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Where Greece Should Go from Here

2015 July 7
by Ian Welsh

Ok. Enough.

I’ve been walking people through what’s happening, what it means, etc. in Greece now for a while, with an able assist from Mandos and commenters.

Let’s cut the crap. Merkel has come back and said that Germany will not allow debt reduction and insists on austerity—and harsh austerity, worse than the last offer. She is backed by most EU members and the European Central Bank, which has put the screws into Greece so hard that imports are piling up on docks because Greece can’t pay for them.


Syriza needs to get its act together. The Euro is a stupid idea, and it always was. It cannot work absent central fiscal policy (aka, national governments reduced to de-facto provinces). It does not allow governments the ability to devalue their currency when they need to increase exports, to print money, and so on.

It cannot work. It never could, as designed. It was always a stupid idea. (And yes, I opposed it from the beginning.)

Oh, it could be fudged. They could forgive Greece’s debt (but then would have been expected to forgive a bunch of other countries some of their debt), and money could be funneled to Greece in various ways and so on. But that can’t be done because of neo-liberal doctrine, which insists that debts are sacred and that creditors must never lose money, which is ludicrous and a direct violation of how capitalism works. People who make bad loans MUST lose their money. Without that, it isn’t capitalism and the virtues of capitalism don’t work.

This is not in question. This distribution of money to people who know how to make a profit and not lose it (and thus make “Productive” use of it), is about three-quarters of the pragmatic argument for capitalism.

Austerity is beyond stupid: In order to fix the economy, you reduce gross expenditures and expect that tax incomes will increase faster than deficits and the economy will grow as a result. It is so dribblingly inane on its own merits that anyone who believes it either hasn’t spent three seconds thinking, is an ideologue incapable of thought, or is on the take, expecting that the benefits of austerity will flow to them.

The Euro is moronic as implemented. Austerity does not do what it is sold to do. And neoliberalism does only one thing more effectively than other forms of capitalism (those which actually work): It transfers money to the rich faster.

Syriza needs to leave the Euro. They are not going to get a good deal, or even a mediocre deal from Europe. They will be better off leaving the Euro. If they do so, they should simply repudiate all debts.

Yes, all of them. Once they leave the Euro, Europe and the neoliberal order will go all out to crush them. It does not matter what they do, they will be target number one.

They should then cut a deal with Russia for oil and a pipeline, and align solidly with Russia and China, asking for aid from those two countries.

They should cease any attempts to stop refugees from flooding out of Greece into the rest of Europe. Heck, put them on buses and ship them to the border.

They should nationalize the distribution of food grown in Greece. Greece grows enough food; just start delivering it to every household. Saddam did this effectively, Greece can too.

That takes care of oil and food (Greece has plenty of refinery capacity).

Medicine is the next issue; Greece will have to arrange to get the meds it needs through Russia and China.

There are other details, but mainly Greece should do everything it can short of leaving the EU (not the Euro, the EU) or going to war to make Europe’s life miserable. Why? Because then they have something to negotiate with.

There are those who will say this escalating, blah, blah, blah.

Yes, it is. The path of capitulation, down which even Syriza was plodding (the deals they were willing to sign were terrible and would have kept Greece in depression for the foreseeable future) did not work. It is time for Greeks take their own future in their hands and be bold.

“Europe” doesn’t want them. Fuck Europe. A Europe which has turned its back on the foremost modern Greek virtue, Democracy, is not a Europe worth bothering with. Greece and the Greeks should regard themselves as what is left of the true Europe (along with Iceland), sneer down their noses at the barbarian Eurpeans and embrace and trust themselves.

Why? Well, because frankly, they don’t have anyone else.

The current world order is breaking up anyway.  Russia, China, and various other nations hate how it is run, and they are moving to destroy the credit/banking gridlock which is the real power of the West. Yes, it would be nice if Greece didn’t have to be one of the first into the breach. But, at this point, every other option is worse.

As for the European leaders insisting on this course of events, and they are insisting, they will be seen as those who destroyed the Euro. Their treatment of Greece is a clear lesson to everyone else in Europe that the Euro does not and cannot work. The moment a country gets into serious trouble (and that time will always come), Europe is not flexible enough to do what needs to be done. The current pols, who are complicit in the crimes of austerity and neoliberalism cannot run against Europe, but they will be replaced, in time, by those who will.

Greece’s situation has been a completely unnecessary mistake and a crime. The amount of money involved is trivial. Simply following basic, capitalist ideology (lenders lose their money if they lend to people who can’t repay) would have solved the situation five years ago. If they’d behaved like slightly decent and competent technocrats, they could have easily solved the crisis and bailed out private investors in any number of ways, while still allowing the Euro and mild austerity to continue.

The leaders of Europe are idiots, as well as being ethical monsters who have impoverished and killed many for an ideology whose sole purpose is to make a small proportion of the population very, very, very rich. This will be seen as the moment when those leaders broke the Euro. Combine this with the US abusing its stranglehold on the financial transfer system to starve countries out, and stupidity like Iraq, and they’ve hastened an end to the American/Western hegemonic period–decades earlier than smart, human policies would have achieved.

A finance system exists, socially, only to direct money to where it is needed to create more social good. It has no purpose otherwise. It is not an end in itself.  Money that is not a useful commodity (a.k.a. food) is not a store of value and never was. It is a fiction used to allow feedback in the system and to act as a distribution mechanism for goods and services based on perceived social utility (a.k.a. people who have more money are assumed to have more social utility).

A society which understands NONE of these points will vastly mis-allocate its productive resources, as, currently, ours is doing. That mis-allocation will, in time, lead to collapse or another disaster (in the much larger picture here, much of the world is now in both a pre-revolutionary state and a pre-war state, though most people won’t believe either until they’re dying).

I have spent my entire life watching these people burn down the house to generate heat and call themselves geniuses. Neoliberalism “works” because it bribes just enough people to maintain enough of a constituency, while piling money into the hands of a very few people who will do anything to keep it going because that’s how they became filthy rich, and virtually any system which cared about the common good would take their money and power away from them.

Neoliberalism works only in the sense that it creates the circumstances for its own continuation. But it is a locust ideology: It cannot last long in historical terms and it will not. That doesn’t mean it will be replaced by something better, the world has often seen centuries to millenia go by with most of the world ruled by nobles, kings, and despots and the majority of populations peasants, serfs, and slaves.

But, be clear: It will end. Be clear: Greece, whether they buckle or fight, is making its end come closer. And be clear: That end will almost certainly result in hundreds of millions to billions of death in war, revolution, famine, and so on.

None of this was necessary. But some people wanted to be really, really rich and many other people were willing to make corrupt deals that cut out most of society from any gains. Most of those people will be dead before the shit hits the fan in any way that would effect them, safe in their core nations. But not all will be dead.

I hope that Juncker, Merkel, and Draghi, among others, live very long lives. Sincerely. I hope they live to be a hundred, with their minds sharp. I hope this devoutly.

Meanwhile, all the stupid options having been exhausted, having a mandate from the population, and with the EU saying “lie down after taking your cup off so we can gather in a circle around you and kick you,” let us hope Syriza does what needs to be done. (They might also wish to just reinstate Varoufakis as Finance Minister. There is no deal to be had, and they’re going to need a competent technocrat to do what needs to be done.)

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ECB Is Trying to Break Greece: Buckle or Leave the Euro

2015 July 6
by Ian Welsh

So: The ECB has both decided not to extend any more money to Greek banks AND appears to have increased the haircut they give on Greek collateral (possibly to 75% from 50%).

I agree with Edward Harrison: This is an attempt by the ECB to force a decision—Greece can deal or leave. And pretty much now. The haircut is particularly brutal, reducing the amount of credit already available.

If the ECB wanted Greece and its creditors to have time to make a deal it could do so. All Tsipras asked for three billion. Pocket change.

This is an abrogation of the ECB’s responsibilities as lender of last resort, and appears to me to be a blatant political act. It will be noticed not just by Greece but by all other countries who use the Euro.

Greece’s one possible fudge is to start producing Euro denominated notes itself. They won’t be worth what the official ECB ones are, but this can buy them some more time to see if a deal with “institutions” is possible.

In other news, Varoufkis stepped down as finance minister at Tsipras’s request because he was hated so much by the negotiators on the other side. If negotiations fall thru, however, Tsipras might want to bring him back.

I may write a bit more on Varoufkis and what his experience tells us about politicians, bureaucrats, and the EU at a later point. In the meantime, understand that the pressure is on and that developments should keep moving fast thanks to the ECB cutting off Greece’s money supply.

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Meanwhile, in China, There’s a Huge Stock Market Crash

2015 July 6
by Ian Welsh

It has dropped about 30 percent in the past three weeks, and today:



And this:

In an extraordinary weekend of policy moves, brokerages and fund managers vowed to buy massive amounts of stocks, helped by China’s state-backed margin finance company which in turn would be aided by a direct line of liquidity from the central bank.

China has also orchestrated a halt to new share issues, with dozens of firms scrapping their IPO plans in separate but similarly worded statements over the weekend, in a tactic authorities have used before to support markets.

Do I need to explain that this is really, really stupid? The Chinext had higher price-to-earnings ratios than Nasdaq when it crashed. These valuations are insane; they do not make sense. This is stock market as ponzi scheme.

Stock markets are socially useful for only three things:

1) IPOs—so that companies can get money unencumbered by debt to undertake large projects. (These days, usually so the founders can cash out, which is at best a limited social good.)

2) Secondary stock offerings; same thing.

3) As Keynes pointed out, to give sociopaths something to do.

There are better ways to deal with these and all of the other supposed advantages of stock markets. (For example, if you want people to be able to share in the success of companies, just tax them and distribute. We would be hard-pressed for a more uneven method than the one we’re using today.)

Stock markets are largely useless to the real economy at this point. But when they go wrong, they can do immense damage to the real economy IF regulators and politicians and central bankers treat them as anything but a game in which money is moved from one set of hands (investors), to another set of hands (brokers, bankers, and since the introduction of stock options as the main way of paying executives, high ranking corporate wankers). Stock markets are snake pits of fraud and conflict of interest and everyone professionally involved in them must be treated as “a criminal the second they can get away with it.”

It’s time to change stock markets entirely so that they are useful again for raising funds for new companies or major new projects without debt and are not so dangerous to the rest of the economy. I suspect the best way to do this is to shut the entire current racket down, mandate dividends and controlled buybacks for all remaining stock companies (public stock companies in the US have dropped by half in the last 20 years anyway), and move to a new model, whatever that will be.

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Consequences of the Greek OXI (No) Vote

2015 July 5

A few points:

  1. This isn’t about soaking bankers. Bankers, with some exceptions, were paid off during the “bailouts.” Right now it is taxpayers who are on the hook. If you wanted this done right (lenders take their losses), it had to be done in 2010.
  2. The immediate question is if ECB will restore “lender of last resort” services. If it doesn’t (a shocking failure in a central bank), then Greece will be forced to issue its own currency. This may mean, initially, bills denominated as equal to Euros. They won’t sell on the market for equal to Euros, though.
  3. Many Greeks who voted “no” seem to think that the vote was a way of giving Syriza a better hand in negotiation (this is what Tsipras said, so it isn’t an irrational belief.) We’ll see whether or not the Troika and the EU are willing to re-start negotiations. If they aren’t, I wonder if Greeks will blame them or Tsipras.
  4. The IMF has called for debt reduction and admitted they got it all wrong. How much that matters, I’m uncertain, but it does give space for a deal. Such a deal would still involve some austerity measures, just not as many or as harsh.

In the short to medium term, this referendum matters more to Greece than Europe. Unless the monetary authorities are completely incompetent, they should be able to contain the shocks. Greece’s economy is small; the amount of debt involved is, actually, small as well.

One should not discount the possibility that the ECB and “Institutions” are incompetent and will screw it up, mind you. Their behaviour thus far hasn’t just been cruel, it has been stunningly stupid from a clean, technocratic POV. Mandos’s article about “How EUians see this” was important, but also necessary to understand that the actual austerity policies followed were delusional if the ECB (or anyone else) thought they would lead to a sustainable debt load for Greece. They could not and did not.

It’s rarely clear in such situations if the people making decisions believe their own propaganda: Did they think it was sustainable and wouldn’t lead to a crisis like this? Did they know it would lead to a crisis and think the Greeks would sit still and take it (not completely unreasonable, actually, given how much pain people have accepted from plutocratic policies in the past).

I don’t know, but I think it’s the winner’s curse: Neoliberalism (and austerity is part of the neoliberal project), has been winning for so long that those who came of age and rose to power during it (essentially all our central bankers, technocrats, and politicians) cannot imagine it would ever lose. The look of incredulity is that of the three hundred pound bully when a 90 pound weakling doesn’t buckle. (Again, this doesn’t mean that the technocrats don’t also think they’re doing the right thing morally.)

If I were them, and by that I mean “not me in their position, but actually them,” I would crush Greece flat and make an example of it. If Greece comes out of this like Iceland, with a healthy economy in three years, then other populist movements (left or right) will receive proof that their policies can work. Democracy, as opposed to technocratic rule, will gain legitimacy, and so on.

This is not a prediction; as Machiavelli observed hundreds of years ago, [people] are generally destroyed because they are unable to be either wholly good or wholly bad. Doing the right thing from day one would have been an excellent policy. Having done the wrong thing, these decision makers’ futures are intertwined with it: They will not keep their positions if Europe turns genuinely populist. Worse, that populism will almost inevitably turn against their masters, the oligarchs.

This is unacceptable. To oligarchs, Europe is one of the few places actually worth living. Yes there are a few American cities, maybe you might want a vacation home in one of the nice Australian or Canadian cities; but that’s about it. Tokyo’s great, but you don’t speak Japanese. Dubai, despite its beauty and being created exactly for oligarchs is too soulless and boring even for oligarchs. Russia or China, well, China’s polluted, and if Putin or the Chinese Communist party says jump you do it, or you get dead or in jail. Oligarchs don’t rule Russia or China, though they hope to in the future.

This is also a significant moment geopolitically. Putin said that he won’t help Greece monetarily as long as it is in the EMU (uses the Euro.)  That’s as good as saying he’s open to helping them if they aren’t. Greece is geographically important, can be used as a pipeline route (or terminus), and could offer Russia a warm water port. There are deals to be made. It’s for this reason that the US Treasury secretary keeps telling the Europeans to cut the debt and make a deal; the US doesn’t give a damn about Greek suffering, but it does care if Greece swings towards Russia.

So the game continues, and it is actually important. Greece is a small country, but it’s not a country whose population is smaller than most cities, like Iceland. Its success or failure at standing up to austerity, neoliberalism and technocratic EUian ideology could make a large difference in whether other, even larger countries, decide to do so. And by “other, even larger countries,” we mean essentially the entire south of the EU: Italy, Portugal, and Spain. Ireland might consider it. Finland should consider it and after a few more years of pain in the Euro straitjacket, may well do so.

These countries subsidize the north, and especially Germany, by keeping the Euro cheaper than it would otherwise be (let alone the value of a reborn German Mark). If they go, Germany’s economy is suddenly going to look a lot less efficient and sell a lot less goods (but, wait, isn’t every advantage the Germans have because they are good people?).

Interesting times, my friends. This is power politics, with huge amounts of real power and massive amounts of money in play– not today, but as consequences of what happens today. The fate of Greece matters, not so much in itself (except to Greeks and kind-hearted souls) but for what it will mean for Europe, NATO, Russia, and every country in Europe. It could be one of the dominoes which leads to the end of the neoliberal era.

You’re watching history: While remaining sympathetic to those being ground to pulp by its wheels (or in between your own screams while caught in said wheels), let me suggest that you enjoy the view.

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Greek Referendum Day

2015 July 5
by Ian Welsh

It’s here. I don’t have much to say about it I haven’t already, but if folks want a thread to discuss it, feel free to do so below. As with most readers, I imagine, I’m cheering for “no.”

Also, take a look at this video (which I can’t figure out how to embed). I can’t think of any other finance minister in the world who would get that reaction from any crowd.

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As a Subject of Her Majesty, the Queen, Long May She Reign

2015 July 4
by Ian Welsh

On the occasion of July 4th, let me just say:

Happy Treason Day


France Arrests Uber Executives

2015 June 29
by Ian Welsh

To recap: French Taxi drivers went on strike, beat cars with metal baseball bats, and damn near shut down Paris’s airport.

As a result, France arrested two French Uber executives. It has also been seizing the cars of Uber drivers.

Unions work. Violence, done smart, works.

(French truck drivers, when they want something, will en-masse park their rigs in the middle of the street, shutting down traffic, etc.)

You receive good wages only when there is a tight labor market. That can be generally, or it can be “your profession/group in specific.” (Professional associations are just upscale unions who pretend they aren’t, unions being declasse.)

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Syriza and the EU Seem to Be in Completely Different Worlds

2015 June 29

Juncker, Hollande, and Merkel have all warned that a “no” vote in the Greek referendum will mean Greece will face leaving the Euro.

Meanwhile, Greek PM Tsipras argued today that a “no” vote gives the Greek government a stronger negotiating position.

So, yeah, who’s right?

Who knows.

Depends if the EU leaders are serious. I tend towards, “They are.” If so, Tsipras is misleading the Greeks. This is a vote on Grexit, not on getting a deal within the Euro.

Of course, European leaders could be just doing their best to get a “yes” vote: Greeks want a better deal, but don’t want to leave the Euro. To that end, they say: “There is no better deal, all you’re voting on is Grexit.”

Tsipras has said that in the case of a “yes” vote he will enact the legislation, then he will step down; he will not be a “humiliated Premier.”

I’d say to get out your popcorn, but the stakes here are very serious. Europe is prepared to lock one of its member states into a permanent depression for an amount of money that is less than one percent of the Euro’s GDP, for the forseeable future.  The Eurocrats and leaders seem to think they are protecting the EU’s legitimacy, but I suspect they are destroying it. If the EU does not include fair deals for all its members, all that is left is, “Well, we won’t allow WWII.” As the memory of WWII becomes purely historical, that will not be sufficient.

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How Eurocrats, Greeks, Germans, and Eastern Europeans View the Greek Crisis

2015 June 28
by Mandos

The Syriza government in Greece just made the move of proposing a referendum on the creditors’ last (unacceptable) offer, so the Greek people can now choose a destiny from a set of unpleasant destinies to which history has brought them. From the creditor’s perspective, this pushes them into precisely the situation they have spent the last seven years (at least) avoiding at all costs–the holding of a democratic dialogue on any part of the bailout. Even their threats to remove the proposal and to cut off ELA are acts of participation in this utterly unwanted dialogue. If Syriza proceeds with this, it will have turned the “sea lion” strategy around and on its head.

The bank bailouts were a “metacrime,” a moral monstrosity by which the productive economy was sacrificed to save what should be merely the money conduit system, rather than sacrificing the finance industry to save the productive economy, and all to conceal crimes and failures inside the money conduit system. However, while the immediate precipitation of the ongoing European/Greek crisis can be attributed to this, the route to such an unstable situation is rather more complex.

Ian asked me to put together some thoughts on the matter of the attitudes, aspirations, and motives of the participants at a “cultural” and interest group level, which I believe are non-trivial drivers of this conflict. For me, at least, when people do wrong things and get themselves into bad situations, I feel it is not enough to turn them into cartoon villains; often outwardly (or “functionally”) sociopathic behaviour has an aetiology in more conventional human failings. Humans often climb up ideological trees from which it is difficult to talk them down. That doesn’t mean I necessarily take a position of pure relativism; being unable to come down from that tree is itself a moral failing.

Before I begin, a disclaimer: I’m going to be painting with a broad brush here. A few years of living in Europe have taught me how impossible it is to live without a certain quota of “pragmatic” stereotyping—whereas it is genuinely easier, in my experience, to act as though one can avoid mentally assigning group characteristics in the USA and Canada. This, I acknowledge, is very dangerous; there are, for example, many Germans who see through what it is their elites have wrought in Greece. Secondly, that I try to write with a layer of sympathy doesn’t mean that I agree with the positions–for some reason, I always have to emphasize this.

EUians and Eurocrats

The first group I’ll discuss isn’t really a “national” grouping at all, but rather a stratum of mostly continental Europeans who view themselves as first and foremost “Europeans” as in citizens of the European Union. I am going to dub them “EUians” from this point on. On the extreme end, I have met EUians who explicitly believe that European countries should abandon their national languages and just adopt a lingua franca (i.e., English). All in all, they believe that Europeans need to “grow up” and accept that the era of the culturally-defined nation state is “over” and that it is a monkey on the back of Europa herself.

Some of you may see this as a pathetic self-abnegation, and maybe it is. But Europe spent the Cold War and maybe before that as a kind of chessboard on which great powers, including powers within Europe, play their games. The only way to evade this fate is to convert Europe into a single, possibly diverse nation on its own — and the only game in town is the EU.

In this worldview, it is only progress that national politics become increasingly devoid of content, and it is only necessary to build European-level democracy when the Europeans have finally, ironically, swallowed the medicine of their own mission civilisatrice. A case in point that is unfolding right now is the drama over refugees, specifically, how to settle them. Brussels had a perfectly reasonable and fair idea that refugees be allocated to countries in proportion to countries’ relative economic weight. This was met with absolute rejection, particularly by newer EU countries in Eastern Europe, who explicitly do not want even a small increase in the proportion of brown people who live there. Behind these countries hid some of the older, larger countries, whose national politics are already burdened by immigration-fatigue.

To EUians, this can only be confirmation that, at the national-political level, Europeans are only a hair’s breadth away from poking each other with sharp sticks in order to maintain ethnoreligious homogeneity. And they may be. But is it a sustainable solution to gradually dilute their democratic rights? To EUians, it is the only answer.

And that bring us to the inner cadre of EUians: the Eurocracy, the elite bureaucrats whose job it is to ^manage^ European economic and political convergence. One of the principal political functions of the Eurocracy is precisely to circumvent national politics. Eurocrats are to act as would-be philosopher-kings, coming up with reasonable solutions based on scientific principles. Oh, they’re human and can be corrupt and venal, but so can elected politicians. Whence the repeated referenda, and then adopting the Lisbon treaty anyway? Well, if the people say “no,” it’s not like the philosopher-kings are going to come up with a better answer–they already emitted the best answer! That’s why they’re Eurocrats.

Now consider the position of Greece at Syriza’s election. Yes, some Eurocrats might have been willing to admit that IMF predictions of Greek GDP growth were just the teensiest bit awry. But there is a procedure for these things, and that is definitely not the demand for changes to existing political agreements, which must then go through the process of national democracy. And Greek leftists just aren’t popular enough to withstand that in the rest of Europe, quite the contrary–by making explicitly left-wing demands, they have asked other populations that are not left-wing to support what they believe is a long-discredited experiment.

@WhelanKarl but the opposite view implies that democracies can’t sign binding agreements rich is surely crazier

— Dan Davies (@dsquareddigest) June 23, 2015

No, the from the Eurocracy’s point of view, the correct way to go about solving this problem is by the baking of fudge. If Syriza had agreed in February to support something memorandum shaped — taken the short-term pain of adopting a kolotoumba — the Eurocracy could have given it a little quid pro quo through the back doors of Brussels. But for EUians and Eurocrats, the bad signs started off very early — choosing ANEL over To Potami as a partner. Readers here probably think of To Potami as a Quisling, capitulationist part, but for the Eurocracy, an alliance with To Potami would have signalled that Syriza could be mollified ultimately through fudging an agreement and was not itself a dangerous populist party. But Syriza chose the spear-carrying nationalist Greeks instead.

So from their perspective, Syriza wanted to play populist politics on the open field of democracy and is reaping what it sowed. Europe does not, cannot, should not have room for a populist left, regardless of whether or not the policy proposed makes sense. European politics is about giving cover, and rational, professorial arguments embedded in a dangerous “democratic mandate” framework is just not on. Even this referendum, which the now apparently non-existent proposal might actually win, is a simply unacceptable exercise that, if repeated elsewhere, will destroy the European project, which is an inherent good that cannot survive the popular sovereignty of barbarian peoples.

The poster children

This is sometimes an overlooked aspect of the discussion, but the views of Baltic and East European states do matter. Some of the Baltic states took very painful medicine recently, and not medicine that different in character from what Greece was being asked to take, but has either refused (under Syriza) or only fudged (under ND, etc). And a lot of these countries have populations that are already poorer than Greeks are now.

Now many of you will retort that these countries, instead of joining in solidarity with the creditors, should likewise have the higher ideological standards that Greeks seem to have. But from their perspective, they embraced austerity and social pain as a manner of slicing off their own forearm in order to escape from the bear that has it by the wrist. Yes, I’m talking about Russia. I know that a good number of readers here think of Russia and Vladimir Putin as a kind of last-stand resistor against “AngloZionist” world domination, but for these countries, what they want to know is how soon the West can bring them that sweet, sweet AngloZionism.

So in a sense, Greece’s apparent cozying up to Putin is in some ways a worse affront than its apparent sense of entitlement. Greece is playing with existential fire for these countries, instead of thanking its lucky stars that’s it’s under the AngloZionist umbrella and putting their grandmothers on ice floes of austerity in gratitude.

(As I said above, I am painting with a broad brush. I have an Estonian colleague who is at least neutral on the matter of Greece, but it is clear to me that in terms of European politics, the existential threat of Russia is not far from his mind in any discussion, and Russia for him is his people’s most recent colonial dominator, not the EU.)

Germany (and Northern Europe)

Germany and German politics have been conceived as the other pole in a kind of Athens-Berlin conflict, as Germany is the Eurozone’s largest economy and its most successful. A lot of things have been said about the German role, and some of the criticisms are correct. And it’s true that to some extent, popular tabloid German media is all about the lazy Greeks, lolling about in the sun with one hand in the pocket of the hardworking German. It’s become a cliché.

But one thing to emphasize is that the debate about economic reason itself is quite different in Germany. Outside of Germany, many people can agree that Yanis Varoufakis’ proposals are economically reasonable and possibly even mainstream while criticizing him for his political approach. But within Germany, the proposals themselves—and the logic of anti-austerity thinking—are widely seen as coming from another planet. That’s because popular discussion on economics within present-day Germany does not really emphasize the notion of flows and balances. What does it matter that everyone can’t simultaneously be an export superpower? It’s everyone’s duty to try and find something they can offer to the world, and in terms of nations, that is expressed in terms of their export power. The US import “power” is viewed by many Germans as an unsustainable boondoggle…but the German export power is not. Germany even exports to the exporters.

From this perspective, the proper domain of economic policymaking isn’t to be playing some kind of Rube Goldberg game of who should be paid what when to make the balances work out, but instead it is about removing the obstacles to economic agility and to everyone reaching a Platonic state of optimal social contribution. The German mainstream isn’t like English-language conservatism — you can believe in principle in a generous welfare state along most of the German political spectrum, but it needs to be a welfare state designed around facilitating life transitions. And that sometimes means giving employers a little flexibility.

It’s on this basis that left-wing government in the rest of Europe provokes little sympathy in Germany, particularly in the case of Syriza (but not even French dirigisme gets any quarter). From the German perspective, far from Syriza having been forced to retract its programme, the last proposal of the creditors was actually quite generous and full of compromises on the things that Germans think matters. Syriza’s Red Lines are exactly the things that show that Syriza isn’t seriously different from any other clientelistic party of Greece, and therefore it deserves no sympathy, leftist or otherwise. Germany is willing to open its pocketbook to Greece — through the back door, of course, via Eurofudge — to ensure that Greece looks like a success story. But only if things like pension reform, privatization, labour reform, take place, and not just in a recalcitrant way, but in a way that shows that the Greek government believes in a reasonable “soziale Marktwirtshaft.”

But, from a German perspective, Alexis Tsipras wants to run non-surpluses without figuring out what Greece’s contribution to the world will be as it is, and neither the Eurozone nor the EU itself needs that. In fact, Tsipras wants to propagate this ideology in Europe elsewhere, and to them, that’s neither right nor tolerable.

Finally, Greece

Even with the proposals offically off the table (the fact that a referendum on them is a dealbreaker is in itself very telling!), the referendum is a useful exercise, especially if the “real” question in people’s minds is formulated correctly. It’s important to know “for real” if the kind of thing that the creditors were asking on Thursday would be acceptable to the average Greek, at least in its broad outline — not just some deal, but that deal, even if it is hypothetical.

But a lot of readers here may be disappointed to know that many Greeks would vote for such a deal anyway, even if it meant that Greece became a “debt colony” of the EU. Why would a people voluntarily choose such abjection, even if the Grexit path is hard?

The truth is that Greece sits in a perfect storm of historical factors and cultural memes that primes it specifically to be a chief candidate for a crisis like this. And the form that Greek nationalism has taken up to now doesn’t help at all. At the point at which Greece is “finally” free to take up its place in heart of the Europe whose mother it is, how is it conceivable that it could be facing ejection from what was supposed to be Europe’s cornerstone? How could it be possible that Greece could actually always have been, effectively, an Orthodox Turkey, when it suffered so much under the Ottomans? And how likely is it that, left to their own devices, the Greek elite would actually themselves choose to turn the corner and build a state administration as good as Germany’s? Isn’t it more likely that outside the Euro, Greece will just follow it’s old trajectory, and not become the devalued competitive powerhouse that Grexit-boosters believe it can be?

These are the questions that Greek citizens are going to be asking themselves over the next week, the real issues of the referendum, and it may be that a lot of participants on Ian’s blog won’t like the answers they come up with. Because a “No” most likely means a Grexit forced by the creditors, and while I believe the Greek government is technically correct in not making this explicit, everyone knows what it means. But it is nevertheless important to have had this exercise, because whatever the outcome of the proposed referendum, it will be contingent on and subordinate to the democratic choice of a people, exactly what the Eurocracy has been avoiding, unsustainably in my opinion.

(Brief Ian notes:

1) I asked Mandos to write this because I think it’s important.

2) Greece has now imposed capital controls.  Five years later than it should have been done, but a good step.)


Finance Ministers Refuse an Extension to Their Offer to Greece

2015 June 27
by Ian Welsh

There were rumors this would be the response last night. To put it simply, they are beyond offended that Syriza wants to put something which concerns all Greeks to a referendum. This is against European values.

I find this, from the NYTimes, interesting:

The refusal by the Eurogroup to grant Mr. Tsipras the extension was the first clear sign that Mr. Tsipras and his leftist government had overplayed their hand by failing to scare the country’s creditors — wearied by months of continuous wrangling and emergency meetings — into making last-minute concessions.

This is an interesting interpretation: It’s not that Tsipras wanted a democratic mandate. Rather, it was just a negotiating ploy (though Syriza has said they’d be happy to recommend “yes” with a better deal).

I hope that Syriza has plans on how to handle what looks like a default, because Europe seems intent on making sure there is one. Certain measures, like capital controls, should be in place now.

Syriza is also being extremely foolish here:

Some Greeks said a better question would be to ask whether Greece should remain in the single currency, a scenario that most Greeks favor. But Mr. Varoufakis told a news conference that the referendum could not be about the euro because membership of the single currency was meant to be irrevocable.

“There are no provisions for exit from a monetary union,” said Mr. Varoufakis, who said the rules foresaw only departure from the European Union. “Anyone who wants us to pose that question must first change the treaties of the European Union,” he said, referring to exit from the Eurozone.

You cannot run on default and not be willing to leave the Euro, because, yes, you will be bankrupt, and you need to be able to print money. This is Syriza accepting that treaties are higher than the democratic will—essentially accepting Eurocrat talking points and ideology.

The vast destruction of default will be Syriza’s fault if they are so stupid as to default without any provisions for also leaving the Euro. Europe will not be kind, they will aim for maximum destruction to make their point that “there is no alternative” and to teach that lesson to all the other countries who would be better off defaulting.

The only non-embarassing reason I can think of is that Syriza knows they will need to go off the Euro, but feels the Greeks wouldn’t say yes. Don’t ask a question when you know you won’t like the answer to it. Even so, Varoufakis should not have used an undemocratic frame.

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