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What passes for smart on the Greek Debt Crisis

2011 November 4
by Ian Welsh

is profoundly stupid and misleading.  Over at Americablog I stumbled across a post written by Kevin Drum on the Greek debt crisis, a post which was also linked to approvingly by Digby.  It is what passes for smart on the left, these days: superficially correct, but riddled with massive assumptions.  Back when blogging was my job, I took out garbage like this regularly, these days I do it rarely, but I’m going to tackle this one because the embedded assumption aren’t just sewage, they are toxic to dealing with the current depression we’re in. Let’s start with the New York Times (I incorrectly attributed this first quote to Kevin Drum, for which I sincerely apologize):

A return to the drachma is unlikely to offer a quick cure for Greece’s ills. Default on the nation’s $500 billion in public debt would become a certainty, depositors would take their money out of local banks and, with a sharp devaluation of as much as 50 percent, inflation would loom. A return to the international credit markets would take years.

It didn’t take years for Argentina when they defaulted.  When Iceland told Europeans to go take a long flying leap of a short pier, it didn’t take them years.  In fact, my best guess is it would take a year, maybe less.  There is too much money chasing far too few returns.  Contrary to the idea that there isn’t enough money in the world, the problem is that there is too much, and it is chasing diminishing returns.  Remember a default isn’t a bankruptcy, in a default Greece says “we aren’t paying this back as scheduled, we’ll pay you back… eventually”.  My suggestion would be to transfer it into 100 year bonds with 1% interest.  If creditors don’t like that they don’t have to take it, they can then try and collect on their credit default swaps, but if they make that claim, the Greek government considers that debt cancelled (you don’t get paid twice.)

Moreover, once Greek returns to the Drachma, it can print money.  At that point it can’t default on any new bond issues as long as they are issued in Drachma. On to Kevin Drum:

Here’s the thing, though: Greek debt is largely held by German banks that made the loans. [See update below.] If Greece has been irresponsible, so were the German banks that happily loaned out the money. So if Greece defaults, the banks go kablooey. But they’re too big to fail, which means the German government would be forced to bail them out. And guess where the bailout money comes from? Tax dollars.

This means that German taxpayers have a bleak choice. They can shovel lots of money to Greece to keep them from defaulting, or they can refuse, and then shovel lots of money into German banks to keep them from collapsing. Either way, German taxpayers are going to foot the bill.

No, no they don’t have to bail out the banks.  Not for the full value of the default (if Greece just said “we won’t pay”, as opposed to “we’ll pay at some point”.)  The banks have shareholders and bondholders.  Those institutions and people take the losses.  Some of them are public (pension funds, etc…) but many of them aren’t.  Let them eat their losses.  The banks go under, you refloat them, but the cost of doing so is far less than paying off all the bad loans, because the private actors have taken their losses and any excess losses, well, they’re just written off.  Same as when you realize cousin Fred ain’t ever paying you back than $100.  It’s gone.  Done.  Over with.

The only reason “all the debts” must be paid off is because the rich demand it.  They don’t want to take their losses. This is what should have been done in the US.  It is what should be done in Europe.  It is what our lords and masters refuse to do at all costs, because the people who own them, or they themselves, or their friends, or their lovers, are the ones who will take the bath.

(on defaulting and going to the Drachma)

But it puts Greece into a death spiral. They can’t pay their debts, so they cut back, which hurts their economy, which makes them even broker, so they cut back some more, rinse and repeat. There’s virtually no hope that they’ll recover anytime in the near future.

According to the IMF, hardly an organization that wants countries to default, the effect on the economy of defaulting is one year of sharp pain, followed (perhaps) by a few years of lesser growth than otherwise.  In other words, not that bad, and no worse than Greece has already suffered.

More Drum:

If Greece exits the euro, it will become terrifyingly obvious that other weak countries might exit too. Portugal, Spain, and Italy are the obvious candidates. Investors, spooked at the thought of their money being stuck in a country that might exit the euro and devalue all its bank deposits, would start huge runs on banks in those countries. The ECB would have to intervene and provide liquidity without limit. It would be a disaster.

Uh huh.  Or those countries could simply slap on currency controls, which experience shows (most recently and clearly in the Asian currency crisis of the 90s), works.  And permanent austerity, which is what France and Germany want to impose on Italy, Greece and Spain (with the apparent cooperation of their political classes, I might add) will erode the value of the bank holdings in time anyway.  Drum’s not exactly wrong, but it’s the other options, which never get mentioned, which matter.

There are economic tools for dealing with these issues.  Capital and currency controls are one of them, the distinction between default (we’ll pay you eventually, as opposed to we’ll never pay you) is another.  The question of who is being bailed out (private investors, in large part) is another.  And bailing out those investors is a political act, their money is their political power.  The current political class, who is complicit with the current monied class, of course wants to bail them out.

All of this is before we even get to the horribly anti-democratic nature of all of this: the repeated refusal of the political class to allow referendums, the complicity of all major political parties in the process (notice there is no party to vote for if you want to default), and so on.

There is no actual democracy in any part of the world which is attached to the Wall Street centered financial system.   Calls can run up to 1000:1 against TARP and it will pass.  Strong majorities can be for or against particular policies and if the elite disagrees, that’s all that matters.  There are no parties to vote for if you are against the current system.

In a sense, this is fair.  Westerners thought that they could have consumer democracy: they didn’t have to participate in it except at election time, when they would vote for parties and platforms paid for and produced by someone other than them.  Coke(tm)/Pepsi(tm) politics – you have a choice, you can choose either Coke or Pepsi!  Politicians aren’t paid by you (their salaries are the least part of their real income) why would you think they care about your concerns?

You don’t pay for politicians or politics.  This is the Facebook rule: if you don’t pay the freight, you aren’t the customer, you are the product.  Politicians compete for the money and favors of the rich, and what they sell is the ability to wrangle you: to pass the austerity bills, to cut the benefits, to privatize the jewels of the public system, to force through the multi-trillion dollar bailouts.  They control government for the benefit of the rich.

And the rich pay all the way down the line.  They control the media, right down to the bottom, to make sure that what is discussed is what they want discussed, in the terms they want it discussed.  That default isn’t that bad: forbidden.  That currency controls mitigate damage in these circumstances: forbidden.  That lenders will lend to defaulting countries almost immediately: forbidden.

I will discuss the pointlessness of media and “popular sentiment” in a post soon.  In the meantime, realize that even the supposed left feeds you intellectual sewage on a regular basis.

50 Responses
  1. November 4, 2011

    LOL. Drum was one of the first bloggers I followed, but I got fed up and refuse to read him anymore. I saw Digby’s link and I felt embarrassed for her. I think I even saw links in other places too, which surprised me. I was actually starting to get curious if he said anything worth reading. Thanks, Ian, for settling that. And as much as I love reading Hullaballoo, I sure wouldn’t recommend it as a place to read about economics or finance.

    I was very disappointed today when I read that the Greek referendum was called off. I guess it was a foregone conclusion that nobody wanted concluded.

  2. November 4, 2011

    Sadly Drum is a tool and pretty much always has been. But, he’s always been a member in good standing of the Kewl Kids.

    I was in Malaysia a few days ago and recall Malaysia was one of maybe two countries to institute currency controls in the wake of the financial crisis in 1998. They’ve done very well, even though the IMF pitched a massive bitch.

    Indonesia, on the other hand, followed the IMF’s advice and has never recovered to the level of prosperity they had before 1998. The infrastructure, built in the late 80s and early 90s is now crumbling and the only tourists who visit are hard bitten, well traveled types who know a bargain. Or the Bali set, but the Bali set goes no where else but Bali. Ughh.

  3. jcapan permalink
    November 4, 2011

    “Politicians compete for the money and favors of the rich, and what they sell is the ability to wrangle you: to pass the austerity bills, to cut the benefits, to privatize the jewels of the public system, to force through the multi-trillion dollar bailouts. They control government for the benefit of the rich.

    And the rich pay all the way down the line. They control the media, right down to the bottom, to make sure that what is discusses is what they want discussed, in the terms they want it discussed.”

    The sweet music of a ball hitting a bat at the center of its percussion. As mind-numbingly obvious as these observations are, it’s gratifying to see them made nonetheless, given how much toxic bilge one has to wade through. The bald fucking truth is downright epiphanic in the midst of so much disinformation. If Drum and Digs aren’t getting money from our overlords, they sure as hell should be.

  4. par4 permalink
    November 4, 2011

    You are reinforcing the fallacy that liberals like Drum and Digby are of ‘the left’. Scratch a liberal and find a Fascist. Look at the Lib Dems and Tories in the U.K. or the “far right” decade long liberal/conservative coalition that just got voted out in Denmark. Now make the comparison to the Democratic Party here in the States.

  5. tBoy permalink
    November 4, 2011

    Unless this guy’s information is wrong Greek public sector debt is held largely by Greek banks. More than everyone else combined.

    http://blogs.independent.co.uk/2011/10/17/who-is-holding-greek-debt/

  6. someofparts permalink
    November 4, 2011

    Maybe I should start a website for gringo geezer retirement planning with a clue, expat special. Start by featuring all the locales who flipped off the banks and have quickly bounced back, with bright futures and everything. Reserve your little piece of the reality-based community early. We have a variety of destinations for every personality – from Iceland to Malaysia.

  7. Suspenders permalink
    November 4, 2011

    Even without Wall Street type influence, I’d still say there’s very little actual democracy in any place goverened through “representative” government. I think representative “democracy” has shown itself to be more or less a sham from an actual democratic viewpoint, if not right away than certainly in the long run, because of the tendency of the system to become oligarchical and un-representative. If there aren’t a large number of popular referendums/direct democracy built into the system, then it isn’t very democratic.

  8. BDBlue permalink
    November 4, 2011

    Thanks for doing this. When I saw this linked at Digby’s place, I took a quick look because usually I find Drum’s analysis to be shallow and mostly wrong. I found it to be so again, but didn’t have the time or inclination to explain why. You do a better job than I would with these things and now I have a handy link. Not that I think Digby reads comments. IMO, Digby’s strength was always in deconstructing the right-wing GOP talking points. That’s become a lot less useful these days and now, unfortunately, her site is mostly partisan hackery (the addition of David Atkins sure hasn’t helped).

  9. Kevin Drum permalink
    November 4, 2011

    I don’t really mind that you think I’m an idiot, and you make some points that I agree with. But why do you attribute that first quote to me? (“A return to the drachma….”) I didn’t write that, or anything like it. Where did it come from?

  10. Noni Mausa permalink
    November 4, 2011

    “…Contrary to the idea that there isn’t enough money in the world, the problem is that there is too much…”

    Yes. I have made the argument that ordinary measures of inflation don’t account for the effect of “gated inflation,” i.e. a large number of people have no money to speak of, but a handful have oceans of it, and mostly use it to either impress each other, influence political and judicial decisions, or become owners of real goods previously owned by many people, or not privately owned at all. You can be a much more successful rent-seeker if you own all the houses, trains, water supplies and so on.

    Money is simply a collectively accepted abstract lever for commanding the efforts of other human beings. At some point, if people fully grasped this, they would cease to buy into a system that inevitably left them the short end of the lever. If they had a choice to get out of the game (like homesteading land, or moving to Jupiter) many would do so and the leverage on labor would lose strength. In the absence of interstellar travel, one good option for the leverage-wealthy at this point in time is to invest in ownership or political control of all the essentials, leaving the 99 with few choices but a sharecropper existence, joining the Roma, heading to the mountains to build an insurgency, or suicide.

    “Ownership Society?” Oh yes. Just not for you.

  11. November 4, 2011

    “unfortunately, her site is mostly partisan hackery (the addition of David Atkins sure hasn’t helped”

    Yes, thank you. She used to have some good things to say, but of late pretty much all of the liberal voice has been devoted to laughing and giggling about the futility of Republican trivia. The “left’s” inability or unwillingness to examine or discuss its own policies and to wallow in hubris merely at the futility of the other side is pathetic.

  12. November 4, 2011

    My heritage is Greek so I have a great interest in what’s happening. There has been years of bad government in Greece. Military coups and mostly run by far right governors. I remember problems from back in the 1960s. If you ever saw the movie “Z” you would understand the problems til this day in Greece.

    I agree with Ian that Greece should pull out of the EZ. The country really can’t take all the years of austerity that is being pushed on them Unemployment is high, 30%. The people of Greece can’t take any more. And right now, in Greece, the people are blaming the Germans. Those feeling are from WWII but still strong.

    I’m hoping they pull an Iceland and get out of the EU and back to the drachma and maybe it will teach the EU to let the banks fail and start a new bank with regulations to protect the people of Europe.

    I can’t completely blame Kevin Drum and Digby because I don’t think they truly understand the thinking of the Europeans . I think the way the EU was set up to begin with was all wrong.
    I recommend that they speak to more Europeans to get an idea of what’s happening. Just like here, in the States, the governments have colluded with the Rich and Big Banks and the people suffer.

  13. November 4, 2011

    The quote is from the New York Times via Americablog in a post that cites Digby and Drum.
    http://www.americablog.com/2011/11/greek-drachma-to-return.html

  14. November 4, 2011

    Atrios has been supporting default for some time: http://www.eschatonblog.com/2011_09_18_archive.html

  15. Ian Welsh permalink*
    November 4, 2011

    Kevin, my apologies on the first quote, I will correct.

    John Emerson: Atrios is almost always good on economics. Atrios’s limitation (and I like him a lot) is that he won’t explain anything long form.

    tBoy: good point. And if it’s mostly owed to Greek banks then you just change it to Drachma, no big deal. But Germany ain’t worrying about Greek banks defaulting on Greek debt. It would be interesting to know who owns those Greek banks, and who holds their bonds, mind you.

  16. November 4, 2011

    I was one of Atrios’s first 50 or so commenters. He’s worn very well compared to a lot of the other now-majors.

  17. November 4, 2011

    Atrios is almost always good on economics.

    Especially amazing given that he’s a PhD economist.

  18. Ian Welsh permalink*
    November 4, 2011

    There are a number of huge issues with economics as a discipline, but perfectly vanilla macro-economics will, and did, predict the housing and financial bubbles if you had the guts to follow the math where it led. Basic macro also prescribes about 2/3rds of the solution, but doesn’t deal properly with social issues, with supply bottlenecks and with the red queen’s race.

  19. digby permalink
    November 4, 2011

    I excerpted Kevin’s post as a “simple Q&A” on the topic and linked to several other posts by various people with different views. My only comment was “yikes”, which last I heard was not an approval, but a reaction.

    I’m not an expert on the Eurozone or the implications of default, bailouts, currency and the rest and haven’t actually written anything on the topic. Contrary to what many of you apparently think, there are varying points of view on the possible fallout of the various scenarios, even among people you respect. I’m glad you’re all so sure of yourselves, though. It certainly makes me trust your judgment.

    But do feel free to bash me for being an ignorant twit and partisan hack for failing to take a position on things I’m still sorting out but offering some links to others who are talking about it. That’s what smart people do.

  20. November 4, 2011

    You asked who owned the Greek banks. Check here:

    Greek Banks: Who Owns What

    http://www.wikigreeks.org/node/3545

  21. November 4, 2011

    Sorry, here’s the link to who owns Greek debt: http://www.thedisciplinedinvestor.com/blog/2011/10/18/who-owns-the-greek-debt-anyway-a-list-of-banks-and-institutions/

    Without preview, didn’t know all that junk would copy.

  22. dandelion permalink
    November 4, 2011

    What you’re really documenting here is the complete divorce of the so-called liberal or “left” from anything to do with economics or economic justice in favor of social justice issues that primarily benefit a certain income strata. That’s been a problem for years. Call it the “white collarization” of the “left.”

    It used to be that the “left” was grounded first in economics.

    Now it’s very hard to find anyone on the left side of the spectrum who ever even cracked one econ book not to mention having looked at Marx, Keynes or Modern Monetary Theory.

    And yeah, it’s way easier — and so much Kewler — to make fun of Sarah Palin and Herman Cain than it is to read and understand the implications of MMT.

  23. November 4, 2011

    dandelion, don’t know where you’ve been looking but I’ve always checked all the econ sites. As far as Palin and Cain, the media darlings, I, personally, don’t pay attention to that. But unfortunately they do make headlines, both right and left.

    Why is economic justice more important to you than social justice? And what exactly is your definition of “economic justice”?

    What are you trying to say? Was FDR more into Economic or Social Justice. Or maybe a mixture?

  24. November 4, 2011

    Sadly, the New Deal was mostly about economic justice. Segregation was untouched, for example. No one wants to return to that.

    But it’s not supporters of economic justice who ignore the contemporary social justice movements, it’s the other way around. Many social liberals who are not merely indifferent but hostile to economic justice. Andy Sullivan is a prime example, but it’s not just one or a few individuals. It’s a powerful and sometimes dominant wing of the party.

  25. November 4, 2011

    But it’s not supporters of economic justice who ignore the contemporary social justice movements, it’s the other way around.

    I’m going to have to disagree with that, John.

    While it is true that they really can’t be decoupled, I’ll agree that there is often an intellectual schism between the two. And where that persists, I would argue that it is at least seen – by some minority populations – as being more strongly held by those who are focusing on economic justice. In some sense the OWS movement can be characterized as being in this camp. While there is a great deal of effort being made to be inclusive, the fact that the two are hand-in-glove is perhaps seen as being taken a bit for granted by the movement.

    While it is healing and moving in the right direction, there are pockets of folks (I know of some) who still feel that this is a movement for an injured white middle-class, and that – socially at least – things will return to business-as-usual once they achieve redress.

    I’ll repeat that these two issues can’t realistically be separated, and so this is largely a matter of perception. Issues that are being taken seriously, by all accounts. One hopes that perception and reality will align, as the true strength of the movement cannot be realized without the full-throated participation of all of us, together.

  26. November 4, 2011

    But do feel free to bash me for being an ignorant twit and partisan hack for failing to take a position on things I’m still sorting out but offering some links to others who are talking about it. That’s what smart people do.

    I’m starting to wonder about your hypersensitivity to any criticism at all, digby. Even questions seem to put you into a ‘state’ these days.

    Actually, Ian is quite correct about the essence of the econo/political quandry we’ve been in lo these many years, and he’s right about the simplicity of potential solutions — if anyone who can do anything about it actually wants a solution. To all appearances, they don’t. So, realistically, we’re going to be stuck where we are into the indefinite future. Apparently a sufficient number of people are profiting from the current state of affairs, so… there you are.

    Of course all this could change in an instant if someone could figure out how to pull the plug on the hypnotic control the financial sector has over governments large and small of every ideological stripe throughout the whole wide world.

    No one has figured out what will work. Telling them “not another dime” or simply to”wait,” seem to be the Great Unmentionables in polite company. Because they are not said, not even in whispers, the plundering continues unabated, with the active complicity of governments everywhere.

    What does Kevin think telling them “No Más” would really do? But there’s the thing: it isn’t even considered. Even the suggestion that someone might say it — through a referendum, perhaps? — is met with complete incredulity. “You can’t be serious! No one in their right mind would even think such a thing!”

    Yet until somebody does and sticks with it, what needs to change in the econo/political sphere won’t change.

  27. BDBlue permalink
    November 4, 2011

    Weighing in on the economic/social justice issues, while I agree they are tied together, I do think it’s easier to address social justice issues when the economy is doing better than when it is doing worse. It’s easier when there’s a secure safety net than it is when we’re gutting it due to austerity. IMO, there’s a reason why the Civil Rights movement and the women’s movement saw much of their success came after the New Deal and amidst the war on poverty. And then stalled in the 1970s when the economic outlook and policy changed.

    The elite essentially pit various groups of people against each other for economic gain. That’s not new. But the importance of such gain increases in times of economic distress. Given the collapsing social safety net, it’s actually not crazy to resent any government help someone else gets because that help could give them a competitive edge over you and that could mean the difference between whether your kid eats tonight or not. We see it all the time – the desire to take away some benefit others have. Now part of that may just be a meanness – we’ve certainly become a very cruel country – but I would argue that even the meanness is largely driven by economic fear and desperation. Look at the backlash against illegal immigration. It has always existed, but wasn’t nearly as big an issue until the economy tanked and unemployment increased. Are there racist whites who always want to see black and brown people fail? Of course. But I think a rather small percentage is driven primarily by racial animus (maybe 10-15%). Mostly what you have is cut throat competition for any scrap from the government or private sector and a desire to leverage whatever benefit you have over others for survival.

    Which, of course, doesn’t make it right and makes it harder to get any kind of economic justice, but I do think social justice is pretty much impossible without economic justice. Sure, you can get gay rights, but that benefits just as many rich people as it does poor (if not more). When it comes to institutional racism and patriarchy, people are not going to give up their racial and gender privileges if that means falling in a collapsing economy.

  28. BDBlue permalink
    November 4, 2011

    One more thing – the other challenge with both the economic and social justice movements is one my father flagged last weekend, which is that nobody gives a shit about poor people (other than keeping them in their place). That’s not strictly true, of course, but it is true that that’s been the policy of the US Government and the position of most of society since before the nation was founded. That hurts both the economic justice movement and the social justice movement.

  29. November 4, 2011

    ” In the meantime, realize that even the supposed left feeds you intellectual sewage on a regular basis.”

    President Obama was powerless to do better than he has.

  30. kidkawartha permalink
    November 4, 2011

    Would really like Ian and the commenters to break down Michael Lewis’ Vanity Fair piece on Greece in light of this post- http://is.gd/RJkbe4 It’s like an alternate financial universe.

  31. November 4, 2011

    “While it is healing and moving in the right direction, there are pockets of folks (I know of some) who still feel that this is a movement for an injured white middle-class, and that – socially at least – things will return to business-as-usual once they achieve redress.

    When a group is accused of being too middle class, the accusation is that it’s ignoring economic justice. What you’re saying isn’t that the OWS group is too concerned with economic justice as opposed to social justice. What you’re saying, rightly or wrongly, is that the OWS group is just fighting to protect its economic *privilege*, and is to that extent working *against* economic justice.

    Of the groups fighting for social justice (minorities of various sorts) some (specifically most black and Hispanic Americans) are inextricably involved in the fight for economic justice at the same time. My own opinion is that all put together, the minority-oriented social justice gains of these two groups over the last 40 years (since 1971) have been worth less to the actual living and breathing members of these groups than a 2% decrease in unemployment or a $2.00 increase in the minimum wage would be. And these are also the groups hurt worst, proportionately, by collapse of the housing bubble.

  32. November 4, 2011

    I’m starting to wonder about your hypersensitivity to any criticism at all, digby. Even questions seem to put you into a ‘state’ these days.

    First, if you don’t know that that’s obnoxiously sexist, you have a serious problem. You sound like a good old boy talking about his silly wife.

    If someone said the things below about me, I’d be “in a state” too:

    If Drum and Digs aren’t getting money from our overlords, they sure as hell should be.

    You are reinforcing the fallacy that liberals like Drum and Digby are of ‘the left’. Scratch a liberal and find a Fascist.

  33. November 4, 2011

    @John Emerson & @BDBlue – just to be clear, I was pointing out the perceptions from some blocks of people – not my own. I stress that these are perceptions, not necessarily reflective of the motives or intentions of the OWS movement. I’m one of the “well-intentioned” whites who enthusiastically endorses it, after all.

  34. November 4, 2011

    One thing that never gets mentioned in this discussion is that it is proceeding on a false premise. The premise that Greece is a hopeless debtor state simply isn’t true unless – as is conventional – we do not include Germany’s substantial debts to Greece. Germany has been in default of its WWII debts to Greece for going on 70 years, and has refused to pay, even to the extent of defying court orders. If you take into account Germany’s debt to Greece, including decades of default interest, Greece is a net creditor, because Germany owes Greece many times more than Greece owes to anyone else, combined.

    If there were any pretence of seriousness in the media coverage, we’d all be debating over whether Greece can be convinced to reschedule Germany’s debts in order to avoid it having too devastating an effect on the federal budget.

  35. Bernard permalink
    November 5, 2011

    there is no separation of economic and social justice possible. one is reliant upon and responsible for the other. and as we have seen the loss of one goes hand in hand with the other.

    Keeping us all fighting on the plantation is the main goal and is highly successful. defining down OWS is part of the “divide and conquer.” letting the poor white know that he could be as bad off as the Hispanic, Black or Women,(minority) pitted against each other. worked very well down here in the South after the war. To keep uppity Whites in their “place.”

    the plantation must and shall continue. as it has. divide and conquer works, really does.

    that anyone would ever expect the Democrats to stand up to the Republicans when both are essential players in the Looting is something i see in very few blogs. and for anyone, in particular Kevin Drum, to have any respect for Obama or excuse his Manchurian/Republican behavior is to disrespect all those believed inHope and Change stood for something. those who blindly expected Obama to be left of Center and not to the Right of Mussolini. Accountability is what has been what this is about. Holding the Thieves and Liars accountable. End the Corporate State, Enforce the law for the 1% too, not just the 99%.

    Obama being a liar is typical, while being a willing accomplice to the Terrorist/Bushian empire is not what any left of center expected. Most every word out of Obama’s mouth seems to have been and continues to be mostly lies, when his actions are listed. I”d have voted for McCain, if i’d known turncoat Obama was worse than any Republican, even that vacuous Caribou Barbie or batshit crazy Michelle Bachmann. Obama gave Republicans the Key to Social Security and Medicare. Extended Bush Tax Cuts. Cutting safety nets is a Republican trait, if i follow Party doctrine correctly. or it used to be. Yeah Obama cares, but only for his Masters approval, not ours.

    very few blogs talk about how both Sides of the Party are screwing the 99%. how Democrats are worse than Republicans in their screwing of the Middle Class. After all, i have always expected Republicans to screw America. that is their purpose in getting elected. always has been since Reagan. nothing new there.

    what is new is the tact, in silent complicity and outright lies Democrats spew abetting the Republicans in the plunder of America. but few blogs ever say a bad word about how the Democrats are. Democrats who never, ever stop the Republicans, much less use accepted Republican methods. very few blogs EVER dare to say the Democrats are half of the problem with the Masters of the Universe, et al. The Democrats don’t fear their base, they run over them constantly, while saying, “oooh, i will throw you to the Republican wolves if you don’t vote me in.”!!!

    somehow the idea of Party loyalty prohibits sustained criticism of any on the D side, Obama included, or steadily focuses the blame on Democrats. like Blue Dogs are somehow better than any outright Republican. weird, like cutting off one’s nose to spite one’s face. weird. Keep the Bread and Circuses going. Don’t look deeply here, nothing to see, move on please!!

    the outright use of FEAR by so called Democrats about letting Republicans “take” control of the Government/power. like the last 30 to 40 years haven’t been that way already. ever seen the Democrats used the filibuster or other “Republican” means of running the Senate. Such tripe. always such pleasing begging by Harry Reid or Pelosi to take “impeachment” off the table. or have Democrats like Bart Stupak screw Women rights. the list is sickening. and endless. Surrender monkeys, indeed.

    the 11th Commandment not to speak ill of the Party(D/R), just like Communism in Soviet Russia.

    if OWS does anything good, like keeping the conversation away from Media/Republican talking memes, it will have served its’ purpose. and that is more than most blogs on the internet. OWS has to go for the jugular, go where the Rich live and sleep. Across from City Halls, away from the Rich’s homes and playgrounds, only allows the Masters to play more games with their “black agents” like we see in Oakland. divide and conquer. send in the homeless and other “non valued” members of Society to create dissension, “problems,” and violations of city ordinances, then “reclaim” the space in the guise of “cleaning up” and ending health and safety “issues” OWS suddenly becomes in violation of.

    just like the homeless, what OWS is symbolizing/inequality, wont go away until change happens.
    But in the meanwhile, i’ll just hold my breath expecting Democrats to help us and not their brethren Republicans in their total obeisance to the Banksters/Owners/Masters. and also i’ll wait for Obama to stand apart from and prosecute the criminals in Wall St. After all, Obama can’t do anything cause of all those Nasty Republicans, as i read on blog after blog.

    interesting times, indeed.

  36. November 5, 2011

    I don’t think anyone is going to leave the euro just yet. There is alot of panic. Everyday the headlines make things worse. I think we are heading for another global recession and this Greece problem is kind of like the veil. I have plenty of friends that work in finance in London and Hong Kong. A few months ago everyone was saying the east is better than west at the moment and plenty of people were moving to Hong Kong for work, now the tide seems to be turning everything seems to be going down in the job and property markets. Italy is now becoming a major concern as well if the current situation carries on in the same direction 2012 is going to be one bumpy ride!

  37. Ian Welsh permalink*
    November 5, 2011

    I don’t think anyone’s leaving the Euro yet, either. I think they will eventually.

    Greece, Italy and Spain would all be better off outside it, but their pols aren’t going to give them an up or down vote on it.

  38. jcapan permalink
    November 5, 2011

    John Emerson:

    “First, if you don’t know that that’s obnoxiously sexist, you have a serious problem. You sound like a good old boy talking about his silly wife.”

    True, though it doesn’t negate Ché Pasa’s otherwise thoughtful comment.

    These are the folks we’re slanging:

    “But the reason I voted for Obama in 2008 is because I trust his judgment. And not in any merely abstract way, either: I mean that if he and I were in a room and disagreed about some issue on which I had any doubt at all, I’d literally trust his judgment over my own. I think he’s smarter than me, better informed, better able to understand the consequences of his actions, and more farsighted.”

    -Kevin Drum, April 2011

    http://motherjones.com/kevin-drum/2011/03/obamas-judgment

    And Digby, well, jesus, I don’t have all night. But this post says it all:

    http://digbysblog.blogspot.com/2010/01/treasure-by-digby-i-somehow-missed-this.html

    “Pick up your muskets, kids, or STFU.” Of course, this was pre-OWS, before the DFHs became so fashionable.

  39. S Brennan permalink
    November 5, 2011

    As many comments as Digby has scrubbed of mine, it leaves a bad taste in my mouth to see her here freely commenting…safe in the knowledge that Ian Welsh plays a straight game with his commenters…I’m sure he has deleted comments at one time or another, but not wholescale…and not for factually based criticisms of political entities.

    As for Kevin [I love the Iraq Invasion...until it becomes unkewl] Drum, we go way back, his record of being wrong on serious issues of the day surpasses that of a typing monkey in a dark room…

    …whereas the only criticism I can lay on Ian are tonal and tempo differences that a piece should take…and that can only come when you are willing to tell the emperor’s that his skinny ass is standing buck naked in front of a large crowd of onlookers…something neither Drum or Digby’s have ever been able to do.

    [Assuming the ID's are correct]

  40. Itsdamncold permalink
    November 5, 2011

    @ S Brennan, I’ve always respected Ian’s ability to take criticism and insults with grace and wit. Bloggers, like digby. who heavily censor their comments, are scumbag cowards who can’t take the heat.

  41. S Brennan permalink
    November 5, 2011

    BTW Elise,

    Good comment…just to follow up on the “people in glass houses” theme of Germany and Greece.

    http://www.spiegel.de/international/germany/0,1518,769703,00.html

  42. Ian Welsh permalink*
    November 5, 2011

    I have deleted some comments, not many. Mostly for ad-homs beyond what I’ll tolerate, a few times for sheer quantity of lying. (It should be noted that there are times/threads where I don’t read all the comments, mind you, though most threads I do.)

    Probably less than 15 comments since the blog started.

    To be fair, though, I do not get the raw sewage the bigger blogs do. It’s easy to leave comments alone when your commenters seem to respect the line and when a gentle “keep it down” is usually respected.

    Locked two or three threads, too, though it’s been a while since the last one.

  43. beowulf permalink
    November 7, 2011

    “But do feel free to bash me for being an ignorant twit and partisan hack for failing to take a position on things I’m still sorting out but offering some links to others who are talking about it. That’s what smart people do.”

    I think she paid you a compliment S Brennan. Everything in the first sentence after “partisan hack” is a precatory statement (which, like “A well regulated Militia, being necessary to the security of a free State”, can be safely ignored).
    :o )

  44. CMike permalink
    November 7, 2011

    Ian Welsh writes:

    …Remember a default isn’t a bankruptcy, in a default Greece says “we aren’t paying this back as scheduled, we’ll pay you back… eventually.” My suggestion would be to transfer it into 100 year bonds with 1% interest. If creditors don’t like that they don’t have to take it, they can then try and collect on their credit default swaps, but if they make that claim, the Greek government considers that debt cancelled (you don’t get paid twice.)

    The Greek government wouldn’t be cancelling any of its debt which went into default triggering private sector counter party pay offs. If the government did that then it would be repudiating its debt, not rescheduling its terms. I imagine CDS contracts provide either that the counter party takes possession of whatever sovereign debt instrument it pays off on when there is a default or the insured bond holder maintains their possession of the bond and the counter party/underwriter makes up for any interest payment short falls there are on a periodic basis.

    That said, perhaps Ian W. can clarify something for me. What is all this talk about the bond holders taking haircuts but the CDS counter party obligations not being triggered?

  45. CMike permalink
    November 7, 2011

    Digby doesn’t do policy. She does contempt for a whole range of others.

  46. Ian Welsh permalink*
    November 7, 2011

    I dare say you are correct, though different parts of an essay which was responses to particular excerpts.

    But CDSs are largely irrelevant anyway. The money all comes from the same general group of people. If Greek default is enough to cause German banks to fail, then them claiming the CDS’s isn’t going to make a damn bit of difference. Who pays the CDSs? The problem is systemic, if the financial system can’t afford the defaults, the financial system can’t afford to pay the CDSs.

    CDSs do not reduce systemic vulnerability, they increase it to the extent people think they provide protection. I would, personally, outlaw them.

  47. November 7, 2011

    I stumbled accidentally across this blog and was astonished as well as excited about the quality of both the posts and the comment section.

    Greece people who have still a job, don’t produce much, they mainly trade and administrate. Services have become the dominant sector of Greece’s economy, contributing about two-thirds of GDP.

    Greece’s mediterranean climate is well suited for growing food, but poor soil and inadequate precipitation are a hinderance. Greek agriculture still employs 528,000 farmers, 12 percent of the labor force. At present, agriculture is subsidized by the EU, but Greek farmers have driven themselves into a corner by growing cash crops like cotton and tobacco, that the EU can get more cheaply elsewhere.

    Men induced environmental damage increases the economic problems. Fishing is declining because of depleted fish stocks and major forest fires destroy large quantities of forests and contribute to soil erosion and desertification. Soil erosion has been ongoing since ancient times (already noticed by Plato). The EU prescribed policy of olive farming is exacerbating soil erosion.

    A disaster plan for Greece would have to include:

    Reversal of the urbanization process, that took place in the last century and a massive buildup of subsistence gardening and farming.

    Reforestation campaigns (like SAE, Penteli SOS Volunteer Group, Friends of Mt. Taygettus) on a nationwide basis.

    Increased building of solar energy farms.

    Retraining the workforce, refocusing education, and shifting employments from services to small scale local (and preferably high tech as well as environmental friendly) productions.

    It is not possible to address the details of training and education here, yet a few buzzwords for a start: A broad based curriculum should teach social skills and subsistence skills, but also provide gateways to high tech (mathematics/programming, engineering, biology and chemistry).

    The global view:

    Greece’s default alone would not bring down the global financial system, but with Italy, Spain, Ireland, Portugal waiting in the wings, it could be the first domino stone.

    The unraveling of the global financial system and the ensuing recession would mean hardship for billions and would force people all over the world to significantly change their lifestyle, but would reduce trade and international dependencies, would reduce fossil fuel consumption, waste of resources, pollution, and environmental destruction, would give a chance to reorganize societies.

    It could also mean chaos and more failed states, warlords, a feast for disaster capitalists.

    Preparing for the worst case scenario: Building local networks (neighborhood committees), subsistence economy, barter trade, co-ops, counter currencies.

  48. Pepe permalink
    November 7, 2011

    But do feel free to bash me for being an ignorant twit and partisan hack for failing to take a position on things I’m still sorting out but offering some links to others who are talking about it. That’s what smart people do.

    If you don’t know enough about the topic to offer your own opinion, how can you justify linking to anyone else speaking on the subject? Rather, how do you know that what you linked to is any good?

    I would think that smart people would educate themselves about a subject in which they were interested; read a lot about it; and then offer an opinion. Or I guess you could just aggregate links, you know, within a narrow range of opinion.

  49. Formerly T-Bear permalink
    November 15, 2011

    Seems the solution was there all along, not to cancel debt, but to cancel democracy, the fatal flaw in Republics. Two democracies have now been replaced with IMF, WTO, World Bank, GS Bankster types, absolutely unelected governments presuming power. This will not end well.

    As how much wealth has been used to buy the market’s emotional “confidence”. I think another meaning of confidence needs to be used, as in confidence scam, confidence game, confidence racket. When are racketeering statutes to be enforced?

    And everyone thought lawyers had their hands in your pockets deeper than your own.

    Demand to see the books before another dime disappears. Facts are your friends, get acquainted!

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