Quotulatiousness

January 31, 2012

Germany issues “secret” document to Greek government on debt repayment

Filed under: Economics, Europe, Germany, Government, Greece, Politics — Tags: , — Nicholas @ 09:41

Mick Hume recounts the machinations within the European Union:

One outraged Greek government minister described it as ‘the product of a sick imagination’. Another called it ‘absolutely laughable’. The formal title of the document in question is ‘Assurance of Compliance in the Second GRC Programme’. It is neither a joke, nor a sick fantasy. It reads more like the draft of a death warrant for democracy, first in Greece and then elsewhere in Europe.

This supposedly secret document was issued by Angela Merkel’s German government to its partners in the Eurozone — and then carefully leaked, to ensure maximum impact. It sets out two extraordinary measures that the Germans want to impose to ensure that the Greek authorities comply with the swingeing budget cuts which they promised but have apparently failed to deliver to the markets’ satisfaction.

First, it says Greece must ‘legally commit itself to giving absolute priority to future debt service’. All state revenues must go first to paying debts and interest due, before a cent can be spent on public services. And the Greek government will not be allowed to threaten to default on its debts in future; if it cannot pay, it must accept that ‘further cuts’ will be ‘the only possible consequence’.

Second, the Germans want the Eurozone to oversee the ‘transfer of national budgetary sovereignty’ from Greece to ‘the European level’ under a ‘strict steering and control system’. The plan is for the Eurozone group to appoint a budget commissioner to oversee Greek finances, with the power ‘to veto decisions not in line with the budgetary targets’ set by European and international officials. If that was not humiliating enough, the Greeks would also have to look happy to bend the knee by ensuring that this new system of outside control ‘is fully enshrined in national law, preferably through constitutional amendment’.

To get the Greeks to agree to these unprecedented conditions, the German document also offers incentives — or as we used to call it, threats. If Athens does not accept the compliance measures, then ‘the Eurozone will not be able to approve guarantees for GRC II’. That is the second huge bailout of €130 billion which Greece desperately needs if it is not to go officially bust in weeks. The ‘Assurance of Compliance’ document is a ‘secret’ blackmail note.

Update: Ah, Monty captures the absurd state of the EU perfectly in a throw-away line in today’s Daily DOOM — “Like German porn, the politics of the Greek bailout just keep getting weirder and more complicated.”

December 7, 2011

Greek army reduces from 30 to 19 brigades

Filed under: Europe, Greece, Military — Tags: , , , , , — Nicholas @ 09:15

Strategy Page lists the initial impact on the Greek armed forces due to the financial squeeze:

The current financial crisis in Greece has led to enormous cutbacks in government spending. The military has not been exempt. This year alone, the defense budget will be cut about a third. Over the next two years, the reduced budget will be cut another 15 percent. The army will lose 11 of its 30 brigades, but the air force has disbanded one of 16 squadrons, but kept the aircraft in service by moving them to surviving squadrons. The navy has retired some older patrol boats.

The army is apparently coping by disbanding many reserve units and retiring older tanks and equipment. There won’t be much new equipment purchased for the next few years, at least. Training will also be cut, because operating vehicles, aircraft and ships for these exercises is expensive. The reduction of training will decrease the combat capabilities of the troops. But the government does not want to dismiss lots of the 156.000 active duty troops. That will just increase the already high (approaching 20 percent) unemployment rate. It’s never a good idea to have a lot of professional soldiers among the unemployed.

November 24, 2011

Nigel Farage on “German-dominated Europe”

Filed under: Bureaucracy, Economics, Europe, Germany, Greece, Italy — Tags: , , — Nicholas @ 08:59

November 17, 2011

Snapshots from Greece

Filed under: Economics, Europe, Germany, Greece, Media, Politics — Tags: , — Nicholas @ 07:54

Brendan O’Neill has a few snippets from Athens:

‘Prime ministers should be chosen by us, not Angela Merkel,’ says the taxi driver taking me to the Acropolis. Taxi drivers here love talking politics, and they love hating Merkel. She’s treated as the arch villain of this tragedy. Magazine covers show a massive Merkel playing with Greek politicians as if they were dolls. Graffiti invites her to do things that are probably anatomically impossible. My advice to her is to avoid visiting Greece for the duration of The 100 Days. Probably longer.

•••

The taxi driver also tells me he can’t relate to Papademos. ‘He’s not a man of the people’. But it’s precisely Papademos’s lack of experience in dealing with the grubby, demanding demos that endears him to the EU elite, which fought tooth-and-catapult to have him installed as PM. As one European economist put it: for Brussels the great thing about Papademos is that he ‘speaks the language and shares the philosophy of [the] EU and ECB’ and that he ‘comes in without officially representing a party’. That is, he’s apolitical, unchosen, boring and bureaucratic — just the kind of politician the EU likes. It’s already a cliché, but that doesn’t stop it being true: Athens is now both the birthplace and graveyard of European democracy.

•••

Yet the graffiti expresses exasperation as well as anger — a deep disappointment with Greek workers. Commonly scrawled phrases are ‘Wake up!’ and ‘Stop being slaves!’ You get the impression that the Greek left, which is rowdier and noisier than its western European counterpart, is as annoyed with the masses as it is with Merkel. In Syntagma Square, nothing much remains of the radical protest camp that so excited outside observers earlier this year and which provided the template for the global ‘Occupy’ movement. There is just a memorial tree, with political paraphernalia attached to it in remembrance of the camp. It’s like one of those shrines that pops up on roadsides where someone has been killed by a speeding car, only it is adorned, not with wreaths, but with balaclavas, goggles and batteries (which were thrown at the police). It has the unwitting whiff of being a gravestone not only for the Greek left, but for Greek politics itself.

November 13, 2011

The report from Greece

Filed under: Economics, Europe, Germany, Greece — Tags: , — Nicholas @ 12:16

Michael Petrou and Stavroula Logothettis survey the Greek debt crisis in a report that Maclean’s cheekily headlines “Acropolis Now”:

“We are finished as a nation,” says Marko Gjini, a 39-year-old unemployed construction worker in Athens. “The country has been sold off. We have no say in anything anymore. Greece is owned by the Germans.”

Like many Greeks these days, Gjini is bitter and despondent because of his country’s financial mess, and the austerity measures that have been imposed in an effort to contain it. His wife, Aleka, a public hospital nurse, has seen her income drop from 1,200 euros a month to 800 euros. Now, facing more taxes and cuts to public expenditures, the family expects to have a net monthly income of less than 500 euros. Marko and Aleka are investing whatever money they can toward English lessons for their twin eight-year-old boys in the hope that they might have a better future somewhere else. “Let the government fall,” says Gjini, “[German Chancellor Angela] Merkel is the boss now anyway.”

[. . .]

For Vaso Gildizi, a Greek freelance writer, events in Cannes were “a national humiliation for the country.” The Greek prime minister was scolded like a schoolboy and sent home. The incident didn’t sit well with many Greeks who were already sour on the bailout deal and the euro itself.

“We’re bankrupt,” says 44-year-old Vasilia Paneli, owner of Bliss, a trendy café a short walk from Syntagma Square and the parliament in Athens. “We know it. The EU knows it. And yet we continue this Greek tragedy. A referendum would at least give us a voice, a chance to speak up for our future.” Paneli was unmoved by French and German threats that a referendum on the bailout deal would have meant a vote on whether to remain in the eurozone. She’d rather Greece leave it. “It’s self-serving,” she says. “I say let’s go back to the drachma.”

[. . .]

William Antholis, a senior fellow at the Brookings Institution think tank, likens flirting with a return to the drachma to “threatening suicide to avoid a lynching.” Greece is in for a painful few years whatever happens, he said in an interview with Maclean’s. The austerity measures are going to bite. But leaving the euro, he says, would be disastrous. The costs could include a run on Greek banks, as people sought to withdraw euros before they were changed to drachmas. Some banks would probably collapse. Greece would likely default on its debts, and would be unable to pay pensions and salaries. Some sectors of the economy built on export might benefit from a new, devalued currency, but at the expense of much heavier blows elsewhere.

November 4, 2011

Opening moments of the G20 in Cannes

Filed under: France, Government, Greece, Italy, Media, Politics — Tags: , — Nicholas @ 09:01

From the tone of the article, even the Guardian is finding it hard to take the politicians seriously this time:

The red carpet was drenched and sodden, the palm trees battered by a storm and even the trumpet fanfares of the French Republican Guard were muffled by the wind.

Nicolas Sarkozy’s glittering G20 summit at Cannes was supposed to be a showcase for his skill as the caped crusader: Super Sarko, fighting his way through the markets and eurozone crisis to rescue his personal damsel in distress, France’s endangered AAA-credit rating.

Instead, the opening hours on the French Riviera seemed more like a muted crisis-gathering of head-scratching politicians, some staring into the jaws of political death, fearing being punished at the ballot box or hung out to dry by their own governments.

Even without the specially summoned whipping boy, the Greek prime minister George Papandreou — who had a constantly furrowed brow and clasped hands, as pressure was heaped on him over his resignation-referendum ping-ping — the red-carpet arrivals ceremony often looked like a roll call of doom.

Silvio Berlusconi arrived in the rain with a huge black overcoat perched on his shoulders, shoulder pads visible from space, likened by his own press corps to a mafia boss from the Sopranos.

November 3, 2011

The “Euro-elites now see democracy not so much as a distraction, more as a disaster or even a death-threat”

Filed under: Europe, Greece, Politics — Tags: , , — Nicholas @ 12:12

With the agonized screaming coming from the various offices of the European Union, you’d think Greek Prime Minister George Papandreou’s announcement of a referendum was the next-best thing to the emergence of the Antichrist. Mick Hume explains that the reason the Eurocrats took it so badly is that, from their point of view, democracy is Kryptonite:

‘If voting changed anything, they would make it illegal.’ So goes the famous old slogan, attributed to the anarchist Emma Goldman, expressing radical cynicism about the capitalist elites’ traditionally contemptuous attitude to political democracy.

In the current Euro-crisis, however, it appears that matters have gone further still. Europe’s political, media and economic elites are now so insecure, isolated and fearful of any hint of popular opposition that even the suggestion of giving Greeks a vote seemed to change everything for them — and some of them would clearly like to make such referendums illegal if they could.

No sooner had Greek premier George Papandreou announced his plan for a referendum on the latest Euro bailout and austerity package than, in two shakes of an imaginary ballot paper, all that the elites hold dear had apparently been destroyed: the ‘historic’ deal to save Europe agreed days earlier was now reportedly ‘in ruins’, the financial markets were sinking like stones, there were warnings that the Euro itself was now in mortal danger and even that the world was heading for a global depression. All this panic and chaos, apparently, because somebody suggested the outrageous idea of giving the Greek people a say on their future? No wonder that many in authority talk as if they really would like to ban voting today.

[. . .]

Papandreou’s announcement of a referendum, described even by the sober BBC as a ‘nightmare’ for Europe, could hardly have caused more shock, anger and revulsion in high places if somebody had placed a bomb under this week’s G20 summit in Cannes. The mood of Europe’s rulers was captured by President Sarkozy’s French regime, which described the Greek prime minister’s dalliance with democratic politics as ‘irrational and dangerous’. Trying to square this disdain for public opinion with his own need to seek re-election by the French people, Sarkozy himself has generously conceded that ‘giving people a voice is always legitimate’ before adding the obligatory ‘but…’: ‘the solidarity of all Eurozone countries is not possible unless each one agrees to measures deemed necessary’. In other words, whatever the Greek or any other electorate wants, their government will have to adopt those ‘measures deemed necessary’ by the Euro-elite, primarily the Germans and the French, if they want to remain members of the club.

September 29, 2011

Greek tax evasion: not a new problem at all

Filed under: Bureaucracy, Economics, Europe, Government, Greece — Tags: , , — Nicholas @ 09:28

In a New York Times article from last year, Suzanne Daley reported the rather amazing statistic from Athens:

In the wealthy, northern suburbs of this city, where summer temperatures often hit the high 90s, just 324 residents checked the box on their tax returns admitting that they owned pools.

So tax investigators studied satellite photos of the area — a sprawling collection of expensive villas tucked behind tall gates — and came back with a decidedly different number: 16,974 pools.

That kind of wholesale lying about assets, and other eye-popping cases that are surfacing in the news media here, points to the staggering breadth of tax dodging that has long been a way of life here.

H/T to Araminta Wordsworth for the link.

September 20, 2011

Finnish MP calls for military coup in Greece

Filed under: Europe, Greece, Media, Politics — Tags: , , , — Nicholas @ 09:33

I guess somebody felt they needed a bit of international headline stimulant:

Jussi Halla-aho, an MP for the populist True Finns party, wrote on social networking website Facebook on Wednesday that the Greek government should use military force against workers on strike.

“What Greece needs at this particular point in time is a military junta that would not have to worry about its popularity and could use tanks to enforce some order among strikers and rioters,” Halla-aho wrote.

The Facebook entry soon sparked outrage, with Halla-aho removing it and retracting his comment.

September 12, 2011

What is “the biggest European policy mistake since Britain and France let Hitler have the Sudetenland”?

Filed under: Economics, Europe, Government, Greece — Tags: , — Nicholas @ 12:09

For the record, I don’t actually think Europe would be better off with a single federal government, but Walter Russell Mead thinks the big mistake was attempting an economic union without a political union to match:

What is worrying investors worldwide is the evident intellectual and political bankruptcy of Europe. The Europeans are not stupider than other people, but they face deep structural economic and political problems that their institutions are hopelessly inadequate to solve. Creating a monetary union without a true federal government is looking more and more like the biggest European policy mistake since Britain and France let Hitler have the Sudetenland.

The current crisis is the result of a decade of policy failure. Greece should never have been allowed into the euro; prudent leaders would have checked its statistics, discovered the blatant frauds with which the Greeks sought to conceal the true state of their affairs, and told the country politely but firmly to come back when it was ready. Following that initial blunder, Europe failed to take note in any serious way of the serious distortions that were caused by suddenly reducing interest rates in Greece and other peripherals to near-German levels. Beyond that, alarm bells should have been ringing as it became clear that Greece and a number of other countries were treating their suddenly lower interest costs as found money. They were spending the windfall rather than taking advantage of the once in a lifetime opportunity to reform their economies in preparation for life under a monetary union with countries like Germany. If Europe’s institutions were up to the job, the warning signs would have been noticed and corrective steps taken years ago.

July 20, 2011

Here’s a bold proposal for Greece

Filed under: Economics, Europe, Government, Greece — Tags: , — Nicholas @ 10:09

Bill Frezza has an idea of what Greece really needs:

what is the purpose of casting Greece into some selective temporary financial purgatory where the irrelevant Greek economy can continue embarrassing anyone foolish enough to lend their dysfunctional government a dime? Why not go all the way and give the country what many of its people have been violently demanding for almost a century?

Let them have Communism.

[. . .]

What the world needs, lest we forget, is a contemporary example of Communism in action. What better candidate than Greece? They’ve been pining for it for years, exhibiting a level of anti-capitalist vitriol unmatched in any developed country. They are temperamentally attuned to it, having driven all hard working Greeks abroad in search of opportunity. They pose no military threat to their neighbors, unless you quake at the sight of soldiers marching around in white skirts. And they have all the trappings of a modern Western nation, making them an uncompromised test bed for Marxist theories. Just toss them out of the European Union, cut off the flow of free Euros, and hand them back the printing plates for their old drachmas. Then stand back for a generation and watch.

The land that invented democracy used it to perfect the art of living at the expense of others, an example all Western democracies appear intent on emulating. Being the first to run out of other people’s money makes Greece truly ripe to take the next logical step beyond socialism.

H/T to Jon, my former virtual landlord, for the link. As he suggests “this probably would be kinda fun to watch”. After all, retro-kitsch “Soviet theme parks” are a going concern, why not a country-sized version?

July 14, 2011

The Eurozone crises

Filed under: Economics, Europe, Greece, Italy — Tags: , , , , — Nicholas @ 17:30

That’s right, crises, not crisis. There are three interlinked crises, not just one:

The crisis in the Eurozone has been lurching from one country to another over the past year or so. After bailouts for Greece, Ireland and Portugal, and with a second bailout for Greece in the offing, the financial markets this week turned their attention to Italy, a far larger economy than those previously affected. Spain, another country struggling to pay its way, has also been hit by austerity measures and political turmoil. But while it is easy to get caught up in the specifics of each new stage of the crisis, it is worth taking a step back to understand what is going on and the possibilities for the future.

The Euro crisis, like just about every other economic story these days, has a three-fold character. It is not, in fact, a single crisis; it has three inter-related elements: financial, economic and political.

Of the three, the financial crisis is, paradoxically, the least significant, even though it is the most prominent of the three and the one which threatens to spin out of control with serious broader consequences. Alongside the financial, the economic aspect is the most entrenched and material of the three, while the political crisis — that is, the failure of the political elites to get on top of the other two challenges — is the most critical, as it is, or should have been, the key to the resolution of the other two. The shift in focus to Italy, the Eurozone’s third largest economy, indicates that time may have run out for effective containment. The Euro genie is probably out of the bottle.

July 11, 2011

The Euro: who’ll be the first to leave?

Filed under: Economics, Europe, Government, Greece, Italy — Tags: , , — Nicholas @ 11:15

With all eyes on Greece recently, the troubles of Italy come as a sudden shock to many:

Greece, Ireland, Portugal, (maybe) Spain…and now Italy? Contagion. The hope on the part of the EU and ECB was to contain the contagion by throwing money at it, but every time they fill one sink-hole with Euros another one opens up. It’s been obvious for a long time that the Eurozone was simply a bad idea, and this crisis has exposed the rotten underpinnings for all to see. Europe wanted to have a currency union just like the United States, but they are finding out the hard way that a monetary union without a fiscal-policy union just won’t work. European countries are not like US states — they have different langauges, different work rules, different governing philosophies…different cultures. The big question in everyone’s mind is…now what? Some countries must default, and a default will probably require leaving the Euro and going back to the sovereign currency. But no one knows exactly how this will work, or what the consequences will be.

Some people are floating the idea of a Euro-Bond, but I find that a little nonsensical absent any fiscal-policy union backing it. But of course this may be the point to the enterprise: to “force” Europeans into a closer union without having to go through the messy (and time-consuming) processes of holding a vote. The EU project has never really been a democratic enterprise from the very first — the Eurozone was implemented without the say-so (even over the protests of) its citizens. If I Eurobond is floated, I expect it to be another example of droit de Seigneur on the part of the Eurozone elite. (And it probably won’t work, and will piss away a lot more good money after bad, but none of that has stopped them so far.)

July 5, 2011

When (not if) Greece defaults

Filed under: Economics, Europe, Government, Greece — Tags: , , — Nicholas @ 09:30

John Lanchester explains why default is inevitable, and that the only question remaining is how it will happen:

The economic crisis in Greece is the most important thing to have happened in Europe since the Balkan wars. That isn’t because Greece is economically central to the European order: at barely 3 per cent of Eurozone GDP, the Greek economy could vanish without trace and scarcely be missed by anyone else. The dangers posed by the imminent Greek default are all to do with how it happens.

I speak of the Greek default as a sure thing because it is: the markets are pricing Greek government debt as if it has already defaulted. This in itself is a huge deal, because the euro was built on the assumption that no country in it would ever default, and as a result there is no precedent and, more important still, no mechanism for what is about to happen. The prospective default could come in any one of several different flavours. From everybody’s perspective, the best of them would be what is known as a ‘voluntary rollover’. In that scenario, the institutions that are owed money by the Greek government will swallow heavily and, when their loan is due to be repaid, will permit their borrowings to be rolled over into another long loan. There is a gun-to-the-side-of-the-head aspect to this ‘voluntary’ deal, since the relevant institutions are under enormous governmental pressure to comply and are also faced with the fact that if they say no, they will have triggered a proper default, which means their loans will plummet in value and they’ll end up worse off. The deal on offer is: lend us more money, or lose most of the money you’ve already lent.

This is, at the moment, the best-case scenario and the current plan A. It reflects the failure of the original plan A, which involved lending the government of George Papandreou €110 billion in May last year in return for a promise to cut government spending and increase tax revenue, both by unprecedented amounts. The joint European Central Bank-EU-IMF loan was necessary because, in the aftermath of the financial crisis of 2008, Greece was exposed as having an economy based on phoney data and cheap credit. The cheap credit had now dried up, and Greece was faced by the simplest and worst economic predicament of any government: it couldn’t pay its debts.

June 29, 2011

The real reason for the Greek bailout

Filed under: Economics, Europe, Government, Greece — Tags: , , , , , — Nicholas @ 15:03

Eric S. Raymond explains why all the politicians and apparatchiks of the world’s bureaucracies are lining up to pump for a Greek bailout:

Lost in the eye-glazing babble about maturity extensions, haircuts, and which acronymic organization is going to funnel the money into place is the real magnitude of the stakes here. It’s not just the Greeks’ opera-bouffé parody of the modern redistributionist state that is circling the structural-insolvency drain; what really terrifies our political class is the prospect that, very soon, the investors simply won’t buy government bonds anymore — and massive borrowing through bond issues is the only thing keeping the redistributionist state afloat.

As I have documented many times on this blog, the entitlement-spending commitments of the U.S. Federal government, most U.S. state governments, most European governments, and indeed most national governments everywhere exceed the capacity of their economies to generate wealth. And demographic trends are making the imbalance worse over time, not better.

This is why raising taxes won’t help. The amount of private wealth available to be taxed is insufficient, even if taxation could be raised to 100% without suppressing all economic activity. In practice, raising taxes leads to increases in spending which more than consume the increased revenue (by a ratio of 1.17:1 in the U.S. since the 1940s).

[. . .]

That is the assumption that is now under threat. Greece must be bailed out in order to preserve the illusion that the borrowing can continue indefinitely, that the bill will somehow never come due. When the political class speaks of “contagion”, what they’re really worried about isn’t the solvency of German banks holding Greek paper, it’s a general flight of investors from the sovereign-debt markets.

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