Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.

For The Record  

FTR #746 Greek Tragedy

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NOTE: This pro­gram descrip­tion con­tains infor­ma­tion not includ­ed in the orig­i­nal broad­cast.

Intro­duc­tion: Exam­in­ing the Greek fis­cal cri­sis and its impli­ca­tions for Europe and the U.S., the pro­gram notes the role Ger­many has played in this dra­ma. Incor­po­rat­ing Greece in an eco­nom­ic union that real­ized Friedrich List’s blue­print for Ger­man eco­nom­ic hege­mo­ny over Europe and the World, Ger­many has advo­cat­ed poli­cies that will hurt Greece and help Ger­man cor­po­ra­tions.

The broad­cast notes that:

  • Greece enjoyed a trade sur­plus with Ger­many pri­or to adopt­ing the Euro.
  • Ger­man cor­po­ra­tions ben­e­fit­ted hand­some­ly from access to Greek mar­kets afford­ed them by the Euro­pean Mon­e­tary Union.
  • Greece’s adop­tion of the Euro has pre­vent­ed that coun­try from stim­u­lat­ing its econ­o­my by revalu­ing its cur­ren­cy.
  • The “aus­ter­i­ty” imposed on Greece at Ger­man behest has actu­al­ly exac­er­bat­ed Greece’s dif­fi­cul­ties, increas­ing unem­ploye­ment and bud­get deficits.
  • Ger­man cor­po­ra­tions stand to ben­e­fit from the pro­posed pri­va­ti­za­tion of Greek assets, a step being demand­ed by Ger­many.
  • Greece is being threat­ened with an unprece­dent­ed loss of sov­er­eign­ty, with its tax rev­enues being col­lect­ed by out­side inter­ests.
  • The “aus­ter­i­ty” being pro­posed for Greece by Ger­many is also being pro­posed for the Unit­ed States by the GOP right.
  • Euro­pean intel­lec­tu­als are see­ing a pat­tern of Teu­ton­ic hege­mo­ny in Ger­many’s behav­ior toward oth­er EU states fac­ing bud­get crises.
  • The “Euro­pean street” is also begin­ning to rebel, see­ing Europe’s loss as Ger­many’s delib­er­ate gain. EU nations are reject­ing plans to impose manda­to­ry retire­ment ages on their respec­tive pop­u­la­tions.
  • The social dis­lo­ca­tion pro­duced by the eco­nom­ic suf­fer­ing grip­ping Europe is lead­ing to xeno­pho­bic, racist and fas­cist sen­ti­ments.

Of para­mount impor­tance, here, is analy­sis of the Euro­pean Mon­e­tary Union as the embod­i­ment of the Third Reich’s plans for Euro­pean eco­nom­ic inte­gra­tion fol­low­ing Ger­man con­quest. Indeed, the real­i­ties of the Euro are the real­i­ties writ­ten about by Dorothy Thomp­son in The New York Her­ald Tri­bune in May of 1940, in which she set forth the para­me­ters of a “Europa Ger­man­i­ca.”

Imme­di­ate­ly fol­low­ing the events dis­cussed in this broad­cast, Greek fas­cists were incor­po­rat­ed into the pro­vi­sion­al Greek gov­ern­ment. The incor­po­ra­tion of the Greek neo-Nazi par­ty into that coun­try’s gov­ern­ment was accom­plished with­out input from the Greek cit­i­zen­ry!

(Although not dealt with at great length in this pro­gram, under­stand­ing the Bor­mann cap­i­tal net­work and, in turn, that orga­ni­za­tion’s place in the car­tel-dom­i­nat­ed inter­na­tion­al eco­nom­ic sys­tem is essen­tial to under­stand the forces dri­ving the ele­ments under exam­i­na­tion here.)

As the GOP right pro­posed dra­con­ian cuts in spend­ing that will increase unem­ploy­ment, increase cit­i­zens’ depen­den­cy on gov­ern­ment social wel­fare pro­grams and decrease tax rev­enues, the Greek tragedy may well be played out in the Unit­ed States or the world stage. (In FTR #747, we com­pare the GOP’s agen­da for Amer­i­ca with the CIA/corporate blue­print for the desta­bi­liza­tion of unco­op­er­a­tive for­eign gov­ern­ments.)

Not­ing GOP rhetoric com­par­ing the Unit­ed States–inaccurately and unfairly–with Greece, Nobel-Prize win­ning econ­o­mist Paul Krug­man warns of the dan­gers of pur­su­ing the pol­i­cy being advo­cat­ed for Greece by Ger­many and the U.S. by the Repub­li­cans and the Tea Par­ty.

Pro­gram High­lights Include: Slove­ni­a’s rejec­tion of a Ger­man-led ini­tia­tive to raise the retire­ment age as a bud­get-bal­anc­ing con­sid­er­a­tion; Deutsche Telekom’s sig­nif­i­cant stake in the Greek tele­phone com­pa­ny [poised to assume an even greater share of the Greek oper­a­tion, Deutsche Telekom is con­trolled by the Ger­man gov­ern­ment]; sus­pi­cions by Euro­pean crit­ics that Ger­many’s grow­ing trade with Chi­na and Asia will lead it to aban­don the Euro as no longer use­ful; Ger­many’s use of bud­get deficits and oth­er eco­nom­ic dif­fi­cul­ties to deride coun­tries man­i­fest­ing them as ’ ”infe­ri­or;” Ger­man finance min­is­ter Wolf­gang Schauble’s attack on the U.S.

1. The pro­gram begins by not­ing that the aus­ter­i­ty mea­sures cham­pi­oned by Ger­many have exac­er­bat­ed, not helped, the Greek finan­cial cri­sis.

In the run-up to deci­sions to be tak­en at the EU sum­mit, to begin tomor­row in Brus­sels, Greek eco­nom­ic devel­op­ment shows the Euro cri­sis man­age­ment in a mis­er­able light. Athens, which, since last year, has been strict­ly apply­ing the aus­ter­i­ty pro­grams being demand­ed main­ly by Berlin, has been reg­u­lar­ly con­front­ed with pop­u­lar protests. Jour­nal­ists and employ­ees of the local pub­lic trans­porta­tion sys­tem in Athens went on strike just last week. The cuts in wages and pub­lic spend­ing are dri­ving the coun­try ever deep­er into the reces­sion. Just tak­ing the peri­od from the first to the third quar­ter of 2010 — the peri­od from the begin­ning of EU cri­sis inter­ven­tion to its first effects — the rate of shrink­age of the Greek nation­al econ­o­my increased from 0.7 to 5.7 per­cent. Simul­ta­ne­ous­ly, unem­ploy­ment increased sig­nif­i­cant­ly. There is a dis­as­trous devel­op­ment of the nation­al debt. Because of its enor­mous pro­por­tions — about 125 per­cent of the gross domes­tic prod­uct — Berlin and Brus­sels have imposed aus­ter­i­ty mea­sures. The cri­sis mea­sures, mod­eled on Ger­many, are forc­ing up the nation­al debt to near­ly 150 per­cent of the gross domes­tic prod­uct. How this is sup­posed to sta­bi­lize Greece and the Euro is a mys­tery.
The Greek cri­sis was most recent­ly on the agen­da of the March 10 EU sum­mit. At that meet­ing, Greece was able to extract a relax­ation of the con­di­tions for the emer­gency cred­it, need­ed to have avoid­ed nation­al bank­rupt­cy in 2010. The cri­sis cred­it pro­vid­ed Athens by the EU and the IMF amount­ed to 110 bil­lion Euros. Brus­sels pro­longed the peri­od of repay­ment from three to 7.5 years. Athens, in addi­tion, was able to nego­ti­ate a reduc­tion of one-per­cent in the inter­est rate, down to five per­cent. Thanks to these more advan­ta­geous con­di­tions, Greece will be able to save six bil­lion Euros, declared Greece’s Prime Min­is­ter, Gior­gos Papandreou.[1]
As always, Brus­sels’ con­ces­sions came with strings attached. Athens had to oblig­ate itself to impose even more aus­ter­i­ty mea­sures and exten­sive pri­va­ti­za­tions — demands raised repeat­ed­ly espe­cial­ly by Berlin. On the eve of the Brus­sels sum­mit, Chan­cel­lor Angela Merkel laid out, to the Europe Com­mit­tee of the Ger­man Bun­destag, under which con­di­tions Berlin would be in agree­ment to grant “Ger­man sup­port” to Greece.[2] Athens would have to sell pub­lic prop­er­ty and under­take exten­sive pri­va­ti­za­tions, if it is to be grant­ed a low­er inter­est rate for its EU cred­it. The pri­va­ti­za­tion pro­gram, being demand­ed by Berlin and Brus­sels is sup­posed to bring Athens’ nation­al bud­get 50 bil­lion Euros by 2015.[3]
The chan­cel­lor defend­ed these con­ces­sions in the boule­vard press with the argu­ment that it is dan­ger­ous to insist on rapid repay­ment. “If we (...) had insist­ed, it would have only led to new turbulence.”[4] Numer­ous hard­lin­ers in Berlin have crit­i­cized this con­ces­sion sharply. Volk­er Wiss­ing, for exam­ple, the FDP’s finance polit­i­cal spokesper­son, announced resis­tance to the exten­sion of the repay­ment peri­od. “Again buy­ing time, with­out a per­spec­tive of a solu­tion, does not instill con­fi­dence,” said Wissing.[5]
No Con­sol­i­da­tion
At the same time, Greece is devel­op­ing into the clas­sic exam­ple of a coun­try that is being dri­ven into a renewed debt cri­sis through its repeat­ed aus­ter­i­ty pro­grams’ dis­man­tle­ment of social wel­fare mea­sures and cut­backs in gov­ern­ment spend­ing. The cut­backs, forced on the Greek pop­u­la­tion by Brus­sels and Berlin, have done absolute­ly noth­ing to con­sol­i­date their nation­al bud­get. In spite of a com­pre­hen­sive social overkill, which has repeat­ed­ly pro­voked hefty protests, the Greek bud­get deficit was at around nine per­cent of its GDP at the begin­ning of this year, even though a nation­al deficit of 7.4 per­cent was the objec­tive for 2011. This has result­ed from the drop in state income, which, at the begin­ning of the year, was 9.2 per­cent less than one year ear­li­er. At the same time, the state’s expen­di­tures, in spite of all of the cuts, rose by 3.3 percent.[6]
Reces­sion Spi­ral
The gov­ern­men­t’s sink­ing income from tax­es has actu­al­ly been caused by the seri­ous reces­sion Greece is now suf­fer­ing, with 2011 prob­a­bly being its third year. In May 2010, the Greek par­lia­ment passed a ruth­less aus­ter­i­ty pro­gram aimed at low­er­ing the bud­get deficit from around 14 per­cent in 2010 to 2.6 per­cent by 2014. The pro­gram con­tained pro­posed cuts of some 30 bil­lion Euros — or eleven per­cent of the annu­al eco­nom­ic activ­i­ty. In Greece, this has set an eco­nom­ic vicious cir­cle in motion, where the aus­ter­i­ty mea­sures have led to a reduc­tion of domes­tic demand — lead­ing to the per­pet­u­a­tion of the reces­sion. The con­tin­ued loss in gov­ern­ment income in tax­es makes, in its turn, even more aus­ter­i­ty mea­sures nec­es­sary. These con­di­tions make a bud­get con­sol­i­da­tion near­ly impos­si­ble. It is already pre­dictable that due to the con­tin­ued reces­sion, this year’s tar­get of com­ing down to 7.4 per­cent will not be reached.
Down­ward Spi­ral
Over the past few months, the reces­sion in Greece has been becom­ing even more acute. The Greek social eco­nom­ic prod­uct has already been shrink­ing for nine quar­ter­ly peri­ods. Dur­ing the last quar­ter, the coun­try reg­is­tered a drop of 6.6 per­cent of its GDP, in com­par­i­son to the same quar­ter the pre­ced­ing year — a neg­a­tive record in recent eco­nom­ic his­to­ry. Dur­ing the first quar­ter of 2010, the Greek econ­o­my dropped only 0.7 per­cent, in the sec­ond quar­ter — the EU’s cri­sis mea­sures were already get­ting start­ed — the drop was already at 5.1 per­cent and dur­ing the third quar­ter of 2010 the down­ward spi­ral was at 5.7 per­cent (always in com­par­i­son to the same quar­ter one year ear­li­er).
Drops in Wages
This seri­ous col­lapse of the econ­o­my has — in inter­ac­tion with the cuts in gov­ern­ment spend­ing — led to a seri­ous regres­sion in wage lev­els. Dur­ing the third quar­ter of 2010 alone, real employ­ee salaries in Greece sank by an enor­mous 11.02 per­cent in com­par­i­son to the same peri­od the pre­ced­ing year. The cri­sis, which is becom­ing more dynam­ic, is also lead­ing to a rapid rise in unem­ploy­ment. Greece’s rate of unem­ploy­ment was already — in Novem­ber 2009 — at a dou­ble-dig­it 10.6 per­cent. In Novem­ber 2010 the Sta­tis­ti­cal Office in Athens record­ed unem­ploy­ment at 13.9 and in Decem­ber 2010 at 14.8 per­cent — an increase of near­ly one per­cent with­in the course of one month.
Retail­er Crash
The col­lapse in the domes­tic demand, brought on by the reces­sion and the aus­ter­i­ty mea­sures, is also tak­ing on dra­mat­ic pro­por­tions. Retail sales in Greece dropped in Decem­ber 2010 in com­par­i­son to the pre­vi­ous year by a breath-tak­ing 19.2 per­cent, mark­ing also the most seri­ous slump in the recent eco­nom­ic his­to­ry of the coun­try. In com­par­i­son to March 2008 — the eve of the eco­nom­ic cri­sis — Greek retail sales have even sank 27 per­cent. This too is accom­pa­nied by dra­mat­i­cal­ly sink­ing tax resources, pro­pelling the state even deep­er into the cri­sis. As a mat­ter of fact, the Greek state’s com­pos­ite debt at the end of 2010 was at 340.2 bil­lion Euros, rep­re­sent­ing a lev­el of indebt­ed­ness at 248.3 per­cent of the Greek GDP. At the begin­ning of the cri­sis, Greek nation­al debt was “only” at about 125 per­cent of its GDP.
The threat of a new Greek debt cri­sis explains the mar­gin­al con­ces­sions toward Athens, to which Ger­man Chan­cel­lor Merkel declared her agree­ment — against resis­tance from mem­bers of her own coali­tion gov­ern­ment. With these con­ces­sions, Berlin is seek­ing to pre­vent the loom­ing “new tur­bu­lence” in the Euro­zone, because of Athens’ imple­men­ta­tion of the dras­tic cut­backs imposed by Ger­many. In the inter­me­di­ate term, sales from the pub­lic sec­tor, with­in the frame­work of the announced wave of pri­va­ti­za­tions, are sup­posed to pro­hib­it a new bud­getary emer­gency in Greece. It will not be the Greek nation, but, more than any­one else, the com­pa­nies — prob­a­bly also Ger­man — that will be the main ben­e­fi­cia­ries, of this forced pri­va­ti­za­tion. They will be able to pur­chase what had pre­vi­ous­ly been Greek pub­lic prop­er­ty, that Greece now is forced to sell.

“From the Cri­sis, Into the Cri­sis”; german-foreign-policy.com; 3/23/2011.

2. Ger­many’s attempt­ed impo­si­tions upon the soverign­ty of oth­er EU mem­bers has drawn strong crit­i­cism from Euro­pean intel­lec­tu­al cir­cles. Note that some see Ger­many as los­ing inter­est in Europe, as its exports to Asia and Chi­na increase, a loss of inter­est indi­cat­ing that the Euro was a vehi­cle of tem­po­rary eco­nom­ic and polit­i­cal util­i­ty to the Ger­mans, not as a real key to Euro­pean inte­gra­tion.

A Span­ish gov­ern­ment advi­sor has sharply crit­i­cized Ger­man dic­tate in the Euro cri­sis. In a recent press arti­cle, José Igna­cio Tor­re­blan­ca, direc­tor of the Madrid office of the Euro­pean Coun­cil on For­eign Rela­tions (ECFR), declared that some states, “led by Ger­many” are using the cri­sis to impose their eco­nom­ic mod­el on oth­er sov­er­eign EU mem­bers. If this con­tin­ues, the Euro­pean Union will end up being, in the eyes of many Euro­peans, what the Inter­na­tion­al Mon­e­tary Fund was for many Asian and Latin Amer­i­can coun­tries in the 1980s and 1990s: a tool for the impo­si­tion of social­ly dev­as­tat­ing eco­nom­ic mea­sures, risk­ing the “end of Europe.” The Ger­man chan­cel­lor’s demand, yes­ter­day, that Greece and oth­er South­ern Euro­pean coun­tries sig­nif­i­cant­ly raise their retire­ment ages, serves as a con­fir­ma­tion of Tor­re­blan­ca’s crit­i­cism. The expert in Madrid expressed the sus­pi­cion that in light of its boom­ing busi­ness, par­tic­u­lar­ly with Chi­na, the south of Europe is seen as a hin­drance to eco­nom­ic growth, that Berlin is no longer against throw­ing over­board. Tor­re­blan­ca warns against a “new Ger­many,” whose elites are in the process of los­ing their pre­vi­ous inter­est in Europe.
Tor­re­blan­ca’s arti­cle was pub­lished in the week­end edi­tion of El País, Spain’s largest dai­ly and an Eng­lish trans­la­tion is also available.[1] Tor­re­blan­ca is a pro­fes­sor at Madrid’s Uni­ver­si­dad Nacional de Edu­cación a Dis­tan­cia (UNED); he has head­ed the Madrid office of the Euro­pean Coun­cil on For­eign Rela­tions (ECFR) since 2007 and, pre­vi­ous to this appoint­ment, was employed at the Span­ish cap­i­tal’s renowned Elcano Roy­al Insti­tute for Inter­na­tion­al Affairs. In his arti­cle, he shows a great deal of sym­pa­thy for Euro­pean inte­gra­tion — and warns that a pol­i­cy, such as is pro­mot­ed by Ger­many, would be seri­ous­ly detri­men­tal to the EU.
Admi­ra­tion and Jeal­ousy
Tor­re­blan­ca recalls that a mere ten years ago, Euro­pean inte­gra­tion was still in a pow­er­ful upswing. With the Euro, a com­mon cur­ren­cy was intro­duced. With the Lis­bon strat­e­gy, Brus­sels sought, with­in a few years, to become the most dynam­ic eco­nom­ic region in the world. A com­mon for­eign pol­i­cy was ini­ti­at­ed; even in the realm of domes­tic pol­i­cy, fur­ther steps were ini­ti­at­ed toward com­mu­ni­ta­riza­tion, includ­ing the incor­po­ra­tion of East­ern and South­east­ern Euro­pean nations, as well as Cyprus and Mal­ta into the EU. All these activ­i­ties were sup­posed to be crowned with an EU Con­sti­tu­tion, which, even with minor con­ces­sions, but essen­tial­ly iden­ti­cal to the Lis­bon Treaty, could final­ly be passed. At that time, talk of Europe did “not pro­voke weari­ness or indif­fer­ence, but rather admi­ra­tion and even, in Wash­ing­ton, Bei­jing and Moscow, uncon­cealed jealousy.”[2]
Bla­tent­ly Racist
Tor­re­blan­ca con­sid­ers that the pre­vi­ous euphor­ic mood has turned com­plete­ly sour. In numer­ous Euro­pean coun­tries, recent­ly for exam­ple in Swe­den and Fin­land, xeno­pho­bic forces have gained ground in elec­tions; some have crossed the line from xeno­pho­bia to a bla­tant­ly racist dis­course. Tor­re­blan­ca uses the exam­ple of “Thi­lo Sarrazin.”[3] In the dis­course intro­duced by Sar­razin, one speaks of the “infe­ri­or intel­li­gence of Mus­lims” dan­ger­ous­ly evok­ing mem­o­ries of how “the Nazis spoke of Jews, blacks and Slavs as ‘Unter­men­schen’ ” (infe­ri­or human beings). The “val­ues of tol­er­ance and open­ness” are in doubt or even in retreat. The Euro­pean response, in the face of the expul­sion of Roman­ian Gyp­sies from France, was just as weak as that to the excess­es regard­ing free­dom of the press in the Hun­gar­i­an Con­sti­tu­tion or the “harass­ment of irreg­u­lar immi­grants in Italy.” One can “expect lit­tle” from the EU in the form of human­ism.
The IMF Image
Tor­re­bla­ca sharply crit­i­cizes Berlin, in par­tic­u­lar. Some states, “led by Ger­many” are using the Euro cri­sis to impose their eco­nom­ic mod­el on oth­er sov­er­eign EU mem­bers. Those coun­tries hard­est hit are to be forced to com­ply with strin­gent aus­ter­i­ty mea­sures. These “solu­tions” are “pre­sent­ed hand-in-hand with mor­al­iz­ing and con­de­scend­ing preach­ing” — as if the deficit or sur­plus of a coun­try reflect­ed the “moral supe­ri­or­i­ty or infe­ri­or­i­ty of a whole group of human beings.” This ver­sion of the cri­sis must be con­test­ed, writes Tor­re­blan­ca, it “risks the end of Europe.” It threat­ens not only to total­ly stran­gle the nation­al economies in ques­tion (german-foreign-policy.com report­ed [4]) but also dam­age the con­cerned pop­u­la­tion’s per­cep­tion. Because, if the Euro­pean Union only impos­es aus­ter­i­ty pro­grams, it will end up being in the eyes of many Euro­peans, what the Inter­na­tion­al Mon­e­tary Fund was for many Asian and Latin Amer­i­can coun­tries in the 1980s and 1990s: a tool for the impo­si­tion of social­ly dev­as­tat­ing eco­nom­ic mea­sures that lack any demo­c­ra­t­ic legit­i­ma­cy. It could be that this method “works,” but the EU will suf­fer from “a severe demo­c­ra­t­ic and iden­ti­ty deficit,” warns Tor­re­blan­ca.
Pure Colo­nial­ism
As if to pro­vide con­fir­ma­tion of this warn­ing, the Ger­man chan­cel­lor announced Wednes­day that the coun­tries of South­ern Europe must imme­di­ate­ly raise their retire­ment ages. “It is not only a ques­tion,” declared Merkel, “that peo­ple in coun­tries such as Greece, Spain, Por­tu­gal should not go on retire­ment ear­li­er than in Ger­many, but also that every­one must make the same effort.”[5] Berlin has decid­ed to raise the retire­ment age in Ger­many from 65 to 67. The coun­tries in South­ern Europe, accord­ing to Berlin, must fol­low suit. Hefty protests are being raised over this most recent Ger­man med­dling. “That is pure colo­nial­ism,” the pres­i­dent of the Por­tuguese CGTP trade union con­fed­er­a­tion is quot­ed as hav­ing said.[6] At the same time, the Greek gov­ern­ment is giv­ing in to Ger­man pres­sure — and has com­mis­sioned the Deutsche Bank to “advise” it in the pri­va­ti­za­tion of Greek state prop­er­ty. Greece has been forced, pri­mar­i­ly under Ger­man pressure,[7] to pri­va­tize 50 bil­lion Euros worth of state prop­er­ty by 2015.
A New Ger­many
Tor­re­blan­ca expressed the sus­pi­cion that the “new Ger­many” is los­ing inter­est in Europe, not least of all because of its boom­ing busi­ness rela­tions with Asia, par­tic­u­lar­ly with Chi­na. This is rel­a­tiviz­ing the role of the EU — exports to Chi­na are on the verge of sur­pass­ing exports to France [8] — and, in Ger­many, is pro­mot­ing the image of south­ern Europe being a “hin­drance to growth.” Where­as one usu­al­ly is con­front­ed with Euro-skep­ti­cal ten­den­cies among the pop­u­la­tion, in the case of Ger­many, there is also, what could be called “a rebel­lion of the elites,” where the EU no longer plays its pre­vi­ous role in their plans. “Can Europe break apart?” asks Tor­re­blan­ca and answers: “yes, of course it can.” The Span­ish gov­ern­ment advi­sor leaves no doubt about his hold­ing Berlin, in par­tic­u­lar, respon­si­ble for whether a break-up occurs or not. Ger­many, which had pur­sued Euro­pean inte­gra­tion as long as it had served as an instru­ment for attain­ing glob­al play­er status,[9] will decide whether this instru­ment is still use­ful — or if it can be eas­i­ly dis­card­ed.

“Rebel­lion of the Elites”; german-foreign-policy.com; 5/19/2011.

3. Increas­ing­ly, Ger­man hege­mo­ny has become the focal point of broad-based Euro­pean dis­sent. Note Slove­ni­a’s rejec­tion of Ger­man pres­sure to raise its retire­ment age. Note, also, the view­point on the part of many Euro­peans that the EU and the IMF were being seen as play­ing anal­o­gous roles in Europe and the Third World, respec­tive­ly.

The Ger­man aus­ter­i­ty dic­tate is meet­ing grow­ing resis­tance with­in the EU. Fol­low­ing the mass protests in Spain and the most recent hun­dreds of thou­sands demon­strat­ing in Greece, fur­ther activ­i­ties have been announced, which are explic­it­ly aimed at the so-called EU Growth and Sta­bil­i­ty Pact. A new devel­op­ment can be observed par­tic­u­lar­ly in Greece. The Greek cri­sis is the result of a struc­tur­al imbal­ance in the Euro­zone, which has degrad­ed Greece to a sales mar­ket for Ger­man prod­ucts. There­fore Berlin is, to a grow­ing extent, becom­ing the focus of the protests. Accord­ing to the Ger­man-Greek Cham­bers of Indus­try and Com­merce, the pop­u­lar opin­ion that “the Ger­mans are liv­ing at the expense of the Greeks” is wide­spread. Struc­tural­ly, Por­tu­gal and oth­er coun­tries are suf­fer­ing from the same prob­lem as Greece. Accord­ing to Ger­man media, there is a dan­ger that Berlin’s new pub­lic aus­ter­i­ty demands could foment “anti-Ger­man sen­ti­ments from Greece to Por­tu­gal.” Just recent­ly, a Span­ish polit­i­cal advi­sor warned that if Berlin con­tin­ues with its dic­tates, the EU will soon have a rep­u­ta­tion sim­i­lar to that of the IMF, to be an instru­ment for impos­ing com­pul­so­ry eco­nom­ic mea­sures.
Mass Demon­stra­tions
The grow­ing resis­tance to Ger­man hege­mon­ic pol­i­cy is embed­ded in the rein­vig­o­rat­ed social protests in numer­ous Euro­pean coun­tries. The protests in Spain are cur­rent­ly draw­ing most atten­tion, with their hun­dreds of thou­sands par­tic­i­pat­ing in protest camps, and far more than 100,000 tak­ing to the streets on May 15 alone. Numer­ous demon­stra­tions have since fol­lowed in many Euro­pean cap­i­tals, for exam­ple at the Place de la Bastille in Paris, in Brus­sels, Lon­don, Rome, Prague and in Berlin. Strong protests have again been report­ed also in Greece, where on May 25 alone, approx. 50,000 peo­ple demon­strat­ed at Athens’ Syn­tag­ma Square. Last week­end the num­ber of demon­stra­tors had risen to 100,000 and accord­ing to some reports even to sev­er­al hun­dred thou­sands. More protests have already been announced, for exam­ple, a demon­stra­tion against the so-called EU Growth and Sta­bil­i­ty Pact on June 19 in Spain.
The exam­ple of Slove­nia, where last week­end a ref­er­en­dum was held on three draft laws, includ­ing a retire­ment reform bill, demon­strates that not only does resis­tance to this social overkill enjoy wide­spread sup­port, it occa­sion­al­ly achieves polit­i­cal results. Accord­ing to this bill, the retire­ment age is to be raised — from cur­rent­ly 61 (women) and 63 (men) — to 65. Both Berlin and Brus­sels sought to influ­ence the results. Jean-Claude Junker, cur­rent pres­i­dent of the Coun­cil of the Euro­pean Union, called the step “unavoid­able” and Euro­pean Coun­cil Pres­i­dent Her­man Van Rompuy went to Slove­nia two days before the ref­er­en­dum in sup­port of the “yes” camp. Berlin also open­ly inter­vened in Sloven­ian deci­sion-mak­ing. The Slove­ni­ans had tak­en note of what the Ger­man chan­cel­lor had said ear­li­er about peo­ple “not going on retire­ment ear­li­er (...) than in Ger­many in coun­tries such as Greece, Spain, Portugal.”[1] The Ger­man gov­ern­ment also made known in Slove­nia that it con­sid­ers a high­er retire­ment age a “sen­si­ble step towards sus­tain­able financ­ing of social insurance.”[2] Yet Slove­ni­a’s pop­u­la­tion has resist­ed Berlin’s bla­tant inter­fer­ence: in their ref­er­en­dum, near­ly three-fourths have reject­ed the retire­ment reform.
At Greeks’ Expense
In Greece, in par­tic­u­lar, social protests are linked to explic­it expres­sions of hos­til­i­ty towards the Ger­man hege­mon­ic pol­i­cy. Over the past few years, it was Ger­many, more than any oth­er coun­try, which had prof­it­ed from trade with Greece. In fact, up until the intro­duc­tion of the Euro, Athens had main­tained a pos­i­tive trade bal­ance with Ger­many. Only after adopt­ing the Euro, which robbed Greece of its option of a mon­e­tary deval­u­a­tion, and there­by the pro­tec­tion of its enter­pris­es vis à vis the more pow­er­ful Ger­man com­pe­ti­tion, was this rela­tion­ship fun­da­men­tal­ly trans­formed. The press open­ly declares that in the Euro­zone, with its “struc­tur­al imbal­ance” there are states, such as Greece and Por­tu­gal today “that are hard­ly (...) more than sales mar­kets for the export-ori­ent­ed and high-per­for­mance mem­ber states of North­west­ern Europe.”[3] In fact, the Ger­man trade bal­ance sur­plus in com­merce with Greece had already risen to more than 6 bil­lion Euros in 2008. The Greek pub­lic is well aware of these facts, which has trans­formed their expen­di­tures into Ger­man prof­its. The admin­is­tra­tive direc­tor of the Ger­man-Greek Cham­ber of Indus­try and Com­merce in Athens admits: “Kostas Nor­mal Con­sumer, in the mean­time, is con­vinced that the Ger­mans are liv­ing at the expense of the Greeks.”[4]
Anti-Ger­man Sen­ti­ments
Greek resent­ment toward the Ger­man aus­ter­i­ty dic­tate is grow­ing, since Berlin and Brus­sels have forced Greece to pri­va­tize a large part of its state prop­er­ties — par­tic­u­lar­ly to the advan­tage of Ger­man companies.[5] Over the past few days, t‑shirts dis­trib­uted by employ­ees of the OTE tele­phone com­pa­ny bear­ing a swasti­ka and slo­gans against Ger­man hege­mo­ny, have been mak­ing head­lines. The Ger­man com­pa­ny Deutsche Telekom owns a large por­tion of OTE, and Athens has now offered to sell even more. Ger­man media have begun to warn that Berlin’s new, too obvi­ous aus­ter­i­ty demands are apt to “foment anti-Ger­man sen­ti­ments from Greece to Portugal.”[6] Some Greek com­men­ta­tors are refer­ring to the Ger­man chan­cel­lor as a “neo-colo­nial despot.”[7] A rever­sal of this trend is nowhere in sight.
Col­lab­o­ra­tion and Resis­tance
Only recent­ly, a Span­ish polit­i­cal advi­sor warned that if Berlin con­tin­ues with its dic­tates, the EU will soon have a rep­u­ta­tion sim­i­lar to that of the IMF: to be an instru­ment for impos­ing com­pul­so­ry eco­nom­ic measures.[8] But even more dan­ger­ous for Berlin is that par­tic­u­lar­ly in Greece, the pop­u­lar anger is no longer direct­ed sole­ly at the EU, but to a grow­ing degree at Ger­many. In the long run, the hege­mon­ic pow­er will have dif­fi­cul­ty avoid­ing this devel­op­ment in areas under its con­trol. Anger in many Latin Amer­i­can coun­tries is sim­i­lar­ly direct­ed at the Unit­ed States, which, until now, has been able to main­tain its exclu­sive pre­dom­i­nance in large areas of its “back­yard” with the help of coop­er­a­tive cir­cles in the Latin Amer­i­can elite. The cur­rent cri­sis will show whether wide­spread pop­u­lar crit­i­cism of Ger­many, along­side coop­er­a­tive domes­tic elites in the coun­tries of the periph­ery will lead to the devel­op­ment of par­al­lel struc­tures in Europe.

“In the Focus of Protests”; german-foreign-policy.com; 6/10/2011.

4. Paul Krug­man held forth on the dan­gers of defla­tion and the Greek sit­u­a­tion. Again, note that the GOP and the Tea Par­ty are advo­cat­ing for the U.S. what Ger­many is advo­cat­ing for Greece, and that it will not work here, any more than it did in Greece.

The debt cri­sis in Greece is approach­ing the point of no return. As prospects for a res­cue plan seem to be fad­ing, large­ly thanks to Ger­man obdu­ra­cy, ner­vous investors have dri­ven inter­est rates on Greek gov­ern­ment bonds sky-high, sharply rais­ing the country’s bor­row­ing costs. This will push Greece even deep­er into debt, fur­ther under­min­ing con­fi­dence. At this point it’s hard to see how the nation can escape from this death spi­ral into default.

It’s a ter­ri­ble sto­ry, and clear­ly an object les­son for the rest of us. But an object les­son in what, exact­ly?

Yes, Greece is pay­ing the price for past fis­cal irre­spon­si­bil­i­ty. Yet that’s by no means the whole sto­ry. The Greek tragedy also illus­trates the extreme dan­ger posed by a defla­tion­ary mon­e­tary pol­i­cy. And that’s a les­son one hopes Amer­i­can pol­i­cy mak­ers will take to heart.

The key thing to under­stand about Greece’s predica­ment is that it’s not just a mat­ter of exces­sive debt. Greece’s pub­lic debt, at 113 per­cent of G.D.P., is indeed high, but oth­er coun­tries have dealt with sim­i­lar lev­els of debt with­out cri­sis. For exam­ple, in 1946, the Unit­ed States, hav­ing just emerged from World War II, had fed­er­al debt equal to 122 per­cent of G.D.P. Yet investors were relaxed, and right­ly so: Over the next decade the ratio of U.S. debt to G.D.P. was cut near­ly in half, eas­ing any con­cerns peo­ple might have had about our abil­i­ty to pay what we owed. And debt as a per­cent­age of G.D.P. con­tin­ued to fall in the decades that fol­lowed, hit­ting a low of 33 per­cent in 1981.

So how did the U.S. gov­ern­ment man­age to pay off its wartime debt? Actu­al­ly, it didn’t. At the end of 1946, the fed­er­al gov­ern­ment owed $271 bil­lion; by the end of 1956 that fig­ure had risen slight­ly, to $274 bil­lion. The ratio of debt to G.D.P. fell not because debt went down, but because G.D.P. went up, rough­ly dou­bling in dol­lar terms over the course of a decade. The rise in G.D.P. in dol­lar terms was almost equal­ly the result of eco­nom­ic growth and infla­tion, with both real G.D.P. and the over­all lev­el of prices ris­ing about 40 per­cent from 1946 to 1956.

Unfor­tu­nate­ly, Greece can’t expect a sim­i­lar per­for­mance. Why? Because of the euro.

Until recent­ly, being a mem­ber of the euro zone seemed like a good thing for Greece, bring­ing with it cheap loans and large inflows of cap­i­tal. But those cap­i­tal inflows also led to infla­tion — and when the music stopped, Greece found itself with costs and prices way out of line with Europe’s big economies. Over time, Greek prices will have to come back down. And that means that unlike post­war Amer­i­ca, which inflat­ed away part of its debt, Greece will see its debt bur­den wors­ened by defla­tion.

That’s not all. Defla­tion is a painful process, which invari­ably takes a toll on growth and employ­ment. So Greece won’t grow its way out of debt. On the con­trary, it will have to deal with its debt in the face of an econ­o­my that’s stag­nant at best.

So the only way Greece could tame its debt prob­lem would be with sav­age spend­ing cuts and tax increas­es, mea­sures that would them­selves wors­en the unem­ploy­ment rate. No won­der, then, that bond mar­kets are los­ing con­fi­dence, and push­ing the sit­u­a­tion to the brink.

What can be done? The hope was that oth­er Euro­pean coun­tries would strike a deal, guar­an­tee­ing Greek debt in return for a com­mit­ment to harsh fis­cal aus­ter­i­ty. That might have worked. But with­out Ger­man sup­port, such a deal won’t hap­pen.

Greece could alle­vi­ate some of its prob­lems by leav­ing the euro, and devalu­ing. But it’s hard to see how Greece could do that with­out trig­ger­ing a cat­a­stroph­ic run on its bank­ing sys­tem. Indeed, wor­ried depos­i­tors have already begun pulling cash out of Greek banks. There are no good answers here — actu­al­ly, no non­ter­ri­ble answers.

But what are the lessons for Amer­i­ca? Of course, we should be fis­cal­ly respon­si­ble. What that means, how­ev­er, is tak­ing on the big long-term issues, above all health costs — not grand­stand­ing and pen­ny-pinch­ing over short-term spend­ing to help a dis­tressed econ­o­my.

Equal­ly impor­tant, how­ev­er, we need to steer clear of defla­tion, or even exces­sive­ly low infla­tion. Unlike Greece, we’re not stuck with some­one else’s cur­ren­cy. But as Japan has demon­strat­ed, even coun­tries with their own cur­ren­cies can get stuck in a defla­tion­ary trap.

What wor­ries me most about the U.S. sit­u­a­tion right now is the ris­ing clam­or from infla­tion hawks, who want the Fed to raise rates (and the fed­er­al gov­ern­ment to pull back from stim­u­lus) even though employ­ment has bare­ly start­ed to recov­er. If they get their way, they’ll per­pet­u­ate mass unem­ploy­ment. But that’s not all. America’s pub­lic debt will be man­age­able if we even­tu­al­ly return to vig­or­ous growth and mod­er­ate infla­tion. But if the tight-mon­ey peo­ple pre­vail, that won’t hap­pen — and all bets will be off.

“Learn­ing from Greece” by Paul Krug­man; The New York Times; 4/9/2010.

5a. The pro­gram reviews the Euro­pean Mon­e­tary Union as the real­iza­tion of the the­o­ries of Pan-Ger­man the­o­reti­cian Friedrich List.

Writ­ing in 1943, Paul Win­kler fore­saw that the Prus­so-Teu­ton­ics would real­ize their goals through the cre­ation of a Ger­man-dom­i­nat­ed cen­tral Euro­pean eco­nom­ic union (bear­ing a strik­ing resem­blance to today’s Euro­pean Mon­e­tary Union.) One of the prin­ci­pal influ­ences on List’s think­ing was the “con­ti­nen­tal” con­cept of Napoleon, who attempt­ed to eco­nom­i­cal­ly unite Europe under French influ­ence.

“Charles Andler, a French author, summed up cer­tain ideas of List in his work, The Ori­gins of Pan-Ger­man­ism, (pub­lished in 1915.) ‘It is nec­es­sary to orga­nize con­ti­nen­tal Europe against Eng­land. Napoleon I, a great strate­gist, also knew the meth­ods of eco­nom­ic hege­mo­ny. His con­ti­nen­tal sys­tem, which met with oppo­si­tion even from coun­tries which might have prof­it­ed from such an arrange­ment should be revived, but, this time, not as an instru­ment of Napoleon­ic dom­i­na­tion. The idea of unit­ed Europe in a closed trade bloc is no longer shock­ing if Ger­many assumes dom­i­na­tion over such a bloc—and not France. [Empha­sis added.] Bel­gium, Hol­land, Switzer­land, will­ing­ly or by force, will enter this ‘Cus­toms Fed­er­a­tion.’ Aus­tria is assumed to be won over at the out­set. Even France, if she gets rid of her notions of mil­i­tary con­quest, will not be exclud­ed. The first steps the Con­fed­er­a­tion would take to assure uni­ty of thought and action would be to estab­lish a joint rep­re­sen­ta­tive body, as well as to orga­nize a com­mon fleet. But of course, both the head­quar­ters of the Fed­er­a­tion and its par­lia­men­tary seat would be in Ger­many. [Empha­sis added.]”

(The Thou­sand-Year Con­spir­a­cy; by Paul Win­kler; Charles Scribner’s Sons [HC]; 1943; pp. 15–16.)

5b. List’s doc­trine was in full swing dur­ing Ger­many’s pros­e­cu­tion of the First World War:

EXCERPT: . . . . This is a direct trans­la­tion of [Ger­man Chan­cel­lor] Bethman-Hollweg’s inter­nal memo on Germany’s war aims, from Sep­tem­ber 1914. . . .

“. . . . We must cre­ate a cen­tral Euro­pean eco­nomic asso­ci­a­tion through com­mon cus­toms treaties, to include France, Bel­gium, Hol­land, Den­mark, Aus­tria-Hun­gary, Poland and per­haps Italy, Swe­den and Nor­way. This asso­ci­a­tion will not have any com­mon con­sti­tu­tional supreme author­ity and all its mem­bers will be for­mally equal, but in prac­tice will be under Ger­man lead­er­ship and must sta­bi­lize Germany’s eco­nomic dom­i­nance over ‘Mid­dle Europe’ . . .”

“WW1 Cen­te­nary — His­tor­i­cal Revi­sion In British Gov­ern­ment Cir­cles”; Ger­many Watch; 6/11/2013.

6a. The Lis­t­ian mod­el was put into effect by the Third Reich, as can be gleaned by read­ing Dorothy Thompson’s analy­sis of Germany’s plans for world dom­i­nance by a cen­tral­ized Euro­pean eco­nomic union. Ms. Thomp­son was writ­ing in The New York Her­ald Tri­bune on May 31, 1940! Her com­ments are repro­duced by Tetens on page 92.

. . . . The Ger­mans have a clear plan of what they intend to do in case of vic­tory. I believe that I know the essen­tial details of that plan. I have heard it from a suf­fi­cient num­ber of impor­tant Ger­mans to cred­it its authen­tic­ity . . . Germany’s plan is to make a cus­toms union of Europe, with com­plete finan­cial and eco­nomic con­trol cen­tered in Berlin. This will cre­ate at once the largest free trade area and the largest planned econ­omy in the world. In West­ern Europe alone . . . there will be an eco­nomic uni­ty of 400 mil­lion per­sons . . . To these will be added the resources of the British, French, Dutch and Bel­gian empires. These will be pooled in the name of Europa Ger­man­i­ca . . .

“The Ger­mans count upon polit­i­cal pow­er fol­low­ing eco­nomic pow­er, and not vice ver­sa. Ter­ri­to­r­ial changes do not con­cern them, because there will be no ‘France’ or ‘Eng­land,’ except as lan­guage groups. Lit­tle imme­di­ate con­cern is felt regard­ing polit­i­cal orga­ni­za­tions . . . . No nation will have the con­trol of its own finan­cial or eco­nomic sys­tem or of its cus­toms. [Ital­ics are mine–D.E.] The Naz­i­fi­ca­tion of all coun­tries will be accom­plished by eco­nomic pres­sure. In all coun­tries, con­tacts have been estab­lished long ago with sym­pa­thetic busi­ness­men and indus­tri­al­ists . . . . As far as the Unit­ed States is con­cerned, the plan­ners of the World Ger­man­ica laugh off the idea of any armed inva­sion. They say that it will be com­pletely unnec­es­sary to take mil­i­tary action against the Unit­ed States to force it to play ball with this sys­tem. . . . Here, as in every oth­er coun­try, they have estab­lished rela­tions with numer­ous indus­tries and com­mer­cial orga­ni­za­tions, to whom they will offer advan­tages in co-oper­a­tion with Ger­many. . . .

Ger­many Plots with the Krem­lin; T.H. Tetens; Hen­ry Schu­man [HC]; 1953; p. 92.

6b. The Euro­pean Eco­nom­ic Com­mu­ni­ty was for­mal­ly artic­u­lat­ed by Reich offi­cials dur­ing the war, with the clear design to extend and ampli­fy the arrange­ment after the war. Below, we quote Gus­tave Koenigs, Sec­re­tary of State at a 1942 con­fer­ence about the Euro­pean Eco­nom­ic Com­mu­ni­ty.

. . . At the moment the so-called “Euro­pean Eco­nom­ic Com­mu­ni­ty” is not yet fact; there is no pact, no organ­i­sa­tion, no coun­cil and no Gen­er­al Sec­re­tary. How­ev­er, it is not just a part of our imag­i­na­tion or some dream by a politi­cian — it is very real. . . .

. . .  Its roots are in the eco­nom­ic co-oper­a­tion of the Euro­pean nations and it will devel­op after the war into a per­ma­nent Euro­pean eco­nom­ic com­mu­ni­ty. . . .

Europais­che Wirtschafts Gemein­schaft (Euro­pean Eco­nom­ic Community–translation).

7a. Com­pare the poten­tial loss of Greek sov­er­eign­ty with Ms. Thomp­son’s pro­jec­tions from 1940.

Euro­pean lead­ers are nego­ti­at­ing a deal that would lead to unprece­dent­ed out­side inter­ven­tion in the Greek econ­o­my, includ­ing inter­na­tion­al involve­ment in tax col­lec­tion and pri­vati­sa­tion of state assets, in exchange for new bail-out loans for Athens.

Peo­ple involved in the talks said the pack­age would also include incen­tives for pri­vate hold­ers of Greek debt vol­un­tar­i­ly to extend Athens’ repay­ment sched­ule, as well as anoth­er round of aus­ter­i­ty mea­sures. . .

“Greece Set for Severe Bail-Out Con­di­tions” by Peter Spiegel, Quentin Peel and Ralph Atkins; Finan­cial Times; 5/29/2011.

7b. Inter­est­ing­ly, the Ger­man finance min­is­ter (Wolf­gang Schauble) has attacked U.S. eco­nom­ic pol­i­cy, quan­ti­ta­tive eas­ing in par­tic­u­lar.

Ger­many has put itself on a col­li­sion course with the U.S. over the glob­al econ­o­my, after its finance min­is­ter launched an extra­or­di­nary attack on poli­cies being pur­sued in Wash­ing­ton.

Wolf­gang Schauble accused the U.S. of under­min­ing its pol­i­cy mak­ing cred­i­bil­i­ty, increas­ing glob­al eco­nom­ic uncer­tain­ty and of hypocrisy over exchange rates. The U.S. eco­nom­ic growth mod­el was in a “deep cri­sis,” he also warned over the week­end. . . .

“Ger­many Attacks US Eco­nom­ic Pol­i­cy” by Ralph Atkins in Frank­furt; Finan­cial Times; 11/7/2010.



15 comments for “FTR #746 Greek Tragedy”

  1. Inter­est­ing pro­gram as always, Dave.
    BTW, are you going to cov­er the prob­lems in Syr­ia any­time soon? Things are start­ing to look bad over there....... =(

    Posted by Steven | June 27, 2011, 9:47 pm
  2. dave-you were rail­ing against the cre­ation of the ‘euro’ TEN years ago. looks like things have come home to roost-just as you said.

    Posted by steve i | June 28, 2011, 2:26 am
  3. Dave Emory is one of the very few humans that I respect and one of the very few that I look up to. His ded­i­ca­tion to dis­clo­sure and mak­ing the truth avail­able to all is hon­or­able beyond mea­sure.

    Posted by Joshua Laudermilk | July 3, 2011, 12:40 pm
  4. @Josh: I feel the same way. If only there were more like him, more peo­ple would know the truth about how things are run in the world today..........

    Posted by Steven | July 3, 2011, 1:34 pm
  5. [...] et moné­taires qui ont lieu à l’intérieur de l’Union Européenne. Écoutez cette dernière émis­sion du chercheur anti-fas­ciste Dave Emory pour vous en ren­dre compte. J’en prof­ite aus­si pour [...]

    Posted by La dernière idiotie en date d’Amir Khadir: Israel dominerait la Grèce grâce à un chantage financier… | lys-dor.com | July 10, 2011, 6:35 pm
  6. [...] of Dave Emory’s last shows deals with the Greek tragedy, the mod­ern one, relat­ed to its finan­cial and eco­nom­i­cal sit­u­a­tion. [...]

    Posted by Greek Tragedy and the Rape of Europe: When myth and reality collide | lys-dor.com | July 25, 2011, 10:14 am
  7. Great show Dave! You and your lis­ten­ers may find this of inter­est:


    Why the Euro can­not sur­vive with Ger­many at its cen­tre
    Ger­man Eco­nom­ic Pol­i­cy and the Euro 1999 — 2010

    Draws some of the same con­clu­sions as your pro­gramme.

    “The Euro has effec­tive­ly become a Ger­man cur­ren­cy empire which is drain­ing the resources of the Eurozone’s small­er economies.”

    Posted by ce399 | September 7, 2011, 4:02 pm
  8. Posted by ce399 | October 4, 2011, 3:33 pm
  9. [...] FTR #746 Greek Tragedy [...]

    Posted by Compendium of Information on Greece the Corporate and Fake Left (@democracynow @TheNation) Media Ignore « ce399 | research archive (fascism) | February 14, 2012, 9:09 am
  10. Anoth­er Mis­sion Accom­plished!!:

    News Analy­sis
    Portugal’s Debt Efforts May Be Warn­ing for Greece
    Pub­lished: Feb­ru­ary 14, 2012

    LISBON — As debt-plagued Greece strug­gles to meet Europe’s strict terms for receiv­ing its next round of bailout mon­ey, the les­son of Por­tu­gal might bear watch­ing.

    Unlike Greece, Por­tu­gal is a debtor nation that has done every­thing that the Euro­pean Union and the Inter­na­tion­al Mon­e­tary Fund have asked it to, in exchange for the 78 bil­lion euro (about $103 bil­lion) bailout Lis­bon received last May.

    And yet, by the broad­est mea­sure of a country’s abil­i­ty to repay its debts, Por­tu­gal is going deep­er into the hole.

    The ratio of Portugal’s debt to its over­all econ­o­my, or gross domes­tic prod­uct, was 107 per­cent when it received the bailout. But the ratio has grown since then, and by next year is expect­ed to reach 118 per­cent.

    That’s not nec­es­sar­i­ly because Portugal’s over­all debt is grow­ing, but because its econ­o­my is shrink­ing. And econ­o­mists say the same vicious cir­cle could be tak­ing hold else­where in Europe.

    Two oth­er close­ly watched coun­tries on the debt list, Spain and Italy, also have ris­ing debt-to‑G.D.P. ratios — even though they, like Por­tu­gal, have adopt­ed the bud­get-slash­ing and tax-rais­ing mea­sures that the Euro­pean offi­cials and the I.M.F. con­tin­ue to pre­scribe.

    And on Tues­day, new fig­ures showed that the Greek econ­o­my shrank even more than expect­ed last year, as Greece strug­gles under ever heav­ier aus­ter­i­ty demands by its Euro­pean lenders.


    Posted by Pterrafractyl | February 14, 2012, 8:42 pm
  11. “We have a new kind of occu­pa­tion in Europe by the Ger­mans” — Zoe Geor­gan­ta

    “We have a new kind of occu­pa­tion in Europe by the Ger­mans,” Geor­gan­ta told Real FM radio, adding that Ger­man offi­cials at Euro­stat put pres­sure on the gov­ern­ment to inflate the 2009 deficit to jus­ti­fy harsh aus­ter­i­ty mea­sures.



    “Unfor­tu­nate­ly for all of us, Greece’s deficit in 2009 was 15.4 per­cent of GDP as was offi­cial­ly announced by Euro­stat and ELSTAT,” Papa­con­stan­ti­nou said in a state­ment.

    “Let’s under­stand the dire sit­u­a­tion the coun­try faced instead of fab­ri­cat­ing cheap and easy con­spir­a­cy-type excus­es for the absolute fis­cal derail­ment we expe­ri­enced,” Papa­con­stan­ti­nou added.

    Posted by MK-OPRAH | June 16, 2012, 12:51 pm
  12. It may not be par­tic­u­lar­ly sur­pris­ing, but it’s still shock­ing: The euro­zone’s “bailout” strat­e­gy for Cyprus appears to involve induc­ing bank runs:

    Seek­ing Alpha
    Cyprus Seizure Is Dawn Of Euro­pean Bank Run
    Nicholas Par­di­ni
    Mar 18 2013, 05:01

    The big news over the week­end was that Euro­pean Union offi­cials forced a tax on deposits of 6.75 per­cent on all bank accounts with amounts less than 100,000 euros and 9.9 per­cent for accounts above that. There will also be a bank­ing hol­i­day for the next two days on the island. Although Cyprus’s econ­o­my is a tiny frac­tion (0.25%) of the Euro­pean econ­o­my, the prece­dent set from this deposit is cat­a­stroph­ic to the sta­bil­i­ty of the euro­zone. Bank runs with­in Europe and the col­lat­er­al dam­age caused by this will be enough to restore the Euro­pean debt cri­sis along with its adverse effect on mar­kets.

    More impor­tant­ly than the actu­al amount of mon­ey seized from the mea­sure is the prece­dent set by the will­ing­ness of Euro­peans to retroac­tive­ly tax deposits to pro­tect bond­hold­ers. As of the writ­ing of this col­umn, there is still a chance that the Cypri­ot par­lia­ment may soft­en or reject this levy entire­ly. How­ev­er, any rever­sal of this pol­i­cy in the near term hard­ly makes a dif­fer­ence. By even con­sid­er­ing the option of direct wealth tax­a­tion, Brus­sels has shat­tered the con­fi­dence of the Euro­pean bank­ing sys­tem.

    Why would any depos­i­tor risk hold­ing their mon­ey in a euro-denom­i­nat­ed bank? Inter­est rates do not offer any real yield and with the high debt lev­els on sov­er­eign bal­ance sheets and under­cap­i­tal­ized bank­ing sys­tems, there is no rea­son to assume that any coun­try’s bank is safe from deposit con­fis­ca­tion. Indi­vid­u­als’ risk of los­ing 6–10% of sav­ings with­out notice far out­weigh any con­ve­nience of a domes­tic bank account. In addi­tion wealthy indi­vid­u­als can eas­i­ly move enough mon­ey to US dol­lar, pound, or Swiss franc denom­i­nat­ed bank accounts who do not have the same cur­ren­cy con­ta­gion risks.

    On top of this, Brus­sels is look­ing to pass laws that force strug­gling coun­tries to accept bailouts. If prob­lems with Italy or Spain’s bank­ing sys­tem per­sist beyond a point accept­able to Ger­man cred­i­tors, sim­i­lar bailout terms to Cyprus can be thrust onto these peo­ple with­out any recourse.


    It’s also worth remind­ing our­selves that Cyprus’s finan­cial cri­sis is direct­ly linked to its bank­ing sec­tor’s hold­ings of Greek bonds. If at first you don’t suc­ceed, try, try again.

    Posted by Pterrafractyl | March 18, 2013, 3:59 pm
  13. With the pro­posed tax on Cypri­ot bank depos­i­tors to finance a bailout con­tin­u­ing to make waves around the euro­zone’s finan­cial mar­kets, here’s an unfor­tu­nate reminder that the junk eco­nom­ic the­o­ries that dom­i­nate Ger­many’s polit­i­cal dis­course have bipar­ti­san sup­port for dam­ag­ing bailouts:

    Finan­cial Times
    March 18, 2013 6:32 pm
    Cyprus shows Ger­man line is hard­en­ing

    By Quentin Peel in Berlin

    When news of the Cyprus bailout trick­led through to Berlin on Sat­ur­day morn­ing, bear­ing with it the poten­tial­ly alarm­ing news that bank depos­i­tors would be “bailed-in” to share the cost, the Ger­man reac­tion was very pos­i­tive.

    Politi­cians from both left and right agreed that with­out such a deal, the res­cue would not have a hope of win­ning approval in the Bun­destag. Wolf­gang Schäu­ble, finance min­is­ter, had done a good job, they admit­ted.

    At €10bn, it is a far small­er pro­gramme than pre­vi­ous ones for Greece, Ire­land and Por­tu­gal. But the Ger­man body politic is pret­ty well unit­ed in insist­ing that a bail-in of cred­i­tors must be part of any bailout by tax­pay­ers.

    Some mis­giv­ings have now emerged about the bur­den falling on savers in Cyprus, and not just on the big depos­i­tors with more than €100,000 in the bank. But the under­ly­ing prin­ci­ple of bur­den-shar­ing is not in ques­tion.

    This time round, how­ev­er, it is the oppo­si­tion Social Demo­c­ra­t­ic par­ty that has been mak­ing the run­ning in set­ting tough con­di­tions for the res­cue pro­gramme, and not hard­line mem­bers of Angela Merkel’s rul­ing cen­tre-right coali­tion.


    The idea of a “hair­cut” for unin­sured depos­i­tors came from the SPD. It also insist­ed that cor­po­ra­tion tax should be increased from the min­i­mal rate of 10 per cent, and Cyprus should join Ger­many, France and oth­er euro­zone coun­tries in intro­duc­ing a finan­cial trans­ac­tion tax.

    On Mon­day, Sig­mar Gabriel, SPD chair­man, ruled out once again any use of the €500bn Euro­pean Sta­bil­i­ty Mech­a­nism to recap­i­talise Cypri­ot banks direct­ly – the only real alter­na­tive to the levy on deposits. It would be “ille­gal” accord­ing to the ESM law approved in the Bun­destag, he said. Only once a ful­ly fledged bank­ing union was in effect, with strict com­mon bank­ing super­vi­sion, might any change in the law be con­tem­plat­ed.

    It is elec­tion­eer­ing, up to a point. Pre­vi­ous­ly, Ms Merkel has won broad pop­u­lar sup­port by com­bin­ing a pro-Euro­pean stance with strict insis­tence on bailout con­di­tions to pro­tect Ger­man tax­pay­ers: sol­i­dar­i­ty in exchange for solid­i­ty. It has left no room for manoeu­vre for the SPD.

    In 2011, Peer Stein­brück, now SPD chal­lenger for Ms Merkel’s job, and Frank-Wal­ter Stein­meier, par­lia­men­tary leader, pub­lished a joint arti­cle in the Finan­cial Times call­ing for lim­it­ed use of euro­zone bonds to ease the debt cri­sis. Last year, Mr Gabriel backed a sim­i­lar idea for “mutu­al­is­ing” debt, by set­ting up a debt redemp­tion fund.


    If the elec­tion were to pro­duce a “grand coali­tion” of SPD and Ms Merkel’s Chris­t­ian Demo­c­ra­t­ic Union in Sep­tem­ber – still math­e­mat­i­cal­ly the most like­ly out­come – the future gov­ern­ment is not like­ly to ease any bailout con­di­tions for its part­ners. Sol­i­dar­i­ty in exchange for solid­i­ty will still be the nation­al slo­gan.

    And here’s a reminder that the poten­tial of a wors­en­ing Cyprus bank­ing cri­sis that could spread to the larg­er euro­zone result­ing from the pro­posed “depos­i­tor tax” is still high:

    The Dai­ly Beast
    Cyprus on Fire? Blame the Ger­man Bul­lies.
    by Daniel Gross Mar 19, 2013 3:58 PM EDT
    The island nation des­per­ate­ly needs a bailout, and Germany’s harsh terms are only mak­ing things worse. Daniel Gross on the euro zone’s cru­el and unusu­al pun­ish­ment

    Over the week­end, the coun­try seemed poised to grab a chunk of every bank depos­i­tors’ account to help fund a bailout from the Euro­pean Union and the IMF. Cypri­ots, not sur­pris­ing­ly, react­ed with fury. On Tues­day, the country’s Par­lia­ment reject­ed the mea­sure, and the finance min­is­ter resigned—except his res­ig­na­tion wasn’t accept­ed. In a scene out of what may be Nico­las Cage’s next movie, Eng­land sent a mil­i­tary plane loaded with one mil­lion euros in cash to dis­pense to U.K. mil­i­tary per­son­nel on the island. Rus­sians, whose deposits helped Cyprus’s for­mer­ly Lil­liput­ian bank­ing sys­tem to swell to Brob­d­ing­na­gian pro­por­tions, flew south to vis­it their mon­ey.

    There are so many cul­prits to blame for Cyprus’s fis­cal dis­or­der: Cypri­ot bankers and gov­ern­ment offi­cials, Russ­ian depos­i­tors, Euro­pean bank­ing reg­u­la­tors, and Greece. (Cyprus banks are suf­fer­ing in part because they own a lot of now-deval­ued Greek gov­ern­ment debt and because they made loans to Greek com­pa­nies.) But in cast­ing blame, we shouldn’t hes­i­tate to look north as well.


    This script has been fol­lowed, with sub­tle vari­a­tions, in Ire­land, Greece, and Spain. In the case of Cyprus, Germany’s dis­re­gard for some pret­ty fun­da­men­tal prin­ci­ples of bank­ing insur­ance and fair­ness is glar­ing. “Fate of island depos­i­tors was sealed in Ger­many,” read the head­line on a great tick-tock piece in the Finan­cial Times on Mon­day by Peter Spiegel. Before a cru­cial sum­mit meet­ing last Fri­day night, Cyprus’s lead­ers had appar­ent­ly agreed in prin­ci­ple to Germany’s demand that bank depos­i­tors should foot some of the bill for the rescue—depositors with under 100,000 euros would pay a 3.5 per­cent levy, while those with more than 100,000 would pay 7 per­cent. But Ger­man Finance Min­is­ter Wolf­gang Schauble report­ed­ly insist­ed on a sig­nif­i­cant­ly high­er lev­el. And if Cyprus refused to do so, it would find it near­ly impos­si­ble to access emer­gency fund­ing for its strug­gling banks. That led to the pro­pos­al of a 6.75 per­cent levy on accounts under 100,000 euros and a 9.9 per­cent tax on accounts above 100,000 euros—which was reject­ed today.


    Posted by Pterrafractyl | March 19, 2013, 2:29 pm
  14. [...] In so many posts and pro­grams, we have dis­cussed and ana­lyzed the EMU/EU as the embod­i­ment and real­iza­tion of Ger­man plans for Euro­pean and world con­quest. It is beyond the scope of this arti­cle to [...]

    Posted by Telling It like It Is: VERY Powerful, Accurate Words from Former Moody’s Vice-Chairman about German “Clausewitzian” Economic Policy toward Europe | The Freedom Report | July 30, 2013, 2:03 pm
  15. This arti­cle involves a plan issued by the Ger­man Eco­nom­ic Min­is­ter, Peter Alt­maier, called a “Nation­al Indus­tri­al Strat­e­gy 2030. The plan is both pro­tec­tion­ist and involves state sup­port and inter­ven­tion for tar­get­ed indus­tries. The plan is to cre­ate “Nation­al and Euro­pean cham­pi­ons” to com­pete with the U.S. and Chi­na. He wants busi­ness­es to be freed from tax, oth­er state con­tri­bu­tions and “bureau­crat­ic restric­tions.”. The plan specif­i­cal­ly iden­ti­fied Siemens as “an exist­ing cham­pi­on” and a poten­tial tar­get for state sup­port. (unstat­ed in the arti­cle was that this was a for­mer key Nazi com­pa­ny).

    The main points of the plan that will result in a con­cen­tra­tion of eco­nom­ic pow­er being sup­port­ed by the state.

    Ger­many reveals plan to stop for­eign takeovers
    Econ­o­my Min­is­ter Peter Alt­maier had already been forced to defend his “Nation­al Indus­tri­al Strat­e­gy 2030” even before offi­cial­ly unveil­ing the details. Crit­ics have accused him of heavy-hand­ed state inter­ven­tion­ism.

    Ger­many’s econ­o­my min­is­ter, Peter Alt­maier, on Tues­day offi­cial­ly launched a con­tro­ver­sial plan aimed at devel­op­ing the coun­try’s indus­tri­al sec­tor and increas­ing its inter­na­tion­al com­pet­i­tive­ness in tech­nol­o­gy and inno­va­tion.

    Though it was the first time Alt­maier ful­ly detailed the “Nation­al Indus­try Strat­e­gy 2030,” some key points had pre­vi­ous­ly been revealed to the Ger­man media the pre­vi­ous week, prompt­ing the min­is­ter to take the defen­sive against claims of pro­tec­tion­ism and intru­sive state inter­ven­tion.
    Plan 2030’s main points
    The state must sup­port inno­va­tion and help bring key tech­nolo­gies to Ger­many and Europe while reduc­ing busi­ness costs from new envi­ron­men­tal and social poli­cies.

    Com­pe­ti­tion law must be over­hauled to facil­i­tate com­pa­ny merg­ers in spe­cif­ic sit­u­a­tions when a larg­er com­pa­ny could bet­ter com­pete at a glob­al lev­el.

    Ger­man or Euro­pean com­pa­nies should be encour­aged to take over key tech­nol­o­gy com­pa­nies up for pur­chase.

    In “excep­tion­al sit­u­a­tions” the state must be allowed to par­tial­ly nation­al­ize such a busi­ness in order to avoid takeover by a for­eign investor.

    An invest­ment fund would be cre­at­ed in order to sup­port these par­tial state takeovers, which would be of lim­it­ed dura­tion.
    Indus­try should make up 25 per­cent of Ger­many’s eco­nom­ic val­ue by 2030, up from 23.4 per­cent today, and 20 per­cent of the EU’s by this same date.  
    Read more: Ger­many pre­pares law for for­eign takeovers

    Alt­maier’s key state­ments
    New “nation­al and Euro­pean cham­pi­ons” need to be cre­at­ed in order to com­pete with Chi­na and the US, Alt­maier, a mem­ber of Angela Merkel’s con­ser­v­a­tive CDU par­ty, said in Berlin.

    In a world of rapid tech­no­log­i­cal devel­op­ment, who­ev­er con­trols these new tech­nolo­gies has a chance “to be at the front of the pack,” while those who “sleep through [these changes] will become the work­shop exten­sions of oth­ers,” he said.
    Read more: Ger­many launch­es dig­i­tal strat­e­gy to become arti­fi­cial intel­li­gence leader

    Crit­i­cism from mul­ti­ple sides
    The econ­o­my spokesper­son for the busi­ness-friend­ly Free Democ­rats (FDP), Rein­hard Houben, described Alt­maier’s plan as “a planned econ­o­my at the end of the day” and called for busi­ness­es to be freed from tax, oth­er state con­tri­bu­tions and “bureau­crat­ic restric­tions.”
    The Left­’s par­ty head, Bernd Riexinger, accused Alt­maier of fail­ing to act in the inter­est of soci­ety and com­pla­cent­ly hand­ing over more pow­er to cor­po­ra­tions.

    Anton Hofre­it­er, the head of the par­lia­men­tary group for the envi­ron­men­tal­ly friend­ly Greens, who cur­rent­ly sit in the oppo­si­tion, said, “instead of blow­ing up large com­pa­nies into cor­po­ra­tions, the gov­ern­ment should pro­fess its adher­ence to clear eco­log­i­cal and social goals.”

    How did the plan come about?
    Alt­maier said that the 2016 acqui­si­tion of Ger­man robot­ics mak­er Kuka by a Chi­nese com­pa­ny had left a last­ing impres­sion on him.
    The 2030 plan also specif­i­cal­ly named Siemens as “an exist­ing cham­pi­on” and a poten­tial tar­get for state sup­port. The Ger­man tech and indus­try con­glom­er­ate want­ed to merge its rail oper­a­tions with those of France’s Alstom in order to rival com­peti­tors includ­ing Chi­na’s CRRC. The Euro­pean Union Com­mis­sion is expect­ed to deny the merg­er on Wednes­day.

    What hap­pens now?
    Alt­maier will now dis­cuss his nation­al strat­e­gy with rep­re­sen­ta­tives from pol­i­tics, busi­ness, trade orga­ni­za­tions and unions. The expect­ed out­come is a new indus­tri­al strat­e­gy that would then be adopt­ed by the Ger­man gov­ern­ment.

    cmb/aw (AFP, Reuters, dpa, AP)

    Posted by Mary Benton | February 8, 2019, 4:35 pm

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