Saturday, July 04, 2015

The state of Europe before the Greek referendum

Jamie Galbraith, a friend and former professional colleague of Greek Finance Minister Yanis Varoufakis, has some interesting observations on the state of the negotiations leading up to tomorrow's Greek referendum. At this writing, it's already tomorrow there. (Greece: Only the 'No' Can Save the Euro The American Prospect 07/01/2015; also appears in Social Europe 07/04/2015)

Galbraith isn't impressed with the current leadership of the eurozone:

To understand the bitter fight, it helps first to realize that the leaders of today’s Europe are shallow, cloistered people, preoccupied with their local politics and unequipped, morally or intellectually, to cope with a continental problem. This is true of Angela Merkel in Germany, of François Hollande in France, and it is true also of Christine Lagarde at the IMF. In particular North Europe’s leaders have not felt the crisis and do not know the economics, and in both respects they are the direct opposite of the Greeks.

He also has a view on why the EU elite so despises the DFH Varoufakis:

For the North Europeans, the professionals at the "institutions" set the terms, and there is only one possible outcome: to conform. The allowed negotiation was of one type only: more concessions by the Greek side. Any delay, any objection, could be seen only as posturing. Posturing is normal of course; politicians expect it. But to his fellow finance ministers the idea that the Greek Finance Minister Yanis Varoufakis was not posturing did not occur. When Varoufakis would not stop, their response was loathing and character assassination.
And he stresses the stone intransigence of Angela Merkel and her supporters:

Ultimately, the Greek government found that it had to bow to the creditors' demands for a large and permanent primary surplus target. This was a hard blow; it meant accepting the austerity that the government had been elected to reject. But the Greeks did insist on the right to determine the form of austerity, and that form would be mainly to raise taxes on the wealthiest Greeks and on business profits. At least the proposal protected Greece's poorest pensioners from further devastating cuts, and it did not surrender on fundamental labor rights.

The creditors rejected even this. They insisted on austerity and also on dictating its precise shape. In this they made clear that they would not treat Greece as they have any other European country. The creditors tabled a take-it-or-leave-it offer that they knew Tsipras could not accept. Tsipras was on the line in any case. He decided to take his chances with a vote.
Here are two PBS Newshour reports on the upcoming referendum.

Yes or no on bailout referendum, how should Greece vote? 07/03/2015

That piece relies a little too heavily on the this-side-says, the-other-side-says approach. The discussion features two economists, Jacob Kierkegaard and Mark Weisbrot. Kierkegaard is from the Peterson Institute for International Economics, whose main purpose is to promote dogmatic neoliberal economics. Weisbrot is from the Center for Economic and Policy Research (CEPR), which actually produces serious macroeconomic commentary and analysis.

Kierkegaard's comments in this segment are pretty much hack work we should expect from the Peterson Institute.

Weisbrot was optimistic in Germany is bluffing on Greece Aljazeera America 06/12/2015: "Take partner-in-chief German Chancellor Angela Merkel: If there’s one thing she doesn’t want to be remembered as, it’s the politician who destroyed the eurozone." But he seems to have underestimated Merkel's willingness to bet the farm on trying to push Greece's Syriza's government into submission, or out of office altogether. Merkel and her supporters scarcely hide the fact that they want "regime change" in Athens.

By the end of June in this fast-changing situation, he was writing (Are European authorities trying to force regime change in Greece? Globe and Mail 06/30/2015):

There is considerable evidence that this has been the European authorities’ strategy since the anti-austerity Syriza party was elected in January. Just 10 days after the election, the ECB cut off its main line of credit to Greek banks, even though there was no obvious reason to do so. Shortly thereafter, the ECB put a limit on how much Greek banks could lend to the government – a limit that the previous government did not have.

From the European authorities’ point of view, “regime change” is the only logical strategy. They do have a nuclear weapon, which is to cut credit to Greece entirely – thus precipitating a financial meltdown that would force the country out of the euro. But German Chancellor Angela Merkel doesn’t want this, and neither does her ally, U.S. President Barack Obama. So European authorities continue to take steps to undermine the Greek economy and government, hoping to get rid of the government and get a new one that will do what they want.
In Congress Weighs in on Holding IMF Accountable for Damage Caused by Failed Policies in Greece The World Post 07/02/2015, he describes further the steps the Troika is taking in their current effort at regime change in Greece:

It is not surprising that the very idea of a referendum would provoke the ire of the eurozone authorities. Unlike the European Union, which has a different history, the eurozone project has become a fundamentally anti-democratic project. It has to be; the people currently running it want to reverse, as much as possible, decades of social progress on issues that are vital to Europeans. But you don't have to take my word for it: there is a paper trail of thousands of pages that spell out their political agenda. ...

The European authorities took advantage of the crisis and post-crisis years to impose parts of this agenda on the weaker eurozone economies: Spain, Italy, Portugal, Ireland and most brutally of all, Greece. More than 20 governments fell as a result, until finally, in Greece on January 25, a government was elected that said no. The goal of the European authorities, therefore, is to topple this government. This has been apparent since the ECB cut off its main line of credit to Greece on February 4.
In the PBS segment, he argues, "The European authorities are not offering anything. And it’s becoming more and more clear actually — and I have been writing about this for a while — that the real goal of these authorities is to really get rid of the Greek government. That’s what they’re trying to do. And that’s why they won’t allow the economy to recover so far."

How is Greece likely to vote in austerity referendum? 07/04/2015:

The PBS "special correspondent" in Greece for both segments is Malcolm Brabant, who doesn't seem to have that good of an understanding of the financial situation. The second one is particularly shallow and fatuous, because he makes it sound like Greece in on the verge of a civil war immediately after the vote.

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