When the essentially powerless fight the powerful, it is usually very easy to find something about their tactics to criticize. In the case of Greece, the flaw in their tactics is their unwillingness to cut themselves free from the Euro—an instrument designed from day one to put them in bondage. And yet the only way to escape the bondage is jettison the Euro.
It will be very interesting to see if Greece finds itself outside the EU. Even more interesting will be the question—did they leave or were they pushed? The articles below seem to argue that because of considerations more important than the desires of the creditor classes (WHAT? you mean there ARE considerations more important than what the rentier classes want?) Greece will NOT be forced out of the Euro zone. These include the strategic location of Greek ports in the Easter Mediterranean, the possibility of a transit corridor for Russian natgas, and probably most importantly, the positive example Greece would provide if it thrived economically outside the Eurozone.
So the Creditor classes will try all their tricks to keep Greece inside the club—but subject to humiliating and debilitating rules. The most obvious, and the one that has worked in so many corners of the world, is to install a new government of puppets willing to sign anything the creditors demand. There always seem to be an unending supply of enthusiastic puppets willing to sell out their country's economic interests for a small cut of the action. But once in a while, people become so desperate, that even this trick doesn't work. The Syriza government has roughly a 66% approval rating—mostly for standing up to the creditors. Toppling these folks will be harder than it looks.
Greek debt crisis is the Iraq War of finance
Guardians of financial stability are deliberately provoking a bank run and endangering Europe's system in their zeal to force Greece to its knees
By Ambrose Evans-Pritchard 19 Jun 2015
Rarely in modern times have we witnessed such a display of petulance and bad judgment by those supposed to be in charge of global financial stability, and by those who set the tone for the Western world.
The spectacle is astonishing. The European Central Bank, the EMU bail-out fund, and the International Monetary Fund, among others, are lashing out in fury against an elected government that refuses to do what it is told. They entirely duck their own responsibility for five years of policy blunders that have led to this impasse.
They want to see these rebel Klephts hanged from the columns of the Parthenon – or impaled as Ottoman forces preferred, deeming them bandits - even if they degrade their own institutions in the process.
If we want to date the moment when the Atlantic liberal order lost its authority – and when the European Project ceased to be a motivating historic force – this may well be it. In a sense, the Greek crisis is the financial equivalent of the Iraq War, totemic for the Left, and for Souverainistes on the Right, and replete with its own “sexed up” dossiers.
Does anybody dispute that the ECB – via the Bank of Greece - is actively inciting a bank run in a country where it is also the banking regulator. In this it has succeeded. The latest data suggests that deposit flight from Greek banks has jumped from €400m a day to nearer €1.5bn.
The guardian of financial stability is consciously and deliberately accelerating a financial crisis in an EMU member - with possible risks of pan-EMU and broader global contagion – as a negotiating tactic to force Greece to the table.
I leave it to lawyers to decide whether this is a prima facie violation of the ECB’s primary duty under the EU treaties. It is certainly unusual. The ECB has just had to increase emergency liquidity to the Greek banks by €3bn (enough to last to Monday night) to offset the damage.
In its report, the Bank of Greece claimed that failure to capitulate to creditor demands would “most likely” lead to the country’s ejection from the European Union. Let us be clear about the meaning of this. It is not the expression of an opinion. It is a threat by the ECB to throw the Greeks out of the EU if they resist.
This is not the first time that the ECB has strayed far from its mandate. It forced the Irish state to make good the claims of junior bondholders of Anglo-Irish Bank, saddling Irish taxpayers with extra debt equal to 20pc of GDP.
This was done purely in order to save the European banking system at a time when the ECB was refusing to do the job itself, betraying the primary task of a central bank to act as a lender of last resort.
It sent secret letters to the elected leaders of Spain and Italy in August 2011 demanding detailed changes to internal laws for which it had no mandate or technical competence, even meddling in neuralgic issues of labour law that had previously led to the assassination to two Italian officials by the Red Brigades. It demanded changes to the Spanish constitution.
When Italy’s Silvio Berlusconi balked, the ECB switched off bond purchases, driving 10-year yields to 7.5pc. He was forced him from office in a back-room coup d’etat, albeit one legitimised by the ageing ex-Stanlinist EU fanatic who then happened to be president of Italy.
Lest we forget, it parachuted in its vice-president – Lucas Papademos – to take over Greece when premier George Papandreou merely suggested that he might submit the EMU bail-out package to a referendum, a wise idea in retrospect. That makes two coups d’etat. Now they are angling for a third.
The creditor power structure has lost its way. The IMF is in confusion. It is enforcing a contractionary austerity policy in Greece – with no debt relief, exchange cushion, or offsetting investment - that has been discredited by its own elite research department as scientifically unsound.
The Fund’s culpability in this fiasco is by now well known. As I argued last week, its own internal documents show that the original bail-out in 2010 was designed to rescue the EMU banking system and monetary union at a time when it had no defences against contagion. Greece was sacrificed.
One should have thought that the IMF would wish to lower the political temperature, given that its own credibility and long-term survival are at stake. But no, Christine Lagarde has upped the political ante by stating that Greece will not be accorded the IMF’s standard 30-day grace period if it misses a €1.6bn payment to the Fund on June 30. Default will be immediate.
Klaus Regling, head of the eurozone bail-out fund (EFSF), entered on cue to hint strongly that his organisation would trigger cross-default clauses on its Greek bonds – 45pc of the Greek package – even though there is no necessary reason why it should do so. It is a discretionary matter for the EFSF board.
He seems to be threatening an EFSF default, even though the Greeks themselves are not doing so, a remarkable state of affairs.
It is obvious what is happening. The creditors are acting in concert. Instead of stopping to reflect for one moment on the deeper wisdom of their strategy, they are doubling down mechanically, appearing to assume that terror tactics will cow the Greeks at the twelfth hour.
Personally, I am a Burkean conservative with free market views. Ideologically, Syriza is not my cup tea. One has a soft-spot for democracy – and we don’t care for monetary juntas – even if it leads to the election of a radical-Left government.
As it happens, Edmund Burke would have found the plans presented to the Eurogroup last night by finance minister Yanis Varoufakis to be rational, reasonable, fair, and proportionate. They include a debt swap from the ECB bonds coming due to bail-out bonds with longer maturities and lower interest rates, reflecting the market borrowing cost of the creditors.
Syriza said from the outset that it was eager to work with on market reforms with the OECD, the leading authority. It wants to team up with the International Labour Organisation on Scandinavian style flexi-security and labour reforms, a valid alternative to the German-style Hartz IV reforms that have impoverished the bottom fifth of German society and which no Left-wing movement can stomach.
It wished to push through a more radical overhaul of the Greek state that anything yet done under five years of Troika rule – and much has been done, to be fair.
As Mr Varoufakis told Die Zeit: “Why does a kilometer of freeway cost three times as much where we are as it does in Germany? Because we’re dealing with a system of cronyism and corruption. That’s what we have to tackle. But, instead, we’re debating pharmacy opening times,” he said.
The Troika pushed privatisation of profitable state assets at knock-down depression prices to private monopolies, to the benefit of an entrenched elite. To call that reforms invites a bitter cynicism.
The only reason that the Troika pushed this policy was in order to extract money. It was acting at a debt collector. “The reforms were a smokescreen. Whenever I tried talking about proposals, they were bored. I could see it in their body language," Mr Varoufakis told me.
The truth is that the creditor power structure never even looked at the Greek proposals. They never entertained the possibility of tearing up their own stale, discredited, legalistic, fatuous Troika script.
The decision was made from the outset to demand strict enforcement of the terms agreed in the original Memorandum, which even the last conservative pro-Troika government was unable to implement, regardless of whether it make any sense, or actually increases the chance that Germany and other lenders will recoup their money.
At best, it is bureaucratic inertia, a prime exhibit of why the EU has become unworkable, almost genetically incapable of recognising and correcting its own errors.
At worst, its nasty, bullying, insistence on ritual capitulation for the sake of it.
We all know the argument. The EU is worried about political “moral hazard”, about what Podemos might achieve in Spain, or the eurosceptics in Italy, or the Front National in France, if Syriza is seen buck the system and get away with it.
But do the proponents of this establishment view – and one hears it a lot – really think that Podemos can be defeated by crushing Syriza, or that they can discourage Marine Le Pen by violating the sovereignty and sensibilities of a nation?
Do they think that the EU’s ever declining hold on the loyalty of Europe’s youth can be reversed by creating a martyr state on the Left. Do they not realize that this is their own Guatemala, the radical experiment of Jacobo Arbenz that was extinguished by the CIA in 1954, only to set off the Cuban revolution and thirty years of guerrilla warfare across Latin America? Don’t these lawyers – and yes they are almost all lawyers - ever look beyond their noses?
The Versailles victors assumed reflexively that they had the full weight of moral authority on their side when they imposed their Carthiginian settlement on a defeated Germany in 1919 and demanded the payment of debts that they themselves invented. History judged otherwise. more
Germany is bluffing on Greece
Berlin is not going to force Athens out of the eurozone anytime soon
by Mark Weisbrot June 12, 2015
You can ignore all the talk of a “Grexit,” the bluff and bluster of right-wing German ideologues such as Finance Minister Wolfgang Schäuble who would celebrate it, and repetitive, stubbornly dire warnings that time is running out. Did you notice that the much-hyped June 5 deadline for the Greece’s payment to the International Monetary Fund (IMF) came and went, Greece didn’t pay and nobody fell off a cliff? Trust me, this is not a cliffhanger.
Although there have been numerous references to game theory in the ongoing commentary, it’s really not necessary if you look at the revealed preferences of those whom the Syriza government is polite and diplomatic enough to call its European partners. Take partner-in-chief German Chancellor Angela Merkel: If there’s one thing she doesn’t want to be remembered as, it’s the politician who destroyed the eurozone.
Of course, we don’t know if a Greek exit would do that, but there’s a chance that it could. Even if the European Central Bank would be able to contain the resulting financial crisis, it is possible that Greece would, after an initial shock, ultimately do much better outside the euro, which might convince others to want to leave. Whatever the probability of that scenario, Merkel is, like most successful politicians, a risk-averse creature who won’t roll those dice.
And there is an elephant in the room that she is not going to ignore: the United States. There are scattered press reports that Barack Obama’s administration has put pressure on Merkel to reach an agreement with Greece, but the importance of that has been vastly understated. Unless it is a request that could get a German government voted out of office — such as George W. Bush’s bid for support of his invasion of Iraq in 2003 — something that is strategically important to Washington is extremely likely to find agreement in Berlin. And in this case, Merkel and Obama are basically on the same page.
The politics of empire are much more important than any economic concerns here. For the same reasons that the United States intervened in Greece’s civil war (1946 to ’49) and supported the brutal military dictatorship (1967 to ’74) — with all the murder, torture and repression that these involved — Washington does not want to have an independent government in Greece.
Europe is the United States’ most important ally in the world, and Washington doesn’t want to lose even a small piece of it, even little Greece. Everybody knows that if Greece leaves the euro and needs to borrow hard currency for its balance of payments, it will get some from Russia and maybe even China. Greece could leave NATO. Greece could participate in Russia’s proposed gas pipeline project, which would make Europe more dependent on Russia — something that American officials warned against, drawing a sharp rebuke from Greece’s energy minister, who rightfully told them it was none of their business.
It would be nice to think that the worst features of U.S. foreign policy have changed since the collapse of the Soviet Union, but they have not. The Cold War never really ended, at least insofar as the U.S. is still a global empire and wants every government to put Washington’s interests ahead of those expressed by its own voters. The current hostilities with Russia add a sense of déjà vu, but they are mainly an added excuse for what would be U.S. policy in any case.
The people primarily responsible for Greece’s deep and prolonged depression and high unemployment are pushing policies that would extend the crisis and worsen its impact on those who have suffered the most.
Once we take all these interests into account and where they converge, the strategy of Greece’s European partners is pretty clear: It’s all about regime change. One senior Greek official involved in the negotiations referred to it as a “slow-motion coup d’état.” And those who were paying attention could see this from the beginning. Just 10 days after Syriza was elected, as I noted previously, the European Central Bank cut off its main line of credit to Greece and then capped the amount that Greek banks could lend to the government. All the hype and brinkmanship destabilize the economy, and some of this is an intentional effect of European authorities’ statements and threats. But the direct sabotage of the Greek economy is most important, and it is remarkable that it has gotten so little attention.
The unannounced objective is to undermine political support for the Syriza government until it falls and get a new regime that is preferable to the European partners and the U.S. This is the only strategy that makes sense, from their point of view. They will try to give Greece enough oxygen to avoid default and exit, which they really don’t want, but not enough for an economic recovery, which they also don’t want.
So far, the damage to the Greek economy has been quite significant. The IMF projected growth of 2.5 percent this year, and now the economy is in recession.
According to leaked documents published by The Financial Times on June 5, the European officials’ negotiating position is a primary budget surplus of 1 percent of GDP in 2015 and 2 percent of GDP in 2016. This represents a climb down from the ridiculous goals that the IMF previously put forth, which called for primary surpluses at “above 4 percent of GDP” for “many years to come.” But with the economy in recession and the current primary surplus at negative 0.67 percent of GDP, the current proposed targets would stifle Greece’s recovery, perhaps even prolong the recession and maintain depression levels of unemployment.
Another sticking point in the current negotiations has to do with debt relief. Even the IMF now recognizes that Greece’s current debt burden is unsustainable, but the European officials are not budging. This pretty much guarantees more crises down the road, which is a major drag on recovery. Who wants to invest or even consume very much with inevitable financial crises on the horizon?
The European officials’ demand for further pension cuts is even more difficult to justify, given what Greece has already done. Besides raising the retirement age by five years (from 60 to 65), The Financial Times reports, “main pensions have been slashed 44 to 48 percent since 2010, reducing the average pension to 700 euros a month … About 45 percent of Greek pensioners receive less than 665 euros monthly — below the official poverty threshold.”
European officials are making more demands for labor law reform, on the dubious theory that further weakening labor’s bargaining power and driving down wages (as if 26.6 percent unemployment doesn’t do that enough) will increase competitiveness enough to spur an export-led recovery.
So we see the ugliest of scenarios playing out: The people primarily responsible for Greece’s deep and prolonged depression and high unemployment are pushing policies that would extend the crisis and worsen its impact on those who have suffered the most — not to mention subvert the will of the electorate.
So far, the government is hanging in there, with the latest polls showing Tsipras’ approval rating at 66 percent. It’s impressive that so many Greeks still understand who is responsible for the crisis, in spite of the balance of media prejudice against the government. It’s vitally important, because Greece’s adversaries are counting on being able to deceive them. more
Why America will never let Greece leave the Eurozone. Merkel will fold like origami to Greek demands
The United States does not want Greece to leave the Eurozone fearing it may then establish new close economic ties with Russia and China. Merkel and Tusk have been ordered by Washington to make a deal.
By Alexrpt Jun 21, 2015
When it comes to Europe, Germany calls the shots. When it comes to Germany, America calls the shots.
The UK…well they do anything America tells them to do, and France’s Hollande is weak beyond all measures.
It all comes down to what America wants for the EU, and when push comes to shove on Monday, Merkel will fold like origami to Greek demands because she knows what her daddy wants…and that is for Greece to stay firmly put in the EU structure.
The US could care less about debt. Washington sees this as a geopolitical issue. Even the slightest risk of having Greece seek closer relations with Russia and China, due to a new found independence and sovereignty, is a no go.
America’s number one EU stooge, Donald Tusk, has called for a special meeting of EU leaders this Monday to hammer out a deal. Tusk has been given his marching orders from D.C. Merkel, if not already, will surely get her orders before Monday’s get together…‘keep Greece inside the EU.’
Via Sputnik News Agency…
Center for Economic and Policy Research Co-Director Mark Weisbrot argued if Greece leaves the Eurozone, it could borrow from Russia and China, and moreover, would follow an independent foreign policy.
“The United States does not want this,” Weisbrot said.
The fear Greece will go rogue is shared by policymakers on both sides of the Atlantic, Weisbrot argued.
“The European [Union] (EU) authorities do not really have a credible threat when they say that they will cut off credit to Greece if the government does not do what they want,” he added.
Jon Utley, publisher of The American Conservative magazine and a prominent antiwar activist, told Sputnik the German government also feared that Greece could draw closer to Russia and China if it pulled out of the Eurozone and eventually left the 27-nation EU bloc.
“The Germans will save Greece in the end because they don’t dare face the consequences of the crumbling of the European Union,” Utley said.
EU policymakers fear that Greece’s radical left-wing government, led by the Syriza Party, could make common cause with other nations not in the EU and US spheres of influence, Utley added.
“The result is that the European authorities are deliberately sabotaging the Greek economy, and have pushed it into recession, in order to undermine support for the Syriza government,” Utley argued.
“The [EU] strategy is ‘regime change,’ to get another government that will do what they want,” he noted.
However the current Greek crisis plays out, the EU’s structural economic woes will continue and accelerate the shift of economic and strategic global power to the east, Institute for Economic Affairs Deputy Editorial Director Richard Wellings told Sputnik from London.
“Europe’s got some very deep fundamental problems, particularly an aging population, a lack of competitiveness due to high taxes and regulation,” Wellings said.
“This is just going to reinforce Europe’s deep-seated problems and it’s very rapid relative decline and the shift of the global economic core towards the Far East.”
Weisbrot, however, noted that “70 years of history all point in the same direction.”
The United States and its European allies remain determined to keep Greece within their sphere of influence, he maintained. more
No comments:
Post a Comment