Dorothea Lange American River camp, Sacramento, CA. Destitute family. 1936
I don’t know about you, but I’m having a ball reading up on the preparations for the Wednesday/Thursday talks between Greece and .. well, everybody else. German FinMin Schäuble proudly declares that it’s do what I tell you or you’re finished, Greek FinMin Varoufakis says prepare for a clash. Greek advisors Lazard say a $100 billion debt reduction sounds reasonable, and some anonymous EU official says Lazard are incompetent and counterproductive (not smart, that).
When will the Brussels luxury cubicles understand that the Greek people have voted down their approach fair and square? That they voted down the government that made deals with the Troika for the very and explicit reason that they made those deals in the first place, and that telling the newly elected government to stick by those deals regardless is a corruption of democracy? So far, all the EU has (anyone notice how silent the IMF has been?) is hubris, bluster and chest-thumping.
They play politicians, but Syriza plays real life. Tsipras and Varoufakis stand up for real people, while Schäuble and Dijsselbloem and their ilk stand up only for themselves. And then pretend, in front of their bathroom mirrors and the news cameras, that they protect their own people against the greedy Greeks. As for the 50%+ of young Greeks who have no future, or the countless elderly who go without basic health care, too bad and boo hoo hoo.
The European Union is no Salvation Army, after all. In Europe, everybody takes care of their own, not the others. It’s a union in name only. That’s why Germany, France, Holland bailed out their own banks after these lost big on wagers in Athens, and want the Greek people to pay for those bailouts – at least the union was good for that -.
Claiming the Greeks all borrowed so much and lived it up way beyond their stature, while in reality people are dying who could be saved with simple treatments still easily available in Berlin, Paris and Amsterdam. Greece, make no mistake, has become the third world, whether your atlas confirms it or not.
Their MO is that banks are more important than people, Germany is more important than Greece, and the Greek people are less important than the great EU project that – and they actually still believe this- will make everybody richer. Only, to Tsipras the Greek people are more important. And so the new Greek leader’s partners in the European Union threaten to make things even worse than they already are.
It’s not just hubris and bluster, it’s pure impotence. If the talks this week don’t provide a solution, or a realistic proposal for one, Greece will be very close to leaving the eurozone. Syriza will not agree to continue with the deals the Samaras technocrats have agreed with the Troika, for the simple reason that their voters have trusted them with the mission to throw out those deals. Otherwise, they might as well have stayed with Samaras, and the elections would have no meaning.
Brussels and Berlin – and Paris and Amsterdam – have such trouble understanding what democracy means, they prefer to ignore it. But it was them who saddled their own voters with the debt which results from wagers on Greece gone awry, it wasn’t the Greek population. The entire western world has elected to not restructure the debt of its banking system. And don’t be confused, that’s not an economic choice, it’s a political one.
A lot more money has been thrown at maintaining the banking system, hopelessly bankrupt as it is no matter what, than would have been needed to guarantee the bank accounts of all citizens and all small businesses. Now the banks are still there, and so is their debt, but the people are sinking into an endlessly dark pool. Not an economic choice, a political one.
What we will see envelop this week is a game in which accusations will grow ever more wild and grotesque, but also a game in which Greece in the end will not do what everyone still seems to expect it to do. Because that would require for Syriza to betray the people who voted for them. Not going to happen.
The underlying – but we’re way past that by now – problem was explained quite well by UofMaryland professor Peter Morici:
Europe has few of the mechanisms that facilitate adjustment in the United States, which has a single currency across a similarly wide range of competitive circumstances. A single language permits workers to go where the jobs are, whereas most Greeks and Italians are stuck where they are born. New Yorkers’ taxes subsidize public works, health care and the like in Mississippi through the federal government in ways the European Commission cannot accomplish.
Germany uses its size and influence to resist changes in EU institutions that could alter fiscal arrangements. Hence, the Greeks and other southern Europeans were forced to borrow heavily from private lenders in the north – mostly through their commercial banks – to provide public services, health care and similar services that were hardly overly generous when measured by German standards.
All this kept German factories humming and German unemployment low. When the financial crisis and meltdown of global banking made private borrowing no longer viable, Greece and other southern states were forced to seek loans directly from Germany and other northern governments. Bailouts implemented by Germany through the ECB, the IMF and the European Commission required labor market reforms, cuts in wages and pensions, higher taxes, and less government spending. All to restore Greek competitiveness, growth and solvency – and all have absolutely failed.
The eurozone is by design and of necessity a predatory ‘union’. The US would be too, to an even greater extent than it is today, if it didn’t have a transfer of federal tax revenue from New York to Nowhere, Nebraska. And it wouldn’t be a union anymore.
So you know, for me, I’m fine with Greece blowing it up. There’s nothing good left from the initial idea that gave birth to the EU. It’s devolved into something utterly ugly, in which fat Germans driving their Mercs and Beamers down the autobahn can yell at their car stereos that those lazy Greeks must pay their due. Which stems from Merkel et al bailing out Deutsche Bank’s insanely outsized derivatives portfolios.
The whole thing is so morally bankrupt, it’s really insane that we’re still trying to have a serious discussion about it. The whole thing, the entire global banking system, is as morally bankrupt as it is financially. And we keep on believing that it matters what Berlin tells Athens to do. Our best hope is that Varoufakis refuses to be told what to do. It’s not as if we did anything about it, after all. We let others do our jobs and watch them do it on TV.
Here’s a prediction for you: the eurozone is ‘past its half-life’, or more correctly, it has over 50% of its existence behind it. It won’t last another 15 years. And perhaps much less than that. And I’m seriously thinking about moving to Greece. Just to experience sanity.
PS: A quantity is subject to exponential decay if it decreases at a rate proportional to its current value.