By Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge and a research associate of The Levy Economics Institute
It would not be impossible to prove with sufficient repetition and a psychological understanding of the people concerned that a square is in fact a circle. They are mere words, and words can be molded until they clothe ideas and disguise.
― Joseph Goebbels, Reich Minister of Propaganda 1933-45
Austerians possess a well-honed psychological understanding of their target markets. They are also quite adept at proving, with sufficient repetition of course, that national governments in the Eurozone cannot afford to pursue pro-LIFE (Low Inflation Full Employment) economic policies. Austerians are very good at Goebbelnomics, indeed.
You see, fiscal deficits are a sin, especially if they are larger than an arbitrary 3% of GDP. “Monetized” fiscal deficits are a mortal sin punishable by the inevitably of hyperinflation – a state of ever accelerating inflation which Austerians love to hyperventilate about, even as more and more nations sink into outright price deflation. Austerians hyperventilate about monetized fiscal deficits even though all fiscal expenditures in countries with sovereign currencies have to be “monetized”, because there is no other way for the private sector to get the money needed to pay taxes and buy government bonds. Households and nonbank firms cannot create money – that is called counterfeiting, and punishable by law.
And government debt to GDP ratios always and everywhere need to be kept below an arbitrary 100% of GDP ceiling. Or better yet, as long as we are pulling numbers out of our asses, below 60% of GDP. Why, you may ask? Because beyond one of those ceilings lies, as Reinhart and Rogoff argued with empirical and historical precision (plus a somewhat faulty spreadsheet formula), very explosive debt dynamic dragons. Big debt dragons. Debt dragons that breathe fire and sink ships.
Forget, for a moment, that government debt is held as an asset by some households after they save money and invest it for retirement purposes. And forget for a moment the government bonds are used as collateral by both the conventional and the shadow banking systems. Forget also that government debt may be financing the construction of tangible assets, like infrastructure, with monetary and social returns lasting decades. You’ve seen the dragons, right?
But that old Austerian schtick – the “sorry, we done ran out of money already” routine – is wearing a little thin – like phyllo dough thin – in the eurozone these days. At least judging by the column of smoke rising from the Bloccupy street protests of the ECB’s grand opening ceremony at its new headquarters in Frankfurt yesterday, the “we ran out of money” routine may need a new laugh track.
In fact, the duplicity of the Austerians has become impossible to ignore. Yet somehow, the mainstream media, and even the opposition politicians, still manage to ignore it. They fail to connect the dots, even though the neoliberal lies, duplicity, and hypocrisy are now “hidden” in plain view. It is as if Lady Thatcher has a grip from beyond the grave on our frontal lobes, and the repeated refrain of TINA – There Is No Alternative – is all that can be heard in the echo chamber between our ears.
The Austerians, it appears, are practicing a form of Goebbelnomics. The square is in fact a square, but we have been led to believe by their awe inspiring persuasive skills that it is a circle – even when the square is sitting right in front of our collective noses. This is no small feat, and old JG would undoubtedly be proud.
In this regard, consider the following excerpt from a March 16th, 2015 Guardian article ostensibly dealing with fingergate:
Adding to the tension, Belgium’s finance minister warned Greece on Monday that it was a dispensable eurozone member. Johan van Overtveldt said the currency bloc had sufficient funds to cope with a Greek departure. “What we have now in place would certainly allow us to survive that,” Mr. Van Overtveldt said. “Nobody talks too much about that very openly, but my feeling is [the concern] is quite present around the table.”
So let’s get this straight. The Troika does not have enough money to roll over Greek debt (in a Ponzi scheme like fashion, mind you) – debt that was incurred not so much as a bailout of Greece, but more as a bailout of German and other core nation banks and insurance companies and private investors who made stupid loans to or investments in Greece, but refused to fob them off on their own taxpayers. But the Troika does have enough money to adequately perform damage control for the eurozone if Greece, because, you know, Greece is a “dispensable” eurozone member – even though ECB lawyers themselves say there is no legal mechanism for disposing of eurozone members in any such fashion.
See, the square, it is a circle. No money in Greece for humanitarian aid in a country that may be on its way to becoming a failed nation state. No money outside Greece to roll over existing debt, or when necessary to extend and pretend, add more debt on existing debt to service the old debt, Charles Ponzi style. But somehow there is still “sufficient” money to ring fence Greece from the rest of the eurozone once Greece figures out is dispensable and so must exit. Wait, what? Oh, right, the square is a circle. Duplicity? Nah. Not in the eurozone. Not amongst Austerians.
But that is not even the whole deception. It turns out the ECB does happen to have enough money to buy 60 billion euros per month of bonds from now until at least September 2016. Which means the same bondholders who are benefitting from the misnamed “bailout” funds used to keep the core nation financial institutions from collapsing under the weight of failed loans, can now count on a monthly government handout, courtesy of the ECB. Since the ECB has to bid up the prices of these bonds in order to purchase them from bondholders, this is, for all intents and purposes, a government subsidy payment to bondholders. Bondholders will be receiving free capital gains from their bond sales to the ECB. You will notice there does not appear to be much of a budget constraint on the ECB. Funny, that.
One could not possibly make this stuff up. We are first told there is no more money for Greece, but then in the next breath, we are told there is enough money for ring fencing Greece, should it recognize it has become dispensable (and the sooner the better, it would seem, according to Belgium’s Finance Minister). Then, as if we had not been told there is not enough money for Greece, the ECB commits to creating money out of thin air for the next 18 months to subsidize eurozone bondholders, who will tend to be either the 1%, or to be eurozone financial institutions. Government handouts are apparently available for finanzkapital only, so perhaps we should conclude that unlike Greece, finanzkapital is indispensable.
Or to take a related example of blatant duplicity from a recent speech by ECB Executive Board member Benoit Couere as he was explaining how the ECB’s QE campaign will work without distorting price discovery mechanisms in the bond market. Within the first few paragraphs, M. Benoit Couere contradicts himself. Openly.
From the summary at the very top of the speech, we are told : “We do want to affect market prices but we will not suppress the price discovery mechanism.” From second paragraph in Section 1 (Transmission) of the speech, we are told: “First, large-scale security purchases mechanically reduce the supply of securities available in the secondary market, which results in higher prices and lower yields through the creation of scarcity.”
Read that sentence again. The ECB will reduce the supply of bonds outstanding in the hands of private investors with QE. This artificial creation of scarcity will drive prices of bonds higher, providing a nice government hand out to bond investors. But this action will not suppress the price discovery mechanism of the bond market. Artificial scarcity never distorts prices…does it?
So M. Benoit Coeure either takes his audience as fools and simpletons, or he has no problem openly engaging in Goebbelnomics in public. Laws of supply and demand have been suspended, according to M. Couere. Artificially reduce supply, and the resulting price won’t be artificial…will it? The square, according to Benoit, is a circle. Any questions?
Surprisingly, no one is calling foul on any of this Austerian duplicity while Greece gets set up to swing in the wind so a proper example can be made of Syriza. The Troika has tipped its cards in a very explicit fashion here. They want Greece to be hung out to dry, and thereby demonstrate to Podemos et al that you never mess with The Institutions Formerly Known as the Troika. The Troika needs the opposition to shrivel up and crawl back to their respective corners with their tails between their legs, never to be heard whimpering against austerity measures again.
This is all about the rules and the discipline, mind you. In fact, it is all about class discipline, an Erratic Marxist, and possibly even a Groucho Marxist, might argue. The eurozone at best is a mechanism for extracting larger current account surpluses and hence larger profits for the core country transnational manufacturing interests, and securing ample subsidies and capital gains for the finanzkapital wing. This machine is well oiled, and the Troika is not about to allow it to be monkey wrenched by a bunch of sniveling anti-Austerians.
Make no mistake – this is an exercise in class discipline, writ large. It is unfolding right before our eyes, yet no one dares call it by its true name, Goebbelnomics. There is no longer even a superficial effort to hide the duplicity of the Austerians. Just repeat after them: the square is a circle. We have no more money, at least not for dispensable nations. But if you are a bondholder, well, step right up, because we just happen to have enough money to bid your bonds higher – though let’s be clear, that will not, and cannot possibly distort market price discovery signals. Even if it is 60b euros per month the ECB will be spending. For eighteen months. And meanwhile, we are told the eurozone has run out of money, so Greece must become a failed nation state.. That square, you see – it is a circle, after all.
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There’s always lots of money for the 1% bondholders. In fact, this is what every country is suffering from: they are attempting to protect those who made uneconomic borrowing decisions from bankruptcy (French and German banks, Goldman Sachs, AIG, etc.)
“It didn’t happen because Greeks are lazy. It happened because the government of Greece and that of the EU attempted to protect those who had made uneconomic borrowing decisions from the outcome of having done so.
In short they attempted to violate the (first and most-fundamental) law of thermodynamics which states, in plain language, that there is no such thing as a free lunch.
Let’s assume for a minute that Greece refuses to pay all the debt taken on “post-bailout” and argues that said debt was fraudulently issued to a knowingly-bankrupt entity and thus was, as a matter of both law and public policy, fraudulently issued and avoidable. The fundamental principle is that fraud eviscerates all contracts and this is no exception. The government further asserts that no act can bind a future government; representative governments are by definition impossible if this is not the case. Since the EU (and all other allegedly-free nations) claim to be representative republics this principle is axiomatic within the EU and is thus enforceable against the EU, ECB and IMF.
Since these loans were made unsecured there is no collateral to seize and the game’s over.
But — instead of leaving the Euro, Greece stays in the Eurozone and immediately balances its budget against what it can and does collect in taxes.
Ok, what happens?
First, an utterly huge amount of credit in the form of Euros goes “poof!”
This makes the Euro stronger; the denominator (the amount of Euros in the form of credit and currency in circulation) decreases.
That in turn means that those who borrowed for any purpose other than production that can cover the carrying costs of said debt in Greece (and elsewhere) get squeezed. Badly. Many of those who did so in Greece will go bankrupt, and that credit destruction will make the Euro even stronger still!
This is bad, right?
No, it’s good! Real good!
See, some of those who will go bankrupt own manufacturing and other productive facilities. They will be forced to sell in the bankruptcy proceeding. Those who will buy are those who have Euros and did not foolishly borrow; there are said people, both in Greece and elsewhere in the EU. They will acquire the means of production at pennies on the dollar.”
http://market-ticker.org/akcs-www?post=229934
The author says that the “price discovery mechanism” is being distorted. Yeah, in all directions, all in an attempt to save debtors from their own stupid decisions. Central banks have been distorting markets and price discovery since the 80’s, since Reagan/Greenspan/Rubin/Summers/Bush Sr., Clinton, Bush Jr., Bernanke, Obama. It’s, “OMG, save this sucker before WE lose all the money we fraudulently skimmed – I mean made.” They’ve been blowing bubble after bubble until eventually the poor are left with ever-increasing prices and nowhere left to go.
Greece needs to refuse to pay anything back post-bailout.
The three laws of thermodynamics:
1) You can’t win
2) You can’t break even
3) You can’t get out of the game
The corollary is that if someone tells you there is a free lunch — you’re the one buying.
backwardsevolution: You are brilliant. You nailed it. You should have written this article instead of me (seriously, give these ideas a little more development, and send the piece to Susan, The Guardian, The Financial Times, The Economist, etc.) The only place I would be careful is in applying laws of physics to the economy. Mainstream economists have physics envy. Funny thing is when they show what they do to physicists (and mathematicians and others in the “hard” physical sciences as opposed to the “soft” social sciences, the economists, even the Nobel Prize winners, get laughed right out of the room – I kid you not). But aside from that, the closest thing we may have in economics to the Law of Thermodynamics is 1) double entry book keeping with respect to money/financial flows, and 2) input/output tables like those of Leontief or production functions like those of Cobb-Douglas origin. Yet both of these tend to get violated, or at least need to be appended with what I would submit are at least 3 FREE LUNCHES that do occur in actually existing economies. First, we long ago figured out how to create money (that allows claims on resources, produced or non-produced by humans) out of thin air, which effect LoT application 1. Second, we have this thing called technological innovation that sometimes allows us to get more output per inputs to production, hence the secular increase (until recently at least) in the so called developed economies in labor productivity which pushes out the production possibility frontier of the economy. Third, we tend to find money using profit maximizing economies often operate well inside those production possibility frontiers that are at least technologically available for us to reach, and we find we can use fiscal policy to guide economies out to that frontier from positions of underutilization of productive resources, which represents unretrievable lost or foregone output and hence lower than possible satisfaction of human wants and needs, at least those that can be purchased with money.
“The Emperor’s New Clothes” is a short tale by Hans Christian Andersen about two weavers who promise an Emperor a new suit of clothes.
The vain Emperor who cares about nothing except wearing and displaying clothes hires two swindlers who promise him the finest, best suit of clothes from a fabric invisible to anyone who is unfit for his position or “hopelessly stupid”. The Emperor’s ministers cannot see the clothing themselves, but pretend that they can for fear of appearing unfit for their positions and the Emperor does the same. Finally the swindlers report that the suit is finished, they mime dressing him and the Emperor marches in procession before his subjects. The townsfolk play along with the pretense, not wanting to appear unfit for their positions or stupid. Then a child in the crowd, who isn’t influenced by pretentiousness, blurts out that the Emperor is wearing nothing at all. The Emperor cringes, suspects the assertion is true, but continues the procession.
Unfortunately, in the modern day version the Emperor malevolently stares at the little boy and commands “Off with his head”.
The means of production got exported to China. And China, unlike Germany, is trying to give back as fast as it can. Stabilize that godawful wobble in the financial world before it all gets thrown out of its orbit. The European Union makes no sense whatsoever anymore. What good is a Greek fire sale when China is doing all the manufacturing? The ECB did the only thing it could do, like the Fed, it chose to put the financial system on life support indefinitely. So now we understand clearly what EU QE is all about. I’m pretty sure every European finance minister allowed the ECB this mandate against their own constitutions. We’ll never hear that story. And Greece? Greece is being allowed to be excommunicated, probably along with NATO. The EU also seems to have sufficient funds to create and maintain its own military now. How interesting. Go for it you guys. It will be probably be a good thing.
Who dares mention Karl Marx in this most necessary of times?
https://www.google.com/search?q=%22strong+currents+that+keep+interest+rates+down%22&ie=utf-8&oe=utf-8
Screwing Greece is all-important to the elites in this situation because they’re no longer interested in making profits by producing anything. Debt treadmills are the new productive capital. Perhaps the goods continue to roll off the assembly line to give the system meaning; I wouldn’t be surprised.
https://www.google.com/search?q=%22strong+currents+that+keep+interest+rates+down%22&ie=utf-8&oe=utf-8
Geez, you seem pissed off! Good. Government bonds are give aways to the wealthy. I wonder why we have them at all if not to give money away risk free. Then again, they control the spenders who may just go on a drunken spending spree. Can’t have that.
The wealthy have no need to worry about social matters or even the state of the infrastructure. So they lie; a lot; to keep things as they are or to move the ball more to them. They will worry about protection for themselves and their comforts and to keep the nasty scoundrels in the world out and firmly under their control.
I wish Greece would leave the euro but then I am not at all sure they can handle it. In time others will be facing the same thing. The euro is a scheme to enrich Germany through exports- – and leave everyone else in debt.
The problem is that the central banks have been putting the financial system on life support for the past 30 years, blowing bubble after bubble in order to bail out the financial elite. They continue to print money, which causes price and asset inflation, squeezing the poor ever more every time it’s done.
You really want to help the poor? Quit printing money indefinitely. Let the people who made uneconomic decisions to go deeper and deeper in debt (who were mainly the rich) take their lumps, declare bankruptcy, causing prices to fall, thereby helping the poor. When you continue to bail out those who made bad decisions by printing more and more money, it just causes price inflation, absolutely screwing the poor.
The boat is filling with water, the poor are thrown overboard, and the rich continue to bail.
I agree with the principle that we somehow need to reset the system. Crossing our fingers and hoping for a return to “growth” is not going to get it done. Adding more debt to the system is not going to stimulate very much organic growth, if any at all. These QE programs only maintain the status quo while the 1% elite have a financial chokehold on everyone. That much I agree with.
But resetting the system by a deflationary collapse (lettering people take their lumps and declare bankruptcy, forcing widespread liquidations) is politically destabilizing. Especially if it lasts a long time. This is a dangerous thing to wish for. If you could complete the process in a year or two maybe this would be feasible. But that’s impossible: the legal process is too slow.
A much better alternative would be a Steve Keen style debt jubilee. Start the helicopter drops to the people (gasp! not the banks? not the bondholders? imagine that!) with the condition that anyone with debt has to pay down the debt first. This way the poor don’t get screwed like they do now.
Another way to reset the system is to induce a hyper-inflationary collapse by irresponsibly printing base money until velocity picks up and runs its course. This would wipe out all that unproductive debt and reboot the system. The obvious downside is that hyperinflations are destructive and disruptive. The upside is that they tend to be short, much shorter than a long drawn out liquidation-style depression. The rich would of course come out ahead because they would be able to outrun everyone else in the scramble for real assets, but they are going to come out ahead anyway, aren’t they? At least this would reset the system. I think this is the most likely outcome in the long run. People will demand it as preferable to the deflationary death spiral you seem to wish for.
Backwards, I tend to agree with Bobbo that you have to be careful of the negative feed back loop you can set in motion when you use the Liquidation/Austrian School strategy to deal with high private debt to income ratios. Google Irving Fishers’ Debt Deflation Theory, or Steve Keen, or Hy Minsky’s Financial Instability Hypothesis, and you will see what I mean…and remember, Fisher was the modern American father of general equilibrium theory, before he lost his shirt in the Great Depression, and realized relative price changes could, under certain conditions like high private debt to income ratios, lead to persistent disequilibrium dynamics that basically insured society would collapse. Apparently, it was not just a theory, if the accounts of the Great Depression before Roosevelt’s full court New Deal press are anywhere near correct. Though interestingly, and perhaps not too surprisingly, the BIS, central bank to the central banks of the world, appears to disagree with me a bit on that. See this link from their Quarterly Report issued this week:https://www.bis.org/publ/qtrpdf/r_qt1503e.htm I have yet to more than skim this, but I plan to see what Borio’s argument (and his worked, I know for a fact and from personal discussions with his former boss, the man who hired him at the BIS) and evidence is over the weekend, though I am aware Michael Bordo (who is influenced by Milton Friedman’s work on Pigouvian real balances I believe, and Friedman was a darling for some factions of the Austrian School) has made similar arguments that price deflation does not necessarily lead to income deflation and output collapse, so perhaps Hoover’s Treasury Secretary, Andrew Mellon, was correct after all to recommend a liquidationist response to the onset of the Great Depression. I would love it if someone could find a country that had pursued this successfully, even with a high private debt to GDP ratio. It might just work in a small, open economy, with large trading partners growing at a rapid rate, especially if it is floating rate or convertible debt, but even Keynes said the terms of trade effects would likely swamp the income elasticity of tradable goods demand effects (much of this discussion of the net effects of price and wage deflation, especially the self-equilibrating properties of economies that depend on absolute price change or relative price effects, in the rarely read Chapters 19 & 20 of the General Theory – in fact, if you were to ask almost any economist today, especially Nobel Prize winners, they would say Keynes only worked with a fixed price economic model, which is a lie, and a reveals their general state of ignorance of Keynes, never mind the history of economic thought).
Dilettante observations, in no order:
A commenter yesterday, apparently proud to claim the title “Economist,” denigrated a poster for being a mere “political-economist.” Do I remember right that economics was birthed as political economy, before the mathematicians started pumping their grand formulae and Nobel-winning insights that prove that economics, shuttered from consideration of and accounting for the all too human interactions and politics, is a science that however is unable to predict or even describe the behavior of that actual political economy that we ordinary people live in, other than by fudging the models post hoc and/or reassuring us that what happened, simply couldn’t or shouldn’t have?
Who again, exactly, are the bondholders that claim priority on all the wealth and livelihoods of everyone else stuck in this mire?
Some Germans denigrate Greeks for living a profligate apparently parasitic lifestyle. Maybe some do, but then where did the wealth of Germany that underwrites the comfortable lifestyle of Germans come from? Accidents of location of coal deposits relative to where the old tribes happened to settle down? Extractions by financial Wehrmachts?
Bondholders apparently get to ignore the fine print that says bonds are risky investments that can go bust. Whence came all that money that, to alleviate actual human suffering and foolishness, cannot ever from the screwees’ side be fiated up to actually stimulate the demand that the bondholders say the rest of us have fallen down on our duty to re-create after they stripped us in the last bubble explosion?
The whole mechanism is posited on continuous growth and expansion, which seemingly happens through consumption and extraction, with a whole lot of complex footnotes and caveats of course. How does that model, where everyone is supposed to have the right and opportunity to live a middle class lifestyle with lots of stuff and energy usage, how does that model differ from and produce a different outcome from plain old cancer? Do I guess right that the Few are well aware of this even as they try to keep that model alive and growing?
And words offered by a couple of old guys long dead:
“Trade it may help, society extend.
But lures the pyrate, and corrupts the friend.
It raises armies in a nation’s aid.
But bribes a senate, and the land’s betray’d.
In vain may heroes fight, and patriots rave;
If secret gold sap on from knave to knave.
Once, we confess, beneath the patriot’s cloke,*
From the crack’d bag the dropping guinea spoke,
And gingling down the back-stairs, told the crew,
” Old Cato is as great a rogue as you.”
Blest paper-credit! last and best supply!
That lends corruption lighter wings to fly!
Gold, imp’d by thee, can compass hardest things,
Can pocket states, can fetch or carry kings;*
A single leaf shall waft an army o’er,
Or ship off senates to a distant shore;*
Alexander Pope, of course, http://quod.lib.umich.edu/e/ecco/004780226.0001.000/1:5?rgn=div1;view=fulltext
And:
All the perplexities, confusions, and distresses in America arise, not from defects in their constitution or confederation, not from a want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation. John Adams, letter to Thomas Jefferson, August 25, 1787. — The Works of John Adams, ed. Charles Francis Adams, vol. 8, p. 447 (1853).
Has the species reached the limits to growth? We don’t seem to have a clue of a healthy direction to go on toward from here. Other than pursuit by the powerful of more of everything for themselves, private gain and public loss.
JTMcPhee: Very well put. Love the John Adams quote. Does anyone know where Adams stood on the issue of the First Bank of the United States which Hamilton pushed through?
Not the deepest dip into the history, but Adams as a Federalist was just fine with the Monster Bank. http://www.encyclopedia.com/topic/Bank_of_the_United_States.aspx . The little article has some terse observations on previous iterations of Greece-ing and fleecing…
And a careful reading of Adams’ words there seems to indicate that he does in fact indict Americans for the “defects in their constitution or confederation,” and “want of honor or virtue,” but deplored even more that failure of understanding of that “money” thing in all its many guises, formulations and abuses. “So much as…”
JT regarding the second main point on cancerous growth and biosphere destruction that undermines human life on this planet, hence society (and not just the economy), remember, as that old bearded barnacle butt Trustafarian (yes, he mooched off Engels as well as his wife Jenny’s family, and so may have been, especially given his wild mane, the original Hippy and Trustafarian himself, Highest of the Most High) Marx, as well as Adam Smith in the prior century to Marx, argued cancerous growth was the advantage of the profit seeking imperative at the heart of capitalist production. It is conceivable, however, that if we are prepared to wisely wield the power a sovereign currency allows with regard to fiscal policy, we can redirect growth in a variety of biosphere sustaining AND enhancing ways. Think a pro-LIFE (Low Inflation Full Employment Economy) where the federal government guarantees an living wage job using Lord Turner’s (and, hah-hah, Milton Friedman circa 1948) “open permanent monetary finance” to fund it, and the work involves energy conservation projects for all government owned building that involve things like insulation or double pane windows in the North or planting shade trees and installing solar panels on in the South. Or the same thing to turn every suburban lawn and every urban rooftop and empty lot into edible and medicinal food forests. Or a full court 1960’s style Space Race, only this time for renewable energy technologies and higher storage battery technologies, all in the name of national security. I mean, when you stop and think about what we COULD be doing if we were actually acknowledged the real plumbing diagram of our monetary and government finance system, it actually makes you vomit to see how TINA, the fiscal deficit terrorists, and the hyperventilating hyperinflationistas have use all cowed, and stunted, and cowering in the corner…all, I suspect, for the benefit of the 1%, particularlty the rentier/finanzkapital wing of the 1%. Why people cannot see this, since it is truly hidden in plain sight, is a testimony to the effectiveness of the technologies of distraction and dissociation that Silicon Valley and Madison Avenue and scum ball political campaign marketeers have so lovingly and carefully delivered to us over the past few decades. Give me internet porn and ultra-violent video games, or give me death, is the new American motto, apparently.
And don’t forget Larry Bubbles Summers. Hot tub salesman of the year. Marx complained that socialism didn’t catch on in America because of all the roast beef. Timing is everything. Which is why things are getting pretty interesting. Too bad Karl and Jenny had to shuffle off, they would have enjoyed this. Alas, (in Marx by Wheen) they died simultaneously, living a tad beyond their means but always supplied with wine from Engels’ estate. Both of them in separate rooms drinking to ease their pain (and I’m sure they had all the opium they wanted as well) and occasionally calling across the hallway to see which one of them was still alive.
btw sorry it’s in German
https://www.youtube.com/watch?v=Vx-1LQu6mAE#t=559
Varoufakis ‘Stinkefinger’ was a fake :-)
As hinted at at the end of the video you linked to, this was satire. This has now been confirmed by ZDF. See here: http://openeurope.org.uk/blog/the-varoufake-row-a-new-low-for-the-eurozone-crisis/
I think “cargo cult economics” is a better name for it.
Which set of us corresponds to the hopeful Melanesians whose traditional, balanced, metastable political economy was f__fed over by perversions induced by having War, Imperial Style, descend from the skies and out of the fertile ocean? And then depart as mysteriously as some inadequately invoked or propitiated set of Gods? http://en.m.wikipedia.org/wiki/Cargo_cult
Most people. Except for the hucksters who founded and perpetuated such cults.
It’s entirely coincidental that German foreign policy strengthens Golden Dawn, Right Sector, Front Nationale, etc.
Right?
OK but it might be better to call it “Garblenomics” — just so tempers don’t flare and close out all possibility.
It’s almost the same in all respects, but it’s different in just the right place.
But we can still know what you really mean.
fukkkk what a Mental Disorder it all is. Down there in the Econ Rabbit Hole it’s darkness in every direction.
That’s the ERH hypothesis. The ERH hypothesis says economic thinking is darkness in every direction and the only source of illumination comes from outside of economics. It’s a perfect form of intellectual efficiency. OK, let’s be honest, it’s not even a hypothesis. ahahahahahahahahah .
.
Greece has promised to create a real estate title record in 1994. For this purpose, because nothing happened for years, they received 100 million Euros in the beginning of the century in financial help. 20 years later, they still have not accomplished this. They also have not returned the money that they were given explicitly for this purpose. Instead, they received another 60 million, in order to finally accomplish this task. But nothing happened. In Greece, to this day, no one knows who owns which properties. But, for some people, northern Europe is the culprit for everything. Sometimes it’s good to climb down from the academic ivory tower just a few steps.
Everyone in Greece knows who owns which properties. We have records. That is how people were taxed the same tax multiple times because the Troika says to do so. You can stop automatically believing what the media tells you and wonder if there is a reason Greece and Greeks are been painted a certain way in order to achieve a certain goal. Or you can go on and keep believing these things.
trelathikes ??? which nomo do you live in ??? maybe you live in Athens but even then I suspect I could put together some questions as to who actually signed off on selling off the family homestead to build condos above it…seriously…don’t just respond in a reflexive manner just because the person is not from south of Trieste…honestly, if Hellas had some politician (any politician) prior to syriza willing to fight as hard for greek jobs the way dr strangelovauble is doing for his fatherland, greece would be switzerland…not zimbabwe….8 magic words….”they lied to you and you believed them”…don’t let the tag team of papandreou and karamanlis confuse you about how we got to this point…the problem for germany and europe is the same it has always been…dr strangelovauble (and one too many germans) refuses to drive around PAST leningrad…germany wins a war (finally) but instead of moving on, it keeps kicking greece in the face…a smart hegemon knows when to declare victory and have a parade…that is why Minister Varoufakis was correct in saying (in 2013) that Germany is stupid…but please, my fellow hellenes, do not act like that little glass pipe with that bit of scouring pad and a blackened end has never been used to smoke rock…we will never move forward if we are not willing to accept some culpability on both sides…we have to negotiate the child visitations reasonably or this will stay ugly…
I have replied but it seems it didn’t pass moderation.
German Native Speaker (& John Jones): I am certain there are enough examples on both sides – $160m in foreign aid spent and no real estate title system still, with multiple taxation still on the same properties – that we could spend the rest of our lifetimes cataloguing them. Culpability is surely on both sides. I am of Northern European descent and my ability to feed my kids depends upon the value my analysis can add to one of the largest German financial firms on the face of the earth (and to be clear, I am not an academic, nor have I ever been one, though I harbor the quaint notion that logic and coherent thinking has some role to play in human progress). Northern Europe is not the culprit, in other words, nor does anything I have written above suggest that I am blaming the people of Northern Europe for all of the challenges Greece faces. I have many fond professional and personal relationships with Northern Europeans, especially German citizens, even though my family probably got kicked out of France three and a half centuries ago (Huguenots, I suspect). I am blaming and shaming a policy elite that cuts across nations and even continents, and I am especially blaming the very wealthy and powerful people behind them that guide these policy diktats, and are insisting upon an economic policy approach that is the equivalent of medical malpractice, if not a mutually assisted suicide pact. Fiscal austerity is necessary under certain conditions – overheating economies being one of them, but I cannot find one in the eurozone, and have not been able to find one since 2008. This is not the time for fiscal austerity. If there is an inflation problem now in the eurozone, it is a problem of too little inflation, especially given the private debt loads that one an observe across the region. Fiscal austerity has failed to reduce government debt to GDP ratios, as promised. This much is indisputable. Why persist in a failed, live experiment – unless the objective was always something other than “fiscal responsibility”? If the policy elite favoring fiscal austerity wants to have either a failed nation state or a neo-fascist regime on its doorstep, then they should continue marching in the direction they have been marching in for the past 5-6 years, if not longer. How that serves anyone’s interest is a mystery to me, unless the point is to use the failure of Greece to make it crystal clear to other opposition parties and movements in the region that if you do not play by the Troika’s rules – and God forbid that you should have the temerity to challenge the Troika’s rules – you will be left to swing in the wind with a noose around your neck. That is precisely what we need to be fighting against, and offering constructive alternatives to – not replaying old cultural animosities that keep the people of Europe from working together to create a pro-LIFE economy and a culture rich in creativity and conviviality that it is, once again, the envy of the entire world. If anything, it is a fight that cuts across class lines, not national borders. And it needs to be properly identified as such. Both Greek politicians and the Troika need to be held accountable for the results of their actions and choices. Syriza appears to be willing to recognize and accept that – but from my perspective, and I am prepared to be proven wrong, the Troika’s stance is that there is nothing to negotiate, despite the blatant hypocrisy and duplicity of their policy approach, which I have detailed in part above.
Very well said!
The kleptocrats love austerity because it puts all those, who are not super-wealthy into desperate circumstances. They hope that desperate people will be too busy fighting each other, for the few scraps that fall from the fatcats’ table, to organize and establish their own political power. This is a very dangerous game, because desperate people, who feel they have nothing left to lose, may well decide they have no choice but to revolt against the system.
Precisely, Ulysses. And divide and conquer is a battle strategy as old as the Roman Empire, if not before that. One also must recognize, at several points in modern history, the capitalist class, or at least large factions of it, have found it preferable to operate within a corporatist/fascist political economic regime. There is a reason for that. And a similar reason may also be present today, though I still feel like that is a bit of a stretch. But maybe transnational non financial firms want to use austerity to dismantle welfare states and crush unions even further than they already have through “globalization” efforts, and maybe rentier finanzkapital interests require huge government subsidies to survive in an era of recurring severe financial crises, and they also supra governmental institutions like the Troika as the enforcer/cappos of their debt contracts to shakedown citizens, and other governments in the region. But nobody dares talk about such matters of substance. The media just fans the flames of historical national antagonisms built on cultural stereotypes, and class consciousness remains fragmented enough that class based opposition is very slow to develop, if it develops at all. And frankly, that is a brilliant strategy…but knowing that is what they are up to, and calling it out, and organizing in light of it, is what we should be discussing in public forums. Not finger gate. Not whether Herr Shauble dissed Yanis. This is infantile. For a reason. Or at least that is what it looks like to me, but perhaps I am some sort of conspiracy theorist or quasi academic idealist or something.
Robert
I agree with all that you say and about the elite putting forth a policy of divide and conquer and who is ultimately to blame. But I do not agree that Greece is as equally culpable as northern Europe. I state what I think Greece is culpable of in my above post.
But if people from the north or anywhere else talk about Greece or Greeks in a prejudiced manner then what can I do but respond when I feel the need to?
It was the northern European elite that fed to its citizens the flames of old prejudices sitting under the surface of many of its citizens. Prejudices that were expressed before this crisis even started by many in the north. And it has made any political solution that could of benefited both close to impossible.
It appears that much of the discussion resolves to pondering what should be done about the 0.01% that seem to run things. Well, I am quite flexible on this. I am OK with one, three, or even fifteen injections.
trelathikes ??? which nomo do you live in ??? maybe you live in Athens but even then I suspect I could put together some questions as to who actually signed off on selling off the family homestead to build condos above it…seriously…
”they lied to you and you believed them”…don’t let the tag team of papandreou and karamanlis confuse you about how we got to this point…
Really I don’t know how you come to any of these conclusions by what I posted.
Seriously were do you get this stuff from? Were you also not the one who talks about someone losing ownership of a property to someone else because they pay someone to say they had seen their donkeys on the property?
I know plenty of Greeks that have title deeds all over Greece and only they can sign off on them. The properties belong to them and know one else can take them. And the state knows who owns what. I don’t know how you formed this view. Because someone in Greece or some diaspora Greeks have some bad experience or because the media or some institute says so does not mean this is how it is.
You don’t seem to talk with facts about Greece as I have seen with a couple of your previous posts. You talk from a negative perception of Greece that seems common among many diaspora Greeks but is not based on facts. Zimbabwe? Really? Though no doubt it is surly on its way there now. With the governments that have sold it out to the troika.
Papandreou and Karamanlis have confused you not me. You are the one that sounds like them in many of your posts. They are the ones that talk like you do. They are the ones that traveled around Europe and the world denigrating Greece for cheap political points at home and to please their euro elite compatriots. They are the ones that would continuously sell it out on every issue. The media picks up on their bullshit that makes the medias job so much easier as now it has a quote mine to quote from and the members of the diaspora and people from other countries repeat it and we arrive at this point of a small weak country been bombarded from all sides in good times and not least of all when it is facing a crisis like today. The least it needs is for Greeks to stick up for it when it is not in the wrong and not help the side that is attacking it unjustifiably.
but please, my fellow hellenes, do not act like that little glass pipe with that bit of scouring pad and a blackened end has never been used to smoke rock…we will never move forward if we are not willing to accept some culpability on both sides…we have to negotiate the child visitations reasonably or this will stay ugly…
There you go again drawing conclusions and generalizing about Greeks. How does someone pointing a falsehood in something mean Greeks are lying or hiding something? Or that Greeks are not willing to accept culpability for things it has done wrong?
Greece and Greeks never blamed northern Europe for problems it has caused to itself in terms of this crisis. Which are joining the E.U and Euro. It blames them for the policies they have pushed since then. And the constant prejudice it has received from the north. Something it use to always receive way before this crisis even began. It blames its politicians for their part in joining and for their part in selling them out to Germany the Euro core and the troika. I am not going to admit culpability for something Greece is not guilty of.
Heaven forbid that Greeks are seen to know what the problems they face are and have always been. They have lived them every day of their lives for Gods sake.
don’t just respond in a reflexive manner just because the person is not from south of Trieste…
I responded to them just as I do to you. I don’t care were they are from. I don’t look down on other ethnicities. I respond because the previous poster above me is trying to portray Greece as just as equally morally culpable of mistreating Germany and northern Europe as Germany and Northern Europe have been to Greece and Greeks when this is not the case. By implying Greek corruption caused this crisis or that look Greece takes money and doesn’t do anything with it. See its corrupt. It takes things out of context as I point to further bellow. If you want to criticize Greece and its politicians the only thing you can criticize it is for joining the E.U and Euro. It is only culpable and to blame for this and then selling out the population and submitting to the wishes of Germany and the troika when this started. Anything else is an internal problem for Greece to solve not to be used as some moral balancing act.
But do the citizens of Greece deserve the fate and punishment they have been given for not understanding how they were joining something that was badly constructed and in such a way that would ultimately work against them? Did they deserve this by countries that had the power to steer them into another less damaging path once the crisis started? Countries that were supposed to be in the same union with them countries that were so called allies and an extension of there economy. Or by a union that they signed their sovereignty over to. I have no problem accepting culpability for things that Greece has done wrong but not for things it hasn’t.
I have no problem with criticism of Greece if they were for genuinely trying to improve the country but I am not going to put up with media talking points especially ones based on myths or at best out of context points and things that have nothing to do with the crisis or have a menial effect at best. And are only said to try bring Greece down or distract from the real cause of the crisis or so it looks like it has been just as bad to Germany and northern Europe as Germany and northern Europe has been to Greece. We didn’t go to their country and economically subjugate and start racially abusing them. If a Greek has responded in kind to someone from northern Europe in such a way it is out of a response to a bigoted portrayal of Greeks.
Even if what the poster above says were true so what? What good does 100, 200 million do when your country bleeds 300 million in trade deficits to the Euro core for every 100 million you are given back. Or when most of your money goes to serving unsustainable interest on debt. How can you spend it on infrastructure the country would need when there are other costs the country has like hospitals etc.
They take out money from Greece by Greece allowing their businesses access to the Greek internal market at the expense of Greek businesses that cannot compete. Then they give them peanuts in return and then think they are doing Greece and Greeks a favor.
If someone wants to help Greece’s internal problems cause he/she thinks the state is doing something wrong that could help them if they turn it around they can do so after solving and addressing the main reasons it is in the situation it is in. The problems of the debt and how to stop the trade deficits. How it can possibly function with a currency that reflects Germany economy rather than its own and succeed in a union that has rules that economically work against it. But you wont hear any of so called ways to help Greece under normal circumstances if there was no debt linked to the euro core. You only hear it now as a moralizing excuse to shift blame on to Greeks and Greece.
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I apologize Lambert. I have seen you an Yves say that before. I thought something was wrong because it appeared then disappeared. I am sorry for the trouble and for making you repeat yourself. It won’t happen again.
No harm, no foul.
Thanks John Jones, well said.
Rob Parenteau’s article starts off OK: his criticisms of austerians are quite correct – in that those criticisms are applicable to monetarily sovereign countries (i.e. countries that issue their own currencies). However, the Eurozone is completely different: it consists of countries which do NOT ISSUE their own currencies.
That difference would not matter if all EZ countries were very similar: in that case it would make sense to regard the EZ as a single country. However it’s plain as a pike staff that for example Germany is very different to Greece.
The way the EZ deals with that difference (in particular differences in competitiveness) is to impose deflation on countries which lose competitiveness. That is done by placing limits on how far they can go into debt. And the purpose of that is to bring internal devaluation in the uncompetitive country. Rightly or wrongly those are the rules of the game in the EZ: and Greece knew perfectly well what the rules of the game were when joining the EZ (which it did by fiddling its books).
Thus Parenteau’s complaints about the ECB having money to do QE (i.e buy bonds) in SOME EZ countries, but not Greece’s bonds do not stand up: stimulatory measures (QE or whatever) in countries which are competitive while ABSTAINING from stimulus in the Greece’s of this world is just the way the EZ works – how it was designed. And frankly I don’t see any alternative way to deal with competitiveness disparities in a common currency system. But if Parenteau has some nice simple cure for the problem, he’ll get a Nobel Prize.
A more intelligent criticism of the EZ was made by Simon Wren-Lewis (Oxford economics prof). He made the point that the speed of internal devaluation in Greece might not be greatly reduced if the DEGREE of deflation imposed on Greece was reduced somewhat.
As for the criticisms of QE made by Parenteau (profits for private bond holders and all that), those criticisms may well be valid. But QE is a measure used (rightly or wrongly) in the US, UK, Japan and other countries. I.e. if there are flaws in QE, that has nothing SPECIFICALLY to do with the EZ or Greece.
Rob Parenteau’s article starts off OK: his criticisms of austerians are quite correct – in that those criticisms are applicable to monetarily sovereign countries (i.e. countries that issue their own currencies). However, the Eurozone is completely different: it consists of countries which do NOT ISSUE their own currencies.
That difference would not matter if all EZ countries were very similar: in that case it would make sense to regard the EZ as a single country. However it’s plain as a pike staff that for example Germany is very different to Greece.
The way the EZ deals with that difference (in particular differences in competitiveness) is to impose deflation on countries which lose competitiveness. That is done by placing limits on how far they can go into debt. And the purpose of that is to bring internal devaluation in the uncompetitive country. Rightly or wrongly those are the rules of the game in the EZ: and Greece knew perfectly well what the rules of the game were when joining the EZ (which it did by fiddling its books).
Thus Parenteau’s complaints about the ECB having money to do QE (i.e buy bonds) in SOME EZ countries, but not Greece’s bonds do not stand up: stimulatory measures (QE or whatever) in countries which are competitive while ABSTAINING from stimulus in the Greece’s of this world is just the way the EZ works – how it was designed. And frankly I don’t see any alternative way to deal with competitiveness disparities in a common currency system. But if Parenteau has some nice simple cure for the problem, he’ll get a Nobel Prize.
A more intelligent criticism of the EZ was made by Simon Wren-Lewis (Oxford economics prof). He made the point that the speed of internal devaluation in Greece might not be greatly reduced if the DEGREE of deflation imposed on Greece was reduced somewhat.
As for the criticisms of QE made by Parenteau (profits for private bond holders and all that), those criticisms may well be valid. But QE is a measure used (rightly or wrongly) in the US, UK and other countries. I.e. if there are flaws in QE, that has nothing SPECIFICALLY to do with the EZ or Greece.