of all European (small `l') liberals. Precisely because this is a seriously worrying tale, I shall include no commentary: just a blow by blow account of facts.

...

So, what was the latest development that egged me on to write this post? This coming Thursday (16th June 2011) a well thought of Greek publisher will be launching a new Greek book of mine in the splendid gardens of the Byzantine Museum (in downtown Athens). It is a Lexicon in which I have compiled definitions and explanations of the terminology of the present economic and political crisis (anything from the word `crisis' to `CDS', `CDO' and the like). Well, this morning my publisher called me with hideous news. For the first time in living memory the three major newspapers of the land (Vima, Kathimerini, Eletherotypia) have failed to publish in their Sunday editions (or even to mention) the press release regarding my book's launch. What makes this even more astounding is that the book will be launched by senior, well established figures: Alekos Papadopoulos (the former Finance Minister of Greece, who was the only Fin Min under whose watch Greece's debt shrank significantly); Christos Chomenidis (one of Greece's renowned new generation novelists) and Nikos Xydakis (the editor in chief of one of these newspapers, Kathimerini, which refused to mention the book's launch).

When I asked my publishers how they interpreted this `silence', the answer came back crystal clear: It is nothing short of an old fashioned purge.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Jun 13th, 2011 at 08:31:35 AM EST
We cannont say we weren't warned: Barroso to plebes: nice indebted democracy you have there... by Migeru on June 17th, 2010
Europe's Economy 'Returning to 1930s' - BusinessWeek
"This is extremely dangerous. This is 1931, we're heading back to the 1930s, with the Great Depression and we ended up with militarist dictatorship," the general secretary of the European Trades Union Congress (ETUC) said in an interview with EUobserver. "I'm not saying we're there yet, but it's potentially very serious, not just economically, but politically as well."

...

"I had a discussion with Barroso last Friday about what can be done for Greece, Spain, Portugal and the rest and his message was blunt: 'Look, if they do not carry out these austerity packages, these countries could virtually disappear in the way that we know them as democracies. They've got no choice, this is it'."



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Jun 13th, 2011 at 08:33:51 AM EST
[ Parent ]
We have indeed been warned repeatedly by the ECB, too:
Bini Smaghi: the euro is not too strong - Il Sole 24 ORE

According to our analysis, debt restructuring would result in the failure of most of the Greek banking system, which holds bonds of that country and is largely guaranteed by the state. Greek banks would no longer have access to refinancing with the ECB and would have to reduce their lending to households and businesses. Not to mention finally the impact on individual investors, pension funds and other Greek institutions that hold their savings in government bonds. The Greek economy would be on its knees, with devastating effects on social cohesion and maintenance of the democratic system in that country. Ultimately it's up to Greece to decide the way forward, given that it will face the worst of the consequences. But other countries should avoid pushing Greece towards disaster.

EUObserver: ECB warns of threat to Greek democracy (15.04.2011)
ECB board member Lorenzo Bini Smaghi warned on Thursday: "According to our analysis, a debt restructuring would result in the failure of a large part of Greece's banking system."

He did not mince his words, saying that Greek democracy would be threatened by such a move.

"The Greek economy would be on its knees, with devastating effects on social cohesion and the maintenance of democracy in that country," he told financial daily Il Sole 24 Ore.

He also subtly told Berlin to not push Athens into a corner.

"Ultimately it's up to Greece to decide the way forward, given that it will suffer the worst consequences. But other countries must avoid pushing it towards a catastrophe."



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Jun 13th, 2011 at 08:51:04 AM EST
[ Parent ]
Last December:
By Lorenzo Bini Smaghi (member of the Executive Board of the European Central Bank)

We're doomed.

Oh, and Godwin, Godwin indeed:

Migeru:

FT.com: Europe cannot default its way back to health by Lorenzo Bini Smaghi
Europeans have not forgotten the devastating effects that the expropriation of wealth, such as that carried out during the two world wars by way of inflation or defaults, may have on the economic and social fabric. There is awareness that, in the end, it may be less costly to tackle excessive public debt with the traditional remedies - that is, achieving an adequate level of primary surplus - rather than looking for quick fixes. There is also awareness that, without restoring economic growth, the debt burden cannot be reduced over time. This requires major structural reforms aimed at improving the functioning of the labour, capital and goods markets.

...

To understand what is happening in Europe, economics textbooks are useful but the history ones even more so.

The writer is a member of the Executive Board of the European Central Bank

(h/t Eurointelligence)
Apparently according to this guy the "devastation of the economic and social fabric of Europe" during the two world wars is associated by "Europeans" with "expropiation through inflation and default".


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Jun 13th, 2011 at 08:53:37 AM EST
[ Parent ]
afew:
Bini Smaghi:
a breakdown of the financial, economic, and social structure of our societies.
No less. So that is what our wise rulers are all so afraid of.

In order to avoid this

Bini Smaghi:

major structural reforms
of the "financial, economic, and social structure of our societies" are of course necessary.

So it would appear everything is going to be restructured anyway. Just depends in whose favour.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Jun 13th, 2011 at 09:02:19 AM EST
[ Parent ]
Must... invade... Poland...

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Jun 16th, 2011 at 11:55:41 AM EST
[ Parent ]
But they have to print money first!

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 16th, 2011 at 12:40:39 PM EST
[ Parent ]
Top quote from here.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Jun 13th, 2011 at 09:21:16 AM EST
[ Parent ]
last week:
One of my currently favourite quotes: from Political Aspects of Full Employment (Michal Kalecki 1943)
One of the important functions of fascism, as typified by the Nazi system, was to remove capitalist objections to full employment.

The dislike of government spending policy as such is overcome under fascism by the fact that the state machinery is under the direct control of a partnership of big business with fascism.  The necessity for the myth of 'sound finance', which served to prevent the government from offsetting a confidence crisis by spending, is removed.  In a democracy, one does not know what the next government will be like.  Under fascism there is no next government.

The dislike of government spending, whether on public investment or consumption, is overcome by concentrating government expenditure on armaments.  Finally, 'discipline in the factories' and 'political stability' under full employment are maintained by the 'new order', which ranges from suppression of the trade unions to the concentration camp.  Political pressure replaces the economic pressure of unemployment.

When neoliberals look at this, they conclude that Keynesianism causes totalitarianism, as did Hayek in The Road to Serfdom. [From Wikipedia]
Significantly, Hayek challenged the general view among British academics that fascism was a capitalist reaction against socialism, instead arguing that fascism and socialism had common roots in central economic planning and the power of the state over the individual.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Jun 13th, 2011 at 09:04:42 AM EST
[ Parent ]
man that hayak has a lot to answer for, for sure.

another perverse thinker that had such a destructive effect on history through paranoia...

from austria.

must be in the water... diary about the formation of political philosophy in austria's history? what thoughtstreams did these lunatics drink from to get to their erroneous conclusions?

DoDo?

perhaps geography has less to do with it than i think...

"We can all be prosperous but we can't all be rich." Ian Welsh

by melo (melometa4(at)gmail.com) on Tue Jun 14th, 2011 at 03:18:49 PM EST
[ Parent ]
My guess would be the drastic collapse of the Habsburg Empire in 1918. Today's little Austria is a successor state to the Habsburg Empire that once led the German Empire, dominated Europe and spanned the New World.

Imagine if Great Britain had been soundly defeated in 1918 and forced not only to abandon its empire but to break up into Ireland (whole of), Scotland (to furthest extent and then some), Wales, Cornwall, and every little region with ambitions. Leaving London with a crippled little state, unable to even lord it over the neighbours, having to take orders from Edinbourgh or be the target of punishment expeditions.

How much hate, bile and longing for the old world would that little England produce?

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES!

by A swedish kind of death on Thu Jun 16th, 2011 at 04:09:47 PM EST
[ Parent ]
Sounds nice, but "the Austrians" were a sect of liberals who had little to do with imperial nostalgia, and the development of their views as we know them today are probably not unaffected by their long-time residences and high standing in Anglo-Saxon countries.

It is also interesting to note that although the Austrians gathered at the university of Vienna, their godfather, Carl Menger, as well as leading figure Ludwig von Mises, came from Galicia (the part of Poland first grabbed by the Habsburgs, later by Stalin, and now part of the Ukraine).

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Jun 16th, 2011 at 04:29:43 PM EST
[ Parent ]
Good thing it was just a guess then :)

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES!
by A swedish kind of death on Thu Jun 16th, 2011 at 04:34:20 PM EST
[ Parent ]

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