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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

Friends come and go. Enemies accumulate.

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

Friends come and go. Enemies accumulate.

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.
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

Friends come and go. Enemies accumulate.

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

Friends come and go. Enemies accumulate.

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.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
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.

"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?
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

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Feb 15th, 2012 at 05:08:37 AM EST
[ Parent ]
Thanks for the link. Bookmarked!

"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

Friends come and go. Enemies accumulate.

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

Friends come and go. Enemies accumulate.

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

Friends come and go. Enemies accumulate.

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.

"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

Friends come and go. Enemies accumulate.

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.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

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

Friends come and go. Enemies accumulate.

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 ]

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