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After first read (and exploring the links), i'm nearly speechless. Many saw this coming, but i can't believe it was expected to be as draconian as it is.

Thanks for posting, Talos, much success, and stay safe.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Sun Feb 12th, 2012 at 08:40:15 AM EST
here is where the neolib rubber meets the road.

on max keiser the other day he referred to it as 'financial sadism', and this great diary clearly spells out the effects of decisions made hundreds of miles away, where money is so much more important than the peoples' wellbeing, it's not even on the same map.

historical irony, greece the country which first iterated democracy, now the gallows on which it's hanged.

the arab world is breaking its chains, yearning for some kind of moral government, now europe's real values challenge emerges.

is it money in the service of people, an efficient tool to spread growth and health to an economy, or a cudgel to enforce servitude of the weak to the strong.

italy, spain and portugal, take a long hard look at greece right now. if they can pull it off there, we're next.

good luck Talos, and thanks for standing up for all of us!

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

by melo (melometa4(at)gmail.com) on Sun Feb 12th, 2012 at 09:06:03 AM EST
[ Parent ]
The Paniritis comment is eye-opening since she has been a high-profile austerity supporter in the USA on our evening news.
by Upstate NY on Sun Feb 12th, 2012 at 10:12:23 AM EST
They should occupy the central bank and start printing Euro notes for disbursement to the unemployed. 1500 Euro per month per unemployed would seem like a good starting point.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 12th, 2012 at 12:16:19 PM EST
Where are Greek euro notes printed? The central bank is probably superfluous for your idea.
by Katrin on Sun Feb 12th, 2012 at 12:29:37 PM EST
[ Parent ]
From wiki:
The euro banknotes are the banknotes of the euro, the currency of the Eurozone and have been in circulation since 2002. They are issued by the National Central Banks of the Eurosystem or the European Central Bank.[1] Denominations of the notes range from €5 to €500 and, unlike euro coins, the design is identical across the whole of the eurozone, although they are issued and printed in various member states.

While the ECB could complain that these notes were not 'authorized' and are, effectively, counterfeit, there would be no way, other than date, perhaps, to distinguish them from genuine, 'approved' Euro notes.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 12th, 2012 at 01:23:24 PM EST
[ Parent ]
Notes can be back-dated and serial numbers repeated, if you have access to the central bank's machinery. If the serial numbers are set using movable type, they can even issue German Euro notes.

Of course they would be counterfeit. But then, so is the current Greek government, and the other Eurozone countries don't seem to have any problem with that.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 12th, 2012 at 01:41:17 PM EST
[ Parent ]
Exactly! And if the system uses digital image generation it would be even easier. I don't suppose Germany would invade with troops if it seemed like this was what the Greek Central Bank was doing.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 12th, 2012 at 04:31:22 PM EST
[ Parent ]
Though people in other countries might start refusing to accept Greek money (though probably only coins, as most people don't know how to tell which country issued the bills).
by gk (gk) on Sun Feb 12th, 2012 at 04:35:45 PM EST
[ Parent ]
Euro banknotes - Wikipedia, the free encyclopedia

Unlike euro coins, euro notes do not have a national side indicating which country issued them (which is not necessarily where they were printed). This information is instead encoded within the first character of each note's serial number.

The first character of the serial number is a letter which uniquely identifies the country that issues the note. The remaining 11 characters are numbers which, when calculated their digital root, give a checksum also particular to that country. Because of the arithmetic of the check-sum, consecutively issued banknotes are not numbered sequentially, but rather, "consecutive" banknotes are 9 digits apart.

But as noted here, if you control the machinery, printing X-notes (Germany) could be as easy as printing Y-notes (Greece). Leading to widespread distrust of euro-notes and a flight to safety in German euro-coins? Nah, probably not.

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 Sun Feb 12th, 2012 at 05:04:19 PM EST
[ Parent ]
Maybe the ECB would start minting €100 coins... Or just switch to the gold standard. It's after all probably what they've wanted all along. That such mad policies would destroy the economy hasn't stopped them this far.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Feb 16th, 2012 at 07:49:10 PM EST
[ Parent ]
Googling I find:

Mints

Greece Bank of Greece341 Messogion Ave., 15231 Halandri, Athens, Greece

So I assume that the central bank of Greece also functions as the mint, and the mint branch has its office at this address. But the unions will know for sure, someone has to handle the machinery.

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 Sun Feb 12th, 2012 at 04:21:08 PM EST
[ Parent ]
well, I somewhat doubt that you find money printing equipment there.

But anyway - I'm pretty sure Europe has a second set of currency designs as a contingency plan for such a situation. So if Greece actually started to massivley attack the Euro with counterfeit bank notes, expect a hastily organized exchange against another set of notes.

Given the incredible hassle that produces that would, of course, eradicate whatever goodwill Greece has left with the other European countries and their citizens.

And it might even give a political opening for a fracturing into a northern hard and a southern weak Euro. Feel free to imagine the consequences.

by cris0 on Mon Feb 13th, 2012 at 07:25:25 PM EST
[ Parent ]
The Northern Euro could be called the Neuro, which would be appropriate.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Feb 13th, 2012 at 07:28:38 PM EST
[ Parent ]
And the softer version would be the Seuro, which is, naturally, more mellifluous. It would, logically, mostly be used by countries south of the Rhine. But it would be harder to predict what the response would be to Greece creating only enough euros to pay government debts. Other than some neurotic fixations on absolute quantities of money by some Europeans what harm would that really do? Greece could just do what is has to do and no more and see what happens. The result is likely to be no worse than what will otherwise happen.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Feb 14th, 2012 at 01:42:04 AM EST
[ Parent ]
I have no doubts France would make very sure to be on the neuro side.... (whatever it would be called in reality)

Aside from that, given the Rhine runs south-north, there is no such thing as its southern side.

by cris0 on Tue Feb 14th, 2012 at 03:55:42 PM EST
[ Parent ]
That would be a mistake for France.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 03:57:23 PM EST
[ Parent ]
French citizens would disagree with you.

Like every other citizenry they appreciate not beeing robbed by their politicians via inflation.

by cris0 on Tue Feb 14th, 2012 at 05:21:15 PM EST
[ Parent ]
???? via inflation??

What in the world do you think LTRO is through the ECB????????

by Upstate NY on Tue Feb 14th, 2012 at 05:25:41 PM EST
[ Parent ]
That's not inflationary.

The 3-year LTRO is the ECB's way of telling the European banking system "winter is coming and it may last years". Basically the ECB is helping the banks to get into an all-cash position is they so wish, and keep it that way for 3 years with an option to get out of the position at any time after one year.

It has nothing to do with lending to the real economy and any inflationary effect is minuscule because any asset that could be turned into 3-year cash at the LTRO was also able to be turned into 1-week cash any week, at the same interest rate. So any asset that the LTRO turned into cash was cash already for all intents and purposes. That's what monetary policy through the discount window (American usage) or refinancing operations (European usage) does. It does not increase the monetary mass and therefore, for those who believe in such things as the quantity theory of money, it is not inflationary.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 05:32:55 PM EST
[ Parent ]
Wouldn't you say, however, that this is the sort of thing the neoliberals opposed precisely because of their overweaning fears of inflation?
by Upstate NY on Tue Feb 14th, 2012 at 05:57:02 PM EST
[ Parent ]
It's the sort of thing the neolibs should oppose if they believe their own theology.

Whether they actually oppose it or not is an excellent benchmark for whether they are deluded or deceptive. From casual perusal of the reactions, they seem roughly equally split between the two.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:00:00 PM EST
[ Parent ]
Spiegel: Deutschlands heuchlerische Monetaristen.

Essentially, monetarists should not oppose the LTRO. Only Austrians should. There are a lot of "neoliberals" who are closet Austrians and who only appear to be Monetarist because, during the 1970s stagflation, both Austrians and Monetarists agreed on policy.

In the current crisis, by and large Keynesians and Monetarists should agree on policy against Austrians.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:13:07 PM EST
[ Parent ]
French citizens would disagree with you.

Improbable. No citizenry anywhere has ever preferred wage suppression and unemployment to inflation.

In fact, this is the precise reason the anti-democratic right had to come up with the garbage notion of "independent" central banks.

Like every other citizenry they appreciate not beeing robbed by their politicians via inflation.

Inflation takes purchasing power from lazy money and gives it to people who invest their money in real capital with real value.

Why do you want to subsidise lazy money and penalise productive capital?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:28:08 PM EST
[ Parent ]
Improbable. No citizenry anywhere has ever preferred wage suppression and unemployment to inflation

Er, not true. I know of one. :-(

by Katrin on Tue Feb 14th, 2012 at 05:32:39 PM EST
[ Parent ]
No, they have been offloading the unemployment on the rest of the Eurozone.

If you had 20 % unemployment in Germany (which you would if you had implemented the Hartz idiocy in a floating exchange rate system), no sober German would have supported the inflation first policy.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:37:12 PM EST
[ Parent ]
by redstar on Tue Feb 14th, 2012 at 05:42:51 PM EST
[ Parent ]
Well, yeah, Sarkozy is in denial.

Do you have any more breaking news?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 04:46:45 PM EST
[ Parent ]
I'm pretty sure Europe has a second set of currency designs as a contingency plan for such a situation.

Considering the amount of foresight and awareness displayed by the Troika, I seriously doubt that.

Given the incredible hassle that produces that would, of course, eradicate whatever goodwill Greece has left with the other European countries and their citizens.

The present amount of goodwill has caused these other European countries to embark on a course of industrial and human devastation that quite literally cannot be topped short of a full-scale shooting war.

I will leave it to the reader to evaluate the worth of such "goodwill."

And it might even give a political opening for a fracturing into a northern hard and a southern weak Euro. Feel free to imagine the consequences.

Troika exit, stage right.

Why is that not desirable, again?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 01:53:38 AM EST
[ Parent ]
Well, if you think the Troika exiting Greece ASAP is a good thing, then we seem to be in perfect agreement.
by cris0 on Tue Feb 14th, 2012 at 03:56:59 PM EST
[ Parent ]
Tell me you're not the cris posting on German-Greek affairs on DailyKos.
by Upstate NY on Tue Feb 14th, 2012 at 04:30:47 PM EST
[ Parent ]
You say "And it might even give a political opening for a fracturing into a northern hard and a southern weak Euro. Feel free to imagine the consequences."

I do imagine the consequences. A deutschmark zone, immediately revalued upwards relative to other national currencies, the countries enjoying the later becoming competitive overnight on export markets and, more importantly, relative to internal demand, and the countries adhering to the strict Austrian school rules governing the deutschmark zone finding the exports, in particular to European trading partners, less competitive overnight.

Germany and its zone (don't even get me started on the Swedes) have been playing beggar-thy-neighbor ever since the crisis began in 2008. It's time for that to stop.

by redstar on Tue Feb 14th, 2012 at 05:06:13 AM EST
[ Parent ]
I can't imagine that the consequences of a Greek disorderly default 2 years ago could have been worse for the Greeks than what they have already endured and what's in store for them.

Yes, they would have had shortages of essential imports, food and fuel, experienced a wave of business failures, personal bankruptcies and unemployment. But 1) have they not basically endured the equivalent of that without default? 2) Would the situation not be improving after two years, with the debt slate wiped clean?

Instead, more debt has been piled on top of Greece, under foreign law rather than under Greek law to add insult to injury, and all the consequences of default have occurred. And the likes of Juncker have the gall of coming out and saying that this constitutes "European 'solidarity'" and that the Greeks have to deserve it if they want more of it.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:05:19 AM EST
[ Parent ]
Something worse has happened for the Greeks, I'm afraid. In talking to relatives, it seems the total disdain for the state and all that entails (taxes, services, etc.) has reached epic proportions and has only reinforced the sort of historical factors which have made Greek life problematic.

This isn't reform at all. It's calcification. It's anti-reform.

Greece responds to history by creating guardrails around it. Taxes are a tribute to occupying entities? Response: don't pay taxes. The leftwing liberates the country and is ascendant in its reconstruction? Response: Clamp down on democracy. Opposition politicians thrown in jail for their views? Response: Pass a law forbidding the incarceration of politicians (even if guilty of corruption).

The last two years are yet another chapter in Greece's woeful history, an extension of its 20th century.

by Upstate NY on Tue Feb 14th, 2012 at 10:48:14 AM EST
[ Parent ]
it seems the total disdain for the state and all that entails (taxes, services, etc.) has reached epic proportions

Well, if you look at things like this (note the date!) it's not hard to feel total disdain for the European Union and all it entails.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 10:51:53 AM EST
[ Parent ]
So, are you saying that the lesson learned (far from warning other countries not to consider default as Greece has) is to default forthwith rather than deal with the powers?
by Upstate NY on Tue Feb 14th, 2012 at 10:49:28 AM EST
[ Parent ]
Yanis Varoufakis has been arguing that Greece should have defaulted because it was insolvent, that it was negligent of the creditor states to lend money to a bankrupt (at penal rates!) and that it was negligent of the Greek government to accept piling more debt on a bankruptcy.

Note that the German "escrow account" basically means that any bailout money has to go to repaying the existing debt before paying for the Greek state service provision. Spain, allegedly under pressure from the powers passed a constitutional amendment along those lines last September:

In fact, most of the provisions of the new Constitutional amendment and impending Organic Law won't take effect immediately. The spending ceiling only becomes binding after 2020 (however, to bring a 9% deficit to 0.40% in 9 years does require reducing it by 1% per year in the middle of a recession, which will require biting austerity with immediate effect). There's only one provision of the proposed New Article 135 (in Spanish) which will have immediate effect:
Los créditos para satisfacer los intereses y el capital de la deuda pública de las Administraciones se entenderán siempre incluidos en el estado de gastos de sus presupuestos y su pago gozará de prioridad absoluta. Estos créditos no podrán ser objeto de enmienda o modificación, mientras se ajusten a las condiciones de la Ley de emisión.
Credits to service interest and principal on the public debt of the various Administrations will be understood to be part of the expense account of their budgets, and their payment will have absolute priority. These credits won't be subject to amendment or modification, as long as they keep to the conditions of the law by which they were issued.
Others will follow suit if the powers have their way.

And the lesson learned is that the powers in Europe have been demanding policy concessions or else horrible things would happen (democracy was at stake!) and then when everything they asked for has been done, horrible things have still happened and democracy is being lost. So another lesson is don't listen to the Barrosos, Trichets, Rehns, Bini-Smaghis, Merkels or Sarkozys of the world.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 11:04:29 AM EST
[ Parent ]
So what happens when you have mutually exclusive provisions in your constitution?

Von überall könnte das Volk, Urbrut alles Undemokratischen, Zelle des Terrors, über die gewählten Hüter von Wachstum und Wohlstand® kommen. - flatter
by generic on Tue Feb 14th, 2012 at 11:43:26 AM EST
[ Parent ]
Then you have a constitutional crisis.

There are various ways to resolve those. Ranging from amicably amending out the stupid provisions, through the courts ruling that one of the provisions trumps the other, all the way to tanks in the streets.

Predicting ahead of time where on the spectrum your constitutional crisis falls can be a little tricky. The French politicians who signed off on the Grief and Stupidity Pact in Maastrict thought we'd get the "quietly drop the stupid provisions" version. But it looks increasingly like we're getting the "tanks in the streets" version.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 02:12:48 PM EST
[ Parent ]
Nothing. Things like article 41 which instructs the "public powers" to pursue a policy conducive to full employment is routinely ignored, especially post-Maastricht.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 04:48:36 PM EST
[ Parent ]
Greece has considered default?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 11:05:02 AM EST
[ Parent ]
They've considered it.

Just as I have considered certain inevitabilities.

The weird thing is though the Greeks pols may be at fault, they actually believed the troika and were suckered by them into the program.

This is the problem with a European political elite. They really put a lot of stock in the privilege of pan-European upper-classes. And people like Papandreou and Papademos come to discover that they were suckered from the very start.

by Upstate NY on Tue Feb 14th, 2012 at 11:26:37 AM EST
[ Parent ]
Varoufakis has a new article up claiming that the German elites have made up their minds to let Greece and Portugal go, push them out of the Euro. He says that the Greek and peripheral governments should not accept and play ball with such a plan However:

Any Greek or Portuguese or Irish government that serves its people's interests would point-blank refuse to play ball. The idea that exiting the eurozone is a simple matter of devaluing is dead wrong. It confuses the correct view that Greece and Portugal and Ireland would have been better off outside the euro with the quite different, and catastrophically erroneous, view that exiting is the optimal strategy. In this sense, our governments have no reason to go along with Germany's amputation strategy. But then again, the Greek government had no reason whatsoever to choose the Bailout Mk2 agreement, and the strings that it came attached with, over a simple default within the eurozone (which I was advocating; along with Wolfgang Munchau). And yet it did. Why? Because the politicians of the Periphery have neither the stomach nor the interest in disobeying orders issued from the North. Why that is is a matter for historians and psychologists. For now, we must take it for granted, unfortunately. Which leads me to the sad conclusion that, even though Germany has no way whatsoever to force certain countries out of the eurozone, the moment the Greek, Portuguese or Irish PMs get their marching orders, they will immediately start marching their way out of the eurozone.


The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Tue Feb 14th, 2012 at 12:14:33 PM EST
[ Parent ]
I read that article and I was thinking, what would it really cost them to keep Portugal around. Would it really be that much of a hardship? I don't think so.

There are other reasons to keep Portugal around as well. In addition to its public debt to GDP, it has approximately 130% private debt. if you squeeze the Portuguese too much, some banks in Europe will surely feel it, unlike in Greece where the debt is mostly public and by now written off from many banks and also owned by the ECB.

by Upstate NY on Tue Feb 14th, 2012 at 12:16:40 PM EST
[ Parent ]
The weird thing is though the Greeks pols may be at fault, they actually believed the troika and were suckered by them into the program.

Worse, they held themselves hostage to their European inadequacy complexes.

In Greece, Portugal and Spain we have countries which were part of The West but, on account of their authoritarian anticommunist regimes, were kept out of the European Communities. Accession to the European Communities was seen as a recognition that they had graduated to "deserving Europeans". For these countries, being a good European means grovelling to whatever the Franco-German axis or Brussels say. It never crossed Zapatero's mind that he should have opposed Merkel in the Spring of 2010 (when Spain still had economic leverage), as that would have been "uneuropean". It was possible for ZP's successor Rubalcaba to claim that the Spanish constitutional reform (debt brake and unconstitutionality of default) was "a pro-european reform" and for 40 million spaniard not only not to die laughing but be soothed by the incantation.

The Greek government has evidently agonised over whether pursuing their self-interest would be construed as "uneuropean" by the Brussels opinion-makers, whereas German actors just played hardball. Nobody dares question the "europeanness" of French or German actions, which is rather toxic when naked self-interest (it is even arguable whether it's German national interest here) is pursued. In other words, nobody in Greece wants to be tarred with the brush of destroyer of the Euro, whereas Merkel, Weber, Stark, Weidmann know they will not be, no matter what they do.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 05:00:06 PM EST
[ Parent ]
Varoufakis wonders whether this complex extends to compliance with an order the leave the eurozone when that comes to pass. Many have mentioned that the ECB will no longer help fund Greek banks, but then again the ECB owns a lot of Greek debt.
by Upstate NY on Tue Feb 14th, 2012 at 05:28:50 PM EST
[ Parent ]
The thing that Varufakis is missing is that Greece will have to leave the Eurozone in order to survive a default. It needs to reassert the authority of the state to conduct economic planning within its jurisdiction, and, short of going all-out wartime command economy, the only way to do that in the middle of a serious industrial depression is through seigniorage.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:32:52 PM EST
[ Parent ]
Greece needs to leave the Eurozone to conduct economic planning within its jurisdiction ONLY IF it feels the need to conduct a local expansionary monetary policy. There are plenty of U.S. states (almost all) that operate under balanced budget rules, and Greece could do the same...
by asdf on Tue Feb 14th, 2012 at 05:47:47 PM EST
[ Parent ]
Greece requires its own money for expansionary fiscal policy more than for less contractionary monetary policy.

The economic planning expected of US states does not include employer of last resort functions. That is a federal obligation. Since the federal level in the EU does not want to assume this function, and since Greece has no means by which it can force the EU to do so, Greece needs its own money.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:54:33 PM EST
[ Parent ]
I really wonder what they are going to do.

The gov't never provided any services.

There is something to be said about tourism in euros. They are making more money than ever before. The product is being upgraded slowly.

But of course manufacturing suffers.

I simply wonder if Greece will become a neoliberal wasteland within the eurozone. In terms of gov't services, they are already threadbare. They may simply decide to continue on in this fashion.

by Upstate NY on Tue Feb 14th, 2012 at 06:30:22 PM EST
[ Parent ]
One of the big lies in this sorry mess is that of the lazy Southerners with their lavish welfare states. Italy, Spain, Portugal and Greece were, for the better part of the 20th century, right-wing regimes. They did not partake of the "social democratic" advances of post-war Europe like their northern neighbours did. As a result there is a dearth of capital accumulation, and a skimpy social safety net.

Daniel Cohn Bendit said it best and early (may 2010): one doesn't legislate into existence the level of social cohesion that Northern Europe enjoys



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:36:54 PM EST
[ Parent ]
But does it need to leave the Euro? Any reason a country sized Wörgl wouldn't work? Except for ECB interference of course.

Von überall könnte das Volk, Urbrut alles Undemokratischen, Zelle des Terrors, über die gewählten Hüter von Wachstum und Wohlstand® kommen. - flatter
by generic on Tue Feb 14th, 2012 at 07:08:04 PM EST
[ Parent ]
A country-sized Wörgl is leaving the Euro. De facto if not de jure.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 07:18:14 PM EST
[ Parent ]
But there is a big political difference between de facto and de jure in this case, no?

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Tue Feb 14th, 2012 at 07:23:16 PM EST
[ Parent ]
At this point? I don't think so.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 07:26:56 PM EST
[ Parent ]
Greece doing Wörgl would probably get Greece kicked out. From a political framing point that might be an advantage to leaving, but it is doubtful considering where media powers sits.

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 Wed Feb 15th, 2012 at 05:00:11 AM EST
[ Parent ]
De jure, Greece can't be kicked out. And it can't leave, unless it also leaves the EU. But this is just lawyer talk. Too bad Brussels/Frankfurt is legalist heaven.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Feb 16th, 2012 at 08:02:05 PM EST
[ Parent ]
Too bad that, 'in legalist heaven', the lawyers can't figure out how to deal with anyone who seriously breaks the system, or even that it has been broken. Completely comparable to the bought and paid for US Congress.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 17th, 2012 at 02:20:42 PM EST
[ Parent ]
If the circulation of Schillings stopped completely I never heard of it. Why should this time be different?

Von überall könnte das Volk, Urbrut alles Undemokratischen, Zelle des Terrors, über die gewählten Hüter von Wachstum und Wohlstand® kommen. - flatter
by generic on Tue Feb 14th, 2012 at 07:53:49 PM EST
[ Parent ]
But the Central Bank banned it and the Supreme Court of Austria declared it a criminal offense to issue more.

So says this book: The making of national money: territorial currencies in historical perspective - Eric Helleiner - Google Books

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 Wed Feb 15th, 2012 at 05:08:37 AM EST
[ Parent ]
Thanks for the link. Bookmarked!

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 12:28:06 PM EST
[ Parent ]
If by "employer of last resort" you are talking about unemployment insurance, the states do indeed carry that responsibility. Well, it is a joint project strongly encouraged and partially funded by the federal government, but mostly it's a state function...
by asdf on Tue Feb 14th, 2012 at 09:52:39 PM EST
[ Parent ]
No, I'm talking about overall macroeconomic stabilisation. Or, to put it another way: Who prints and spends during a recession.

The federal government does.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 15th, 2012 at 03:15:45 AM EST
[ Parent ]
Many have mentioned that the ECB will no longer help fund Greek banks, but then again the ECB owns a lot of Greek debt.

Part of the Greek "bailout" currently under discussion involves the ECB swapping its holdings of Greek bonds for newly issued EFSF bonds, at face value. So the EFSF will be left holding the bag.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 05:35:25 PM EST
[ Parent ]
And once again, the BuBa gets someone who is not the BuBa to pay for maintaining the BuBa's currency policy.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:38:05 PM EST
[ Parent ]
And they are on the road selling EFSF bonds to China?
by Upstate NY on Tue Feb 14th, 2012 at 06:03:59 PM EST
[ Parent ]
They are making noises about wanting to, but I would not place any expensive bets on the Chinese buying into that particular pyramid scam. I have a hard time seeing what China would get better from that that they couldn't gain from dealing bilaterally with the countries being ECB'ed.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:07:07 PM EST
[ Parent ]
China is not buying.

I keep wondering whether Regling is a useful idiot or a master snake-oil salesman.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:07:29 PM EST
[ Parent ]
True believers often make the most convincing salesmen.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 12:29:42 PM EST
[ Parent ]
Part of the Greek "bailout" currently under discussion involves the ECB swapping its holdings of Greek bonds for newly issued EFSF bonds, at face value. So the EFSF will be left holding the bag.

You really couldn't make this shit up:

Jens Weidmann says the ECB cannot participate in a debt restructuring as this would amount to monetary financing; he also seems to oppose forgoing on the ECB's profits; also expresses criticism of the expansion of the ECB's balance sheet;
(Eurointelligence daily briefing summary, 15 February 2012)

The reference to "forgoing profits" is to the bond swap with the EFSF at par. The reason is that Greek bonds were bought by the ECB at a higher yield than the EFSF bond yield, and a swap at par value, while representing no loss in "hold to maturity" accounting, is actually a loss (forgoing of profits due to the lower yields).

So Weidmann really does think it's right for the ECB to make a profit off the penal rates of lending to Greece.

Weidmann opposes the eurosystem's help for Greece

Jens Weidmann is opposed to any mechanism like a rapid distribution of the national central banks' gains on Greek bonds to the governments that would lead to a contribution by the eurosystem to the second rescue package for Greece. ,,The key point is that we (the eurosystem's central banks) are not allowed to renounce to demands against a state. This would be a form of monetary financing of that state", Weidmann said in an interview with Handelsblatt. The Bundesbank president appeared to directly contradict ECB executive board member Benoit Coeuré who had told Libération on Tuesday: ,,Should there be a profit (on Greek bonds), like all monetary revenues, it is to be distributed to the (member) states", the board member had said. "They could use it to contribute to the sustainability of Greek debt".

Weidmann further stressed that he was worried about the increasing risks that the eurosystem is taking on its balance sheet. Examples are the SMP and the loosening of the collateral framework by the central banks in France, Italy, Spain, Portugal, Austria, Ireland and Cyprus with quality standards below the standards currently in place in the eurosystem. ,,Also Mr. Draghi has conceded that with this acceptance of additional collateral the risks increase", the German central banker said. Weidmann announced that the Bundesbank would probably announce an increase of its provisions of €1.6bn last year at its annual press conference in March in order to cover potential risks and losses.



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Wed Feb 15th, 2012 at 05:46:15 PM EST
[ Parent ]
There needs to be an article in the next treaty revision saying that nobody who has ever served with the Bundesbank may be appointed to any position of trust in the ECB.

Insane, the lot of them.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 15th, 2012 at 05:55:09 PM EST
[ Parent ]
who are these people, we have their names, but who are they, really?

and who are the birds of similar feather they flock to?

lemme guess... the usual suspects...the utility companies, the MIC, the banksters, and the slimeball meatpuppets who are the interface with the hypermediated public, you know the donkeys we pin our illusional tails of hope onto when we go vote.

how do they face their children? how do they rationalise plunging a continent into perdition, to avoid losing even one cent on their euros? how do they glide from meeting to another without recognition or the opprobrium they deserve? how are they able to continue to exist surrounded by the fruits of their destruction, veiled by firewalls of force? in this age of free(er) information, why aren't their faces plastered all over as enemies of the state? have they vanished into the mist of our own inability to connect dots?

has the capture really gone so far that our very minds are enslaved as to a cult, so whole populations slide into collective stockholm syndrome?

TINA may ass, it's that we have been too well taught that any alternative is unthinkable, so it can be right under our own noses and we'll see right through it as if it weren't there.

how did we get so cognitively messed up? and other that blogviating, wtf can we do to wake up from this insanely perverse reiteration of the worst of who we are, ruling events with such orwellian effectiveness? is it that we have been lied to for so long, truth flies under the radar? lays like a diamond under windblown sand? waits like an acorn in dry moss for the moisture needed for its transformation to begin?

is knowledge what we need? is that the rain we await?

a big thanks to all here for the space to share these concerns, it means a lot to me to have found such a funny, hip and wised up group of folks to vent to/with.

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

by melo (melometa4(at)gmail.com) on Wed Feb 15th, 2012 at 07:32:17 PM EST
[ Parent ]
Once again, the governor of the BuBa shows how dear to his heart is the sacred principle of the independence of the ECB.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Feb 16th, 2012 at 01:10:33 AM EST
[ Parent ]
Well, he does sit on the Governing Council of the ECB.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Thu Feb 16th, 2012 at 08:34:07 AM EST
[ Parent ]
True. It's only the confidentiality of ECB deliberations that he's showing his respect for.

Confidentiality that Germany and the BuBa insisted upon at the time...

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 16th, 2012 at 12:40:23 PM EST
[ Parent ]
IOKIYAG
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Feb 16th, 2012 at 01:50:12 PM EST
[ Parent ]

nobody in Greece wants to be tarred with the brush of destroyer of the Euro, whereas Merkel, Weber, Stark, Weidmann know they will not be, no matter what they do.

Oh, if anything does happen to the euro, NONE of them will escape the blame. It will have happened on their watch.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Sat Feb 18th, 2012 at 02:59:27 PM EST
[ Parent ]
What do you mean? Weber and Stark will be said to have resigned because they were not allowed to defend the Euro.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 03:01:09 PM EST
[ Parent ]
You should use the present tense.
by IM on Sat Feb 18th, 2012 at 03:05:02 PM EST
[ Parent ]
The Euro hasn't imploded yet.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 03:40:08 PM EST
[ Parent ]
They will be seen as part of the Serious People who "lost the euro" and destroyed Europe in the process.

Because the only way the euro is destroyed is if France and Germany split up.

As we know, the crisis will be resolved when France (or, possibly, Italy) tells the Germans - either you pay or you treat us as second zone Europeans and you will have killed Europe and we'll all call you nazis, and the Germans will blink - or not, but of course they'll blink.

France definitely has what it takes to put the gun to Germany's head that way (which will have a price as well, even if successful); it looks like Italy could succeed too as Germany doesn't seem to want a Europe without them - and thankfully that would not involve the same kind of nasty brinkmanship and collateral damage that the French solution will entail.

Or we can somehow drag this on until the next German elections and someone with a bit more sense joins (hopefully) Hollande. Or maybe Hollande's election (hopefully) helps change the debate already - maybe not abandoning the "good European syndrome" completely but at least not going along with all the nastiest moral stuff.

btw - just like in 1981, you're beginning to read stories in France about the rich getting ready to leave the country if Hollande is elected...


Wind power

by Jerome a Paris (etg@eurotrib.com) on Sat Feb 18th, 2012 at 04:36:15 PM EST
[ Parent ]
As we know, the crisis will be resolved when France (or, possibly, Italy) tells the Germans - either you pay or you treat us as second zone Europeans and you will have killed Europe and we'll all call you nazis, and the Germans will blink - or not, but of course they'll blink.

France definitely has what it takes to put the gun to Germany's head that way (which will have a price as well, even if successful); it looks like Italy could succeed too as Germany doesn't seem to want a Europe without them - and thankfully that would not involve the same kind of nasty brinkmanship and collateral damage that the French solution will entail.

We know how well that worked out last time (and I'm not referring to de Gaulle and the Empty Chair Crisis, but to May 2010).

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 05:07:56 PM EST
[ Parent ]
Germany and its zone (don't even get me started on the Swedes) have been playing beggar-thy-neighbor ever since the crisis began in 2008. It's time for that to stop.

Hey, at least we have a freely floating currency, and unlike the Swiss we are'nt capping it. Be my guest and put your money in Swedish sovereign bonds, we'll need every cent when our real estate bubble bursts.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Feb 16th, 2012 at 07:55:50 PM EST
[ Parent ]
A test case, a guinea pig, because it is obvious that in one form or another this austeritarian disaster will be unleashed around the EU, and the core should not feel safe from harm. Already labor conditions and real wages in the EU southern periphery are converging downwards towards the poorest members of the union.

Part of the problem is that those who today pass for 'leaders' have no idea other than to follow the current course - at least no idea acceptable to their financial masters. And this is in no small part due to the parallel past efforts of their masters to spread, via their owned media, their views on the economy and society - TINA to neo-liberal, NCE inspired poison. Few prominent people will say that allowing the entire society to be run by finance in the interests of the continual enrichment of the very top of wealth holders leads directly to disaster. It has and we are teetering on the edge of collapse, but still they pursue their disaster inducing policies resolutely.


As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 12th, 2012 at 01:03:49 PM EST
i dont see much bullying by Nasty Kapitalists here.Much more one or two generations of Greek who robbed their kids by cheating on their taxes and loading on debts (good luck trying to find a shop in Greece that accept credit cards, cash only everywhere).

Not the Germans fault, isnt it ?I pretty sure German taxpayers know a better use for their hard earned money at home.

I am pretty sure that noone in europe enjoy the situation and all would have preferred not to exist.

by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 02:12:19 PM EST
[ Parent ]
Germany suppressed wages (yes, Hartz, I'm looking at you). Wage suppression, being the retarded brother of protectionism, causes current accounts imbalances and demand-side crises like the ones we're currently in.

So yeah, it really is the Germans' fault.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 12th, 2012 at 02:14:56 PM EST
[ Parent ]
when was last time Greek's trade balance was positive ? probably never.

but you re right they should not be using the same currency as Germany/France, few others countries are in the same situation, I guess it will be sorted out soon by shrinking the Eurozone.

by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 02:38:58 PM EST
[ Parent ]
Right, all countries have a duty to have a positive trade balance.

Query: who do they all export to?

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Feb 12th, 2012 at 02:42:19 PM EST
[ Parent ]
dont have to be every years, there are economical cycles
by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 02:48:06 PM EST
[ Parent ]
And right now, the economic cycle requires Germany to have 6-8 % yearly inflation for a few years, so Greece can avoid deflation while the trade imbalance is worked out.

If you don't like that, then you don't like the common currency.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 12th, 2012 at 02:51:21 PM EST
[ Parent ]
I have nothing against inflation.What ever works.but yes as you point out, the logic of a common currency between Greece and Germany is not very rational and quite painful to manage ;-)
by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 02:55:31 PM EST
[ Parent ]
From an operational point of view, it's actually extremely easy to manage. The ECB just has to print money in proportion to each member state's internal current accounts deficit, and use that money to reduce the co-pays on deficit countries' regional development funds.

Voila, problem solved.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 12th, 2012 at 02:58:29 PM EST
[ Parent ]
Precisely ~ the logic of a common currency is that since Germany profited from a decade a German banks lending into the Greek bubble economy to generate the purchasing power for German production and employment, as the trade surplus-creating country it bears equal guilt for the imbalance as Greece, the trade deficit-creating country.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Mon Feb 13th, 2012 at 09:58:49 AM EST
[ Parent ]
Lest we forget: unlike for example Spain, Greece did have really crappy public finances, deficits and so on, before the crisis.

The other periphery countries had their finances screwed as a result of the crisis, due to lower revenue, higher social costs (that is, good contra-cyclical policy) or retarded bank rescues (Ireland).

Greece is at a greater fault than Italy, Spain etc. But I'm not defending the ECB for a second. I argued Greece should default back in 2008, and I haven't changed my mind.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Feb 16th, 2012 at 08:09:21 PM EST
[ Parent ]
Well, Spain et al mismanaged their private sector solvency just as badly as Greece allegedly mismanaged its public sector. A mismanagement I still don't see that much evidence of, to be honest. Barring retaliatory wage suppression, which is the ultimate in irresponsible short-term begger-thy-neighbour policy, they were really in a pick-your-poison type of scenario between a run on their public bonds or a run on their private banks. That Greece picked the former rather than the latter does not make them any more or less virtuous.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 17th, 2012 at 03:01:44 AM EST
[ Parent ]
True, but the risk-taking of the private sector, while certainly relevant to the authorities, is less their respoinsibility than is the risk-taking of the public sector, which the authorities directly control rather than just regulate.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Feb 17th, 2012 at 03:43:11 AM EST
[ Parent ]
I'm not talking about risk-taking.

I'm talking about simple rules of addition and subtraction telling you that if you make like the Spanish and run a public sector surplus in the face of an external deficit, you are pushing your private sector into a messy default.

I'm still not clear on how that's a more responsible sort of thing to do than to run a public sector deficit and then repudiate the public debt in an orderly manner.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 17th, 2012 at 03:54:04 AM EST
[ Parent ]
Because in a non-mad world, private defaults do not lead to public bailouts and massive costs to the tax-payer, but rather to wipeouts in private wealth/capital/equity, which individual investors have decided to risk to get a chance at higher returns.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Feb 17th, 2012 at 04:11:29 AM EST
[ Parent ]
However, in a non-mad world, public defaults do not lead to liquidation sprees that destroy extant capital equipment. Private defaults do. So it's not a priori such a clear-cut thing which is preferable.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 17th, 2012 at 04:16:00 AM EST
[ Parent ]
In my experince, private companies that go bust do not melt down their machines, they (the companies) are either bought wholesale out of bankruptcy by competitors, or their machines are.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Feb 17th, 2012 at 04:26:48 AM EST
[ Parent ]
The problem is less that they go bankrupt (although some do melt down their machines in that eventuality). The big problem is that they hang on for dear life for a while, trying to survive through cutting costs by cutting corners. There's no company more risk loving and short-termist than a company trying to paper over an insolvency.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 17th, 2012 at 04:34:34 AM EST
[ Parent ]
Hardly an overbearing problem. A little friction is to be expected in an economy based on creative destruction. The upside of the managed capitalist system is worth this little downside, by a very wide margin.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Feb 17th, 2012 at 05:40:18 AM EST
[ Parent ]
Jake:
public defaults do not lead to liquidation sprees that destroy extant capital equipment.

That would be true for GM. But is it really applicable to the problem in Spain, where the mis-allocation resulted in a vast supply of overpriced real estate. It would seem that, in that case, private sector defaults would be an efficient way to reprice the assets at the cost of those who could most afford to pay. But we can't have the wealthy paying, can we?

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 17th, 2012 at 02:28:27 PM EST
[ Parent ]
The bubble having happened, the assets obviously need to be reassessed with an eye towards finding a sustainable price level.

But ex ante it is not obvious that inflating a housing bubble and then popping it is less painful for the common Spaniard than selling bogus Spanish government bonds to German banks and then telling them to fuck off and die when they come to collect.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 17th, 2012 at 03:10:57 PM EST
[ Parent ]
If most of the holders of MBSs written around the inflated real estate are foreign, especially is many of them were involved in creating the MBSs and/or the bubble, I think I know which I would choose were I a Spaniard. By writing down the value of the asset it becomes liquid again. Life can resume. Better yet if the financial sector took the hit. The part of the hit that is to pension firms and/or small holders could be partly compensated, though writing down the value to something close to actual market value would certainly help all Spanish holders of underwater mortgages.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 17th, 2012 at 09:39:54 PM EST
[ Parent ]
That's all true, but doesn't speak to the point I was making at all.

My point was that if you had been Senate and People of Spain in 2001 and, for some reason that defies rational comprehension, decided to hitch your wagon to the Eurozone, would it be better for the Spanish people to accommodate German mercantilism by blowing a real estate bubble (as they in fact did) or by selling bogus government bonds (as Greece did)?

My point is that that choice is far from clear-cut in 2001.

In 2012, after the fact, it's obvious what should be done. But also totally irrelevant to the discussion I was commenting on.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 04:29:01 AM EST
[ Parent ]
My point was that if you had been Senate and People of Spain in 2001 and, for some reason that defies rational comprehension, decided to hitch your wagon to the Eurozone, would it be better for the Spanish people to accommodate German mercantilism by blowing a real estate bubble (as they in fact did) or by selling bogus government bonds (as Greece did)?

Incidentally, there was a recent op-ed in El Pais that's related to that: La gente que pagará esta reforma laboral (XAVIER VIDAL-FOLCH 16 FEB 2012)

Desde hace decenios existía en España un consenso básico, casi tácito, en que había que superar el modelo económico basado en salarios bajos y mediocre tecnología, que se reputaba propio de los países menos desarrollados. Pero la Agenda 2010 del canciller Schröder reverdeció una competitividad alemana basada en reducir costes al factor trabajo. De forma que si los vecinos, y entre ellos los más exitosos, optaban por ello, quizá había que volver a las (cutres) andadas del modelo español.

No es así: con esta reforma estamos tomando solo en parte, en la parte más dura para los trabajadores (la reducción del coste del despido, por ejemplo), las recetas alemanas. Pero no las partes más blandas: allá se exige el permiso de la autoridad a los despidos colectivos; prosiguen intactos los mecanismos de cogestión en la empresa; existe una auténtica política activa de empleo / recolocación.

Y sobre todo, se emplea a mansalva el kurzarbeit, o reducción temporal de la jornada laboral cuando disminuyen los pedidos, copagada por la empresa y el Estado: este es el mecanismo que salva a Alemania del paro --más que los minijobs-- y del que el decreto-ley realiza una ruda caricatura: descuento de la cuota de la Seguridad Social y pequeña compensación del seguro de desempleo, no real copago.

The people who will pay this labour reform (XAVIER VIDAL-FOLCH 16 FEB 2012)
For decades there was in Spain a basic, almost tacit, consensus, that the economic model based on low wages and mediocre technology had to be overcome, as it was reputed to be characteristic of less developed countries. But Chancellor Schroeder's Agenda 2010 gave new life to a German competitiveness based on reducing the cost of the labour factor. Thus if our neighbours, and among them the most successful, took that option, maybe it was time to go back to the (shoddy) old ways of the Spanish model.
Let's recall the Agenda 2010 was adopted by the EU Council as "Agenda 2010 for Growth and Jobs".
That's not the case: with this reform we're taking only in part, in the part that's harder on the workers (the reduction of the cost of layoffs, for instance), the German recipes. But not the softer parts: there, the authorisation of the authorities is required for collective layoffs [no longer the case in Spain]; the co-management mechanisms [union involvement] remain untouched; there is a true active employment/retraining policy.

And, above all, there is massive use of the kurzarbeit, or temporary reduction of the workday when orders fall, copayed by the firm and the State: this is the mechanism that saves Germany from unemployment --more so than the minijobs-- and which the [labour reform] legislative decree roughly caricatures: a discount on the Social Security contributions and a small compensation from unemployment insurance, not a real copayment.



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 05:04:44 AM EST
[ Parent ]
But the shoddy economic model based on low wages and mediocre technology was never abandoned, as the real-estate bubble shows. The Spanish political economy is unable to conceive of other activities than bricklaying.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 05:05:59 AM EST
[ Parent ]
Oh, and this is what adjustment looks like: (year-on-year change in wages and company profits

Purple: company profits
Orange: wages of salaried workers

That's not going to improve "competitiveness" but it's definitely not the fault of the wages as the aggregate wage bill has dropped maybe 2% per annum over the past 3 years.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 05:30:58 AM EST
[ Parent ]
And while, as you note, 'the assets obviously need to be reassessed' we have spent the last three years avoiding doing so, mostly in order to save financial institutions that would better be/have been liquidated. Neutralize the toxins in the system. Substitute 'Recognize and reorganize' for 'Extend and Pretend'. All would be better off a few years later that way. The current path will make everyone worse off a few years later.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 17th, 2012 at 09:44:15 PM EST
[ Parent ]
Regarding Greece, what we have experienced was a fierce take over of the public sector by the private sector in a similar way that happened in the US under G.W. Bush (the war of Hulliburton etc). For example, pharmaceutical expenses of the public sector have doubled for 2.5 to over 5 billion euros in just five years. There was no similar improvement of the level of the health of the population as a result of raising the expenses. But that was public money that mainly went to the hands of private companies (mainly foreign) and to a lesser degree to "lazy and corrupt" civil servant.

"Eurozone leaders have turned a €50bn Greek solvency problem into a €1,000bn existential crisis for the European Union." David Miliband
by Kostis Papadimitriou on Fri Feb 17th, 2012 at 04:11:55 AM EST
[ Parent ]
Economically speaking, "Germany/France" does not exist.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 12th, 2012 at 02:44:48 PM EST
[ Parent ]
The best way for Greece to improve its trade balance will be to exit the Euro and issue its own currency. Other weaker net-importing economies joining Greece in an exit of the Euro may also have the desirable effect of driving the Euro up, making German exports less competitive (especially in the former Eurozone nations).
And Germany can then complain about how they deserve to be richer (but aren't) because they're so morally upstanding. Undoubtedly, they will use the fact of their depressed economy to further increase income disparities within Germany.
by Andhakari on Mon Feb 13th, 2012 at 07:56:39 AM EST
[ Parent ]
So yeah, it really is the Germans' fault.

But of course in your world everything is the germans fault.

by IM on Sun Feb 12th, 2012 at 03:31:24 PM EST
[ Parent ]
Theo Weigels' merry men wrote the 3-percent deficit limit into the Maastricht Treaty.

Germany opposed any effort to work towards an EU-wide bank resolution scheme when the shit hit the fan in late 2008.

Germany opposed fiscal stimulus as the G20 in 2009 on the grounds that "automatic stabilizers were sufficient" only to spearhead the destruction of the EU's welfare state and social compact when the said automatic stabilizers pushed deficits well above 3% EU-wide as they couldn't possibly fail to do in a deep recession.

Germany has for 2 years and increasingly transparently pushing a laundering a bank bailout through Greece, in the process destroying the Greek economy and making the Greek debt situation worse with each  crisis "resolution" proposal.

Germany is pushing treaty reforms and policy proposals at the EU level which have nothing to do with the causes of the crisis and do nothing to resolve it.

For "Germany" read "Merkel and her government" above if you must.

Now name another country and we can go through the ways it has contributed to the crisis.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sun Feb 12th, 2012 at 06:09:07 PM EST
[ Parent ]
let me translate fthat.

Germany has resisted efforts by other countries to extract even more money from the German taxpayers.

It was clear from the very beginning that the Euro was not supposed a wealth transfer mechanism.

You are basiscally whining about not beeing able to steal more from us. If that's what Europe is about, this is not gonna work at all.

by cris0 on Tue Feb 14th, 2012 at 04:08:28 PM EST
[ Parent ]
Germany has resisted efforts by other countries to extract even more money from the German taxpayers.

If Germany does not like paying for keeping the Euro, then Germany must pay its workers enough that they can import as much from other Eurozone countries as Germany wishes to export to them.

It was clear from the very beginning that the Euro was not supposed a wealth transfer mechanism.

Current accounts surplus; no wealth transfer. Pick one.

You are basiscally whining about not beeing able to steal more from us.

No, you're whining about basic arithmetic:

Total exports to other countries
+ total wealth transfers from other countries to you
=
total imports from other countries
+ total wealth transfers to other countries.

And that's really not negotiable unless you want to abolish double-entry bookkeeping.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 04:18:29 PM EST
[ Parent ]
i am so fed up with this constant fake math.

Everbody has his own made up economic theory to explain why the most simple tenets of bsusiness, simple addition and subtraction don't apply any more.  Instead we get drowned in fuzzy make-belive mathg that explains away basic tenetes.

You work hard and live frugal, you create wealth. You have wealth.

You spend and waste and idle and don't work - you go bankrupt and die poor.

What applies to your house applies, by simple iterative logic, also to a village, a city, a nation.

Thats the simple reality. Everything else is panicking make-believe and charlatanery.

by cris0 on Tue Feb 14th, 2012 at 04:50:48 PM EST
[ Parent ]
Once again, if it makes you feel better, that's the main thing, isn't it?
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Feb 14th, 2012 at 04:54:19 PM EST
[ Parent ]
You work hard and live frugal, you create wealth. You have wealth.

Money is not wealth. It is not even a token representing wealth.

If Germany had accumulated real physical wealth instead of money claims on other people, we wouldn't be having this problem.

Instead it accumulated money, which has no value beyond the political power it commands, and is now attempting to claim a value that it believes the money should represent.

What applies to your house applies, by simple iterative logic, also to a village, a city, a nation.

Swabian Housewife Economics.

A house that has a suitcase full of money in its basement but no car is richer than a house that has a car but no money. A country that has a vault full of money in its vault but no factories is poorer than a country full of factories but with no money.

This should not be difficult to understand, but apparently Swabian Housewife Economists have difficulty grasping it.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:05:42 PM EST
[ Parent ]
the basis of international trade is actually the mutual agreement that money actually does represent value, and thus, wealth.

So, now, we abolish trade as well?

And your proverbial Swabian Housewife does not have the money in her basement - she has it in the bank. Where she gets decent interest. Which is practically the definition of wealth.

by cris0 on Tue Feb 14th, 2012 at 05:42:33 PM EST
[ Parent ]
the basis of international trade is actually the mutual agreement that money actually does represent value, and thus, wealth.

No, the basis of international trade is comparative advantage. International trade does not require that money retain its purchasing power any longer than it takes the exporter to exchange his foreign currency with the importer's domestic currency.

For the purposes of foreign trade, you only need money to retain its value for longer than that if you want to run an aggregate current accounts surplus. Which your trading partners have no particular obligation to support or encourage.

Running a trade surplus is a form of industrial subsidy. Other people don't have any obligation to pay your industrial subsidies.

And your proverbial Swabian Housewife does not have the money in her basement - she has it in the bank. Where she gets decent interest.

In other words, the state pays her a subsidy for doing fuck all with her money. That policy creates no wealth. Not a single meter of railway is built because she has money in the bank. Not a single ball bearing is cast because she has money in the bank. Not a single ship is launched because she has money in the bank. Money in the bank has, quite literally, no economic function until it is spent.

Tell me again why money in the bank should pay interest at all?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:51:39 PM EST
[ Parent ]
you are abolishing any single element of basic economics.

That money in the bank is money the bank does lend to someone who needs money to create wealth. Economy needs credit.

And comparative advantage doesn't create trade any more than gravity creates rivers. Yes, it is a necessary precondition, but in real life, without money there is only very very limited trade actually happening.

Money is the abstraction of wealth and value, and a great facilitator for every kind of economics.

Denying money's existence or value is a sure sign of crackpot economics.

by cris0 on Tue Feb 14th, 2012 at 06:21:21 PM EST
[ Parent ]
Economy needs credit so credit is created. Then credit may circulate as money. But credit is a precondition for money, and not the other way around.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:24:06 PM EST
[ Parent ]
That money in the bank is money the bank does lend to someone

Loanable funds fallacy.

In the real world, banks create credit when someone borrows from them. They then turn around and get the central bank to sign off on that credit, thus turning it into legal tender.

There is no reason, save atavistic tradition, to even house deposit-taking and lending in the same institution.

Money is the abstraction of wealth and value, and a great facilitator for every kind of economics.

Money is an abstract representation of state power. An important point of being a sovereign state is that you reserve the right to revoke this power from foreign parties (either through strategic default or inflation) arbitrarily and without notice.

That's what "sovereignty" means: That you reserve the right to revoke political commitments to foreign entities.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:29:38 PM EST
[ Parent ]
Welcome to ET, cris0.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 12:33:15 PM EST
[ Parent ]
See fallacy of composition.

The very first example from the above wiki link:

In Keynesian macroeconomics, the "paradox of thrift" theory illustrates this fallacy: increasing saving (or "thrift") is obviously good for an individual, since it provides for retirement or a "rainy day," but if everyone saves more, Keynesian economists argue that it may cause a recession by reducing consumer demand. Other economic schools, such as the Austrian School, disagree.[

The Austrian School appears to subscribe to a view of wealth similar to that of the mythical German Dragon Joseph Campbell described, which stayed in its cave guarding its horde of wealth, for which it had no conceivable use.  

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 12:43:16 PM EST
[ Parent ]
The Austrian School, it should be noted, is not a school of economic thought, as it refuses as a matter of dogma to submit to empirical testing.

Insofar as economics is a scientific endeavor, therefore, Austrian moral theology does not qualify.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 15th, 2012 at 01:09:20 PM EST
[ Parent ]
Unfortunately that critique largely applies to all of "mainstream" economics, which considers itself a branch of moral philosophy and employs deductive reasoning from stated axioms.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 01:23:18 PM EST
[ Parent ]
If Germany had accumulated real physical wealth instead of money claims on other people, we wouldn't be having this problem.

Like, as I've argued several times earlier, channeling all that surplus cash into buying out ENI, Iberdrola, Santander, UniCredit, all the Greek shipping companies et cetera et cetera.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Feb 16th, 2012 at 08:13:38 PM EST
[ Parent ]
So, Greece must be rich because Greeks work harder than a great many Europeans and they have a very high savings rate (low private debt i.e. no credit card spending).
by Upstate NY on Tue Feb 14th, 2012 at 05:32:41 PM EST
[ Parent ]
Apparently Economics 101 never happened?

What applies to the finances in your house, village, and city does not apply to a nation, because the nation prints its own currency. It is a completely different situation, as is explained in tedious detail to thousands of college freshmen every year.

by asdf on Tue Feb 14th, 2012 at 05:52:59 PM EST
[ Parent ]
The solution to that problem is to for states to legislate their own money-printing privilege out of existence. Eurozone member states don't print their own currency, problem solved. We need new Economics 101 textbooks.

In fact, not even the Eurozone as a whole prints its own currency, because each Euro in existence is the result of the ECB president shitting a gold ingot. The Euro gold hoard is kept in Frankfurt by the Nibelungen.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:00:37 PM EST
[ Parent ]
"You work hard and live frugal, you create wealth. You have wealth"

That is the most evidence-free statement about wealth I have ever heard. I know plenty, and I mean plenty of people who did exactly that and are now subsisting on 400 Euro pensions. This sort of way to create wealth, in the real world, is so rare as to be irrelevant. If you want to have wealth you inherit it, or steal it from someone, or set up fancy con-artist schemes such as Nth order derivatives etc. I mean take the Fortune 500 list of the wealthiest people on the planet, and see how many of those fit your description

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Tue Feb 14th, 2012 at 06:14:44 PM EST
[ Parent ]
You work hard and live frugal, you create wealth. You have wealth.

Of course not. You may create wealth to markets, but there is no guarantee, that the market returns you the wealth you created. You may i.e. pay all your surplus to a landlord.

by kjr63 on Wed Feb 15th, 2012 at 08:48:12 AM EST
[ Parent ]
One suspects he is talking about Germany. He works hard, he lives frugally, he creates wealth, and Germany has wealth. He has pride in the Top Nation status, and this apparently compensates from the lack of accrual of material benefits to those who create the wealth.

Or something.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Wed Feb 15th, 2012 at 09:00:05 AM EST
[ Parent ]
But the euro is a wealth transfer mechanism. It transfers wealth from the poor to the stinking rich. So from the poor in both Germany and Greece to the stinking rich in both Germany and Greece.

If German workers got paid enough to keep Germanys trade balanced, they could afford more holidays in Greece and the workers in Greece could then afford more industrial goods from Germany. Instead we get Harz in Germany to push wages (though they call it inflation) down and slaughter of jobs, wages and rights for workers in Greece.

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 Tue Feb 14th, 2012 at 04:27:30 PM EST
[ Parent ]
I still don't understand how welfare and unemployment benefits (aka Hart IV) are related to the rise of wages, or lack thereof.

Can you explain?

by cris0 on Tue Feb 14th, 2012 at 04:53:27 PM EST
[ Parent ]
Reducing unemployment benefits and making the unemployed jump through useless hoops will reduce wages, no?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 04:58:08 PM EST
[ Parent ]
Reducing welfare and unemployment benefits creates greater precarity for the less well-off, leading to employers being able to impose less advantageous working conditions and lower wages.

And in fact, unit labour costs in Germany have fallen in relation to those of other eurozone countries since the implementation of Hartz IV.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Feb 14th, 2012 at 04:58:18 PM EST
[ Parent ]
Germany has resisted efforts by other countries to extract even more money from the German taxpayers.

When you have an agreement to keep exchange rates pegged to each other, each side should be responsible from defending its own currency from appreciation, because trying to defend your own currency from depreciation is an untenable position. This is because you can always print more of your own currency to buy foreign currency, thereby devaluing your currency ("defending your currency from appreciation") but you cannot always buy your own currency with your foreign currency reserves, thereby increasing the value of your currency ("defending your currency from depreciation"). The recently established one-sided bound on the Swiss Franc's exchange rate is an example of this - the Swiss bound is unassailable if the Swiss Central Bank chooses to defend it. It will never run out of reserves, rather it will accumulate reserves, trying to enforce its stated policy.

Bundesbank refusal to hold its end of a stable exchange rate deal (granted: nobody made it explicit that it was everyone's obligation to defend their own currency from appreciation) ejected the Pound and the Lira form the European Exchange Rate Mechanism 20 years ago. The EU should have recognised that this made stable exchange rates within it unsustainable and stopped pursuing them as a policy goal. The Euro project should have been abandoned by the French side. Unfortunately for us all, the Bundesbank did defend the DM from appreciation when it looked like it was the French Franc that would be ejected next.

Therefore, contra your claim I quote at the start, the Euro is a huge wealth transfer mechanism towards intra-EU net exporters (notably Germany, but also the Netherlands and Finland) because it put all the economic burden of the fixed exchange rate regime on the shoulders of the deficit countries (which would naturally see their currency depreciate if if were allowed to float).

Keynes recognised that devaluation, deteriorating terms of trade and indebtedness are in themselves a penalty that deficit countries have to pay, so at Bretton Woods he proposed that, in order to restore a sustainable fixed-exchange-rate system (then the Gold Standard) this system would have to impose some sort of penalty on surplus countries. The US, then the world's exporter of last resort, "took the position of absolutely no". This is typical of exporters of last resort in international trade crises (see China and Germany at the G20 in 2009).

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 05:21:02 PM EST
[ Parent ]
IIRC the Euro was set up so that there should not be "deficit countries". It was stressed quite loudly that it needed a coherent fiscal policy by all its members. Thus the deficit and debt criteria.

So the case you describe should just not happen because all countries run the same deficits.

by cris0 on Tue Feb 14th, 2012 at 06:32:25 PM EST
[ Parent ]
No, the Euro was set up so that there was no constraint on the creation of current accounts deficit countries. Specifically, there was no mechanism by which current account surplus countries would be forced to repatriate that surplus.

Current accounts is the surplus/deficit that actually matters. This pathological obsession with inflation, government bonds and government spending is an Austrian-school cargo cult, not any form of economics conventionally recognised in the social sciences.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:37:44 PM EST
[ Parent ]
The 3% deficit limit is macroeconomic nonsense, as demostrated by the fact that in 2009 because of the depth of the recession the average Eurozone deficit was well above that just form "automatic fiscal stabilizers" (the social safety net).

You cannot legislate recessions deeper than 3% out of existence.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:38:57 PM EST
[ Parent ]
In the case of Spain, the government kept to the 3% deficit limit "impeccably, impeccably". Too bad that this implied the country's trade deficit had to be financed by private debt. The EU's asymmetric concept of debt (public debt: toxic; private debt: okay) coupled with the refusal to acknowledge you cannot have a surplus without someone else having a deficit, caused the current crisis. And, by the looks of the policy response, will cause the next crisis, too.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:43:04 PM EST
[ Parent ]
What is "other countries"? It isn't "other countries" that "extract wealth" from the German taxpayer. It's European (and prominently German) banks. Greece for example saw precious little of the first loan deal money, and is assured not to see any money from the latest deal. It all goes to service unserviceable debt, which should have been repudiated (or generously restructured) in early 2010. That the German government decides to bail-out the banksters claiming that it has to do that because of the "lazy Greeks" or all the other racist stereotypes that a Bild reader can be driven on, is a game a couple of centuries old at least: nationalism and racism in the service of local elite interests. In fact most sane people (Die Linke prominent among them) were against the first loan, on exactly these grounds.

I would be very careful about using the term "steal" in the context of Greco-German relationships. First of all Greece was among the countries that helped German recover in the 1953 debt settlement (without which Germany would never have gotten back on its feet), and also Germany has never repaid back the forced loan that the Nazi occupation forces forced on the Bank of Greece, taking pretty much all of the gold in its treasury. The loot was kept by the FRG without repayment, pending reunification. After reunification it became "old history". This is not about war reparations (a separate matter) but about an actual debt, never repaid but never forgiven also by the Greek state. At this stage of Greco-German relations it is a sure bet that the (quite defendable legally I'm told) loan claims will be put on the table by the successor gvt, especially if it is of the left.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Tue Feb 14th, 2012 at 06:10:44 PM EST
[ Parent ]
It isn't "other countries" that "extract wealth" from the German taxpayer. It's European (and prominently German) banks.

Shhh!! You wouldn't want to disturb the (German) children. They are sleeping so nicely through the looting.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 17th, 2012 at 02:33:54 PM EST
[ Parent ]
I didn't wanted, but since it is discussed anyway.

<Theo Weigels' merry men wrote the 3-percent deficit limit into the Maastricht Treaty.>

No. They proposed it; and 1< other governments accepted it. What about their agency?

 <Germany opposed any effort to work towards an EU-wide bank resolution scheme when the shit hit the fan in late 2008.>

Now you are just making things up. There was no effort to work toward a EU-Wide resolution scheme. Every country - and that was the problem - acted for themselves. As usual the main culprit and trigger were the Irish with their idiotic blanket guarantee.

> Germany opposed fiscal stimulus as the G20 in 2009 on the grounds that "automatic stabilizers were sufficient" only to spearhead the destruction of the EU's welfare state and social compact when the said automatic stabilizers pushed deficits well above 3% EU-wide as they couldn't possibly fail to do in a deep recession.>

That is a bit dubious history. In July 2009, when the summit happened, in Germany the stimulus was already enacted at about 1.6% of gdp in 2009. That was not really then the stimulus in the US, not to talk of the other G8 countries. And the argument that countries with big automatic stabilizers like Germany need a smaller explicit stimulus is at least plausible.

 <Germany has for 2 years and increasingly transparently pushing a laundering a bank bailout through Greece, in the process destroying the Greek economy and making the Greek debt situation worse with each  crisis "resolution" proposal.>

You mean Germany and the other EU-countries, I hope. And the greek economy was hardly in a healthy state in 2009. There was and in same sense is a global crisis starting in 2008, even if you like to pretend it isn't.

 >Germany is pushing treaty reforms and policy proposals at the EU level which have nothing to do with the causes of the crisis and do nothing to resolve it.>

True. Neoliberalism in action. Is e. g. Rajoy any different? Most of europe is governed by right.wingers. What do you expect?

 >For "Germany" read "Merkel and her government" above if you must.<

No, that would misconstrue your argument: You don't mean Merkel, you don't mean right-wing policies, you mean Germany, going back to at least Waigel. But probably you think that the root of this ancient conspiracy goes back to when Helmut Schmidt duped Giscard d'Estaing into a common european currency.

 

by IM on Sat Feb 18th, 2012 at 09:59:37 AM EST
[ Parent ]
<Theo Weigels' merry men wrote the 3-percent deficit limit into the Maastricht Treaty.>

No. They proposed it; and 1< other governments accepted it. What about their agency?

In most ethical systems, the quack and the con-man is held to a higher standard of foresight than his marks.

> Germany opposed fiscal stimulus as the G20 in 2009 on the grounds that "automatic stabilizers were sufficient" only to spearhead the destruction of the EU's welfare state and social compact when the said automatic stabilizers pushed deficits well above 3% EU-wide as they couldn't possibly fail to do in a deep recession.>

That is a bit dubious history. In July 2009, when the summit happened, in Germany the stimulus was already enacted at about 1.6% of gdp in 2009.

Which is chickenshit compared to the magnitude of money printing needed to restore private sector solvency.

That was not really then the stimulus in the US, not to talk of the other G8 countries. And the argument that countries with big automatic stabilizers like Germany need a smaller explicit stimulus is at least plausible.

Only if you do not then proceed to destroy those automatic stabilisers when they start working.

<Germany has for 2 years and increasingly transparently pushing a laundering a bank bailout through Greece, in the process destroying the Greek economy and making the Greek debt situation worse with each  crisis "resolution" proposal.>

You mean Germany and the other EU-countries, I hope.

No, Germany and France.

If you start holding mini-summits with Merkozy and presenting their conclusions as fait accomplis that Germany will not deviate from, then Germany and France are to blame for EU policy.

And France will get its comeuppance soon enough, so again we're back to the problem of con-men and marks.

And the greek economy was hardly in a healthy state in 2009.

Irrelevant when the German response was to do everything in its power to make the crisis worse.

There was and in same sense is a global crisis starting in 2008, even if you like to pretend it isn't.

Irrelevant to the Eurozone. The Eurozone would have been fully capable of burying the crisis in newly printed money if the Bundesbank assholes and Frau Merkel and her merry band of Swabian Housewife Economists had not pitched a hissy fit every time an actual workable solution was proposed.

You don't mean Merkel, you don't mean right-wing policies, you mean Germany, going back to at least Waigel.

Germany has been consistently conducting right-wing policy at least since Weigel. So, yeah.

But probably you think that the root of this ancient conspiracy goes back to when Helmut Schmidt duped Giscard d'Estaing into a common european currency.

No, it goes back to when Schmidt duped d'Estaing into accepting that the Bundesbank's Lysenkoist economic theology was used as a foundation for that common currency.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 10:12:43 AM EST
[ Parent ]

In most ethical systems, the quack and the con-man is held to a higher standard of foresight than his marks.

That is just nonsense. Your picture of an europe where all other countries are not only powerless but not even able to understand what they sign is a fairy tale.

 >Which is chickenshit compared to the magnitude of money printing needed to restore private sector solvency.<

And that is shifting the goalposts. Tgere was a very considerable fiscal stimulus in Germany, perhaps the biggest in the G8.

 <Only if you do not then proceed to destroy those automatic stabilisers when they start working.<<p> The automatic stabilizers in Germany are unchanged.

 >No, Germany and France.

 If you start holding mini-summits with Merkozy and presenting their conclusions as fait accomplis that Germany will not deviate from, then Germany and France are to blame for EU policy.

 And France will get its comeuppance soon enough, so again we're back to the problem of con-men and marks.<

What about the Netherlands or Finland? or Luxemburg? All german puppets? Once again, you are denying the agency of all other EU countries.

 <Irrelevant when the German response was to do everything in its power to make the crisis worse.>

 Irrelevant to the Eurozone. The Eurozone would have been fully capable of burying the crisis in newly printed money if the Bundesbank assholes and Frau Merkel and her merry band of Swabian Housewife Economists had not pitched a hissy fit every time an actual workable solution was proposed.

And here you are denying the agency of all other members of the governing council. Was Trichet a stealth keynesian or what? And neither the fed nor the BoE was able or perhaps willing to bury their great recession. Do want to blame Merkel or the "Bundesbank" for that result, too?

 >Germany has been consistently conducting right-wing policy at least since Weigel. So, yeah.

 No, it goes back to when Schmidt duped d'Estaing into accepting that the Bundesbank's Lysenkoist economic theology was used as a foundation for that common currency.<

And I thought I was joking. You really think everything is a german conspiracy. Have you worked in templars and jesuits yet?

by IM on Sat Feb 18th, 2012 at 10:52:05 AM EST
[ Parent ]
Your picture of an europe where all other countries are not only powerless but not even able to understand what they sign is a fairy tale.

As a matter of fact, given the quality of public debate, this is exactly what happened.

It is apparently a matter of national pride that Spain "will be in the core Euro" (that's just laughable given the fundamentals, in the case of France it's equally wrongheaded but at least borderline), just like it was a matter of national pride to get into the Euro in 1999. A lot of it must have had to do with "showing those Germans and Dutch" (do you remember the rhetoric of the late 1990s about undeserving Southerners? Not that different from Rutte's and de Jager's this past year)

Another example, when in late 2008 there were discussions about having a G20 there was a huge brouhaha in Spain about whether Spain would have a seat at the table or not. It was all about national pride again. There was not a single discussion of what it was that Spain wanted to say from that seat, if it got it (which it did, and we apparently had Sarkozy to thank for that, or something).

I mean, European politics is at the level of a nursery school playground.

In addition, as I have pointed out repeatedly, there is an issue of "European inadequacy complex" on the part of Greece, Portugal and Spain, which were kept out of the European Communities on account of, first, underdevelopment and then, until the mid-1970s, because they were dictatorships. Presumably Italy got in early because of its industrial North, because Italians also contributed greatly to the Gastarbeiter in the 1960s like the other Mediterranean countries.

Around 1990, only the lyrical left opposed the Maastricht treaty and, boy, were they right (and for the right reasons, too). By the time 1999 rolled by, the Euro wasn't debatable in serious company.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 11:04:29 AM EST
[ Parent ]
>As a matter of fact, given the quality of public debate, this is exactly what happened.<

Do really think the quality of public debate in Germany is higher? The other european countries have professional governments, professional administrations, armies of economist, jurist etc. too. So they shuold have been as bale or unable as germany to understand what they were doing. It is not as if Germany is the only professional government in the EU facing a bunch of prt.time village councils.

 >It is apparently a matter of national pride that Spain "will be in the core Euro" (that's just laughable given the fundamentals, in the case of France it's equally wrongheaded but at least borderline), just like it was a matter of national pride to get into the Euro in 1999. A lot of it must have had to do with "showing those Germans and Dutch" (do you remember the rhetoric of the late 1990s about undeserving Southerners? Not that different from Rutte's and de Jager's this past year)<

You can't blame idiotic nationalistic pride in other countries on Germany.

 >Another example, when in late 2008 there were discussions about having a G20 there was a huge brouhaha in Spain about whether Spain would have a seat at the table or not. It was all about national pride again. There was not a single discussion of what it was that Spain wanted to say from that seat, if it got it (which it did, and we apparently had Sarkozy to thank for that, or something).<

Like german as working language in the EU or the eternal german quest of a permanent seat in the security council.

 >In addition, as I have pointed out repeatedly, there is an issue of "European inadequacy complex" on the part of Greece, Portugal and Spain, which were kept out of the European Communities on account of, first, underdevelopment and then, until the mid-1970s, because they were dictatorships. Presumably Italy got in early because of its industrial North, because Italians also contributed greatly to the Gastarbeiter in the 1960s like the other Mediterranean countries.>

I am reasonably sure a similar complex exists in most eastern european countries.

 

by IM on Sat Feb 18th, 2012 at 11:33:28 AM EST
[ Parent ]
I am reasonably sure a similar complex exists in most eastern european countries.

Luckily for them, they joined the EU in 2004.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 11:48:33 AM EST
[ Parent ]
Do really think the quality of public debate in Germany is higher?

No, but Germany is benefiting from the delusions in question.

Again: Does Scientology magically become not a pyramid scam just because the people running it happen to believe in the bullshit they're selling?

Does a homeopath suddenly become blameless for killing people through malign neglect, just because he believes that his magic water will cure their cancer?

Does Jim Jones becomes blameless for lacing his kool-aid with cyanide, just because his followers swallowed it?

If the answer to any of those questions is "no," then why the fuck should we cut Germany a break for wrecking the Eurozone?

I am reasonably sure a similar complex exists in most eastern european countries.

And this makes it OK for Germany to exploit it?

Just so we're clear on that. Because if it's OK for Germany place its own narrow national interest above the interests of the European community, then it would also be OK for, say, Ireland to selectively default on only German holders of Irish government bonds.

Sauce for the goose, and all that.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:48:40 AM EST
[ Parent ]
The  tax-haven and neo-liberal casino of Ireland has done damage enough, including  sending european commissars pushing neo-liberalism.

Do you really want to argue that out of 27 EU-Countries only one has a national interest?

>then it would also be OK for, say, Ireland to selectively default on only German holders of Irish government bonds.<

careful here, the mask is dropping-

by IM on Sat Feb 18th, 2012 at 11:54:44 AM EST
[ Parent ]
And now the half of the Irish population that never touched Fianna Fail with a barge pole must be punished for McCreevy, eh?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:59:40 AM EST
[ Parent ]
Oh, no nationality doesn't matters, what?
by IM on Sat Feb 18th, 2012 at 12:18:59 PM EST
[ Parent ]
My point is that why did they join is not an argument. They did it ostensibly for the wrong reasons.

Also, countries have not opposed Merkel more forcefully because doing so "might be un-european" or something. In the Spring of 2010 Sarkozy reportedly (later deniedly) threatened to quit the Eurozone there and then if Germany didn't agree to a Greek bailout. Also Zapatero should have realised the "European friends" were not his friends at all, but he probably couldn't fathom it (Here is a fully sourced contemporary diary to anger you). Less than a year after that, Socrates and Zapatero even saw it fit to shun a PES summit in order not to be seen as "not playing ball" with the Eurozone powers that be.

I call this Stockholm syndrome. You may disagree. What it isn't is a rational macroeconomic policy.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 11:56:44 AM EST
[ Parent ]
And I call it blame shifting. And scape goating.

The actual policies of the european countries - as opposed to the policies you thin they should pursue - matter very much.

>You may disagree.<

Very generous.

>What it isn't is a rational macroeconomic policy.<

Have I said so?

by IM on Sat Feb 18th, 2012 at 12:04:54 PM EST
[ Parent ]
And I call it blame shifting. And scape goating.

Accusing Zapatero of being spineless and clueless is blame shifting?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 01:33:07 PM EST
[ Parent ]
Yes. Of the "the emperor is good-intentioned. But just listening to evil councilors. These evil councilors being in the pay of foreign interests" sort.
by IM on Sat Feb 18th, 2012 at 01:42:23 PM EST
[ Parent ]
Funny you should say that.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 01:52:52 PM EST
[ Parent ]
 Jordi Sevilla, alias Jürgen Schulze, german agent.
by IM on Sat Feb 18th, 2012 at 01:54:17 PM EST
[ Parent ]
He's just as neoliberal as the SPD.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 02:03:54 PM EST
[ Parent ]
As to ZP's cluelessness, do you know about the anecdote of the "two afternoons"?

There was a notorious "open mike" gaffe between Sevilla and Zapatero. Zapatero had made some rookie mistake in a public statement as opposition leader and Sevilla said to him "don't worry, I can teach you all you need to know in two afternoons".

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 02:06:22 PM EST
[ Parent ]
To teach the tenets of practical neoliberalism, two hours will do. Perhaps another hour for the third way dressing.
by IM on Sat Feb 18th, 2012 at 02:14:01 PM EST
[ Parent ]
Well, I could also conclude that ZP was evil or traitorous. Would that be better?

After all,

The day after ZP won the elections on March 14, 2004, the cry of the youth on the street was Zapatero, no nos falles (Zapatero, don't let us down). [After May 15, 2011], it's Zapatero nos falla y nos reprime (Zapatero lets us down and represses us).


tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 02:29:03 PM EST
[ Parent ]
>As a matter of fact, given the quality of public debate, this is exactly what happened.<

Do really think the quality of public debate in Germany is higher?

Patently not, as you know from my commenting here.

But what is the implication of that? That we should just accept that the body politic is stupid and stop criticising stupid policy?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 02:11:27 PM EST
[ Parent ]
In most ethical systems, the quack and the con-man is held to a higher standard of foresight than his marks.

That is just nonsense. Your picture of an europe where all other countries are not only powerless but not even able to understand what they sign is a fairy tale.

Caveat emptor, eh?

In point of fact, they did not understand what they were signing. This is a matter of public record. Nowhere in the Eurozone was there any substantive public debate on the consequences of accession. And what sorry excuse for a debate there was adopted Lysenkoist economics wholesale.

Suppose, now, that Germany was, in fact, acting in good faith. What is the good-faith response to realising that you have proposed a system that manifestly does not work?

It is to say "oops, sorry, let's fix this." In this case, to support unconditional fiscal defence of full employment, backed by the full seigniorage power of the central bank.

Germany has not made this good-faith response to the crisis. On the contrary, Germany has been the loudest and most hysterical voice decrying any and all reasonable plans, and proposing one Rube Goldberg-esque bullshit pseudo-solution after the other in order to avoid negotiating in good faith.

The fact that Germany is not the only Eurozone country to do so does not detract from the fact that it is both the largest, the most vocal and the most extremist in insisting that others bow down before its inflation neurosis.

And that is shifting the goalposts. Tgere was a very considerable fiscal stimulus in Germany, perhaps the biggest in the G8.

No. To be "considerable," it has to bear some considerable relationship to the magnitude of the problem. Defining "considerable" as "considerable relative to what the Swabian Housewife Economists at the Bundesbank would have liked," by contrast, is moving the goalposts.

What about the Netherlands or Finland? or Luxemburg?

Were they invited to the Merkozy mini-summits?

No, I thought not.

If you presidentialise the EU around Frau Merkel, then you don't get to play the victimisation card and the "but they do it too" card when people assume that Merkel is the president of Europe.

All german puppets? Once again, you are denying the agency of all other EU countries.

I am noting that under current treaty arrangements they have no power to overrule an obstructionist German position.

And neither the fed nor the BoE was able or perhaps willing to bury their great recession.

The US Fed/Treasury are doing an almost reasonable job of fighting their recession.

The BoE can't tell the Exchequer to spend more money. But it sure as Hell isn't telling the Exchequer that it can't spend more money.

The central bank and the treasury have to work together to bury a downturn in newly printed money. In the UK, it's the Tory-controlled Treasury that is obstructionist. In the Eurozone, it is the BuBa-dominated ECB that is obstructionist.

And I thought I was joking. You really think everything is a german conspiracy. Have you worked in templars and jesuits yet?

I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.

The fact that the Swabian Housewife Economists believe in the bullshit they peddle is not an excuse, any more than being a fervent believer in homeopathy is an excuse for pretending that it can cure disease. Nor is the fact that the rest of Europe believes it as well.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:13:04 AM EST
[ Parent ]
>Caveat emptor, eh?<

Among professionals that is indeed the legal principle. And the other european governments are as professional or non-professional as the the german one.

 >In point of fact, they did not understand what they were signing. This is a matter of public record. Nowhere in the Eurozone was there any substantive public debate on the consequences of accession.<

But this nowhere in the eurozone includes Germany doesn't it?

>Suppose, now, that Germany was, in fact, acting in good faith. What is the good-faith response to realising that you have proposed a system that manifestly does not work?

 It is to say "oops, sorry, let's fix this." In this case, to support unconditional fiscal defence of full employment, backed by the full seigniorage power of the central bank.<

Hold on. is there a single, I repeat a single european government proposing that? You see the problem?

>No. To be "considerable," it has to bear some considerable relationship to the magnitude of the problem. Defining "considerable" as "considerable relative to what the Swabian Housewife Economists at the Bundesbank would have liked," by contrast, is moving the goalposts.<

That is not what I said. Considerable compared to all other G8 countries, including the US and considerable measured in gdp.

 >I am noting that under current treaty arrangements they have no power to overrule an obstructionist German position.<

Of course they can. Theres is no German veto not shared with any other Eu country. In every majority voting case, there is a possibility to out-vote Germany. And at the ECB, the center of your complaints, is is really easy to outvote two german members on the council.

 >The US Fed/Treasury are doing an almost reasonable job of fighting their recession.<

Nonsense. The stimulus was much to small. But even you can't refashion republicans or moderate democrats into german agents, so you rather paint a rosy picture.

 >I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.<

In other words, you are postulating a conspiracy. And I thought blaming les anglo saxons is simple minded.

 >The fact that the Swabian Housewife Economists believe in the bullshit they peddle is not an excuse, any more than being a fervent believer in homeopathy is an excuse for pretending that it can cure disease. Nor is the fact that the rest of Europe believes it as well.<

But a fact; a fact you tend to ignore in preferment to your nationalistic narrative.

by IM on Sat Feb 18th, 2012 at 11:51:05 AM EST
[ Parent ]
>I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.<

In other words, you are postulating a conspiracy.

Well, no. The German economic establishment is wrong but powerful so it can spread its wrongness.

I mean, the conventional wisdom at street level is that anything Germans say on economics must be right.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 12:00:36 PM EST
[ Parent ]
I mean, the conventional wisdom at street level is that anything Germans say on economics must be right.

But back in the far-aywy day of say 2004 that wasn't conventional wisdom. Back then the celtic tiger was the model.

Or Slovakia or Estonia or whatever.

by IM on Sat Feb 18th, 2012 at 12:07:11 PM EST
[ Parent ]
No. It is a modern variation of 'Might makes Right.' Germany is the modern European economic superpower. 'It must be because they are doing things right.' Not only are the poor honest, but they are also generous. They would not think that the reason Germany is doing so well, comparatively, is that they are manipulating the rules to their advantage.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 19th, 2012 at 07:46:18 PM EST
[ Parent ]
Among professionals that is indeed the legal principle.

Except when it comes to government bonds, apparently. You're not allowed to tell the buyer to fuck off and die on those, are you?

But this nowhere in the eurozone includes Germany doesn't it?

It does.

Believing in fairy tales is not an excuse for murder.

And let's be perfectly fucking clear here: What Mr. Schauble is doing is murder. Clear, cold-blooded murder. Before this crisis is over, he and his friends will have murdered tens of thousands of Greeks and God only knows how many Spaniards, Irish and Italians.

Major industrial depressions are not a fucking game that you get to play over drinks in the country club.

Hold on. is there a single, I repeat a single european government proposing that? You see the problem?

No, I do not see any problem with attacking the most stridently insane country of the lot.

When Germany starts acting less insane than the Netherlands, I will happily begin going after the Netherlands. Until and unless that happens, however, you are making pathetic excuses.

>I am noting that under current treaty arrangements they have no power to overrule an obstructionist German position.<

Of course they can. Theres is no German veto not shared with any other Eu country.

My emphasis.

See the problem here?

In every majority voting case, there is a possibility to out-vote Germany. And at the ECB, the center of your complaints, is is really easy to outvote two german members on the council.

And every time they do that, the Bundesbank immediately goes to Frankfurter Allgemeine BildZeitung and shrieks and whines about how unfair everybody is treating Germany until it stops.

>The US Fed/Treasury are doing an almost reasonable job of fighting their recession.<

Nonsense. The stimulus was much to small. But even you can't refashion republicans or moderate democrats into german agents, so you rather paint a rosy picture.

The stimulus was much too small, certainly.

But I note that no American state has seen 34 % drops in government outlays, 15 % drops in nominal wages and unemployment percentages in the high 20s. Even after you strip out all the lies the Americans put in their statistics, they're still outperforming the Troika by five to ten percentage points on all important measures.

>I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.<

In other words, you are postulating a conspiracy. And I thought blaming les anglo saxons is simple minded.

I am blaming the Hayekians. I am noting that Germany is the foremost peddler of the Hayekian cancer in Europe today.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 12:18:03 PM EST
[ Parent ]
>Except when it comes to government bonds, apparently. You're not allowed to tell the buyer to fuck off and die on those, are you?<

As far as I understand the legal situation, it is not any different. But you don't really want to hear that, do you?

 >It does.

 Believing in fairy tales is not an excuse for murder.<

And hyperbole doesn't replace an argument.

 >No, I do not see any problem with attacking the most stridently insane country of the lot.

 When Germany starts acting less insane than the Netherlands, I will happily begin going after the Netherlands.<

Ad calendas graecas or so.

 >My emphasis.

 See the problem here?<

No.

 >And every time they do that, the Bundesbank immediately goes to Frankfurter Allgemeine BildZeitung and shrieks and whines about how unfair everybody is treating Germany until it stops.<

But that, like the two resignations, is actually a sign of weakness and waning influence.

 >The stimulus was much too small, certainly.

 But I note that no American state has seen 34 % drops in government outlays, 15 % drops in nominal wages and unemployment percentages in the high 20s.<

As far as I understand the states and local governments have almost offset the federal stimulus with their balanced budgets requirements. and the resulting fiscal austerity.

by IM on Sat Feb 18th, 2012 at 12:36:45 PM EST
[ Parent ]
Believing in fairy tales is not an excuse for murder.

And hyperbole doesn't replace an argument.

The closest point of comparison to what the Troika is inflicting on Greece is Russia under Yeltsin.

That experience killed roughly 1 % of the Russian population. If Greece performs similarly, and there is no, a priori, any reason it should not, you're looking at somewhere on the order of fifty thousand preventable deaths.

Yeah, I call that murder.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 12:42:35 PM EST
[ Parent ]
As far as I understand the [US] states and local governments have almost offset the federal stimulus with their balanced budgets requirements. and the resulting fiscal austerity.

And yet they are still doing measurably better than the Troika.

In other words, the Troika confidence fairie performs worse than a placebo stimulus.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 12:45:30 PM EST
[ Parent ]
Because of - may I mention that once again - automatic stabilizers. The federal spending on Social security, medicare and medicaid keeps places like Nevada afloat.
by IM on Sat Feb 18th, 2012 at 12:53:24 PM EST
[ Parent ]
Automatic stabilisers which Germany is busy dismantling in Greece.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 01:57:03 PM EST
[ Parent ]
Let me remind you that Greece was running deficits even before the crisis hit and the automatic stabilizers kicked in. Look, if you want to run Keynesian policy, either through automatic stabilizers or stimulus programs, you need to have at least semi-sound public finances before the crisis hits. And after the crisis, you need to pay down debt, so you have a space financial space available to borrow heavily during the next crisis.

Sadly, politicians far prefer spending during bad times than they enjoy saving during good times (try to convince the Swabian housewifes that taxes must rise during good times to increase the size of the budget surplus), which is likely why Keynesians has gotten such a bad reputation.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Feb 18th, 2012 at 02:24:43 PM EST
[ Parent ]
That's only true under a commodity standard or pegged ForEx policy.

It is true that ideally you would attempt to deter inflation whenever this is consistent with full employment. But under a floating FX regime and absent atavistic commodity pegs, nothing about having spent yesteryear prevents you from spending this year.

Yes, spending yesteryear may have created inflation. But it makes no sense to encourage deflation today just because because there was inflation yesterday. For the same reason it makes no sense to shoot a man in the back after he has been shot in the front, on the theory that "the average bullet velocity through his chest will be zero."

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 03:39:48 PM EST
[ Parent ]
But probably you think that the root of this ancient conspiracy goes back to when Helmut Schmidt duped Giscard d'Estaing into a common european currency.
No, actually. It's pretty clear that this is all down to the political naivete (and overreaching ambition) of Jacques Delors.
> Germany opposed fiscal stimulus as the G20 in 2009 on the grounds that "automatic stabilizers were sufficient" only to spearhead the destruction of the EU's welfare state and social compact when the said automatic stabilizers pushed deficits well above 3% EU-wide as they couldn't possibly fail to do in a deep recession.>

That is a bit dubious history. In July 2009, when the summit happened, in Germany the stimulus was already enacted at about 1.6% of gdp in 2009. That was not really then the stimulus in the US, not to talk of the other G8 countries. And the argument that countries with big automatic stabilizers like Germany need a smaller explicit stimulus is at least plausible.

Hmm, I thought the summit took place in April 2009. And anyway, I didn't say that Germany opposed stimulus per se. What happened was that first, the US tried to get some sort of global agreement and was shunned by China on the one hand and Germany with the "automatic stabilizers" argument on the other.
Here's a message from Berlin to U.S. officials arguing that Europe's governments should pony up as much as Washington has to stimulate their economies: Germany's already doing it.

U.S. officials say they want to use the April 2 summit of the Group of 20 countries to persuade other economies to do more to boost flagging demand by passing bigger emergency government spending packages, similar in scale to the $787 billion that the U.S. administration recently pushed through Congress.

...

But the trans-Atlantic debate over stimulus packages has touched a nerve in Germany, which believes many U.S. critics fail to take into account differences between the U.S. and European economies. One big one: In Europe's generous welfare states,when recession strikes, governments automatically start paying out more than in the U.S. in the form of welfare checks and other so-called automatic stabilizers.

(WSJ, March 12, 2009) The "problem" was that, by the end of 2009, the said "automatic stabilizers" had demonstrated that the 3% deficit limit was bullshit. The "solution" adopted in 2010-11 has been to dismantle the said "generous welfare states", precisely in the countries where they are least generous (as a fraction of GDP).
Neoliberalism in action. Is e. g. Rajoy any different? Most of europe is governed by right.wingers. What do you expect?
May I ask you for the political affiliation and nationality of the person famous for the phrase crass Keynesianism (uttered at the end of 2008)?

What happened in July 2009 was that Germany passed its own "debt brake" constitutional amendment (see Berlin weaves a deficit hairshirt for us all), surely in an effort to rein in its own out-of-control "automatic stabilizers".

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 10:18:38 AM EST
[ Parent ]
>No, actually. It's pretty clear that this is all down to the political naivete (and overreaching ambition) of Jacques Delors.<

Yes, Jacques Delors, famous spineless political yes man, just a lost babe in the woods. But perhaps he was a long-term german agent.

>Hmm, I thought the summit took place in April 2009.<

Finance ministers, probably.

>And anyway, I didn't say that Germany opposed stimulus per se.<
What about: "Germany opposed fiscal stimulus"?

>What happened was that first, the US tried to get some sort of global agreement and was shunned by China on the one hand and Germany with the "automatic stabilizers" argument on the other.<

I am a bit irritated. Why do always assume that "automatic stabilizers" is some german excuse cooked up on he spot in 2009 and not a age old economic concept?
And the german argument: we are already doing what you demand, was right. Especially if you remember that the impressive looking american stimulus was full of non-stimulative things like the ATM fix.

And is that argument:

<But the trans-Atlantic debate over stimulus packages has touched a nerve in Germany, which believes many U.S. critics fail to take into account differences between the U.S. and European economies. One big one: In Europe's generous welfare states,when recession strikes, governments automatically start paying out more than in the U.S. in the form of welfare checks and other so-called automatic stabilizers.>

not largely right?

>May I ask you for the political affiliation and nationality of the person famous for the phrase crass Keynesianism (uttered at the end of 2008)?>

That would be the finance minister responsible for the biggest stimulus package in german history?

 >What happened in July 2009 was that Germany passed its own "debt brake" constitutional amendment (see Berlin weaves a deficit hairshirt for us all), surely in an effort to rein in its own out-of-control "automatic stabilizers".<

Sticks and stones will break my bones, but words will never hurt me. What actually happened in Germany in 2009 and 2010 was a classical keneysian stimulus. The whole crisis was successful seventies revival in germany, including unions and employers.

by IM on Sat Feb 18th, 2012 at 11:09:08 AM EST
[ Parent ]
I am a bit irritated. Why do always assume that "automatic stabilizers" is some german excuse cooked up on he spot in 2009 and not a age old economic concept?

It is extremely annoying that you keep misrepresenting this argument.

The point is not that the German argument did not make sense in 2009. The problem is the hysterical shrieking that the German Seriöse Leute began emitting the second those automatic stabilisers actually started making any meaningful contribution.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:18:00 AM EST
[ Parent ]
>The point is not that the German argument did not make sense in 2009.<

But that was the argument; a opposition in 2009 to fiscal stimulus, using the automatic stabilizer argument. So you admit that the argument was indeed right in 2009?

by IM on Sat Feb 18th, 2012 at 11:57:37 AM EST
[ Parent ]
I believe it was, yes.

But that's because I believe that the hysterical children didn't realise in 2009 that their automatic stabilisers would certainly breach their magical voodoo 3 % deficit limit.

The other possibility is that they had realised this elementary fact that anybody who took the time to add the numbers together would realise. In which case they were lying when they said that automatic stabilisers would suffice, because they clearly didn't intend to let them work.

I'm going with stupidity here, but it's almost equally easy to make a case for malice aforethought.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 12:04:01 PM EST
[ Parent ]
Unity!

Well, almost.

I remember the policy discussion in late 2008 early 2009 around quite good and as far as I was aware nobody thought that after the impact of the crisis and the stimulus where would be a german deficit inside the Masstricht rules.

by IM on Sat Feb 18th, 2012 at 12:17:20 PM EST
[ Parent ]
Then what was the debt brake amendment and the deficit panic of late 2009 all about?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 12:49:50 PM EST
[ Parent ]
God if I knew I would already told.

 The debt brake is a imitation of the debt brake in Switzerland introduced in 2001, the concrete german rule a result of commission working from early 2007 to early 2009. So I think we are talking less about a reaction to the crisis and ore about a manifestation of a long term obsession of the german body politic with public debt.

by IM on Sat Feb 18th, 2012 at 01:05:51 PM EST
[ Parent ]
So I think we are talking less about a reaction to the crisis and ore about a manifestation of a long term obsession of the german body politic with public debt.

And what we're arguing is that it's toxic for the rest of the Eurozone to have by far the largest and currently most solvent country in the Eurozone acting on that obsession.

One thing we have pointed out is that after the summer of 2011 even France had lost any of the political leverage it may have had (and, again, reportedly Sarkozy got to make credible threats in the Spring of 2010 - now Merkel thinks she needs to help him with his reelection). So now it's just a Germany with a decades-old unhealthy obsession with public debt alone in the driving seat. Or do the Netherlands, Finland and Luxembourg set EU Council policy independently of Germany?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 01:42:50 PM EST
[ Parent ]
See, I tried you answer your question and you just use is as a cudgel.

"Or do the Netherlands, Finland and Luxembourg set EU Council policy independently of Germany?"

A straw man. The three and others Austria e. g, share the "decades-old unhealthy obsession with public debt".

Why do deny this simple fact? The government of say the netherlands is not a bunch of fanatic keynesians forced on a difference course.

by IM on Sat Feb 18th, 2012 at 01:52:39 PM EST
[ Parent ]
For all the apparent disagreement I think it's been pretty well established that the Eurozone cannot work as structured and with its current membership.

At  which point one wonders if the inevitable conclusion is not that the Eurozone will shed its members one by one until all that's left is, well, Germany, the Netherlands, Finland and Luxembourg.

The problem is that it's one thing to say that the countries South of the Alps should never have joined a currency union with Germany, and a very different thing to say the proper thing to do now is to throw them out. But that's what appears likely. And the rump Neurozone would probably not enjoy having their currency appreciate by maybe 50% with respect to the old broad Euro average.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 02:03:00 PM EST
[ Parent ]
Well, it'll be good for Sweden, as the majority of our exports go to the Neurozone... ;p

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sat Feb 18th, 2012 at 02:26:39 PM EST
[ Parent ]
It may have been right in the first half of 2009, but a bigger stimulus wouldn't have hurt ('adequate' is not an exaggerated size). And the argument was symptomatic of a general opposition to fiscal stimulus, as we saw by the "crass Keynesianism" "argument" (ahem) of late 2008, the debt brake of mid-2009, and then the panic over EU-wide breaches of the deficit limit at the end of 2009, to be followed by liquidationism and "expansionary austerity" since.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 12:45:41 PM EST
[ Parent ]
but a bigger stimulus wouldn't have hurt ('adequate' is not an exaggerated size).

That is a much weaker claim and you could say the same with more justification about the american stimulus. As far as I remembered krugman admitted grudgingly that the (german) stimulus was big enough for Germany and then aargued oit was to small for the whole EU.

I thought is was to small back then too, but are not so sure now. That said, there was a bot of top on off the original stimulus

 >And the argument was symptomatic of a general opposition to fiscal stimulus, as we saw by the "crass Keynesianism" "argument" (ahem) of late 2008,>

The stimulus in Germany did indeed came months to late, but the resistance had crumbled around the time of the inauguration of Obama.

As far as I remember the stimulus in other european countries wasn't timely too.

by IM on Sat Feb 18th, 2012 at 01:11:47 PM EST
[ Parent ]
The real problem is that the stimulus was withdrawn and then reversed in 2010.

Only now are they starting to make noises about the need to have "jobs-friendly growth and growth-friendly fiscal consolidation". The "growth-friendly fiscal consolidation" is akin to "circle-friendly squaring".

So we're still withholding the necessary stimulus because, you know, 0.1% growth still destroys jobs and physical capital. So the criteria for fiscal stimulus should not be that growth is negative but that jobs are being destroyed.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 01:37:37 PM EST
[ Parent ]
is unemployment benefits and classical welfare rolled into one program.

It is completely unrelated to wages, or their suppression (whatever that exactly means).

by cris0 on Tue Feb 14th, 2012 at 04:04:43 PM EST
[ Parent ]
Removing or degrading workers' security against hardship during unemployment forces workers to accept lower wages and/or less safe and comfortable working conditions.

Wage suppression is lowering unit labour costs. Unit labour costs, judging by historical experience, need to remain at approximately 70 % for a modern industrial society to function. Pushing unit labour costs substantially below this creates demand-side crises, like the one we are presently seeing. It is conceivable that pushing unit labour costs substantially above this value will create other forms of dysfunction, but such an income distribution has not been observed for any length of time together in any mature industrial economy, so this remains speculation.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 04:13:14 PM EST
[ Parent ]
But the Hart IV reforms did not substantially degrade anything.

Before Hatz IV there were 2 completely parallel systems of welfare (unemployment benefits and classical welfare ("Sozialhilfe")). The Hartz reforms unified the systems in an attempt to make them more efficient. They also toyed with the procedural details of the system, also in order to increase efficiency and decrease cost.

It is open to debate if the desired effect actually happened.

Yes, there was a concerted effort to keep wage increases down. And, yes, that was a mixed blessing, to put it mildly.

OTOH, maybe you stop whining about the efficient Germans and start getting a little more efficient yourselves.

by cris0 on Tue Feb 14th, 2012 at 05:00:15 PM EST
[ Parent ]
But the Hart IV reforms did not substantially degrade anything.

You were the one who appended the "IV." The Hartz wage suppression programme, taken as a whole, certainly did degrade the income security of the unemployed.

Before Hatz IV there were 2 completely parallel systems of welfare (unemployment benefits and classical welfare ("Sozialhilfe")). The Hartz reforms unified the systems in an attempt to make them more efficient.

The Hartz degradation packages also introduced bullshit measures like excluding the unemployed from benefits when they refused to take shit jobs at shit wages, and reducing their stipend when they failed to find jobs.

OTOH, maybe you stop whining about the efficient Germans and start getting a little more efficient yourselves.

Germany hourly productivity is flat over the last ten years. Every single bit of "competitiveness," so-called, has come from falling wages.

As noted elsewhere, that is a fundamentally unsound policy.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:13:04 PM EST
[ Parent ]
[...falling wages...] As noted elsewhere, that is a fundamentally unsound policy.
.
Agreed. It's unsustainable in the long run, and harmful to society.

As for the "bullshit" measures, it's not that simple. Yes, able bodied unemployed welfare recipients are expected to work. If they can't find work to their liking, after some time (Months or years, actually) they will be forced to accept any work they can do, otherwise their benefits will be reduced.

I consider this perfectly appropriate. As does, fort that matter, the majority of taxpayers across all parties.

by cris0 on Tue Feb 14th, 2012 at 05:35:02 PM EST
[ Parent ]
This presumes (a) that the hoop-jumping is only aimed at able-bodied workers of sound mind and (b) that the state is prepared to ensure that such work is available at a wage that does not compare unfavourably to the wage they held at their previous employment.

Both are facts not in evidence.

Further, such measures do contribute to a deterioration of labour's overall bargaining position, and must therefore be compensated with some combination of higher baseline unemployment benefits and greater bargaining power for unions. Otherwise, they contribute to unsustainable erosion of wages.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:42:28 PM EST
[ Parent ]
It is my understanding that unions in Germany live quite comfortably, and in a position of strength, compared to, say, the US, or Mexico, or China, or Japan, or the UK, or Australia, or any number of other states.

Greece probably excluded.

In fact, the reason we have no minimum wage in Germany is that unions fought hard to prevent it to be enacted.

by cris0 on Tue Feb 14th, 2012 at 06:42:45 PM EST
[ Parent ]
It is my understanding that unions in Germany live quite comfortably, and in a position of strength, compared to, say, the US, or Mexico, or China

Yeah, you're not really making a great case by comparing Germany to third-world countries like that.

Oh, and your prejudice is showing. The Greek unions have less power than the German ones, and stand to have even less if current German demands are met.

In point of fact, there is a very clear relationship between union power and prosperity: More powerful labour unions makes your country prosperous by enforcing prosperity-creating economic policies like high wages and full employment.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 07:21:57 PM EST
[ Parent ]
It is self serving for unions to fight minimum wage laws when they are in an effective partnership with employers, as it reinforces their position as the ONLY source of protection for labor.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 12:51:40 PM EST
[ Parent ]
lies in driving down wages compared to other countries:

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Feb 14th, 2012 at 05:27:55 PM EST
[ Parent ]
Forgot to link to the source.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Feb 14th, 2012 at 05:38:35 PM EST
[ Parent ]
German wages started to decline in real time from 1993 or 1994. So ALG II, starting in 2005, can't really be the main cause. Perhaps more important, the low wage sector in Germany,  where ALG II probably had a influence is in the service sector. The Export sector tends to be manufacturing. So the whole chain of reasoning doesn't really works.

I will add that Germany and Greece are hardly the only trade partners of each other.

by IM on Sat Feb 18th, 2012 at 10:12:57 AM EST
[ Parent ]
Foreign trade consists of both exports and imports.

Nobody here is begrudging Germany its exports. What I and others are saying is that Germany needs to either stop short-charging its workers so they can start importing stuff from other European countries, or accept that Germany will never get paid for its exports.

Because there is one and only one way to pay for exports: Through imports.

The low-wage service sector may be unimportant to the export side (to low order), but it is very important to the import side.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 10:47:25 AM EST
[ Parent ]
It bears repeating at this point that the Eurozone as a whole has balanced external trade and negligible foreign-denominated debt so the entire Eurozone crisis is one of internal redistribution. There is no fundamental pressure on the exchange rate (if you take the view that trade-weighing is a good proxy for the "fundamentals" of exchange rates) and there is no collective risk of insolvency (as all the debt overhang is in the fiat currency that the ECB issues).

This is partly why it's utter madness that the Serious People of Europe continue argue for IMF involvement. Why should the IMF get involved in loaning Euros to Euro countries, when there's a perfectly functional ECB? And that's why especially the BRICs are increasingly annoyed by EU suggestions for IMF involvement, saying (not without irony) that the Eurozone "hasn't done its homework" and that it has sufficient resources.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 10:53:37 AM EST
[ Parent ]
Nobody here is begrudging Germany its exports.

Apart from you.

 >What I and others are saying is that Germany needs to either stop short-charging its workers so they can start importing stuff from other European countries, or accept that Germany will never get paid for its exports.<

They could also import from non-euro countries; what then?

 >Because there is one and only one way to pay for exports: Through imports.<

Germany is also one of the biggest importers in the world.

 <The low-wage service sector may be unimportant to the export side (to low order), but it is very important to the import side.>

But then you are shifting your argument

by IM on Sat Feb 18th, 2012 at 11:14:30 AM EST
[ Parent ]
They could also import from non-euro countries; what then?

Then the Euro falls relative to those currencies, until those imports stop. That is why you have a floating currency.

This isn't fucking rocket science.

<The low-wage service sector may be unimportant to the export side (to low order), but it is very important to the import side.>

But then you are shifting your argument

No, my argument has always been about current accounts imbalances.

That it comes as a surprise to you that current accounts imbalances can arise from both import suppression and export subsidies speaks to the quality of your knowledge of national accounting, not to the quality of my argument.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:21:27 AM EST
[ Parent ]
No, my argument has always been about current accounts imbalances.

That is not true; you have a habit to conflate trade and sometimes even merely exports with CA.

 That it comes as a surprise to you that current accounts imbalances can arise from both import suppression and export subsidies speaks to the quality of your knowledge of national accounting, not to the quality of my argument.

You are assuming quite a lot; but if if you prefer to make my arguments in your head to defeat them, go ahead.

by IM on Sat Feb 18th, 2012 at 12:14:25 PM EST
[ Parent ]
They could also import from non-euro countries; what then?

Under an "economic equilibrium" frame it would go something like this:

Then the Eurozone would no longer be in trade balance as a whole so there would be a downward pressure on the exchange rate. The rest of the Eurozone would benefit from the lower exchange rate, and would increase their exports outside the Eurozone, too. Equilibrium (again balanced trade EZ-wide) would be attained at a lower exchange rate. But now Germany would be running a smaller trade surplus and some of the deficit countries a smaller deficit.

Imports would become more expensive and that would lead to some pain, but also for opportunities for import substitution if because of the lower exchange rate production in the EZ became profitable where it was marginally unprofitable before.

Unfortunately, the ECB would react to the consumer price inflation resulting from the more expensive imports by raising interest rates and nipping in the bud any private-sector attempts at investment for import substitution. And the public sector, as we know, cannot do anything meaningful without running afoul of EU "illegal state aid" rules.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 01:51:03 PM EST
[ Parent ]
It's funny how one does not separate different kinds of inflation from each other (in central bank practice). It's quite absurd to me that the central bank should increase rates to combat inflation which is caused by dearer imports (caused by an oil shock, for example). It's not like it's going to help, is it? Especially not if you're not looking at core inflation, but rather at the CPI!

The reverse should be true as well: don't cut rates and blow bubbles just because you're importing disinflation from China.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Feb 18th, 2012 at 02:32:00 PM EST
[ Parent ]
It's funny how one does not separate different kinds of inflation from each other (in central bank practice).

Central banks like their interest rate management to be based on very very simple rules of thumb.

There is more than one rate of inflation? Wud? <bits of central banker cranium all over the walls>

I think they use deliberately obscure language so as to hide the fact that there isn't much there, there. Also it might explain why they spend all their time admonishing the fiscal authorities on fiscal policy and protesting that nobody else should admonish them on monetary policy.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 02:43:56 PM EST
[ Parent ]
deliberately obscure language so as to hide the fact that there isn't much there

As we say in Sweden: det dunkelt sagda är det dunkelt tänkta, "what is unclearly said is unclearly thought".

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Feb 18th, 2012 at 02:50:59 PM EST
[ Parent ]
You know another funny thing the ECB does? If a government raises VAT, they interpret the resulting price rise as inflation, and raise interest rates.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 02:45:29 PM EST
[ Parent ]
You know another funny thing the ECB does? If a government raises VAT, they interpret the resulting price rise as inflation, and raise interest rates.

Yeah, about as funny as a debt-depression death spiral.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 19th, 2012 at 08:26:20 PM EST
[ Parent ]
Or when the inflation is driven by increased interest rates...

A swedish kind of death:

Riksbanken var oenig om räntebeslutet - Ekot | Sveriges Radio
Förklaringen finns bland annat i högre priser på livsmedel och energi, och i Riksbankens egna räntehöjningar. The explanation [to higher inflation] is partly found in increased prices on food and energy and also in the increased interest rates of the Central Bank.
Men till det kommer ett problem med att effektiviseringen av produktionen sjunkit, att produktiviteten blivit sämre än väntat. Något som i sin tur delvis bottnar i att det är goda tider på arbetsmarknaden med fler jobb och högre löner.But adding to that is the problem that the efficiency increase in production has declined, the productivity is worse then expected. That in turn is related to the good times on the labor market with more jobs and higher salaries.
Det är de problemen som vice riksbankschefen Svante Öberg i redan i december ville stävja med höjd styrränta.These are the problems deputy chairman Svante Öberg already in december wanted to stop by increased interest rate.


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 Sat Feb 18th, 2012 at 03:53:39 PM EST
[ Parent ]
This blog is full of information and analysis. They do great work here. Anyone can read it. It's really well done.
by Upstate NY on Sun Feb 12th, 2012 at 02:40:23 PM EST
[ Parent ]
And yet they still manage to collect 40% of GDP in taxes. Suppose all the evaded taxes are paid up. What happens next? Taxes drop and they collect the same amount if taxes.
by Upstate NY on Sun Feb 12th, 2012 at 02:42:10 PM EST
[ Parent ]
OECD says 29.4% (41.9% for France).I found the tax cheating shocking when I was there, I am surprised by the 29.4%, could it be that a large part of GDP is not in the statistics because of black ??
by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 02:50:21 PM EST
[ Parent ]
Are those aggregate? Do they include social contributions?

Here's Eurostat: http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/introduction

Click on the following:

  1. Database
  2. Annual Government Finance Statistics
  3. Government Revenue
  4. Under the INDIC scroll menu, click on Total Government Revenue

Something is wrong about that OECD grid because almost all of the European countries hover around 40-45%.

Greece was at 39.5% for 2010, and hovered around 40% for the last decade.

Are you seriously judging how people are handling their money during a total economic meltdown when capital has fled the country? Seriously? It's very hard to believe.

Greece right now has a primary surplus for the gov't budget. the interest on debt is well above 10% GDP. Are you saying that the Greeks should pay an amount well over and above that primary surplus in order to pay the bankers?

As I said, they collect enough in tax revenue now for gov't expenditures. They don't collect enough for debt--and they never will. It is impossible.

by Upstate NY on Sun Feb 12th, 2012 at 03:04:10 PM EST
[ Parent ]
Tax relative to GDP is notoriously easy to make whatever you want it to be, by netting or not netting out taxes on government salaries, social protection, etc.

If Eurostat says one thing and the OECD/IMF/World Bank says another thing, then Eurostat is more likely to be right.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 12th, 2012 at 03:08:03 PM EST
[ Parent ]
you know better but what s the solution, debt forgiveness (and bankruptcy) by bank like Jerome's employer ;-)

What ever works but yes things are going to change now.

by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 03:12:41 PM EST
[ Parent ]
We're far beyond discussions of whether there should be debt forgiveness.

2 years ago, the Greeks were at 115% debt to GDP, but they were overspending by $30 billion. A quick adjustment of the budget deficit down to 5% (or $20 billion) would have turned them around in one fell swoop and those could have coupled with 5% cuts as in Portugal. Instead, they have cut by 19% or $56 billion and are now looking at 2% more cut in GDP (an additional $6 billion). And the bailout money paid out so far is around $80 billion. Do the math, it doesn't add up.

And now you know precisely why the troika wants an escrow account to funnel money directly to the banks in Greece's name. Greeks won't own that debt that's in an escrow account. Essentially, the troika has underscored to the Greek people that this money is not for Greece, but for the banks. The natural reply of the citizens is: "in that case...."

by Upstate NY on Sun Feb 12th, 2012 at 03:28:50 PM EST
[ Parent ]
fredouil:
German taxpayers know a better use for their hard earned money at home.

What would that be? Spend money, buy stuff, stimulate internal demand?

What would happen then?

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Feb 12th, 2012 at 02:44:45 PM EST
[ Parent ]
They could spend some holidays in Greece ;-)

What s the alternative to what s happening now ? frankly ?

by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 02:51:34 PM EST
[ Parent ]
Greece could tell its foreign creditors to fuck off and die.

Germany could stop laundering the bailouts of its banks through the Greek government. (Because that's what's happening here: None of this money ever actually gets to Greece.)

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 12th, 2012 at 02:53:16 PM EST
[ Parent ]
What ever works ;-), at this moment bankers would prefer to be on another planet, i guess they all wish to stop lending to greece but they cannot live with the default (and greek would have hard time to pay salaries without more lending, dont know who is really going to be F..k off at the end)
by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 02:58:25 PM EST
[ Parent ]
Greece has a perfectly fine printing press for salaries.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 12th, 2012 at 03:00:56 PM EST
[ Parent ]
fredouil:
at this moment bankers would prefer to be on another planet

Just tell them not to slam the door as they leave.

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Feb 12th, 2012 at 03:04:02 PM EST
[ Parent ]
Greece has a primary surplus.
by Upstate NY on Sun Feb 12th, 2012 at 03:04:47 PM EST
[ Parent ]
Does it? According to the OECD numbers, they will only reach a primary surplus or balance in 2012. And that is obviously only a projection. (I haven't found anything on eorstat regarding primary surplus).
by IM on Sun Feb 12th, 2012 at 03:30:12 PM EST
[ Parent ]
http://www.bbc.co.uk/news/business-16746455

Stephanie Flanders at the BBC ran through the math and has a citation for the last two quarters.

The surplus was achieved solely through cuts because revenue is still paltry.

BUT, when you consider that the amount of debt isn't going down (the budget deficit is still 9-10%), then all numbers are now relative to the budget which has shrunk by 19% so far and is being cut another 6% soon.

They went from a 15% budget deficit to 9%. Meanwhile, their debt rose from 115% debt to GDP to 150%. This phenomena is primarily because of the huge contraction in the budget.

by Upstate NY on Sun Feb 12th, 2012 at 03:36:49 PM EST
[ Parent ]
The Oecd said something like 9% deficit and 6.9% net debt interest. That would still have been 2.1%. Now 5.1 billion less 1.8 billion is still  3.3 billion.

That said if the result of the last half year was relatively positive, why is everybody so hysterical right now? That the debt would still rise in 2011 should have been clear at the beginning of this year.

by IM on Sun Feb 12th, 2012 at 03:57:21 PM EST
[ Parent ]
I don't know. Obviously, no one's data should be trusted. I'm not sure if the principals know.
by Upstate NY on Sun Feb 12th, 2012 at 05:10:08 PM EST
[ Parent ]
why is everybody so hysterical right now?

Because they are pushing a political agenda and public hysteria is a useful tool?

Because those Serious People comprising your 'everybody' mostly have few clues as to what is going on but can accurately judge how the public will react to their histrionics and posturing?

Both of the above?  

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 12th, 2012 at 05:18:25 PM EST
[ Parent ]
Germany could stop laundering the bailouts of its banks through the Greek government. (Because that's what's happening here: None of this money ever actually gets to Greece.)

As demonstrated by the German proposal of paying the bailout money into an "escrow account" out of Greece's reach.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sun Feb 12th, 2012 at 06:01:30 PM EST
[ Parent ]
Yes, if Germany wants to bail its banks out it should just tell that to the German voters. Said voters will then want something in return from the banks, IE shares in the banks. Fine, do that then. We did it 20 years ago and it worked perfectly well.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Feb 16th, 2012 at 08:24:28 PM EST
[ Parent ]
Have you read what's happening now, up there in the diary? Do you really think that is just? Are the people who are being forced to take a huge drop in living standards to blame for corruption or unpaid taxes by the more wealthy?

I'll give you one alternative, it is that those people rise up and cut the more wealthy into bite-sized chunks.

Another would be a form of default that does not involve hardship for the same ordinary people through inflation on imported necessary commodities. Perhaps not easy to bring about, but given the alternative to which you say there is no alternative...

Oh, but that would involve our magicians of the financial world taking a hit that would make them look like the sorry assholes they really are. Can't have that kind of alternative, can we?

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Feb 12th, 2012 at 03:02:22 PM EST
[ Parent ]
In Greece it is not only the wealthy who cheat, it s everyone.

They robbed their kids.

by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 03:07:56 PM EST
[ Parent ]
You're another of these "I was there so I know" people. So you know that ordinary Greeks of the kind who will take a hit on minimum wages or pensions were all taking on debt and "robbing their kids"?
by afew (afew(a in a circle)eurotrib_dot_com) on Sun Feb 12th, 2012 at 03:11:31 PM EST
[ Parent ]
Is this a concerted attempt at hijacking this diary, about where real action is taking place to try and end a horror show?

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Sun Feb 12th, 2012 at 03:13:30 PM EST
[ Parent ]
not really, but do you really thing this "action" matter one bit ? LOL
by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 03:16:40 PM EST
[ Parent ]
and your recommended action is?

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Sun Feb 12th, 2012 at 04:29:14 PM EST
[ Parent ]
Yep, it sure will. This sort of colonialism isn't going to work without tanks.

you are the media you consume.

by MillMan (millguy at gmail) on Mon Feb 13th, 2012 at 11:32:35 PM EST
[ Parent ]
The question is, at which point does the public in Core Europe wake up to what's being done in their name and in the name of European unity and solidarity?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:06:40 AM EST
[ Parent ]
Alas, I'm not sanguine about that. Selfishness runs deep, and moral posturing can feel so comfortable.

Plus, the worsening situation is often presented as Greece not upholding its promises -fuelling more anger at those lazy southerners.

So I would say that the public is unlikely to wake up this decade.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Tue Feb 14th, 2012 at 08:12:00 AM EST
[ Parent ]
The public will wake up when they stand in the breadlines.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 08:26:24 AM EST
[ Parent ]


Austerity can only be implemented in the shadow of a concentration camp.
by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 08:39:58 AM EST
[ Parent ]
Breadlines in Greece:



The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Tue Feb 14th, 2012 at 09:07:31 AM EST
[ Parent ]


tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 10:40:29 AM EST
[ Parent ]
And other famous last words.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Feb 14th, 2012 at 03:26:05 PM EST
[ Parent ]
Stats show that 86% are full up with taxes. 14% are responsible for 30% tax evasion. If your paycheck is docked art the source, how can you cheat? There are also 23% VAT taxes.

Now, since the argument is that Greece's bureaucracy is bloated, how are you to argue that everyone cheats? A bloated bureaucracy of half of all workers means half of all workers at least are taxed at the source. There's a contradiction there.

by Upstate NY on Sun Feb 12th, 2012 at 03:31:38 PM EST
[ Parent ]
there's got to be an infographic that shows that somewhere

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Sun Feb 12th, 2012 at 03:58:22 PM EST
[ Parent ]
No. (I'm on the run, back and forth from the flaming and teargas drenched streets - more soon)

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Sun Feb 12th, 2012 at 04:07:42 PM EST
[ Parent ]
http://twitpic.com/8j2csm

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Sun Feb 12th, 2012 at 05:14:47 PM EST
[ Parent ]
Pretty much this: Those that tax evaded are rewarded. Those that didn't are punished now. Luxury taxes are abolished, VAT on food is increased... And this isn't about Greece - it's bankster capitalism starting to swallow the welfare state. You are next.

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Sun Feb 12th, 2012 at 04:10:50 PM EST
[ Parent ]
Indeed.

My concern isn't that the economics of the bailout make no sense - obviously, they don't - but that Greece is being used as a testbed for a return to 19th century capitalist values across Europe.

Not so popularly known as 'reform.'

So yes - I think it's likely we'll see similar measures in other countries, using whatever melodramatic excuses can be waved in front of the financial press.

This is basically a class-led land-grab similar to the Enclosures in the UK and the Clearances in Scotland, but making a claim on the productive economy instead of physical territory.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Feb 13th, 2012 at 05:55:33 AM EST
[ Parent ]
ThatBritGuy:
This is basically a class-led land-grab similar to the Enclosures in the UK and the Clearances in Scotland, but making a claim on the productive economy instead of physical territory.

bingo. the consumer economy is tapped out, and there's nothing to take its place.

planet couldn't take it this way for long anyway.

i heard an italian economist say today that all greece's profitable industries are registered and pay taxes in the netherlands, wtf?

nothing else but yoghurt and tourism, according to him...

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

by melo (melometa4(at)gmail.com) on Mon Feb 13th, 2012 at 09:29:42 AM EST
[ Parent ]
This is also very similar to the situation in the US in the 1890s with the Robber Barons, the labour conflicts of 1893 (Eugene Debs) etc.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Feb 13th, 2012 at 07:02:17 PM EST
[ Parent ]
Luckily, there is a strong intellectual argument, supported by solid technical analysis and factual understanding, that is being used to drive a popular social movement to reverse the trend, which will lead to a changed political environment and suitable adjustments to the overall system.

Not.

by asdf on Wed Feb 15th, 2012 at 12:38:30 PM EST
[ Parent ]
The Occupy movement?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Wed Feb 15th, 2012 at 03:56:27 PM EST
[ Parent ]
Well, they have a good organizational name. Now all they need is...all the other stuff.
by asdf on Wed Feb 15th, 2012 at 10:29:24 PM EST
[ Parent ]
See this Reuters blog: Occupy's amazing Volcker Rule letter by Felix Salmon (FEBRUARY 14, 2012)

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Thu Feb 16th, 2012 at 09:05:56 AM EST
[ Parent ]
That's great wonkery. But you don't accomplish social change by wonkery, you do it by having a populist story and a lot of political power.
by asdf on Thu Feb 16th, 2012 at 10:00:10 AM EST
[ Parent ]
asdf:
you do it by having a populist story

The 1% stole everything. We are the 99%.

asdf:

and a lot of political power

Yes, it is unclear how the Occupy movement can translate their street presence into political change, without loosing their strengths. But the meetings are a start.

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 Feb 16th, 2012 at 11:14:26 AM EST
[ Parent ]
Do you really think that is just? Are the people who are being forced to take a huge drop in living standards to blame for corruption or unpaid taxes by the more wealthy?

Yes.

Elections have consequences. The greek mess is collectively and very firmly the product of the Greek citizens.

by cris0 on Tue Feb 14th, 2012 at 04:15:26 PM EST
[ Parent ]
Lenders have a duty to due diligence.

Sovereign states have no duty to repay their creditors.

Don't like that? Don't lend money to sovereign states.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 04:19:53 PM EST
[ Parent ]
well.

Nobody will lend you money if you stop paying it back.

Don't like that? Pay your debts...

It goes both ways.

by cris0 on Tue Feb 14th, 2012 at 04:30:06 PM EST
[ Parent ]
Sovereign states have no need to borrow money. They have a perfectly good printing press.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 04:33:09 PM EST
[ Parent ]
That basically characterizes your whole argument.

Only in wishful thinking land money printing produces actual value.

But if you don't accept this reality, you can not be helped.

by cris0 on Tue Feb 14th, 2012 at 07:05:04 PM EST
[ Parent ]
Printing money does not produce real value.

Refusing to print money can destroy real value.

So when in doubt, print more money. If that doesn't solve the problem, print even more money while looking for other ways to solve the problem. The only harm that can do is inflation, which isn't actually harmful at all.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 07:24:53 PM EST
[ Parent ]
Historically that isn't true,

States have always been able to default on their debts, and other states have always been willing to lend to them again afterwards, as other states are the only game in town.

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Tue Feb 14th, 2012 at 07:09:03 PM EST
[ Parent ]
Historically, states who default on their debts have faced the Gunboat Collection Agency.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Feb 16th, 2012 at 08:29:38 PM EST
[ Parent ]
Historically, the Gunboat Collection Agency has considered it unsporting for its victims to field NATO weapons.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 17th, 2012 at 03:02:38 AM EST
[ Parent ]
Which is why I don't really mind the Greek overspending on defence...

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Feb 17th, 2012 at 03:46:23 AM EST
[ Parent ]
An astounding version of democratic responsibility. The ordinary, lower-income, least powerful citizens are entirely to blame for the corrupt wealthier classes and for the successive governments of different parties - and their guilt is such that they should be punished.

But if it makes it easier for you to feel self-righteous, I guess it must be worth it.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Feb 14th, 2012 at 04:27:21 PM EST
[ Parent ]
this isn't about punishment.

Nobody is 'punished' here, any more than you are 'punished' when you get wet after walking in the rain.
Dont want to gert wet? Don't walk in the rain...

Actions have consequences.

by cris0 on Tue Feb 14th, 2012 at 04:32:33 PM EST
[ Parent ]
cris0:
Actions have consequences.

This, Germany will certainly learn in the next few years.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Feb 14th, 2012 at 04:36:05 PM EST
[ Parent ]
Yes, lending to an insolvent means you lose your money.

Except apparently not in this case.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 04:36:19 PM EST
[ Parent ]
Weather is not politics.

Politics is a human construction. The rules can be changed at any moment. (And often are, to suit someone or other.)

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Feb 14th, 2012 at 05:01:39 PM EST
[ Parent ]
afew:
The ordinary, lower-income, least powerful citizens are entirely to blame for the corrupt wealthier classes and for the successive governments of different parties - and their guilt is such that they should be punished.

It is at least close to half the case that they so easily bought into the lies that brought them to their present condition, though credit must be given to the sociopathic 'social scientists' who helped them figure out how to appropriately frame these issues.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 12:57:15 PM EST
[ Parent ]
An astounding version of democratic responsibility. The ordinary, lower-income, least powerful citizens are entirely to blame for the corrupt wealthier classes and for the successive governments of different parties - and their guilt is such that they should be punished.

Nonsense, of course, but so's the opposite position: that voters who vote for those who court their dark sides have no responsibility for what they do.
by Colman (colman at eurotrib.com) on Wed Feb 15th, 2012 at 01:04:16 PM EST
[ Parent ]
This would be true if there wasn't an astounding unanimity of fuckwittery among pols, and if they didn't lie like pigs just to get into power - before conveniently throwing all their very important publicly-held principles into the bottom of the nearest cess pit.

If you can think of anyone in mainstream politics in the UK who actually represents the interests of the voting majority, instead of pretending to in a rather half-hearted way but very serious way, let me know who they are.

I promise to vote them for them next time around, if you can convince me it will make a useful difference.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Feb 15th, 2012 at 01:11:13 PM EST
[ Parent ]
But that's largely a closed loop: politicians run on the basis of what people will fall for and act on the basis of what they'll get away with.

Satisfy enough of enough people's dark side and you'll get away with a lot.

Run on the basis of people's good side and you tend to not get elected - so even originally well-meaning politicians don't and that's an awful slippery slope. Once you're inside the machine you end up being swallowed by it.

Labour tacked to the right partly because they decided it was the only way to get elected.

by Colman (colman at eurotrib.com) on Wed Feb 15th, 2012 at 01:15:39 PM EST
[ Parent ]
You're not getting away from the fact that the politicians who fucked Greece up before the crisis were elected by the Greek people.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Feb 16th, 2012 at 08:31:55 PM EST
[ Parent ]
Yes, but this is systemic and it cuts both ways, not only Greek politicians fucked up public finances, but politicians in the rest of the EU accepted Greece in the EZ knowing full well it didn't meet the standards, and the German and French governments had no problem exacerbating the situation via arms sales. And more importantly lenders lent at rates they shouldn't have lent at...

But this is neither here nor there: this type of democracy we supposedly have is in fact a mediated system in which the "viable" choices are selected for the people by a series of checks and mechanisms, in which cultural hegemony plays a big role. Not only Greece though. What you say is the same type of fallacy that Al Qaida has employed in the not so distant past: Americans elected Bush, Bush kills Arabs, Arabs have a right to kill all Americans as complicit in Bush's election in a free and fair (well...) way. It doesn't work that way.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Thu Feb 16th, 2012 at 09:26:28 PM EST
[ Parent ]
And the politicians who now create these bank bailouts for european tax payers (and turn national budjets into junk funds) are also elected by these countries.

What we after all should not forget is that neoliberalism is a religious movement. The poor are "sinners." They must be punished, when the elites f** up.

by kjr63 on Fri Feb 17th, 2012 at 09:05:17 AM EST
[ Parent ]
I don't think that's neoliberalism, rather it's Calvinism/protestant work ethic kinda thingie.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Feb 17th, 2012 at 12:42:56 PM EST
[ Parent ]
I don't think so. Neoliberals could care less about work. These are more like pagan rituals.
by kjr63 on Fri Feb 17th, 2012 at 01:07:53 PM EST
[ Parent ]
Do you really think that is just? Are the people who are being forced to take a huge drop in living standards to blame for corruption or unpaid taxes by the more wealthy?

Yes.

Elections have consequences. The greek mess is collectively and very firmly the product of the Greek citizens.

Being such a fan of collective punishment, I assume you will be prepared to argue that every surviving Wehrmacht soldier should have been shot at the end of the last world war?

For that matter, you should be a big fan of the Versailles treaty.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 04:35:23 PM EST
[ Parent ]
Oh no, Jake S, I carefully avoided suggesting that if every citizen was collectively and firmly responsible for the acts of their government, Germany would have been obliterated from the map in 1945 instead of being given a massive wealth transfer to a thriving industrial economy.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Feb 14th, 2012 at 04:38:43 PM EST
[ Parent ]
You did. I was feeling less charitable. And the analogy is becoming increasingly apropos.

Papademos and his merry band of collaborators should take very careful note of what happened to Vidkun Quisling.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 04:46:20 PM EST
[ Parent ]
you might want to read a little about that before making wild claims.

Germany received some 1.4 billion US$ over the whole Marshal plan duration; which amounts to slightly more than 10% of its overall size. Germany repaid about 2/3 of that.

On the other hand, the allies took values from Germany, in the form of dismantled industries, patents, trademarks, trade secrets and abducted scientists that exceeded that sum by orders of magnitutde.

And that doesn't even account for all the other willful damage that the allied occupation forces inflicted, especially in the early years of the occupation (when they did not fear a surging Soviet Union).

Go, read some Wikipedia

by cris0 on Tue Feb 14th, 2012 at 06:03:10 PM EST
[ Parent ]
you might want to read a little about that before making wild claims.

Germany received some 1.4 billion US$ over the whole Marshal plan duration; which amounts to slightly more than 10% of its overall size. Germany repaid about 2/3 of that.

Forgetting the Versailles war reparations, are we?

Forgetting the reparations to the victims of war crimes, are we?

Forgetting the reparations to occupied states for the goods and services looted from them during the war, are we?

On the other hand, the allies took values from Germany, in the form of dismantled industries, patents, trademarks, trade secrets and abducted scientists that exceeded that sum by orders of magnitutde.

Oh, you mean they took away war criminals like von Braun and put them to use in their own industries instead of shooting them? How was that burden not self-inflicted, again?

Patents, trademarks and trade secrets were not internationally protected at the time, so no dice there.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:12:54 PM EST
[ Parent ]
now you crossed from economical delusions and hate mongering to open historical revisionism.

Which is the signal for me to call it a day. It probably was time for that hours ago.

Arguing with fanatics is a waste of time.

by cris0 on Tue Feb 14th, 2012 at 07:15:33 PM EST
[ Parent ]
The only revisionism here is your insistence that Germany was not granted massive aid and debt relief after the last world war (starting, actually, in the interbellum).

It really is bizarre. These facts are a matter of public record. Anybody can look up how great a fraction of the Versaille payments Germany actually made, and how many reparations Germany paid to the victims of its various occupations. The numbers are not secret. Just embarrassing to any German who gets on a high moral horse about international debts.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 07:34:52 PM EST
[ Parent ]
Well, I think you are both right.

First the allies pillaged Germany:
Industrial plans for Germany - Wikipedia, the free encyclopedia

The first "level of industry" plan, signed by the Allies on March 29, 1946, stated that German heavy industry was to be lowered to 50% of its 1938 levels by the destruction of 1,500 listed manufacturing plants.[2] In January 1946 the Allied Control Council set the foundation of the future German economy by putting a cap on German steel production capacity: the maximum allowed was set at about 5,800,000 tons of steel a year, equivalent to 25% of the prewar production level.[3] The UK, in whose occupation zone most of the steel production was located, had argued for a higher limited reduction by placing the production ceiling at 12 million tons of steel per year, but had to submit to the will of the US, France and the Soviet Union (which had argued for a 3 million ton limit). Steel plants thus made redundant were to be dismantled. Germany was to be reduced to the standard of life it had known at the height of the Great Depression (1932).[4] Car production was set to 10% of prewar levels, etc.[5]

Destroyed forests:
Industrial plans for Germany - Wikipedia, the free encyclopedia

Timber exports from the US occupation zone were particularly heavy. Sources in the US government admitted that the purpose of this was the "ultimate destruction of the war potential of German forests." Extensive deforestation due to clear-felling resulted in a situation which could "be replaced only by long forestry development over perhaps a century.".[7]

And took over patents, copyrights, trademarks and trade secrets:
Industrial plans for Germany - Wikipedia, the free encyclopedia

The Allies also confiscated large amounts of German intellectual property (patents and copyrights, but also trademarks).[28] 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.[29][30][31] The US competitors of German firms were encouraged by the occupation authorities to access all records and facilities.[32] In 1947 the director of the US Commerce Department's Office of Technical Services stated before congress: "The fundamental justification of this activity is that we won the war and the Germans did not. If the Germans had won the war, they would be over here in Schenectady and Chicago and Detroit and Pittsburgh, doing the same things."[32] A German report from May 1, 1949 stated that many entrepreneurs preferred not to do research under the current regulations (Allied Control Council Law No. 25) for fear of the research directly profiting their competitors. The law required detailed reporting to the Allies of all research results.[32]

The patents, drawings and physical equipment taken in Germany included such items (or drawings for) as electron microscopes, cosmetics, textile machinery, tape recorders, insecticides, a unique chocolate-wrapping machine, a continuous butter-making machine, a manure spreader, ice skate grinders, paper napkin machines, "and other technologies - almost all of which were either new to American industry or 'far superior' to anything in use in the United States."[33]

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.[34]

Though I must say that I do not know exactly how that worked. I would imagine that at least they transfered the rights companies held in the western allied countries to allied companies and the rights companies held in Germany to allied companies. If enforced in Germany that should have been quite devastating. I know that the neutral Swedish government did not quite accept these seizures leading to an interesting period. Still does not accept some of them as the copyright of Mein Kampf in Sweden was in the 90ies found by a Swedish court not to belong to the state of Bavaria. Probably would belong to hitlers relatives but they do not enforce their rights.

Anyway, then the Allies changed their policy and instituted the much more well known policies to let West Germany rebuild.

So what Jake should say that in keeping with Cris view on the consequences of going out in the rain, the policy of grabbing everything should have continued.

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 Wed Feb 15th, 2012 at 05:57:00 AM EST
[ Parent ]
The plunder described here is still assessed as less than a third of the aid and debt forgiveness granted to Germany, nevermind the order of magnitude that Chris was confabulating about.

You can quibble with the valuation, of course, but one and a half orders of magnitude is a pretty big quibble.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 15th, 2012 at 06:53:34 AM EST
[ Parent ]
The whole idea is obscene given the human toll.
by Upstate NY on Wed Feb 15th, 2012 at 09:39:54 AM EST
[ Parent ]
cris0 is talking about the post WW II era while Jake is including the entire period from the end of WW I through the Marshall Plan. The US did change its plan part way through the post WW II era when it became concerned about the perceived thread from the Soviet Union. Before it was planning on turning Germany into a poor agricultural and resource extracting country. After, it was concerned to turn Germany into a pillar of opposition to the Soviets and supported the re-industrialization of Germany and encouraged the beginnings of the common market.

I recall being shown equipment in the Mechanical Engineering Lab at Oklahoma State University that had come from Germany in the early years after WW II. But given Germany's performance during and before WW II, a case could be made for the first policy: "Never Again!" Now, an argument can be made that they are accomplishing through economic means what they could not accomplish through military might.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 01:08:46 PM EST
[ Parent ]
That is one take on what happened. Varoufakis' book, Modern Political Economics, has a lot of research that shows that in the immediate postwar period, the USA also had plans to recycle its surplus through Germany and extend its economic dominance. So it wasn't only a military strategic goal, but also an economic one. Varoufakis sees the Marshall Plan as the upshot of the US's rejection of a global surplus recycling mechanism as proposed at Bretton Woods. So, some form of Marshall Plan was already in the offing as soon as 1944.
by Upstate NY on Wed Feb 15th, 2012 at 02:01:15 PM EST
[ Parent ]
Great book. I wish he had referenced his sources for the discussion of post war US planing. I strongly suspect his conclusions are based on biographies, memoirs and secondary works. It would be unreasonable to expect an economist to do the sort of primary source research to document such a claim. And this is not an area I ever studied in any significant way, but his conclusion seems so right.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 16th, 2012 at 12:38:44 AM EST
[ Parent ]
You are not seriously arguing the postwar?

I mean, massive amounts of German debt were expunged. In Greece alone, Germany not only had its pre-war debts expunged, but its forced loan for the German occupation was never repaid, it took many billions of gold from the National bank treasury, not to mention all the damage, death and destruction.

Read all about it: http://www.spiegel.de/international/germany/0,1518,769703,00.html

by Upstate NY on Tue Feb 14th, 2012 at 06:15:14 PM EST
[ Parent ]
Prior to the Marshall Plan, the USA had given an equivalent amount to Germany. The total of the Marshall Plan was $26 billion or more than 15% of US GDP at the time.

In an American context, this is equivalent to $225 billion today.

In a German context relative to GDP, this would be $50 billion.

The total amount Greece has received from Germany so far is $15 billion, but it will all be paid back, and it is being paid back at 5.25% over the last 18 months. Germany actually received the Marshall Plan money. The Greek money however has mainly gone to the creditors.

by Upstate NY on Tue Feb 14th, 2012 at 06:43:21 PM EST
[ Parent ]
Hmm

Wikpedia seems to differ (it gives the total amount as 12.731 bn), but in any case, as mentioned before, the actual subsidy to Germany was about 400m US$, plus another 1bn in repaid loans. The vast majority of Marshal Plan funds went to US allies; and the British received another 40bn on top outside of it.

But this exists in a context of allied powers extracting/looting several 10bns of values from Germany during the same period; and further damage through malicious and/or stupid occupation rules and actions. (like, intentionally starving the population, forbidding food imports etc).  Just read the Wikipedia article.

by cris0 on Tue Feb 14th, 2012 at 07:29:33 PM EST
[ Parent ]
I should have written the total aid. In the year prior to the Marshall plan they gave $13 billion and then another 12.7 in the Marshall Plan. Germany was one of the biggest beneficiaries, but unlike countries in the Eastern Bloc and Greece where all the money was spent on the military in fighting still running wars, 60% of the 3 billion given to Germany was used giving loans to industry to rebuild Germany's industrial capacity.
by Upstate NY on Tue Feb 14th, 2012 at 10:23:10 PM EST
[ Parent ]
I trust you're familiar with the following story, too.

From Deutsche Welle: Als Griechenland deutsche Schulden halbierte. That's what "European solidarity" means.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 04:45:22 PM EST
[ Parent ]
I really doubt we'd be having this debate if this was about debt. If Greece campaigned to get its debt cut in half, and could show how it would get its budget back on track by that, practically every German politician would jump at the occasion.

You would see Schäuble walking around as Greece's biggest supporter.

But, alas, they can't.  

by cris0 on Tue Feb 14th, 2012 at 06:10:39 PM EST
[ Parent ]
Of course it's not about debt, it's about guilt.

Oh, wait...

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:15:45 PM EST
[ Parent ]
Oh, suddenly this debate is no longer about debt? Interesting.
by Katrin on Tue Feb 14th, 2012 at 06:17:42 PM EST
[ Parent ]
David Graeber would love this exchange.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:18:14 PM EST
[ Parent ]
debt and deficit are 2 different things.

Very early on quite a few European politicians noted that Greek debt in and by itself was not the major problem.  

Greece's complete inability to balance its budget even with much reduced debt, though, certainly was. (and is)

by cris0 on Tue Feb 14th, 2012 at 07:33:05 PM EST
[ Parent ]
Balancing the government budget is stupid.

The government is the employer of last resort. This implies that the government has to be able to print and spend money at will.

Why is this difficult to understand?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 07:36:28 PM EST
[ Parent ]
sigh

since everybody is going to jump on that:

s/balance/curb to a level appropriate for its growth/

by cris0 on Tue Feb 14th, 2012 at 07:37:30 PM EST
[ Parent ]
Greece's deficit was perfectly appropriate for its growth path. Probably a bit too small, actually, considering the mercantilist attack Germany and the Netherlands were subjecting it to.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 08:14:25 PM EST
[ Parent ]
Much reduced debt? What? Debt is up.
by Upstate NY on Tue Feb 14th, 2012 at 10:20:07 PM EST
[ Parent ]
Greece should not get its budget "back on track" to a 1930s style depression.

Balanced budgets are bad. Why is this so hard to grasp? Governments need to run deficits - usually quite substantial ones - to ensure full employment and macroeconomic stability. Any deal that does not allow European states to run any deficit required to defend full employment is a totally unacceptable deal and should be rejected and repudiated.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:17:53 PM EST
[ Parent ]
I'm at pains not to flip my wig here.

Greece has cut its budget by 19%.
It is being asked to cut it another 6%.

No country in history has ever cut its budget that much without an accompanying economic stabilizer (such as currency devaluation).

In other words, Greece has slashed a ton already.

And it did so in a recession. Any further so-called reforms would have only killed the economy even more.

Not single serious economist has ever said this plan would ever work. And now that it hasn't worked, the dunderheads are looking for scapegoats, as though the deregulation of the taxi and pharmacy sector will save Greece.

Even the IMF in its own handbook warns against cutting the budget like this in so short of time without any economic stabilizer whatsoever.

by Upstate NY on Tue Feb 14th, 2012 at 06:19:22 PM EST
[ Parent ]
When the IMF says you're cutting government budgets too fast, you know you're in really deep shit.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:25:08 PM EST
[ Parent ]
And yet, Greek politicians prefer this to default and control over their currency...
by asdf on Wed Feb 15th, 2012 at 01:17:27 PM EST
[ Parent ]
They yearn to be "good Europeans"...

... and to retire to a sinecure at a global corporation.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Wed Feb 15th, 2012 at 03:54:15 PM EST
[ Parent ]
Greece needs some crazy Mahathir Mohammad-style guy.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Feb 16th, 2012 at 08:38:18 PM EST
[ Parent ]
Ant the current political mood? Payind down the public debt.

And the current political mood last now for over twenty years.

Before the usual blame shifting starts: I am pretty sure that most - perhaps all - european governments would do the same.

by IM on Sun Feb 12th, 2012 at 03:41:45 PM EST
[ Parent ]
i dont see much bullying by Nasty Kapitalists here.

In case you had not noticed, the Troika ARE the front men for the European financial establishment and their clients are the largest wealth holders in Europe and those political leaders who represent that wealth in government. But it has been my sad observation that the last people to see the invidious nature of an unjust economic or social arrangement are those who are or who imagine they are the beneficiaries of that injustice. It has also been my observation that the majority of those who support such systems only think they are the beneficiaries and that, in reality, they are victims also.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 12th, 2012 at 05:57:15 PM EST
[ Parent ]
No.

The troika are the front men of the group of states that Greece has desperately been begging for ever increasing amounts of money.

Don't like the Troika? Just fucking throw them out of the country - and stop begging for money.

by cris0 on Tue Feb 14th, 2012 at 04:35:13 PM EST
[ Parent ]
It's unbelievable that you still stick with this idea that the troika is doing anything but passing money through Greece to European banks. Please, it's ridiculous. I mean, just what in heaven's name do you believe the escrow account that's part of this package is for?
by Upstate NY on Tue Feb 14th, 2012 at 06:20:48 PM EST
[ Parent ]
I'm fighting cops on the streets in order to be able do just that: throw them out. The banksters' quislings however are, for the time being, still holding on.

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Tue Feb 14th, 2012 at 06:23:25 PM EST
[ Parent ]
This diary starts with the quote of delicate balance that loan sharks must perform, and ends with a guinea pig test metaphor. It seems that the loan shark industry need test cases in all ages, and particularly now, they need all scientific, empirical, heuristic and inspirational methods. No doubt they were working on this for years (Africa, South America, South East Asia, Eastern Europe...). Now, surely, comes an exciting switch towards new discoveries.
by das monde on Mon Feb 13th, 2012 at 03:59:30 AM EST
[ Parent ]
European Tribune - Greece: they must not pass
A police officer's union has declared that it will refuse to attack its brothers, and threatened the troika members with arrest...

From the article:

Greek police union wants to arrest EU/IMF officials | Reuters

Feb 10 (Reuters) - Greece's largest police union has threatened to issue arrest warrants for officials from the country's European Union and International Monetary Fund lenders for demanding deeply unpopular austerity measures.

In a letter obtained by Reuters on Friday, the Federation of Greek Police accused the officials of "...blackmail, covertly abolishing or eroding democracy and national sovereignty" and said one target of its warrants would be the IMF's top official for Greece, Poul Thomsen.

The threat is largely symbolic since legal experts say a judge must first authorize such warrants, but it shows the depth of anger against foreign lenders who have demanded drastic wage and pension cuts in exchange for funds to keep Greece afloat.

I think wheter it is symbolic or not hinges mainly on if the police union carries it out. The legal experts appear not to have been confronted by the very real executive powers of police, even when it is not backed by the laws.

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 Sun Feb 12th, 2012 at 05:16:42 PM EST
I would like to see nothing more than for the police to arrest these people.  That would be a moment for the ages.  A true flag in the fucking ground.  Get to it, coppers.
by paving on Mon Feb 13th, 2012 at 12:22:57 AM EST
[ Parent ]
It could end up like a Western Movie: sheriff arrests loathed villain; mob of angry citizens storm jail and lynch villain. Not exactly the preferred outcome, but perhaps preferable to the outcome the villain had in mind. When justice is perverted by the mighty for too long and to too great an extent on rare occasions it blows up on them. But most often it is another small group of villains who profit by taking the place of the former group.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 13th, 2012 at 12:46:03 PM EST
[ Parent ]
Bloomberg: Rioters Burn Buildings as Greek Parliament Votes
Ten fires were burning in central Athens including buildings housing a Starbucks Corp. (SBUX) cafe, a bank and a movie theater, a fire department spokesman said, speaking on the condition of anonymity in line with official policy. The blazes were near a bank that was set on fire in May 2010, killing three bank employees, during a general strike against Greece's first bailout package.

...

Demonstrators, rallying against austerity measures including job cuts, tore up marble in front of parliament that they hurled with fire-bombs at police guarding the chamber. Officers in riot gear responded with tear-gas and flash grenades. More than 50 officers were injured in the violence, police spokesman Takis Papapetropoulos said by telephone. The Greek Health Ministry said in an e-mailed statement that 54 people had been taken to hospital. Police said 25 rioters had been detained.

...

"The message to the Greek government is they should leave the country, right now," one protester, Dimitris Fokos, 49, unemployed, said. "They don't represent the people anymore."



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sun Feb 12th, 2012 at 05:50:55 PM EST
Protests, fine. It's the right thing to do. But I fucking hate rioters.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Feb 16th, 2012 at 08:40:50 PM EST
[ Parent ]
"Protest" means the police beat the protesters.

"Riot" means the protesters are fighting back.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 17th, 2012 at 02:57:58 AM EST
[ Parent ]
The riots have the same net effect as the words of the Greek President (normally a mild-mannered octogenarian). They are a threat that better laid plans are about to combust into a bonfire.

After Papoulias went ballistic the other day, suddenly everyone calmed down.

He essentially said, "Burn it, burn it all to the ground."

People don't have the voice he does, but the net impact is the same.

Fire tends to clarify.

I wonder why we saw no one firing back at Papoulias? Could it be because the stock market tanked? And the stock markets did not understand the relevance of 100 burning buildings? Because it wasn't on TV?

by Upstate NY on Fri Feb 17th, 2012 at 11:08:15 AM EST
[ Parent ]
Reuters: Central Athens burns as lawmakers weigh austerity
"We are facing destruction. Our country, our home, has become ripe for burning, the centre of Athens is in flames. We cannot allow populism to burn our country down," conservative lawmaker Costis Hatzidakis told parliament.

..

"The choice is not between sacrifice and no sacrifices at all, but between sacrifices and unimaginably harsher ones," [Venizelos] told a stormy debate expected to run well into the night.

...

"Enough is enough!" said 89-year-old Manolis Glezos, one of Greece's most famous leftists. "They have no idea what an uprising by the Greek people means. And the Greek people, regardless of ideology, have risen."



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sun Feb 12th, 2012 at 05:52:50 PM EST
"The choice is not between sacrifice and no sacrifices at all, but between sacrifices and unimaginably harsher ones,"

And we note, with some dismay, that you went for the unimaginably harsher ones.

Well, for the country at least. Of course, for you the choice was between being despised by a polity that you avoid meeting and being expelled from your party and from all the cocktail parties held by your rich buddies, so I can see how the latter would have been unimaginably harsher.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Feb 13th, 2012 at 02:23:29 AM EST
[ Parent ]
AP via Google: Rioting engulfs Athens, buildings burn before vote
Athens Mayor Giorgos Kaminis said rioters tried to storm the City Hall building, but were repelled. "Once again, the city is being used as a lever to try to destabilize the country," he said.

Conservative New Democracy leader Antonis Samaras said the rioting "hurts the entire country."

"We are seeing scenes from a future that we must do our utmost to avert," he said.



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sun Feb 12th, 2012 at 05:56:05 PM EST
BBC news reports the parliament has passed the austerity measures.

Here.

'tis strange I should be old and neither wise nor valiant. From "The Maid's Tragedy" by Beaumont & Fletcher

by Wife of Bath (kareninaustin at g mail dot com) on Sun Feb 12th, 2012 at 06:04:12 PM EST
What was the majority?
by IdiotSavant on Sun Feb 12th, 2012 at 06:11:33 PM EST
[ Parent ]
Ah, the Guardian has it: 199 to 74.
by IdiotSavant on Sun Feb 12th, 2012 at 06:31:30 PM EST
[ Parent ]
The numbers of interest are as follows:
22 MPs from the Socialist Party (PASOK) voted against party line for YES and were expelled from the party (among them 2 very ,
21 MPs from the Conservative Party (ND) voted against party line for YES and were expelled from the party,

On the other side,
2 MPs from the ultra-right LAOS voted YES against party line to absent and were expelled from the party.

"Eurozone leaders have turned a €50bn Greek solvency problem into a €1,000bn existential crisis for the European Union." David Miliband

by Kostis Papadimitriou on Sun Feb 12th, 2012 at 06:56:56 PM EST
[ Parent ]
So what happens with the 43 PASOK and ND MPs who were expelled from their parties? What do they do now?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sun Feb 12th, 2012 at 07:11:56 PM EST
[ Parent ]
In Pasok, there is an open question of whom will control the party after/if George Papandreou steps down as a president. To make an analogy with Argentina, it is now even more probable that a Menem rather than a Kirchner will get the party, With leadership question settled, Pasok will return to above 30% in the actual coming election (from current 8% in polls). At the moment it is not probable that the NO dissidents will form a new party (it would be suicidal). At least, there is no such talk.

In New Democracy, things are different. I believe that more or less that was a theatrical performance. With the dissidents, Samaras appears now much more centrist than before so he will gain moderate voters. Just before the election, he will accept back the 'black sheeps' for the greater good. The YES dissidents from LAOS are also expected/rumored to join the conservative ND party. Despite the silly polls, I guess Samaras will get above 40% and closer to 45%. Then we will have an Orbán in Greece.

LAOS will collapse and the left parties will return to their normal historical high i.e. 14-15% collectively.

"Eurozone leaders have turned a €50bn Greek solvency problem into a €1,000bn existential crisis for the European Union." David Miliband

by Kostis Papadimitriou on Mon Feb 13th, 2012 at 02:21:38 AM EST
[ Parent ]
(from current 8% in polls)

Is there an aggregator site for polls in Greece? If not, can you link to/give us the latest poll(s)?

Pasok will return to above 30%... Despite the silly polls, I guess Samaras will get above 40% and closer to 45%

Does that mean you think voters will not make a connection between Pasok, ND and the approval of austerity by their MPs, or that you think the majority at least tolerates austerity itself?

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

by DoDo on Mon Feb 13th, 2012 at 04:16:46 AM EST
[ Parent ]

PASOK, ND,CP, SYRIZA,  LAOS(far-right), Greens, Democratic LEft, Neolibs, Nazis, Etc.

That was before the new colonial memorandum however, when people still believed that Samaras could cut a better deal... This is also a projection, among likely voters. 30% declare that they will abstain. The raw percentage of PASOK voters among the general population is certainly under 5%...

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Mon Feb 13th, 2012 at 07:38:27 AM EST
[ Parent ]
I disagree on this. PASOK is a non-existant party. The society it organized around it no longer exists. If there was a way to return to the status quo ante what you say might be probable. There isn't. Greece is no longer a middle class society, more than 50% of the population are already either precarious workers or will become soon. There is no room, no method for PASOK to re-emerge as a major party. They cannot recreate the clientilist system that was the core of PASOK's power - despite having very strong support in the media establishment. It is very possible that in the mid-term DIM.AR (Democratic Left) will become the vehicle of a less corrupt and delegitimized Center-Left (it is already acquiring socialist MPs and politicians at a growing rate).
I'm from Iraklion, PASOK's most faithful heartland. Very few in town are even considering "retuning" to PASOK, and the party polls I've seen with Venizelos as the new leader are only marginally better for PASOK i.e. around 10% (but that was before the current memorandum). It is not a coincidence that exactly in Iraklion were the proportionally larger demonstrations outside of Athens and violent attacks against the two political parties...

I don't think moderate voters exist anymore as such, at least not as a determining quantity. Poor and moderate do not mix. I think Samaras is old news. If (when) the conservatives regroup, they will be a much more populist and much more nationalist party - which is why they elected Samaras in the first place...

I note also that the Chryssi Avgi Nazis will enter parliament, and personally I think they will achieve more than 5%, unless Kammenos forms a credible non-fascist nationalist alternative perhaps.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Mon Feb 13th, 2012 at 07:28:03 AM EST
[ Parent ]
that economics minister better start jogging practice. well-fed fellow!

"We can all be prosperous but we can't all be rich." Ian Welsh
by melo (melometa4(at)gmail.com) on Mon Feb 13th, 2012 at 07:40:00 AM EST
[ Parent ]
Well, Pasok will re-group after the leadership question is solved. Pasok basis is the private and public sector employees. So it's mainly lower middle class, which not only still exists but it expands as parts of the upper middle class are re-homogenising with lower middle class. But that is a long talk and it's not confined to Greece.

For Dimar let me have a different opinion. It's a typical poll bubble created by the media and fed with the dissapointment of voters. We' ve seen that before in Greece, France, Germany etc. Maybe an one-off nice election performance and that's it. Moreover, Dimar is currently heavily funded by a media and shipping tycoon, a fellow Kretan of yours, as a means to support Samaras by weakening Pasok. We' ve seen that before with a previous leader of the same fraction of the Left.  

I wish things would be as you describe them, but they aren't.

Anyway, election day is coming (and with it Darkness).

"Eurozone leaders have turned a €50bn Greek solvency problem into a €1,000bn existential crisis for the European Union." David Miliband

by Kostis Papadimitriou on Tue Feb 14th, 2012 at 12:35:21 AM EST
[ Parent ]
Private and Public sector employees, are now mostly precarious workers, and poor by yesterday's standards. I think we should forget the previous social structure of Greece, that is unless there is some sort of a fight back. PASOK has nothing to offer to its former clients. It's political remnants are heading to all conceivable political directions.

DIMAR is a bubble. I agree. But if there are elections soon, it will be a bubble that will have secured political clout. This will preserve it and transform it - maybe. I'm not sure. In Argentina the local PASOK created its own left offshoots and helped society. I think that the current PASOK is even more deeply corrupt than the Peronists, if one could imagine that. Should some of the not-so-obviously-corrupt cadres start their own party, perhaps they might preserve the party. Perhaps.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Tue Feb 14th, 2012 at 05:28:26 AM EST
[ Parent ]
I think what you and Kostis are disagreeing about is the extent to which the patronage network which PASOK represents is still operative, or even dormant, rather than having been destroyed beyond repair.

Part of the point is that alternative political parties need to be part of a patronage network or they will be a bubble. After one or two election cycles they will fizzle out and whatever's left of the old PASOK network will pick up where PASOK left off in 2009.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:09:19 AM EST
[ Parent ]
"Eurozone leaders have turned a €50bn Greek solvency problem into a €1,000bn existential crisis for the European Union." David Miliband

These are post modern anti-leaders.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 13th, 2012 at 12:51:52 PM EST
[ Parent ]
These are post modern mortem anti-leaders</s>
FTFY

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Mon Feb 13th, 2012 at 01:40:11 PM EST
[ Parent ]
Well, we have had zombie banks and zombie countries so I guess it is time for zombie anti-leaders. That is truly what Papademos and his cohort are and they are eating the flesh of a dead social order for brainless and soul-less bankers and wealth holders to the north and west.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 13th, 2012 at 04:32:01 PM EST
[ Parent ]
zombie zombie zombie

There's a lot of passionless and idea-less people out there waiting for the world to burn.

you are the media you consume.

by MillMan (millguy at gmail) on Tue Feb 14th, 2012 at 12:04:32 AM EST
[ Parent ]
I think they are expecting wealth to just keep falling into their pockets, the way it long has. Only when it has blown up will they have any motive to try and understand what happened, and then most will just look for a scapegoat.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Feb 14th, 2012 at 01:31:56 AM EST
[ Parent ]
Partly it's the wealthy who have nothing else to do than try to make more money, but I'm also thinking of people like the gold bugs. With them (and others) I think there is a large element working from the "cleansing flood" myth.

you are the media you consume.

by MillMan (millguy at gmail) on Tue Feb 14th, 2012 at 01:10:22 PM EST
[ Parent ]
One might think what Katrina showed of the 'cleansing power' of floods - decidedly negative. But, if your life is miserable, radical, millennial or apocalyptic change can seem attractive. This has been used to explain the excitement in so many countries at the outbreak of WW I and is likely at work now in many places.


As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Feb 14th, 2012 at 03:22:00 PM EST
[ Parent ]
From my own experience being in very physically run down and negative states - the appeal is the fantasy wherein the source of my stress disappears overnight. And yes, it's also good for cultivating an already chaotic internal state. That's what drew to the peak oil websites - as much as the science side, which I was also on board with, obviously.

It's taboo to acknowledge how physically and emotionally draining modern life can be in the "rich" world. We're actually required to believe the opposite. There is no easy to find, constructive narrative out there to vent this.

For others who have an internal desire to control the external world (I don't), the "righteous punishment of sinners" aspect of the flood myth is in play.

you are the media you consume.

by MillMan (millguy at gmail) on Tue Feb 14th, 2012 at 05:32:21 PM EST
[ Parent ]
When I was in grad school friends used to joke with me that I was "a real Götterdämmerunger".

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Feb 14th, 2012 at 05:43:57 PM EST
[ Parent ]
I'm still waiting for your diary about all this, having to make do with the occasional comment.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:05:21 PM EST
[ Parent ]
I'll probably have the time / drive / energy to write something once I'm on the road again later this summer. I'm still bummed that I couldn't get something out in late 2009 / early 2010.

you are the media you consume.

by MillMan (millguy at gmail) on Tue Feb 14th, 2012 at 07:20:25 PM EST
[ Parent ]
Yes, I used to refer to it as apocalyptical euphoria. If the world goes to hell, then the daily stresses goes away. Future stresses are expected to be more of a do-or-die quality (wheter it is the Revolution, Mad Max, or 1984 that comes along). Seen quite a bit of it in different settings.

Not to go all biological, but maybe many of us are better equiped for the do-or-die scenario with the adrenaline rush and all. But before we get some Eden-scenario, many of the daily stresses comes from upholding our place in the pack and that unfortunately looks like a constant.

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 Wed Feb 15th, 2012 at 06:17:15 AM EST
[ Parent ]
Status seeking (upholding our place in the pack) is definitely the big one. Even if you're fine with not playing that game, though, it's very hard to opt out of society altogether. Almost all land on the planet is "owned" and is part of the world economy even if only indirectly.

you are the media you consume.

by MillMan (millguy at gmail) on Wed Feb 15th, 2012 at 04:25:08 PM EST
[ Parent ]

I turned back. It is impossible to reach down-town. 50 buildings have been set on fire and the smell of tear gas is overpowering. A few minutes ago a police precinct was attacked. A bank in Volos was burned to the ground, while MPs offices were attacked in Corfu, Western Greece and Crete...

The mobilization was unprecedented. By 5 o'clock Syntagma square was full, so was Omonia, and almost all of the surrounding streets - but it's difficult to gauge participation though because as soon as the square started to fill up the police attacked the protesters with large amounts of teargas... There is an estimate around the tweetosphere of 500.000, this is not unrealistic. Bear in mind though that after the first chemicals people, especially older people,  decided not to show up, or attempt to approach Syntagma.

Even the orderly and robust communist union's block didn't make it to Syntagma although they attempted an approach from three different directions. The Syriza block attempted many times to reach parliament. They were pushed back, and the block was attacked around 10 - 10:30.

The cops were throwing tear gas canisters in the middle of huge but peaceful crowds. The number of people injured and taken to the hospital tonight officially is 75, but in reality it's much more, the makeshift first aid stations around Syntagma (some of which I hear were attacked by the police) treated scores of people....

Among the first to be hit were Greek resistance icon Manolis Glezos and music composer Mikis Theodorakis (89 and 91 years old respectively), giving a signal that the police was not about to spare anyone. It was obvious that they had orders to keep Syntagma square clear and they did it with extreme brutality.

After that, however things got wild, either through some sort of concerted black-block action, or whatever, one after the other buildings were set on fire, banks initially but then other buildings: coffee shops, and cinemas among them - grand old buildings of great contemporary historical significance sadly.
As I write this Athens is still ablaze, and I fear this might be the start of a trend, not just an explosion. Certainly the number of people despising both the police and the current government skyrocketed today and as the state is reduced more and more to shows of police brutality anti-authoritarian or even just blind violence will grow more frequent.

About the vote: As expected. The two leaders, the political and electoral nullity (8% approval rate) of George Papandreou and Antonis Samaras (soon to follow him in disrepute) threw out a total of 41 MPs from their parties. The two teams of expelled MPs are strong enough to create two new parties: one at PASOK's left perhaps (although most of them are also in disrepute exactly for following the PASOK leadership's orders for so long) and one at ND's populist right. Panos Kammenos, an economic populist (and virulent nationalist , it has to be said) is said to be preparing such a party, though not all of the MPs who were expelled would feel comfortable in such a political environment.

The left will gain: Democratic Left as a more "moderate" left is receiving a huge inflow of moderate PASOK voters, looking for a less damaged political roof, but also SYRIZA and KKE have stabilized at very high numbers and the current climate of popular unrest will probably strengthen them. All three of these parties voted against the memorandum and SYRIZA and KKE have promised to undo all of its measures one by one, on constitutional grounds...

There is talk of a continuous general strike planned for most of the country's public enterprises, and a continuous series of strikes in the rest of the public and private sector. I think it is labor now, more than any other part of the Greek population that will carry the torch of the popular battle...

I would also like to point out that those who are building a Europe of solidarity, a real European Union, well they are not Merkel...


The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Sun Feb 12th, 2012 at 09:05:26 PM EST
Can you suggest Twitter tags in English for those of us interested in following the events?
by asdf on Sun Feb 12th, 2012 at 10:22:25 PM EST
[ Parent ]
#12fgr #syntagma #Greece

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Sun Feb 12th, 2012 at 10:31:59 PM EST
[ Parent ]
Excellent coverage, talos.  Stay safe!

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Mon Feb 13th, 2012 at 06:08:49 AM EST
as official nominal wages dropped 15%, unemployment passed the 20% mark and, according to polling company VPRC, the bottom 90% of Greek households, suffered in 2011 alone loss of income on average ~45% of their incomes

Are there any datasets out or upcoming we could use to verify that?  If that figure's true -- wow.  It's almost unfathomable.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Mon Feb 13th, 2012 at 06:19:12 AM EST
Page 9 here, in Greek. These are the result of a poll conducted by VPRC a social and political polling company a month ago...
I translate:

What is the percentage of income loss from all sources that your household has suffered compared to last year (twelve months ago)
(Among those who have stated that their personal economic situation has improved - [which is 89% according to the previous slide])

Average reported reduction of income loss over the past year - 46,3%.

So no datasets, but that's a reputable research company...

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Mon Feb 13th, 2012 at 07:47:18 AM EST
[ Parent ]
I meant to write of course "Among those who have stated that their personal economic situation is deteriorating"!

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Mon Feb 13th, 2012 at 09:51:23 AM EST
[ Parent ]
What makes the situation completely surreal are the numbers. Greek debt in 2008 was approximately 260bn Euro. The first bailout was 110bn, the current one, that appears to be tearing the country apart, is 130bn. Add in the PSI+ haircut of approximately 100bn ( after sweetener deduction ) and you realized that Europe could have simply paid the entire bill in 2008 and saved itself 80bn Euro. Ok, that is an oversimplification of the problem but you can see my point.

However now, after 340bn Euros, Greece is still has an unmanageable debt, is in a far worse position than it was 3 years ago and it appears the country itself is coming apart at the seams.

Looks like bond vultures are having good business: They are already getting all old "lazy" Greek debt back, and they can expect much more?! Like with the subprime, what a fascinating game: roll over the debt until the music stops?!

by das monde on Mon Feb 13th, 2012 at 10:03:07 AM EST
The quote is from here.
by das monde on Mon Feb 13th, 2012 at 10:03:49 AM EST
[ Parent ]
Of course most of the bailout money went to the creditors, and not to Greece.

And it's still going to the creditors and not to Greece.

This is simply a cash handout from the Troika to 'investors', which happens to be laundered through the destruction of a democratic constitution.

The ECB could have stopped the pantomime at any point. But where would be the fun in that?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Feb 13th, 2012 at 11:48:02 AM EST
[ Parent ]
Only 80 billion of the first bailout has been paid so the math is off.
by Upstate NY on Mon Feb 13th, 2012 at 02:20:27 PM EST
[ Parent ]
Alarmingly the UK Conservative analysis of the unmsustainability of the Euro seems to be coming true.

Presumably the answer for |Greece is to repudiate the debt in total, withdraw from the Euro and accept that the New Drachma is going to start its existence at a low value.

The richer Greeks would then see the value of assets they have kept at home severely depreciate. Foreign creditors would lose their investments. However some new growth could at least try to emerge from the scorched earth of the old economic order.

The above seems to me to be a best case solution for Greece, in the absence of agreement for massive gifts in transfer payments from the richer parts of Europe. Perhaps an intra-European equivalent of the Marshall plan after the Second World War might work, but I doubt either the vision or the altruism (enlightened self interest) to tey such an approach is lacking. Certainly the British public would be strongly opposed.

by Gary J on Mon Feb 13th, 2012 at 10:26:25 AM EST
The question then would be whether this same approach is appropriate for Portugal, Italy, etc...
by asdf on Mon Feb 13th, 2012 at 11:50:45 AM EST
[ Parent ]
They all would be better off if they exited in union to a new union. If only.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 13th, 2012 at 12:59:20 PM EST
[ Parent ]
Ironically the Conservative analysis is only correct because of conservative policies.

Masstricht was an idiocy, but in some different reality where Maastricht never happened there would have been nothing inevitable about the current meltdown.

It could easily have been avoided with progressive policies.

The only costs would have been loud but ignorable squealing from 'investors' complaining about being robbed, and about solutions that were inherently unserious and damaging, likely to cause job losses, etc.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Feb 13th, 2012 at 11:52:20 AM EST
[ Parent ]
Ironically the Conservative analysis is only correct because of conservative policies.

As we have noted before, neoliberal fantasy-world economic notions such as the loanable funds fallacy, or the 'facts' that governments both fund themselves in the open market and crowd out private investment are actually institutionally true in the EU, which has legislated itself into a neoliberal fantasy world.

The fact that neoliberal fantasy world economics is untenable and ends up crashing and burning will crash and burn the EU, but in the meantime all political and economic agents in the EU are constrained to operate within neoliberal fantasy world economics.

And you know what's best? Narratively speaking, when it all dies it will be Keynes' fault.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Mon Feb 13th, 2012 at 07:00:09 PM EST
[ Parent ]
Apparently, the troika has moved the goalposts on Greece again by stating they need maximum participation in PSI by Wed. morning--this after many creditors expressed misgivings at the weekend's events.

Greece reminds me of Charlie Brown, the troika is Lucy.

See this: http://youtu.be/GsSXMT0NrB4

by Upstate NY on Mon Feb 13th, 2012 at 02:14:19 PM EST
That's true. I very much doubt if there is a deal with the Troika. Greece has signed its part of the deal but Germany seems that has changed its mind (we' ve seen that before with the PSI I of July).

"Eurozone leaders have turned a €50bn Greek solvency problem into a €1,000bn existential crisis for the European Union." David Miliband
by Kostis Papadimitriou on Tue Feb 14th, 2012 at 12:43:26 AM EST
[ Parent ]
according to today's papers, greece hasn't really decided were to get part of the revenues it promised.

Also the leader's commitment to their policy is still not there.

So it's not about PSI (yet)

by cris0 on Tue Feb 14th, 2012 at 04:26:13 PM EST
[ Parent ]
according to today's papers, Greece's Quisling government hasn't really decided were to get part of the revenues it promised.

Fixed that for you.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 04:38:14 PM EST
[ Parent ]
The quisling gov't actually did decide where the money is coming from. They cut it out of the military budget.

Maybe they didn't specify that they would be cutting German Leopard tanks or else submarines built by Thyssen-Kruppe?

by Upstate NY on Tue Feb 14th, 2012 at 04:57:53 PM EST
[ Parent ]
if they did so, more power to them.

One of the many sins of Greek society is its massive military overspending. Look it up - military spending to GDP ratio of different countries.

by cris0 on Tue Feb 14th, 2012 at 05:09:30 PM EST
[ Parent ]
No small thanks to Germany. First the German companies bribed corrupt Greeks to approve useless submarines and tanks (which didn't even work), and then Germany blackmailed Greece by making the many billion euro purchase of new subs a prerequisite of the bailout. Talk about German hyocrisy.

Then Germany freaked out when France announced it was selling jetfighters to Greece at a cut-rate cost (thereby muscling out German companies trying to earn a profit) with German money!!! Hilarious!

by Upstate NY on Tue Feb 14th, 2012 at 05:38:08 PM EST
[ Parent ]
and then Germany blackmailed Greece by making the many billion euro purchase of new subs a prerequisite of the bailout.

A brazen lie.

by IM on Sat Feb 18th, 2012 at 10:28:34 AM EST
[ Parent ]
No, that is a matter of public record.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 10:49:42 AM EST
[ Parent ]
Bit of cours ethere is nothign, absolutely nothing about any defense contracts being part of the bail-out in there.

So it is a brazen lie.

That:

>The second boat, Pipinos, was officially launched in February 2007 and is at present going through Greek harbour acceptance trials in Piraeus.

On September 21, 2009 TKMS announced that the contract with the Greek Navy for all four submarines had been cancelled due to country's arrears of more than 520 million Euros. TKMS is now seeking arbitration to resolve the matter.[21][22]

On October 27, 2009 the Greek Ministry of Defence officially confirmed that they intend accepting the three boats built in Greece. The first-of-class boat built in Kiel will not be accepted, and will be offered for sale. Proceeds from the sale will be used to pay the debt to TKMS>

also shows that the squabbling about the quality of the submarines is rather pre crisis. And that th reamining orders are about submarines built in Greece.

by IM on Sun Feb 19th, 2012 at 04:32:14 PM EST
[ Parent ]
The tutelary powers have apparently decided that the Greek government doesn't have the prerogative to decide on their own military budget. From EuroIntelligence :

Migeru:

the euro working group rejects Greece's proposal to make up for €325m shortfall by defense spending cuts and ask for pension cuts instead

hmmm doesn't fit the frame very well, Cris...

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Wed Feb 15th, 2012 at 06:16:43 AM EST
[ Parent ]
The really oddball thing is that onlooker-analysts predicted this.

It's as though they are trying to ask the question: "How craven can we be?"

by Upstate NY on Wed Feb 15th, 2012 at 09:37:30 AM EST
[ Parent ]
you just solidify my conclusion that we should have stayed out of Greece from the beginning. And that we should just walk away now.

This kind of horridly unfair and inaccurate propaganda is exactly the reason. German taxpayers committed massive amounts of money to help Greece, and they get spit in the face for it.

Bad idea alltogether, from the start.

by cris0 on Tue Feb 14th, 2012 at 05:06:43 PM EST
[ Parent ]
The German taxpayer has committed absolutely no money to Greece.

The German taxpayer has committed a whole lot of money to bailing out German, French and British banks. The German taxpayer actually got a pretty good deal on that bailout, seeing as the American taxpayer and the other EU countries' taxpayers chipped in with well over half the bailout of the German, French and British banks.

That the bailout was laundered through a compliant Greek government is incidental and irrelevant.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:16:15 PM EST
[ Parent ]
But there was a considerable Greek primary deficit until just now that was financed too.
by IM on Sat Feb 18th, 2012 at 10:24:06 AM EST
[ Parent ]
A primary deficit which financed import orders for the German export industries.

As long as Germany wants to keep running a current accounts surplus against Greece, it needs to be willing to pony up the money to finance that surplus, or allow Greece to print that money itself. Insisting that Greece pays for the German current accounts surplus is an exercise in futility. (Also in arbitrary cruelty to Greek society. But we seem to have established that the German version of European solidarity ends when it starts costing money, so that probably doesn't count.)

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 10:53:39 AM EST
[ Parent ]
>A primary deficit which financed import orders for the German export industries.<

Do really want to argue that Greece has exactly one trade partner?

by IM on Sun Feb 19th, 2012 at 04:25:31 PM EST
[ Parent ]
Trade: Exports (2010): $22 billion: manufactured goods, agricultural products, beverages, tobacco, petroleum products, cement, chemicals. Major markets--Germany, Italy, Cyprus, Bulgaria, Turkey, U.K., France, U.S., Romania, Spain. Imports (2010)--$64.55 billion: basic manufactures, food and animals, crude oil, chemicals, machinery, transport equipment. Major suppliers--Germany, Italy, China, France, Netherlands, U.S., Russia.
(US State department)

Assming the countries are listed in decreasing order of importance, Germany is both Greece's leading importer and exporter. Now we just need to find a source for the actual amounts.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 04:31:04 PM EST
[ Parent ]
With bilateral trade worth more than EUR 8.5 billion, Germany is Greece's principal trading partner. German companies are among the most important foreign investors in the country. Over the past two years, Deutsche Telekom has gradually acquired a 40 per cent share in the semi-state-owned Greek telecommunications company OTE. In addition to companies including Siemens and Bayer that have been operating in Greece for many years, there has been a recent increased influx of retail companies like Lidl and Media-Saturn. Major infrastructure projects such as the Athens Metro and the new Athens airport have been conducted with the help of German companies. The 144 German companies operating in Greece employ a total workforce of approximately 37,000 and account for an annual turnover of some EUR 10.5 billion (German Federal Bank figures, as of April 2010).
(Auswärtiges Amt)

Nice how they give the gross amount of bilateral trade, but not the net.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 04:36:50 PM EST
[ Parent ]
It has three trading partners who are abusing the European fixed exchange rate system for protectionist gain.

Of those three, one is Germany and the other two (Finland and the Netherland - and Finland's inclusion on this list is actually questionable) are an order of magnitude (and some small change) smaller. As trade scales faster than linearly with size, Germany is well in excess of 80 % of the trade imbalance.

So for all practical purposes, yes, Greece's primary deficit went to German export companies.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 19th, 2012 at 04:39:15 PM EST
[ Parent ]
The percent of total German exports going to the Euro area as a whole has actually declined since the euro was introduced because the Euro area has grown more slowly than other regions. Germany's bilateral trade balance in goods with each of the GIIPS, however, has improved. For example, Greece's bilateral trade deficit with Germany widened from -1.5 percent of Greece's GDP in 1999 to -2.5 percent in 2008. Other core European countries, like the Netherlands, saw similar developments with the GIIPS, suggesting that all of the surplus countries benefited from increased demand in the weaker Euro area members.
(Carnegie Endowment)

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 04:41:53 PM EST
[ Parent ]
Foreign Affairs: Why Only Germany Can Fix the Euro (November 17, 2011)
First, rather than providing peripheral countries with a market for their distress goods, the Germans have been enthusiastically selling their manufactured goods to the periphery. According to Eurostat, Germany's trade surplus with the rest of the EU grew from 46.4 billion euro in 2000 to 126.5 billion in 2007. The evolution of Germany's bilateral trade surpluses with the Mediterranean countries is especially revealing. Between 2000 and 2007, Greece's annual trade deficit with Germany grew from 3 billion euro to 5.5 billion, Italy's doubled, from 9.6 billion to 19.6 billion, Spain's almost tripled, from 11 billion to 27.2 billion, and Portugal's quadrupled, from 1 billion to 4.2 billion. Between 2001 and 2009, moreover, Germany saw its final total consumption fall from 78.5 percent of GDP to 74.5 percent. Its gross savings rate increased from less than 19 percent of GDP to almost 26 percent over the same period.


tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 05:11:04 PM EST
[ Parent ]
Not that you'll care, but I'd appreciate it if you used fewer rhetorical questions and more links to sources in debates.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 04:57:21 PM EST
[ Parent ]
If you don't care, why should I care?

I do overuse rhetorical questions, but I really don't think that matters . A assertion without a question mark is not really much better.

Now , according to the statistical annex of the OECD economic outlook report 90,

http://stats.oecd.org/Index.aspx?DataSetCode=EO90_INTERNET

Greece had a current account trade deficit of 14.9% in 2008. In absolute numbers 51.2 billion $. The trade deficit was 49,1 billion $. Now as big as 2.5% of gdp is, that is not everything and certainly not 80% of the total.

by IM on Sun Feb 19th, 2012 at 05:19:52 PM EST
[ Parent ]
In the Eurozone as a whole, there are five surplus sinks: Germany, the Netherlands, Austria, Luxembourg and Finland.

The rest are surplus sources, and the external account is balanced.

Therefore, any surplus generated by the deficit countries will eventually find its way to the five surplus sinks.

Germany is larger than the other four by a factor of what? Four? Five? Something like that, anyway.

The fact that the Greek sovereign primary deficit passed through Italy before ending up at Siemens and Rheinmetall AG is of no consequence to the conclusion that it did, in fact, end up there.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 19th, 2012 at 05:37:14 PM EST
[ Parent ]
We follow this logic the greek primary deficit financed chinese exports.
by IM on Sun Feb 19th, 2012 at 05:55:06 PM EST
[ Parent ]
No, the Eurozone has balanced foreign accounts.

RoW is not a surplus sink for the Eurozone, which means that none of the money the Eurozone's members pay for import end up in China.

The notion that "China is bankrolling Europe" is American conventional wisdom that you're puking up as if it were fact.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 19th, 2012 at 06:05:46 PM EST
[ Parent ]
The notion that "China is bankrolling Europe" is American conventional wisdom that you're puking up as if it were fact.

I said nothing of the sort. Don't make things up.

I cuold have used Ireland. Or the Netherlands. But countries with a considerable trade surplus with Germany. Or Japan.

by IM on Sun Feb 19th, 2012 at 06:10:15 PM EST
[ Parent ]
No.

The Eurozone has balanced foreign accounts. RoW is therefore not a surplus sink for the Eurozone. RoW not being a surplus sink, and China belonging to RoW, China cannot be a surplus sink.

This is elementary graph theory. So elementary, in fact, that you can prove it simply by drawing a graph with the nodes "Greece," "rest of Eurozone" and "Rest of World."

Then impose the boundary conditions that inflows must exceed outflows for Greece, and that all in- and outflows to RoW must sum to zero.

The only sink in that graph is RoE. China is not in the Eurozone, and is therefore not a sink.

Q.e.d.

This has been your first and last fee lesson in elementary graph theory. If anything here is unclear, look it up before venturing into discussions of international trade again.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 19th, 2012 at 06:25:41 PM EST
[ Parent ]
That, as so often from you is nonsense. Even after we factor out the eurozone, Greece is not running a balanced trade account with the rest of world.
by IM on Sun Feb 19th, 2012 at 06:30:51 PM EST
[ Parent ]
sigh

The Eurozone is running a balanced trade with RoW.

That means that the Greek deficit cannot end up in a sink outside the Eurozone. It. Is. Not. Possible.

As long as the Eurozone as a whole is running balanced foreign accounts, all Eurozone countries' aggregate deficits must end up as surpluses for other Eurozone countries.

This is not a difficult concept to grasp, so I really don't see why you continue this obtuse insistence that German surpluses are not the problem.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 19th, 2012 at 06:47:53 PM EST
[ Parent ]
You keep (deliberately?) forgetting Greece is part of a currency union with aggregate balanced external trade.

Greece doesn't have a problem with its debt in Yuan either.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sun Feb 19th, 2012 at 06:06:28 PM EST
[ Parent ]
What would have been your attitude in 1953 when Greece forgave 55% of the pre-war debt you owed to Greece (an amount at least as high as the 15 billion Germany has passed through Greece to its own banks) and then, as an additional reward, Germany received massive stimulus funds?

Did Germany suffer the consequences of its decisions then, as you so put it?

by Upstate NY on Tue Feb 14th, 2012 at 05:40:29 PM EST
[ Parent ]
Well yes. Do you really want to argue that a relevant proportion under discussion at London wasowed to greece?

Germany received massive stimulus funds?

Just like anybody else, including Greece and proportionally the least.

by IM on Sat Feb 18th, 2012 at 10:22:47 AM EST
[ Parent ]
Greece received was funding for the war against the Communists that lasted until 1949. Literally nothing for industry or anything else.
by Upstate NY on Sat Feb 18th, 2012 at 06:40:06 PM EST
[ Parent ]
Greece did get:

1948/1949: 176

1949/1950: 156

1951: 45 million $

from the Marshall plan. That is not nothing.

by IM on Sun Feb 19th, 2012 at 04:24:00 PM EST
[ Parent ]
You're evading Upstate NY's point that Greece in the postwar years was a theatre for the "Allies" against Communism in a quite different way from West Germany. While West Germany was the poster child, Greece was literally a battleground.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Feb 20th, 2012 at 01:43:30 AM EST
[ Parent ]
You're evading

Say it ain't so!

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Mon Feb 20th, 2012 at 02:12:14 AM EST
[ Parent ]
It is questionable whether additional debt really helps Greece. It is precisely the problem that Germany doesn't have enough money to simply give enough money to the PIGS nor the resolve to dissolve the Euro that is causing this prolonged crisis.
by oliver on Wed Feb 15th, 2012 at 06:26:40 AM EST
[ Parent ]
And what of all the other options that have been bandied about?

It's curious that when it comes to financialization methods meant to line the pockets of bankers, we dream up the most fanciful vehicles. But when it comes to addressing the sovereign debts of nations, it's direct deposits.

Or, as we say in America, "Straight cash, homey."

by Upstate NY on Wed Feb 15th, 2012 at 09:36:23 AM EST
[ Parent ]
I guess most of that is an attempt to avoid naming the dreadful truth. For Greece there are only two significant options. Either unquestioning obediance or an exit from the Euro. Matters have progressed too far to allow anything less radical.
by oliver on Wed Feb 15th, 2012 at 10:18:22 AM EST
[ Parent ]
It's clearly gone beyond that. Unquestioning obedience will not make the debt stability analysis come out positive. Unquestioning obedience has dug them into an ever-deepening hole :

austerity -> shrinking economy -> shrinking tax base -> unsustainable debt -> da capo al fine.

The name of the game now is "humiliate them until they snap".

Hence the endlessly moving goalposts.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Wed Feb 15th, 2012 at 10:24:35 AM EST
[ Parent ]
This.

The lie (sold most vehemently of all to the German public) is that austerity measures were every going to put Greece into a position to pay off it's debt.

What was needed was a short sharp ECB intervention at the beginning to show that it wasn't going to tolerate random speculation in Eurozone government bonds - and then an EU-wide dose of fiscal spending to dig Europe out of the worst situation since the Great Depression.

Ever since Austerity was chosen as the policy response, we've been locked into a death spiral. Many on this site (including me) kept hoping that we could break out of that - but the reality is as long as people keep pretending the Austerity could work in the middle of a Lesser Depression, the more doomed we are.

by Metatone (metatone [a|t] gmail (dot) com) on Wed Feb 15th, 2012 at 10:59:29 AM EST
[ Parent ]
That's not the way the papers are phrasing it.

Last week, Greece agreed with the troika on the austerity package. When it went in front of the EU FMs, they demanded an additional 325 million that sent Greece back to the drawing board.

Commentators all over Europe noted that it appeared the EU was shifting the goalposts to antagonize the Greeks.

Others said, if the Greek parliament approved the new measures, watch the EU go back again and shift the goalposts.

The new package contained $325 million in additional cuts, and it was approved. Where did the cuts come from? The military.

This is part of the austerity deal the Greeks sent.

It's been less than a week since the additional demands (made Thursday night). what exactly is it that you want?

Greece agreed to an additional 325 million to be cut from defense procurements.

But I bet Germany wasn't expecting that since Germany demands Greece buy useless armaments from Germany, stuff that doesn't even work.

by Upstate NY on Tue Feb 14th, 2012 at 04:39:10 PM EST
[ Parent ]
well, according to the Papers I've read those 325 Million were included in the 3.3 billion savings package but not substantiated as of Sunday evening (according to Der Spiegel). So Juncker postponed the meeting.
by cris0 on Tue Feb 14th, 2012 at 05:18:45 PM EST
[ Parent ]
Is news traveling by pony in Germany these days?

http://www.washingtonpost.com/business/markets/a-look-at-the-austerity-measures-greece-has-to-introd uce-before-getting-bailout/2012/02/14/gIQArPpBDR_story.html

Note, 300m in military cuts that weren't there on Thursday. The additional 25m is coming out of pensions.

It's there. Junker can pretend, but it's there.

Moving the goalposts again.

by Upstate NY on Tue Feb 14th, 2012 at 05:43:26 PM EST
[ Parent ]
Hmm...

that was published tuesday.

Juncker postponed the meeting on Sunday evening.

by cris0 on Tue Feb 14th, 2012 at 06:55:39 PM EST
[ Parent ]
No, he postponed it today.

Everyone knew of what the Greek vote consisted. It was an actual vote on the program. Ollie Rehn said late this afternoon that the meeting was on.

You're telling me that the meeting was postponed on Sunday and Ollie Rehn was not informed until today?

I'd like to see a source for that.

They are moving the goalposts no matter how much you wish to deny it.

by Upstate NY on Tue Feb 14th, 2012 at 07:11:43 PM EST
[ Parent ]
From Eurointelligence this morning by e-mail:

The other issue is the €325m shortfall in savings.  Kathimerini  writes that the Greek cabinet examined a proposal to use cuts in defense spending, public investment funds and the health sector, but that this proposal was rejected by Euro Working Group -- low-level EU finance ministry officials who were meeting in Brussels on Tuesday. Kathimerini's sources said that the EU officials insisted that the additional savings should come from cuts to pensions.  
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Feb 15th, 2012 at 02:55:14 AM EST
[ Parent ]
>But I bet Germany wasn't expecting that since Germany demands Greece buy useless armaments from Germany, stuff that doesn't even work.>

Could we retire that lie?

by IM on Sat Feb 18th, 2012 at 10:18:57 AM EST
[ Parent ]
In the latest round of negotiations Greece proposed to cut its defence budget by a few hundred million and was told by the Troika to go back to the drawing board and cut pensions instead. Is that also a lie?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 10:30:41 AM EST
[ Parent ]
It's the truth.

The submarines were designed for the North Sea and they keel over in the warm med waters.

by Upstate NY on Sat Feb 18th, 2012 at 06:41:17 PM EST
[ Parent ]
Tell that to Israel.
by IM on Sun Feb 19th, 2012 at 04:18:21 PM EST
[ Parent ]
You act as if I'm making this up...

http://en.wikipedia.org/wiki/Type_214_submarine

by Upstate NY on Mon Feb 20th, 2012 at 11:38:51 PM EST
[ Parent ]
I find this extremely hard to believe. Swedish subs are made for Baltic waters, but the only thing needed to modify when they went to the Med IIRC, was improved air conditioning.

And as IM said, tell it to Israel.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun Feb 19th, 2012 at 04:40:27 PM EST
[ Parent ]
by Upstate NY on Mon Feb 20th, 2012 at 11:39:04 PM EST
[ Parent ]
There are many articles on this, by the way, and Cohn-Bendit is on the record in the commission.
by Upstate NY on Sat Feb 18th, 2012 at 06:42:03 PM EST
[ Parent ]


The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Tue Feb 14th, 2012 at 01:24:23 PM EST
Is Greece putting its last offer on the table?

"Greece has made all the efforts that it needed to do, and the people cannot take any more," Greece's public order minister Christos Papoutsis said after a cabinet meeting. "The government is making superhuman efforts and we have reached the limits of the social and economic system. From now on, Europe has to take the responsibility."

This was in response to Junker calling off the meeting for some ridiculous reason.

by Upstate NY on Tue Feb 14th, 2012 at 10:17:05 PM EST
A tale of several hours:

9 hours ago, Greece was going to achieve the additional requirements demanded of it on Friday by making cuts to the military:
http://www.bloomberg.com/news/2012-02-14/greece-to-pare-spending-in-defense-investment-to-close-gap- 1-.html

These were deemed unacceptable by Junker.

Two hours ago, this article came out. There's been a change:

Greece's prospects hinged on Prime Minister Lucas Papademos's Cabinet finding 325 million euros of the extra budget cuts demanded by European governments and the International Monetary Fund as conditions for fresh loans.

The Cabinet late yesterday agreed to trim pensions at state-owned companies and banks by 300 million euros, according to an official who declined to be named. Parties backing Papademos's interim government also need to endorse the savings.

Given the shoddy reporting prevalent in this fiasco, this latter report may be incorrect. But if it isn't, it seems noteworthy--to me at least--that Greece announced cuts in military procurements. They were then rebuffed. It's impossible to know why they were rebuffed or whether the denial was at all related to the plans as they stood at the time.

Now, after the talks are cancelled, we are told that they are making cuts to pensions instead. If indeed this turns out to be true, I will be very curious to see if the new plans will be more acceptable to Junker.

by Upstate NY on Tue Feb 14th, 2012 at 11:12:01 PM EST
From Eurointelligence today:

The other issue is the €325m shortfall in savings.  Kathimerini  writes that the Greek cabinet examined a proposal to use cuts in defense spending, public investment funds and the health sector, but that this proposal was rejected by Euro Working Group -- low-level EU finance ministry officials who were meeting in Brussels on Tuesday. Kathimerini's sources said that the EU officials insisted that the additional savings should come from cuts to pensions.  
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Feb 15th, 2012 at 02:52:46 AM EST
[ Parent ]
Let's turn up another rock and see what's under, shall we?

http://www.washingtonpost.com/business/markets/asian-stock-markets-on-hopes-that-greece-will-comply- with-demands-of-lenders/2012/02/14/gIQATBdgER_story.html

While many economists have advocated for a so-called orderly default, essentially allowing Greece to renege on all or most of its debts, others warn that would set a bad precedent.

"The ramifications from this are potentially catastrophic," said David White, a trader for Spreadex. "Why would any member state act on Eurozone ministers' demands when it's been proven doubtful that what is promised in return might not be 100 percent deliverable?"

What sort of assurances does the EU make to bond investors? If I headed a bond fund, I would run away from these people as soon as humanly possible. I guess if you are El-Erian at PIMCO, you have that luxury, as people try to keep you happy, and you have a reputation for stability. But maybe the smaller fry are seeking high returns to impress their bosses.

by Upstate NY on Wed Feb 15th, 2012 at 12:39:05 PM EST
[ Parent ]
This is what Juncker said when cancelling the meeting yesterday :

FT Alphaville » The Juncker statement

I welcome recent further progress made regarding the second adjustment programme for Greece. In particular, I welcome the agreement reached between the troika and the Greek government on the programme as well as the positive vote ofthe Greek Parliament last Sunday. At the same time, following today's Eurogroup Working Group meeting, it has appeared that further technical work between Greece and the troika is needed in a number of areas, including the closure of the fiscal gap of € 325 million euro in 2012 and the debt sustainability analysis. Furthermore, I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the programme. Against this background, I have decided to convene ministers to a conference call tomorrow in order to discuss the outstanding issues and prepare the ordinary meeting of the Eurogroup on Monday, 20th February 2012.

So, if you do a new iteration of the debt sustainability analysis using recent measures of the implosion of the Greek economy (as opposed to the fantasy-land Troika projections where savage cuts in wages and government spending provoke an economic stimulus), the obvious conclusion is "you can't get there from here".

i.e. all the sacrifices are in vain, because nobody can pretend that the residual debt burden after writedowns is sustainable with a shrunken economy.

There is no way the deal is going through.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Wed Feb 15th, 2012 at 06:27:02 AM EST
An extract from this morning's "Markets live" webchat on the Financial Times :

FT Alphaville

I think Powerfrau and Co have decided to cut Greece loose. They are goading them to leave the Euro. And instead all firepower will be directed at saving Portugal.
[snip]

Actually just realized a load of short term Portugal paper being auctioned this morning.
Get this: Bid to cover on three month paper 10.3 times
 Scrum
 That's insider trading.
 Greece is toast; Portugal will be saved.

Their thesis is that

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Wed Feb 15th, 2012 at 08:02:11 AM EST
[ Parent ]
It's not only the protesters on the street that are whipping out the Nazi card.

http://www.smh.com.au/business/world-business/greek-president-attacks-german-ministers-taunts-201202 16-1t9t7.html

"I do not accept having my country taunted by Mr (Wolfgang) Schaeuble, as a Greek I do not accept it," President Carolos Papoulias said during a visit to the defence ministry.

"Who is Mr Schaeuble to taunt Greece? Who are the Dutch? Who are the Finns?" the 82-year-old head of state said.

"We always had the pride to defend not only our freedom, but also that of Europe," said Papoulias, a former youth resistance fighter during Greece's wartime occupation by Nazi Germany who later studied law in Munich and Cologne.

Seems like things are coming to a head.

by Upstate NY on Wed Feb 15th, 2012 at 02:45:52 PM EST
The self-absorbed arrogance of German leadership is truly appalling and disturbing to behold. They certainly rival any that was on display by Bush 43 et al.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 16th, 2012 at 12:44:21 AM EST
[ Parent ]
to the Most commented diaries list - at the top of the list.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Sat Feb 18th, 2012 at 04:27:08 PM EST
Greece must default if it wants democracy

When Wolfgang Schäuble proposed that Greece should postpone its elections as a condition for further help, I knew that the game would soon be up. We are at the point where success is no longer compatible with democracy. The German finance minister wants to prevent a "wrong" democratic choice. Similar to this is the suggestion to let the elections go ahead, but to have a grand coalition irrespective of the outcome. The eurozone wants to impose its choice of government on Greece - the eurozone's first colony.



Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Mon Feb 20th, 2012 at 04:55:03 AM EST

"Come on... there's still a rag left"
"We told you, naked!"
"You want the nice euros, don't you?"

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Mon Feb 20th, 2012 at 10:56:28 AM EST

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