Economy
Related: About this forumA gem of an article re: Greece & its Predicament from Greg Palast
This is just the ending, if you can find the time, please do read the article in its entirety. I wish there were more Greg Palasts in the world, alas, just like Yanis Varoufakis, there is but one.
http://www.gregpalast.com/trojan-hearse-greek-elections-and-the-euro-leper-colony/#more-10311
Trojan Hearse: Greek Elections and the Euro Leper Colony (1-20-15)
Theres Life after Euro
Many nations do quite well without the euro. Sweden, Denmark and India do just fine without the euroand so does Turkey, which had the luck to be excluded from the euro-zone. As long as Turks stick to the lira, even Turkeys brain-damaged Islamo-fascist President Tayyip Erdoğan cannot destroy their economy.
Can Greece just dump the euro? They have happy precedents to follow. Argentina was once pegged to the US dollar much as Greece is tied to the euro today. In 2000, Argentines, hungry and angry, revolted. Argentina ultimately overthrew the dollar dictatorship, the IMF diktats and the threats of creditors, and defaulted on its dollar bonds. Free at last! In the decade since, the Argentine economy soared. Yes, today, Argentina is under attack by financial vultures, but that is only because the nation became so temptingly wealthy.
I was in Brazil when its President Luiz Inácio Lula da Silva told the IMF to go to helland rejected privatization of the state banks and the state oil company, rejected cutting pensions and thumbed his nose at the rest of the austerity nonsense. Instead, Lula created the bolsa familia, a massive pay-out to the nations poor. The result: Brazil not only survived but thrived during the 2008-10 world financial crisis. Despite pressure, Brazil never ceded control of its currency. (It is a sad irony that Brazil is only now faltering. Thats the fault entirely of Lulas successor, President Dilma Rousseff, who is beginning to dance the austerity samba.)
Austerity: Religion, Not Economics
The euro is simply the deutschmark with little stars on it. Greece cannot adopt Germanys currency without adopting Germanys finance minister, Wolfgang Schäuble, as its own.
And Schäuble has determined that Greece must be punished. As my homey Paul Krugman points out, there is no credible economic theory that says that austeritythat is, cutting government spending, cutting wages, cutting consumer demandcan in any way help a nation in recession, in deflation. Thats why, in 2009, Obama ordered up stimulus, not a sleeping pill.
But austerity has nothing to do with economics. It is religion: the belief by the stern Lutheran Germans that Greeks have had too much fun, spent too much money, and spent too much lazy time in the sunand now Greeks must pay a price for their sins.
Oddly, I hear this self-flagellating nonsense from Greeks themselves: we are lazy. We deserve our punishment. Nonsense. The average Greek works more hours in a year than any other worker in the 34 nations of the OECD; Germans the least.
The Euros Father Describes his Little Bastard
Alexis Tsipras, the leader of Syriza, would like to pretend that austerity and the euro are two different things, that you can marry the pretty girl but not invite her ugly sister to the wedding. Apparently, the Syriza chief is blissfully ignorant of the history of the euro. The horror of austerity is not the consequence of Greek profligacy: it was designed into the euros plan from the beginning.
This was explained to me by the father of the euro himself, economist Robert Mundell of Columbia University. (I studied economics with Mundells buddy, Milton Friedman.) Mundell not only invented the euro, he also fathered the misery-making policies of Thatcher and Reagan, known as supply-side economics or, as George Bush Sr. called it, voodoo economics. Supply-side voodoo is the long-discredited belief that if a nation demolishes the power of unions, cuts business taxes, eliminates government regulation and public ownership of utilities, economic prosperity will follow.
The euro is simply the other side of the supply-side coin. As Mundell explained it, the euro is the way in which congresses and parliaments can be stripped of all power over monetary and fiscal policy. Bothersome democracy is removed from the economic system. Without fiscal policy, Mundell told me, the only way nations can keep jobs is by the competitive reduction of rules on business.
Greece, to survive in a euro economy, can only revive employment by reducing wages. Indeed, the recent tiny reduction in unemployment is the sign that Greeks are slowly accepting a permanent future of low wages serving piña coladas to Germans on holiday cruises.
It is argued that Greece owes Germany, the IMF and the European Central Bank for bail-out-billions. Nonsense. None of the billions in bail-out funds went into Greek pockets. It all went to bail out Deutsche Bank and other foreign creditors. The EU treasuries swallowed 90% of its private bankers bonds. Germany bailed out Germany, not Greece.
Nevertheless, Greece must pay Germany back, Mr. Tsipras, if you want to continue to use Germanys currency, that is.
Greece: Goldman Sacked
Greeces ruin began with secret, fraudulent currency swaps, designed a decade ago by Goldman Sachs, to conceal Greek deficits that exceeded the euro zones 3%-of-GDP limit. In 2009, when the truth came out, Greek debt holders realized they had been cheated. These debt buyers then demanded usurious levels of interest (or, if you prefer, a high spread) to insure themselves against future fraud. The compounding of this interest premium brought the Greek nation to its knees. In other words, the crimes committed to join and stay in the euro, not Greek profligacy, caused the crisis.
The USA, Brazil and China escaped from depression by increasing their money supply and government spending and taking control of currency exchange ratescrucial tools Greece gave up in return for the euro.
Worse, once the Trojan hearse of the euro entered Athens, tourism, Greeces main industry, drained to Turkey where hotels and souvenirs are priced in cheap lira. This allowed Dr. Mundells remorseless wage-lowering machine, the euro, to do its work, to force Greece to strip all its workers of pensions and power.
Greece fell to its knees, with no choice but to beg Germany for mercy.
But there is no mercy. As Germanys Schäuble insists, democracy, this weeks vote, means nothing. "New elections change nothing in the accords struck with the Greek government, he says. [Greeks] have no alternative.
Ah, but they do, Mr. Schäuble. They can tell you to take your euro and shove it up your Merkel.
magical thyme
(14,881 posts)Without fiscal policy, Mundell told me, the only way nations can keep jobs is by the competitive reduction of rules on business.