The resignation of the Greek Finance Minister is the clearest possible indication that my last posting was correct and that Greece is ready to climb down in negotiations, in exchange for any sliver of a fig-leaf. The “Troika” is very keen that there will be another bail-out because of course the money goes to the bankers to whom the political elite are beholden. It is increasingly plain that Tsipras does not have the balls for debt repudiation. Yesterday’s choice was meaningless; debt repudiation is the only real alternative.
No bail-out will make any difference, we will be enmired in the same issues again every six months, but with less drama. The Euro will survive because it is the resilient currency of the World’s largest economy. Merkel will continue to manage it cleverly – she has just demonstrated that Germany can determine who is Greece’s finance minister. Greeks will suffer through more austerity, comforted by yesterday’s meaningless shout of defiance, and large corporations and banks will get their hands on Greece’s remaining state assets.
I think the lesson from this is that the 21st Century corporate and banking state is beyond amelioration. Any change needs to be a fundamental challenge to the system. It will seem strange to future generations that a system developed whereby middlemen who facilitated real economic transactions by handling currency, came to dominate the world by creating a mathematical nexus of currency that bore no meaningful relationship to real movements of commodities.
Uzbek See the rise in emigration from Ireland 2007-2014 cf previous years.
http://www.cso.ie/en/releasesandpublications/er/pme/populationandmigrationestimatesapril2014/#.VZqWbGHbJ_8
•Almost half of the 81,900 people who emigrated in the year to April 2014 were Irish nationals (40,700 persons, or 49.7 per cent).
•Net migration among non-Irish nationals from outside the EU is estimated to be plus 11,200 (of which almost 20 per cent were Brazilian).
•This release provides an analysis of emigration by economic status for the first time and shows that the majority of those emigrating were either at work or a student in the period prior to departing with fewer than 1 in 5 being unemployed (see table 6).
•A breakdown of emigration by level of education (also published for the first time), shows almost half of those emigrating (47%) were educated to third level (see table 5).
What recent events in Greece have exposed to many is an essential truth tacitly accepted in Craig’s blog ;
‘ He who controls the debt controls the nation ‘ .
Hence demands for political independence as in Craig’s case for Scotland are meaningless .
Political independence without substantial economic independence is illusory for those advocate it and deceitful to those to whom the idea is sold .
Only a much wider global movement can challange the existing economic status quo .
All this (or something very similar) was predicted from the start by those who knew Greece. It has been inevitable from the moment they were allowed to join the Euro.
I love the Greeks but they are (as a nation and with many honourable exceptions, of course) hopelessly individualistic and disorganised, and regard paying tax as something other people do. I have spent the last 30 years or more when visiting trying to get receipts for hotel bills and meals, or pay with credit cards in hotels with prominent VISA signs, only to be told with an amused wink “machine not working”. After a while you smile back and give up. Doctors have to be bribed to see you, dentists want cash in advance.
You could tell when the tax people were visiting an island as suddenly neat little receipts in an ouzo glass would appear with your coffee and everyone looked over their shoulder.
That’s not to see that the Greek people aren’t suffering, they are and friends have had their salaries and pensions halved at a stroke. A family can just about get by on 1200 euros a month, but not on 600. Private sector companies are simply not paying their staff, the cost of living has spiralled, and the tourists vanished.
Those at the top won’t be beggared by this, of course. They have long since got their money out of the country, and everyone thinks that previous governments deliberately dithered over negotiations to make sure they and their mates did just that.
As I see it, default and the short-term pain of losing at least part of bank deposits, plus return to a drachma that devalues by 25% overnight, are now probably the least worst option.
Habbabkuk
One way or another Greek economy is f..ked in medium terms. They will need decades to come back to the pre Euro level and not sure if they will ever come back to pre 2007. They can default at their debts (I actually think it will be far better for them economically), get out of Euro and introduce their own currency again. Their government will need to introduce regulatory measures to keep local currency inflation under control and being cut off from credit line will not help this. I predict around 50% annual inflation (at best) within the next 5-10 years. Lack of credit, lack of infrastructure (despite huge debt Greeks have managed to spend very little on infrastructure), strained relations with other EU nations will all make Greek economy harder to come back.
Alternative, staying in Euro means that they effectively going to be governed from Berlin and at some point will be forced to leave Euro but will suffer even worse at the end.
There is unfortunately no way and no option for Greeks to keep similar living standards without Germans paying for much of it.
“Greece – Opposition parties support Tsipras in his negotiations with creditors, Kammonos says – along with a reference to debt relief.”
Statement to follow.
As with the vote, so with the political parties.
It’s no longer Syriza versus the bankers. It’s Greece and its political class versus the bankers.
http://www.theguardian.com/world/live/2015/jul/06/greek-referendum-eu-leaders-call-crisis-meeting-as-bailout-rejected-live-updates#block-559a8a1ce4b00bdd277080ae
Mary
I am not claiming that there will not be increase in emigration from Greece, and I agree that good proportion of emigrants will be with higher educational degree.
What I claiming is that you are exaggerating that Greece will be left with no college grads. In fact even in the worse off economy (and I say especially in worse off economy) it is easier for college grad to find a starting job than for someone with no higher educational degree.
You also ignoring cultural difference between Anglo Saxons and Greeks, Spanish and Portuguese. They are much closer to their families and relatives and emigrating for them is less attractive.
The National Bank of Greece has considerable global presence.
https://www.nbg.gr/en/the-group/group-companies
“A debt write-down is polite language for not paying back some of what you owe. ”
Much of the debt, as the Greek Parliament has established and is well known, is odious. This means that it is not “owed” and can properly be written off and the creditors penalised for their criminality.
As to the general principle: very few nations have not, in modern times, repudiated all or part of their debt. Germany, for example, was relieved of vast debts once it had agreed to join NATO, re-arm and threaten the Soviet Union. The list is a very long one and includes almost all US states and the US government.
It is high time that Britain considered getting in on the game- far better that creditors suffer haircuts than that old people die of cold, or want of food, that young people are homeless, that workers are unprotected against the bullying of employers and that children lack the essentials.
Underlying the policy of public borrowing, pledging the nation’s credit as colateral, is the ancient fact that the land owes the people a living and that the provision of shelter, food, clothing and other essentials is the first duty of property owners and the condition of society’s protection of property.
“There can be no doubt about the fact that Germany benefits from the euro in a significant number of ways…..”
http://www.ged-project.de/wp-content/uploads/2014/12/3b_PolicyBrief_Vorteile_Euro-Mitgliedschaft_ENGLISCH.pdf
fedup
Not sure where you found racism in my claim. You just need to visit southern Europe to prove me right. Most of their grown ups (over 18ns) are staying with their parents (and have been even during good economic climate) whereas in the UK it is obligatory to leave and rent (or buy with parents help) after someone is past 18.
Family gatherings are also much more common and often in southern Europe and not just on mother’s or father’s day or at Christmas.
You only need to look at Wikipedia (the most easily accessible source) to find out that median salary in Greece was in 2014 twice higher than in Turkey (dispute their economies being very look alike), and 30% higher than in counties like Czech Republic or Hungary, or Poland, despite economies of those countries is much more industrialised and more productive and with much less exposure to European debt. Where those (Greek) salaries are coming from?
I don’t doubt that there has to some form of bailout for Greece, but the question is – Who pays?
It certainly won’t be the banks, since we know that they have the political power to avoid this, and probably aren’t solvent enough to write these amounts off anyway. As I see things it is likely to be the usual cash cows – i.e. people in the rest of the EU with some combination of additional taxes, austerity measures, quantitative easing in Germany, UK, France … etc., which will only get worse if other Southern European countries go the same way as Greece
Wouldn’t it be more just if, instead of burdening others, we investigated the corruption that caused this and got some of the money back from the politicians (and their business associates) who got Greece into this mess in the first place?
Hope you are correct Uzbek for the sake of the poor benighted country.
I know it won’t happen, but I rather hope it will that Greece will leave the Euro and return to the Drachma, its currency would be devalued, but Greece could begin again so to speak.
Imagine the advantage the Drachma would have over the Euro, when it come to lets say tourism, which would help it rebuild its economy again.
With the banks closed and cash machines issuing only €60 Euros per day (in some cases €50 Euros) unless you have a foreign account, only pensioners are allowed to withdraw more, in the form of a pension, it must be very frightening and daunting for the Greeks.
Some accounts I’ve read, claim in major cities like Athens, there can be queues at these machines with a four hour waiting time common practice.
Whether or not the replacing of Varoufakis, is a sign that the Greek government intentions to conform with its EU debtors wishes, remains to be seen, surely leaving the Euro would cause less pain and austerity in the long term.
How much more can the Greek people take, I wonder?
It got me thinking, if this is how the international banking community treats Greece (A European nation) over debt, how must these same powerful banking institutions treat third world countries, over debt owed, in hindsight I think most people in here know the answer to that question.
Mary
poor benighted country
Not sure if above statement could be referred to Greece. I would say countries like Bangladesh, Kenya, Congo and so on are more fit the criteria. The problem is that no government borrows billions to feed voters in those countries.
When a company or person cannot pay their unsecured debts, they become bankrupt. That is what the Greek government needs to do. Sadly for the creditors, they have lost their investment – one they should never have made in the first place.
“I know it won’t happen, but I rather hope it will that Greece will leave the Euro and return to the Drachma”
How do you know it won’t happen? Greece won’t start to recover until it happens.
It’s only the hopeless attachment of the Greek people to the euro that’s keeping the country in it. It’s analogous to heroin addiction. Given the choice of more heroin or cold turkey, most addicts will choose more heroin. But it can’t go on like that.
Shows how out of touch you are.
Currently young people as old as thirties and forties are staying in their parental homes in UK. It is no longer the heady days of the past for everyone to have a job offer in the afternoon if they left their job in the morning. The endemic poverty has brought about the extended families living together, and for some families to live in one bedroom bedsit; that is mother father, and children to live, and cook and sleep in the same bedroom. One in three families are in need of food banks to supplement their food stock. The fact that most these families are working families (ie they work umpteen hours a week and still cannot make ends meet) is not even hinted at.
Greece having a population of just over ten million, has the same economic foot print as Turkey with seventy six million. And the median taken from a seventy six million samples is to be compared with the median taken from ten million! Who said there are lies, damn lies and then there is statistics?
And speaking of a a fundamental challenge to the system, having lightly purged the security services, SYRIZA is ready for its next snook, at the BRICS Financial Forum in Ufa on 8 July. Greece doesn’t even have to join the bank. They can just make noises. Greece will need interim humanitarian relief, access to a payments system, and development aid. The BRICS could offer all that in the medium term while evoking the Berlin airlift with relief, this time as the heroes. The reflexive NATO response will be to knock the Greek government over (that’s where Golden Dawn comes in.)
Who knows how it will turn out. This is a question of institutions and power imbalances. We’re going to hear a lot of superstitious worship of capital markets from victims of Anglophone miseducation. All the contingent institutional detritus of the NATO bloc gets deified as ineluctable markets, the modern equivalent of god’s will for the downtrodden middle-class serfs of today such as this Habbakuk.
I haven’t yet had time to read all the comments here.
Rafael Correa, the populist president of Ecuador, was recently in Brussels to take part in an EU summit. EuroNews interviewed him. Correa talks about the Greek crisis, debt in Latin America and Julian Assange…
https://www.youtube.com/watch?v=wTV9FaMEpmc
Finian Cunningham predicts similar economic problems for some other countries being sucked dry by the arms manufacturers.
Greek Crisis Awaits Other NATO Partners
July 04, 2015 “Information Clearing House” – “SCF”
One notable consequence of the Ukraine conflict and the ongoing confrontational stand-off between the West and Russia is the dramatic surge in military spending among several European countries.
However, this unprecedented militarisation of economies across Europe portends a disastrous Greek-style future of crippling debt for these same countries. Those most at risk from a future hangover of military overspend in the years ahead include the Baltic states, Poland and the Scandinavian countries.
/..
http://www.informationclearinghouse.info/article42289.htm
What fools.
” Nothing in the NATO Charter requires particular levels of military mobilization, ”
There is a target, a guideline not a hard and fast rule, of 2% GDP
Fedup, surely Turkey’s economy is far bigger than Greece’s? Turkey’s in the Top 20 GDP, while Greece is in the mid-40s. I don’t understand what you mean by “economic footprint”, though.
http://knoema.com/nwnfkne/world-gdp-ranking-2015-data-and-charts
[ Mod: This had been caught in the spam-filter ]
@Habbabkuk
I suggest you familiarise yourself with Argentina and it’s defaults. Very quickly afterwards the international banks have beaten down Argentina’s door offering more loans, seeking to buy Argentine govt debt. Why? because there is still money to be made. it will be the same in Greece. They have to get in there in case their competitors do and they miss out. Investment is all about risk, without risk there is no interest and you cannot make money. This is economics 101.
“Greece having a population of just over ten million, has the same economic foot print as Turkey with seventy six million.” Fed Up.
How do you mean? Turkey is in the Top 20 for GDP, while Greece is in the mid-40s.
[ Mod: This had been caught in the spam-filter ]
Yes, and it’s wisely ignored. The less abject satellites spend half that. The autonomous European countries spend nothing at all. Now the nuclear umbrella is Russian and Russians don’t come crying about the cost.
Fed up of rubbish about Greek gov spending beyond its means, here’s a simple article that may benefit certain commentators.
http://www.nationofchange.org/2015/07/05/greece-what-you-are-not-being-told-by-the-media/?utm_content=buffer53453&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer
I was sort of hoping Varoufakis would continue to advise ‘behind the scenes’.
” Very quickly afterwards the international banks have beaten down Argentina’s door offering more loans, seeking to buy Argentine govt debt. ”
Yes at a price. Greece is already having to pay 18% on it’s government issued bonds compared to 1-2% for the rest of the EU. Argentina has been paying 14%.
Muscleguy
I’m afraid I can’t respond to your post (addressed to me) of 19h03 as the Moderator has seen fit to delete the two posts of mine to which you were presumably referring.
Muscleguy
Ah, I see you’re referring to the only post of mine on this thread which the Moderator hasn’t kindly deleted.
Well, I think Kempe has responded appropriately, don’t you? There is certainly good money to be made if govts are willing to offer sky-high yields on their bonds. But the question is really how did those govts get into a situation where they can borrow only at 18% rather than at 2%? That, too, is _Econ 101 stuff. 🙂
This seems to be an experiment of some sort, with Greece as a guinea pig, to see how far an EU nation can carry out destructive austerity measures before causing civil war. If I was Greek, I would be showing Europe and its finance buggers my backside.