Thursday, May 24, 2012

Greece tries democracy (again)

The situation in Greece grows worse by the day.  And in the middle of this catastrophe, they are supposed to select a government.  Unfortunately, electing someone new with no viable options isn't going to solve much.  What's more, the Greeks know it.  So here we have stories about the newcomer who looks set to get the chance to form a new government.  His precarious situation is shown by the fact that his assessment of the problems he faces is actually pretty good but his proposed "solutions?"—not so much.  The ONE thing he has going for him is that saner heads KNOW that a Greek exit from the Euro will trigger an economic catastrophe.

Alexis Tsipras warns Greek crisis is also Europe's

Greece's leftwing leader tells Paris audience that other EU countries will be next if they fail to oppose radical austerity drive, 21 May 2012

The rising star of Europe Alexis Tsipras, the radical left Greek leader, has arrived in Paris to warn EU countries that their turn would come if they failed to oppose the radical austerity that is driving Greece to the brink of "collective suicide".

Tsipras, who is leading an austerity-backlash, said the future of Europe and the euro depended on the outcome of the Greece debt crisis. And he said he could feel a "wind of change" blowing across the continent that he hoped would lead to the "complete re-founding of Europe based on social cohesion and solidarity".

To continue down the path of austerity, he warned, would turn the Greek tragedy into an European catastrophe.

"Greece is a link in a chain. If it breaks it is not just the link that is broken but the whole chain. What people have to understand is that the Greek crisis concerns not just Greece but all European people so a common European solution has to be found," he told a press conference in Paris.

"The public debt crisis is hitting the south of Europe but it will soon hit central Europe. People have to realise that their own country could be threatened.

"We are here to explain to people in Europe that we have nothing against them. We are fighting the battle in Greece not just for the Greek people but for people in France, Germany and all European countries."

"I am not here to blackmail, I am here to mobilise," he said.

"Greece gave humanity democracy and today the Greek people will bring democracy back to Europe."

Opinion polls suggest Tsipras's party Syriza could be in a position to lead a coalition government in Greece after a second general election next month. He was in the French capital to meet members of France's far left, including Front de Gauche firebrand Jean-Luc Mélenchon, who stood as a presidential candidate in April.

The young and charismatic Greek politician will travel to Berlin to reiterate his message; this is that Greece wants no more austerity and is willing to tear up the country's €130bn (£105bn) bailout agreement if necessary.

His defiance appears to be catching. Before Greece held a general election on 6 May, the 37 year old and his Syriza party were widely mocked as a motley collection of ex-Trotskyists, Maoists, champagne socialists and greens, who appealed to fewer than 5% of voters. After polling more than 25%, the Greeks and the rest of Europe have been forced to take him and his party seriously. more
The German public most certainly does not want to pay for the economic sins of the Greeks.  Hence the hectoring tone of this piece from Der Spielgel.
'Sick Conditions'

Why Greeks Will Vote for Tsipras

By Julia Amalia Heyer  05/21/2012

Greeks have spurned the politicians who represent the country's broken system, and many are now following rising star Alexis Tsipras. The radical left-wing politician has pledged to free Greece from painful austerity measures while keeping the euro, but no one knows how he plans to fulfill his promises.

Alexis Tsipras, the man who will very likely emerge again as the winner of the upcoming Greek parliamentary election, is campaigning throughout the country primarily under one slogan: "We won't pay any more."

He doesn't say what would replace the "barbarism of the austerity dictates," which he maintains that the European Union partners, above all German Chancellor Angela Merkel, have forced upon his country. He argues that the Europeans are only bluffing -- and he promises that they will continue to help, even if the Greeks no longer service their debts. He says: Elect me and all this misery will come to an end.

Stavros Lygeros, 59, is sitting in a café in the posh Athens neighborhood Neo Psychiko. Lygeros is a political commentator and a bourgeois intellectual. He's endeavoring to explain why the Greeks are following Tsipras in droves, although this young politician is clearly a seductive new star and his successful radical left-wing Radical Left Coalition (Syriza) cannot explain who will pay the future salaries of civil servants, doctors and nurses. Lygeros says that many Syriza voters don't even believe that this party has a solution.

The tragedy is that Greeks don't really have a choice when they return to the polls on June 17 -- their only option is refusal and protest. Suddenly all of Europe is demanding that they vote once again for, of all people, the very politicians who brought them all this misery in the first place, namely the socialists under Evangelos Venizelos and the conservatives under Antonis Samaras.

Because the discredited parties stand for the loan agreement and the conditions laid down by the lenders, many Greeks see Tsipras as their only alternative. At 37, he is young compared to the usual gerontocrats who dominate Greek politics. With an annual income last year of €48,000 ($61,000), a motorcycle and a modest apartment, he's fairly poor for a politician, which is yet another factor that fuels his popularity among voters. And he's the only one who promises to free Greece from the yoke of the austerity measures -- yet retain the euro.

Up until the crisis, Greek politics was governed by an "unwritten social contract," says Lygeros, author of the bestselling book "From Kleptocracy to Bankruptcy," which deals with Greece's economic collapse. According to Lygeros, this contract was based on giving and taking. Voters left the politicians alone. They didn't complain about waste and corruption and, in return, were rewarded by the two alternating main governing parties with public service jobs and waves of new social services.

The crisis has brought this tacit agreement to an end and the social contract has collapsed, says Lygeros. Now, there is no longer any money for either side. According to Lygeros, today's dilemma is that "the old kleptocratic system, which created these sick conditions" is bankrupt in the truest sense of the word, yet there is still no new one to replace it. At the same time, he notes that the troika consisting of the European Commission, the European Central Bank and the International Monetary Fund has lost all credibility because it has so visibly allied itself with the ruling class, which has long since been discredited.

Thus, a politician doesn't have to be a demagogic genius to harness the enormous discontent among the population, as Tsipras is currently doing. And Chancellor Merkel's alleged proposal that Greece hold a referendum on its membership in the euro zone only makes life easier for the left-wing candidate. She's treating Greece "like a protectorate," he says. more
Again a story from the Germans—this time Deutsche Welle.  Note the agreement that what has been tried is a massive failure.  Note the lack of alternative.  Folks still believe that if you tinker with the process, you are going to have a better outcome.  I have noticed that this rarely works but that doesn't stop folks from believing in a process "solution."

'The program that has been used in Greece has failed'

The head of Greece's left-wing alliance Syriza, Alexis Tsipras, wants to take the reins in Athens and end the austerity program after elections in June. He told DW that EU's policies so far have failed.

Alexis Tsipras is head of Greece's radical left-wing alliance, Syriza, which came second in the May 6 elections. His party is hoping to take over after fresh elections in June, when he has vowed to reject austerity measures and work towards growth and justice instead.

DW: Various heads of government in the eurozone insist that Greece must stick to the agreements which were the conditions under which it received the loans. If you were to be in a position to form a government, how would you justify approaching them and demanding new negotiations?

Alexis Tsipras: The cornerstone of European politics is democracy, not austerity. We should all respect that. If a people corrects defective policies by means of an election, the partners in the agreement have to sit down with the people's new representatives - in this case, those of the Greek people - and examine what went wrong. The mistake should be corrected and things put back on track. The way the conservative - or rather, the leading powers in Europe are reacting to the Greek people's cry for help is tainted with guilt, because they're not prepared to accept that they have made a mistake.

DW: But who do you want to negotiate with in Europe if they all stick by what they have said and refuse to enter into new negotiations?

AT: I know that the political forces that govern Europe today are either neo-liberal, conservative, or social-democratic. However, I know of no European agreement that forbids other political forces to come to power. So if the Greek people vote us into power, all the European partners - regardless of whether they agree with us politically to us or not - will have to accept this decision. They will have to accept us as the new government of the Greek people and not as a political force they don't agree with.

DW: To what extent are you prepared to compromise on the issue of the conditions of credit?

AT: We are ready to go to the absolute limit in order to assert the rights of the Greek people. We are not demanding anything absurd if we ask our partners to compromise. The program that has been used in Greece has failed.

We are turning to the German people, the German taxpayers, and asking them: for how long have you been throwing your money into a bottomless pit? You can't constantly keep investing in an ineffective program, because if that continues, in a few months Greece is going to need a third package of loans and second debt cut. As I say, we are not claiming anything absurd. What is absurd is when the European governments persist with their mistake. The mistake has to be corrected. more
And here we see Robert Kuttner at least LIST some of the elements of a non-catastrophic outcome.  He also suggests that only two have a chance of being implemented.

Which Way for Europe?

Robert Kuttner 05/20/2012

PARIS -- The good news: Austerity is finally on the defensive. At the Camp David G-8 summit, all the other national leaders pressed German Chancellor Angela Merkel to relent and to allow Europe's ravaged economy to grow.

The bad news: The shift is mainly at the level of rhetoric and token policy changes. Nobody in the political mainstream is seriously proposing the kind of radical reform that would allow growth to occur.

Two weeks of interviews with progressive leaders in Europe -- academics, the left wing of labor and social democratic parties, NGO groups -- suggest a remarkable consensus on what needs to be done. You can see it in any of several manifestos from groups like Social Europe, the European Trade Union Confederation,Re-Define, Foundation for European Progressive Studies, Finance Watch, the British group Compass, among several others.

The elements:
  • Drastic debt relief for Greece, so that the Greek economy can begin to grow again, coupled with real tax reform in Greece so that wealthy Greeks begin paying taxes owed. This means cancelling a lot of the Greek debt. Yes, the previous Greek government cooked its books, but do you think the government of East Germany didn't? Yet that didn't prevent the West German government from pumping about a trillion dollars into the former communist state. Oh, but these people were Germans, not Greeks.
  • A makeover of the European Central Bank, so that it can lend directly to European countries, rather than using a subterfuge of low interest rate loans to Europe's commercial banks, which in turn buy government bonds. The problem with the present policy is that it is a house of cards that puts banks more deeply in debt.
  • Radical constraints on financial speculation, so that hedge funds and banks stop speculating against the bonds of weak countries and start financing the real economy. A combination of regulation and a financial transaction tax could achieve this.
  • Mutualization of sovereign debt through Euro bonds, so that weak countries are not made to pay exorbitant interest rates to finance crushing debt. This would also take a lot of the profit out of speculation. The behavior of money markets in the European depression is pro-cyclical -- it piles on vulnerable countries and deepens the slump. Government policy needs to be counter-cyclical.
  • Massive public investment financed at the European level, to improve green infrastructure and create jobs. This is a "supply-side" as well as a "demand-side" program. It improves productivity even as it boosts purchasing power
  • Suspension of the deficit reduction clause in the Stability and Growth Pact that requires EU member countries to move towards deficit reduction in a deep recession. The pact, in fact, has just such an escape provision, allowing countries to exceed the debt and deficit limits of Europe's Maastricht Treaty, which created the European Union, when they face an economic emergency. But Chancellor Merkel and the European Central Bank have been behaving as if that clause didn't exist, putting pressure on Greece, France, Italy and Spain to cut deficits in a deep slump.
The rhetoric has changed, but how many of these radical policy changes are seriously on the table?

Perhaps two.

European leaders are now talking seriously about cobbling together an investment program of as much as 200 billion euros, using mainly unused regional development funds. The funds haven't been used because peripheral countries such as Greece, Portugal, Spain and Ireland are under such pressure from the same EU to cut spending that they can't come up with the necessary national matching funds. These investment funds though not large enough to pull Europe out of its incipient depression; but if targeted at small countries, they could make a constructive difference.

There is also serious talk, belatedly, about suspending the austerity provisions in the EU's 1997 Stablity and Growth Pact, as embellished by the austerity compact agreed to by 25 European governments last December.

But because of the general conservatism of most European leaders, there is no agreement on the more radical and necessary measures.

There is little support for Euro-bonds, little support for converting the ECB to a true central bank, and not quite enough support for a financial transactions tax. more

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