More on the Greeks Germans

Eduardo Porter, business columnist at the NY Times, is only the latest to point out the forgotten half of the German-Greek crisis.  Germany is insisting that Greek pay-up or get out, forgetting that the world was far kinder to the Germans on at least two occasions  in the last hundred years.

Major debt overhangs are only solved after deep write-downs of the debt’s face value. The longer it takes for the debt to be cut, the bigger the necessary write-down will turn out to be.

Nobody should understand this better than the Germans. It’s not just that they benefited from the deal in 1953, which underpinned Germany’s postwar economic miracle. Twenty years earlier, Germany defaulted on its debts from World War I, after undergoing a bout of hyperinflation and economic depression that helped usher Hitler to power.

Greeks Off the Cliff

So the Greeks have voted NO to accepting more austerity as the price of more loans from the Big 3 European banking institutions.  At least most Greeks.

The final results of Greece’s bailout referendum are in, with all 19,159 precincts reporting. The “No” side won with a higher than expected 61.31 percent, while “Yes” got 38.69 percent.

A total of 6.16 million Greeks voted in Sunday’s referendum, or 62.5 percent of eligible voters. The poll needed a minimum 40 percent turnout to be valid.

As usual, one has to wonder about the 37.5% who chose not to vote, in perhaps the most direct and pressing question any electorate has ever been asked to vote on.

What happens next is not at all clear, though certainly more negotiations will take place between the Greek government, their creditors and at least one of the 3 banks, the IMF.  If that fails, as would seem likely, bankruptcy will be declared, ties will be severed between the Eurozone and Greece, and somehow a new currency will be put in place.  One hopes smart people are at least at the drawing boards for that.

It seems to me that in calculations and negotiations not all the externalities are factored in.  One easy postulate for Germany and France, for example, it that a severe weakening of Greece and its economy would make its shores the destination of choice for migrants from the Middle East. Certainly, Turkey, Greece’s near neighbor and once-upon-a-time applicant to join the Eurozone, will be having second thoughts, if only because of the bad management of the whole slow growing crisis.

Not only that, but as with drunk driving charges only being brought against the drinker and not the salesman behind the bar, most of the opprobrium has been directed against Greek pensioners. Here’s a counter-view by an investment banker.

The northern Europeans … were outright enablers of Greek excess. Not only did they aggressively seek to provide loans to Greece during the bubble era (through their private banking sectors and the bond markets), but in what can only be seen historically as a panicked response to preserve the euro system, the euro group (through the European Central Bank and its individual country central banks), together with the International Monetary Fund, bailed out European banks and the bond market by socializing Greece’s bad debt and placing taxpayers throughout the euro zone at risk of sharing the losses thereon.

Paul Krugman has also been a strong opponent of the austerity hawks in Europe, and today repeats his belief that Greece exit from the Euro currency may be better than staying in.

The truth is that Europe’s self-styled technocrats are like medieval doctors who insisted on bleeding their patients — and when their treatment made the patients sicker, demanded even more bleeding.

Though it’s a lot to ask, I know, I hope the analysts and scholars are hard at work figuring out how it came to this.  When is lending bad policy? How is any group of people rescued from bad luck + bad decisions+ co-dependency with others?  How can improvident loans be identified and those who made them be recipients of the largest ‘hair cuts?” Given the data banks of information of economies rising and falling, how can better predictions be made?  A surplus of questions is swirling, even with a drought of wisdom.

How this might affect “us” depends of course on who “us” is.  If us is drawn narrowly to be our close family, perhaps not too much — some fear of stock market gyrations and uncertainty.  If us is instead, we the people of the world, some of us have been suffering outside their share of human misery already, and may suffer more.

Bernie Sanders has called on the U.S. to understand the problem in also ours, as I’ve wondered for months why it has seemed to be only a German-Greek fight.

“It is unacceptable that the International Monetary Fund and European policymakers have refused to work with the Greek government on a sensible plan to improve its economy and pay back its debt,” Sanders said in an exclusive statement to The Huffington Post. “At a time of grotesque wealth inequality, the pensions of the people in Greece should not be cut even further to pay back some of the largest banks and wealthiest financiers in the world.”

All the best to the Greek people, one of whomcalled yesterday, elated by the vote but completely unsure how he or the country was going to make it through the next year.


If you really want to get down in the weeds about Germany’s claim to the moral high-ground over indebtedness, here are two interesting articles by Eric Toussaint: #1 Greece-Germany: who owes who? (1) London 1953: cancellation of the German debt and #2 Creditors are protected, the people of Greece sacrificed

Greece: Confronting the Far Right

“On Tuesday, officers raided three police stations on the outskirts of Athens. The sweep came a day after the government replaced seven senior police officials — including the chiefs of special forces, internal security, organized crime and the explosives unit — to ensure the investigation [into Golden Dawn and the murder of Pavlos Fyssas,]  would take place with “absolute objectivity.” In addition, two top members of the Greek police force resigned abruptly Monday, citing “personal reasons.”

“Such steps have the potential for volatile repercussions in a country where the security forces have had links to far-right organizations at various points since the end of World War II. They are likely to test the determination of the government and the public to turn back the influence of Golden Dawn, which has climbed steadily in opinion polls in the past year and has 18 of its members in Parliament.

NY Times


Immigrant Hatred: Greece

Immigrant hating is often the first card played when the right-wing comes to sit at the table, so Greece isn’t particularly different from other countries around the globe.  What is amazing is that Greeks have been the immigrants par-excellence, all over the Mediterranean and Asia-Minor for centuries; tens of centuries.  Greek colonies around the Black Sea, Greeks along the Turquoise Coast in (now) Turkey; Greeks in Antioch the fabulous Egyptian city.  I’m sure there were incidents when locals didn’t welcome them, beat them or burned their shops, but thrive they did, grew and prospered, raised their children who spoke the local languages and yet remained Greeks.  How nice it would be were History a better teacher.

ATHENS — A week after an extremist right-wing party gained an electoral foothold in Greece’s Parliament earlier this summer, 50 of its members riding motorbikes and armed with heavy wooden poles roared through Nikaia, a gritty suburb west of here, to telegraph their new power.

As townspeople watched, several of them said in interviews, the men careened around the main square, some brandishing shields emblazoned with swastikalike symbols, and delivered an ultimatum to immigrants whose businesses have catered to Nikaia’s Greeks for nearly a decade.

“They said: ‘You’re the cause of Greece’s problems. You have seven days to close or we’ll burn your shop — and we’ll burn you,’ ” said Mohammed Irfan, a legal Pakistani immigrant who owns a hair salon and two other stores.

NY Times

and for more on the appearance of Greek Fascists, see Spyros Marchetos in the Guardian

Fascists did not suddenly multiply in Greece. Rather, extreme right ideas and values gradually permeated public consciousness, and became mainstream in the last 20 years. Then the troika (of the European commission, European Central Bank and the IMF) imposed measures of violent pauperisation, and even created widespread perceptions of decay and victimisation, and feelings of national persecution and humiliation. All these, as the US historian Robert Paxton argues in his magisterial Anatomy of Fascism, help fascism rise. Finally, when the crisis stole the clientelist appeal of the ruling parties, many of their voters turned towards those who professed openly what traditional politicians only implied

Al Jazzera has an extensive collection of pieces Greece and the New Dawn fascism

On Those “Lazy” Greeks….

From Paul Krugman, the day after the squeaker election on Sunday:

  …many things you hear about Greece just aren’t true. The Greeks aren’t lazy — on the contrary, they work longer hours than almost anyone else in Europe, and much longer hours than the Germans in particular. Nor does Greece have a runaway welfare state, as conservatives like to claim; social expenditure as a percentage of G.D.P., the standard measure of the size of the welfare state, is substantially lower in Greece than in, say, Sweden or Germany, countries that have so far weathered the European crisis pretty well.

So how did Greece get into so much trouble? Blame the euro.

And, as he says at the end, the election “ended up settling nothing.”  Or, it kicked the can further down the road.  Baring a miracle far greater than multiplying loaves for a few thousand, a reckoning will come due, well within our life-times.

Markets rejoicing short lived.

Kicking the Can.

for more Krugman, here’s some couched praise by Economist writer, Matthew Bishop of Krugman’s new book: End This Depression Now!

Longtime readers of Krugman will know there are at least two of him. One is the gifted winner of the Nobel in economic science, respected throughout the academy for his mastery of the dismal science; the other, the populist polemicist and baiter of the right who writes columns in The New York Times. “End This Depression Now!” is a collaborative effort by the two Krugmen. Professor Krugman usefully contributes plenty of mainstream economics in support of his stimulus plan and in order to debunk the idea that austerity policies in today’s circumstances can boost an economy by increasing confidence. (As he points out, Britain, the leading country to embrace austerity voluntarily, is hardly setting the world on fire.) Yet no opportunity to preach to the choir is missed by the populist Mr. Krugman, nor any chance to mock those he calls the “Very Serious People” who disagree with him.

That Bailout Money for Greece? Hah!

Once again the adage is proven: when trouble is brewing, protect your own. In this case, bankers protecting bankers with the aid of the bankers’ closest allies – their governments….

Its membership in the euro currency union hanging in the balance, Greece continues to receive billions of euros in emergency assistance from a so-called troika of lenders overseeing its bailout.

But almost none of the money is going to the Greek government to pay for vital public services. Instead, it is flowing directly back into the troika’s pockets.

The European bailout of 130 billion euros ($163.4 billion) that was supposed to buy time for Greece is mainly servicing only the interest on the country’s debt — while the Greek economy continues to struggle.

… the money dispensed by the troika — the European Central Bank, the International Monetary Fundand the European Commission — comes from European taxpayers, many of whom are increasingly wary of the political disarray that has afflicted Athens and clouded the future of the euro zone.

As they pay themselves, though, the troika members are also withholding other funds intended to keep the Greek government in operation.

Alderman and Ewing in NY Times

The Euro: Unscrambling the Omelet

Informative column by Eduardo Porter in NY Times Business section on the motivation behind the creation of the Euro, why it has failed to do what was intended, and in fact is doing the opposite, and what the prospects are today:

Despite its flaws, there is one powerful reason to stick to the euro that even some of the most skeptical economists accept: the prospect of breaking away from the euro is very scary. It’s difficult to forecast how such a dissolution would unfold. There is, in fact, no legal way to leave. And it would be searingly painful for many countries.

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Greece: Anti-Austerity Anger

From Link TV


Protests have erupted in the Greek capital with thousands of people joining strike action over the prospect of more budget cuts. Unions say the economy is being driven downwards by the government. Greece’s EU partners are also frustrated but they blame the government’s failure to implement reforms. Despite all night talks with the “troika” of lenders, the EU, IMF, and the ECB, Greece’s Finance Minister, Evangelos Venizelos, said more time is needed to agree on the right package.