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

Where Greece Should Go from Here

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.)

If you enjoyed this article, and want me to write more, please DONATE or SUBSCRIBE.


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


Chinese Stock Market Woes and the Pre-War World


  1. Mr.Murder

    “wear(where) it is needed” was having a convo today about the topic, said Greece should go the way of Scandinavia, your Iceland take was even better. Agreed on China/Eastern money, India would be smart to join the market there. The Greek reality is it needs currency debase to be competitove or must find alternative niche to attract capital.

  2. bob mcmanus

    Varoufakis is still around, and according to what I heard, Tsakalotos is somewhat the better technocrat, and has been doing much of the gruntwork all along.

    I have no recommendations for the Greeks, but old nationalist models of withdrawal, independence, and isolation don’t suit me anymore. I would rather stay “inside” and fuck up shit til the shooting starts and stops. Greece, in the EU, still has a veto. Greeks have freedom of movement across borders. If it goes to war, let it be versus Greeks + guest workers in Munich. Shut the motherfucker down.

    (This has theoretical backing, Negri, tiqqun, post-Capitalism, accelerationism. There is no outside of neoliberalism.)

    Putin pulling out of Donbass? Let Merkel pay for the unification and reconstruction of Ukraine. Then return.

  3. Nathan Hawks

    I like your logic and argument very much. In the interest of turning this into cogent talking points, I have some questions:

    1. You said: “People who make bad loans MUST lose their money. Without that, it isn’t capitalism and the virtues of capitalism don’t work.”

    The challenge: what passage(s) of capitalist doctrine, is this based on? I am hoping for something straight out of Locke or Smith or such, i.e. a source considered authoritative (or foundational) by the opposition.

    2. Syriza the sellout. Normally in these situations, the first populist revolutionary party to gain power, is actually just a new salesman for the old slaver. Do you think Syriza is a fake revolution, or just playing smart with the delaying tactics? E.g. was the mention of a Nazi reparations discount dismissed so easily in order to disarm the possibility of that argument growing legs, or a delaying tactic, or what?

    I also like your suggestions about what Greece should do… and I have to say, it would be excellent if Greece took the insanely ballsy step of allowing Russian and Chinese military bases, from which to protect economic development in north Africa, which would be most overjoyed to assist in a new economy.

    Only one problem: Where would one put the “G” in “BRICS?” 🙂

    Well, and another problem: how to fight back against Islamophobia? Because World War 2 never stopped being hot for them, and now… well, I’m not trying to accuse Merkel of being a German Chancellor or anything, but some people sure be trying to throw the Arabs even deeper in the oven…

  4. Cliff


    I understand your rage, and I share it. Austerity is murder.

    But Varoufakis has been consistently adamant, for *years*: exit is the greater disaster.

    The situation is awful: death by murder, or by suicide?

    In any event, Varoufakis can always go back to his $100K gig at Austin. He’s said so himself.

    I yearn for a hero, but I don’t see any.


  5. Ian Welsh

    Of, Varoufakis was always wrong about that, in my opinion. I just think he’s relatively competent and willing to stand up.

    Grexit was the right thing to do in 2010, honestly, and yeah, I said so then.

    The problem with people like Varoufakis is that they assume that the people running the state and banking system are like them: essentially sane, not inhumane, technocrats who care about numbers.

    They aren’t. There wasn’t a deal to be had worth taking in 2010. There has never been a deal worth taking. Capital controls and Grexit should have occured in 2010. Greece would be FAR better off if they had, and so would Europe. Now, after virtually all the moveable capital has left the country, they stumble into Grexit.

    I get that this is also the problem of the people: The Greeks loved the IDEA of being in the Euro and were, frankly, delusional about its consts and benefits and about the willingness of Europols to make them suffer.

    But the role of intellectuals, if they have any socially useful role, is to be clear eyed about such things AND tell the truth.

    The Euro was always a bad idea as implemented.

    There was never a deal to be had for Greece that wouldn’t crush the economy.

    They would have always been better in Grexit.

  6. tatere

    it doesn’t look promising:

    “Greek premier Alexis Tsipras never expected to win Sunday’s referendum on EMU bail-out terms, let alone to preside over a blazing national revolt against foreign control.
    “He called the snap vote with the expectation – and intention – of losing it. The plan was to put up a good fight, accept honourable defeat, and hand over the keys of the Maximos Mansion, leaving it to others to implement the June 25 “ultimatum” and suffer the opprobrium.”

  7. Ian Welsh

    Yeah, I saw the Ambrose piece. I didn’t run with it because I’m not sure if true. If it is true, it’s beyond damning and suggests they haven’t done the necessary pre-work for Grexit, which should have been going on all along, even if you thought the odds of it were low and didn’t want it to happen.

    I hope that is wrong.

    If true, then my disgust with Syriza’s incompetence will be sub-nuclear.

  8. Lisa

    Agree, except that neo-liberalism was never an economic theory.
    The ‘economics’ were just a political fig leaf. It is and was a political theory, about what type of society should be formed.

    That was obvious right from Milton Freidman’s British TV series in the 70s.

    The best I can make of it is a desire to re-create an imaginary neo-Victorian British society. With all the classes, power, rentier and wealth concentration, lack of democracy, near universal poverty for the majority of the forelock tigging population and their exclusion from any political power, etc, etc. ‘Gentlemen’ not getting their hands dirty, making their money through being rentiers and speculators.

    Their history is broken though, since that time was a period of tremendous social, political, economic and technical upheaval.

    Interestingly they also throw away Adam Smith who was virulently against rentiers, while modern neo-liberals want to create and entrench, as a dominant force, rentiers.

    Milton Freidman’s dream place in his TV series was Hong Kong, British rule (and no nonsense about democracy or freedom), entrenched elites,oligarchs and rentiers, the average person working 24/7 in (at that time) little more than shanty towns. He went on and on about how good it was, 6 people to a room and all that, children working…heaven.

    That ‘dream’ is what they want to achieve worldwide. With an interesting twist, they are also virulently anti-science and technological development. Perhaps they realise that technical change can upset their perfect society and disturb rentiers.
    Hence the shutting down of manufacturing, science research (except in areas they approve of, like longevity), locking up ideas into endless patents and all the rest. They want a static non changing society after they achieve their goals, with rentiers permanently in a privileged position collecting money from everyone at every point, zero disturbances from democracy, national sovereignty and the rest.

    Govts only allowed role will be as a national security and military force to keep the proles down.

  9. Lisa

    Just to add ‘debts must be paid’ is a rentier argument not an economic one.

    The fact is that debt has an interest rate, a major part of which is to cover the risk of default.
    You lend and take the risk.
    You cannot take the interest money without taking on that default risk.

    Only rentiers want an interest payment and zero risk.

  10. gtg

    Eternal Byzantine stasis…

  11. jump

    Ian, I so want to throw arguments and facts at the technocrats in the EU and US. I also want to stop banging my head against a wall. But values are different.
    You (and I) want a responsible economy that benefits the people, has a commons base and is regulated accordingly.
    And then there are all the decisions that are against that, but can make money for those in control.
    I guess stupid is relative for some.
    Back to those values.
    I think I share the pain.

  12. S Brennan

    “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.”

    Seems like that was the plan all along

    “The ‘evil genius’ behind the euro was actually a Canadian called Robert Mundell…[who] believed, apparently boasted: “It puts monetary policy out of the reach of politicians, (and) without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.”

    “…for (Mundell), the euro wasn’t about turning Europe into a unified economic unit…when crises arise, economically disarmed nations have little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the celebrated European welfare state down the drain.”**


    Lisa; your comment on Milton Mephistopheles Friedman and his “Satanic Verses” was spot on. To my knowledge, the series “Freedom to Lose” has been repeated at least seventeen years in US prime time…to be clear, one economic* viewpoint has had 204 hours of uncontested prime time air.

    *in truth, philosophy


  13. Ghostwheel

    This essay needs to go viral all over the world, translated into every language and sent everywhere.

    We should also broadcast it out into space so alien civilizations know not to do the same thing.

  14. mike

    “Dribblingly inane” is such a perfect statement for our times that I can see future historians labeling these years “D.I.” at the end of each year.

    Unfortunately, there is one way to keep Greece in the Euro and EU while replacing the elected officials with subservient technocrats, which Lisa has described and which would be a “justifiable” way to respond, with substantial local support, to the action you recommend. And I do agree with you that this year would be the first to have “D.I.” added as a result after the blowback it will bring on down a road that may be much shorter than the dribblingly inane could possibly have any clue about.

  15. EmilianoZ

    Neoliberalism is a strip mining operation. It stripmines everything, montain tops, people, cities, countries, … On one side it churns out profits for the few, on the other, it leaves a barren wasteland. Neoliberalism will only stop when it has stripmined everything than can be stripmined.

    Neoliberalism is the final product of the degenerescence of capitalism. It is capitalism when where is nothing left to oppose it.

  16. S Brennan

    More on the wanker who caused this mess:

    “The idea that the euro has “failed” is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do.

    That progenitor is former University of Chicago economist Robert Mundell. The architect of “supply-side economics” is now a professor at Columbia University, but I knew him through his connection to my Chicago professor, Milton Friedman, back before Mundell’s research on currencies and exchange rates had produced the blueprint for European monetary union and a common European currency.

    Mundell, then, was more concerned with his bathroom arrangements. Professor Mundell, who has both a Nobel Prize and an ancient villa in Tuscany, told me, incensed:

    “They won’t even let me have a toilet. They’ve got rules that tell me I can’t have a toilet in this room! Can you imagine?”

    As it happens, I can’t. But I don’t have an Italian villa, so I can’t imagine the frustrations of bylaws governing commode placement.

    But Mundell, a can-do Canadian-American, intended to do something about it: come up with a weapon that would blow away government rules and labor regulations. (He really hated the union plumbers who charged a bundle to move his throne.)

    “It’s very hard to fire workers in Europe,” he complained. His answer: the euro.

  17. Hairhead

    Everybody please note that the Chinese stock market bubble is collapsing — it has lost 30% of value over the last three weeks, over $2 trillion. The stock market bubble was a direct result of the end of the China’s housing bubble. What China’s leaders are going to need is a new distraction/sponge for more money. What would be better than supporting Greece and getting a Mediterranean/African port?

    We are standing at a historical crossroads now, and an isolated and angry Russia, a China desperately needing distraction for its restive populace, and a Greece realizing that the friend it has chosen (Europe) is only its torturer and would-be dictator — that’s a real possibility of a worldwide whirlwind of epic financial, political, and military proportions.

  18. bob mcmanus

    Neoliberalism is a strip mining operation. …yeah, maybe

    Read two things this week.

    One was about a software developer trying to a startup in Thessalonika I think, some weather program who’s customer target was Europe-wide and who had lost his totally essential access to the Cloud. I was wondering about nationalizing this guy, his software, his seed money. No way.

    The other was about smaller towns and villages in Greece that have been totally Walmatized and 7-11’d. The original shopkeepers and the farmers have emigrated in the last few years.

    You talking Grexit, you talking something like Maoist China or Pol Pot Cambodia, putting software developers and professors with hoes back to the soil. What would you do in your city, if they disconnected you from the Internet and Global system?

    Grexit will fail. Grexit will fail. There is no going back from neoliberalism. Marx always knew that, history and technology only has one direction, short of apocalypse. Next system is going to have to include neoliberalism.

    Not sure about the way forward, maybe simply and only the communalisation of finance. But Greece or Ukraine or Syria can not become Cuba or North Korea anymore. Independence and sovereignty is over.

  19. Hairhead

    Independence and sovereignty are not over. Tell that to the ISIS commanders who are mass-murdering people in Palmyra and destroying millennia-old cultural artifacts. Independence can and will be bought with blood and violence.

  20. bob mcmanus

    MacKenzie Wark …pdf, halfway critical on the #Accelerate Manifesto. Wark has written two books on the Situationists.

  21. Ian Welsh

    Greece already produces more food than it needs. No need for a single other Greek to work the fields, though no harm in everyone starting a garden who has land (and the Govt. can distribute plots as well.)

  22. Why stay in the EU?

    The rest of this makes a lot of sense but it is not at all obvious why Greece is better off in a slowly collapsing institution than out.

    The politics of Grexit, with Frau Merkel waving her fiscal finger, are not going to make Greece very welcome at the EU. It will have to figure out how to live in the bigger world. Which, realistically, with a greatly devalued currency should not be so very difficult.

  23. Ian Welsh

    It gives you certain monkeywrenching opportunities. For example, you can veto further sanctions against Russia. You can veto (some) sanctions against yourself. It reduces the trade barriers they can put up, allows you to get refugees out of Greece (because you don’t want to be feeding them), etc…

    I could be convinced it’s more trouble that it’s worth, but I don’t see any reason in particular to leave the EU itself.

  24. CMike

    Whereas I appreciate Ian W.’s sentiment there’s a problem with his prescription, namely it does not look like Syriza has been preparing at all to put his Plan B in action these past several months. Human beings born and raised in a modern industrial society really aren’t likely to fare too well dealing with a collapse of their economic order for six or seven days, let alone for the six or seven months it’s going to take to get the skeletal organization in place to take on the challenges of running a society with script and the commandeering of the necessities of life.

    I mean, at least by the time a country has lost a war, its system of government in some de facto sense has all ready has been swept away. Greece hasn’t even gone through that transition yet.

    Necessity is the mother of invention and all but the hardship certain from what Ian is proposing would be shocking just to watch from afar.

  25. Daize

    I totally agree with you Iain, but I am still under complete shock about that Ambrose piece. If it is true, Tsipras is about to have the Greeks take it in the butt in the worst possible way. I am more then totally disgusted, it sickens me. I hope it is not true, but it has a ring to it 🙁

  26. Tsipras reminds me of Obama, trying to negotiate with the Republicans. And Merkel reminds me of Bush II.

    I wonder if the rest of the European leadership will stick with Merkel. They aren’t all fanatics like her; she may be the only one. I expect some of them have doubts, especially since their own experts are telling them this is crazy.

  27. Europe badly needs a Lincoln. I wonder if there is one, somewhere, lurking in the shadows.

  28. This is no longer about bankers losing money. 85% of the Greek debt is in the hands of the IMF, ECB, or other governmental lenders of last resort at this point. This is no longer about the debt being repaid. Even Frau Merkel understands that the current strategy of “extend and pretend” will never result in the debt being repaid.

    This is not about either of those.

    What this is, is German cultural racism coming to the fore again. The Greeks are disorderly and uncouth and dare question orthodoxy. They are volatile and both work harder than Germans and play harder than Germans. Their economy prior to the crash exhibited the sort of exuberance that makes any good German blanch with dismay. They simply are not being good stable upright boring obedient Germans, and must be punished, punished severely, until they become good Germans. Much as a white slaveholder in the American South justified his overseer’s whipping of “lazy” blacks as being a moral good to the Negro people because it taught them the value of hard work and discipline, this flogging of the Greek people is intended to teach them the moral lessons needed to become good Germans.

    What this is doing is exposing the lie of a unified Europe with European values, which it turns out was a smiley happy face mural slapped onto the wall of nationalism and cultural bigotry that has characterized the last 500 years of European history, except it turns out this mural was done in watercolors and now that it is rainy, the mural is washing off and showing the bigotry beneath. There is no logic or reason involved here, just pure racism. Racism based on cultural racism, not actual ethnicity as Americans view it, but racism still.

  29. I suppose I will take the contrary, and argue for why the euro was, once upon a time, a good idea. but it was a good idea that went truly wretchedly bad when A. M. was put in charge of Deutschland. for the first decade of the euros existence, there was a president, who was unelected, ruining the US dollar. there was only two currencies in existence which, at least for the non-elite of us, where we could hide our money in. that was the great British pound, and the fledgling currency known as the euro. and for the decade of the knots, not only was there money to be made, but lots of it. the euro was a very good idea at the time.

    but then came the crash, and it was not clear what would be done, in fact it still not clear that this was the best alternative, because there is creaking in the branches even as we speak. the crowd which came into control wanted all of the money, every little last bit. this is not possible, and the faux euro which they have erected is a vast mistake – but it was not the case from the beginning, when there was a real possibility that euros could be a counterweight to the dollar. it is not the case of the beginning made bad, but the bad stealing the vote-rigging and watching things spiral out of control, because they do not understand the limits on their power. AM does not realize what limits are, and she was elected by a group of people, which can only be described as stupid.

    No Ian, it was not a mistake made from the beginning, because for the first decade there was more money then anyone could count, but it was a mistake made very wrong in the crash of 2007. and there is so much pain to go around. but as I said, it is China, not Greece, where the pain will be suffered from. and last I checked, China’s stock markets (plural) have a great deal more liquidity in them. this is a slow disintegration, interesting but not that important.

  30. Socialist

    BRAVO! What a great piece, just a pleasure to read! Thanks, Ian.
    I definitely could argue with a couple points from the text, but otherwise it is so brilliant, I don’t even want to bring petty things like that up.

    We are still bombarded with the anti-communism slogans and propaganda from every corner of our society (communist failure states, stupid “idealist” economists like Marx, Stalin and Mao who killed trillions of people and exterminated almost all of species that have been recovered thanks to capitalism etc.) That is the only way to actually manage the world and make lives of the vast majority of the planet’s population at least bearable. It will still take decades of strife, poverty and complete annihilation of human rights, freedom and dignity. This is when people will once again start remembering such incredible thinkers who have been able to provide us with the deepest and most critical economic as well as social insight such as Marx, Lenin and others.

  31. quite clearly, in all this. but remember the Greeks joined figuring that they would not pay the bill. because, that us face facts, for a long time the moment along with all of this. is only in the last year or so, that they have not cooperated, because they felt a cold wind over there necks. the time to get out was when Iceland got out, or Ireland stayed in, and most of the people loved the country – not a good situation, but at least they were finally free. ( and told the pope to go stick it)

  32. fgb

    “Tsipras reminds me of Obama, trying to negotiate with the Republicans. And Merkel reminds me of Bush II.”

    If he he’s like Obama then he’s trying to help the people he’s pretending to oppose. And if Merkel’s like Bush II then she’s smarter than her constant floundering due to her trying to keep track of so many lies makes her appear.

  33. EmilianoZ

    The key to understanding the German psyche was provided by an interview of Emmanuel Todd:

    Basically, Emmanuel Todd calls the German psyche fundamentally hierarchical and irrational.

    I think it is very difficult for us to understand because most of us are not like that. It would seem that the Germans are deeply offended when supposed inferiors are defying their supposed superiors. It’s like their world doesn’t make sense anymore when it happens. They do not understand why Varoufakis and Tsipras are not flattened to the ground begging for mercy but are instead peacocking like alpha males. To them this is a deeply insulting behavior that must be punished at all cost, even at the price of burning down their own house or even the world (see the myth of Brunhilde to which Yves Smith made reference). Unfortunately history has shown that they are very capable of doing it, they have already done it a few times.

    Quote from the interview (made in 2014):
    The German culture is un-egalitarian : it makes difficult the acceptance of a world
    of equals . When they are feeling that they are the strongest , the Germans will take
    very badly the refusal of the weaker to obey , a refusal which they perceive as unnatural ,
    unreasonable .

  34. guest

    Before the Euro, there was another reserve currency called the mark, and there was also the franc. So the world lost 1 or 2 decent reserve currencies and got a franc’n’stein monster in return.
    If the Euro actually *was* a good idea ever, and I doubt it, it should have started off with just a few countries that would have been safe or compatible in there. Instead they roped in the PIIGS and any and everyone else they could cajole into it.
    My sense at the time reading the news was that they knew problems lay ahead, but there seemed to be an assumption that when that time came, Europe would be forced to make the changes needed to fix the single currency. And since the whole EU project seemed very benign and positive back then, people assumed that those changes would result in something closer to a US of E, rather than the Disaster Capitalism vulture behavior we’ve been witnessing for the last 8 years (longer, but it’s really really been out there recently, whereas before that stuff mostly happened in Africa, Asia and S America)

  35. Badtux, no doubt there is quite a bit of cultural racism in your comment.

  36. I like the article. Where’s the “share” button?

  37. Dave

    I couldn’t agree more. Fuck Europe. If the Cypriot banking plunder wasn’t enough to enlighten the fools that slaver like hounds for “prestige” and other nonsense, nothing will cure them of their disease. Unfortunately, pandering dogs, like shit, rise to the surface and import themselves into offices where they can do the most damage to the most people through the greatest and least sincere incompetence imaginable.

    On the upside, catastrophic biosphere collapse is in a dead heat for dealing the final death blow to humanity. No coincidence it’s the same amoral jackasses, acting out for the same goddamn reasons bolloxing up the works there either.

  38. The Mark and the Frank were not powerful enough, that is why we needed the euro, until AM screwed us over. note she is having the IMF beg for more time, because her house is not in order.

  39. jsn

    While not necessarily a mistake, the Euro was always incomplete: monetary union cannot work without fiscal union. Wynne Godley summarized the problem here in the fall of 92:

  40. It is ironic to think that the resistance against a haircut is somehow undemocratic. Nothing could be further from the truth.

    The problem is that in the first bailout the debt has been rolled over from commercial banks to the states, and now the governments of these countries that are holding the debt face an angry electorate that won’t accept a haircut. The Finish PM for instance never gets tiered to point out that their share equals 10% of their GDP.

    To move past this would require some innovation along the line of the “bad banks” that sprung up after 2008 to hold all the trash collateral, aka a “bad sovereign fund” that will keep the debt on the books yet, guarantees a long enough debt moratorium for Greece to recover.

    Unfortunately nothing of the sort seems to be in the cards.

  41. Wynne Godley was the cantankerous person that one needs to keep the big boys honest. I do not know who will play that role again. he was old when I met him.

  42. jsn

    You are lucky to have met him! I grew up in Texas watching the Galbraith clan loose their bite. J. K. was fierce, Jamie, while right can’t get traction.

  43. Met JK in later years, do not care for the younger set.

  44. bvf

    And since the whole EU project seemed very benign and positive back then, people assumed that those changes would result in something closer to a US of E, rather than the Disaster Capitalism vulture behavior we’ve been witnessing for the last 8 years

    Bush II and Iraq II were the end of the EU as a counterpole to U.S. power. Breaking Europe was the central objective of that era of American foreign policy.

    As a U.S. satrap, the current zombie EU is essentially an American black propaganda exercise aimed squarely at itself.

  45. guest

    Bush II and Iraq II were the end of the EU as a counterpole to U.S. power.
    And they made not a peep when Bush stole the election. They pretty much asked for everything that came after (“coalition of the willing” and all that shit).

  46. I do not remember seeing you on the steps of the Florida state legislature.


    If the posters over at Daily Kos know that the big story just may be China, that means that the rest of you should think about it.

  48. Ian Welsh

    There is a reason I already posted about China. I’ll come back to it in a bit.

    I am aware that Stirling was for the Euro, it’s one of the few policy issues we disagree on. As with many things, the Euro could have turned out well if run properly, but betting on boomers to run anything well is rarely a good bet.

  49. Lisa

    Stirling Newberry: The Euro was flawed from the start because of two main reasons:

    (1) Germany was allowed to use a far too low DM/Euro rate. This was an effective devalution which made them hyper competitive within the EU and in the rest of the world.

    (2) There were no governmental and systemic transfer mechansims to move surpluses around. In a normal country (eg Australia) there are a multitude of mechanisms to move money around the country. So (eg) Western Australia’s trade surpluses get recycled into Victoria’s and NSW’s trade deficits.

    The only mechanism for the Euro was the private debt marets.

    So you had a hyper competitive Germany, wiping out other European industry and building up massive trade surpluses. With their (and many other countries) banks recycling that through bank debt. This was not a sustainable system.

    Germany also, on the quiet, crushed its wages, making it even more competive, making things even worse.

    This advantage has went to Germany’s head and they will do anything to maintain it. Plus some of the elite are getting all sorts of daft ‘forth reich’ ideas, as Emmuanal Todd has outlined (and is looking ever more correct). In this EU, especially Euro members are just economic colonies of Germany, with limited (if any) political control over their own economies, to be endlessly looted to German elite benefit. What little benefit they get will be as cheap workers for German factories for EU external exports.

    Obviously part of the German elites understand the nonsense of this and the disaster that it will cause. But they are out of power, partially because the US pretty much agrees with Germany on this, not for economic reasons, but to keep the EU in line against Russia. So they have a ‘devils bargain’ between them and the US will be very active in any EU country stepping out of the anti-Russia line.

    It would be a brave (and very short lived) EU leader that voted agaiinst Russian sanctions…..

    Provided Germany stays virulantly anti-Russian, the US will aid them on their economic colonisation.

    But, some of you say, what about Merkal and the French poodle and their Ukrainian intervention? Didn’t they go against the US on that?

    Well they got a good press on that, but here is an alternative explanation:
    They were told to do that by the US to save the Kiev military, which had already suffered terrible losses and was facing extinction. To buy time for more weapons, training, money, etc to rebuild the Kiev forces for another attack.

    The use of Merkal and poodle was to to con the Russians into agreeing, make them believe that this was a sign of EU independence and that they want normal relations with Russia. In this they succeeded and Putin and his Govt were conned beautifully.

    If you examine subsequent events and statements, then this is a much better explanation for what happened.

  50. no, there was a another mechanism:

    solves both problems, but was not done – therefore breaking the euro zone, and dumping us in this mess

  51. Lisa

    Stirling Newberry. Sorry I should have added the work ‘automatic’ to the surplus/deficit issue. The transfer systems have to systematic AND automatic. Like Keynes Bancor idea.

    Because that option was voluntary and the banking system was far easier to access, that approach was never applied.

    There were techncial issues too. The banks can make new money out of nothing (ref Steve Keen and others). The ECB had a very limited charter, to use this investment idea then it would have had to come to the party by them (rather than just the banks) expanding the money supply to meet those needs. A lot of Germany’s surpluses are held in foreign currencies, they would have to be recycled into Euros to be useful within the Euro zone (hence part of the money supply issue). German companies would have had to be forced to post their external to Germany earnings internally, which then could be taxed and sucked up (or at least controlled) by the ECB and available for recycling.

    Then there are the other political/economic issues . Far more proftable for German companies to invest their ‘super profits’ in low wage, zero union countries (US, Thailand, South Africa, etc). Govt direct investment in other countries would have met significant internal political oppostion, with people asking why they not invest in Germany’s also crumbling infrastructure, wages and social benefits?

    You have the issue that a trade surplus is an accounting trick, for the money to be actually availble for a Govt to use (or direct) elsewhere it has to be taxed and collected. You can have the situation where a country has a massive trade surplus…but the Govt is broke, if those earnings are all held by companies. How do you force those companies to (say) invest in Spain, vs a more profitable US?

    For within Euro trade it is a zero sum game. Deficits and surpluses match and cancel.
    How does a deficit nation fund it or stop it? No trade barriers after all, so the Euro deficit nation cannot put up tariffs, devalue and the like.

    So, that was a possible option, but there would also have had to be many changes in the whole EU taxation/banking/etc systems, with commensurate national changes too.

    The easiest and best option was for the Euro to be an internal Bancor system, with countries maintaining, for internal purposes, their own currencies. To expand the Euro for internal use required much further changes than that to ensure surplus recycling.

  52. Why did the euro implode? the problem is not with the concept, it is how it was set up, and why it was set up to crush little economies such as Iceland, Ireland, and Greece – and now seems to set its sights on larger economies. I am not worried about Greece, they had here chance and squandered it comes the thought they were special. this is not the sort of the way to get my sympathy ( unlike Iceland). now however the euro is going to feast on larger economies, unless the closeout Greece. this did not have to happen, the key point was the election of 2005 when AM got in to our and decided it would be better to have a rich Germany then a happy Germany.

  53. Ian Welsh

    Maybe I’ll write on it, but I’m about Greek’d out. I’ve said most of what I have to say, though I suppose I’ll need to cover whatever actually happens next.

  54. markfromireland

    @ Ian,

    There’s an interesting set of reports from McKinsey in order they are:

    Debt and deleveraging: The global credit bubble and its economic consequences | McKinsey & Company

    Debt and deleveraging: Uneven progress on the path to growth | McKinsey & Company


    Debt and (not much) deleveraging | McKinsey & Company

    Each of those pages has full download links in various formats.


  55. It’s an idiotic line peddled by German conservatives who can’t bear the thought of ordoliberalism being proven wrong.

  56. It works it no one with any money calls them on it. last I checked, there still in charge.

  57. Monster from the Id

    @Hairhead: Yes, but who in their right minds would want to be Cuba, North Korea, or the Islamic State?

    @Socialist: Uh, your heroes did kill huge numbers of people, though to be fair, their buccaneer-capitalist adversaries did and do that as well.

    I don’t like the buccaneers, but I know how to survive in their system. I’ve survived a bit over 52 years now.

    I might die prematurely in the process of installing your preferred system–or I might survive the installation process, but not learn quickly enough how to survive in the new system, and die prematurely for that reason.

    Hence, the only rational, self-interested reason I would have for choosing revolution is if I could be rewarded in some afterlife for my risks and sacrifices in this life.

    However, according to you lot, gods and afterlives are foolish superstitions. When I die, my consciousness disintegrates forever, never to exist again, and my body becomes Purina Worm Chow, and THAT’S IT.

    So where is my incentive to choose your way?

Powered by WordPress & Theme by Anders Norén