Greece brought a latte to a gunfight

[geek tragedy]

http://www.nakedcapitalism.com/2015/07/greece-brought-a-latte-to-a-gunfight.html

Germany has not changed its position recently, if at all throughout the four year crisis. For Germany the euro is a simple national interest weapon. It allows it to dominate Europe and global trade by artificially suppressing its real exchange rate. For it to sustain that position it cannot allow peripheral nations to successfully drop out of the currency. They’d flood out and the more that left the higher the euro would rise as the German weighting in the currency increased. Anyone staying must adhere to German rules and anyone leaving must be destroyed to deter others from doing do. The euro and Europe are irrelevant to German real politik. They are in it for the Germans.

Yanis appears to have assumed that he could grasp the European light on the hill and persuade with elegant reason all of Europe to embrace enlightened super-national consciousness. He’s been genteelly sipping lattes at a gunfight and by doing so has played right into realist German hands by destroying his country’s economy as an example to all other European ‘dead beats’.

...

And so, by burning its political capital with Brussels over five months of polished debate, convincing the Greek people of the righteousness of their cause of staying in the Euro but paying no German price for doing so, and then flipping to outright panic as their banking system collapsed, Greece has destroyed itself so that Germany can rule the zone.

How bad did Syriza bungle this? They never developed a plan, not even an emergency plan, to leave the Euro.

Even when the president of the EU came out and said that the weekend summit would determine if Greece was going to get kicked out.

So they transformed the Grexit from their only source of leverage to their greatest weakness.

The Germans play a cold, hard game. They behave as states are predicted to behave.

Greece wasn't supposed to help the Germans screw them.

[CTyankee]

1. I'm getting to a point with Germany that is close to fearing its influence...

and I"m wondering how much of its political culture can be successfully challenged. It worries me...

[geek tragedy]

2. The Germans have no real military and are still only one of 19 Eurozone countries.

What they did is what states are supposed to do--they seek to maximize the welfare of their own citizens.

Their main enemy is inflation. Wolfgang Schauble isn't going to lead a Panzer division into Poland.

[CTyankee]

3. No, I'm talking about "political" influence...a mindset...not actual military strength...

and I see your point but in the context of the other European nations, they hold a big winning card. How they handle that card will be something to watch...

[geek tragedy]

4. They're the strongest individual country, but they're still bound

by consensus requirements with the other 18 (or 27 in cases of EU matters).

Italy and France can team up at just about any juncture to temper Germany's outsized influence.


O, it is excellent to have a giant's strength, but it is tyrannous to use it like a giant

[CTyankee]

5. And I hope they plan to do so...I'm glad for the tempering requirement...just hoping

the "austerity fever" doesn't spread...it's one thing to say people shouldn't be able to avoid paying taxes, but this kind of punitive austerity is something else, IMO. It doesn't help at this point....

[geek tragedy]

6. the EU already has a moderate austerity requirement--members can't run

a deficit more than 3% of GDP or have public debt equal to 60% of GDP. They're not supposed to anyways.

https://en.wikipedia.org/wiki/Stability_and_Growth_Pact

For reference, the US was running deficits of 9-10% of GDP during the pits of the recession and just now has the deficit come back down to 3%.

But we don't have that restriction, so we recovered faster.

[Jefferson23]

7. Germany has a short memory. n/t

[geek tragedy]

8. Not a short memory, just a lack of concern for another state's interests. nt

[Jefferson23]

9. It's disgusting how much so.n/t

[geek tragedy]

10. Germany is just like everyone else when it comes to altruism re: Greece.

China, Japan, the US, Russia, India, Brazil, the UK--none of them are offering aid to Greece either.

[Jefferson23]

11. IMF calls for Greece debt relief ahead of bailout vote

An International Monetary Fund study published on Tuesday showed that Greece needs far more debt relief than European governments have been willing to contemplate so far, as fractious parties in Athens prepared to vote on a sweeping austerity package demanded by their lenders.

The IMF's stark warning on Greece's debt came as Prime Minister Alexis Tsipras struggled to persuade deeply unhappy leftist lawmakers to vote for a package of austerity measures and liberal economic reforms to secure a new bailout.

In an interview with state television, he said that although he did not believe in the deal, there was no alternative but to accept it to avoid economic chaos.


The IMF study, first reported by Reuters, said European countries would have to give Greece a 30-year grace period on servicing all its European debt, including new loans, and a dramatic maturity extension. Or else they must make annual transfers to the Greek budget or accept "deep upfront haircuts" on existing loans.

http://www.reuters.com/article/2015/07/14/us-eurozone-greece-idUSKBN0P40EO20150714