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’.
There is nothing new here. Yanis has simply been outplayed.…
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.Translation: Yanis assumed he was dealing with rational actors instead of thugs. He should have known better based on past performance.
Bottom line. Neoliberalism is based on thuggery. Anyone assuming otherwise is a mark and like to become a patsy. It's dealing with psychopaths and sociopaths as if they were sane people.
Naked Capitalism
Greece Brought a Latte to a Gunfight
David Llewellyn-Smith, founding publisher and former editor-in-chief of The Diplomat
25 comments:
If the French do a bilateral loan to Greece then the EU credibility has gone and funny, some countries have kind of left the EZ. :)
Yves Smith is talking thru her rear end when she says Germany “…cannot allow peripheral nations to successfully drop out of the currency.”
Germany and other core countries would be only too happy for Greece to depart the EZ and revert to the Drachma. In fact dozens of lefties have been complaining recently about “bully” Germany trying to do just that: push Greece out of the EZ.
Ralph if someone would ask them they would say that they only want nations that net export in... the others out....
YV should have gotten that on a recording and put it on his blog and we all could have had a good laugh!! (Unless YV also thinks the same way.....)
There is an interesting interview with Varoufakis. He seems to be kind of sincere and It comes out they were afraid of their own currency because they didn't have the expertise and they didn't know what a currency collapse would bring. It was probably that and they thought it unthinkable. I personally was hoping so much out of Syriza because they had such a strong mandate. If you look at other anti austerity political forces in Europe then that is not so. They turned out to be complete fuck ups. I kind of respect YV for this interview, not that he was any different really than the rest of Syriza.
http://www.newstatesman.com/world-affairs/2015/07/exclusive-yanis-varoufakis-opens-about-his-five-month-battle-save-greece
Pretty much all MMT people have said that reintroducing the dramacha would not be the apocalypse that Syriza thinks it would be. But we have comments like(below) that says actually implementing a reintroduction would be a disaster especially in regards with electronic payment.
Some of dismissed the comments below as scaremongering but I have yet to see a complete rebuttal of the points raised below. I'm not saying I believe the Greeks should have submitted to the Trioka like they have, but maybe because they truely believed the scenarios raised below which would explain their insistence on not leaving the euro.
1. http://www.nakedcapitalism.com/2015/07/greece-beware-merchant-services-providers-bearing-ddcss.html
2. http://www.nakedcapitalism.com/2015/07/the-card-system-demystified-and-implications-for-a-grexit.html
That's because they keep making the same mistake - believing that a 'new currency' requires any setup.
*A new currency comes about when the peg between the various players is broken and one or the other of the parties refuses to transfer liabilities at par*.
The Greeks wouldn't conduct card payments in Drachma. They would do it in Euros, which would then charge against the bank accounts of those holding the cards in Euros. All within the Greek banking system.
Those operating cross border would simply fail because the clearing mechanism would fail at the ECB level and the transaction would be refused.
That's just the same as if a card terminal can't get hold of the issuing bank to get the validation details.
Transactions between Greece and the rest of the world would indeed move back to the stone age, but that is probably not a bad thing since it would slow down foreign exchange and that makes its hard to speculate in the currency.
Greece has already temporarily left the Euro by virtue of the ECB refusing to clear Euros at par. You'll note that the internal transfer economy within Greece is still working, and that cards are being used today to clear transactions between the Greek banks.
If Greece took control of its central bank and ordered it to provide cash and liquidity to the banks, then the cash economy would recover and all that would be different would be international payments.
I was asked earlier this morning what the Greek word for "quisling" is. Obviously, he meant "traitor." :(
Tentative Deal Strips Greece of Sovereignty, Makes Debt Relief Dependent on Compliance
http://www.nakedcapitalism.com/2015/07/tentative-deal-strips-greece-of-sovereignty-makes-debt-relief-dependent-on-compliance.html
May be we all overestimated YV because Galbraith was speaking highly of him. Also Tsipras is in this modern money and public purpose video https://www.youtube.com/watch?v=qVsAjb0NKPc before he became PM of Greece also in this one https://www.youtube.com/watch?v=vVIzDxmV0U4
WTF happened?
WTF happened?
Feldmarschall Schäuble!
Schäuble verspricht mehr Geld für Panzer (Schäuble promises more money for tanks)
Der Finanzminister will mehr Mittel für die Bundeswehr bereitstellen, kündigt er in einem Interview an. „Die Welt ist leider unsicherer geworden“, sagt Schäuble. Allerdings soll der Wehretat erst 2017 steigen.
(The Minister of Finance will allocate more resources to the armed forces, he announced in an interview. "The world has become more uncertain, unfortunately," said Schäuble. However, the defense budget is expected to increase until 2017.)
http://www.faz.net/aktuell/politik/inland/bundeswehr-schaeuble-verspricht-mehr-geld-fuer-panzer-13457020.html
Tom-
I have to disagree with this line:
"Translation: Yanis assumed he was dealing with rational actors instead of thugs."
Yes, the Germans were thuggish throughout (along with the fins and many other hard-line nations), but as the story you are linking to points out, from the perspective of Germany, everything they did was entirely rational. "rational" is only a relative term with no objective definition in this case. Policies to maximize German power and continue the neo-liberal order are surely rational to the Germans. Just like rich people supporting policies here at home that are bad for the nation but good for themselves is rational from their POV.
WRT currency ops after a Grexit, just because the Greek leaders are too incompetent to know how to successfully implement a new currency (Gruro or drachma) doesnt mean that establishing a new currency is some strange phenomnenon. This stuff has happened dozens of times in the last 100 years, its not a mystery and its not impossible. It only seems impossible when you dont know anything about monetary operations. Given YV's interactions with MMTers going into this ordeal, I too thought that he had taken MMT knowledge seriously and understood it, which is why I was hopeful. Obviously, YV never took MMT seriously enough to fully incorporate the information MMT provides. Dean Baker sat with Scott Fulwiler for hours at one of the Money and Public Purpose workshops and he literally could not grasp what the mechanics of buffer stocks that Scott had spent an hour describing. As such, Dean's writing has not incorporated much (if any) of that knowledge in his subsequent writings. Clearly the same thing has happened with YV. Hearing is not the same thing as understanding.
There was no intention to negotiate with Syria. as Yanis finally realized and is now transparent to the world.
From the outset the intention was to force Syriza from office as a leftist party and it still is.
This was not much different from the US removing leftist governments by stealth and when necessary by force. There is no respect for sovereignty and no respect for democracy. Like the Mafia, they make offers that can't be refused. That's being a thug.
That's a good one Neil.
My impression is this Tom that I have to agree with Auburn Parks. It was here where you and some others were standing up for him when he made some comments about MMT that I didn't like. I didn't like his comments about Keynes also. Like Marx had some serious monetary or economic theory at all.
Auburn,
"Dean Baker sat with Scott Fulwiler for hours at one of the Money and Public Purpose workshops and he literally could not grasp what the mechanics of buffer stocks that Scott had spent an hour describing. As such, Dean's writing has not incorporated much (if any) of that knowledge in his subsequent writings. Clearly the same thing has happened with YV. Hearing is not the same thing as understanding."
Secular view: "Mathematical maturity is an informal term used by mathematicians to refer to a mixture of mathematical experience and insight that cannot be directly taught."
https://en.wikipedia.org/wiki/Mathematical_maturity
Non-secular view: ""Ideally the holy spirit speaks through Isaiah the prophet, to your fathers,
saying, 'Go to this people and say, "In hearing, you will be hearing, and may by no means be understanding, And observing, you will be observing, and may by no means be perceiving,"
Acts 28:25-26
Not many are given the ability to exceed mere hearing and reach "understanding" or go well past simple observing and reach "perceiving"... I still say there are at this point only about 1,000 of us qualified/competent in these matters ... maybe more headed to 2,000 maybe by this time...
rsp,
As I said, this is not over and the intention remains to replace Syriza with a technocratic government.
As long as that Is not possible, then the heat will be turned up on Greece, turning it into a failed state to be plundered instead of just looted.
There was and is not intention to let Greece succeed under a leftist government.
This is not chiefly Schaeuble, btw, but Merkel. She is rabid anti-left.
@ Matt
Then Jesus said, "Whoever has ears to hear, let them hear." Mt. 4:9 (NIV)
AP,
Ironically, it was on YV's blog that I first came across the mention of MMT a few years ago. I had asked a question to YV regarding debt, and he replied that a government is NOT run like a business or household. So, another poster immediately asked him if he was familiar with MMT (first I heard of it so googled it, damn it!), and he replied something to the effect that he was too old to learn new theories.
@ Matt
Then Jesus said, "Whoever has ears to hear, let them hear." Mt. 4:9 (NIV)
Is Matt a preacher? I've noticed that he often quotes the scriptures here ;)
"he was too old to learn new theories"
Translation: "I've been in the academe a long time and have numerous publications that are in conflict with it and cannot bear to read something that I think will conflict with my life's previous works..."
LG, Ha! ... no not a "preacher"... not hardly (I'd be a poor 'evangelist'!) .... BUT.. I am (at least I try to be) a serious student of the Greek Scriptures ... rsp,
I was just curious, Matt. No disrespect meant.
Every time you quote the scriptures here, it reminds of an anecdote I once read in a history book on Byzantium. The author related a story of a young medieval Greek complaining to his father why he has to bother reading some old, stuffy texts (Bible, Homeric texts). Father replied, "Because there is wisdom in the ancient texts!"
A little modified from that found in the Bible is the beautiful phrase: "There are none so blind as those who will not see."
That should be stuck on to every saltwater and freshwater economics department. Actually EVERY economics department except for a few. And strap the committee to save the world (Greenspan, Summers and Rubin) down and tattoo it on to their heads.
Oh, and what's that one about the hypocrite? Jesus was probably thinking about economists.
"Because there is wisdom in the ancient texts!"
The sages are not called sages and still read for nothing.
But one still has to understand them.
Anyone with exposure to scholarship knows that the understandings differ widely across an entire spectrum. And the conclusions of non-experts that do not invest themselves is often just fantasy.
What I mean there by "fantasy" is projection.
People refer everything to themselves based on the limited self, identifying self with body, mind and personality instead of the higher self that is universal.
Then they project themselves onto the world in terms of their narrow interests. The result is fantasy.
Doing this is the opposite of what the sages are saying.
"st hs",
As others above have noted, the Naked Capitalism arguments that a currency conversion would be incredibly disastrous are highly dubious. Yes it would be inconvenient - ATM's may not be stocked for some time (under the reasonable assumption that Greece would not print external euros). Somehow civilization survived not having ATMs until the 1980s. The Irish economy was able to function with the banking system shut down using post-dated cheques that were cleared at pubs.
The tourist trade would have a hard time, as foreign credit cards would not work. But these inconveniences would be worked around by the private sector, as they would know that they are essentially permanent. (In the current crisis, the private sector has no way of knowing when things return to normal, so they have no reason to find work arounds).
For example, payments to and from the euro area would have to be blocked, as the existing systems would be denominated in euros. But I see no particular reason why Greek tourist hotels could not set up U.S. Dollar credit card payment systems.
Just because things are more complicated does not mean it would be the end of the world.
Tom,
have you read this?:
http://www.newstatesman.com/world-affairs/2015/07/exclusive-yanis-varoufakis-opens-about-his-five-month-battle-save-greece
Open in my browser but I haven't gone to read it yet. I just posted it. Thanks.
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