Part two of the insider view of negotiations between Greece and the Eurogroup. When is a rescue not a rescue but a seizure of assets? Interview.
Just as Michael Hudson has been predicting.
James Galbraith: First of all, it’s important to distinguish between the public rationale for the policies that have been imposed on Greece, which are as you describe, and the underlying reasons which are quite different. The public rationale is the notion that so-called structural reforms will produce growth. The underlying reason is that the creditors wish to get their hands on as many Greek assets as possible at the lowest possible prices. Once you see that you’ll see that the policies are quite consistent with the reason, though not with the rationale.
What we are going to see now is an intensification of those policies and the liquidation of public and private assets in Greece: public assets which are being auctioned at undoubtedly low prices under the so-called privatization fund, and private assets because the Memorandum provides for accelerated liquidation, basically foreclosures of people’s homes and real estate and of the remaining Greek businesses. Basically that is the direction of policy, and if the Memorandum stays in place that is what we are likely to see.
LM: If you are correct, it would seem that the institutions (the IMF, the EC and the ECB) will have to rescue Greece indefinitely…?
JG: There is no “rescue” going on here. There is no “rescue,” there is no “bailout,” there is no “reform” going on. I really need to insist on this, because these words creep into our discourse. They are placed there by the creditors in order for unwary people to use them, but there is nothing of the kind taking place. What is going on is a seizure of the assets owned by the Greek state, by Greek businesses and by Greek households. There is no sense that this has anything to do with the recovery of the Greek economy or with the welfare of the Greek people. On the contrary, the policy is utterly indifferent to those considerations.…Damning the neoliberal devils.
LM: Will Greece end up out of the euro?
JG: Somebody will be out of the euro at some point, because the politics of the choices here have now become exceptionally clear.…The kiss of death. Greed.
More on the inside story, too.
Open Democracy
The poisoned chalice
James Galbraith and J. Luis Martin
Well they can go ahead and "sieze" them but it still isnt going to work...
ReplyDeleteIt doesnt matter who owns something if the revenues to maintain it arent there...
If they convert to a private toll road and nobody drives on it then it will fail under the new form of ownership too... (this is like Warren's '10th plague' analogy for Germany)
Go back to sources and sinks 101:
https://en.wikipedia.org/wiki/Current_sources_and_sinks
The road is a SINK... NOT a source... what is the source morons?
True. But they are still getting assets for nearly free.
ReplyDeleteAnd why is this being imposed on Greece? It does not benefit Greek growth.
This how debate is of the "we can't do anything" variety.
Greece should just Grexit and renationalise the assets. If parliament asserts the asset is nationalised, it is nationalised. No lasting damage.
But Hudson doesn't make that simple point.
Any thoughts Matt and Tom?
The way it works, usually, as that the assets will generate a level of income, enough to be profitable. Economies have been running at depression levels before, and some making a killing off rents meanwhile.
ReplyDeleteIf you acquire an asset at low cost, well below it's amortization costs, after the investment has already being paid, there is a lot of upside and margin to exploit the asset and extract a good income out of it. Even at depression levels.
And you still hold that asset, because the economy will not stick forever like that, and in a few years, when if needed there will be devaluations and hyper-inflations (when the country is dysfunctional enough) and even wars, after that point you will stay hold the asset (maybe) and will be able to sell it back.
This kind of deals are done all the time, were done in the last world wars, they have been done in recent conflicts all over the world, etc. Is risky, sometimes you can lose the asset permanently, but more times than not, you will make a killing out of this deals, they pay themselves. Otherwise, those vulture funds wouldn't exist.
Well Random I dont like these privatization people either, but I dont see how drawing attention to the form of ownership and perhaps some sort of unjust/unfair way of obtaining said ownership is going to change anything or help the current situation....
ReplyDeleteI dont think unqualified ideologues like Mankiw or Galbraith here masquerading as technocrats can help right now... they have been at it for decades with their ideological back and forth since we got out from under the metals to no great effect...
Ignacio right they might make a little on these schemes but its doomed if they dont get the incomes back up to where they have to be so the systems can be maintained/operated properly... nobody good is going to help them maintain these systems without being paid well... these are high maintenance systems... if they sign a contract that has functional/operational quality requirements they could end up quickly in breach... rsp,
It would not matter if the assets being stripped in Greece were privately owned. The issue is not privatization but asset stripping.
ReplyDeleteGalbraith claims, rightly I believe, that there was no intention to resolve the Greek crisis with a so-called rescue, because even the IMF says it won't work. So either the eurocrats are stupid or there is another agenda operative. Given asset stripping, it sure looks like that what was about from the get-go, as people like Hudson were warning. Same with Ukraine. These were set-ups.
"So either the eurocrats are stupid..."
ReplyDeleteThat is the case I continuously try to make... and it increasingly looks like the eurocrats arent the only ones
And btw more BS metaphor:
ReplyDelete"The poisoned chalice" (oooooohhh...)
Add that to "the global minataur"
from the 2 stooges here....
Lord, what an inflated and impertinent prig you are, Matt.
ReplyDelete"perhaps some sort of unjust/unfair way of obtaining said ownership"
ReplyDeleteOwnership is granted by the will of the people. If the will of the people change and they, as a majority, believe that you obtained the asset unfairly they are perfectly within their rights to strip you of ownership.
There is no God given right to own anything. It is a social grant.