Feb 162015
 February 16, 2015  Posted by at 8:46 pm Finance Tagged with: , , , , , , ,

John M. Fox WCBS studios, 49 East 52nd Street, NYC 1948

It’s really not that hard. It’s even elegantly simple. But that still requires you’re willing to listen, willing to think, and you don’t go into talks with your mind already made up. Obviously, that is too much to ask from the Eurogroup side of the negotiations with Greece. They haven’t been able to move one inch from their ‘Do as we say or else’ bluster.

German Fin Min Schäuble earlier implied that the Greek people have elected the ‘wrong’ government, an already unforgivable intrusion into a EU member state’s internal affairs. What if the Greeks said the same about Merkel et al, what do you think the reaction would be? Today, SPD executive board member, Joachim Poß, member of Merkel’s German coalition government, does Schäuble one better:

“In the interest of the Greek people and in view of the difficult situation, Prime Minister Tsipras should consider to replace Mr Varoufakis with a political experienced, realistic-efficient person.”

They call for the Greeks to see reality, but they themselves have completely lost it. They think reality is whatever they think or wish it is. The only true reality, however, is that the Greek people, in a very democratic and very convincing way, have elected the government that a cackle of Germans now apparently find inconvenient.

Germany has European reality, and history, and economics, fully upside down. Which, no matter how you take the Greek claim that Germany got in 1953 what Greece deserves today, or their insistence on WWII reparations, is remarkable. How is it possible that there is no voice coming from Berlin to question, doubt, attack, their government’s position? It’s after all not as if there are no unresolved issues left. There are no clear cut positions other than what Berlin and Brussels say there are.

Merkel and Dijsselbloem and Draghi don’t get to decide for the entire world what goes and what does not. Their ‘model’, their ideas, have failed dramatically, and Dijsselbloem’s hollow statement that “much progress has been made” (talking about Greece) only serves to confirm that. They seem to think that a double or nothing on Greece will hide their failures, but the exact opposite is true: Syriza is exposing them as unsavory naked emperors.

Schäuble, in the same vein as Dijsselbloem, insists on saying: “look how great we’ve been doing, which is why we have the right to keep on acting the way we have”. But that is nonsense, neither Schäuble nor Draghi’s policies have been a huge success, far from it. And while Germany may have scraped by – and not much more than that -, this is not remotely true for some of the countries both gentlemen are in an economic union with, least of all Greece. It is simply not true, it’s a self absorbed and self aggrandizing delusion.

If New York State, Texas and California were not bound by the policies inherent in a federal fiscal union, they would have been even richer than they are, but Oklahoma and Nebraska (I’m just picking a few examples) would have been much poorer, and would have no reason to remain part of the USA. The EU and eurozone have no such fiscal union, which means Germany gets to keep all the spoil, and Greece pays the bill. This is possible because Greece, unlike Oklahoma, only gets hand-outs that it has to pay back with interest. Which may be low right now, but that doesn’t change the principle – or the principal, for that matter: Greece gets it share of ‘help’ of the union it’s in, in the form of additional debt. Oklahoma does not.

While at the same time, Greece no longer has a central bank or a currency, so it’s fully dependent on what Berlin decides Frankfurt (ECB) must do. And wouldn’t you know, Frankfurt always decides on doing what is best for Berlin, because it’s the major power in the union. That leaves Greece in a deep dark hole, and one that can only possibly get deeper and darker, unless the eurozone economy starts growing at double digit rates (not!). And even then. Even then that – fantasy – growth would be primarily German.

Just like Nebraska will never be New York or California, Greece will never be Germany. In the US, this was understood – luckily – at an early stage. Or there wouldn’t be a US. I’m not saying the present day US is some sort of Nirvana, but at least it got its basic fiscal principles down early in the game. There’s a means for the federal government to lift up the poorer parts of the union using tax revenues from the richer. And no, that’s not socialism, it’s the only way to keep the better part of an entire continent tied together. And when I say ‘better’, please note I’ve already in my young life lived in Canada for 20 years. And left. And that Canada is actually bigger than the US. It’s a figure of speech.

Schäuble pretends that what is good for Germany, is also good for Greece. And that is manifestly untrue. It would be in a true fiscal union, but it is not true today. It’s nonsense. Doesn’t Germany understand this? That’s hard to believe. Still, they insist that the only way forward for Europe is the one that benefits themselves most. And they get the likes of Dijsselbloem and Draghi to confirm that for them.

All against the Greek underdog. Which, as democratically as their ancestors invented it eons ago, voted they had had enough. And what is Germany’ s reaction? Schäuble said: “The problem is that Greece has lived beyond its means for a long time..” But isn’t that perhaps even more true for Germany itself? It depends on how you look at it.

Greece never stood a chance in the present configuration. All benefits would always have gone to Germany, simply because they get to decide everything. There are no EU or eurozone rules that say Berlin has to bequeath part of its surplus to weaker parts of the union. What inevitably follows from that is that Germany will, as time goes by, squeeze Greece and Italy and Spain ever drier. After all, Berlin is not the Salvation Army, right?! These things should have been written down in very strong terms long ago, like they were in the US. If you don’t do that, there’s no escaping the consequences.

What Greece, Syriza, Tsipras and Varoufakis are doing right now is to try and change this arrangement, which benefits only the richer parts of the European Union, and does so on an inevitably ever larger scale. They’re trying to make the EU perhaps not precisely like the US (Zeus forbid!), but certainly more like it.

In the US there’s at least a basic kind of fairness, which – well, mostly – prevents parts of its union to dissolve into Third World status. Europe has no such fairness, and it therefore does indeed create that sort of misery within its own borders. And instead of saying, ‘okay, perhaps we should have shared a bit more of our wealth, and let’s discuss that’, they dig in and they treat the Greeks like they’re some kind of inferior species whose best option is to wait for some scraps to fall off the beer and beerwurst-laden tables of Bavaria.

And lest we forget it, one more time, and Varoufakis repeated it again last week, the majority of the Greek debt is what Germany and France burdened the country with when they decided to bail out their own banks who has wagered huge amounts of ‘money’, encouraged by Goldman Sachs’ derivatives schemes that hid Athens debts and allowed Greece entry into the eurozone to begin with.

But for Schäuble to state that “Greece has lived beyond its means for a long time” is a huge leap away from that, because those people lining up at the soup kitchens, and those who sleep in the streets, and those who’re dying from ailments that a 100 miles from the Greek border don’t even faze anyone, have obviously not lives beyond their means.

The Greek people haven’t “lived beyond their means for a long time”, or they wouldn’t live in their “hideous humanitarian crisis”, as Varoufakis calls it, to begin with. The Greek elite may have made off like bandits, but not the people. And who did the EU, Schäuble, Dijsselbloem and Draghi, make the deals with that got the situation where it is?

That’s right, the elites. Brussels installed the technocrat Samaras government, and they did it for a reason. And now that whole set-up has been defeated. Which is why Schäuble says things like “the new Greek government [is] behaving “quite irresponsibly”, and it’s all their fault and none of it is his.

Hubris, bluster, and not much else. That’s how Europe enters the negotiations with Greece. So why should Varoufakis be replaced? I can think of a few others who should first. The entire Greek debt story is nothing but a narrative that will only hold until it no longer can. Thing is, by then the entire eurozone may be gone. And whether you think that’s a good idea or not, just make sure you understand that it will happen only because a bunch of stuck-up politicians too full of themselves to see their own blubber want it to.

Not because of Greece or Syriza. They just want to stop their people’s misery. And what does Germany have to say about that? Well, as per Herr Schäuble, that the Greek government is behaving “quite irresponsibly”.

Upside down, topsy turvy, Bizarro. And that’s what Tsipras and Varoufakis must face. l can only hope they have more patience with it than I would.

Home Forums The Elegant Simplicity Of The Greek Conundrum

Viewing 11 posts - 1 through 11 (of 11 total)
  • Author
  • #19210

    John M. Fox WCBS studios, 49 East 52nd Street, NYC 1948 It’s really not that hard. It’s even elegantly simple. But that still requires you’re willing
    [See the full post at: The Elegant Simplicity Of The Greek Conundrum]


    The “dumb” Greeks are living beyond their means, under the bridge because the smart E U people are living in palaces financed by Greek debt payments.


    Perhaps that old one liner has some truth in it after all. “Germany is trying to do with Banks what it couldn’t do with tanks””


    The ones who put up the money are the ones who make the rules. If the home boys don’t care about the well being of its citizens why should we expect Europe to care?

    “Lost in this discussion is that modern Greece, formed in 1830, has never really been required to stand on its own. Generations of support from abroad, typically given for strategic reasons, has created a false sense of prosperity in the country and has prevented the Greeks from accepting the realities of their current situation.” – John Browne, Monday February 9, 2015


    Every European country has its own set of spooks, their own CIA’s, who are aligned with and as often as not junior partners with Americas burgeoning secret state. These entities also have their own military arms, mostly secret again, integrated to one degree or another with NATO and so the US. Surely Greece must have these also.

    I wonder where they stand in the current situation. I am going to guess Tsipras doesn’t know either. Such things are beyond politicians, even in America. Even American presidents must know their place and leave the secret elites and institutions alone for the most part. If they didn’t know that they wouldn’t be president.


    I don’t think the US as fiscal union analogy works well. Two separate counterarguments:

    1. Greece and the richer parts of Europe were running exactly the same games in 1947, before the EU was formed.


    2. Most of the time the federal system DOESN’T smooth out the differences between New York and Nebraska.

    This happened only once, under FDR. He saw that New York speculators had created not only the industrial depression but the agricultural Dust Bowl. From 1914 to 1929, NYC had been driving businesses and farmers elsewhere into unsustainable debt so NYC could own everything. Good old LBO as always, just like Germany and Greece.

    FDR stopped the speculators and rebuilt the agricultural areas so they could be self-sustaining again.

    After FDR, the national admin reverted to the old practice of starving everyone else to fatten NYC. Fortunately, some of the bureaucracies that FDR had built to protect farmers remained in place, but other types of business lost their protections.

    Diogenes Shrugged

    Off-topic, but germane to some of the concluding articles posted here:

    Unsurprisingly, “climate change” continues to be exposed as a (solely) political issue.
    Calling it “science” was pure, premeditated fraud from the get-go:


    Enjoy the coming socialist, oligarchical, kleptocratic feudalism (with a taste of “democracy” thrown in to keep you inert). And remain calm. That should keep the CO2 in your exhale within the legal limits.

    V. Arnold

    “In the interest of the Greek people and in view of the difficult situation, Prime Minister Tsipras should consider to replace Mr Varoufakis with a political experienced, realistic-efficient person.” Joachim Poß

    The hubris of Poß is illustrative of the west’s political class and especially the west’s leaders.
    These people get lost in their spin-world of reality.
    BRICS and PIIGS are breaking the mythical world view fostered by the U.S. and followed by Briton, Australia, and Germany. Good dogs, want a dog biscuit?

    Dr. Diablo

    Again, what makes you think that Germany doesn’t want to make Greece responsible for breaking the Union? And Varoufakis is certainly making it hard on them. At this rate, Germany will have to take some responsibility too.

    It’s an interesting question what holds the U.S. together, I’ve thought of many times. Primarily, the U.S. is an IDEA, not a geographical place, and absolutely, positively not a fiscal union. The “Idea” is the principles encoded in our founding documents about the rights and responsibilities of men and their governments, which is why we get so schizophrenic when those beliefs are contradicted.

    We can be pretty sure it’s not a fiscal union because from the Treaty of Paris right through the Constitution, Civil War, and on, there was no transfer of taxes from rich to poor. In fact, “social justice” and the “redistribution of wealth” is completely against the founding principles of the nation, and indeed the covenant between people, states, and federals, which is why in 1913 they had to pass an Amendment to change the Constitution: it was flat-out illegal before, for better or worse. This also broke the U.S. as a collection of independent national governments, ie the States, and finalized their servitude to the Federal level instead of their collective cooperation in creating that level–a thing which also was not originally intended and not seen until then. Only then did the Federals have even the foreshadow of “redistributing,” because roughly until then, they WERE the states, sitting in self-council. Remember until this time Senators were not directly elected but representatives of their State governments.

    Governments are not founded on the principle of stealing from me to give to you because they don’t last long on a foundation of every man/group/state being out for themselves to steal from the other guy, and this is exactly what we see in Europe today. As Bastiat would say, this is the illusion of everybody living at everybody else’s expense.

    But to be productive in this argument, what makes non-distribution work, when intuitively, socialism, redistribution “to each according to their needs,” SHOULD work so much better, but absolutely never, ever has? The U.S. was founded on opportunity. They didn’t just hand money from N.Y. for Nebraskans to take Carnival Cruises with, day after day for 100 years: the money was invested into barren wasteland because they believed it could be make productive and sustain itself. Turns out, with a lot of hard work, totally new inventions, innovation, and development, it could. Not everywhere, as much of the U.S. remains a beautiful wasteland for now, but far more than anyone ever imagined in 1804 looking at the “Great American Desert” of the Great Plains, today the world’s richest land. Someday R.E. mining, solar, wind, who-knows-what may transform Death Valley, who knows? But the money wasn’t “transferred” to provide welfare to indigent populations, it was invested to explore if more could be created from a little, and when it could, to see how much more. If it couldn’t, wealth was withdrawn with an arcane and outdated thing we used to call “bankruptcy.”

    This is simple EIEO accounting, thermodynamics. If more energy isn’t returned than is invested, the activity is not sustainable. The Sisyphean task is then halted as being stupid and counterproductive. We don’t just keep offering free houses and health care in Death Valley or the bottom of the ocean because it doesn’t make sense. People then gravitate to places where they can be productive, as evidenced by their own prosperity. All this is the OPPOSITE of wealth transfers from N.Y. to Utah, from Boston to W. Virginia, which having passed the 16th Amendment, set up a Central bank, and post-WWI and II, and a large enough Federal Government to intervene in everything, is what we do today. Everywhere. And especially Canada. But by doing so we prevent the States from working and adjusting because it’s easier to steal from neighboring states, which causes bad will, social disintegration and the dissolution and/or civil war of the country. That’s what we see today. The OPPOSITE of America, the original intent, and the end of what made us strong.

    So prescribing to Europe what is causing the U.S. itself to disintegrate into violence may not be wise. However, Europe’s solution is the same as ours: not wealth transfers, the long habit of robbing neighbors, but to STOP robbing neighbors and let each stand on their own merits. If they believe there is opportunity, they can lend money on the chance.

    And if it fails, they can lose that money without crying like a bunch of pantywaisted sissies before crying to mommy and stealing it back from the people.

    Danny B

    Berlin was willing to spend billions and billions to join West and East Germany after the wall came down. After all, they were spending it on their own tribe. They starved many thousands of Greeks in WW II to feed their own tribe. Europe is tribal in spite of all the forced immigration.

    Danny B

    At a news conference last week in Brussels, Christiana Figueres, executive secretary of U.N.’s Framework Convention on Climate Change, admitted that the goal of environmental activists is not to save the world from ecological calamity but to destroy capitalism.

    Read More At Investor’s Business Daily: https://news.investors.com/ibd-editorials/021015-738779-climate-change-scare-tool-to-destroy-capitalism.htm#ixzz3S3Wb3zmd

Viewing 11 posts - 1 through 11 (of 11 total)
  • You must be logged in to reply to this topic.