06
Jul
15

chiming in

Greece.

Who needs me to chime in on the situation in Greece or the future of the Euro? Well, probably nobody, considering the fact that I am no economist and have absolutely no expertise in the area.

But I heard a number of things over the weekend, and I tend to believe them… first, that in the last rounds of “bailouts,” 90% of the money went to German and French “zombie” banks, not to Greece itself—a situation that is eerily similar to the US “bailout” in which the highest priority of American politicians seems to have been the salvation of the banksters (who are still held unaccountable for their financial crimes) rather than the suffering of the American people; second, that the Greek people are already working harder and suffering more than their fellow-Europeans including the Germans; third, that when the markets opened on Monday, yes, there were losses, but these were only in the area of 1%-2% and seemed to be much less severe than the end-of-the-world predictions of many observers including the financial media; and fourth, that there appears to be an “austerity psychosis” afoot in Merkel’s Berlin. The Germans even have a word for it—Abbauwahn—which suggests to me that it may be more an example of political groupthink, rather than something that is real and predictive of the Euro’s existential future.

I have also heard that Angela Merkel and her financial advisors are not exactly sharpest knives in the drawer. Merkel has been described as a consensus politician who rules by opinion polls, rarely taking strong positions. Merkel’s surveys of the German people tell her that bailing out Greece is not a popular option. So she is opposed to extending a lifeline to Athens. But is this position correct?

I read that if the same degree of austerity were imposed in the US over the past few years, we would have seen the hourly minimum wage drop from $7.25 to $5.66, the average government worker’s annual salary decrease from $51,340 to $43,639, and the average senior citizen’s monthly check drop from $1,294 to $776. How would you have voted?

She certainly seems to be a most ungenerous person, suffering from memory loss, and lacking in moral backbone. In the early ’50s when Germany was on the ropes after WWII, the Greek government joined about 20 of Germany’s former foes in signing the 1953 London Agreement, which wrote off a large chunk of Germany’s loans and restructured the rest, linking West Germany’s debt repayment schedule to its ability to pay—that is, tying repayments to the trade surplus Germany was running and expected to run. This created an incentive for trading partners to buy German goods and became a landmark case that shows how effective debt relief can be. It helped spark what became known as the German economic miracle. Shouldn’t Merkel be advocating paying it forward?

Many commentators have said that the actual amount of money involved, relatively thinking, is a drop in the bucket. It still sounds like a lot of money to me, but I question the premise that you can cost-cut your way to prosperity when you’ve already cut all the fat (and some of the muscle) to the bone. This sounds like the kind of bone-headed concept that only a politician or banker could think makes sense.

The Greeks are venturing into uncharted territory and I admire their courage. They sent a resounding message to Brussels, Frankfurt, and Berlin that they are not willing to acquiesce to further humiliation at the hands of the bankers. Far from being a failed economy and nation, Greece may in fact have been the place where our humanity has been reasserted for all of us. Thank you, Greece.

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greece-financial-crash.

۞

Groove of the Day

Listen to Annie Lennox performing “Money Can’t Buy It”

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Weather Report

97° and Partly Cloudy, Thunderstorms in the Afternoon & Evening

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1 Response to “chiming in”


  1. July 9, 2015 at 8:25 am

    On July 9, Robert Reich said:

    People seem to forget that the Greek debt crisis — which is becoming a European and even possibly a world economic crisis – grew out of a deal with Goldman Sachs, engineered by Goldman’s Lloyd Blankfein. Several years ago, Blankfein and his Goldman team helped Greece hide the true extent of its debt — and in the process almost doubled it. When the first debt deal was struck in 2001, Greece owed about 600 million euros ($793 million) more than the 2.8 billion euros it had borrowed. Goldman then cooked up an off-the-books derivative for Greece that disguised the shortfall but increased the government’s losses to 5.1 billion euros. In 2005, the deal was restructured and the 5.1 billion euro debt was locked in. After that, Goldman and the rest of Wall Street pulled the global economy to its knees – whacking Greece even harder.

    Undoubtedly, Greece suffers from years of corruption and tax avoidance by its wealthy. But Goldman Sachs isn’t exactly innocent. It padded its profits by catastrophically leveraging up the global economy with secret, off-balance-sheet debt deals. Did any of its executives ever go to jail? Of course not. They all got fat bonuses and promotions. Blankfein, now CEO, raked in $24 million in 2014 alone. Meanwhile, the people of Greece struggle to buy medicine and food.

    Doesn’t seem right, does it?


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