Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: Europe Page 10 of 16

When Will Greek Looting and Austerity End?

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On July 15, 2015

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Back in 2010 a friend predicted it would end when Greeks stormed parliament and beat or hung members of parliament.

It seems that, while that may or may not be literally the case, in general terms it is one of three possible end states. Since there are always enough MPs willing to sign any deal, no matter how bad, because they personally do not suffer the consequences of said deals, bringing the consequences home will be necessary.

The second possibility is the Schauble plan. It is odd that Schauble, though extraordinarily punitive, is willing to offer a pretty good deal for Grexit. He’s worked hard for it, and maybe he’ll be able to force it through yet. So far he has been stymied primarily by the fact that the Greeks will accept any deal, no matter how bad. You can imagine Schauble thinking:

“I want the Greeks out, so I’ll offer bad deals, surely they’ll leave.”

“Hmmm, that didn’t work, I’ll offer a worse deal!”

“No!?  A terrible deal, then?”

“Ah, ha, finally, a NO vote in the referendum.”  (Rubs hands together with glee.)

“Now, an apocalyptically catastrophic deal on one hand, countered with a reasonably generous plan for support if they leave!”

“No? No!?”

So, Schauble, having realized that Greece will not leave no matter how terrible the deal inflicted on them, must now convince not Greeks, but other key European decision makers.

The third possibility is that a truly radical government takes over in Greece: Likely Fascists or Communists. Someone who actually says what they mean about austerity and will do whatever it takes to end it.

Remember, Hitler did turn the German economy around. Mussolini turned around the Italian one.

One can hope it will be a slightly nicer set of people, but we are definitely in a period where the “decent” people mostly don’t have the necessary courage to stand up for anything that matters; certainly not the courage to actually face down neo-liberalism.

This isn’t a joke post, though I wish it was. I want everyone to remember the rule of prosperity and rights.

You have exactly and only the rights and prosperity which are useful to your lords and masters or those you are able to secure from them with force or the credible threat of force.

Any rights or prosperity you have beyond that will always be taken away from you.

Always.

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Syriza Wins in Greece: What It Must Do

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On July 13, 2015

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(Given the way Greek financial negotiations have played out, I think my first take is timely/relevant, and have restored it to the top. Originally published in January. -Ian)

It would have been better if they won last time, Greece is pretty fully looted now. But Greeks thought they were Europeans, and didn’t realize the contempt that French and Germans had for them, nor how willing they were to kill and impoverish large numbers of them.

There is a great deal of hand-wringing in conventional circles over the Syriza win. They are worried about the Greeks exiting the Euro (Grexit) and defaulting on their debt.

Greece should do both of these things, or something close to it. (Rolling the debt over into 100 year bonds at 1 percent, for example.) Greek debt is at a level which is effectively impossible to pay off and has been made much, much worse by all the “aid packages” and “bailouts” given by their “fellow” Europeans. (a.k.a., they should have defaulted years ago.)

As for the Euro, Greece can’t print it, and Greece will need to print money.

I worry that Syriza is serious about negotiating on the debt. There is essentially no chance the Troika (well, really, Germany) will give them acceptable terms on a write-down. Negotiations should be intended only to go on long enough to demonstrate that a good deal is not possible. While they are ongoing, the Greeks should be preparing for Grexit and repatriating all the resources they can. Since Greek debt is under foreign law, debt vultures will go to the courts to seize all foreign Greek assets once Greece does default or restructure its debt.

Greece needs to recognize that it will effectively be a financial pariah, unable to access Western money markets. It will have almost no hard currency, and no ability to buy goods which require hard currency.

This is a huge problem for Greece because it has neither oil nor the ability to feed itself. Syriza MUST have a plan to deal with both these problems. Neither is insurmountable.

For oil, Greece will simply have to make a deal with Russia, Venezuela and/or Iran. Greece will be a pariah state just like them, and they have oil. What does Greece have to offer? Well, sub voce, access to Greece. Greece will be out of the Euro, but it will still have borders with Europe. Once whatever you want into Europe is in Greece, it’s easy enough to get it into Europe. And anything those countries want from Europe, the Greeks can obtain and ship to them. Grey market, baby, and grey market finance, as well.

In terms of food, a deal must be made with a food surplus nation. I would suggest Argentina, which has plenty of food. (This is incorrect, Greece can feed itself, Greeks will just have to eat less imported foods.-Ian)

Remember that Greece has one of the largest merchant marines in the world. It has that to trade, and it has access to Europe to trade.

In addition, currency controls must be put on immediately and the borders must be secured against those trying to move goods out of the country (a.k.a., Greece’s useless rich).

Given that all this will cause Greece to be completely loathed in Washington, London, Berlin, and Paris, they may also wish to consider seizing much of whatever means of production remain in the country. If they want a reason, simply use the Lagarde list of Greek oligarchs who haven’t paid their taxes, and seize their back taxes—with plenty of interest.

The media is playing this as an anti-austerity vote, and it is. But voting anti-austerity for a country like Greece, which can’t feed itself, has no oil, and doesn’t have a lot of industry, is one thing, not being austere is another. If the Greeks want a decent life again, they will have to take on some of the most powerful nations in the world and at least fight to a draw.

Many nations are in the same boat as Greece: Russia, Iran, Venezuela, Argentina. Greece needs to make the necessary alliances with such countries and it needs to align with the rising Chinese block.

Doing this requires a psychological step that many Greeks may be unwilling to take: A recognition that their interests do not lie with Europe and an understanding that Europeans are willing to see them impoverished, homeless and dead. Greeks who are living in the past and think the EU is about prosperity for everyone in the EU need to learn otherwise.

If the Greeks are unwilling to be coldly pragmatic and give up their illusions about who they are, what their fellow Europeans are willing to do to them, and what their actual assets are, then Syriza will fail, and Greece will continue on their path of impoverishment.

I wish the Greeks all the best.

(26/01/15 – There is some dispute over whether the Greeks can leave the Euro and not the EU.  See this paper for a discussion — pp 26-29.)

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Yet Another Deal

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On July 13, 2015

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So, Tsirpas has agreed on a deal. It includes 50 billion in collateral to be managed by a fund controlled by Juncker.

We’ll see if the Greek parliament will pass it.

I have yet to see a single indication that Syriza ever made the necessary moves to allow for an orderly Grexit, though the EU has. They went into this fight relying on the good will of, yes, their enemies. (That they did not realize they were negotiating with their enemies was their first mistake.)

This is yet another step necessary for the end of the neo-liberal era. A tragedy, cruel beyond any justification, but that’s rather the point. Westerners, not just the rest of the world, need to understand who they are ruled by, and that no one is immune to their cruelty.

The EU’s leaders, however, have most likely done what is in their personal self-interest. They are either the people who inflicted austerity, or the politicians who accepted it. Under no circumstances could it be shown that there was another choice with better outcomes. If so, they would be fools or criminals, having inflicted unnecessary pain.

I am particularly amused by the Finnish government’s ferocity towards Greece, since Finland, now that Nokia is dying and lumber prices are down, needs to devalue its currency. Being in the Euro, it cannot, and must instead suffer.

In time, everything the Finns value about their country’s social network will be sacrificed to stay in the Euro.

I don’t believe in people getting what they “deserve,” because we’d all be fools to want that. So let’s just say that the Gods enjoy using our most fervent desires to destroy us.

I’ll keep covering Greece as necessary, but the topic is beginning to become tedious. Horrible people doing horrible things to incompetent fools who refuse to resist, but simply lie there taking kick after kick to the nads while saying, “But we love you, we want to be one of you, do anything to us, so we can prove our devotion.”

I no longer have much preference for how this turns out. It is clear that, while Grexit would be preferable in principle, Tsipras and Syriza could not so much as manage a lemonade stand, let alone handle something as difficult as leaving the Euro under hostile fire and then rebuilding prosperity with Europe opposing them every step.

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Greek Talks Continue

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On July 12, 2015

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Basically the Greeks offered the EU everything they had asked for before and then some, but the EU won’t take it, they want their pound of flesh for being embarrassed by the referendum.

I get that Syriza and some Greeks don’t want Grexit, and will do virtually anything to avoid it, but I’m hoping (probably vainly) that there might be some depths to which they will not sink, some abasement they will not endure, some calamity they will not inflict upon the weakest and poorest in their own society.

Probably not. Not quite sure why I still have faith in humanity to ever do the right thing when any other option exists.

“OK, now that you’re crawling, down on your belly!”

Worms.

Feel free to use this thread for talk about Greece.

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What Does Syriza Have a Mandate to Do?

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On July 10, 2015

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Syriza’s mandate, given twice, is as follows:

End austerity without leaving the Euro.

This mandate cannot be executed. Without leaving the Euro they can cannot reduce their debt sufficiently, nor avoid imposed austerity from their creditors.

Does that mean they must accept any deal?

If they do, they have violated their mandate as well. They have not left the Euro, sure, but they also haven’t ended austerity.

So, they are forced to choose between two parts of a mandate. They may end austerity. Or they may leave the Euro.

I will suggest that since the austerity is what is killing and impoverishing Greeks that, given a choice between these two opposed goals, they should leave the Euro.

The counter-argument is that leaving the Euro will make things even worse.

This is true. But there is a very strong argument that it will do so only for two to three years and that after that Greece would be better off than it would be still in the Euro, and therefore, still in austerity.

It is insane to say, “This mandate has two parts, we cannot do both, and therefore we must choose the one which will lead to suffering for which we can see no end-date, rather than taking a chance will likely end the suffering sooner, and in the forseeable future.”

Greece did have its own currency, you know. And the economy was better then. It is not like no one still alive remembers a Greek economy outside of the Euro. Acting as if the world will end if it goes back to the Drachma is deranged.

That is all.

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New Greek Proposal—Essentially the Same

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On July 10, 2015

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So, this is basically the same deal as they refused last time, just a little worse. There is some talk that American pressure has made Merkel decide to consider a debt writedown, which they will do by extending the duration of some of the bonds. It is unclear if this will really happen.

If this deal, or some form of it even with mild debt reduction, is accepted, Greece will remain under austerity and in depression.

Syriza will say they had no mandate to leave the Euro, and it’s true they never asked for one. But they did have a mandate to not accept this bad a deal, I believe.

More to the point, they did have a mandate to end austerity, and they will have failed.

I think part of this is due to clearly delusional thinking: They really did believe that Europe would let them cut a deal which wasn’t harsh austerity.

Much is incompetence: They did not make the necessary preparations for Grexit. They had no BATNA–best alternative to a negotiated agreement. As such, they basically had to accept whatever Europe offered. If it wasn’t for American intervention, I’m not sure they’d have been able to get even what they’ll get after the referendum. (Americans intervened because a Grexit could have been the first move in Greece spiraling towards the Russian orbit.)

The rest is simple spinelessness. Cowardice. Yeah, I’m just going to say it.  This is a cave.

This is a mistake politically as well. Having failed to end austerity, Syriza will not be the next government of Greece. If they had gone to Grexit and the economy had recovered by the next election, they’d be golden and probably a majority party for a generation.

I wrote what I think the consequences of Syriza blinking (I consider this them blinking) yesterday.

Please read that post. It is an important one. This failure will have huge consequences for the future of Greece, Europe, and, indeed, the world.

Enjoy your weekend, and listen to some 80s ballads.

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If Syriza Blinks

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On July 9, 2015

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So, the EU wants Greece to sign an even worse deal than the “no” referendum already rejected.

If Syriza accepts such a deal, Greece will stay in depression and, likely, that depression will get worse.

Let me be explicit: This sort of thing will not stand. If the moderate left-wing (not center-left, moderate-left) won’t do the job, then someone else will.

That will mean either the hard-right, or the hard-left. People who can credibly say: “When we say we will end austerity, we mean we will do anything it takes. Anything.”

You have all been warned, repeatedly. French Economy Minister Emmanuel Macron said it, so it’s been said by a “real person”:

“Let’s not re-enact the Treaty of Versailles.”

The hard-right is salivating over what is being done to Greece. LePen in France, the hard-right in Britain, and so on. They know that rage, anger, and hate is building as people are smashed in the face over and over again by neoliberal politics. They are thrilled by Cameron’s smash-mouth budget in England. They love the way the refugee crisis is being bungled.

They know how to use the fear, desperation, and rage. And they will use it. People will become so fed-up with having lousy lives and no hope for the future that they will turn to anyone who looks hard-assed enough to fix it and to break with current power structures, who will get (and deserve) the blame.

This is not a game; this is not consequence free. We are fulfilling all the necessary conditions for an age of war, famine, and revolt. Greece is only one domino, but be clear, it is both a crime and a mistake. No matter what happens, the consequences of all these stupid and cruel decisions will be harsh. They will be harsher if the hard-right are the ones who make the break.

Europe has a chance here to negotiate with people who still believe in the European project and who are essentially moderates (Syriza is hardly left-wing at all in historical context, sorry).

There will come a day when they will meet people, from either the Left or the Right, who have no interest in negotiating. Given an electorate willing to follow me, I can tell you that, even in 2010, I would have had only very brief negotiations with the EU if I ran Greece.

Today, people like me who are willing to break things to make a new world are in the minority.

Today is passing.

Be afraid. Be very afraid.

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Where Greece Should Go from Here

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On July 7, 2015

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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.

ENOUGH.

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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