Greece 'far right' rejects austerity after 'socialists' capitulate!

[asexual trans victimologist]

In any case, the Greek government now needs to maintain law and order or risk the entire nation going up in flames. The protesters are using deadly force, and have actually killed innocent women in banks, and anytime protesters use deadly force you need to respond with deadlier force.

Small gubmint!

So if you were in Greece, you would rather see anarchy than restoration of law and order?

Greek law and order right now is effectively a state of dictatorship, with neoliberal punishment ideology and rightist sadism as the dictators.

[Χahar]

What reason would any Greek have to accept this system? They're being reduced to destitution for the sins of their rulers to appease a distant owning class. How does Greece benefit at all?

[Χahar]

Very soon, ND leader Samaras will be making the walk to Canossa to swear his undying fealty to his corporate masters in the form of a letter of commitment.  One wonders how long he'll be left outside before his masters let him in.

[TheDeadFlagBlues]

I can't believe that there are relatively educated posters on this forum that buy into the neo-liberal myth that the plight of the Greeks was caused by profligacy. The severe economic downturn that was worsened by the EU's monetary union is to blame for the currently outrageous debt to GDP levels. Greece has no control over monetary policy so it was hamstrung in meeting the downturn head-on. The bondholders naturally react differently to nations caught in this situation. This was the perfect recipe for a positive feedback loop of destruction across the so-called "PIIGS" nations.

http://www.levyinstitute.org/pubs/hili_113a.pdf

[Gustaf]

What reason would any Greek have to accept this system? They're being reduced to destitution for the sins of their rulers to appease a distant owning class. How does Greece benefit at all?

I don't get this notion that the Greek people have done nothing wrong. This isn't about one leader, it's about an entire system that has been thoroughly corrupt.

I appreciate that plenty of Greeks are innocent in some sense, but in a democratic country the people are ultimately responsible for the acts of their leaders.

[© Tweed the Younger]

What reason would any Greek have to accept this system? They're being reduced to destitution for the sins of their rulers to appease a distant owning class. How does Greece benefit at all?

I don't get this notion that the Greek people have done nothing wrong. This isn't about one leader, it's about an entire system that has been thoroughly corrupt.

I appreciate that plenty of Greeks are innocent in some sense, but in a democratic country the people are ultimately responsible for the acts of their leaders.

oh man.  you unreformed True Believer.

[ag]

What reason would any Greek have to accept this system? They're being reduced to destitution for the sins of their rulers to appease a distant owning class. How does Greece benefit at all?

The alternative is an "uncontrolled" default, followed either by even deeper cuts to everything (well, your sallary might stay as it is, but the government will promise to pay it some time, perhaps, after you are dead), or reintroduction of the drachma - followed by rapid devaluation, which will have an effect of cutting everyone's real income and savings sharp (your pension is going to be there, and even paid, and enough to buy a couple of coffees a week, if you are lucky). Naturally, the Greeks are scared sh**tless at either prospect. If Europeans do not give money, though, there ARE no other options.

Now, I happen to suspect that reintroduction fo the drachma is the least bad of the bad options. But they don't have good options.

[ag]

I do feel a bit sick of the moralist talk of "punishing" the Greek populace. The real problem is that euro system has been built in a manner, in which such "punishment" is the only enforcement mechanism, its only defense against disintegration. This is not a desirable feature of the eurozone architecture, but, rather, its main flaw.

[Gustaf]

I do feel a bit sick of the moralist talk of "punishing" the Greek populace. The real problem is that euro system has been built in a manner, in which such "punishment" is the only enforcement mechanism, its only defense against disintegration. This is not a desirable feature of the eurozone architecture, but, rather, its main flaw.

Well, to be fair, for some people (not the ones getting hurt though of course) this outcome is considered one of the benefits.

[opebo]

What reason would any Greek have to accept this system? They're being reduced to destitution for the sins of their rulers to appease a distant owning class. How does Greece benefit at all?

The alternative is an "uncontrolled" default, followed either by even deeper cuts to everything

Actually no, if they would just play the game of poker a bit more boldly the silly Germans might agree to print the debt away without this unhelpful austerity, since failing to do so would lead to a breakup of the Euro.

At any rate it certainly behooves them to refuse to pay back any of this debt and say to Europe - 'its up to you'.

[© Tweed the Younger]

the real 'Other' option would be to leave the EU, default and return to drachma, and exit world capitalism and join up in a trading partnership with ALBA.  if they did this though they'd probably get invaded or bombed by NATO.

[ag]

Actually no, if they would just play the game of poker a bit more boldly the silly Germans might agree to print the debt away without this unhelpful austerity, since failing to do so would lead to a breakup of the Euro.

At that point, euro with Greece in it would likely be less attractive to the Germans than the Deutschemark. Also, if the Greek bluff is called, the pain would be far too asymmetric: what would be a hiccup for Germany, would be a disastrous bloodletting for the Greeks. And, of course, at that point the Germans (and not only the Germans) would feel only too justified in punishing the Greeks - if pushed, this might, actually, end in making EU too hot for Greece to stay in.

[ag]

the real 'Other' option would be to leave the EU, default and return to drachma, and exit world capitalism and join up in a trading partnership with ALBA.  if they did this though they'd probably get invaded or bombed by NATO.

It would be a lot worse that invaded or bombed by NATO )) Without any NATO invasion this would imply becoming permanently (i.e., very likely for the lifetime of pretty much all the Greeks currently alive) poorer than Turkey. It would also imply losing one of the few safety walves left: emigration to the wealthier European countries (if Greece leaves the EU, Greeks would need visas to travel and work). The proportion of the Greek population that would be substantially worse off than it is even now, at the height of a depression, would come close to 100%. Also, this would, probably, mean the end of Greek democracy for a long time: the country would go from a coup to a revolution for years to come.

[ag]

I do feel a bit sick of the moralist talk of "punishing" the Greek populace. The real problem is that euro system has been built in a manner, in which such "punishment" is the only enforcement mechanism, its only defense against disintegration. This is not a desirable feature of the eurozone architecture, but, rather, its main flaw.

Well, to be fair, for some people (not the ones getting hurt though of course) this outcome is considered one of the benefits.

And you know what I think of the morals of those people.

[Gustaf]

I do feel a bit sick of the moralist talk of "punishing" the Greek populace. The real problem is that euro system has been built in a manner, in which such "punishment" is the only enforcement mechanism, its only defense against disintegration. This is not a desirable feature of the eurozone architecture, but, rather, its main flaw.

Well, to be fair, for some people (not the ones getting hurt though of course) this outcome is considered one of the benefits.

And you know what I think of the morals of those people.

Yes, and I'd agree. Just thought it was worth pointing out.

[opebo]

At that point, euro with Greece in it would likely be less attractive to the Germans than the Deutschemark. Also, if the Greek bluff is called, the pain would be far too asymmetric: what would be a hiccup for Germany, would be a disastrous bloodletting for the Greeks. And, of course, at that point the Germans (and not only the Germans) would feel only too justified in punishing the Greeks - if pushed, this might, actually, end in making EU too hot for Greece to stay in.

Its a gamble, but as you said in your earlier post, leaving the Euro is their least bad option, given the posture of their masters the Germans. 

You may be right that having the Greeks and others leave the Euro might not be a severe negative for the Germans, but on the other hand printing away the debt wouldn't be nearly as bad as they imagine either.

[ingemann]

I do feel a bit sick of the moralist talk of "punishing" the Greek populace. The real problem is that euro system has been built in a manner, in which such "punishment" is the only enforcement mechanism, its only defense against disintegration. This is not a desirable feature of the eurozone architecture, but, rather, its main flaw.

Most (through some do) don't want to force this on the Greeks, but the Greek economy and government need reforms, and while it would be better for everybody that they was pushed through much much slower, no one expect the Greeks would keep any promises they make for reforms the moment they got the money. Remember this isn't the first time the Greeks is taken in massive mismanangement of their economy and conning the rest of EU, and everytime they have promised that they would make reforms, the moment they got the money, they ran from all those promises. As such the decision have been made to force all the medicin down Greece's throat, while it doesn't have a choice, and hope the patient survive the massive dose.

[ag]

You may be right that having the Greeks and others leave the Euro might not be a severe negative for the Germans, but on the other hand printing away the debt wouldn't be nearly as bad as they imagine either.

By itself, "printing euros to save Greece" right now wouldn't be too bad for Germany. The problem is, once this is allowed, the value of staying in the euro for Germany is negative: they will have all the incentives for going back to the Deutschemark.

[Beet]

The Levy paper is correct. Had Keynes lived another decade, and the ideas he was working on at the time of his death reached their full fruition, and in the unlikely event that the designers of the euro took these ideas seriously, then precisely the present problem would have been anticipated.

At the heart of the matter is a fundamental mathematical identity, the balance of payments equation.

current account + capital account + foreign reserves = 0.

Any country without reserves running a current account deficit (like Greece) must have positive net capital inflows. If a country (like Greece) cannot convince others to continue to throw capital into the country, then it must adjust its current account. This can happen in two ways: a contractionary recession that shrinks the economy until imports fall lower than exports, or an expansionary action that grows exports until the country is earning its keep.

the value of staying in the euro for Germany is negative: they will have all the incentives for going back to the Deutschemark.

Not necessarily. The value of staying in a supranational superpower in which you have all the power and leverage, versus going it alone as a nation of 80 million people with a shrinking population, is quite intangible and arguably immeasurably large.

[opebo]

By itself, "printing euros to save Greece" right now wouldn't be too bad for Germany. The problem is, once this is allowed, the value of staying in the euro for Germany is negative: they will have all the incentives for going back to the Deutschemark.

What now?  The whole benefit of the Euro for them is an 'unnaturally' devalued currency - printing loads of Euros will only increase this benefit.  Going back to the Deutschmark would kill their exports because they'd go back to having a fairly valued currency.

[ag]

What now?  The whole benefit of the Euro for them is an 'unnaturally' devalued currency - printing loads of Euros will only increase this benefit.  Going back to the Deutschmark would kill their exports because they'd go back to having a fairly valued currency.

That's not how the German public and policymakers view it. Germany sacrificed its currency for the common project on the condition that this will be the new Deutschemark. They do not want inflation - and they are pretty competitive even outside the eurozone, despite euro being strong. In any case, printing euro to save Greece is, by itself, a major transfer from Germany to Greece. If Germany doesn't want to do this directly, which would mean financing the transfer with taxes (which it has no trouble collecting), why would it want to do it in this manner, financing it with segnorage?

Furthermore, if printing euros becomes a standard remedy for situations like the current one (and, in the absense of political mechanisms that might support fiscal transfers, it will very likely become so), the resultant common currency will start inflating fairly rapidly. Nobody in Germany would want to be a part of this.

[Beet]

Ah yes, the present creation of a lost generation, breakdown of economy, society, and political system, rise of extremism and looming revolution, and destruction of the 60-year dream, and looming return of global depression must not take precedence over the terrifying spectre of 2.5% inflation some years from now.

With 'responsible' Germany at the helm, we shall pull through!

[ag]

It's going to be not 2.5% inflation, but something much more serious. Unless the political mechanisms that could support fiscal transfers on a much greater scale are introduced (and there is a near zero chance of that short-term, unfortunately), short-term fixes like "printing money now" are only bringing forward the "end of the 60-year dream" - or, at least, the end of the Euro. It seems, the single currency is just to costly for pretty much everyone involved. The best way to avoid "the lost generation" is to face the music and to get Greece (and, I guess, may be not only the Greece) out of the project, at least temporarily. If, once again, the desire is that the project itself survives.

[Beet]

It's going to be not 2.5% inflation, but something much more serious. Unless the political mechanisms that could support fiscal transfers on a much greater scale are introduced (and there is a near zero chance of that short-term, unfortunately), short-term fixes like "printing money now" are only bringing forward the "end of the 60-year dream" - or, at least, the end of the Euro. It seems, the single currency is just to costly for pretty much everyone involved. The best way to avoid "the lost generation" is to face the music and to get Greece (and, I guess, may be not only the Greece) out of the project, at least temporarily. If, once again, the desire is that the project itself survives.

Anything more than Greece and Portugal out of the Euro and you likely have a systemic collapse, depression, and lost generation. Remember, we have already started well on the way toward that path. If the Euro must be broken up, better a country that can work from a position of strength be the first to break off and go it alone - i.e., Germany. What we are facing is much worse than 1970's style inflation or even stagflation. At threat is the entire social fabric in Europe. This is not some phantom or result of mental exercise, more like reality that is creeping in right now.

[ag]

Anything more than Greece and Portugal out of the Euro and you likely have a systemic collapse, depression, and lost generation.

Not true. Simply not true.

And if you believe it is true, then the only way out is forward: at the very least, give the European Parliament direct taxation authority over the eurozone member states. Create a powerful European government, politically responsible primarily to the European Parliament. Create pan-European political parties and run elections on European issues. Have the first-rate politicians go into European politics - national politics can survive w/ the young and the second-rate.  Otherwise, this is not going to be sustainable - every crisis will be ending up like this. This is merely the consequence of putting the cart before the horse and going blindly into the monetary integration before the political integration. As it is, the whole architecture is simply unsustainable. Even if it doesn't collapse now, it will eventually.

PS And, of course, if Germany gets out of the euro, euro won't survive long. Even if they keep the name, within years we will be reading in the newspapers about the exchange rate of the French euro against the Italian euro