Quotulatiousness

June 18, 2012

Rerun of the Greek election

Filed under: Economics, Europe, Greece, Politics — Tags: , , , — Nicholas @ 09:16

The Economist summarizes the results of yesterday’s election in Greece:

WHEN deciding whether to grant citizenship to an outsider, the Ancient Greeks would put the matter to a vote, tossing coloured pebbles into a clay jar. On June 17th almost 29.7% of voting Greeks picked the colours of New Democracy, a centre-right party that broadly supports the country’s EU bail-out agreement. It was seen as a vote to remain citizens in good standing of the single currency. New Democracy narrowly beat Syriza, the “coalition of the radical left”, which was threatening to rip up the bail-out agreement. That would have resulted in ejection from the euro area or at least ostracism (another Ancient Greek practice) from its fellow members.

On the face of it, this do-over election has generated the kind of result euro-officials were hoping to see in the first election on May 6th. The leader of New Democracy, Antonis Samaras, will now seek to form a coalition with other parties that broadly support the bail-out. The Greek people can look forward to the sweat of fiscal austerity, not the tears of financial chaos. They can expect chronic misery rather than acute disaster.

[. . .]

What about the economy? As our piece last week reported, it has spent the last six weeks in suspended animation. Unfortunately, economies do not keep well in the freezer. The hesitation has wreaked great and irreparable harm. The banks have lost more deposits. The government’s arrears have grown. Erik Nielsen, chief economist of UniCredit, reports that pharmacists have suspended credit to the government, hampering the supply of medicines. The pebbles cast in May have spread damaging ripples through world markets, which have not reversed themselves. They “introduced yet another round of uncertainty” that the second bail-out programme “was not built to deal with.”

June 13, 2012

“… there simply aren’t enough lifeboats!”

Filed under: Economics, Europe, Greece, Italy — Tags: , , , , — Nicholas @ 13:18

Nigel Farage speaking in the European Parliament:

Another one bites the dust. Country number four, Spain, gets bailed out and we all of course know that it won’t be the last. Though I wondered over the weekend whether perhaps I was missing something, because when the Spanish prime minister Mr Rajoy got up, he said that this bailout shows what a success the eurozone has been.

And I thought, well, having listened to him over the previous couple of weeks telling us that there would not be a bailout, I got the feeling after all his twists and turns he’s just about the most incompetent leader in the whole of Europe, and that’s saying something, because there is pretty stiff competition.

Indeed, every single prediction of yours, Mr Barroso, has been wrong, and dear old Herman Van Rompuy, well he’s done a runner hasn’t he. Because the last time he was here, he told us we had turned the corner, that the euro crisis was over and he hasn’t bothered to come back and see us.

I remember being here ten years ago, hearing the launch of the Lisbon Agenda. We were told that with the euro, by 2010 we would have full employment and indeed that Europe would be the competitive and dynamic powerhouse of the world. By any objective criteria the Euro has failed, and in fact there is a looming, impending disaster.

You know, this deal makes things worse not better. A hundred billion [euro] is put up for the Spanish banking system, and 20 per cent of that money has to come from Italy. And under the deal the Italians have to lend to the Spanish banks at 3 per cent but to get that money they have to borrow on the markets at 7 per cent. It’s genius isn’t it. It really is brilliant.

So what we are doing with this package is we are actually driving countries like Italy towards needing to be bailed out themselves.

In addition to that, we put a further 10 per cent on Spanish national debt and I tell you, any banking analyst will tell you, 100 billion does not solve the Spanish banking problem, it would need to be more like 400 billion.

And with Greece teetering on the edge of Euro withdrawal, the real elephant in the room is that once Greece leaves, the ECB, the European Central Bank is bust. It’s gone.

It has 444 billion euros worth of exposure to the bailed-out countries and to rectify that you’ll need to have a cash call from Ireland, Spain, Portugal, Greece and Italy. You couldn’t make it up could you! It is total and utter failure. This ship, the euro Titanic has now hit the iceberg and sadly there simply aren’t enough life boats.

June 6, 2012

Cassy’s guide to naming spaceships

Filed under: Greece, History, Humour, Media — Tags: , , , — Nicholas @ 08:13

You have to put a bit more thought into how you name your spaceships, people of the future!

Dear People of the Future,

Congratulations! If you’re reading this, you’ve just received a state-of-the-art spacecraft, and you’re probably about to take it on an extremely dangerous mission. Your journey may even concern the safety and continued survival of the human race.

But don’t worry! I’m betting your new ride is pretty sick. It’s probably got a warp drive and maybe a solar sail and lots of other technology I couldn’t even begin to understand.

At this point, you’re probably wondering: What should I name my spacecraft?

It’s good advice. Really. But I was surprised to find that there had been a USS Custer, a USS General Burnside, and even the USS Benedict Arnold.

H/T to John Turner for the link.

May 24, 2012

A Greek exit is an existential threat to the Euro

Filed under: Economics, Europe, Greece — Tags: , , — Nicholas @ 09:55

John Kay explains why it’s not just a simple cut-and-run for Greece or the rest of the Euro:

When countries joined the single currency, a relatively simple piece of domestic legislation converted contracts in drachmas, pesetas, markkas and Deutschmarks into contracts in euros at a prescribed exchange rate. But you cannot simply reverse that process when countries leave the single currency. You have to prescribe which contracts are now to be fulfilled in drachmas and which remain in euros or converted into Deutschmarks. That determination is politically fraught, technically complex and subject to long legal challenges.

About two years ago some large businesses and wealthy individuals began seriously to ask, “if the euros were to unwind, in which currency would my asset or contract be denominated?” The issue is not whether the euro coins in your pocket carry an Athenian owl or German imperial eagle. The issue is the status of bank deposits and loans, residential mortgages and commercial contracts, as well as wages and prices. The drain of funds from Greek banks is an indication that ordinary people are now thinking in these terms.

Europe’s hapless politicians, having asserted that exit from the single currency was impossible, must now claim that exit would be relatively easy. Only then can they plausibly threaten the Greek electorate with expulsion if they vote the wrong way. But exit was never impossible, never easy and even when it was publicly unthinkable central banks would have been negligent not to have put in place contingency plans.

That is why even though Greece is a small part of the eurozone, a Greek exit is an existential threat to it. Once a path to exit has been defined, business and individuals will have a template for understanding the consequences of further unwinding.

May 13, 2012

Greek railway dis-economy of scale

Filed under: Economics, Europe, Greece, Railways — Nicholas @ 11:22

It would actually be cheaper to send all Greek train passengers by private taxi than using the public rail network:

The claim that it would be cheaper for Greece to send every rail passenger to their destination by taxi was most recently made in the book Boomerang by Michael Lewis, the Moneyball author.

But it was first made by Stefanos Manos, the former Greek finance minister, in 1992. Manos used the railway system to illustrate what he saw as gross public sector waste.

“I was in favour of the Maastricht Treaty and was supposed to defend it in Parliament,” says Manos, now heading his own party, Drasi.

“I said we should drastically reduce the size of the public sector and its expenditure. And I gave as an example the railway where there were exorbitant wage bills compared to the revenue of the country.”

He says it was an off-the-cuff remark but about right.

“I knew the number of passengers and I made a brief estimate of what it would cost to send them from Athens to the north of Greece and I decided it was quite obvious it would be cheaper to send them there by taxi rather than train.”

It’s not quite true now: two passengers would have to share each taxi. If you got three passengers into each taxi, the government would be saving money.

May 9, 2012

Misreading the European electoral tea leaves

Filed under: Economics, Europe, France, Government, Greece, Italy, Media — Tags: , , — Nicholas @ 10:19

Brendan O’Neill points out that there’s something lacking in the analyses of all the recent electoral upheavals in Europe:

Great claims are being made in the wake of the local elections in Britain, the presidential elections in France, and the legislative elections in Greece. Britain’s Labour Party may have secured the votes of just 12.5 per cent of the eligible electorate, but it came top in the local elections, and so we’re told that ‘Labour is back’. The victories of Hollande in France (where he won 51.63 per cent of the vote to Nicolas Sarkozy’s 48.37 per cent), and of SYRIZA in Greece (the anti-austerity, radical left coalition which won 16.78 per cent of the vote), are being talked up as a ‘new dawn’ for European social democracy. According to a Guardian editorial, we have witnessed a ‘stunning victory… for the left in Europe’.

These observers urgently need to take a reality check. Because in truth, the most striking thing about the recent elections in Europe has been the utter absence of any matters of doctrine, of principle, of ideological outlook. In England, France, Greece, Italy, no doctrinal matters whatsoever have been raised, far less contested. These elections are best seen, not as a new dawn for social democracy, but as an unfocused emotional reaction against things — against Sarkozy, austerity, Brussels. Actually, it’s worse than that. Where once the left was concerned with creating a new reality, one based on systems and values quite distinct from those of traditionalists, today’s emerging left is obsessed with avoiding reality, with hiding away from the harshness of economic life in 2012 and simply saying: ‘Be gone!’ The problem with the newly successful left movements is not just that they’re attracting shallow protest votes, but that they’re extraordinarily infantile, blinkered outfits.

The only ‘doctrine’ uniting the various movements against austerity in modern Europe (both the left-wing and right-wing ones) is the doctrine of responsibility aversion, of shirking seriousness in favour of emotionalism. What the cheerleaders of these movements fail to realise is that being anti-austerity without positing an alternative route out of recession, without any serious proposals for stabilising economic life in Europe, is mere gesture politics. In fact it’s an act of irresponsibility, of wilfulness, where the key aim is to insulate oneself and one’s supporters from the harsh realities of our recessionary times rather than face up to those realities and potentially transform them. The new anti-austerity posturing, to quote an old communist, is an infantile disorder.

March 5, 2012

Tim Worstall: “Neoliberal” has a meaning

Filed under: Economics, Europe, Greece — Tags: , , — Nicholas @ 09:55

He’s ticked off at an article at the Guardian, blaming “neoliberals” for the Greek crisis:

In what paranoid fantasy is what is happening in Greece neoliberal?

The actual neoliberal position (recently affirmed at our meeting in the underground secret headquarters under the volcano that sank Atlantis) is that the euro itself was and is a bad idea as it’s not an optimal currency area. And if there is to be a euro then Greece should not be a part of it. Since it is, and it’s bust, then it should default and devalue.

In short, the neoliberal solution is the Icelandic one, not the Irish, Greek or Portuguese.

So how come we neoliberals (as you know, the modern incarnation of the Green Lizards, Rosicrucians and Illuminati all rolled into one) are getting blamed for the entire fuck up that is happening precisely because no one will follow the prescriptions of neoliberal economics?

March 1, 2012

A Kickstarter campaign for … Greece

Filed under: Europe, Greece, Humour, Media — Tags: , , — Nicholas @ 13:12

I guess it’s about their last available option:

Greece is a small country in the south of Europe known for inventing democracy and western philosophy and for its national motto, “Release the Kraken!” Our shores are a popular destination for backpackers and tourists wishing to relax amid sun-drenched beaches by day and intoxicated British tourists by night.

We wish to continue this good work, but to do so our creditors are demanding €14.5 billion ($18.6 billion) by March 20. We do not have this money, nor do we think we can raise it in time: Our asset sales have gone nowhere, and the EU has nixed our plan to close shop and re-open a few blocks away as “Greeze”. And so we come to you, our friends, for help.

A donation of any amount is appreciated, and gifts are available for those who give at premium levels. We promise these funds will be used only to pay down debt, and any funds received above the requested amount will be rolled over to our next, inevitable Kickstarter campaign.

February 28, 2012

Did Greece get bailed out or did it default? A little from column A and a bit from column B

Filed under: Economics, Europe, Government, Greece, Politics — Tags: , , , — Nicholas @ 09:56

Detlev Schlichter explains what happened in the “big fat Greek bailout”:

Greece was bailed out for the second time in four months. Or did it default? Well, a bit of both, I guess.

All bondholders are equal. But some are more equal than others. If you are the ECB, your Greek bonds were exchanged, par for par, for new Greek bonds, and you can go on pretending that they are worth their principal amount. You won’t have to report a loss for now. But if you are a ‘private’ entity — and that is a rather loosely used term these days as it includes the banking industry which is either now partially owned by the state or to a considerable degree dependent on ongoing support from the lender-of-last resort — more than half your Greek investment was wiped out. So Greece defaulted. But as you ‘agreed’ to the ‘haircut’ it was in fact a ‘voluntary restructuring’, although you really had no choice.

[. . .]

I guess we shouldn’t lose sight of the fact that Greece’s economic model is fundamentally unsustainable, whichever way you cut it. Greece has been living beyond its means for a long time, and has managed to do so by flying under air-cover of the EMU project and with the tailwind of cheap credit and easy money. Spending by the Greek state accounts for more than half of registered economic activity, and a third of the workforce is employed by the public sector. ‘Activities’ are being subsumed under the heading of ‘Greek GDP’ that nobody would voluntarily pay for, that are to a large degree wasteful, and that are simply unaffordable under anything but the most bizarrely generous credit conditions, i.e. precisely those that Greece enjoyed from 2001 to 2008. Easy money has been used to paper over grave economic imbalances. Some of what is generously labelled ‘GDP’ should be discontinued — and fast.

To even suggest that such an economic model would be manageable if Greece, a country with about three quarters of the population of metropolitan Los Angeles but with less than half of L.A.’s GDP, only had its own paper currency and could inflate and devalue to its heart’s content, is economically illiterate. No country ever prospered by running budget deficits funded by the printing press or by creating domestic inflation. Devaluing your currency may give your exporters a shot in the arm — for about five minutes. But it scares your domestic savers away for years to come and severely diminishes your ability to keep or attract capital, the backbone of any sustainable economic model. To even try and attempt to ‘inflate away’ a debt load worth 160 percent of a generously calculated GDP would cause economic damage of gigantic proportion. One must have swallowed the Keynesian mythology of deficit-spending whole to believe that the country could borrow and print itself out of this mess. A proper default on its existing debt and rebuilding from a lower base — but with a hard currency — are the better options.

February 21, 2012

Greece: “now officially a ward of the international community”

Filed under: Economics, Europe, Government, Greece — Tags: , , , — Nicholas @ 10:40

Felix Salmon on the dire Greek financial future:

Greece is now officially a ward of the international community. It has no real independence when it comes to fiscal policy any more, and if everything goes according to plan, it’s not going to have any independence for many, many years to come. Here, for instance, is a little of the official Eurogroup statement:

    We therefore invite the Commission to significantly strengthen its Task Force for Greece, in particular through an enhanced and permanent presence on the ground in Greece… The Eurogroup also welcomes the stronger on site-monitoring capacity by the Commission to work in close and continuous cooperation with the Greek government in order to assist the Troika in assessing the conformity of measures that will be taken by the Greek government, thereby ensuring the timely and full implementation of the programme. The Eurogroup also welcomes Greece’s intention to put in place a mechanism that allows better tracing and monitoring of the official borrowing and internally-generated funds destined to service Greece’s debt by, under monitoring of the troika, paying an amount corresponding to the coming quarter’s debt service directly to a segregated account of Greece’s paying agent.

The problem, of course, is that all the observers and “segregated accounts” in the world can’t turn Greece’s economy around when it’s burdened with an overvalued currency and has no ability to implement any kind of stimulus. Quite the opposite: in order to get this deal done, Greece had to find yet another €325 million in “structural expenditure reductions”, and promise a huge amount of front-loaded austerity to boot.

February 16, 2012

Getting rid of that messy, obstructive “democracy” thing in Europe

Filed under: Bureaucracy, Europe, Government, Greece, Liberty — Tags: , — Nicholas @ 10:40

Bruno Waterfield on the destruction of democracy in Greece and what it will mean for the rest of the European Union:

What happens in Greece will mark the opening of a new era in European politics. It is important therefore to understand what is and isn’t going on. The crisis is not, as many believe, being driven by ‘neoliberal’ economic policies. It isn’t caused by any Greek cultural propensity to fecklessness either. And, despite the protest graffiti and the timeless appeal of Nazi references, the Greek tragedy is not a plot to restore an explicit German hegemony in Europe. Angela Merkel is no Adolf Hitler.

What is happening in Greece is a crisis of European proportions because it is the sharpest expression of a destructive trend common to all countries in the EU: the twenty-first-century elite mission to place institutions, policy and statecraft above society. The Greek catastrophe, then, is an indicator of what happens when the question of interest or politics becomes the sole preserve of bureaucratic or state structures decoupled from, and increasingly defined against, the public.

Measures imposed on Greece are explicitly declared, even celebrated, as being in opposition to Greek society. Any attempt by political parties to uphold the democratic representation of Greek interests is met with aggressive hostility. Moreover, the EU-IMF programme, or so-called Memorandum of Understanding, for Greece is utterly divorced from economic reality. As documented in the Daily Telegraph, the Eurozone’s policies are pushing Greece into a ‘death spiral’ that defies any economic logic.

February 13, 2012

How Greece got into their predicament

Filed under: Economics, Europe, Government, Greece, Politics — Tags: , , , — Nicholas @ 10:18

Anita Acavalos wrote this article in 2010. It’s still relevant — perhaps even more so today:

Although at first glance the situation Greece faces may seem as simply the result of gross incompetence on behalf of the government, a closer assessment of the country’s social structure and people’s deep-rooted political beliefs will show that this outcome could not have been avoided even if more skill was involved in the country’s economic and financial management.

The population has a deep-rooted suspicion of and disrespect for business and private initiative and there is a widespread belief that “big money” is earned by exploitation of the poor or underhand dealings and reflects no display of virtue or merit. Thus people feel that they are entitled to manipulate the system in a way that enables them to use the wealth of others as it is a widely held belief that there is nothing immoral about milking the rich. In fact, the money the rich seem to have access to is the cause of much discontent among people of all social backgrounds, from farmers to students. The reason for this is that the government for decades has run continuous campaigns promising people that it has not only the will but also the ABILITY to solve their problems and has established a system of patronages and hand-outs to this end.

Anything can be done in Greece provided someone has political connections, from securing a job to navigating the complexities of the Greek bureaucracy. The government routinely promises handouts to farmers after harsh winters and free education to all; every time there is a display of discontent they rush to appease the people by offering them more “solutions.” What they neglect to say is that these solutions cost money. Now that the money has run out, nobody can reason with an angry mob.

[. . .]

Greece is the perfect example of a country where the government attempted to create a utopia in which it serves as the all-providing overlord offering people amazing job prospects, free health care and education, personal security and public order, and has failed miserably to provide on any of these. In the place of this promised utopian mansion lies a small shack built at an exorbitant cost to the taxpayer, leaking from every nook and cranny due to insufficient funds, which demands ever higher maintenance costs just to keep it from collapsing altogether. The architects of this shack, in a desperate attempt to repair what is left are borrowing all the money they can from their neighbours, even at exorbitant costs promising that this time they will be prudent. All that is left for the people living inside this leaking shack is to protest for all the promises that the government failed to fulfil; but, sadly for the government, promises will neither pay its debts nor appease the angry mob any longer. Greece has lost any credibility it had within the EU as it has achieved notoriety for the way government accountants seem to be cooking up numbers they present to EU officials.

H/T to Steve Baker MP for the link.

Greek government expands categories of disabled to include “compulsive gamblers, fetishists and sadomasochists”

Filed under: Bureaucracy, Europe, Government, Greece, Health — Tags: , , , , — Nicholas @ 10:04

At a time most people expect the Greek government to be cutting back, the Labor ministry just expanded the recognized disabilities to include a few categories that will raise eyebrows:

Disability groups in Greece expressed anger on Monday at a government decision to expand a list of state-recognized disability categories to include pedophiles, exhibitionists and kleptomaniacs.

The National Confederation of Disabled People, calling the action “incomprehensible,” said that pedophiles could be eligible for a higher disability pay than some people who had received organ transplants.

The Labor Ministry said the categories added to the expanded list — that also includes pyromaniacs, compulsive gamblers, fetishists and sadomasochists — were included for purposes of medical assessment and used as a gauge for allocating financial assistance.

Der Spiegel: Is it too late to save Greece?

Filed under: Bureaucracy, Europe, Government, Greece — Tags: , — Nicholas @ 08:48

The Greek civil service is overstaffed, and has lots of quirky habits, proving the old adage that there’s nothing as permanent as a “temporary” government program:

One of Greece’s purported saviors is a short, rotund, 72-year-old man named Leandros Rakintzis. He was once a respected constitutional judge on the country’s highest court, the Areopagus. Since 2004, he has been the head of a government agency that is the first of its kind for Greece. Rakintzis is Greece’s general inspector of public administration.

His body twitches and shakes with delight as he talks about his successes and discoveries. For example, he discovered that on weekends, hospitals admit elderly people who require nursing care or are confused because their children bring them there so that they can take a few days of vacation. This, of course, drives up healthcare costs.

[. . .]

Rakintzis has stories to tell that take place throughout Greece, and some are downright unbelievable. For example, the government agency that was created to manage a bid to make Greece’s second-largest city, Thessaloniki, a European cultural capital in 1997 is still humming away. Its employees are supposedly working on winding down the major event and settling up the accounts — 13 years later.

How many people work there? “I don’t know. Not even the government knows that,” says Rakintzis. He adds, in an almost threatening tone: “Not yet.” Rakintzis and his staff are now in the process of investigating about 4,000 government offices and agencies in similar situations.

[. . .]

Greece has more than five times as many civil servants per capita than the United Kingdom. The country’s inflated government apparatus consumes tens of billions of euros a year. It’s money the Greek state doesn’t have — and actually never did. Greece’s gross domestic product is only slighter higher than that of the German state of Hesse and is just one-tenth the size of Germany’s total economic output.

February 8, 2012

A spectre is haunting the EU elite: the spectre of democracy

Filed under: Bureaucracy, Europe, France, Greece, Politics — Tags: , , — Nicholas @ 10:25

Bruno Waterfield on the worries of the movers and shakers in the fancy office suites in Brussels:

The European Union is currently straining every sinew in a campaign to stifle outbreaks of politics across Europe.

For the EU oligarchs, democracy sucks. What if the Greeks — voting in elections this April — decide to tear up an austerity programme painstakingly hammered out by their betters in the EU and the IMF? Imagine — and the memory of all those lost referendums still smarts among Eurocrats — if a country should decide it has had enough of the economic mismanagement and diktat that has characterised the Eurozone’s handling of the economic crisis.

A spectre is indeed haunting the corridors of Brussels offices and it is real: a well-founded fear that voters will reject the ‘fiscal compacts’, ‘debt brakes’ and ‘golden rules’ aimed at securing the EU’s reign in de facto perpetuity.

[. . .]

Pierre Moscovici, the Socialist campaign manager, has further horrified the EU by hinting that a new French president could hold a referendum — a taboo in contemporary European politics. ‘I am convinced that we will find allies for a renegotiation aimed at a policy change to pull us out of this austerity spiral and recession. We don’t like the idea of a popular vote because we are pro-Europeans and we don’t want a “No”, but nor can we allow tensions to spill over’, he said last week.

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