Summary: Germany used it power over the European Monetary Union to institute a monetary policy that disproportionately benefited itself, to the disadvantage of the periphery nations. Germany prospered, they lost competitiveness. Now Germany acts to continue the game, attempting to force the losers to stay in the game. Now it’s Greece’s turn to go under the hammer. Will they comply or resist?
Contents
- The Financial Times breaks the story
- Update: The Greek government responds
- Update: Replies to Greece by the EU and the German goverment
- For more information about the European crisis
(1) The Financial Times breaks the story
“Call for EU to control Greek budget“, Financial Times, 27 January 2012 — Opening:
The German government wants Greece to cede sovereignty over tax and spending decisions to a eurozone “budget commissioner” to secure a second €130bn bail-out, according to a copy of the proposal obtained by the Financial Times.
In what would amount to an extraordinary extension of European Union control over a member state, the new commissioner would have the power to veto budget decisions taken by the Greek government if they were not in line with targets set by international lenders. The new administrator, appointed by other eurozone finance ministers, would take responsibility for overseeing “all major blocks of expenditure” by the Greek government.
Here is the “proposal” obtained by the FT. Only fools would accept this insulting and contemptuous offer.
Assurance of Compliance in the 2nd GRC Programme
I. Background
According to information from the Troika, Greece has most likely missed key programme objectives again in 2011. In particular, the budget deficit has not decreased compared to the previous year. Therefore Greece will have to significantly improve programme compliance in the future to honour its commitments to lenders. Otherwise the Eurozone will not be able to approve guarantees for GRC II.
II. Proposal for the improvement of compliance
To improve compliance in the 2nd programme, the new MoU will have to contain two innovative institutional elements on which Greece will have to commit itself. They will become further prior actions for the second programme. Only if and when they are implemented, the new programme can commence:
(1) Absolute priority to debt service
Greece has to legally commit itself to giving absolute priority to future debt service. This commitment has to be legally enshrined by the Greek Parliament. State revenues are to be used first and foremost for debt service, only any remaining revenue may be used to finance primary expenditure. This will reassure public and private creditors that the Hellenic Republic will honour its comittments after PSI and will positively influence market access. De facto elimination of the possibility of a default would make the threat of a non-disbursement of a GRC II tranche much more credible. If a future tranche is not disbursed, Greece can not threaten its lenders with a default, but will instead have to accept further cuts in primary expenditures as the only possible consequence of any non-disbursement.
(2) Transfer of national budgetary sovereignty
Budget consolidation has to be put under a strict steering and control system. Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time. A budget commissioner has to be appointed by the Eurogroup with the task of ensuring budgetary control. He must have the power a) to implement a centralized reporting and surveillance system covering all major blocks of expenditure in the Greek budget, b) to veto decisions not in line with the budgetary targets set by the Troika and c) will be tasked to ensure compliance with the above mentioned rule to prioritize debt service.
The new surveillance and institutional approach should be formulated in the MoU as follows: “In the case of non-compliance, confirmed by the ECB, IMF and EU COM, a new budget commissioner appointed by the Eurogroup would help implementing reforms. The commissioner will have broad surveillance competences over public expenditure and a veto right against budget decisions not in line with the set budgetary targets and the rule giving priority to debt service.” Greece has to ensure that the new surveillance mechanism is fully enshrined in national law, preferably through constitutional amendment.
(2) Greece’s government responds to Germany’s assertion of authority over it
(a) From a written statement by Pantelis Kapsis, the offiical spokesman for the Greek government and one of the two Ministers of State.
“The government stresses that this responsibility lies exclusively with the Greek government.”
(b) Statement by Evangelos Venizelos, Deputy Prime Minister and Finance Minister of Greece, 29 January 2012
The people of Greece is fully aware of the extent of assistance the country receives from its institutional partners in Europe. With their sacrifices, Greeks will fulfill their historical obligation to take Greece out of the deep fiscal, social and developmental crisis, and will take and implement tough, yet necessary, decisions.
On the other hand, our partners do know that European integration is based on the institutional parity of member states and the respect of their national identity and dignity. This fundamental principle fully applies for countries that go through periods of crisis and adjustment and are in need of their partners’ assistance for the benefit of the whole of Europe and the Euro Area in particular.
Anyone who puts a nation before the dilemma of ‘economic assistance or national dignity’ ignores some key historical lessons. I am certain that the political leaderships of all European nations –particularly bigger nations that bear increased responsibility for the course of Europe — are aware of how friends and partners, who have joined their historical destinies, raise questions.
The October 26 EU Summit conclusions provide a comprehensive provision about the monitoring mechanism for the implementation of the Greek program. This mechanism is completely securing the mutual interest of Greece and its partners for the timely and successful implementation of the program and the relevant commitments of our country. The very foundation of that mechanism after all is the implicit assumption that Greece itself has both the responsibility and the motive to make sure that the program will be implemented.
(c) Various reactions from Greek political leaders, from the Keep Talking Greece website, 28 January 2012
Education Minister Anna Diamantopoulou (PASOK) described it as the product of a sick imagination. “Tt’s an issue of sick imagination, whoever thought it” Diamantopoulou told private Mega TV on Saturday morning.
Greek Communist Party (KKE) said “f the Commissioner be necessary for the plutocracy, it will accept him. But with or without a commissioner, crime against the people is predetermined by the co-ruling of the EU the ECB and the plutocracy in general. ”
Alexis Tsipras, chairman of left-wing SYRIZA asked the Greek government to resing immediately and general elections to be held in February. He describeed the transefer of budget control as “a plan beyond any reason. “It is a plan to loot the country and the transfer of its sovereignty to the Eruopean banks and the international usury” Tsipras said (via Proto Thema)
KKE and SYRIZA are the third and fourth strong parties respectively in the Greek parliament.
(3) Replies to Greece by the EU and the German goverment
(a) Dow Jones reports that the European Commission sent a response, which came through a written correspondence by a spokesman:
… {the spokesman} stressed that an October decision on the conditions attached to Greece’s second bailout package called for its “enhanced role” on the ground in Greece. {and} that the European Union’s technocrats were in the process of building their presence in Greece and that their new roles would be reflected in the contract — or memorandum — that Greece will sign for its second bailout package.
(b) Statement by Philipp Rösler from an interview with Bild newspaper to be published Monday, reported by Reuters on January 29. He is the Federal Minister of Economics and Technology, the Vice Chancellor of Germany, and Chairman of the Free Democratic Party (FDP).
We need more leadership and monitoring when it comes to implementing the reform course. …. If the Greeks aren’t able to succeed themselves with this, then there must be stronger leadership and monitoring from abroad, for example through the EU.
The Reuters story ends with another important statement:
A government source in Berlin said Germany’s proposal was aimed not just at Greece but also at other struggling euro zone members that receive aid and are unable to make good on their obligations.
(4) For more information
(a) Other articles:
- “Lawsuits and Empire: On the Enforcement of Sovereign Debt in Latin America“, Faisal Z. Ahmed, Laura Alfaro, and Noel Maurer, Law and Contemporary Problems, Fall 2010
- Resolution of the 24th Party Conference of the CDU of Germany: A Strong Europe – A Bright Future for Germany, 14 November 2011
Economist Megan Greene notes how current events were foreshadowed in the CDU policy paper:
The aims of this process will be to restore the country’s financial capacity to act and to safeguard public services. During this phase, the European Commission should provide the affected eurozone country with a commissioner responsible for budgetary savings, who would oversee the use of budgetary funds and the implementation of any restructuring measures that may be required. This commissioner should also have the right to intervene if the country does not meet its obligations. The whole process must be designed in such a way that private creditors are involved in each phase of the restructuring and that a chain reaction in the markets, or indeed the risk of contagion for other eurozone countries, is avoided.
If a Member State of the monetary union does not wish to comply with the rules associated with the single currency in the long term, or is not in a position to do so, it has the option, in accordance with the provisions of the Treaty of Lisbon on withdrawal from the European Union, of withdrawing from the eurozone, but without leaving the European Union.
(b) If you liked this post, like us on Facebook and follow us on Twitter. See all posts about the European Union, and especially these about the perilous state of the European Union…
- Can the European Monetary Union survive the next recession? Probably not. — July 2008.
- Europe has chosen a harsh future. All the paths for Greece lead into darkness — February 2012.
- The Fate of Europe has become visible. Only how and when the break comes remains uncertain. — June 2012.
- The hidden goal of Europe’s leaders. See it and then their actions make sense. — July 2012..
The really interesting thing is that if all these states were really part of the same country, it would be unimaginable for the poorer regions to be looted and saddled to pay the rich ones. Industrialized America subsidized rural America, West Germany subsidized East Germany. The fact that this debate is happening at all is the strongest proof that the European Union is not a union.
You are DEAD WRONG.. and by what You write .. You show that You have NOT understood the real situation in the sc Peripheral Mediterrainean Countires at all
I KNOW .. cause I have lived in that region for the whole of that time period where what occurred .. took place…
Your article is wishfull desperate US thinking and is an example of intentional mischieveous DESINFORMATION
SORRY .. to say so.. but thats the TRUTH !
I agree with Greg. Please tell us what you know, linking to generally accepted official news sources as much as possible. Everybody here would like to know know more if you can show us that your statements are valid.
Ole: “You show that You have NOT understood the real situation in the sc Peripheral Mediterrainean Countires at all.”
Please explain what the real situation is.
Breton
Ole?
Is the situation like this:
http://www.youtube.com/watch?v=ur5fGSBsfq8
Or this:
http://www.youtube.com/watch?v=grbSQ6O6kbs
Plesae explain.
Breton
Did I miss something? Could have sworn that the Wehrmacht did take Greece, in April 1941 (with Crete falling to an airborne attack about a month later).
The Wehrmacht visited Greece rather than taking it. It’s a pedantic distinction to us looking upon these events from across the pond, but an important distinction to the Greeks.
In other words, that was a headline to the post. Brief, provocative, designed to generate floods of traffic. In keeping with our plan to eventaully re-brand as the Fabius Maximus Times, website of record for America.
From a written statement by Pantelis Kapsis, the offiical spokesman for the Greek government and one of the two Ministers of State.
Dow Jones reports that the European Commission sent a response, which came through a written correspondence by a spokesman:
FM offers: “…the European Commission sent a response, which came through a written correspondence by a spokesman…”
I guess if these Euro people decide they want the bloody EURO bad enough, then loss of Sovereignty is a final conclusion. Have at it, folks. That still will not solve the underlying problems of who/how to pay the Debts. Little Greece is getting to be a really old story. These Political types are so terribly disorganized; but what else is new?
Bring out the Dead and try to grow your way out of this mess! You can tell the King…he rides along without any sh*t on him!
Breton
“That still will not solve the underlying problems of who/how to pay the Debts”
It’s fascinating that four years into this crisis so many people do not understand the problem. The debts are a symptom of the problem, not the problem. So I’ll repeat what I (and so many others) have said so many times.
The European Monetary Union created one monetary policy for the entire eurozone. Unfortunately, the ez is not one nation. The monetary policy that worked so well for Germany crushed the peripherial nations. Imbalances built up, increasing the competitivenesss of northern europe (eg, Germany) vs. the PIIGS, resulting in capital flows (loans) from north to south.
Even if the loans were written off, the south would remain uncompetitive. Hence the austerity policy, deliberate internal deflation of wages attempting to restore equilibrium. But the gap is too wide, perhaps 40% for Greece and Portugal.
The usual remedy — done so many times during the past century — would be devaluation, both reducing debts and restoring competitiveness. It buys time for internal reform, which is sometimes used effectively.
The other alternative, taken by the United States after the Articles of Confederation failed, is unification. The current system cannot work. They will eventually be forced to unify or fragment.
This brief history of the first occupation {at Wikipedia}, during WWII, paints a pretty complex picture of Greece then, after and today. Might give you an indication of what’s to come.
A clear, brief analysis of the eurocrisis: “The two halves of the eurozone are locked in a broken marriage“, Ambrose Evans-Pritchard, columnist for The Telegraph, 30 October 2011 — “One by one, the democracies of Southern Europe are being broken on the wheel of monetary union.”
That just shows how you cant rely on Jennie’s uncle’s war stories or what you were taught at school or read about on the BBC or Wikipedia , but only on the Fab Times . The Italians didnt invade Greece, then , get replaced by the Germans in 1940- ish , starve hundreds of thousands to death ,murder thousands of Jews , appropriate mega Greek money and never pay it back , and move laterally to win a civil war that resulted in fascist rule until the Colonels were overthrown in 1960 -something ?
duh ?
We read in the newspapers that the ECB will fix everything with their massive loans!
Experience since 1980 has taught us that central banks are omnipotent with respect to economic problems! Or so the consensus wisdom goes.
This is silly — almost religious — faith in the power of central banks.
The structural problems of the EU look larger than any of those. As the every political solution has failed, it leaves the ECB as almost single-handedly attempting to mitigate the effects, without any ability to even address the structural problems. Very Serious People cheer the ECB’s actions, while economists note that these are almost certain to fail.
This crisis has proved that the critics of central banks are right in one respect. Monetary easing has become like booze or drugs. It makes us feel good and removes pressure to take corrective action.
“The world’s major central banks were on alert”
Stop it, please! You’re killing me. Haven’t laughed this hard in a year. Laughed ’til I cried.
No need to pick on the Germans, a lot of people failed at unifying Europe: Will Merkozy Succeed Where Charles V, Louis XIV, Napoleon Bonaparte and Adolf Hitler Failed? by anonemiss at Applied Philosophy, 19 November 2011
Quite so. But this is different, and a sense worse. Those previous attempts were unification by conquest, for the benefit of the aggressor. No major war of conquest has succeeded in Europe since the Thirty Years War ended in 1648.
Today we see Germany hijacking a dream, the multigenerational voluntary unification of Europe into one nation — for the benefit of all.
The irony here is that Germany has been the single biggest beneficiary of the Euro. Imagine if it had not been created, what would the D-Mark’s value be? Yep, Germany wouldn’t be selling many VW’s made in Germany.
If you want to save the Euro then the best thing would be to expel Germany! The Euro would fall, dramatically, benefiting all the other countries trade positions (and debt values).
I heard a commentary by one the designers of the Euro who was horrified at what has happened. Basically the introduction of the Euro was supposed to be with (or shortly afterwards) an introduction of transfer payments which would have evened everything out. Just as there are huge transfer payments within the US or Australia for example.
But national Govts just about all rejected that step. Now there was an option for an implicit transfer system. Allow Govts to borrow from the ECB directly, then quietly deeps six the debts every now and then. The richer nations recapitalising the ECB periodically. Not as good as proper tax/grant/etc based transfer mechanism, but done carefully (I emphasise the carefully) it would reasonably work.
Hand in hand with tidy ups of tax (etc) collection in some countries (ie Greece and Italy) over time (pointless hoping to do it overnight, that is a 20 year project) and you would have had something reasonably workable using either approach.
But everyone put their head in the sand and the problem grew and grew. The wonders of ‘financial engineering’ didn’t help. Several Govts managed to hide away their debt issues for far longer than they should have with all sorts of ponzi mechanisms, thus delaying the issue and making things far worse.
As usual Govts automatically turn to lying as their first tactic when anything goes wrong.
The flaw in the Euro is that it contains Germany, and Germany is the worst run economy in the western world – despite what people who couldn’t predict a sunrise might tell you. The German economic model is rotten to its core, and they’re exporting this rot to the others.
The economy exists of three parts, government, business and household. But economists only care about business growth and government debt. That’s why their clueless about what’s going on in Germany. Instead do some fishing into the state of German households and you’ll see what a sick state the Germans are really in. Unlike in other countries where governments have taken the pain of businesses onto their shoulders; in Germany they have forced all the pain of badly run businesses and badly managed government onto the household consumers.
When the crises started the government and business conspired to organise a 50% percent pay-cut for everyone, yay! To sweeten the deal the government now pays unemployment benefit to the employed – because there are so many Germans in full-time jobs below the poverty line. This is only the most recent foray into kicking-the-consumer-in-the-head, their government has been at this for years.
You can see it in the demographic figures. They’ve got the mother of all demographic crises. By comparison America’s demographic crises is a pygmy. There’s an iron link between household disposable income plus first home purchase and the amount of children over a society as a whole. Due to most people being responsible enough not to bring a child into the world when they have no idea how to feed it. Most German workers have been treading water for the last thirty years, they where never in a secure enough position to have children. So there’s none about. Sixty five percent of the population is over forty! (compare that to America’s 44% and Japan’s 48%, and Japan is the country people think of when they think demographic crises? The difference is that Japan’s is a gradual rise in the number of retirees that’s ongoing; where as, Germany has a great glut of people in their early fifties)
At least Japan’s lost generation was around to complain – Germany’s was never even born.
Of course having the majority of your population in their forties/fifties makes for a very productive society. (Hence why economists think Germany is doing well) You don’t need much consumption, because there’s no kids to spend it on, you don’t need expensive investments because there’ll be no one around to use it: The German government is currently running a huge program of tearing schools down, otherwise they’d just fall derelict. Companies have diligent workers who’ve been at it a life time, so they’re well trained with no ‘youthful hyginks’. They’ll always be on time and be willing to do overtime – because they’ve got nothing to go home to. Plus companies don’t have to pay to train new workers, there aren’t any.
Great for business, great for government: high productivity, strong currency, no debt and low wages. In short you can be a export super power – right up until the day all the workers turn 65 and the government has to explain that there’s no one around to pay the pensions.
Now Germany wants to force their model on the rest of Europe. “That wage cuts (or wage guts) and a strong currency will make businesses productive…” Yes, but it will also make consumption impossible, which will collapse the birth rate and condemn the country a much bigger mess down the line. Spain’s birth rate collapsed last year, following Greece which has been in free fall for three years, soon they’ll be a productive as the Germans, the productivity of the grave.
Doubt if FM will let us debate this -but why should older persons ,+ 65 to +80 yrs , be a bigger burden on the State ? I dont know about Germany but in my country the equation is :- Old person :small state pension , healthcare , care homes , possibly extra money for the poorer . Tax is paid but not National Insurance. Child ,-9 months to +16 yrs :- maternity care , healthcare , education , child beneftit payments , possibly free school meals , child protection and support agencies, social services , law enforcement ; child does not pay national insurance , rarely has income to tax ( not really allowed to work ) and parents may get tax releif . Older people are probably better for balance of payments as well , buying fewer imported baked beans and more homegrown cabbage …And there will be no forseeable shortage of adults for the decreasing number of jobs.
That is what the weekly question post is for. Please post it there — and debate away!
I agree, iam german. but this finance war doesnt comes from the german people, but from the politicans and their lobbyists. and its supported from same bankers who financed adolf hitler and nazireich. so criminal nazi became mportant person in political prozess in EWG and EU after 2. ww II. pls google Dr. Rath and IG Farben
You’re right. This section on IG Farben management is very unsettling reading: history of the pharmaceutical industry
As disturbing as histories of how Americans treated the Indians and slaves. But all those people are dead, and the evil they did died with them. Our responsibilty is to learn from their history and do better.
The disturbing part is that many convicted IG Farben directors received very early pardons based on serious lobbying by “powerful friends.” No guarantee that those family connections, and friendly lobbyists don’t still exist.
Royalty still exist all over Europe – ever since an early pope proposed permanent “divine” status to tribal war chiefs. That pact has lasted, what, ~1700 years?
Sorry, but there are things, that cannot be compared! Don´t forget, all the activities shall help greece in its financial desaster. The germans do not have any interrest about paying more money to greece. Doing that means to have a very big risk. You feel that every day. The fee is increasing in Germany, it is getting higher and higher. What interrest should germans have on that???
The author shall shame about this stupid article!
Dieter
I’m not sure what Dieter is saying. English might be a second language for him, in which case he’s doing FAR better than I could in my high school German.
“The germans do not have any interrest about paying more money to greece.”
To refer to a nation as a unitary entity (such Americans or Germans) is always dubious — although we all do it sometimes (me, too). We have some data suggesting that this statement is wrong — or at least too broad — in several ways.
(1) The German government definitely intends to loan (not “pay”) more money to Greece, should they get acceptable terms.
(2) Both party coalitions officially support the eurozone project, and the necessity of lending more money to Greece.
(3) The most recent State elections were in Berlin last September, and strongly pro-eurozone. For details see Reuters’ analysis of the election results:
Important statements in this tense situation have been posted in sections 2 and 3 of this post. Statements, official and unofficial, by the EU, the Greek and German governments.
Does this look like July 1914 to anyone else? Not in terms of armies poised to roll, but as an escalating crisis that might soon spin out of control.
You mean statements like this: “On the other hand, our partners do know that European integration is based on the institutional parity of member states and the respect of their national identity and dignity. ”
?????? Pretty strong and clear statement, it seems to me.
Please elaborate on July 1914.
Breton
On 28 June 1914 Gavrilo Princip, a member of Young Bosnia, assassinated the heir to the Austro-Hungarian throne (Archduke Franz Ferdinand) in Sarajevo. This was followed by a series of diplomatic notes of increasing harshness, culminating in a war none of the Great Powers wanted. Things spun out of control.
Mr Evangolos Venizolos , dep PM Greece, 30 Jan ( no year given- today ? )( etacthimerini.com ), is reported as :
dismissed the idea of an Eur Budget Commissioner overseeing the country’s fiscal policy … ” whoever puts before a people the dilemma of choosing between financial assistance and national dignity disregards basic historical lessons … ”
education minister Anna Diamantopolou slammed plan as ” product of a sick imagination ”
Yr Reuters link I interpreted that he’d accepted the deal ?
Any current similar situations between American states and the US gov you could tell us about ?
(1) Venizolos statement in full was one of the updates I mentioned above.
(2) Thanks for the Ed Minister’s statement!
(3) I did not consider the Reuters story to have implied agreement. Perhaps you are confusing these issues with the Private Sector Involvement (PSI), renegotiating the value of Greek government bonds.
The EU administation could start by cutting their own budget . Gimme the power , a list and a red pen…. Strasbourg building can be sold off , Ashton and Rompuy and their entourage dismissed ( without redundancy payments ) for hors d’oevres. In fact Brussels building can be sold off as well and they can Skype each other. That’s sorted the travel and hotel budget gravy train too . Now for the Common Agricultural Policy …
Emailed comment from someone with experience in these matters:
OK ..I will give 2 Answers to those who have requested some arguments from my side. FIRST some summary explanations copied from “Report on the European Economy 2011“, European Economic Advisory Group at CESifo, 22 February 2011 — {excerpt from the summary}:
I could also say the same in the words of a simple common person :MYSELF. It could be said in ONE WORD : GREED … but i will say : The REAL SITUATION is .. that the people in the mediterainean area ( Greece , Cyprus , Spain ) ventured into an unprecedented CONSUMPTION ORGY for which there was NO REAL FUNDING . The misconception of RICHES was mainly based on selling property to people from the north of Europe at EXORBITANT PRICES … developing property for sale for BORROWED MONEY .. but CONSUMING the PROCEEDS gained .. in stead of paying down debts incurred in the process . This is the main problem in SPAIN and CYPRUS . I know the situation best from Cyprus where I have lived for 11 Years , but through reading realize that the problems in Spain are almost similar . Regarding Greece , there is a close connexion between the economy of Cyprus and Greece.. so what I have experienced in Cyprus i extrapolate also occurred in Greece .
Every second man in Cyprus became a PROPERTY DEVELOPER ,selling sunshine and beaches , building posh houses for himself , driving the most luxurious cars , travelling abroad and enjoying the go easy life sipping cofee whilst studying the tourist sceene and.. believing this BONANZA would go on forever . REAL production was hard to observe .. well except the offshore industry hiding east european ill gained proceeds and HARD labour was done by ilegally imported workers from the third world . The process took its start when i came to the Island but became a Frenzy where the local population finally believed they could walk on water financially .. so to say … selling sunshine and beaches .
To exemplify it with numbers : In Cyprus with 800.000 inhabitants there currenlty are approximately 45.000 unsold properties much of which is SLUM ..Tourist Slum . Because the cypriot sellers of properties did NOT pay their debts to Cypriot Banks upon recieving payment in full at the sales .., the title-deeds still are in the posession of the Banks who keep these as their security for loans to the cypriot population . There are at least 25.000 foreign buyers of cypriot property who in fact do not own what they paid in full now for over 10 years . The banks are thus left with DEBTS no one will pay and property evaluations have NOT been adjusted to market value ..as that would bancrupt the banks . The numbers for this debt is at least 5 Billion EURO may be even as high as 10 Billion . The GDP of Cyprus is approx 16 Billion . So these debts must be added to all other debt .. … normal indigenous mortgage debt .. consumtion debt ..car debts gouvernment debt and whatever else …..
So there we are today.. few have nothing more than DEBTS .. except a small very wealthy ELITE Common folks are quite unhappy with having to return to previous levels of FUNDED consumption … and will protest that for all they are worth ..while shops are closing down and work is hard to come by. Still continue to live their laisse fair daily lives not really having understood the demands of eficiency of a modern competitive societyand hoping for some miracle like sudden Oil wealth or rich Arabs or Russians
I tried to tell my aquaintances many years ago that this would end bad .. they almost hated me for it .. it was like taking away the sugar bowl from kids .. similar to the property speculation as it occurred ..in all of the western world . just in the PIGGS on a much bigger as well as extremely GREEDY scale .My cypriot bank manager today considers me a ” financial expert ” because he remembers I told him all what now happens …8 years ago . In fact i am NOT .. i just have some common sense !
.
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FM Note: About the source of the report cited above:
I find Mr. Olesen’s rant to be somewhat imcomprehensible (often showing a profound ignorance of basic economics). But the Ifo report he cites is well worth reading, and consistent with the material presented on the FM website since July 2008.
Where does Europe go from here? Mr. Olesen’s description is quite correct:
Unificantion can work. Divorce can work. Either course requires more wisdom and skill from Europe’s ruling elites than has been displayed since 1999.
And as a further response to the NONSENSE in the above article and ESPECIALLY its TABLOID STYLE HEAD-LINE … read here : “Bogenberg Declaration: Sixteen Theses on the Situation of the European Monetary Union“, Friends of the Ifo Institute, 15 October 2011:
FM Note: From the Wikipedia entry for the Ifo Institute:
Thanks for the link to this Ifo publication. As a description of this situation it agrees with the material in the many posts about the Euro-crisis posted on the FM website since the first warning in July 2008.
It #2 is absurdly false. Since the members of the Ifo Institute know this — that Germany has been the major beneficiary of the EMU, with substantial economic outperformance over the perifery since its creation — I assume this is an attempt to gain the moral high ground. As in we’re victims too!. Which is false, except in the sense that German’s export success over the PIIGS has been largely self-financed. So the GIIPS exit from the eurozone, with default and devaluation, will be to a large extent paid for by Germany.
Much of this “declaration” represents Germany’s attempt to keep the GIIPS in a game rigged against them, in which they pay the costs of remaining in the game. Brilliant, if cold-blooded and antithetical to the idea of European unification on which so much much effort has been expended since WWII.
Great commentary on the operational economics of Germany’s current Greek campaign: “Greece to leave the Eurozone and become a German colony“, Billy Mtichell (Prof Economics at the U of Newcastle, NSW Australia), 30 January 2012
To Fabius Maximus : it is with regrett that I realize that You are ” blinded ” by Your basic US MISPLACED Patriotism .. and therefore wishfull thinking . You cannot even READ something without that BIAS… which is apparent by Your comments which just repeat unfounded statements and do not comment WHAT I HAVE WITTNESSED WITH MY OWN EYES and exellently described in FINANCIAL JARGON by the IFO Institute
THAT is a BIG HANDICAP and does NOT bode well for what You otherwise so COMENDABLE try to support ..in Your own country .
You see .. if one cannot see REALITY … there is NO WAY .. one can improve an abysmal situation … which I am sad to say .. is the case for the USA . POLITICALLY as well as FINANCIALLY ..internally as well as externally and with PUBLIC INFORMATION by the Powers who are … most of all based on LIES .
I will write no more about this remembering Napoleons words: ” If You see an enemy make a mistake .. You should Not try to hinder him “
There appear to be two elements to your comment.
(1) “You are ” blinded ” by Your basic US MISPLACED Patriotism”
Yes, my patriotism provides a fixed perspective — with all of the limitations that result from that. I try to overcome this, but of course can only do so to a small degree. I do not apologize for that, or consider my patriotism “misplaced.”
(2) You provide first-person evidence. In the social sciences that’s called annec-data. Annecdotal data, to a small degree. I suggest a google of “eyewitness testimony” to gain some knowledge about its limitations even when describing an event bounded by the aristotelian unities of time, place, and action. Imagine how much more limited eyewiteness testimony is when dealing with macroecnoomic phenomena! Which is why experts rely more on time-series numbers to measure and describe an economy, interpreted according to basic economic laws.
“Greece and the Rape by the Rentiers“, Marshall Auerback (research associate, Levy Institute), New Economic Perspectives, 10 February 2012 — Excerpt:
“…unless Greece regains some modicum of self-respect and tells the Troika to take a hike and leaves the euro zone”
This phrase sir captures the feelings of the vast majority of the Greek population this day. We brought this to our selves indeed, by voting men who used loaned money to turn us in neo-rich self-absorvant pricks. An ancient greek saying goes”Ουδεν κακον αμιγες καλου” or vice versa, which means “there is always something good in everything bad that happens”, loosely translated. Maybe we’ll get to become better people and citizens. If not, maybe we did not deserve this blessed place under the sun and its heritage after all.
Thank you for posting this comment. On-the-spot reporting is always valuable!