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The Progressive Economics Forum

Greece and the death of democracy, economics and civility

Greece and the death of economics, and democracy, and civility, and so much more

Louis-Philippe Rochon
Associate Professor of Economics, Laurentian University
Co-editor, Review of Keynesian Economics

Irrespective of whether it was total capitulation, there are already a multitude of analyses trying to decipher what (and how) exactly happened in Greece and whether it could have been avoided. Countless opinions will be offered as to who is to blame.

My sense is that this Greek tragedy could not have been avoided no matter the level of strategy involved: what was suppose to happen, happened exactly the way it was suppose to. The truth is, it was unavoidable and the one lesson we learned was that the power of finance trumps democracy, every time. What the Left now need to do is how to reverse this, which is not an easy thing to do. Afterall, the whole purpose of the Occupy movement is to do just that. So the Left has a lot of soul searching to do.

So we know that democracy does not work, but we also learned that economics had nothing to do with this as well. There was a quasi-unanimous opposition from economists warning against the imposition of more austerity and the inevitable failure in which it will eventually result. Stiglitz, Krugman, Piketty, Wren-Lewis, Sachs, to name but a few, all condemning the actions, all warning that this was bad economics. But in the end, even this did very little to stem the ideological penchant toward imposing more austerity.

Finally, we realize that international diplomacy and civility failed miserably. Germany was never prepared to lead, but rather to crush – crush the will and democratic expression of a people, at all costs. As a result, the European dream is dead: there is no Europe, just the German will to dominate. After this, who will dare to oppose Germany? In a sense, this was the objective all the time: beware of dissent, we will not tolerate it and will threaten to crush your economy if you dare to raise your voice. This is the new European zeitgeist.

I am not saying this out of any sense of anger, malice or disgust (although I am angry, and disgusted), but rather from a cool, rational place. One only needs to read any of the major newspapers in the world today to realize the quasi-unanimous condemnation of how Germany fucked Greece. Perhaps not a poetic way of saying it, but any other way would have failed to convey the real sense of what happened. In Canada, the Globe and Mail in its editorial of July 14, stated that Europe is no longer a currency union but that it revealed itself to be a “opportunity or blackmail”: disagree with Germany and we will throw you out. The Guardian (July 14) compared Europe to a war zone with “wreckage everywhere”. Social media was trending with the hashtag #ThisIsACoup.

Yet, a number of realities were made apparent through this humiliation.

First, when your opponents play dirty, you must be prepared to play dirty as well. Tsipas was a bit naïve in this, thinking for some reason that democracy could trump the power of the elites. It never stood a chance. Of course, it did not help that they had ruled out a grexit from the beginning and that in that sense, had told their opponents in essence that they were not prepared to play dirty. So the fix was in. Germany and the Troika knew this and simply waited. Tsipas tiptoed on the line of dirtiness when it allowed Greece to default, albeit briefly, but backed away when the ECB squeezed the Greek banks.

It is not sure the impact this will have on the Left in Europe. In a sense, I think it may empower the Left and activists. It will be interesting to see how this affects Podemos in Spain. Will ‘people power’ fall into line or dare to rise up again, and this time more determined to stand up to Germany? Time will tell, but one thing is clear, Europe RIP.

 

 

 

 

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Comments

Comment from Darwin O’Connor
Time: July 14, 2015, 4:04 pm

It may also empower the unrepentant Fascist of Golden Dawn who may end up leading Greece out of the EU and get credit for the economic recovery that follows. Then things get real bad.

Comment from Larry Kazdan
Time: July 14, 2015, 5:18 pm

Finance as Warfare

http://michael-hudson.com/2015/06/resisting-financial-conquest/

Eurozone financial strategists made it clear that they wanted to make an example of Syriza as a warning to Spain’s Potemos party, and anti-euro parties in Italy and France. The message was supposed to have been, “Avoid our austerity and we will cause chaos. Look at Greece.”

But the rest of Europe is interpreting the message in just the opposite way: “Remain in the eurozone and we will only create money to strengthen the financial oligarchy, the 1%. We will insist on budget surpluses (or at least, no deficits) so as to starve the economy of money and credit, forcing it to rely on commercial banks at interest.”

Greece has indeed become an example. But it is an example of the horror that the eurozone’s monetarists seek to impose on one economy after another, using debt as a lever to force privatization selloffs at distress prices.

In short, finance has shown itself to be the new mode of warfare. Resisting debt leverage and financial conquest is as legal as is resisting military invasion.

Comment from Sandwichman
Time: July 14, 2015, 5:26 pm

Canadians might be interested to learn that there is a Canadian connection to the German Finance Minister Wolfgang Schäuble through the intermediary of Mulroney crony Karlheinz Schreiber.

Slush-Fund Schäuble

“He [Schäuble] admitted that he had met the arms dealer and lobbyist at the centre of the scandal, Karlheinz Schreiber, and accepted an undeclared DM100,000 (£36,300) cash donation from him.”

This inconspicuous line appeared in a BBC story Wolfgang Schaeuble: Germany’s man with a Grexit plan. I hadn’t heard about this background detail before. Why not?

In November 2013, Karlheinz Schreiber was sentenced by a German court to six and a half years for tax evasion. He was also involved in “inappropriate” transactions with former Canadian prime minister, Brian Mulroney. “Mulroney admitted taking $225,000 in cash from Schreiber, but said he broke no laws or ethical guidelines.”

That’s a lot of cash. “Broke no laws or ethical guidelines” doesn’t pass the laugh test.

The nature of Schäuble’s shady dealings with Schreiber have apparently never been fully disclosed, apart from his admission that he accepted the cash, which resulted in his resignation as leader of the CDU and Angela Merkel’s elevation to that post.

Articles from the Guardian, Der Speigel and Deutsche Welle give further details related to Schäuble’s involvement, which I link to at EconoSpeak.

Comment from Michael John
Time: July 14, 2015, 9:21 pm

“we also learned that economics had nothing to do with this as well.”

According to Yanis Varoufakis, when he tried to talk economics in the Eurogroup “there was point blank refusal to engage in economic arguments. Point blank. … You put forward an argument that you’ve really worked on – to make sure it’s logically coherent – and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply.”

http://www.newstatesman.com/world-affairs/2015/07/yanis-varoufakis-full-transcript-our-battle-save-greece

Comment from Brandon L
Time: July 18, 2015, 7:28 pm

Greece had few options, the worst option is to raise taxes while cutting spending. I would just had defaulted on all debts, (greek pensions, german debt), and adopted a money supply that was not fiat, and restarted from scratch.

Now the option I feel this progressive forum wanted was for the ECB to devalue, so prices and wages in Greece too Spain would then be competive with Germany. With no central government as in USA, and Germany fearing an expanding money supply given their history when government printed notes for German workers to spend while the Frence occupied the Rhineland didn’t work at all.

So if Germany occupation indirectly of Greece, leads Greece devalue the dracma to pay all & any holders of Greek debt. It might be holders of Greek debt who are Greek citezens who get every nominal dollar, and defaults for everybody else, while devaluing the currency.

Again defaul on all debt, do not devalue your currency, enjoy falling prices. Similar deflation to 1930s, and save every penny.

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