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

Bleed, you sinners!

by Jerome a Paris Thu Sep 22nd, 2011 at 04:34:43 AM EST

"Bild" is impressed with Greek reform efforts
Until now mass circulation daily Bild has distinguished itself by ridiculing or humiliating the Greeks in its reporting on the country's crisis. But yesterday's announcement of deep cuts in retirement benefits and the number of government officials seems to have impressed the editors of newspaper. "Fewer retirement benefits! Fewer officials! Now the Greeks really have to bleed" is Bild's headline against the backdrop of the Acropolis under the sunset's light.

A good example of what's been happening for a while now - the crisis is no longer about economics (see here a list of potential solutions to the crisis) but about something else. Some would call it morality, some would call it simply politics, but this is certainly not about rational decision-making. Thrifty Northerners are offended by corrupt Southern free riders and want payback.

But is it really? I'm pretty sure most Germans would be ok with the solution to the current crisis which comes through higher wages for them. Their sense of righteousness at having sacrificed and thinking that these sacrifices are going to be taken advantage of by the profiteering Greeks is being whipped and promoted and inflated for a very good reason: it's a distraction from the real profiteering taking place: that of the investor class abusing the middle class in multiple ways and not sharing the fruits of growth anymore.

There is a "euro" crisis only because bond investors have taken the euro hostage, and claim the worst will happen if Greece defaults - and they've managed to impose sacrifice on the hapless Greek population and the other European taxpayers in order not to take any hit on their reckless investments. But this is not necessary (we could let Greece default, let investor take their losses and nationalise banks that fail as a result) - indeed it is economically catastrophic, as we enter a vicious circle of deflation and recession, but it can be made to look satisfying to those who can be encouraged to feel smug about this, because they get others to suffer more than them.

In other words: propaganda works. And as usual it works by tapping into our worst instincts.


Display:
If anyone can find the actual frontpage of Bild, I'd be interested to see it.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Thu Sep 22nd, 2011 at 04:35:42 AM EST
As I wrote not long ago:


Well, it's simple. Germans should be pissed off (i) at their politicians for squeezing their wages to create profits for multinationals and their owners, (ii) at their banks for blowing off that money in stupid casino bets in US subprime and Spanish real estate, (iii) at their politicians for bailing out the banks at no political or practical cost to bank managers and bondholders, (iv) at their elites for blaming Greek laziness for the stagnant wages.


Wind power
by Jerome a Paris (etg@eurotrib.com) on Thu Sep 22nd, 2011 at 05:11:33 AM EST
[ Parent ]
<a href="http://news.firedoglake.com/2011/09/24/multi-trillion-euro-bank-bailout-prepped/">http://news.firedoglake.com/2011/09/24/multi-trillion-euro-bank-bailout-prepped/</a>
by Phoenix Woman on Sat Sep 24th, 2011 at 10:33:09 PM EST
[ Parent ]
Welcome to ET, Phoenix Woman. Check How to post a link in our New User Guide. (Upper left box on some pages.)

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Sep 25th, 2011 at 01:54:19 AM EST
[ Parent ]
[ET Moderation Technology™]

Sorry you fell foul of our antispam html restrictions on new accounts, Phoenix Woman. Your account is now fully enabled.

Here's your FDL link: Multi-trillion Euro Bank Bailout Prepped.

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Sep 25th, 2011 at 03:15:37 AM EST
[ Parent ]
I think we are long past the point of rationality. As you may know, Ireland needs to raise 5 billion from a sale of assets, you know, things government shouldn't own like electrical infrastucture and stuff, things you want to sell to the nice people who used to run Enron, 'cos like, they need a break....Anyway a couple of years ago there was a proposed deal I wwas involved in, whereby property rent roll was going to be turned into a bond, and sold on that way, separating the financial stream from the asset. If the dumb government set up an SPV, put the ESB, Bord Gais and the Natioanl Lottery into it, it has a demonstrable revenue stream of 5-600 million per annum. Ten year bond with a 20% coupon. Sell nothing, and get the money. Any reason this won't work...?
by Gerard de Dub on Thu Sep 22nd, 2011 at 05:04:51 AM EST
It appears (analytically and empirically) the Major Money Market banks and other large, trans-national, Financial institutions have, more-or-less, stopped lending.  To put it bluntly.  This in an effort to shore-up their Balance Sheets in the face of the existence and steady increase of non-preforming loans because debtors are unable to meet principal and interest payments on existing debt.  

Further, the various Austerities being imposed, globally, in supposedly freeing money so governments can meet the principal and interest payments on existing debt is destroying the global micro-economy that generates the excess monies needed to meet the principal and interest payments on existing debt by both government and private entities.

In this financial climate, under the existing system, introducing a new round of debt will accomplish little.  

IMO.  YMMV.

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

by ATinNM on Fri Sep 23rd, 2011 at 01:29:53 PM EST
[ Parent ]
this is not necessary (we could let Greece default, let investor take their losses and nationalise banks that fail as a result) - indeed it is economically catastrophic, as we enter a vicious circle of deflation and recession, but it can be made to look satisfying to those who can be encouraged to feel smug about this, because they get others to suffer more than them.
Krugman: The Hangover Theory (Slate, 1998)
The hangover theory, then, turns out to be intellectually incoherent; nobody has managed to explain why bad investments in the past require the unemployment of good workers in the present. Yet the theory has powerful emotional appeal. Usually that appeal is strongest for conservatives, who can't stand the thought that positive action by governments (let alone--horrors!--printing money) can ever be a good idea. Some libertarians extol the Austrian theory, not because they have really thought that theory through, but because they feel the need for some prestigious alternative to the perceived statist implications of Keynesianism. And some people probably are attracted to Austrianism because they imagine that it devalues the intellectual pretensions of economics professors. But moderates and liberals are not immune to the theory's seductive charms--especially when it gives them a chance to lecture others on their failings.


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 05:26:32 AM EST
Yes, I'm just paraphrasing what you've written and quoted in recent threads. This needs to be repeated as often as we can.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Thu Sep 22nd, 2011 at 05:30:40 AM EST
[ Parent ]
The "sinners" moniker comes from Germany's EU Commissioner Oettinger: 'Deficit Sinners' Flags Should Fly at Half-Mast' (Spiegel, September 9, 2011)
Greece clearly needs help escaping from its financial quagmire, according to German European Union Energy Commissioner Günther Oettinger. In fact, the EU should consider using some "unconventional" methods to increase motivation among Greek officials for solving the country's problems, he told daily Bild on Friday.

"There has been the suggestion too of flying the flags of deficit sinners at half mast in front of EU buildings," the member of Chancellor Angela Merkel's conservative Christian Democrats told the paper. "It would just be a symbol, but would still be a big deterrent."

Another tactic for pulling the debt-stricken country out of crisis could be replacing "the obviously ineffective administrators" there, he added. Because Greek officials have failed at collecting outstanding taxes and selling state-owned assets as planned, Oettinger alleged, experts from other EU nations should be sent in to do their jobs instead. "They could operate without concern for resistance and end the inefficiency," he told Bild.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 05:32:05 AM EST
The idea of "administrative nationbuilding" is not limited to Öttinger: Dutch government calls for powerful EU budget enforcer: report (Reuters, September 7, 2011)
Writing in the [Financial Times] newspaper, Prime Minister Mark Rutte and Finance Minister Jan Kees de Jager said the new "commissioner for budgetary discipline" should have the authority to impose painful penalties on profligate eurozone countries, including the withholding of EU development funds.

Rutte said his plan would force countries to adhere to EU demands for spending restraints as they would be required to submit their budgets to the commissioner, who would have the power of veto.

...

On Wednesday, Rutte, together with the Dutch finance and economics ministers, published a plan, which states that the Netherlands will lobby the European Union for tougher measures on euro zone countries which break budget and state deficit rules.

A majority of Dutch voters, or 54 percent, want Greece and other peripheral countries thrown out of the euro rather than rescued, a poll showed last month.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 05:35:17 AM EST
[ Parent ]
Rutte and Kees are actually singing from Trichet's hymn sheet: EU should control member states' budgets, says bank boss (2 June 2011)
"In this union of tomorrow, or of the day after tomorrow, would it be too bold, in the economic field, with a single market and a single central bank, to envisage a ministry of finance of the union?" he said as he accepted the Charlemagne prize for contributions to European unity.

...

"But if a country is still not delivering, I think all would agree that the second stage has to be different," he said, suggesting that eurozone authorities be given "a much deeper and authoritative say in the formation of the country's economic policies if these go harmfully astray".

He added: "It would be not only possible, but in some cases compulsory, in the second stage for the European authorities - namely the council on the basis of a proposal by the commission, in liaison with the ECB - to take themselves decisions applicable in the economy concerned."



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 05:39:33 AM EST
[ Parent ]
For examples of this sort of retribution they have only to look at Wisconsin Governor under Teaparty Governor Scott Walker.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Sep 22nd, 2011 at 10:50:09 AM EST
[ Parent ]
I'm personally coming to the conclusion that the European Union, and especially its technocratic elite, is morally bankrupt.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 11:13:18 AM EST
[ Parent ]
The neo-lib/neo-cons operate on a different sort of "morality" -- that of the predator. Some have managed to convince themselves that TINA.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Sep 22nd, 2011 at 11:22:10 AM EST
[ Parent ]
I think technocrats have managed to comvince themselves there is no political or moral dimension to their work.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 11:25:32 AM EST
[ Parent ]
In my opinion they almost exclusively give off a corporate executive vibe. It's felt that way to me since the late 90s.

you are the media you consume.

by MillMan (millguy at gmail) on Thu Sep 22nd, 2011 at 12:18:48 PM EST
[ Parent ]
the assertion that what they do is politically and morally neutral, that they are selected entirely on self-evident, classless merit, and that their policy agendas are above politics.
by wu ming on Thu Sep 22nd, 2011 at 12:57:18 PM EST
[ Parent ]
Yes, and the moon is made of green sheep.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Thu Sep 22nd, 2011 at 01:36:52 PM EST
[ Parent ]
On this, see The Best and the Brightest by geezer in Paris on December 17th, 2008.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Sep 23rd, 2011 at 04:30:17 AM EST
[ Parent ]
when you attach and tighten thumbscrews on people
FDP boss Rösler proposes toughening the deficit limits

As the German cabinet and Bundestag put their finishing touches to the legislative proposal to enhance the EFSF, economics minister and FDP leader Philipp Rösler proposed to toughen the  deficit limits in the stability and growth pact, Süddeutsche Zeitung reports. "I could for example imagine that we lower the current deficit limit of 3%", he said. "We must think about how we further tighten the budgetary thumbscrews".



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 05:45:49 AM EST
On the premise: if a gram will kill you, 100 kilos is really what you need?

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Fri Sep 23rd, 2011 at 01:32:04 PM EST
[ Parent ]
Krugman column: The Bleeding Cure (NYT, September 18, 2011)
Doctors used to believe that by draining a patient's blood they could purge the evil "humors" that were thought to cause disease. In reality, of course, all their bloodletting did was make the patient weaker, and more likely to succumb.

Fortunately, physicians no longer believe that bleeding the sick will make them healthy. Unfortunately, many of the makers of economic policy still do. And economic bloodletting isn't just inflicting vast pain; it's starting to undermine our long-run growth prospects.

...

And the austerity has been real. In Europe, troubled nations like Greece and Ireland have imposed savage cuts, even as stronger nations have imposed milder austerity programs of their own. In the United States, the modest federal stimulus of 2009 has faded out, while state and local governments have slashed their budgets, so that over all we've had a de facto move toward austerity not so different from Europe's.  



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 05:48:15 AM EST
Fortunately, physicians no longer believe that bleeding the sick will make them healthy. Unfortunately, many of the makers of economic policy still do.

Utter fucking nonsense. The people pushing "austerity" are actively, consciously killing off the middle class because these folks still have the resources to resist the elites. They can't tell you to your face "We do these things to kill you." because you might wake up and do something so they give you the old vitamin pill analogy. "This tastes bad but it's good for you ... it's necessary ... whatever."

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Thu Sep 22nd, 2011 at 08:32:04 AM EST
[ Parent ]
Maybe Greece has hemochromatosis?
How is hemochromatosis treated?

Treatment is simple, inexpensive, and safe. The first step is to rid the body of excess iron. This process is called phlebotomy, which means removing blood the same way it is drawn from donors at blood banks. Based on the severity of the iron overload, a pint of blood will be taken once or twice a week for several months to a year, and occasionally longer.

In  the case of Greece, a lot longer.
by gk (gk (gk quattro due due sette @gmail.com)) on Thu Sep 22nd, 2011 at 08:40:58 AM EST
[ Parent ]
Is a pint of blood like a pound of flesh?

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 08:49:39 AM EST
[ Parent ]
"A pint's a pound the world around!"

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Sep 22nd, 2011 at 10:52:52 AM EST
[ Parent ]
An amazing graph in a front page post on DailyKos:

Everybody but a VERY SMALL elite is seeing sharp income drops. This is in the US, but Germany is one of the countries that has pushed wage stagnation the most in Europe. Are the 97% less educated all "sinners"?

Wind power

by Jerome a Paris (etg@eurotrib.com) on Thu Sep 22nd, 2011 at 05:49:55 AM EST
Not as long as they live within their means.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Sep 22nd, 2011 at 05:54:02 AM EST
[ Parent ]
Let's hear it for us Ph.D.s !!!  Woo Hoo !!!

The real upside is having the good sense not to spend the little money you have on crap. And always read ET ... best entertainment in town.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Thu Sep 22nd, 2011 at 08:35:32 AM EST
[ Parent ]
Remember I keep saying that the middle class (not the upper income working class) are doing just fine?

The real victory in the class war was conflating upper income working class with middle class.

by Colman (colman at eurotrib.com) on Thu Sep 22nd, 2011 at 09:39:02 AM EST
[ Parent ]
When you write "the middle class are doing fine" you are using the new meaning of middle class in today's media (ie what we should be calling upper income working class) instead of referring to the actual middle classes, or did I misunderstand your comment?

If the above, I agree: a lot of economic commentary makes a lot of sense when you understand "the economy" as really meaning "the top 1% of the economy" (ie the only part that matters to today's media and pundits, most of which are part of that 1%)

Wind power

by Jerome a Paris (etg@eurotrib.com) on Thu Sep 22nd, 2011 at 09:46:47 AM EST
[ Parent ]
By middle class I mean the traditional lawyers/doctors/senior managers and such. People who have significant economic independence. Not the new meaning, which is basically "middle income".
by Colman (colman at eurotrib.com) on Thu Sep 22nd, 2011 at 09:49:09 AM EST
[ Parent ]
There was a debate in Spain recently about a new property tax which would have impacted high-net-worth individuals. The right-wing PP argued that it would impact the "middle class". When the tax was abolished 4 years ago, only 5% of taxpayers had high enought net worth to pay this tax. So the question is, is the top 5% most wealthy "middle class"?

Maybe it's the people the politicians live among...

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 10:00:40 AM EST
[ Parent ]
Well yes.

If you're especially slippery you can change meaning of middle class at will, meaning "middle income" one moment and "economically independent professionals" the next. It's very convenient.

by Colman (colman at eurotrib.com) on Thu Sep 22nd, 2011 at 10:07:25 AM EST
[ Parent ]
Essentially "middle class" just means "my constituency" when a "centrist" politician says it.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 10:17:47 AM EST
[ Parent ]
...a lot of economic commentary makes a lot of sense ...

I submit a lot of economic commentary makes sense when it is realized the commentators are talking about some other Economy, in some other Universe.

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

by ATinNM on Fri Sep 23rd, 2011 at 01:36:32 PM EST
[ Parent ]
Also cut from the bottom increasing housing costs and add them as incomes to top we see even more clear picture.
by kjr63 on Thu Sep 22nd, 2011 at 05:31:54 PM EST
[ Parent ]
At least in Germany housing costs have declined last 20 years.
by kjr63 on Thu Sep 22nd, 2011 at 05:32:52 PM EST
[ Parent ]
Regarding housing prices, Germany (and Austria) is the exception amongst the developed countries. Most other countries from Greece in the south-east to the US in the far west house prices were inflated due to low rates and variable-rate mortgages.

"Eurozone leaders have turned a €50bn Greek solvency problem into a €1,000bn existential crisis for the European Union." David Miliband
by Kostis Papadimitriou on Fri Sep 23rd, 2011 at 12:15:30 PM EST
[ Parent ]
as a related side note, there is often a differentiation between (institutional) bond holders (who should share a part of the burden) and poor private citizens whose deposits should be protected.

Of course a default would not hurt the depositers directly, but an important question is, who has given the instutional investos the money to buy bonds? Often, us poor workers who are told to save money for retirement. That money goes to insurance companies / mutual funds who then buy bonds so essentially a debt haircut or default or whatever will hurt the poor worker again.

by crankykarsten (cranky (where?) gmx dot organisation) on Thu Sep 22nd, 2011 at 09:20:21 AM EST
Often, us poor workers who are told to save money for retirement.

If governments had not been infected by neoliberal brain rot and de-funded public pension systems while encouragin people to feed the global financial markets with their life savings, we woulnd't have that problem.

The number of ways in which the German public has been screwed by its successive governments is legion...

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 09:25:38 AM EST
[ Parent ]
This could be mitigated by structuring defaults so that there were strong upper limits on reimbursements to bond holders in resolution/bankruptcy proceedings...

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Sep 22nd, 2011 at 10:59:29 AM EST
[ Parent ]
Since when do the working poor have spare cash to invest in private retirement funds?

Oh, wait, I get it: your poor in us poor workers must be rhetorical.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 11:40:38 AM EST
[ Parent ]
I don't know the situation in Germany, but a number of unions in the UK have pension funds for members - some of whom aren't earning much - and those pension funds are privately invested...
by Metatone (metatone [a|t] gmail (dot) com) on Thu Sep 22nd, 2011 at 11:58:01 AM EST
[ Parent ]
Repeat after me: There is nothing wrong with insolvent private pension funds that cannot be solved with better public pensions.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Sep 23rd, 2011 at 07:53:21 PM EST
[ Parent ]
by Jerome a Paris (etg@eurotrib.com) on Thu Sep 22nd, 2011 at 09:44:20 AM EST
Thrifty Northerners are offended by corrupt Southern free riders and want payback.
NPR.org: Speculation Grows: Greece Will Default On Its Debts
International lenders return to Athens next week to discuss the next installment of a vital $150 billion bailout. Otherwise, Greece will go broke and default on its debt. Meanwhile, there's growing resentment among Greeks toward their EU partners and many think default is not such a bad idea.

...

YANIS VAROUFAKIS: Greece must default, and the logic is very simple: when you have a huge debt buildup and a debt overhang following a financial crisis, it is impossible to repay your debts, even if you are extremely willing to do so, simply by cutting through austerity. Austerity will make the debt crisis worse, always has done, always will do.

POGGIOLI: Varoufakis is outraged by the divisions among the EU partners, and says their policies are just aimed at buying time. They refuse to acknowledge, he says, that the Greek crisis is just a symptom of a much bigger crisis within the European banking system.

VAROUFAKIS: Greece has not been bailed out, all the bailout money goes to the Greek state in order to repay the banks. Well, give it directly to the banks.

POGGIOLI: The contagion has started, says Varoufakis, affecting Italy, Spain, and France. He says this will ultimately force the EU to face the core issue the lack of political and fiscal unity behind the euro, the common currency.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 11:10:59 AM EST
The thrifty northerners should be outraged at their own corrupt governments who are using Greece as a conduit for bailout money to the European banks, destroying Greece in the process.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 11:18:19 AM EST
[ Parent ]

Germans should be pissed off (i) at their politicians for squeezing their wages to create profits for multinationals and their owners, (ii) at their banks for blowing off that money in stupid casino bets in US subprime and Spanish real estate, (iii) at their politicians for bailing out the banks at no political or practical cost to bank managers and bondholders, (iv) at their elites for blaming Greek laziness for the stagnant wages.


Wind power
by Jerome a Paris (etg@eurotrib.com) on Thu Sep 22nd, 2011 at 11:46:51 AM EST
[ Parent ]
We saw the crisis began with German and French banks having 75 billion at least of debt exposure to Greece. given the fact Greece has not yet received the last few tranches (including the almost due 8 billion) of the initial 110 billion loan, we can assume then that there is absolutely no way in heaven that Germany and France have bailed out their banks to the tune of 75 billion. Instead, the drop in exposure to Greece was a gift from OTHER European countries. I think Finland, Austria, Slovakia and Holland realize this.
by Upstate NY on Thu Sep 22nd, 2011 at 11:48:42 AM EST
[ Parent ]
According to the BIS, in march 2001 the exposure was

French banks: Foreign claims: 56.9 billion $
             Public sector:  13.4 billion $
             Banks:           1.6 billion $
             Non-bank private sector: 41.9 billion $

German banks: Foreign claims:  23.7 billion $
             Public sector:   14.1 billion $
             Banks:            2.1 billion $
             Non-bank private sector: 7.6 billion $

Exposure to the public sector combined 27 billion $ or 20.5€.

The exposure of all european banks to the greek public sector is 42.9 bill. $.

http://www.bis.org/statistics/provbstats.pdf

table 9E, page 104.

by IM on Thu Sep 22nd, 2011 at 03:02:59 PM EST
[ Parent ]
March 2011?
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Sep 22nd, 2011 at 03:13:32 PM EST
[ Parent ]
Yes. Newest numbers.
by IM on Thu Sep 22nd, 2011 at 03:26:49 PM EST
[ Parent ]
Yanis Varoufakis: Open letter to the Greek Prime Minister (6 June 2011)
Thus we arrived in May 2010, a juncture where you were ambushed by the most momentous decision any peacetime Prime Minister has had to face hitherto. You know that we disagreed on whether it was the correct decision. It matters little now. They convinced you that the deal you put your signature to was a genuine bailout; a lifejacket offered after a shocking shipwreck for the purposes of allowing the shipwrecked a chance to buy time and find their way, through stormy waters, toward some terra firma. I considered the same `bailout' a massive ball-in-chain, attached to our collective ankles, dragging the whole of the eurozone toward the bottom (surplus and deficit nations alike, North and South bound together in a deathtrap). You chose to follow the advice of your counsellors, and of the captains of finance, judging that the `bailout' was, indeed, buying you precious time. Nevertheless, to the extent that I know you, your decision filled you with angst and sadness.

For months now you knew that the `bailout' was failing because it was in its DNA to fail (and not because it was not followed as best as it could have been by your government). We, economists, as you well know, disagree on almost everything. History has, however, taught us two lessons: (1) You cannot save the bankrupt by means of expensive, new loans; and (2) Swinging austerity cannot and will not reduce the deficits and debts of a macro-economy caught in a savage recession, especially when it is unable to devalue its currency and, to boot, forced to operate in a recessionary global and regional environment. Last year's `bailout' violated both principles. Is it any wonder it failed?

...

At the very end, look into one of the cameras trained in your direction by some member of the audience, the video of which will soon find its way onto youtube; look into its lens and address the German viewer, in English, saying: "It is a scandal of the first degree that you, the hard working German, should be furnishing loans to my government which, tragically, I am forced not to use to reinvigorate our ailing economy but which I am coerced to pay back zombie banks which, fully aware of their awful state, hoard the money, refuse to loan it to business and, thus, end up like black holes that absorb your economic energy at the same time that you Greek counterpart here is suffering with no hope for the future."



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Sep 22nd, 2011 at 11:55:36 AM EST
[ Parent ]
Yanis Varoufakis has become the Greek chorus to this ongoing tragedy.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Sep 23rd, 2011 at 01:13:23 PM EST
[ Parent ]
VAROUFAKIS: Greece has not been bailed out, all the bailout money goes to the Greek state in order to repay the banks. Well, give it directly to the banks.

Obviously Varoufakis is UnSerious© and should be banned from the mass media.


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

by ATinNM on Fri Sep 23rd, 2011 at 01:39:42 PM EST
[ Parent ]
I thought he already had been.
by gk (gk (gk quattro due due sette @gmail.com)) on Fri Sep 23rd, 2011 at 02:26:08 PM EST
[ Parent ]
He has written about how he has been dumped from greek media. No longer interesting. Nothing to see there.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Fri Sep 23rd, 2011 at 04:51:52 PM EST
[ Parent ]
This is in Deutsche Welle, German and Spanish edition. I can't find it in English.

Als Griechenland deutsche Schulden halbierte (23.09.2011)

London 1953: Deutschland verhandelt mit 22 Staaten. Die deutsche Delegation bittet ihre Partner um einen Schuldenerlass. Zu sehr drücken die hohen Verbindlichkeiten aus dem Marshall-Plan und den Reparationen, die noch für den Ersten Weltkrieg zu bezahlen sind.

Die Bitte der Deutschen wird erhört. Die 22 Staaten, unter ihnen Griechenland, erlassen den Deutschen die Hälfte der Schulden. Der Zweite Weltkrieg war erst wenige Jahre zuvor 1945 zu Ende gegangen und für die junge Bundesrepublik Deutschland war der Schuldenschnitt eine große Hilfe, sagt Jürgen Kaiser, Koordinator der Entschuldungsinitiative 'erlassjahr.de': "Deutschland hatte danach eine Schuldendienstquote, die deutlich unter dem lag, was heute Entwicklungsländer oder auch Griechenland bezahlen müssen."

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Seit langem setzt sich die Initiative 'erlassjahr.de', eine Koalition aus mehreren christlichen und entwicklungspolitischen Gruppen, für Insolvenzverfahren ein. Das Londoner Abkommen aus dem Jahr 1953 könnte Vorbild sein, wie man mit überschuldeten Staaten umgeht, findet Jürgen Kaiser von 'erlassjahr.de': "Genau wie während der Schuldenkrise der 1980er und 1990er Jahre viele Dritte-Welt-Länder mit einer solchen Regelung besser gefahren wären als mit den sehr langsamen, häufig wirkungslosen Entschuldungsmechanismen von Weltbank und Internationalem Währungsfonds, genauso könnte das Abkommen heute ein Vorbild für die Situation von Griechenland sein."

De cómo los griegos perdonaron a los alemanes su deuda (24.09.2011)
Londres, 1953: Alemania negocia con 22 países. La delegación germana ruega a sus socios la condonación de su deuda. Además de las obligaciones contraídas por las ayudas del Plan Marshall, tenía préstamos para pagar reparaciones que aún debía de la Primera Guerra Mundial.

La petición es escuchada. Los 22 países -Grecia entre ellos- perdonan a los alemanes la mitad de lo que deben. "Para la joven Alemania, aquel gesto supuso una ayuda enorme", dice Jürgen Kaiser, coordinador de la iniciativa Año para la Condonación de Deuda (Erlassjahr.de): "El interés de su deuda de aquel entonces es comparable con el que hoy tienen que pagar países en desarrollo e incluso la propia Grecia."

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Desde hace tiempo, la iniciativa Erlassjahr.de trata de que se implemente un protocolo de insolvencia. "El Acuerdo de Londres de 1953 podría servir como ejemplo sobre cómo actuar con países con sobreendeudamiento como Grecia", opina Jürgen Kaiser, de Erlassjahr.de. "Durante la crisis de deuda de los años 80 y 90, a muchos países del Tercer Mundo les hubiera ido mejor con un cierto protocolo de actuación, en lugar de con los ineficaces mecanismos del Banco Mundial y del FMI."

When Greece halved Germany's debts
London, 1953: Germany negotiates with 22 countries. The German delegation begs its partners to forgive its debts. In addition to the obligations contracted though Marchall Plan aid, it had loans to pay from WWI war reparations.

The request is heard. The 22 countries, Greece among them, forgive the Germans half of what they owe. "For the young Germany, that gesture was an immense help" says Juergen Kaiser, coordinator of the initiative Year for debt forgiveness (Erlassjahr.de): "The interest on the debt back then is comparable to what developing countries or Greece must pay today."

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For some time, the Enlassjahr.de initiative is trying to get an insolvency protocol established. "The 1953 London agreement could serve as a model on how to act on overindebted countries such as Greece", says Juergen Kaiser of Erlassjahr.de. "During the debt crisis of the 1980s and 90s, many Third World countries would have been much better off with a given action protocol, rather than the ineffectual mechanisms of the World Bank and IMF."



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Sun Sep 25th, 2011 at 04:08:30 AM EST
Worth diarying and fornt paging?

Wind power
by Jerome a Paris (etg@eurotrib.com) on Sun Sep 25th, 2011 at 07:05:03 AM EST
[ Parent ]
Maybe, along with Varoufakis' take on the Marshall Plan and the Euro.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Sun Sep 25th, 2011 at 09:04:28 AM EST
[ Parent ]
why isn't this front page on the national press of all euro nations?

how short the public's memory! how clueless the choice of institutional solutions till now...

'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 Sun Sep 25th, 2011 at 07:36:54 AM EST
[ Parent ]
Oh, but it has been all over the place:

Comment is Free: Germany owes Greece a debt: Germany's ducking of the war reparations issue makes its attitude to the current Greek debt crisis somewhat hypocritical (Albrecht Ritschl, 21 June 2011)

What is truly strange, however, is the brevity of Germany's collective memory. For during much of the 20th century, the situation was radically different: after the first world war and again after the second world war, Germany was the world's largest debtor, and in both cases owed its economic recovery to large-scale debt relief.

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Having footed the resulting massive bill, after the second world war the Americans imposed the London debt agreement of 1953 on their allies, an exercise in debt forgiveness to Germany on the most generous terms. West Germany's economic miracle, the stability of the deutschmark and the favourable state of its public finances were all owed to this massive haircut. But it put Germany's creditors at a disadvantage, leaving it to them to cope with the financial aftermath of the German occupation.

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It may or may not have been wise to put the issue of reparations and other unsettled claims on Germany to rest after 1990. Back then, the Germans argued that any plausible bill would exceed the country's resources, and that continued financial co-operation in Europe instead would be infinitely more preferable. They may have had a point. But now is the time for Germany to deliver on the promise, act wisely and keep the bull away from the china shop.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Sun Sep 25th, 2011 at 09:10:55 AM EST
[ Parent ]


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