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The Elegant Simplicity Of The Greek Conundrum

Politics / Eurozone Debt Crisis Feb 17, 2015 - 04:05 AM GMT

By: Raul_I_Meijer

Politics

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 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.

By Raul Ilargi Meijer
Website: http://theautomaticearth.com (provides unique analysis of economics, finance, politics and social dynamics in the context of Complexity Theory)© 2015 Copyright Raul I Meijer - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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