Michael Roberts — Greece: on parole

Backgrounder on Greece (and the IMF and Eurocrats). A sad tale of elite rule and rent extraction off the back of ordinary workers with no power or influence — unless they rise up angry and are willing to pursue it.

Michael Roberts Blog
Greece: on parole
Michael Roberts

Gilbert Doctorow — News flash: Europe is brain dead and on the drip

In what follows I will describe an event of this kind which was held in the European Parliament building on Tuesday, 31 May. Though unexceptional in its format and in its attendees, it illustrates perfectly how and why Europe is sleepwalking its way into World War III with Russia, or why, as I say more colorfully in the heading, the Old Continent is ‘brain dead,’ just no one has bothered to publicize this fact.

Une parole franche
News flash: Europe is brain dead and on the drip

Gilbert Doctorow | European Coordinator of The American Committee for East West Accord Ltd.

See also

The Saker hears the drumbeats of war. On this week’s Solari Report, Saker and I discuss his latest, A Russian Warning co-authored with Dmitri Orlov and Dr. Eugenia V Gurevich:

“We, the undersigned, are Russians living and working in the USA. We have been watching with increasing anxiety as the current US and NATO policies have set us on an extremely dangerous collision course with the Russian Federation, as well as with China. Many respected, patriotic Americans, such as Paul Craig Roberts, Stephen Cohen, Philip Giraldi, Ray McGovern and many others have been issuing warnings of a looming Third World War. But their voices have been all but lost among the din of a mass media that is full of deceptive and inaccurate stories that characterize the Russian economy as being in shambles and the Russian military as weak—all based on no evidence. But we—knowing both Russian history and the current state of Russian society and the Russian military, cannot swallow these lies. We now feel that it is our duty, as Russians living in the US, to warn the American people that they are being lied to, and to tell them the truth. And the truth is simply this: If there is going to be a war with Russia, then the United States will most certainly be destroyed, and most of us will end up dead.”

The Saker gives us an update on the Ukraine and the impact, along with events in the Middle East and US and European sanctions, on the Russian economy. We cover the ancient history of tensions between Russia and the Western nations and revisit why the Russian people are so supportive of Putin’s efforts to resist accommodation. Saker suggests some of the actions we can each take to reduce the chances of war.
Our discussion raises important questions about the shift to a multi-polar world. If the US offers countries two options – submit to multinational corporate control or be destroyed – it is only a matter of time before the world shifts into a deflationary spiral or war. Where are the incentives to cooperate and honor agreements that are the basis of global economic growth?

The Solari Report
The Emerging Multipolar World with Saker: Russia, Ukraine & the Risks of War

Catherine Austin Fitts interviews The Saker

The Financial Invasion of Greece — Sharmini Peries interviews Michael Hudson

HUDSON: The IMF says it will not reduce Greece's debt by a single penny. It will keep the debt in place. The problem is the way that the European central banks keep their balance sheets, if it breaks down Greece's debt owed to the IMF then the countries Germany, France, and other countries whose banks are bailed out will have to take a loss and they refuse to lose a single penny. So the IMF has not made a creative proposal. It has repeated what it said a year ago without changing a single word. It says okay, we're going to keep every penny of debt in place but we're going to give you a fudging number.…

There's only one kicker. You're going to have to cancel your pensions, write them down, impose austerity, privatize your government, and you're going to have to shrink your economy so that it will shrink by about 1, 2, 3% a year so that the 1.5% interest that we're charging as little as it is, is going to absorb all the income growth you have. Every penny of growth of have from the next 25 years you'll have to end up paying the German banks. Now we know you can't do it. We know that when you cancel the pensions you're going to shrink. We know your labor's on strike. We know they're going to immigrate.
But there's a way out. You can sell your ports, your land, your public utilities, your railroads, your airports, anything you have you can sell to the Germans and at the end of this time you won't have a single thing and all we ask is that all you Greeks get out of our country, now that we own you. That's what the IMF is saying. It's not creative, it's absolutely brutal. That's why the Greeks are out on strike.… 

Neoliberalism taken to its logical conclusion — we own everything.

There is a war going on in Europe but it's not a military war anymore. They're now using finance instead of war and they're using finance to say, we can grab your country.…

Real News Network
The Financial Invasion of Greece

Sharmini Peries interviews Michael Hudson

Andrea Terzi — Eurozone desperately needs a “FISCAL WHATEVER-IT-TAKES”. But EU leaders ain’t bold enough to act.

The problem with construction of the EZ is that following "the rules" results in an unresolvable balance of payments for successive countries until all the surpluses are in the hands of one country, or all the EZ countries can export themselves out of it, which foists the balance of payments problem on the rest of the world.

This is just a matter of balance sheets and accounting identities. No fancy math required. Just the ability to put figures in the correct accounts, do some arithmetic and compare balance sheets using simple algebra. Hardly rocket science.

Professor Terzi illustrates this through the game Monopoly.

Germany, controlling the ECB, is the banker. Therefore, Germany will be the last country standing. Of course, the EZ will implode before that, or the rules will be changed. As Italy and France are squeezed more, then the issue will surface with a vengeance.

Without concerted action to address the balance of payments issue the EZ is toast.

Ending the collapse is possible, and yet Europe clearly lacks political will. This week begins with a country in ruins. As it is, the Eurozone will not last long.

Money And The Real Economy
Eurozone desperately needs a “FISCAL WHATEVER-IT-TAKES”. But EU leaders ain’t bold enough to act.
Andrea Terzi, Professor of Economics, Franklin College, Switzerland

Alexrpt — No deal on Greece today. EU schism with France on one side and Germany on the other

At the euro-circus, the clowns are throwing cream pies at each other now. Pleaz pass the popcorn.

Whatever happens, there are going to be consequences and then the recriminations begin. 

Recall that the US leadership was following the rules of neoliberal capitalism when it decided collectively to put Lehman under. Then the sky fell in.

As Paul Krugman recently pointed out, no one knows the consequences of various scenarios being advanced, least of all Grexit, which Germany is pushing for.

Red Pill Times
No deal on Greece today. EU schism with France on one side and Germany on the other

Alexrpt

Alexrpt — Quarantine Greece? EU is placing terms into new loan proposal that will cut Greece off from BRICS financing

Its not enough that the Eurogroup will make sure Greece carries out harsh austerity and cuts in just about every part of its economy, while raising taxes just about everywhere and for everyone…but any chance of Greece looking for additional financing and investment from the powerhouse BRICS nations will also be strictly prohibited under the new deal being hashed out in Brussels.

Now that Merkel and Schäuble have Greece right where they want it, it’s time to permanently break any hopes and dreams Greece had of growth and opportunity that can be found in the Eurasian new silk road.

Germany wants to squash any possible pivot, or though of a pivot, that Greece may have hoped and dreamt of with Russia and China.

Forget Greek Stream, forget the AIIB and the BRCIS development bank. Forget the SCO…Greece will be prohibited to play with Russia and China. If, and after, the new debt deal is signed with the Troika, consider Greece under quarantine.…

Anyone still think that this is not economic warfare if this is true?

Red Pill Times

Quarantine Greece? EU is placing terms into new loan proposal that will cut Greece off from BRICS financing

Alexrpt

Constantin Gurdgiev — 12/7/15: Instead of Abating, Greek Crisis Just Accelerated

In order to continue funding discussions, Greece is required to pass the following 12 measures before Wednesday:

Source: @eurocrat

Unconditional surrender.

true economics
12/7/15: Instead of Abating, Greek Crisis Just Accelerated
Constantin Gurdgiev

Alexrpt — German newspaper editor for Die Zeit calls it…Tsipras won. Even if Greece leaves Eurozone, it stays in EU with ‘access to zillions of money’

German Chancellor Angela Merkel “knows she does not want to have a dead body on her hands — not in Europe, not in her Europe,” Josef Joffe told CNN’s Christiane Amanpour on Monday.

Alexrpt:

Is it game theory at its best? 

Is this why Alexis Tsipras and Yanis Varoufakis were so relaxed throughout this whole process? 

Perhaps the only reason Tsipras is actually working to strike a deal with creditors is because he has been given a cleat mandate by the people…negotiate a better debt deal, but do not leave the Eurozone. 

So Tsipras is negotiating to get a debt deal that, at its best, eases five years of austerity, but at its worst does not mean a Grexit…but even at its worst one fact should be emphasised, Greece will remain in the European Union. 

Let’s emphasise this again. Even if Greece leaves the Eurozone (the currency union) it will remain in the European Union, and that means access to all the benefits of the EU without the terror of the currency.

Merkel knows this. Hollande knows this, and this is why German newspaper editor of Die Zeit, Josef Joffe, believes the EU will eventually blink…and even if it does not blink, which is possible knowing the poor calibre of leader Merkel is, Tsipras and Varoufakis may actually have the last laugh.

The free market will ensure that whatever Greece lacks, due to its past Euro import-dependant economy, its future “drachma” economy will find ways to substitute and this will snowball into big time growth.

Red Pill Times

German newspaper editor for Die Zeit calls it…Tsipras won. Even if Greece leaves Eurozone, it stays in EU with ‘access to zillions of money’

Alexrpt

The eurocrats have lost in any case.

1. Tsipras caves to austerity; Greece becomes a failed state in Europe.

2. The eurocrats cave and this sets an example for other countries to demand  similar treatment.

3. Grexit and the eurozone is threatened.

There is no good solution for the eurocrats and the only good solution is to admit that Maastricht has failed.

The Greek Revolt Against Bad Economics Threatens European Elites — Lynn Parramore interviews James K. Galbraith

James K. Galbraith, author of The End of Normal and professor at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin, has an inside view of the crisis leading to the recent referendum in Greece. Galbraith has worked for the past several years with recently departed Greek finance minister Yanis Varoufakis as both a colleague and co-author, and he has just returned from Greece, where he looked down over the rooftops of Syntagma Square as citizens made history in a strong vote against austerity. He discusses the dramatic turn of events and what is at stake going forward as the austerity doctrine — and the entire neoliberal project — come under threat.

INET
The Greek Revolt Against Bad Economics Threatens European Elites
Lynn Parramore interviews James K. Galbraith

Daniel Hannan — The Eurocrats are punishing Greece to scare other countries

Good analysis. Nothing you don't know already but interesting to hear a conservative member of the European Parliament saying it.

CapX
The Eurocrats are punishing Greece to scare other countries
Daniel Hannan | Conservative Member of the European Parliament
ht/ Constantin Gurdgiev at true economics

William K. Black — Greece Proves Again Why Democracy is the Criminal Classes’ Great Fear

The people of Greece have just shown great courage, and even greater common sense, in voting “No” in overwhelming numbers against the troika’s war on the Greek people and labor throughout the EU. In recent days we have seen the spectacle of the major media shamelessly lying globally about the referendum and the Greek government – cheered on by the troika. The troika openly sought to depose a second Greek head of state for the high crime of favoring a democratic vote on the troika’s economic malpractice and effort to extort the Greek people by threatening to destroy their economy. The tone and content of the propaganda were extraordinary – and reversed reality.

New Economic Perspectives
Greece Proves Again Why Democracy is the Criminal Classes’ Great Fear
William K. Black | Associate Professor of Economics and Law, UMKC

Steve Randy Waldman — Greece

SRW is outraged and rightly so.

Interfluidity
Greece
Steve Randy Waldman

Seumas Milne — Syriza can’t just cave in. Europe’s elites want regime change in Greece

Greece’s confrontation with the euro overlords will shape resistance to austerity – and the future of the whole European Union

It’s now clear that Germany and Europe’s powers that be don’t just want the Greek government to bend the knee. They want regime change. Not by military force, of course – this operation is being directed from Berlin and Brussels, rather than Washington.

But that the German chancellor Angela Merkel and the troika of Greece’s European and International Monetary Fund creditors are out to remove the elected government in Athens now seems beyond serious doubt. Everything they have done in recent weeks in relation to the leftist Syriza administraton, elected to turn the tide of austerity, appears designed to divide or discredit Alexis Tsipras’s government.

They were at it again today, when Tsipras offered what looked like almost complete acceptance of the austerity package he had called a referendum on this Sunday. There could be no talks, Merkel responded, until the ballot had taken place.

There’s no suggestion of genuine compromise. The aim is apparently to humiliate Tsipras and his government in preparation for its early replacement with a more pliable administration....

Class warfare.

Already the class nature of the divide between the wealthier yes and more working-class no camps is stark.

The Guardian
Syriza can’t just cave in. Europe’s elites want regime change in Greece 

Seumas Milne

ht Clonal

Ambrose Evans-Pritchard — Europe has suffered a reputational catastrophe in Greece

The eurozone has shown itself unable to manage its basic moral responsibilities....

It is an odd spectacle to watch a central bank with a treaty duty to uphold financial stability take the deliberate decision to precipitate the collapse of banks that it regulates. But the deeper point is that the insane construction of the euro - a naked currency union without fiscal and political foundations - must inevitably tend to authoritarian monetary dystopia in the end....

I'd say the "game theorist" is winning. He has managed to trash neoliberalism and the eurocrats to the degree that only fools and fellow kleptocrats would do business with them now.

The Telegraph
Europe has suffered a reputational catastrophe in Greece

Ambrose Evans-Pritchard

Merijn Knibbe — Breaking: ECB states that Euro is reversible and not irrevocable

Breaking (and I can’t stress enough how important this is): the wound is really deep, as the ECB changed its mind in a fundamental way. Up till now the ECB has been adamant. THE EURO IS IRREVERSIBLE, adopting it is irrevocable. But they changed their mind (and historians of course knew better all the time). Yesterday, an interview with Benoît Cœuré, one of the highest ranking civil servants of the ECB, started with this sentence: La sortie de la Grèce de la zone euro, qui était un objet théorique, ne peut malheureusement plus être exclue. Translation: Grexit can’t be excluded, anymore....

Real-World Economics Review Blog
Breaking: ECB states that Euro is reversible and not irrevocable
Merijn Knibbe

Christian Rickens — Greece's Referendum: The Price of Five Years of Cowardice

Much of Europe is outraged by Alexis Tsipras' decision to hold a referendum on reforms in Greece. But how did the euro zone allow an economically irrelevant country of 11 million to bring the common currency to the brink? Through cowardice.

Der Spiegel piles on.

Spiegel Online
Greece's Referendum: The Price of Five Years of Cowardice
Christian Rickens | head of SPIEGEL ONLINE's business and economics desk

See also


Opinion: We Are Living in the Anti-Europe By Dirk Kurbjuweit

Peter Dorman — Greece: A Referendum on What to Do Yesterday

I think a referendum was appropriate, but perhaps a month ago, not now. (1) The creditors never negotiated; they never horse-traded compromises. That was obvious from the beginning, and glaringly obvious when they responded to Syriza's final offer, which tiptoed across some red lines, with even more demands. It was always take-it-or-leave-it. Tsipras and Varoufakis were not honest with the Greek people, in my opinion, by repeatedly making optimistic statements -- they should have said "we can't negotiate with these guys" and put it to a vote right away....

As for the IMF, it was no secret that there has been a lot of tension between the technical staff and the politicians at the top. They have a policy, established after the Argentine fiasco, of not lending to insolvent states, but instead requiring writedowns from the creditors. Ah, but the creditors in the Greek case are the banks and governments that installed the IMF directors, so the policy is being flagrantly violated....

Power politics and cronyism, hallmarks of the neoliberal order being imposed through globalization. Europe is only a test case.

Econospeak
Greece: A Referendum on What to Do Yesterday
Peter Dorman, Professor of Political Economy, The Evergreen State College

Iain Martin — There’s method in Greece’s madness – it could pay off

The action is now political.

The Telegraph
There’s method in Greece’s madness – it could pay off
Iain Martin

ht Clonal

Costas Douzinas — Referendum and democracy: putting the demos on stage

It is against this background that the Greeks elected in January 2015 the Syriza government committed to reverse these policies. A period of negotiations followed. But these were not proper negotiations. The huge gap between the two parties in power resources and ideology made the talks brutally asymmetrical. I have called these ‘negotiations’ a European coup, an attempt at ‘regime change’ using banks and not tanks. The economic stakes for the lenders are relatively small - the Greek economy is only 2% of European GDP - and does not justify the risk of a breakdown in relations. The precautionary principle of risk theory, inscribed in the European DNA, demands that the unpredictable effects of Grexit on the European and world economy should be avoided. If the collapse of Lehman Brothers created such a huge crisis, even the consideration of Grexit is more dangerous

The perceived threat of a Syriza success and of a haircut of the Greek debt, repeatedly declared unviable by the IMF, is political not economic. The European elites fear a contagion throughout Southern Europe of the anti-austerity stance of the Greek people and government. The result in the Spanish local elections, the Scottish anti-austerity vote and the Sinn Féin opinion poll results indicate that the people hit by austerity have started stirring. The Syriza government is leading the attack on the ‘there is no alternative’ neoliberal mantra. Even a limited success would show that the only fight that cannot be won is a fight not joined.

The fear of political contagion is the only credible interpretation of the actions of Europeans and the IMF. The aim is clear. Either overthrow the government, if it does not accept the onerous conditions imposed on it, or humiliate it so much as to make it impossible to keep party and government together. There are many signs of this attempted ‘regime change’. Every time the Greek government presented to the European leaders a political proposal solving the long-term problem of debt sustainability, it was asked to go to the technocrats and cost it. When the Greeks returned with a detailed costing, the lenders would challenge the political framework behind it....

Open Democracy
Referendum and democracy: putting the demos on stage
Costas Douzinas | Professor of Law and Director of the Birkbeck Institute for the Humanities at Birkbeck, University of London

ht Clonal

Bill Mitchell — Greece has only one viable path – exit

Neoliberalism is a political theory based on economics and bad economics at that. This is all about politics, that is distribution of power, rather than economics, in that economic distribution is based on economic power that flows from political power, which in term flows from social power, that is, is class structure and interest.

Bill Mitchell – billy blog
Greece has only one viable path – exit
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia