Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

ET Symposium: Now What?

by dvx Thu Oct 27th, 2011 at 02:49:23 AM EST

Once again our "leaders" have taken the euro - and us - to the brink. And there are not a few who are saying that they've already dragged us into the abyss. The most recent dramas in Berlin and Brussels have already been thoroughly analyzed here.

So what's next?

If there's one thing the ET community has demonstrated, it is an uncanny ability to consistently anticipate events three to six months in advance.

It is time to bring this power to bear on the current mess - see below the fold.


So what now? Did the good guys win, or is the euro Doomed?

And, though the ramifications of a failure to construct a viable single currency system are innumerable, some have already been discussed: for instance, there is a consensus here that that failure will condemn the continent to years of contraction, with all the hardship that entails.

But other, more immediate ramifications have not been looked at as closely. Some burning questions would include:

  • The euro: dead or alive?
  • If the euro is de facto dead, it is certainly not legally over. How soon can countries revert to national currencies (or can they)?
  • What will happen to the European treaties of the last 20 years: How much of the rest of the EU structure (Lisbon, Schengen, ...) will remain standing following a euro debacle?
  • How badly will the transition process impact individual citizens, and in what ways? Is this enough to undermine citizens' confidence in their money?

These are just some of the questions Europeans will be asking in the coming weeks. What can we tell them? What other questions, in your view, need to be examined?

Display:
For reference, what the midnight summit came up with:

Text: Summary of statement from euro zone summit | Reuters

1. An agreement that should secure the decline of the Greek debt to GDP ratio with an objective of reaching 120% by 2020. Euro area Member States will contribute to the PSI package up to 30 bn euro. The nominal discount will be 50% on notional Greek debt held by private investors. A new EU-IMF multiannual programme financing up to 100 bn euro will be put in place by the end of the year. It will be accompanied by a strengthening of the mechanisms for the monitoring of implementation of the reforms.

2. The significant optimisation of the resources of the EFSF, without extending the guarantees underpinning the facility. The options agreed will allow the EFSF resources to be leveraged.

The leverage effect of both options will vary, depending on their specific features and market conditions, but could be up to 4 or 5, which is expected to yield around 1 trillion euro (around 1.4 trillion dollars). We call on the Eurogroup to finalize the terms and conditions for the implementation of these modalities in November. In addition, further cooperation with the IMF will be sought to further enhance the EFSF resources.

3. A comprehensive set of measures to raise confidence in the banking sector by (i) facilitating access to term-funding through a coordinated approach at EU level and (ii) the increase in the capital position of banks to 9% of Core Tier 1 by the end of June 2012. National supervisors must ensure that banks' recapitalisation plans do not lead to excess deleveraging.

4. An unequivocal commitment to ensure fiscal discipline and accelerate structural reforms for growth and employment. Particular efforts are being deployed by Spain. New strong commitments on structural reforms have been made by Italy. Portugal and Ireland will continue their reform programmes with the support of our crisis mechanisms.

5. A significant strengthening of economic and fiscal coordination and surveillance. A set of very specific measures, going beyond and above the recently adopted package on economic governance, will be put in place.

6. Ten measures to improve the governance of the Euro area.

7. A mandate to the President of the European Council, in close collaboration with the President of the Commission and the President of the Eurogroup, to identify possible steps to strengthen the economic union, including exploring the possibility of limited Treaty changes. An interim report will be presented in December 2011. A report on how to implement the agreed measures will be finalised by March 2012.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 03:01:39 AM EST
I can't see a single measure that will bring the slightest element of economic stimulus. "structural reforms for growth and employment" is code for lower wages. Unlike some previous summits, no trace of funds for investment to increase competitivity in deficit countries.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Oct 27th, 2011 at 03:32:32 AM EST
[ Parent ]
From the full statement (here (pdf):

"growth enhancing structural reforms" for Italy are described thus:

Italy will now implement the proposed structural reforms to increase competitiveness by cutting red tape, abolishing minimum tariffs in professional services and further liberalising local public services and utilities. We note Italy's commitment to reform labour legislation and in particular the dismissal rules and procedures and to review the currently fragmented unemployment benefit system by the end of 2011, taking into account the budgetary constraints. We take note of the plan to increase the retirement age to 67 years by 2026 and recommend the definition by the end of the year of the process to achieve this objective.

Though further:

We support Italy's intention to review structural funds programs by reprioritising projects and focussing on education, employment, digital agenda and railways/networks with the aim of improving the conditions to enhance growth and tackle the regional divide.

Railways, they mentioned railways!

(Otherwise it's just the usual neolib neospeak).

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 04:27:15 AM EST
[ Parent ]
He still has to get Lega Nord to vote for the reforms, a party that is headed by a man whose wife retired at 39.....
by gk (gk (gk quattro due due sette @gmail.com)) on Thu Oct 27th, 2011 at 04:34:08 AM EST
[ Parent ]
Have you noticed how much Beppe Grillo looks like an aged John Belushi?

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Thu Oct 27th, 2011 at 07:38:14 AM EST
[ Parent ]
A set of very specific measures, going beyond and above the recently adopted package on economic governance, will be put in place.

A set of very specific measures, but no-one to know what they are! It's the South Seas Anti-Bubble.

by TYR (a.harrowellNOSPAM@gmail.com) on Thu Oct 27th, 2011 at 08:28:43 AM EST
[ Parent ]
Has any of the mainstream Italian media yet noted just how effective the troika's "reform" measures have been where they have been tried?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 27th, 2011 at 12:07:49 PM EST
[ Parent ]
Well, whatever doesn't fit the narrative cannot be enunciated.

This is not about finding a solution, it's about the narrative.

I'll write the headlines 2 months from now:

"Despite 50% reduction of debt, the Greek government still cannot meet its economic targets and requires more relief."

by Upstate NY on Thu Oct 27th, 2011 at 12:13:08 PM EST
[ Parent ]
Looks like Critical Theory might be more useful than Economics or Finance at this juncture...

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 12:15:01 PM EST
[ Parent ]
Oh god please no.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Thu Oct 27th, 2011 at 12:54:04 PM EST
[ Parent ]
... insist on approaches to Economics and Finance that insist upon critical thought?

Jumping over the pointless math technique arms race that is the barrier to entry for post-graduate Economics is bad enough, but having to jump over the pointless layered thickets of oh so clever language that is the barrier to entry for some of the non-mathematical approaches is an extra headache.

So if we have to use Critical Theory, I hope we can do so without also taking on board the pendantic posturing and preening that sometimes accompanies it.

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 Thu Oct 27th, 2011 at 01:45:10 PM EST
[ Parent ]
Isn't it the same thing though as a neophyte trying to figure out what you all are talking about on EuroTrib. It didn't take long to figure out that I was among people who knew a lot about economics and finance.
by Upstate NY on Thu Oct 27th, 2011 at 03:47:46 PM EST
[ Parent ]
Not quite the same ~

... those of us who are obscure by accident because we didn't take into account that some common knowledge isn't actually ... that's pretty much a universal in an ongoing discussion. So the newb asks questions and the questions make it clear that something commonly understood, whether brought into the discussion by the participants or hammered out some half a year or three years back ...
... and somebody (or multiple somebodies if the first effort fails) tries to clarify the things left as common knowledge.

I'm more referring to the deliberate obscurity that creates boundaries around an ongoing program of academic study. Its a natural thing in academic fields of study, but its something we have to watch out for when we are focused on trying to actively spread the ideas, rather than focusing on forming an in-group to hammer the ideas out.


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 Thu Oct 27th, 2011 at 04:00:10 PM EST
[ Parent ]
I guess it requires a much longer discussion of what specifically creates the hurdles in critical/philosophy circles. I do teach basic theory to undergrads and MA students, and I certainly introduce them to the terminology we'd be using, which is otherwise missing from from general discourse.
by Upstate NY on Thu Oct 27th, 2011 at 04:41:30 PM EST
[ Parent ]
The point is this is politics, so technically sound approaches to Economics and Finance are irrelevant.

Paraphrasing Upstate NY, it's the narrative, stupid!

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Oct 28th, 2011 at 06:44:54 AM EST
[ Parent ]
Not irrelevant, just not the final word.

Critically sound finance and economics allows a change coalition in possession of it to be aware of what is likely to transpire before the opposing interests are.

Whether that can be parlayed into political wins depends upon the effectiveness with which that coalition makes use of that early warning.

The status quo power can, of course, invest in a range of sui generis strategies for exploiting crisis ... and since blundering around blinded by legitimizing fictions about the financial and economic system is sure to create a crisis, be confident of sooner or later having a crisis to exploit ... or IOW the shock doctrine.

The vulnerability of the shock doctrine is the unplanned and unintended consequences that invariably result when a canned script is rolled out in response to a novel crisis ~ so there is always a real risk of the shock doctrine script backfiring, which by the prepared script nature of the shock doctrine strategy cannot be eliminated without dithering so much that the first mover advantage is lost.

Part of the strategy for those in the change coalition who know what the actual problem is likely to be may to spread tinder to increase the likelihood of shock doctrine backfires and the leverage of those backfires in undermining the position of the status quo.


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 Fri Oct 28th, 2011 at 01:41:45 PM EST
[ Parent ]
IOW, we have to do our job in order to make positive change possible.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Oct 28th, 2011 at 03:38:13 PM EST
[ Parent ]
And, in particular, one part of that is laying ambushes in places where the legitimization myths create blind spots.

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 Fri Oct 28th, 2011 at 10:14:53 PM EST
[ Parent ]
I used to joke that the only difference between postmodernist philosophy and neoclassical economics is that the former is not generally expected to inform macroeconomic planning.

I now believe that I was too kind to neoclassical macroeconomics. I would, in fact, prefer to have postmodernist philosophers in charge of the major macroeconomic institutions of the European Union.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Oct 30th, 2011 at 07:06:28 PM EST
[ Parent ]
Not only did she retire at 39 with a minimum contribution of 18 years, she is presently teaching in a private school which she co-founded that, thanks to the Lega's control of the Senate Balance Committee, received 800,000 euro in 2008.

The first fact was revealed by Gianfranco Fini on a popular infotainment program Ballarò along with his remark that with a government run by the richest man in Italy there's no chance the rich will be taxed.

A brawl broke out in the House of Deputies with the majority calling on Fini to resign- for just having told the truth.

by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Thu Oct 27th, 2011 at 12:37:22 PM EST
[ Parent ]
We take note of the plan to increase the retirement age to 67 years by 2026 and recommend the definition by the end of the year of the process to achieve this objective.

As pointed out here in Italy the plan is already law, in fact the retirement age for 2026 is already 67 years and seven months. So the letter is actually hacking off 7 months. What is outrageous in all this is that Bossi threatened hell over the retirement reform- and in the end Berlusconi's letter simply states what is already in law.

Do remember that it is no more than a letter of intentions of utterly no value whatsoever, especially coming from a similar individual and his clique.

The farce is that the Brussels letter takes it all in stride. The entire get-together is just a charade, cheers and Campai! in Pompei.

by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Thu Oct 27th, 2011 at 12:50:52 PM EST
[ Parent ]
So, nothing more than what was expected: a 50% Greek bond haircut, the EFSF raised to €1 trillion, bank recapitalisation to 9% Core Tier 1.

On the leveraging of the EFSF, Eurointelligence offers this analysis (by email):

We thought that the following comment by Herman van Rompuy was noteworthy in terms of the way political leaders are justifying the huge risks they are taking through leverage: "There is nothing secret in all this, it is not easy to explain but we are going to more with our available money, it is not that spectacular. Banks have been doing this for centuries, it has been their core business, with certain limits," he said last night. (The reason why banks have been able to do this for centuries is because they are backstopped by central banks and governments. The situation changes when the governments themselves act in this manner. There is nobody to pick up the tab if this CDO collapses - if they ever get anyone to invest in this toxic debt instrument in the first place.)

The question of whether the EFSF leveraging will even succeed is definitely posed. An effort will be made to bring in BRICS investors (who have already stated their lack of interest).

The one-trillion EFSF is all the same supposed to be the show-stopper that will impress the bond markets with Europe's firepower. Since financial analysts are unlikely to be fooled by it, the show-stopper will probably leave the stage to be followed by the fat lady.

Who will not be singing Beethoven/Schiller's Ode To Joy.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 03:33:48 AM EST
[ Parent ]
"There is nothing secret in all this, it is not easy to explain but we are going to more with our available money, it is not that spectacular. Banks have been doing this for centuries..."
Which is why Germany and the ECB opposed tooth and nail giving the EFSF a banking license.

Right.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 04:09:47 AM EST
[ Parent ]
And Germany willing to allow the "leverage" option for the EFSF as long as the German liability was limited to €211bn.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 04:29:23 AM EST
[ Parent ]
I found this particularly amusing:
In the current rules for expanding the euro-rescue parachute, the [German] legislature specified that it did not anticipate the occurrence of a guarantee exercise and a taxpayer burden.
(Already shredded to pieces in the linked thread, but feel free to do it again here)

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 04:56:39 AM EST
[ Parent ]
Doesn't matter. In the final analysis, it will be backstopped by the ECBuBa, because all Eurozone banking is. So the German limited liability is kabuki theatre.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Oct 30th, 2011 at 07:03:09 PM EST
[ Parent ]
afew:
The question of whether the EFSF leveraging will even succeed is definitely posed.

The far more interesting question is: What happens if (when?) it doesn't?

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt t gmail dotcom) on Thu Oct 27th, 2011 at 04:44:06 AM EST
[ Parent ]
So, imagine the Chinese -- and the Russians, for good measure -- decide to invest in this fund. This gives it a certain credibility, insofar as they are the meanest sons of [politically incorrect term redacted] on the planet.

What we are selling out here, among other things, is the PSE's "fairer trade" program : i.e. the EU would have set higher standards about social and environmental conditions in partner countries, potentially with tariffs.

I wonder if the EPP discussed this with the PSE beforehand.

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

by eurogreen on Thu Oct 27th, 2011 at 04:57:33 AM EST
[ Parent ]
I keep repeating myself but this point cannot be stressed enough: there is no economic justification whatsoever for the Eurozone to borrow in its own fiat currency from foreign entities. The EU needs to stop managing the Euro as if it were on the gold standard.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 05:05:47 AM EST
[ Parent ]
That it won't work is a given, because everyone knows that the whole point of the insurance-cum-CDO structure is to try to hide the fact that they really really don't want the Eurozone to have a market-maker of last resort. Since everyone knows the financial fact that is being hidden, structured finance will fool nobody.

In addition, it is explicitly said that the EFSF is there to help Italy (it's a little more ambiguous on Spain given the recognition of the "fiscal consolidation efforts" and the fact that Spain has lower debt to DGP than the UK, France,  Germany or Belgium, let alone Italy).

It is self-evident that Italy cannot guarantee itself so Italy's EFSF capital doesn't count towards the effective base on which the EFSF will leverage. At this point, it's just France, Germany and the Netherlands. And France is already under market attack due to its exposure to Greece but, most importantly, to Italy.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 05:02:24 AM EST
[ Parent ]
Well, at that point they'll just have to print euros. Though by that stage it'll probably be too late for even that to work ...
by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 05:31:26 AM EST
[ Parent ]
National supervisors must ensure that banks' recapitalisation plans do not lead to excess deleveraging.

The public sector is expected to deleverage, the households and nonfinancial sector have no choice but to do it, and now the banks are supposed to raise their capital ratios without deleveraging!?

Leverage is roughly the inverse of the capital ratios...

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 04:05:25 AM EST
[ Parent ]
Well, EU Summit communiques are obviously not constrained by anything so mundane as accounting identities and realities, unless the real plan is:

EVERY COUNTRY IN THE EUROZONE WILL HAVE LARGE TRADE SURPLUSES.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 27th, 2011 at 12:19:29 PM EST
[ Parent ]
How did you guess?
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 12:42:20 PM EST
[ Parent ]
  1. More of the same, with a few transparent efforts to pretend that there's something new being done.

  2. ???

  3. Every EU nation has trade surpluses!


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 Thu Oct 27th, 2011 at 01:51:02 PM EST
[ Parent ]
1 is insufficient. By 2020? 9 fucking years?

2 Is nonsense.

3 Confidence is not the problem.

4 Will make things worse.

5 Will make things worse.

6 Waffle, waffle, waffle.

7 Will make things worse.

by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 06:47:21 AM EST
[ Parent ]
This is what a working austerity programme does:

'Even though domestic demand has fallen significantly (at least in part due to the austerity measures undertaken) and domestic demand has remained weak, the General Government deficit is improving. The underlying deficit has declined from 11.8 per cent of GDP in 2009, to a projected 10 per cent this year. Austerity measures are working to reduce the deficit.'

Yes boys and girls, by cutting 12% of GDP in government spending - with more to come - from the domestic economy during a depression you too can reduce your deficit by 1.8%. Let the good times roll.

(From Notes on the Front, where you can also see how the government's wise men have been trying to avoid putting that down in black and white.)

by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 06:51:33 AM EST
[ Parent ]
Colman:
you too can reduce your deficit by 1.8%

Optimistic projection. Reality waits in the wings.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 07:43:59 AM EST
[ Parent ]
That too. But even pretending they're right, it's not exactly an achievement to be proud of. Especially since they've probably knocked a couple of percent a year off the growth rate.
by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 07:49:15 AM EST
[ Parent ]
Will make things worse for the 99%,

Will make things better for the 1%.

So - er - what's not to like?

After years of headbanger ranting about 'reform', the economic Nazis who claim to be 'investors' are finally getting what they want.

They couldn't get it by lobbying, so they've decided to throw a couple of countries against the wall pour encourager etc.

That's all.

Anyone who thinks the rescue plan was ever about a rescue is being somewhat naive.

It doesn't matter if the Euro survives, because the Euro is a footnote to the political process by which post-war European social democracy has been utterly subverted and sacrificed to our new financial aristo-wannabes.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Oct 27th, 2011 at 06:59:10 AM EST
[ Parent ]
Can you substantiate the "will make things better for the 1%"?
by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 07:00:36 AM EST
[ Parent ]
Cheaper slaves that speak your language?
by generic on Thu Oct 27th, 2011 at 07:02:22 AM EST
[ Parent ]
Yes, thanks.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Oct 27th, 2011 at 07:24:10 AM EST
[ Parent ]
Right. That would be a no then.

Carry on.

by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 07:26:50 AM EST
[ Parent ]
My take: In terms of political power it will as that is a zero-sum game, in terms of economic wellbeing it might be a draw - lower activity overall but lower wages to be paid - in economic security and physical security it won't.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Thu Oct 27th, 2011 at 09:04:38 AM EST
[ Parent ]
There will be plenty of people grateful to be hired cheaply as thugs.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 09:05:28 AM EST
[ Parent ]
Which increases the direct power - nothing like having your thug push people out of the way - but I do not think it offsets the increased threat to personal safety.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Thu Oct 27th, 2011 at 12:31:17 PM EST
[ Parent ]
But this is a prisoner's dilemma ~ to get the 99%:1% win-win requires getting enough of the 1% on board with pursuing the collective interest of the 1% over their individual personal interest, when their own individual action which creates the decline into chaos will not, in fact, prevent the decline into chaos if its reversed and the rest of the 1% do not follow.

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 Thu Oct 27th, 2011 at 01:54:38 PM EST
[ Parent ]
Game: Using a knife divide a cake between players

Goal: Grab as much of the cake as you can

High WIN! Strategy for the 1%:  Grab the knife, stab the other players, and walk off with all the cake.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Oct 27th, 2011 at 02:23:27 PM EST
[ Parent ]
Especially if you have appointed the prosecutor and are certain that he will rule the stabbings "self defense".

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 27th, 2011 at 03:24:24 PM EST
[ Parent ]
That can be a functional problem if you killed the chef who bakes such excellent cakes and now the plebes who do things are not in a position to acquire such excellent cake-baking skill.

Now, not likely with actual chefs (gardeners, security thugs, etc.) for the 1%, but a serious problem for those who run the social infrastructure taken for granted by those who have not experienced societies, like the Dem. Republic of Congo, where the multiple groups of skilled specialists required to maintain the social infrastructure of an advanced industrial society do not exist in numbers adequate to the task, or are shunted aside in favor of incompetent relatives of the DRC 1%.


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 Thu Oct 27th, 2011 at 04:05:43 PM EST
[ Parent ]
I was snarking on naive Game Theory.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Thu Oct 27th, 2011 at 05:33:46 PM EST
[ Parent ]
And all I had to do to open the door to elaboration was to ignore the snark and charge ahead.


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 Thu Oct 27th, 2011 at 11:37:22 PM EST
[ Parent ]
This looks like the right spot for this ritual post:

Bob the Angry Flower

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Oct 28th, 2011 at 01:47:27 AM EST
[ Parent ]


To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 07:16:53 AM EST
[ Parent ]
is there anything by this guy you don't agree with?

if we could only sub him in for the present greek finance minister, who looks to me to be a prime example of what a 1%er is...

'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 Thu Oct 27th, 2011 at 04:26:26 PM EST
[ Parent ]
1. On strengthening the mechanisms of monitoring, the Greek opposition has signalled a no go on this, and those watching Greek politics feel pretty confident that the PM (with a 3 seat majority) does not have the votes in his own party to comply with the EU's insistence on economic governance.

I'm sure the provision in this deal is not an absolute requirement because if it were, the deal would be dead in a few weeks, instead of its actual expected death of 4 or 5 months.

by Upstate NY on Thu Oct 27th, 2011 at 09:07:44 AM EST
[ Parent ]
See here.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 09:08:48 AM EST
[ Parent ]
The deal's not going to last long enough for them to vote on it.
by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 09:12:16 AM EST
[ Parent ]
One more thing I neglected to mention: the Greece deal of July was dependent on 90% of banks accepting the 21% haircut. So then, even though the group representing major banks that negotiated the deal with the troika agreed to that haircut, less than 75% of banks agreed to the deal by the deadline. Greece was said to cancel the deal at that point (not quite sure why, maybe had to do with the conversion of debt from debt under Greek law to debt under British law) because of the shortfall in the program.

So, if banks were reluctant to agree to a 21% haircut, what's the level of enthusiasm for a 50% cut?

The IMF by the way were recommending a 75% cut at a minimum, and when that was rebuffed, it was mentioned that a 100% cut (a credit event) would be in the offing otherwise.

by Upstate NY on Thu Oct 27th, 2011 at 09:34:50 AM EST
[ Parent ]
Yanis Varoufakis: Another emblematic EU non-event: A first reaction to the latest EU `agreement'
Europe had committed to providing a grand solution to three related problems: Its collapsing banking sector, the problem with Italian and Spanish public debt (and their potentially catastrophic effects on France's triple-A rating), and the derelict Greece economy. Not one of these was even remotely tackled last night. The banking sector required aggressive, compulsory recapitalisation at a central European level. It will not happen. (Not only is the sum set aside to feeble but, primarily, the bankers will be given multitude chances to wriggle out of losing control over their bankrupt banks through various means that will render recapitalisation a dead letter.) The EFSF-on-anabolic-steroids (which is what its private capital leveraged version will turn it into) that has been announced will neither lessen the burden on Italy (nor remove the dark clouds over France). Lastly, the Greek haircut is a mere empty shell of a number (50% is the rule of thumb agreed on in the early hours of the morning, just in order to have a number) since it is predicated upon a series of ludicrous assumptions and deals that deals with the bankers that politicians are nowhere near completing.


To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 11:12:35 AM EST
[ Parent ]
6. Ten measures to improve the governance of the Euro area.
What are those?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 12:02:57 PM EST
[ Parent ]
Essentially, the creation of the (announced) Euro Summit, ie the European Council in eurozone mode, chaired for the moment by Van Rompuy. (Last night's 8-hour meeting was the first of the Euro Summit).

Here again is the link to the pdf of the full statement.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 12:18:56 PM EST
[ Parent ]
Well, if I break up a decision into 10 bite-sized paragraphs I can also take "ten measures"...

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 12:22:25 PM EST
[ Parent ]
Exactly.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 12:37:40 PM EST
[ Parent ]
I thought of translating this last night:

  1. We are still trying to make our magic trick with the ESFS convincing and are committed to success.

  2. All hail the Confidence Fairy! As proof of its beneficence just look at how the ECB has controlled inflation!

  3. Our job destroying Austerity Program WILL produce GROWTH AND PROSPERITY! (The Confidence Fairy insures this.) And we are determined to apply this program in all member countries.

  4. Our Austerity Program will continue and in countries where it has resulted in market attacks that program will be redoubled.

  5. All hail Spain for incorporating self flagellation into their constitution. Spain's efforts at self-flagellation are exemplary and the blood that flows is an offering to the Confidence Fairy.

  6. We welcome Italy's commitment to commence self flagellation and job destruction. Italy is to be commended on its refusal to just default on the massive debt held by its corrupt banks, especially as this is actually the worst of Italy's problems -- er, after Berlusconi, that is.

  7. Hail the flagellators in Ireland, Portugal and Greece. Blessed be their sacrifice and long may it continue. We promise to keep providing them the money to save our banks.

  8. We are particularly pleased by the fervor of the flagellators in Ireland and Portugal.

  9. Despite the opposition in Greece we are going to give Greece the money to save our banks for a couple more months. Our improved magic tricks and the Confidence Fairy will take over in Greece next year.

  10. Why do we keep on generating this drivel?

  11. etc.

  12. etc.

  13. ad nauseum.

 

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 27th, 2011 at 01:04:49 PM EST
[ Parent ]
French stock index is up 3%.

That information is worth its weight in peanuts.

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

by eurogreen on Thu Oct 27th, 2011 at 03:24:56 AM EST
As you know, the markets run on expectations of how the markets will run.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 04:30:47 AM EST
[ Parent ]
In all the press and comment and sleight of hand, i've seen and heard little discussion of the effect on Greek human beings.

According to our leaders' figures, Greek debt goes to 120% from 160%, which should still be high enough to strangle normal life. Greeks will have to step up the pace of privatization, which is surely good for everyone except Greeks.

When compared to the reality of potential bond default, the bondholders seem to have been given a sweeter deal than the citizens of Greece. Plus Greeks now get to have structural external oversight (permanent?) on what used to be their government.

Now i support strong moves to end tax evasion and corruption, but in the end the charade we've seen over the past weeks (18 months) is carried on the backs of normal people.

We really need to put together a strong progressive narrative.

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

by Crazy Horse on Thu Oct 27th, 2011 at 04:39:11 AM EST
Cohn Bendit was talking about the human cost for Greece back in early May 2010:

I suspect he was roundly ignored.

He was specifically asking for the Commission's DG Employment [Social Affairs & Inclusion] to get involved with the Troika. I don't think it did, or not meaningfully.

Luckily on ET we do have on the ground analysis of what's going on in Greece.

Meanwhile, this is what the German public sees in their newsstands...

Additionally, Greece's debt-to-GDP ratio was about 120% back in February 2010 when the crisis first came to a head. So, what THE FUCK has been accomplished by the Brussels Consensus in the intervening 18 months?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 04:52:41 AM EST
[ Parent ]
is an international rescue plan which is capable of repairing the severe economic damage inflicted by the...

... international rescue plan.

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

by eurogreen on Thu Oct 27th, 2011 at 05:11:47 AM EST
[ Parent ]
The first thing that Greece needs is awareness that the economic damaga has in fact been inflicted by the international "rescue" plan.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 05:20:44 AM EST
[ Parent ]
That is the first thing the Greek Government needs. The Greek people are already aware of that damage.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 27th, 2011 at 01:09:53 PM EST
[ Parent ]
An awareness by a substantial fraction of the voting public in other EU countries would be good, too...

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 05:26:24 PM EST
[ Parent ]
it's iatrogenic economics!

'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 Thu Oct 27th, 2011 at 04:24:20 PM EST
[ Parent ]
No, iatrogenic morbidity and mortality accompanies medical treatment. This is quackery, on a level with homeopathy or bleeding for evil humours.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Oct 30th, 2011 at 05:49:32 PM EST
[ Parent ]
Additionally, Greece's debt-to-GDP ratio was about 120% back in February 2010 when the crisis first came to a head. So, what THE FUCK has been accomplished by the Brussels Consensus in the intervening 18 months?"

According to the plan now, from what I read at the Greek interwebs, it is to reach... 120% in 2020. So returning to the (unsustainable I remind you) level of debt Greece was at in 10 years, is what the program will call success. Meanwhile it will have left behind it a social desert.

This is moot however, you can't implement further cuts in Greece without a military occupation or martial law, and unless they bribe cops and the military with very generous salary raises, it is more likely that they will turn against the government and its overseers, or simply refuse to cooperate.

The government having agreed to relinquish yet another portion of sovereignty, would theoretically have to pass this new deals with a 3/5 majority for it to be legal. I fully expect them to lawyer their way out of this clause. However whether they seem to be losing MPs at a rate of about 1 for every critical vote, so I'm not sure if they'll manage to pass it without elections.

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

by talos (mihalis at gmail dot com) on Thu Oct 27th, 2011 at 06:12:13 AM EST
[ Parent ]
Recall Krugman's: They Have Made a Desert
And called it successful adjustment.
And see the reaction of the European serious people.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 06:27:46 AM EST
[ Parent ]
Additionally, Greece's debt-to-GDP ratio was about 120% back in February 2010 when the crisis first came to a head. So, what THE FUCK has been accomplished by the Brussels Consensus in the intervening 18 months?  

I was about to ask this question too...

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Thu Oct 27th, 2011 at 07:45:38 AM EST
[ Parent ]
From about 2:16 mark:
- there was a time we heard: "I want my money back!" (M. Thatcher). Now it seems to me what we're are telling the government is: "I want to make money off the Greeks!" Because that's also what this is about: when we borrow at 1.5% or 3% and then lend it to Greece at 3.5% or 6%...

Is this the business model of those buying parliaments? Not bad <snark>. So much innovation... in corrupting the whole Europe. You have to do something with your money, right?  
by das monde on Fri Oct 28th, 2011 at 12:21:57 AM EST
[ Parent ]
Making money? Sure. Getting a market-rate risk-adjusted return? I don't think so... That is to say, there are opportunity costs at work here.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Oct 28th, 2011 at 01:43:28 PM EST
[ Parent ]
Getting a market-rate risk-adjusted return?

Will you stop bringing Theology into the discussion?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Oct 28th, 2011 at 03:45:40 PM EST
[ Parent ]
Theology? I'm just arguing aginst the thought that Germany bailing-out other countries is profitable for Germany. It's not. However, these things are not done for a profit anyways, and should not be either. Which is just my point: if there was a profit motive involved, other actions than these would be taken.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Oct 30th, 2011 at 09:02:03 AM EST
[ Parent ]
It's very profitable for Herr Ackerman.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Oct 30th, 2011 at 05:53:16 PM EST
[ Parent ]
The secret of making money of "investments" these days is in knowing the politics of bailouts. Where more QE money is going to be pushed for some time? What will be allowed to fail soon? The Greak debt is a Ponzi scheme, basically. They seem to be increasing its interest rate until it will be impossible to serve it. The opportunity is still there - but you rather be one of those dictating the terms of this madness.
by das monde on Sun Oct 30th, 2011 at 05:44:18 AM EST
[ Parent ]
Why would this be an end to corruption? Greeks are still forced to buy frigates and tanks. It looks like extended corruption.

Tax evasion is being reinforced as well. All Greeks are now actively evading taxes when they can, because money and assets are being extracted to other countries.

I have my doubts about any so-called oversight ever being enacted.

by Upstate NY on Thu Oct 27th, 2011 at 09:09:39 AM EST
[ Parent ]
how long until the next crisis summit.

We all know this won't work. How quickly until it becomes obvious again?
From recent past, I suspect not that long. With the French election coming, I suspect that France itself will be the target, and it's going to become a big attempt to browbeat Hollande into endorsing massive austerity or else cause the crash of the euro...

Wind power

by Jerome a Paris (etg@eurotrib.com) on Thu Oct 27th, 2011 at 06:33:07 AM EST
I'm guessing days or weeks. Not months.
by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 06:41:12 AM EST
[ Parent ]
No later than November 7.

I saw that date mentioned for a scheduled Ecofin or Eurogroup meeting. Also, there will be an ECB Council meeting and Draghi's first press conference as ECB Chair on Thursday, November 3.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 06:43:50 AM EST
[ Parent ]
There's a certain expediency in keeping this running as a permanent crisis, while 'structural reforms' are visited on one population after another.

So I don't expect it to be resolved any time soon - and probably not before wages in the Eurozone are running at sub-Chinese levels.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Oct 27th, 2011 at 07:02:15 AM EST
[ Parent ]
This whole crisis amounts to a controlled disintegration of the European economy.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 07:14:49 AM EST
[ Parent ]
More of a controlled dismantling of democracy, I think.

The economy continues to be secondary.

The aim is to lower worker expectations - of effective representation and influence, of economic security, and of social mobility.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Oct 27th, 2011 at 07:27:52 AM EST
[ Parent ]
I rather see the objective is to turn Europe (and America) into China.
by Andhakari on Thu Oct 27th, 2011 at 12:24:25 PM EST
[ Parent ]
I rather see the objective is to turn Europe (and America) into China.

I agree.

The problem is they want to pay Chinese, etc., wages without reducing the Cost of Living in European (and North American) to the Chinese level.

And you can't do that.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Oct 27th, 2011 at 12:57:53 PM EST
[ Parent ]
Sure you can. Between deflation in prices, and deflation in expectations, we can all live at about $8k annually, per person.

It works out very well. Gonna raise hell with the gadget market, tho.

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Thu Oct 27th, 2011 at 06:10:26 PM EST
[ Parent ]
Can't live on $8k a year if you're in hock for a $1,295¹ a month mortgage payment.  

¹ 2006 US median mortgage payment

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Oct 27th, 2011 at 07:10:49 PM EST
[ Parent ]
Well, let's rephrase that a little.

There are a lot of people who think we have to compete with China.

We can do that either by raising Chinese wages and standard of living to be commensurate with our own or dropping our own to Chinese standards.

We've chosen option B because option A involves blasphemies like tariffs and looking after people outside most voter's in-group.

I actually see this as more of a rebalancing of where the underclass and the middle classes live. Global poverty may very well fall as a result. It's just going to get worse in the bits that used to be rich.

We're all part of the rich 25% (or whatever), after all.

by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 01:29:44 PM EST
[ Parent ]
Where do you see "control"? Who is exercising it?
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 08:22:23 AM EST
[ Parent ]
"Germany", whatever that means.

(I realise German workers got the shaft during the Schröder Chancellorship, for instance, and that the German state is not doing that well either (80% Debt to GDP).

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 08:42:29 AM EST
[ Parent ]
Right, we really mean the German government and the various Very Serious People who influence the government, to be clear.

German workers have been shafted like everybody else.  And unfortunately they've been fed a steady diet of "Lazy darkies on the periphery are taking your money" bullshit for so long that it's hard to blame them for not recognizing how wrong that is.

Taking it with the desire of regular people and their politicians to see economics as some kind of morality play, and it becomes nearly impossible to combat the bullshit.

Eventually people will get it.  Unfortunately untold millions of lives will be ruined before that happens.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Thu Oct 27th, 2011 at 05:56:11 PM EST
[ Parent ]
The succession of summits, the succession of new institutions created, and so on.

Merkel has political control, even though she's not in control of the facts on the ground.

But the fact is that there are enough voices from the German economic establishment advocating for liquidation and depression in the periphery, and that's what we're getting. In fact, we're told that kind of "adjustment" is what the Euro was intended to produce all along.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 08:48:00 AM EST
[ Parent ]
Migeru:
we're told that kind of "adjustment" is what the Euro was intended to produce all along.

Who's telling us that?

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 11:24:13 AM EST
[ Parent ]
Martin Wolf, for instance.

And this is plausibly a German establishment program for the future:

Ten commandments for a renewed Eurozone

The "commandments" limit the scope for political ad-hoc actions and specify a crisis procedure that is a compromise between the goals of maintaining discipline and preventing panic in the case of a crisis. They balance out the need to help with the need to respect the stability and solvency of the rescuing countries. The crisis countries will themselves then be able to decide whether they see a possibility of managing the real depreciation process, or whether they find the burden too large and prefer to exit the Eurozone. The procedure gives them a fair chance and a safe option if they are willing and able to find the necessary internal consensus. It does provide much more solidarity than the Maastricht Treaty foresaw, without establishing a self-service shop for debtors.

In detail, the following measures could be taken:

1. No government bond purchases

Further purchases of government bonds by the euro rescue fund EFSF and the ECB are prohibited. Only assistance programmes that count on the participation of the IMF are allowed. Eurobonds are ruled out permanently. Even in a putative United States of Europe there is no place for them. Both the US and Switzerland, two decentralised fiscal systems that originated through a long trial and error process, do not foresee this kind of help.

2. Paying back the Target credit

The credit given by the Bundesbank (Target) to the GIPS is not to increase further. The Target balances are to be settled once-yearly with marketable assets bearing market interest rates, as is the case in the US. Transition rules for the existing balances could be agreed upon.

3. New voting rights in the ECB

Voting rights in the ECB Council should be weighted by ECB capital shares.

4. Unanimity for credit policies

The ECB Council is to require unanimity and the approval of the creditor countries' governments for any inter-country credit transfers that it tolerates or induces.

5. Liquidity help for two years

The EFSF is to concentrate on liquidity assistance for crisis countries and limit such assistance to two years.

6. Slicing the problem in the case of impending insolvency

If a euro country cannot service its debts after the two years, an impending insolvency instead of a mere illiquidity is to be presumed. In such a case, and under exclusion of the cross-default rules, an automatic haircut is to be applied to the maturing bonds, and only to them. The depreciated old debt is to be replaced by new sovereign bonds guaranteed up to 80% by the EFSF, limiting such guarantees to 30% of GDP.

7. Full insolvency and exit for non-performers

A country whose guarantees are drawn or that exceeds the guarantee limit must declare insolvency. The country in question will be granted a haircut on its entire sovereign debt, and it must leave the Eurozone.

8. Basel IV: Higher risk weights for government bonds

After the Basel III system for bank regulation, a Basel IV system is needed in which the risk weights for sovereign debt are to be raised from zero to the level for mid-sized companies.

9. Higher equity ratios

Common equity (Tier-one ratio and leverage ratio) is to be increased by 50% with respect to Basel III.

10. Bank recapitalisation

Weak banks unable to raise enough capital in the market to fulfil these requirements are to be forced to recapitalise and will be partly nationalised. The government is to sell its shares in them once the crisis has been overcome.

(Hans Werner Sinn, whose position about the "stealth bailout" by the ECB via the Target2 system has been debunked)

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 11:30:56 AM EST
[ Parent ]
My memory fails me on where Martin Wolf said the euro had always been intended to produce "liquidation and depression in the periphery".

I can't see where Sinn says that either.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 11:48:59 AM EST
[ Parent ]
Martin Wolf in intolerable choices for the Eurozone, which I recently discovered is based on a lecture by Sinn which has been the object of much debunking.
The eurozone was supposed to be an updated version of the classical gold standard. Countries in external deficit receive private financing from abroad. If such financing dries up, economic activity shrinks. Unemployment then drives down wages and prices, causing an "internal devaluation". In the long run, this should deliver financeable balances in the external payments and fiscal accounts, though only after many years of pain.
That's the way Wolf implies it was supposed to work, by design.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 11:54:16 AM EST
[ Parent ]
It does sound Sinn-ish.

In any case, if some Austerians, from the start, saw the euro's handling of potential current-account imbalances in terms of "shrinkage" of debtors, I don't think the euro was deliberately designed with that as an aim.

It's surely true, though, that no contrary (surplus recycling) provisions were made.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 12:02:59 PM EST
[ Parent ]
Saying Merkel is Germany is one thing - perhaps permissible short-hand.

But you can't just assume that Sinn is Germany.

Especially since his nonsense about the target system a lot of people think of him as a buffon.

by IM on Thu Oct 27th, 2011 at 11:53:45 AM EST
[ Parent ]
FT Alphaville

In a sensible world, the southern states would devalue to become competitive - but they cannot. They are locked in a single currency. And because they cannot devalue their currency, they must devalue their living standards and promote reforms to enhance efficiency. This will take years. Meanwhile, wages must fall, unemployment will rise and social unrest will increase. The severity of this medicine may not be bearable in a liberal democracy.

Most obviously, this has an impact on Greece. Of course, it has behaved foolishly. But that does not mitigate the present pain. As salaries are cut, new taxes are imposed and other taxes rise. It is no wonder people are frightened.

Interesting discussion on Latvia and Ireland with respect to Greece.

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

by eurogreen on Thu Oct 27th, 2011 at 11:36:59 AM EST
[ Parent ]
permalink

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 11:41:34 AM EST
[ Parent ]
Everything they say about Ireland is in terms of GDP, which is fucking nonsense. Oh, and our deficit is projected to be down to 10% or so, as discussed above.
by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 11:43:25 AM EST
[ Parent ]
Above, I read:

"expediency in keeping this running as a permanent crisis"

"wages in the Eurozone... at sub-Chinese levels"

"controlled disintegration of the European economy"

"controlled dismantling of democracy"

When I ask who is doing this, you respond "Germany", but you admit that quite what is meant by that is hard to define.

Then the succession of summits and new institutions - as if it were obvious these were evidence of consummate play-acting rather than incompetence, panic, cluelessness, self-importance, etc.

You say Merkel has political "control" - but that is the word I was questioning. Undoubtedly she is the head of the country that predominates and therefore has more influence than any other leader, but that doesn't amount to control of an entire process according to a preconceived plan.

Migeru:

there are enough voices from the German economic establishment advocating for liquidation and depression in the periphery, and that's what we're getting

Agreed, but that's a long way from the quotes at the beginning of this comment.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 11:35:23 AM EST
[ Parent ]
Early in July when trouble in the maker for Spanish and Italian bonds flared up, Sarkozy wanted to have an emergency summit. Merkel replied there was no need to hold a summit because there was no agreement on Greece yet. She had her way: the summit was delayed by a week.

I don't know whether Merkel was playing hard of hearing when she reacted to calls about Spain and Italy with "but there's nothing on Greece yet".

About the same thing happened in August - after Trichet's Jedi Mind Trick on the markets failed, there was a mini-market-crash and an emergency conference call on a Sunday night to sort things out. In this case, a market scare was needed to soften the resistance of Jürgen Stark, who promptly resigned.

This past week, with a summit already scheduled, the Bundesbank announced that Merkel didn't have a negotiating mandate. Then the summit was not cancelled or postponed, but a second summit called 3 days after the first one.

Keeping this running as a permanent crisis and pretending to be stupid or powerless is doing nothing but strenghten Merkel's hand at the council, even as her ability and willingness to actually do anything positive go away.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 11:48:45 AM EST
[ Parent ]
This past week, with a summit already scheduled, the Bundesbank announced that Merkel didn't have a negotiating mandate.

You surely can source this claim?

by IM on Thu Oct 27th, 2011 at 12:02:50 PM EST
[ Parent ]
Actually, I can
... The postponement is due to a combination of two factors: Nicolas Sarkozy's diplomacy, and the German Bundestag's insistence that it needs to give a mandate to the chancellor ahead of the summit. Merkel would not have had a mandate to negotiate anything beyond the minimalist insurance solution that was recently under discussion. She now has to crawl back to the Bundestag each time where she gets on a plane.

...

Another Summit on Wednesday

A follow-up summit is now scheduled for next Wednesday, Frankfurter Allgemeine Zeitung reports. Since there was no political agreement, chancellor Merkel was unable to deliver her speech in front of Bundestag today and to seek a negotiating mandate by the deputies as is now required after the constitutional court rulings and the legislation about the parliament's involvement in EU decisions with budgetary implication. So Merkel intends now to go to parliament in the beginning of next week to deliver what she could not bring to the deputies today. Meanwhile, Wolfgang Schäuble explicitly ruled out that the EFSF will be refinanced via the ECB as Sarkozy wants. Frankfurter Allgemeine Zeitung's political correspondent Günter Bannas has an excellent analysis how the Bundestag's enhanced powers will force the Brussels machinery and the complex EU political summit mechanism to profoundly change to accommodate the German parliament's new powers.

(Eurointelligence)

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 12:08:15 PM EST
[ Parent ]
One day earlier: France insists on banking licence for the EFSF (20 October 2011)
Bundestag insists on full implication on all Euro rescue decisions

The Bundestag made it clear to Angela Merkel that it insists on seeing the draft proposals for the EFSF guidelines in German this Thursday if it is to give the chancellor a mandate for negotiations at the summit on Sunday, Frankfurter Allgemeine Zeitung reports. The parliament intends to discuss the guidelines at a special session of its budget committee today but there have been no drafts so far. According to the new law about the co-decision of the Bundestag on European matters (a result of the Constitutional Court's ruling ordering a systematic implication of Bundestag on all EU matters with budgetary relevance), the government has to seek a mandate from parliaments in order to have the legitimate right to decide on behalf of Germany during summits. FDP parliamentary leader Rainer Brüderle said the EU drafts had to be presented to the Bundestag at midnight today. Otherwise Merkel would have to go to Brussels without a mandate and thus unable to conclude any deal. Some parliamentarians said Brussels would have to get used to producing its draft early enough so that Bundestag could debate them and decide whether to give the government a negotiating mandate or not.

(This absurd story tells us that the German political and legal system is no longer for membership in the EU.)

I interpret this as an unanticipated roadblock thrown in the way of last Sunday's summit by the Bundestag last Wednesday. Therefore "This past week, with a summit already scheduled, the Bundesbank announced that Merkel didn't have a negotiating mandate".

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 12:12:43 PM EST
[ Parent ]
(FAZ source)

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 12:13:37 PM EST
[ Parent ]
Gah, I mistyped "Bundesbank" when I meant "Bundestag"...

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 12:16:14 PM EST
[ Parent ]
Oh, fine. the Bundestag did indeed this.

The regional branch office of the ECB was not involved.

That

(This absurd story tells us that the German political and legal system is no longer for membership in the EU.)

is of course still absurd.

by IM on Thu Oct 27th, 2011 at 12:31:45 PM EST
[ Parent ]
Martin Wolf just chaired a conference in Reykjavik (Krugman attending) and it was live-cast, so I watched. His finishing remarks was about the euro in general and about Iceland joining it in particular. It went something like this (loosely quoted from memory):
"Look, I want you to think very carefully if you want to join the euro. I spent the the entire 90's travelling Europe talking about this. People thought that if they joined the euro, they would get German interest rates. I told them that was just the beginning. I told them, when you join the euro, you join Germany. That's what happens, that what you do. Deal with it."

Alas, if people had but listened...

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

by Starvid on Thu Oct 27th, 2011 at 02:41:02 PM EST
[ Parent ]
Sarkozy just said on TV, words to the effect that

"France must come closer to a system that works, Germany's system"

... Stockholm syndrome

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

by eurogreen on Thu Oct 27th, 2011 at 03:51:34 PM EST
[ Parent ]
You mean I get to vote in the 2013 Bundestag elections?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 05:27:59 PM EST
[ Parent ]
No, this is taxation without representation. But you do (did) get (got) really cheap loans (for a while)!

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Oct 27th, 2011 at 05:33:44 PM EST
[ Parent ]
Then Wolf shouldn't have said you join Germany but you become a German colony or you join the GErman Empire...

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 06:05:54 PM EST
[ Parent ]
Apparently when German export subsidies take the form of private loans from German banks to the Euro periphery, they're legal, because the State isn't involved. Except that, in the end, when the private credit bubble blows up, the State does get involved to bail out the banks and collect from the foreign State after it bails out its borrowers.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Oct 28th, 2011 at 07:13:16 AM EST
[ Parent ]
The clip of him saying it is up now. You can find it here. Just click at "Panel Discussion" (third from the bottom) and fast forward to 1 hour 34 minutes, and then it comes during the following 50 seconds. I certainly recommend it.

   

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

by Starvid on Sat Oct 29th, 2011 at 04:19:59 AM EST
[ Parent ]
Multi-national corporations, playing one national government against another like pawns on a chessboard.

We all bleed the same color.
by budr on Thu Oct 27th, 2011 at 11:15:38 AM EST
[ Parent ]
I think that's the essence. Germany may or may not be acting on their behalf, but eventually they'll find themselves speaking Chinese, too. Not that China is the bad guy, but their economic system has become so attractive to the moneyed class. Whatever breeds and supports income disparity and a desperate labor market will be facilitated. Is this too CT? Even so, it's the smell in the wind.
by Andhakari on Thu Oct 27th, 2011 at 12:43:50 PM EST
[ Parent ]
Well ... kinda.

Don't forget the various national elites are directly or indirectly tied to trans-nationals operating from their national boundaries.  To "protect" (sic) their national economies they must, willy-nilly, support and protect the conditions under which all trans-nationals profit, the conditions that led to and are acerbating the crisis.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Oct 27th, 2011 at 01:11:23 PM EST
[ Parent ]
Well ... that's kinda what I said ... isn't it?


We all bleed the same color.
by budr on Fri Oct 28th, 2011 at 07:15:21 AM EST
[ Parent ]
I put it badly.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Fri Oct 28th, 2011 at 11:30:05 AM EST
[ Parent ]
War is peace.

Ignorance is Strength.

Freedom is Slavery.

Austerity is growth.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 10:10:53 AM EST
[ Parent ]
More precisely, what are the various things they say they want, so we can see which and why are mutually contradictory and we can figure out what will give.

I stand by my assessment that, as of right now, Germany is the only country with agency at the Council. Whatever leverage France had 18 months ago has been lost.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 07:01:44 AM EST
They believe that it's their virtue that has made them strong.

And that the solution for others is to be as virtuous as them.

Cut social supports - even though they're far below German levels.

Cut spending, even though they're below German levels.

Everyone run a trade surplus.

Everyone let the serious German's run their economic policy.

Private entitites to take a haircut, so long as they're not German private
entitites.

German taxpayer not to pay for the extravagances of otheres.

by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 07:12:06 AM EST
[ Parent ]
In other words, an incoherent set of impulses emerging from atavistic cultural frames.

Dangerous and wrong, but hardly at the level of paranoid CT I'm reading in parts of this thread.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 07:57:07 AM EST
[ Parent ]
Are you denying the political effects will be the ones I've described? Or do you see anything here which is going to enhance democracy in Greece?

Are you also denying that there have been countless serious op-eds and tink tonk policy papers aggressively promoting exactly this kind of 'structural reform' since at least the start of the previous decade?

Are you also denying that the ratings agencies seem to have been at least as much motivated by politics as by economics in making their downgrades and cheerleading the markets into monetary attacks - and that everyone has been playing by obvious double-standards, praising refi policy when Germany does it, and attacking it viciously when other countries do exactly the same thing?

Apart from that - yes, obviously this is all just happenstance and none of these data points could possibly be related.

I expect it's also coincidental that a key part of the Greek proposal is loss of sovereignty, with policy set explicitly by financial advisors rather than by popular consent.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Oct 27th, 2011 at 08:35:38 AM EST
[ Parent ]
I think it's complicated, as messes tend to be.

Although I too tend to ascribe malevolent motives to the financiers who are advising the politicians in this, I have been persuaded, mostly by Migeru, JakeS and Krugman, that they simply don't understand the forces they are unleashing, let alone the unforeseen (as in "Who could have Predicted ?") consequences of so doing.

After all, as Michael Lewis so compehensively demonstrated with his essays, Betting on the Blind Side and The End, these people are so concentrated on the now, the next trade, the next market movement that almost none of them ever lift their noses from the line of cocaine money trail to notice if they're running towards a cliff edge.

They simply have neither the experience, the background nor, most importantly, the training to be able to provide the advice they are giving. They are myopic one-eyed men leading the truly blind.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Thu Oct 27th, 2011 at 08:56:56 AM EST
[ Parent ]
I'm not as optimistic as you. I think it's all going according to plan, just not a plan we like or is public.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Thu Oct 27th, 2011 at 09:05:24 AM EST
[ Parent ]
Which effects do you mean? Sub-Chinese wage levels? Controlled (the word is important) destruction of democracy?

I entirely disagree with those.

Otherwise, I don't see much beyond strawmen in your comment: I am clearly not saying anything here will enhance democracy in Greece or elsewhere. I have often, quite clearly, denounced the punditry, the think-tankery, the rating agencies. Obviously I was not pretending that none of these could possibly be related.

But I don't see events as seamlessly stage-managed as you do. The fact that things are not happenstance != there is a determined set of plotters manipulating events at a global level. I think neolib theology is extraordinarily successful, certainly, and that it obviously serves the interests of a plutocratic class. I see that class, by pursuing its interests, as exerting enormous and disproportionate influence through corporate clout, the power of (mostly offshore) international finance, dwarfing the authority of states and vacuuming out the better-quality political and administrative personnel just as from all other non-financial sectors of activity, and I obviously see that as deleterious to democracy and to the simple well-being of the majority of humans on a planet that will in any case be hard put to it to provide them with sustenance.

But I don't see the exact contours of the tightly-knit group that has all the right analysis, all the efficient plans, all the agency, and is so presciently moving the pawns on the world stage. In the absence of such a group, it may be tempting to ascribe, by anthropomorphic transfer, characteristics such as conscious thought, understanding, belief, volition, definition of aims, to a social stratum or class - but it's a fallacy. Either way, the assumption that there is coherent control of the application of a set of well-crafted aims seems to me wrong. Reality is more diffuse and chaotic than that.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 10:33:34 AM EST
[ Parent ]
I have to comment that inability to describe the precursor to emergent behavior of a dynamic system is NOT a good argument that the emergent behavior cannot be occurring.

The purpose of most financialization is not improvement of the living standards for humans, but the improvement of status for those who have been active in setting the system up.

I think they're succeeding, like the scorpion on the back of the swimming turtle succeeds in getting a free, but too short, ride.

It's the nature of unregulated capitalism.

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Thu Oct 27th, 2011 at 06:35:30 PM EST
[ Parent ]
It seems to me that I am describing an emergent behaviour (of a class system). What I take issue with is your anthropomorphic lapsus "purpose".
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Oct 28th, 2011 at 01:54:50 AM EST
[ Parent ]
But I don't see the exact contours of the tightly-knit group that has all the right analysis, all the efficient plans, all the agency, and is so presciently moving the pawns on the world stage.

The stated economic policy of every non-communist party in Europe is incompatible with democracy. Because it requires and produces the utter, abject immiseration of a larger fraction of the nominally franchised public than even modern managed democracy can be reasonably expected to bear. Whether the people who pursue this economic policy are aware that it is incompatible with democracy is wholly inconsequential to the outcome, at least as far as the maintenance of democratic rule of law is concerned.

But for the record, most non-headbanger right-wingers are well aware of that fact. One does not have to read long in the works of right-wing "intellectuals" (and I use the term loosely) to find lamentations that democracy distributes the vote far more evenly than "the market," if left to its own devices, would distribute the money. And that, therefore, right-wingers must constantly indoctrinate the voting public on the necessity of not voting to make the distribution of wealth more akin to the distribution of votes. Which conclusion is not a million miles away from concluding that it would be more expedient to make the distribution of votes more akin to the distribution of wealth.

I happen to believe that the right-wing politicians are mostly of the headbanger variety. So they likely do not understand the ramifications of the economic policy they push. Whether that is better or worse than the alternative, I do not know.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Oct 30th, 2011 at 06:51:13 PM EST
[ Parent ]
Interesting, but what does it have to do with the passage from my comment you quote?
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 1st, 2011 at 04:35:07 PM EST
[ Parent ]
My claim is that it doesn't matter whether you suppose that the neoliberal politicians are evil or stupid. The end result is going to be the same in either case.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Nov 1st, 2011 at 08:13:03 PM EST
[ Parent ]
You may well be right. I'd suggest that the accuracy of our understanding of events has some importance, however.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Nov 2nd, 2011 at 03:32:36 AM EST
[ Parent ]
Quite. But sufficiently advanced incompetence is experimentally difficult to distinguish from malice, so reasonable people may disagree on the interpretation of present events.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Nov 2nd, 2011 at 05:28:33 AM EST
[ Parent ]
You have your head in the sand.

When was the last time a central Western government set policy for the benefit of the working class - never mind the middle classes?

I expect you think this happy state of affairs is something that just happened one day, entirely by accident?

Well.

When it comes to conspiracies, of course we have the Koch brothers in the US.

But interestingly, there's also the Mont Pelerin Society.

I'm not sure exactly what's needed to turn a lobby group into a conspiracy - although I suspect large piles of cash, influential connections, a history of seeding think tanks and lobby groups, and a secretive approach to membership aren't too far from the requirements.

See also from Wikia:

Hayek stressed that the society was to be a scholarly community arguing against collectivism, while not engaging in public relations or propaganda. However, the society has always been a focal point for an international think-tank movement; Hayek himself used it as a forum to encourage members such as Antony Fisher to pursue the think-tank route. Fisher went on to establish the Institute of Economic Affairs (IEA) in London during 1955, the Heritage Foundation in Washington, D.C., during 1973, the Manhattan Institute for Policy Research in New York City during 1977 and the Atlas Economic Research Foundation in 1981. In turn the Atlas Foundation supports a wide network of think-tanks, including the Fraser Institute.

That would be the Atlas Foundation which says:

The Atlas Economic Research Foundation is a nonprofit organization connecting a global network of more than 400 free-market organizations in over 80 countries to the ideas and resources needed to advance the cause of liberty.

(Ironic that all these for-profit people keep sponsoring non-profit organisations. But still.)

The point is that there has been a concentrated, successful movement working consistently against bottom-up populist democracy since at least the end of WWII, centered around Hayek, Chicago and the Austerian dingbats, and their cronies and sponsors.

It has been persistently active in pushing market interests over democratic interests, and it's done most of its work out of the sight of the public - because, for some reason, the existence of the network and its political influence goes unreported and unremarked.

Compare with the left equivalent. As soon as there's any evidence of left wing consistency or organisation - whether it's in the form of a strong union movement, or eco-activism, or Occupy Wall Street - the organisation is almost instantly reported by the mainstream media, usually in negative terms.

And yet - not a mention of the truly vast sums collected and spent by organisations like Atlas. No mention of its sponsorship and mentoring programs for promising compliant students. No mention of its ability to maintain a rigid grip on policy in many Western countries, and the EU's financial nomenklatura, and parts of the developing world too.

Peculiar, isn't it?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Oct 30th, 2011 at 08:15:09 PM EST
[ Parent ]
All true (I'll ignore the first statement). But read my comment.

I am not for an instant denying the influence of money and the deliberate efforts (crowned with success) of neolib ideologues (I take it you link to the Mont Pelerin Society and discuss Hayek, Chicago and the think-tanks in order to inform readers who may know nothing of them, but thanks, I'm well informed about them). Nor am I denying the shift of the Overton Window, the absence of leftwing parties of government, the compliance of the media - how often and how long have we discussed these on ET?

What I am clearly denying (again, please read my comment) is that events are controlled, manipulated, stage-managed, by an omnipotent conspiracy with clearly-agreed aims and a plan that is rolled out stage by stage.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 1st, 2011 at 05:04:49 PM EST
[ Parent ]
So you're agreeing they have been pursuing well-defined goals and promoting their own power and influence since at least the end of WWII, you're agreeing most of their efforts have remained hidden from the public, and you're agreeing their efforts have been successful.

Which definition of a conspiracy does this not meet?

I presume you've read Confessions of An Economic Hitman, in which the stages and predictable effects of an IMF takeover (sic) are clearly delineated?

How is this not what's being attempted in Greece?

You seem to be arguing that something can't be a conspiracy unless it has the equivalent of Bond-villain masterplan, with dates and critical events and (for all anyone knows) expense accounting.

I'd argue that whenever any group attempts to set policy without public awareness and debate, they're acting as a de facto conspiracy.

If they succeed in setting policy to the point where they successfully exclude most of the public in the Western world, then even more so.

Legally, their actions are outside the constitution (where there is one) so they're certainly acting outside the law - which is the official definition of criminal conspiracy.

Technically I suppose it could be argued we're dealing with a cabal looking for promote its interests from within, rather than a conspiracy dedicated to promoting them by violent overthrow.

But considering the number of democratically elected governments that seem to have had unfortunately terminal experiences at the hands of fans of Hayek, never mind various dissenters and activists, I'd consider that an un-useful distinction.

The problem with the 'C' word is that it has - usefully - been tainted by people who think they're being visited by alien lizards in UFOs.

I'd suggest a purer political definition continues to be useful - as it has been from at least Catiline onwards.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Nov 1st, 2011 at 05:54:32 PM EST
[ Parent ]
ThatBritGuy:
I'd argue that whenever any group attempts to set policy without public awareness and debate, they're acting as a de facto conspiracy.

OK, that's your definition, not mine. End of discussion.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Nov 2nd, 2011 at 03:30:48 AM EST
[ Parent ]
People like their paranoid CT.

The superhero narrative is deeply embedded in the culture, and it's even more important that your enemies be superheroes than your allies.

by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 09:10:21 AM EST
[ Parent ]
There is a single goal that is consistent with all of those.

Protecting the purchasing power of the net worth of savers and creditors.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 09:33:55 AM EST
[ Parent ]
Is that a goal or a consequence?
by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 09:34:30 AM EST
[ Parent ]
It works as a single organizing principle to analyse the situation.

But, really it's the economics of the penny pincher, so it might be the underlying ideological drive for all of it. The rest (for instance, the morality play about virtuous savers and sinner borrowers) is rationalization.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 09:40:57 AM EST
[ Parent ]
Protecting the purchasing power of accumulated wealth seems to be the goal of all policy in the US and Europe. And it does not distinguish between wealth that has been accumulated based on self liquidating investments and wealth that has been accumulated by fraud. A large part of the problem is that wealth from fraud is becoming, if not has become, the largest portion of what is being protected.

The only strategy forward that offers the possibility of preserving and enlarging social democracy is to split the holders of wealth on the basis of legitimate vs. fraudulent origins of money. But the monies from the different sources have by now been thoroughly mixed together. But still, it is the TBTFs that are both the most vulnerable and the biggest malefactors in the creation of this situation. But the politicians can not see beyond the next election cycle and their needs for contributions -- from whomever. That is why I believe that the best chance for a positive outcome is for there to be a disorderly default.

Interestingly, it seems that Germany might be the most likely to support such an outcome. Were it able to throw off the EU neoliberal policy restrictions on its Landesbanken it is best positioned to survive such a crash, as it is least reliant on private banks. Also, Germany has retained its manufacturing base. So there is a potential alignment of interests between progressive policy goals and the natural interests of the majority of Germans, and even the majority of German wealth. A coordinated move to prosecute and unwind fraud in banking would hurt Germany the least and Great Britain and the US the most.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 27th, 2011 at 03:16:52 PM EST
[ Parent ]
I agree with that as a broad organizing principle.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 10:34:47 AM EST
[ Parent ]
However are the powers that be in Germany, I assume their worldview is not that different form this:

US embassy cables: Mervyn King says in March 2008 bailout fund needed | Business | guardian.co.uk

The problem is now not liquidity in the system but rather a question of systemic solvency, Bank of England (BOE) Governor Mervyn King said at a lunch meeting with Treasury Deputy Secretary Robert Kimmitt and Ambassador Tuttle. King said there are two imperatives. First to find ways for banks to avoid the stigma of selling unwanted paper at distressed prices or going to a central bank for assistance. Second to ensure there's a coordinated effort to possibly recapitalize the global banking system.

First one is fairly successfull so far - as long as you do not count the unimportant little banks. Second one I figure can not be done to such a degree that it would solve the problem of the big black hole of the distressed assets - so it can not be done as long as first stands.

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

by A swedish kind of death on Thu Oct 27th, 2011 at 01:06:23 PM EST
[ Parent ]
"Whoever". Stupid language.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Thu Oct 27th, 2011 at 01:07:04 PM EST
[ Parent ]
Indeed. And why is protecting the purchasing power of the net worth of savers and creditors so important to the Germans? Because it fits into the narrative about What Happened Last Time.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Oct 27th, 2011 at 02:54:59 PM EST
[ Parent ]
Except that it didn't.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 05:30:14 PM EST
[ Parent ]
Exactly, but it does absolve people from thinking about why it did happen. It's very convenient if you can blame it all on inflation.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Oct 27th, 2011 at 05:37:23 PM EST
[ Parent ]
what should a 99%er in Europe take away from this discussion, recommendations to survive what is coming? Just look on and be awed by the continuing train wreck, while your democracies/economies disintegrate?

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Thu Oct 27th, 2011 at 07:58:57 AM EST
Buy guns and ammo.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Oct 27th, 2011 at 02:58:15 PM EST
[ Parent ]
I'm not sure guns and ammo are actually all that useful. When the army comes with their tanks and heavy machine guns, your personal weapons are going to be pretty useless.

What you want to do is retain whatever small wealth you may have gathered so far. My guess would be that income-producing farmland might be the best bet in the long run...

by asdf on Thu Oct 27th, 2011 at 10:03:58 PM EST
[ Parent ]
It's not the forces of order that worry me, but rather what one might face if they fail to do their job.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Oct 28th, 2011 at 01:59:01 PM EST
[ Parent ]
Strangely enough, that is my thought. The last time I was in this kind of situation was the Y2K possibility ... I bought a small pump shotgun and shells which I never got to use and I eventually gave it to a friend. This time I'm going to get a handgun and take a safety course to make sure I don't shoot myself. It all feels different this time ... very 1960's all over again, only this time there's not a Viet Nam draft.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Fri Oct 28th, 2011 at 08:01:58 AM EST
[ Parent ]
Well, everyone should have a gun anyway, it gives you a certain resilience. I'm going to buy a pump-action shotgun myself soon (Remington 870 seems awesome) just gotta get the permit sorted, and then it's time to start hunting deer, duck, grouse, pheasant, fox and hare.

Oh, and then a 22 cal for target practice and pest control, and a bolt-action rifle with a good scope for deer, moose, bear, boar and wolf... and a century-old bolt-action Mauser (€150) just for the hell of it! :)

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

by Starvid on Fri Oct 28th, 2011 at 01:53:28 PM EST
[ Parent ]
No guns for me under any circumstances.

You can't be me, I'm taken
by Sven Triloqvist on Fri Oct 28th, 2011 at 02:12:59 PM EST
[ Parent ]
How very un-Finnish of you. ;p    

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Oct 28th, 2011 at 02:17:31 PM EST
[ Parent ]
Yes, very. I have a number of friends who wear orange in the fall -
and they are not Netherlands supporters.

You can't be me, I'm taken
by Sven Triloqvist on Fri Oct 28th, 2011 at 05:19:29 PM EST
[ Parent ]
You might consider a pump Mossberg that has interchangeable barrels. One is available that uses sabot slugs in a rifled barrel for deer, has an alternate barrel with chokes for turkey, and a longer barrel with chokes for ducks and geese. The sabot slugs carry half a mile, or almost a kilometer, and are probably going to knock the deer down for good; it is for that reason that, in many US states, there are more days of hunting permitted for shotgun than for rifle.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Oct 28th, 2011 at 03:57:11 PM EST
[ Parent ]
They say here that Germany is to pay one way or another (no matter how hard they try to avoid it). And destroying Euro doesn't seem to be in their interest (or what?). If we know where all this is going, they must know even better than us. So who is pushing this actually? USA? Who? Small 1% of world's mega rich (having governments in their pocket)? They are very well organized then on a global scale...
If it is political background only (which I doubt) all I can say is: Are they mad? It seems like they are cutting "branch that they are sitting on".
Maybe now with China and Asia "rising" they do not need us as mass consumers any more...so they can cut our wages to slavery level. I do not understand where is reasoning to all this. Do you?


Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Thu Oct 27th, 2011 at 08:01:18 AM EST
vbo:
If we know where all this is going, they must know even better than us

Why?

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 08:20:17 AM EST
[ Parent ]
Indeed: Why assume intelligent action?

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt t gmail dotcom) on Thu Oct 27th, 2011 at 09:36:13 AM EST
[ Parent ]
Does Merkel think she's totally beyond her depth and acting at random?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 09:43:00 AM EST
[ Parent ]
What Merkel thinks she is doing hardly proves anything.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 09:45:52 AM EST
[ Parent ]
I have no reson to believe she's not rational in the economists' "instrumental rationality" sense. She's doing what she believes is the best she can do, or there's no evidence to the contrary.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 09:47:43 AM EST
[ Parent ]
Does the economists' "instrumental rationality" posit superior knowledge or intelligence?
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 10:40:19 AM EST
[ Parent ]
No, but it does posit the ability to act in the belief that one is furthering one's goals.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 10:42:23 AM EST
[ Parent ]
That belief was not in doubt in the above exchange. The question was whether "they know better than us". It was about knowledge and intelligence.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 11:08:56 AM EST
[ Parent ]
But the goal of Merkel and her government is staying in power another two weeks. And that goal they achieve  week after week. That is rational self-interest. So the policy they push or more often oppose are very short term.

And the addition of these short term policies does get us some sort of general policy. Perhaps not created by random, but by drift.

The combination of the most powerful EU-country
and a weak government leading it delivers curious results. But there isn't a master plan.

by IM on Thu Oct 27th, 2011 at 12:16:49 PM EST
[ Parent ]
So, is there something we could call "Germany's Euro policy position"? How consistent does each decision have to be with the previous course?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 12:24:29 PM EST
[ Parent ]
Yes. A policy created by drift is still a policy. A better question would be: Is there a coherent policy position of Germany on the Euro?
I don't think so.

<How consistent does each decision have to be with the previous course?<<p> Not at all.
There is a lot of policy all over the world not consistent with the previous course. How did Harold Macmillan express it? Events, my dear boy, events.

by IM on Thu Oct 27th, 2011 at 12:55:30 PM EST
[ Parent ]
Not at all.

As is the FDP will not enter the Bundestag again. If Merkel reversed policy  they could blow up the government as defenders of tax payer's money and the sole bulwark against hyperinflation and Bild may just carry them though. I have no idea how committed they are to the survival of their party though.

by generic on Thu Oct 27th, 2011 at 02:39:23 PM EST
[ Parent ]
So is it one of Merkel's goals to destroy the FDP as a parliamentary party, or are they just collateral damage?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 05:31:58 PM EST
[ Parent ]
They might just be doing it to themselves by appearing both corrupt and incompetent.
by generic on Fri Oct 28th, 2011 at 08:29:59 AM EST
[ Parent ]
in his immortal essay, The Lion and the Unicorn :

George Orwell: Part I: England Your England

In spite of the campaigns of a few thousand left-wingers, it is fairly certain that the bulk of the English people were behind Chamberlain's foreign policy. More, it is fairly certain that the same struggle was going on in Chamberlain's mind as in the minds of ordinary people. His opponents professed to see in him a dark and wily schemer, plotting to sell England to Hitler, but it is far likelier that he was merely a stupid old man doing his best according to his very dim lights. It is difficult otherwise to explain the contradictions of his policy, his failure to grasp any of the courses that were open to him. Like the mass of the people, he did not want to pay the price either of peace or of war. And public opinion was behind him all the while, in policies that were completely incompatible with one another.


It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Oct 27th, 2011 at 10:40:30 AM EST
[ Parent ]
It is interesting to note that Baldwin, chamberlain's predecessor, set in train the building up of Fighter Command and commissioned the building of spitfires and hurricanes. however, none of these preparations, particularly the command and control infrastructure had been completed even as late as 1939.

These preparations continued at pace under chamberlain who was very aware that britain wasn't in a position to resist a bombing campaign and so his humiliations could be seen as a very necessary buying to time for Dowding to get ready.

A preparedness that was nearly wrecked by Churchill committing too many squadrons to the futile defence of France and which left Britain without proper fighter cover for the remainder of '40

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Thu Oct 27th, 2011 at 11:34:56 AM EST
[ Parent ]
It was impossible to know that the defence of France was futile. There was no way of knowing if beforehand. Indeed, had not the Germans been forced, through a completely random event, to change their plan from a very conventional invasion to the Manstein plan, they would not have been able to exploit their immense operational superiority in armoured warfare, and things might have ended very differently.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Oct 27th, 2011 at 03:05:47 PM EST
[ Parent ]
Hee, I was unaware of that incident, even if the farce of it rings true it carries connotations of Major Martin.

Nevertheless, the original commitment of fighters to France was manageable and a reasonable help to an allied country. Sadly, it was a hopeless battle as they were handicapped by a lack of radar, command, control or effective communications to cope with the fast moving german advance. They were outnumbered and then unable to repair any damaged aircraft as spare parts were on the wrong side of the channel. The RAF wasn't geared up to fight the war from France and were losing pilots and planes at a rate that was absolutely unsustainable.

However, as defeat became inevitable, Churchill still felt obligated to send over yet more squadrons (18 I think) in response to pleas from a desperate French govt. But was in fact playing double or quits. And lost.

When they were overrun by the german army, all of the damaged planes were lost and many of the RAF's more experienced pilots were captured. It was this second wave that was sent when it was obvious France was lost that left Britain defenceless

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Fri Oct 28th, 2011 at 03:07:21 AM EST
[ Parent ]
Starvid:
It was impossible to know that the defence of France was futile.

No it wasn't. It was an ((expect)) event. De Gaulle knew, and had spent the 1930s lobbying for the modernization of French equipment and tactics in order to prepare the army for modern (post-1918) warfare.

The only variable would have been the speed of the fall of France.

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

by eurogreen on Fri Oct 28th, 2011 at 05:17:33 AM EST
[ Parent ]
Sorry, I mean a Who Could Have Predicted? event.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Fri Oct 28th, 2011 at 05:18:22 AM EST
[ Parent ]
There was nothing wrong with French equipment, or with the skills and courage of the individual French soldier, in 1940. Indeed, the French tanks (Char 1B) were superior to the German ones. The Germans just had developed a superior operational philosophy (mission type tactics, concentrating armour in armour divisions instead of dispersing them among the infantry, extremely well trained junior officers who had been taught that initiative and speed was all) and so on. Even so, without the bold strike across the Ardennes and the breakthrough at Sedan (which was contrary to the orders of the conservative OKW), things might have developed very differently.

If the original plan would have been just, things might have bogged down somewhat in the same places as during WW1 (except far more fluidly), and there might been enough time for the French to fall back and have Darwin cull away their bad officers, like what eventuallt happened on the Eastern front. Furthermore, the armoured conter attack that was launched at the flank of the German spearhead after Sedan (by de Gaulle himself IIRC) might have succeeded, or there might have been others, or even the threa of others, These things would have emboldened the conservative views of OKW and slowed downed the tempo of operations radically, hamstringing people like Guderian and Rommel.

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

by Starvid on Fri Oct 28th, 2011 at 02:14:40 PM EST
[ Parent ]
This was my read of it as well.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Thu Oct 27th, 2011 at 06:20:03 PM EST
[ Parent ]
Sommet UE : "un Munich financier" - Europe1.fr - Economie
Le député PS Henri Emmanuelli a estimé jeudi que l'accord intervenu dans la nuit pour sauver la zone euro "restera comme la date d'un véritable Munich financier". "L'accord intervenu dans la nuit du 26 au 27 octobre restera comme la date d'un véritable Munich financier", écrit l'ancien ministre dans un communiqué, dans une allusion aux accords de septembre 1938 qui avaient eu pour conséquence le démembrement de la Tchécoslovaquie, au bénéfice d'Adolf Hitler. Pour le député et président du conseil général des Landes, "l'Europe va être désormais en position de faiblesse, voire de dépendance pour l'avenir".

Emmanuelli is the only leading figure in the PS whom I have seen talking sense about the financial crisis in recent months.

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

by eurogreen on Thu Oct 27th, 2011 at 11:54:43 AM EST
[ Parent ]
Sommet européen: "un véritable Munich financier" (Emmanuelli), Actualités European Summit: "veritable financial Munich" (Emmanuelli), News
Le député PS Henri Emmanuelli a estimé jeudi que l'accord intervenu dans la nuit pour sauver la zone euro "restera comme la date d'un véritable Munich financier".
"Laccord intervenu dans la nuit du 26 au 27 octobre restera comme la date dun véritable Munich financier", écrit l'ancien ministre dans un communiqué, dans une allusion aux accords de septembre 1938 qui avaient eu pour conséquence le démembrement de la Tchécoslovaquie, au bénéfice d'Adolf Hitler.
"Faute de pouvoir se financer auprès de la Banque centrale européenne, le Fonds européen de stabilisation financière (FESF) va devoir se tourner vers le FMI et les pays étrangers à la zone euro. Au premier rang de ces pays figure la Chine, principal prédateur de lindustrie européenne", s'indigne Henri Emmanuelli.
Pour le député et président du conseil général des Landes, "lEurope va être désormais en position de faiblesse, voire de dépendance pour lavenir".
"Les responsables politiques, représentant 30% du PIB mondial, qui ont accepté cette capitulation devront en rendre compte devant lHistoire", conclut M. Emmanuelli.
The PS member of parliament Henri Emmanuelli said Thursday that the agreement reached in the night to save the euro area "will be the date of a real financial Munich."
"The accord reached on the night of October 26 to 27 will go down in history as the date of a veritable financial Munich," writes the former minister in a statement, in an allusion to agreements in September 1938 which had resulted in the dismemberment of Czechoslovakia, the benefit of Adolf Hitler.
"Unable to obtain financing from the European Central Bank, the European Financial Stability Fund (EFSF) will have to turn to the IMF and foreign countries outside the euro area. Foremost among these countries is China, the main European industrial predator, Henri Emmanuelli says indignantly.
to the member and President of the General Council of the Landes, "EUROPE will now be at a disadvantage or dependency for the future".
"Politicians, representing 30% of global GDP, which accepted the surrender will be held accountable before history," concluded Mr. Emmanuelli.


It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Oct 27th, 2011 at 11:59:16 AM EST
[ Parent ]
It seems China is doing better than the democracies. What a surprise.

Old Greeks knew democracy didn't work. China knew before then.

Humans are hive animals with pretentions to awareness.

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Thu Oct 27th, 2011 at 06:43:40 PM EST
[ Parent ]
If public opinion in the deficit countries was followed by their politicians it would be better for us all. Looks like the problem is to little democracy.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Fri Oct 28th, 2011 at 04:48:39 AM EST
[ Parent ]
ormondotvos:
China is doing better than the democracies

Depends on what criteria.

ormondotvos:

Old Greeks knew democracy didn't work. China knew before then.

Has strictly no relevance to modern (attempts at) democracy.

ormondotvos:

Humans are hive animals

No, they're not.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Oct 28th, 2011 at 05:10:34 AM EST
[ Parent ]
George Orwell: Part I: England Your England
And public opinion was behind him all the while, in policies that were completely incompatible with one another. It was behind him when he went to Munich, when he tried to come to an understanding with Russia, when he gave the guarantee to Poland, when he honoured it, and when he prosecuted the war half-heartedly. Only when the results of his policy became apparent did it turn against him; which is to say that it turned against its own lethargy of the past seven years.

Which reminds me of Sir Neville Hendersons A failure of a mission about his time as the Brittish ambassador to Berlin during appeasement. In his account they followed a very clear set of ideas:

  • The german people are as a race more suited to dictatorship of some kind. It was wrong to expect democracy to work.
  • Versailles created Hitlerism (IIRC, that is how he calls it). By removing the conditions of Versaille and allowing the germans to gather in one state, the conditions that supported Hitlerism would go away and Germany would return to something more like the Kaisers time.
  • The Nazi party has different wings, some wants war, some does not.
  • By forcing Germany to negotiations and there normalising their position, the peace wing gets the successes and thus is strenghtened.

In this view, Munich was a success. When Germany attacks the rest of Checkoslovakia and thus conquers non-Germans, the view falls apart. As Henderson puts it, they did not know that Hiter belonged to the war party.

Now, who are they? As I understand it, it was the top men in the foreign service. They delivered the analysis, and Chamberlain acted upon it.

So who delivers the analysis to Merkel and what do they read and believe?

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

by A swedish kind of death on Thu Oct 27th, 2011 at 01:35:58 PM EST
[ Parent ]
By the outside system evidence, assuming her acting for the best under the constraints of the political terrain, her advice is from well trained neoliberals ...

... but it would be interesting to have inside information as to who it is she is taking her economic pictures in lieu of reality from.

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 Thu Oct 27th, 2011 at 02:03:44 PM EST
[ Parent ]
Of course she doesn't believe it. She believes she's been getting rational advice, and that she understands what she's been told.

I tend to think it's a mistake to see her as someone who has an economic agenda of her own. To my mind she's primarily a political animal - just like her mentor the Fat Man.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt t gmail dotcom) on Thu Oct 27th, 2011 at 10:51:45 AM EST
[ Parent ]
Well, if her only goal is to increase her own power and influence she's definitely scored an important win over Sarkozy since May 2010...

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 10:56:18 AM EST
[ Parent ]
She doesn't posture.

All her internal party competitors postured. And they all failed.

Again, just like the Fat Man.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt t gmail dotcom) on Thu Oct 27th, 2011 at 11:27:36 AM EST
[ Parent ]
What does "posturing" mean in this context?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 11:32:08 AM EST
[ Parent ]
Generally going to great lengths to demonstrate that they're the alpha animals, to the point where it becomes an end in itself.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt t gmail dotcom) on Thu Oct 27th, 2011 at 01:09:58 PM EST
[ Parent ]
Well, certainly human intelligence is overvalued, present company excepted of course.
by Andhakari on Thu Oct 27th, 2011 at 01:15:01 PM EST
[ Parent ]
Because they have all those experts to tell them.
And it's a bloody MATH...


Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Thu Oct 27th, 2011 at 10:25:20 AM EST
[ Parent ]
ahem.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 10:28:24 AM EST
[ Parent ]
Why do the experts know better than we do? Why do you assume they are not wearing ideological blinkers?
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 10:42:15 AM EST
[ Parent ]
Oh, they do.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 10:43:21 AM EST
[ Parent ]
I stand confounded.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 11:15:55 AM EST
[ Parent ]
It's basically a piece of apologia for the present generation of central bank macroeconomic models tossing out what little empirical reality there was in the previous generation and replacing it with axiomatic assumptions as to the behaviour of individual economic actors.

There are some details of DSGE model construction, but they are trivial and pointless.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Oct 30th, 2011 at 07:34:53 PM EST
[ Parent ]
My "confounded" was snark.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Oct 31st, 2011 at 06:34:35 AM EST
[ Parent ]
Real experts usually don't have the patience for politicians.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Thu Oct 27th, 2011 at 06:23:16 PM EST
[ Parent ]
They're not mad, they're religious.

Like any religion, some are true believers and some are in it for what they can get out of it and some are in it because they have to be to get taken seriously or to get elected.

by Colman (colman at eurotrib.com) on Thu Oct 27th, 2011 at 09:39:10 AM EST
[ Parent ]
If we know where all this is going, they must know even better than us.

You greatly overstate the intelligence of the political leadership, I'm afraid.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Thu Oct 27th, 2011 at 06:15:56 PM EST
[ Parent ]
It's not just that. I've seen many a genuinely intelligent person be clueless about the current situation. And, let's face it, a real understanding of the whole thing requires grasping distinctly non-trivial concepts from a variety of pretty technical fields.

What we (at ET) may sometime forget is the rarity of being constantly exposed to very varied expertise that does not fear being non-conventional.

"Elites" are in a very different position. Many of them are extremely highly skilled in a narrow field and unable to transfer their structure of thought somewhere else. Most of them end up living in an echo chamber, not all (unlike people from the right) deliberately so. But to get access to deciders, you need to have proved your conventional credentials. Which means that, at best, you are fighting with the weapons for the 70s, at worst, you are merely spouting self-validated nonsense that fits its own hypothesis but is completely at odds with reality.

Maybe what's needed is less intelligence than curiosity. But curiosity can be a career killer in many fields (including mine, regrettably. I've missed opportunities because I was expected to repeat the empty phrases in the interview, and the directors certainly did not feel comfortable about having someone challenging the dogma that helped hide their own lack of thought).

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

by Cyrille (cyrillev domain yahoo.fr) on Fri Oct 28th, 2011 at 03:45:54 AM EST
[ Parent ]
All you need to know is that many intelligent people are religious.
by Colman (colman at eurotrib.com) on Fri Oct 28th, 2011 at 05:13:53 AM EST
[ Parent ]
That, too.

And they end up having an influence on those who are not. Because if you're only (or at least overwhelmingly) exposed to one train of thought, even if you realise it has a lot of problems and are happy to challenge it, it will be your basis for reasoning.

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

by Cyrille (cyrillev domain yahoo.fr) on Fri Oct 28th, 2011 at 05:52:00 AM EST
[ Parent ]
And religious about any narrative they have emotional ties too - not just the invisible sky giant.

you are the media you consume.

by MillMan (millguy at gmail) on Fri Oct 28th, 2011 at 12:58:54 PM EST
[ Parent ]
vbo:
They are very well organized then on a global scale...

see tbg's comment above regarding think tanks.

i would add the media monopoly, especially the 1200 to 1 imbalance of right wing hate radio stations to others in the usa. this has created a massive population of unthinking dittoheads, wound up like a spring, and ready to act out. there's a new term 'stochastic terrorism' meaning beck, limbo and other media personalities who foment public rage and point to where they want it to go, then stand back and disavow responsibility. free speech protects them from blowback.

they are indeed very well organised.

'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 Mon Oct 31st, 2011 at 06:22:42 AM EST
[ Parent ]
Merkel wants 'permanent' supervision of Greece, warns of war

http://euobserver.com/19/114075

In a dark blue jacket reflecting the mood in and about the eurozone, Merkel abandoned her usual cautious rhetoric warned outright of a war.
..."Nobody should take for granted another 50 years of peace and prosperity in Europe. They are not for granted. That's why I say: If the euro fails, Europe fails," Merkel said, followed by a long applause from all political groups.
...That's why, she said, Greece would have to be "assisted" for quite some time. "It's not enough that the troika comes and goes every three months. It would be desirable to have a permanent supervision in Greece," she said, adding that this issue would be brought up at the summit.
...The leftist opposition was outraged, with Die Linke leader Gregor Gysi pointing out that austerity has forced 27,000 small and medium enterprises to go bankrupt in Greece and that teachers earn as little as €1,000 a month. "What more do you want from them? Do you want them to starve to death?" he said.



Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Thu Oct 27th, 2011 at 08:13:29 AM EST
Merkel did not "warn outright of war", it's sufficient to read what she said: "Nobody should take for granted another 50 years of peace and prosperity in Europe".

That has been used by scoop-hungry journalists in ambiguous terms to insinuate, practically, that Germany is threatening war. Utter nonsense.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 08:19:44 AM EST
[ Parent ]
Actually, the last 30 years have seen an ever rising tide of poverty which has been masked by the provision of easy credit leading to a rising level of middle class debt.

When the rising tide of poverty crossed the rising level of debt was the point where Merkel's 50 years of peace and prosperity in Europe was exposed as a falsehood.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Thu Oct 27th, 2011 at 09:02:20 AM EST
[ Parent ]
ANOTHER 50 years of peace and prosperity in Europe".

She is talking about NEXT 50 years...so it sounds like a warning...I am sorry but it sounds like a threat not only too me.

I couldn't resist ;(



Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Thu Oct 27th, 2011 at 10:20:59 AM EST
[ Parent ]
Her language could not have been less threatening. And she was addressing the German parliament to remind them of the positive aspects of European integration.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 10:44:25 AM EST
[ Parent ]
It would be desirable to have a permanent supervision in Greece," ...

Like the US in Iraq for the past ten years?

"What more do you want from them? Do you want them to starve to death?" he said.

Answer:"Why yes, that is what we want. Could you arrange that as soon as possible? We 1%ers have better things to do than listen to your children dying."

P.S. Great Democracy Now! telecast right now. Thurs. A.M.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Thu Oct 27th, 2011 at 08:30:15 AM EST
[ Parent ]
Either Gysi is misattributed (quite possible, the greek reports have the correct numbers) or he couldn't believe the actual numbers. Salaries of teachers in Greece now start at 600 Euros not 1000 a month.

I note that the larger part of the Greek left is trying hard to avoid nationalizing the issue (see here SYRIZA leader Alexis Tsipras' speech at the Die Linke congress), but not all of it...:

Actual street posters reads: Throw out the goverment, the troika, the memoranda. We will not become a German protectorate

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

by talos (mihalis at gmail dot com) on Thu Oct 27th, 2011 at 08:52:06 AM EST
[ Parent ]
Almost posted "You wear it well" by Rod "the bod" Stewart.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Thu Oct 27th, 2011 at 09:00:53 AM EST
[ Parent ]
that;s horrible.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Thu Oct 27th, 2011 at 09:03:05 AM EST
[ Parent ]
Yes it is, but I can assure you the Greeks - and others - do not have particularly found memories of Germans imposing their will. Oversensitive? Unfair? You bet. Real? Absofuckinglutely.
by Andhakari on Thu Oct 27th, 2011 at 01:25:15 PM EST
[ Parent ]
It seems incongruous to call the Greek people "over-sensitive" just now. Might we consider that many Germans might be a bit insensitive to the suffering of the Greeks?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 27th, 2011 at 04:27:46 PM EST
[ Parent ]
No, we might not consider that many Germans...

Not counting a whole world full of insensitive and just plain ignorant people. Why do you keep harping on this? You really believe most people have any idea what their national bank or TBTF banks are about?

besides, how would you know anyway? How often do you converse with normal Germans?

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

by Crazy Horse on Thu Oct 27th, 2011 at 05:11:49 PM EST
[ Parent ]
To keep this into perspective: Tsipras (who reminds audiences that this isn't about Germany but about European and Greek bankers and elites) is the head of a party that might even pass the 10% mark. KOE is a group that was part of SYRIZA but by itself is too small to measure. However since KOE are post-maoists you can assume that this sort of rhetoric (targetted at Merkel specifically, in KOE's case as they have been quick to explain, and not Germans as a whole) and much, much worse is quite on the ascendant in Greece right now...

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Thu Oct 27th, 2011 at 09:44:31 PM EST
[ Parent ]
If the euro fails, Europe fails

This is one opinion ( not mine)

Eurozone looks like it may fail. Not European Union.

European Union failing would be further down the line, relating and not to the Eurozone failing.



Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Thu Oct 27th, 2011 at 10:38:11 AM EST
[ Parent ]
War with what?  The German military is like seven soldiers, some Buddy Holly fucking plane and a Polish jeep driven by a guy named Lars.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Thu Oct 27th, 2011 at 06:27:25 PM EST
[ Parent ]
Yeah that's what my husband said but this may not be her own words. And we have seen NATO TAKING CARE OF THINGS IN EUROPE AND AROUND GLOBE. So do not be so sure. Why would she say something as offending as this? She is usually very constrained when it comes to speeches. She is not Gaddafi. When politicians (and specially head of state) talks it shouldn't be taken lightly what they say. It is not just rhetoric. She is threatening those who may think they can escape their control. And by "their" I do not think about Germany only.

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Thu Oct 27th, 2011 at 07:55:51 PM EST
[ Parent ]
She was not using threatening language at all and your belief about it is plain mistaken.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Oct 28th, 2011 at 02:02:38 AM EST
[ Parent ]
The European Union was quite a good thing before it had a single currency, you know.
by TYR (a.harrowellNOSPAM@gmail.com) on Thu Oct 27th, 2011 at 08:30:43 AM EST

Pascal Canfin, in French, chastises van Rompuy for proposing to apply to Italy the same failed recipe as in Greece. Also for not saying one word about tax evasion and instead putting all the burden on salaries, pensions and unemployment insurance.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 09:01:53 AM EST
... and I understand that those who understand the issue are reticent about attempting explanations, because it's clearly too complicated for me, at least, to actually understand.

But. It would seem that this business about CDS payouts sinking banks is actually a crock'o'crap. Here's Lisa Pollack from FT Alphaville (please read the whole thing if you want to understand how "net CDS" works, it's very good) :

FT Alphaville

If a credit event could be proven tomorrow and none of the current counterparties failed, the maximum amount that could settle for CDS referencing Greece is $3.7bn. Even that amount is an overestimate because it assumes a final price of zero being determined in the auction. If the final price was say, 50, then the total amount changing hands, on a net basis when all is said and done, would be $1.75bn.

So it appears that banks holding Greek bonds aren't well-covered at all if Greece should default, and a 50% writedown is rather cheap for them. None of this helps me to understand why the insistence that the writedown should not be construed as a credit event. A couple of billion ought to be a handy top-up for the banks which have CDS coverage, without actually ruining those who have been pocketing the premiums.

Or not?

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

by eurogreen on Thu Oct 27th, 2011 at 09:10:27 AM EST
It is a credit event.

However, once it is admitted to be a credit event then the buyers of CDOs could demand payment by the sellers.  According to this in 2008 there was a notional $38.6 trillion of the things outstanding.  The current outstanding amount is anybodies guess but it's certain it would drive the sellers into bankruptcy, destroying the global financial system.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Oct 27th, 2011 at 12:41:44 PM EST
[ Parent ]
that's what the above link debunks. Do you disagree with her numbers about net CDO positions relating to Greece?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Oct 27th, 2011 at 01:01:52 PM EST
[ Parent ]
Greece (and Italy and Spain and Portugal and etc.) HAVE reached "a credit event."  (Stupid phrase, btw.)  If things were all ducky wonderful why do The Markets© refuse to acknowledge it?  If things could be worked out in an orderly manner then why aren't they?  

Secondly, what empirical evidence does the analyst offer that those scenarios are anything more than mathematical moonshine?  None.  Things "could" go this way; they "might" go that way; if [hypothetical] then [unjustified].

Sorry but that's nothing more than hand-waving.  

Last, the analyst uses deductive axiomatic logic to analyze dynamic, iterated functional, phenomena subject to phase transition(s) and you can't do that.  Simply put: once the phenomena has undergone bifurcation there's no justification that the descriptive statements of the Model are 'apt.'  (I put it that way to avoid 30,000 words of exposition.  :-)  

Thus, I don't believe the analysis.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Oct 27th, 2011 at 02:14:56 PM EST
[ Parent ]
It is good that you do, because that question appears crucial to understanding how the set of dominos is balanced. And I have no clue.

Is a CDS (or CDO, is there a difference?) any different from a bet? Are they now trying to avoid the wording of the bets?

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

by A swedish kind of death on Thu Oct 27th, 2011 at 01:10:31 PM EST
[ Parent ]
CDS= credit default swap. An insurance on a bond.

CDO= collateralized debt obligation. Lots of different bonds chopped up and repackaged.

So two completely differnet things. And yes, I do hate acronyms.

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

by Starvid on Thu Oct 27th, 2011 at 02:45:59 PM EST
[ Parent ]
The assumption that none of the counter parties fail is quite a bold one, since in the US a major contagion link from CDS payouts and broader financial crisis was precisely the failure of counterparties, which eliminates the value of all of the CDS they are counterparty to, independent of the default event they are held against.

Given broadly distributed and papered over insolvency among major EU financial institutions, you don't want to have a new liquid liability such as paying out on CDS at the same time as the event that you are paying out on has taken you further from solvency.


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 Thu Oct 27th, 2011 at 02:10:08 PM EST
[ Parent ]
Emphasis added.

The assumption that none of the counter parties fail is quite a bold one ...

A polite way to put it.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Oct 27th, 2011 at 02:26:47 PM EST
[ Parent ]
Quote. For some reason, "Bold Assumption" is more often abbreviated as if spelt "Bold 'Ssumption".


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 Thu Oct 27th, 2011 at 04:07:11 PM EST
[ Parent ]
I just realized I didn't link the original blog post correctly: How gross and net CDS notionals really work
Posted by Lisa Pollack on Oct 27 12:29.

Apparently it's not possible to know the net CDS positions of the various banks and insurers, so I don't know how she obtains her gross and net numbers. That's why I was interested in whether you disputed them.

You say ATinNM:

According to this in 2008 there was a notional $38.6 trillion of the things outstanding. The current outstanding amount is anybodies guess but it's certain it would drive the sellers into bankruptcy, destroying the global financial system.

but if we go to the source (ISDA, which is the authority on deciding whether a "credit event" has occurred or not), we find :
Summary of Recent Survey Results

The notional amount outstanding of credit default swaps (CDS) was $26.3 trillion at mid-year 2010,

... these are the latest numbers available, and there is a decrease in each and every semester since they peaked at year end 2007 at 62.2 trillion.

Here is the series : Notional amount outstanding of credit default swaps (CDS)(trillions of dollars)


S2 2007 : 62.2
S1 2008 : 54.6
S2 2008 : 38.6
S1 2009 : 31.22
S2 2009 : 30.4
S1 2010 : 26.3

I don't know if the amounts have continued to shrink, but there's definitely a trend. Looks like CDS are going out of fashion.

For comparison, the gross notional outstanding amount of CDS on Greece is (alleged to be) $75 billion, that's about 0.2% of the mid-2010 general total.

In insurance, companies spread their risks : they buy re-insurance. This creates systemic risk on the entire insurance system (if there are major disasters everywhere, the reinsurers may fail), but generally ensires that even a small regional insurer can pay out on an earthquake or hurricane.

I'm guessing, perhaps naively, that entities selling CDS have, since 2008, been prudent enough to spread their risks. If this is the case, then it's hard to see how a Greek default could cause systemic failure.

If this is not the case, then the guilty parties (those concentrating the risks) should be named. And closed down.

So, I'm not for making bold assumptions. But you seem to have asserted that a payout on Greek CDS would create cascading system failure, and I'm interested to examine how that works.

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

by eurogreen on Fri Oct 28th, 2011 at 06:19:10 AM EST
[ Parent ]
Spreading of risk in actual insurance is in part driven by the regulatory requirements that the insured risk be fully backed. The point of CDS as opposed to insurance is not just to allow quasi insurance to be held by a party with no insurable interest in the event (removing the cap represented by the sum  total of insurable interest), but also to circumvent insurance industry regulations requiring that the insured risk be fully backed.

There will be sets of events that will be successfully covered under present CDS counterparty practices, and sets of events that will fail to be covered under CDS counterparty practices.

Failure is a contagious process if there is a wide variety of partially filled sets of events required for failure, and the failure of one set of CDS then completes the set of events required for another set of CDS to fail, and so on.

That is, IOW, financial fragility under Minsky's financial fragility hypothesis: that it is commonplace that the sets of events required for failure are already partially filled, and there are a range of possible individual failures that will suffice to set off a cascade of failures.

And, indeed, we've only had the one mob running across the minefield put in place before 2008, blowing up those mines that they encountered, which involved a financial crisis but not a core economy monetary crisis. Whether there are unexploded mines already in place from before 2008 that will explode in the event of a monetary crisis is a crucial experiment that the EU will be engaging in, I'd be guessing sometime in the next six months to two years.


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 Fri Oct 28th, 2011 at 01:28:53 PM EST
[ Parent ]
First, let me give the 'background' to my thinking.  (lucky you!)

I'm going to assume you know nothing of Dynamic Logic, usually a safe assumption :-), so you can skip the next bit if you do.

T6:

Is a first order, or generation, derivation from the axioms of Dynamic Logic.  What this means is:

if it is possible to bring about p by performing a sufficiently often, then either p is true now or it is possible to perform  a repeatedly to bring about a situation where p is (still) false but one more performance of  a could bring about p.

This is the logic ("argumentive structure or form") by which one can validly include bifurcation in an argument without completely losing Categorical Logic - including Set Theory¹, considered broadly.

END SKIP-ABLE

... bifurcation occurs when a small smooth change made to the parameter values (the bifurcation parameters) of a system causes a sudden 'qualitative' or topological change in its behavior.

I state a Fitness Landscape exhibiting Self-Organized Criticality is such a system. I further state the "bifurcation parameters" include the affect of the Agents (here defined as "purposeful Actors") on the Fitness Landscape.  Lastly, the most successful Actors on a Fitness Landscape achieve their success by exploiting, however defined, the Properties and Attributes of the Fitness Landscape in which they evolved; this implies a necessary high degree of dependence on those Properties and Attributes for the continued existence of those Agents².

Certain Agents, at different times, because of their combinatorial 'position' within Agentive interactions within the Fitness Landscape, become a "Critical Agent" and what they do or what happens to them can cause a bifurcation of the Fitness Landscape.  (!)  When that happens Everything You Know Is Wrong,  highly successful Agents become highly unfit, the Complex System simplifies, and 'things go to hell in a handbasket.'

What this means, if you will ...

Greece, considered from 1971 - 2008 (Fall of the Breton Woods System to the onset of the current economic crisis,) is hugely unimportant.  It has become vitally important due to everybody concluding it is vitally important and, thus, it has become a Critical Agent, as defined above.  

Greece's Critical Agency within the global Fitness Landscape is occurring simultaneously with:

  1.  Peak Oil

  2.  Peak Water

  3.  Peak Food

  4.  GW induced Global Weather Pattern shifts

  5.  Global Financial Crisis

  6.  Increasing internal political conflicts

  7.  Global Real Estate price collapse

  8.  Human overpopulation wrt planetary resources

& etc., usw.

All of which a affective on the Properties and Attributes of the global Fitness Landscape.  

And in my estimation: We're moving toward a different Fitness Landscape.  Whether we are in the beginning or middle or even at the end of the move is unknown.  (Ask me again in 2030, if I should live so long.)  

In my eyes the importance of Greece is it gives us a clear insight into the thinking of the global Decision Makers, and their staffs and allies, wrt how they think about, thus how they respond, to the situation.  

So far they are responding by attempting to sustain the highly successful Agents from the previous Fitness Landscape.  

Needless to say, in my considered opinion, that's not going to succeed.

What their attempts will do, IMO, is squander time, money, and their Political Power making them ever more irrelevant when it comes to being able to affect and/or control events.  For example, we've already seen political figures in various nations, including the US btw, losing Command and Control of their police and/or military.  What was unthinkable one year ago, is now fact: political leaders can no longer assume they can impose their will.  A fruit seller burns himself to death in protest over local thuggery and the Tunisian, Egyptian, and Libyan governments are overthrown by popular uprisings.

Global financial powers are finding limitations too.  I present the Curious Case of Iceland:

GFP:  Don't default or BAD THINGS will happen

Iceland:  Fuck off.  <defaults>

GFP:  crickets

And it's time to wrap this up.

I haven't, exactly, answered or addressed your post but I've tried to give you some "channel markers" of an analytical stance I find compelling.  And - gadzooks - even useful.  

---------------------------------------------------------------------------------------------------- ---------------
¹  Thus "saving" Mathematics and simultaneously allowing me to deploy the findings of Mathematics without having to "Do" Math

²  N.b. all of these statements can be justified

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Oct 28th, 2011 at 03:23:30 PM EST
[ Parent ]
He! I was going to ask what happened when a Fitness Landscape turns out to be an Incompetence Landscape, but I see that that eventuality is covered! Objection withdrawn.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Oct 28th, 2011 at 11:57:18 PM EST
[ Parent ]
And there is always the example of Morgan Stanley:

Morgan Stanley's Exposure To French Banks Is 60% Greater Than Its Market Cap... And More Than Half Its Book Value Who knows what the knock-on effects of the vaporization of Morgan Stanley would be? It certainly would not be good for all the French Banks that are supposedly relying on MS CDSs.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 27th, 2011 at 04:37:37 PM EST
[ Parent ]
Eurointelligence this morning (by email):

An estimate by the Depository Trust & Clearing Corporation suggests that the net outstanding amount of CDS on Greek papers, is relatively small - at €3.7bn. FT Alphaville has all the details about how large gross exposures can turn into small net exposures.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Oct 28th, 2011 at 03:14:07 AM EST
[ Parent ]
You think that being validated by Eurointelligence makes a difference? and that perhaps we could discuss the issue a little bit more substantively?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Fri Oct 28th, 2011 at 05:30:21 AM EST
[ Parent ]
Huh? It was a data point I came across and contributed.

You want a substantive discussion, write a diary and get it going.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Oct 28th, 2011 at 05:49:57 AM EST
[ Parent ]
that my attempts at understanding have been treated a bit dismissively. I have no axe to grind, no agenda to push. I've had one last try, above, and if it generates any actual discussion I might turn it into a diary over the weekend.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Fri Oct 28th, 2011 at 07:01:14 AM EST
[ Parent ]
Here's a presumably authoritative source: Greek Sovereign Debt Q&A (Update) (ISDA)
The following are responses to the most frequently-asked questions that ISDA has received in connection with the application of credit derivatives to a potential restructuring or reprofiling of Greek sovereign debt. The following does not constitute legal advice, and is subject in all respects to any determination that the ISDA EMEA Credit Derivatives Determinations Committee may make in relation to CDS referencing the Hellenic Republic (Greece). ISDA makes no comment on the likelihood of the events described in this Q&A.

...

Would a Credit Event on Greece lead to massive payments by protection
sellers?

No. According to the Depository Trust & Clearing Corporation's CDS data warehouse, the total net exposure of market participants who have sold CDS credit protection on Greek sovereign debt is approximately $3.7bn as of 10-21- 2011. This figure is calculated by summing the net exposures of the protection sellers, and so it is impossible for any one firm selling protection to have more than $3.7bn in exposure and, of course, given that there are many net sellers, any one seller's exposure is likely to be far less. Also, firms' net exposures are partially offset by the recovery value of underlying obligations. For example, if the CDS auction showed the recovery value of debt to be (hypothetically) 50%, the maximum aggregate amount payable would, in Greece's case, be 50% of $3.7bn: $1.85bn. Furthermore, statistics indicate that, on average, 70 per cent of derivatives exposure is collateralised and the level of CDS collateralization is likely to be even higher as over 90% of CDS transactions (by numbers of trades) are collateralised. Thus, in this example, of the $1.85bn payable, about $1.5bn has effectively already been paid.

The data regarding CDS exposures on Greek sovereign debt, and for the top 1,000 reference entities, are public. They are available here: http://www.dtcc.com/products/derivserv/data_table_i.php?tbid=5 (Greece is listed under "Hellenic Republic").

Regulators have access to additional data, including individual firm CDS exposures.



To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Oct 28th, 2011 at 07:08:17 AM EST
[ Parent ]
I didn't mean to be dismissive. I wouldn't have a lot to say about CDSs, there's a steep learning curve for me there too. But I do suggest a diary, it could become a useful resource.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Oct 28th, 2011 at 09:41:06 AM EST
[ Parent ]
The CDSs on Greek debt is likely the tip of the iceberg and quoting those miniscule amounts could be misdirection. A much larger problem is the effect that Greek defaults will have on French banks and banks in other countries. Morgan Stanley has written $39 billion in CDSs for French Banks that hold large amounts of Greek debt. Were MS required to pay out even one third of that amount that would well exceed its market capitalization. We would then have to see what the NY Fed would do. And that is only one example.

Part of the problem is that we are getting figures without any clear understanding of contractual liabilities. For instance, what is the total value of CDSs purchased by French banks and from how many issuers, how much might each issuer have to pay and how likely is it that each issuer would be able to pay its liability?  That is the problem with opacity.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Oct 28th, 2011 at 05:10:45 PM EST
[ Parent ]
If a credit event could be proven tomorrow and none of the current counterparties failed, the maximum amount that could settle for CDS referencing Greece is $3.7bn

The order in which the margin calls go out will matter when the gross positions are orders of magnitude greater than the net positions. Company A can go bust from a margin call by company C, which then goes bust from a margin call by company B, which then goes bust because it can't cover the margin call from company A's receiver.

The contracts that net out will presumably net out in the end when all the dust has settled. But quite a lot of institutional (and not a little physical and human) capital will have been liquidated in the intervening chaos.

And, more importantly for one's understanding of the current crisis, a lot of executives will have been replaced by bankruptcy receivers. Which may not in every case be bad for the real economy, but will almost invariably be bad for the executive in question.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Oct 30th, 2011 at 07:53:31 PM EST
[ Parent ]
European Tribune - Comments - ET Symposium: Now What?
What will happen to the European treaties of the last 20 years: How much of the rest of the EU structure (Lisbon, Schengen, ...) will remain standing following a euro debacle?

From a previous discussion:

A swedish kind of death:

I do not think the EU will unravel even if the euro does. Neither do I think members abandoning the euro will be forced out. I see no new treaty in my crystal ball, european integration will unravel a bit but hold in general.

Schengen will probably last in principle, but with increasing exceptions. I note that there is already a pre-crisis history of limiting the movement of leftish elements in the run-up to big summits.

Common Foreign and Security Policy will not go much further, be neither will the structures EU inherited from WEU be lost.

Cooperation in Criminal Justice might unravel if there is a serious challenge to the European arrest warrant. That would for example be if there is a case where the government and/or justice system of one member state refuses to extradite a citizen (which will not happen in the Assange case).

CAP, the common market, the EU lawmaking structure and other basic structures I think will keep going.

A swedish kind of death:

A part of the Cooperation in Criminal Justice that I think will last is the part were cops from one country can act in another. Marketed as being necessary in order to allow cross-border chases of bank-robbers and such, as far as I know it has mostly been used to reinforce local cops when an international summit needs to be protected against demonstrators. And that will probably be needed in the future too, which I think will trumph by far the nominal resistance from local nationalists against foreign cops on their streets.


Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Thu Oct 27th, 2011 at 09:16:04 AM EST
Nach EU-Gipfel: Paris sieht einen Sieg Sarkozys - Wirtschaft - FAZAfter EU summit: Paris sees a Sarkozy win

Die politische Führung Frankreichs hat am Donnerstag den entscheidenden Einfluss von Präsident Nicolas Sarkozy auf die Beschlüsse des Brüsseler Gipfels herausgestrichen.

France's political leadership on Thursday emphasized the decisive influence of President Nicolas Sarkozy on the resolutions of the Brussels summit.
,,Sarkozy hat Europa auf den Weg der Verantwortung geführt", sagte der französische Finanzminister François Baroin in einem Radio-Interview. In Regierungskreisen wurde betont, welche Maßnahmen Frankreich durchgesetzt habe: So werde der europäische Rettungsfonds EFSF ,,gehebelt". Dadurch könne er sein Rettungsvolumen nicht nur auf 1000 Milliarden Euro, sondern maximal auf 1400 Milliarden Euro ausweiten, hieß es im Finanzministerium. "Sarkozy has led Europe onto the path of responsibility," French Finance Minister Francois Baroin said in a radio interview. Government sources stress the measures that France pushed through: The European rescue fund EFSF will be "leveraged". In this way, it can expand its rescue volume not to just 1 trillion euros but to a maximum of 1400 euros, the Finance Ministry says.
Wichtig sei auch, dass der künftige Präsident der Europäischen Zentralbank, Mario Draghi, den weiteren Aufkauf von Staatsanleihen angekündigt habe. Sarkozy hatte in dieser Woche mit Draghi telefoniert. ,,Zur Erklärung von Draghi ist es nicht zufällig gekommen", hieß es in Kreisen der französischen Delegation.The same sources added that it is also important that Mario Draghi, the incoming president of the European Central Bank, announced the further purchase of sovereign bonds. Sarkozy telephoned with Draghi earlier this week. "Draghi's announcement wasn't just a coincidence," sources inside the French delegation say.


The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt t gmail dotcom) on Thu Oct 27th, 2011 at 11:00:53 AM EST
This is hardly surprising given that Sarko intends to go on TV to blow his own horn and insinuate that his main rival in the coming elections is a nobody with zero international experience.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 11:11:48 AM EST
[ Parent ]
I watched 5mn and then shut it off.

  • we've been living above our means for 30 years and the crisis is all Mitterrand's fault (pensions at 60-year) and Jospin (35-hour week - and he let Greece into the eurozone!)

  • nationalising banks is evil and a catastrophe; separating commercial banking and investment banks is stupid ; our baks are strong and our rescue plan made money;

  • stupid clueless journalists letting all his lies pass by

  • oh, it's all because pensions come too early, and he's the only one to have pushed them further.

  • oh, and he's working hand in hand with Germany.


Wind power
by Jerome a Paris (etg@eurotrib.com) on Thu Oct 27th, 2011 at 03:49:08 PM EST
[ Parent ]
I was fortunate enough to miss it.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 03:52:41 PM EST
[ Parent ]
Pascal Canfin blog: Sommet européen: le deal secret avec la Chine ? (Libération)
L'accord trouvé cette nuit à Bruxelles comporterait une clause secrète. En échange d'une participation financière de la Chine négociée par Klaus Regling, le patron du Fonds européen de Stabilité financière qui se rend en Chine dès demain, l'Union européenne serait prête à céder à une exigence formulée depuis longtemps par la Chine: lui accorder le statut d'économie de marché telle que défini par l'Organisation mondiale du commerce (OMC). Ce statut diminuerait considérablement la possibilité pour l'Union de porter plainte devant l'OMC contre la Chine pour dumping. Ce statut, la Chine en bénéficiera de toute façon en 2016 suite aux engagements pris lors de son entrée à l'OMC en 2001. Mais elle a fait de l'accélération du calendrier une priorité diplomatique.
The agreement arrived at tonight in Brussels would include a secret clause. In exchange for the financial participation of China negotiated by Klaus Regling, the head of the EFSF who travels to China starting tomorrow, the Union would be ready to give in on one demand made by China long ago: to give it the status of Market Economy as defined by the WTO. This status would considerably reduce the possibility that the Union could bring dumping complaints against China before the WTO. China would in any case benefit from this status since 2016 as a result of the commitments made when it joined the WTO in 2001. But China has made a diplomatic priority of accelerating this calendar.
Let's not forget there's no need for the EFSF to go cap in hand to China to borrow Euros. Euros are ultimately lent by the ECB. Maybe the EU could have allowed the EFSF to apply for a banking licence, like the one Siemens already enjoys. But no, by a theological refusal to allow the EFSF to fund itself at the ECB, the Union forces itself to surrender a key policy objective of China.

I note the responsibility for the failure to give the EFSF a banking licence lies squarely at the feet of Germany.

Well done!

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Oct 27th, 2011 at 12:37:27 PM EST
This is what I'm talking about above :
eurogreen:
So, imagine the Chinese -- and the Russians, for good measure -- decide to invest in this fund. This gives it a certain credibility, insofar as they are the meanest sons of [politically incorrect term redacted] on the planet.

What we are selling out here, among other things, is the PSE's "fairer trade" program : i.e. the EU would have set higher standards about social and environmental conditions in partner countries, potentially with tariffs.

I wonder if the EPP discussed this with the PSE beforehand.


It's also what Emmanueli is talking about.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Oct 27th, 2011 at 01:11:39 PM EST
[ Parent ]
But this is wholly unnecessary - just fucking create the necessary fiat Euros!

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Oct 28th, 2011 at 06:43:23 AM EST
[ Parent ]
BOOO!! INFLATION! WOOOOO! IT'S THE INFLATION MONSTER COME TO HAUNT YOU!!!
by Colman (colman at eurotrib.com) on Fri Oct 28th, 2011 at 06:48:21 AM EST
[ Parent ]
ECB educational resources: What is inflation?

Have you seen the inflation monster?
Watch our cartoon on price stabillity



To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Oct 28th, 2011 at 06:51:07 AM EST
[ Parent ]
Oh. My. Holy. Fuck.

We. Are. Doomed.

by Colman (colman at eurotrib.com) on Fri Oct 28th, 2011 at 06:56:33 AM EST
[ Parent ]
You missed its earlier appearances?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Oct 28th, 2011 at 07:01:14 AM EST
[ Parent ]
I either missed it or blanked it from my mind.
by Colman (colman at eurotrib.com) on Fri Oct 28th, 2011 at 08:09:30 AM EST
[ Parent ]
We need a macro for that, don't we?
by Colman (colman at eurotrib.com) on Fri Oct 28th, 2011 at 06:57:12 AM EST
[ Parent ]
I can smell the Socialism from here.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Oct 28th, 2011 at 07:08:34 AM EST
[ Parent ]
Now you know what keeps Europe's central bankers up at night.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Oct 28th, 2011 at 07:09:04 AM EST
[ Parent ]
This is what I'm talking about above:

So, imagine the Chinese -- and the Russians, for good measure -- decide to invest in this fund. This gives it a certain credibility, insofar as they are the meanest sons of [politically incorrect term redacted] on the planet.

 What we are selling out here, among other things, is the PSE's "fairer trade" program : i.e. the EU would have set higher standards about social and environmental conditions in partner countries, potentially with tariffs.

 I wonder if the EPP discussed this with the PSE beforehand.

That would probably already be illegal under WTO rules. In any event, the WTO has no divisions. It can only allow other countries to retaliate against mercantilist attacks by putting up their own mercantilist defences...

... which China is already doing.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Oct 30th, 2011 at 08:00:10 PM EST
[ Parent ]
If Greece, Italy, whomever, defaults tomorrow, who exactly loses their chips? What pensioner, what multinational corporation, what government investment organ gets the shaft? An honest debt is just that, but if we're just talking about saving some smarmy banker's xmas bonus, or feathering the Koch's counter-revolutionary nest-egg (or their Chinese or Saudi equivalent) I really can't see impoverishing millions of working folk for the moral satisfaction of paying down the mortgage. Forgive me, but a simple toodle-oo should do.
by Andhakari on Thu Oct 27th, 2011 at 01:48:50 PM EST
Your point is the baseline. The ET contributors have been collectively losing their minds over the past few years watching humanity throw away its future for reasons that can't even be described as reasons, and the sarcasm / incredulity seen in the comments here is the result.

you are the media you consume.

by MillMan (millguy at gmail) on Thu Oct 27th, 2011 at 02:09:34 PM EST
[ Parent ]
I object to that.  My sarcasm and incredulity was here long before Europe decided to commit harakiri.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Thu Oct 27th, 2011 at 06:34:56 PM EST
[ Parent ]
As Colman (or Mig?) is fond of saying: there's no problem with eradicating the private foolishly invested savings of pensioners which can't be resolved with higher public pensions.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Oct 27th, 2011 at 02:56:48 PM EST
[ Parent ]
It is worse. The goal is to make real the gains that a few wealth holders made through fraudulent activities and counterfeit debt.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 27th, 2011 at 04:50:09 PM EST
[ Parent ]
This breakdown was provided by Eurointelligence yesterday (email) of who would be concerned by the planned 50% haircut:

Nick Malkoutzis in Kathimerini points out that the haircut will only apply to two-thirds of the country's debt, and almost half of that is in Greek hands. "According to calculations by UBS, Greece's total public debt is just under €350bn. Of that, €55bn (16%) is with the ECB, €17.9bn (5%) with the IMF and €47.7bn (14%) has been borrowed through bilateral loans. This debt will not be written down. Instead, the haircut will apply to the remainder, which is €125.9bn (36%) held in the international markets, €73.9bn (21%) sitting with Greek and Cypriot banks, and €26bn owned by other Greek institutions, mostly social security funds.... A 50% writedown means Greek banks will have to be recapitalized and pension funds, already strapped for cash, will take a hit of some €12bn. When added to the losses from the haircut, the deal ... could cost Greece and its banks some €40bn."
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 04:55:43 PM EST
[ Parent ]
BBC News - Has Germany been prudent or short-sighted? - Robert Peston

It was billed as the eurozone leaders' package to prop up their currency union.

In practice many would see it as the German plan because:

  1. it was Germany that pushed hardest for banks and private sector lenders to the Greek government to take a 50% cut in what they're repaid;
  2. it was Germany that placed a strict limit on the expansion of the resources of the bailout fund by vetoing the deployment of the unlimited resources of the European Central Bank;
  3. and the imposition of strict new budgetary disciplines on governments perceived to be borrowing too much is a manifestation of Germanic fiscal rectitude.

Also what may gall some is that German banks even got off relatively lightly from the measures to strengthen European banks - since they're being forced to raise a relatively paltry 5bn euro in new capital.

It all means that reputationally Germany has the most to lose if the rescue flops, even if all of Europe would pay a steep economic price from such a failure.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 27th, 2011 at 02:41:41 PM EST
Italy 10-year auction yield hits euro-era high - FT.com

Italy issued 10-year debt on Friday, but paid the highest price since joining the euro, in the first bond auction in the region since new steps were agreed to tackle the eurozone debt crisis.

The auction yield on Italy's March 2022 bond rose to 6.06 per cent from 5.86 per cent a month ago. The sale of the 10-year bonds was covered less than 1.3 times, but demand for the total sale of medium and long-term paper was sufficient for the Treasury to raise €7.94bn - at the top end of its target range of between €5.25bn and €8.5bn.



It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Fri Oct 28th, 2011 at 06:36:00 AM EST
I can't get this to embed, but it's pretty good.

An animation to explain the big Eurodeal.

The site, xtranormal.com, also lets you make your own animation... who's up for it?

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

by eurogreen on Sat Oct 29th, 2011 at 05:04:05 PM EST


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