Greece Asks Troika For Moon

Time Means Money

By MIKE SHEDLOCK

It will be interesting to see how long the coalition in Greece will last after Germany shoots down Bailout Easing Proposals by Greece to ....

       ·         Cut the VAT
·         Freeze layoffs
·         Extend timeline to reduce its deficit by two years
·         Recapitalize lenders
·         Provide more help for the unemployed
·         Accelerate payments to providers of government services.

Bloomberg reports Greece Seeks at Least Two-Year Extension to Bailout Goals noting that: 

"New Democracy, Pasok and the Democratic Left agree that plans to cut 150,000 public-sector jobs should be scrapped."

Loosening of Pledges Unacceptable
The coalition parties (New Democracy, Pasok, Democratic Left) can agree to whatever they want. They may as well agree the moon is made of green cheese while requesting slices on a platter.

Second thoughts of an environmentalist

Global warming smoke dreams 

Fritz Vahrenholt, one of Germany's earliest green energy investors, is not convinced that humanity is causing catastrophic global warming.

By Fritz Vahrenholt

Scientists of the Intergovernmental Panel on Climate Change (IPCC) are quite certain: by using fossil fuels man is currently destroying the climate and our future. We have one last chance, we are told: quickly renounce modern industrial society – painfully but for a good cause.

For many years, I was an active supporter of the IPCC and its CO2 theory. Recent experience with the UN's climate panel, however, forced me to reassess my position. In February 2010, I was invited as a reviewer for the IPCC report on renewable energy. I realised that the drafting of the report was done in anything but a scientific manner. The report was littered with errors and a member of Greenpeace edited the final version. These developments shocked me. I thought, if such things can happen in this report, then they might happen in other IPCC reports too.

Black people will remain poor for ever

The Other Side of Socialism

An eloquent indictment of the primary destructive principle of socialism and social welfare – dependency and the entitlement mindset.

Red Plenty

Inside the Fifties’ Soviet Dream

“The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe.”

                                                 - by Mikhail Gorbachev

By Francis Spufford

Cultural historian Francis Spufford’s Red Plenty is a novel about the reform of the planned economy in the Soviet Union during the years of the Khrushchev thaw. It is one of the oddest books written about economics—a fictional approach peopled by computer researchers, planning bureaucrats, Communist Party apparatchiks, and factory managers. While fact and fiction in Red Plenty can initially be difficult for the reader to distinguish, the fictional parts breathe life into the economic reasoning. The author provides an extensive set of notes explaining the historical facts and also where his poetic license diverges from them.

The Future of Money and the Death of Banks

The present fiat money economy is ripe for some Schumpeterian ‘creative destruction’.

by DETLEV SCHLICHTER

UK Chancellor George Osborne and Bank of England Governor Mervin King last week announced another round of fiscal and monetary stimulus measures, including steps to ease the funding for banks and allow them to extend more loans.

If these measures were hoped to instil confidence they must be classified as a failure. We have lived through quite a few years of unprecedented and fairly persistent monetary accommodation and occasional rounds of QE by now, and I doubt that yet another dose of the same medicine will cause great excitement. Furthermore, observers must get confused as to what our most pressing problems really are. Have we not had a real banking crisis in the UK in 2008 because banks were over-extended and in desperate need of balance sheet repair? Is a period of deleveraging and a rebuilding of capital ratios not urgently required and unavoidable? Let’s not forget that the government is still a majority-owner of RBS and holds a large chunk of Lloyds-TSB. If banks are still on life-support from the taxpayer and the central bank, is it wise to already prod them to expand their balance sheets again and create more credit to ‘stimulate’ growth?

Europe 1-2-3

The Simplification of Europe

“Paying attention to simple little things that most men neglect makes a few men rich.”

                           -Henry Ford

by Mark Grant

I am under no delusion nor are they my audience; nothing that I write will change much of anything for the public and so I am not passing out knowledge at the supermarket. There are a few of you however that pay attention not to who I am but to what I think. Europe has become so complicated and so riddled with the obtuse and the fractured that I thought I would take some time today to try to simplify the process. All of my life I have listened to economists, who always seem to want to make things more and not less complicated to make themselves sound more intelligent I have always supposed, and I have read research reports that offered forty pages of excuses mostly in an attempt to sell you something. To be perfectly honest; I have never found either of these tacts useful. I would guess that ninety-five percent of what I write is to warn you away from the pitfalls and very occasionally I think something is of interest and might be useful and I point it out. The point of my commentary is to try to keep you out of trouble which is an increasingly difficult task these days as the European Union is the most confusing government on Earth bar none.

An Austrian Defense of the Euro

An Almost Golden Currency

by Jesus Huerta de Soto

1. Introduction: The Ideal Monetary System

Theorists of the Austrian School have focused considerable effort on elucidating the ideal monetary system for a market economy. On a theoretical level, they have developed an entire theory of the business cycle that explains how credit expansion unbacked by real saving and orchestrated by central banks via a fractional-reserve-banking system repetitively generates economic cycles. On a historical level, they have described the spontaneous evolution of money and how coercive state intervention encouraged by powerful interest groups has distanced from the market and corrupted the natural evolution of banking institutions. On an ethical level, they have revealed the general legal requirements and principles of property rights with respect to banking contracts, principles that arise from the market economy itself and that, in turn, are essential to its proper functioning.[1]

All of the above theoretical analysis yields the conclusion that the current monetary and banking system is incompatible with a true free-enterprise economy, that it contains all of the defects identified by the theorem of the impossibility of socialism, and that it is a continual source of financial instability and economic disturbances. Hence, it becomes indispensable to profoundly redesign the world financial and monetary system, to get to the root of the problems that beset us and to solve them. This undertaking should rest on the following three reforms:

1.   the reestablishment of a 100 percent reserve requirement as an essential principle of private-property rights with respect to every demand deposit of money and its equivalents;

2.   the abolition of all central banks (which become unnecessary as lenders of last resort if reform 1 above is implemented, and which as true financial central-planning agencies are a constant source of instability) and the revocation of legal-tender laws and the always-changing tangle of government regulations that derive from them; and

3.   a return to a classic gold standard, as the only world monetary standard that would provide a money supply that public authorities could not manipulate and that could restrict and discipline the inflationary yearnings of the different economic agents.[2]

What’s next…

Nearly every western nation on the planet is insolvent

by Simon Black

One of the things that’s really unique about this part of the world, Esthonia, is having access to so many people with first-hand experience of living under Soviet rule.

It’s a bizarre thing to say, but the stories they have to tell are extraordinary.

Last night I had dinner with some friends, including one woman who was just a child at the end of World War II.

She explained to me that her family had been wealthy landowners near the capital city… until the Soviet-controlled government came in, confiscated all of their property, and shipped the adults off to Siberia.

“There were so many opportunities to leave beforehand,” she explained, ”but they just never thought things would ever get that bad here. Everyone saw what happened in other countries, but my family never expected that it would happen to them.”

While most people probably aren’t going to end up in Siberia anytime soon, the lesson is still valuable.

It’s easy to look around the world and think “It can’t happen here. It won’t happen here.” But this is really foolish thinking.

Governments steal, then spend, other people’s money with reckless abandon. They conjure paper currency out of thin air, rob the future earnings of generations which have not even been born, and create mind-numbing barriers to real growth.

These are not people who can be trusted to do the right thing.

Here in Europe, the Greek government is helping itself to its citizens’ bank accounts; the Italian government is working with banks to freeze customers out of their accounts without warning.

Europe Still Doesn’t Get It

The Continent’s latest solution points back to the problem—the euro itself.

βυ NICOLE GELINAS

Europe faces withered economies and double-digit unemployment rates from Ireland to Italy. Now, after yet another summit, Europe’s wise men and women have hit upon yet another fix. This time, they’re pushing universal deposit insurance across the Eurozone, in which the people of any nation in trouble would be bailed out by people in other euro nations: Spanish bank depositors, for example, would pay for rescues of Greek bank depositors if Greek banks failed, and vice versa. The new idea, like many before it, ignores the problem at the root of the European crisis: the euro itself.

Greece, Spain, and others are in trouble because they—and their banks—borrowed so much money so recklessly during the boom years. Global money managers thought these nations’ euro membership made investment in their debt a sure thing. Strong countries like Germany, the thinking went, would never countenance defaults on government or big-bank debt issued in the common currency. Easy money, in turn, allowed much of Europe to avoid hard questions on unaffordable retirement benefits and inflexible labor markets.

When the bust came, the euro fetters compounded the problem. Fifty years ago, a country like Greece would have dealt with a debt burden by printing up more money to pay off bonds in cheaper drachmas. The subsequent fall in the value of the Greek currency would have encouraged foreigners to buy Greek products and to visit Greece, ameliorating the country’s economic contraction. Of course, such a solution wouldn’t have been good for Greek savers, and it would present tremendous risks if carried too far.

We’re mortgaging the future of the younger generation'

If young Americans knew what was good for them, they would all be in the Tea Party

Just say no: the young can unwittingly argue against their own long-term economic interest.
 If young Americans knew what was good for them, they would all be in the Tea Party. 

Uncontrolled public debt threatens to rupture society as the older generation thrives at the expense of the young.

By Niall Ferguson

Critics of Western democracy are right to discern that something is amiss with our political institutions. The most obvious symptom of the malaise is the huge debts we have managed to accumulate in recent decades, which (unlike in the past) cannot largely be blamed on wars.

According to the International Monetary Fund, the gross government debt of Greece this year will reach 153 per cent of GDP. For Italy the figure is 123, for Ireland 113, for Portugal 112 and for the United States 107.

Britain’s debt is approaching 88 per cent. Japan – a special case as the first non-Western country to adopt Western institutions – is the world leader, with a mountain of government debt approaching 236 per cent of GDP, more than triple what it was 20 years ago.

Often these debts get discussed as if they themselves were the problem, and the result is a rather sterile argument between proponents of “austerity” and “stimulus”. I want to suggest that they are a consequence of a more profound malaise.

The heart of the matter is the way public debt allows the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn. In this regard, the statistics commonly cited as government debt are themselves deeply misleading, for they encompass only the sums owed by governments in the form of bonds.

Dithering Europe is heading for the democratic dark ages

A Greek economy run by Brussels will ignore the lessons of history, leading to more misery.

By Boris Johnson

It is one of the tragic delusions of the human race that we believe in the inevitability of progress. We look around us, and we seem to see a glorious affirmation that our ruthless species of homo is getting ever more sapiens. We see ice cream Snickers bars and in vitro babies and beautiful electronic pads on which you can paint with your fingertip and – by heaven – suitcases with wheels! Think of it: we managed to put a man on the moon about 35 years before we came up with wheelie-suitcases; and yet here they are. They have completely displaced the old type of suitcase, the ones with a handle that you used to lug puffing down platforms.

Aren’t they grand? Life seems impossible without them, and soon they will no doubt be joined by so many other improvements – acne cures, electric cars, electric suitcases – that we will be strengthened in our superstition that history is a one-way ratchet, an endless click click click forwards to a nirvana of liberal democratic free-market brotherhood of man. Isn’t that what history teaches us, that humanity is engaged in a remorseless ascent?

On the contrary: history teaches us that the tide can suddenly and inexplicably go out, and that things can lurch backwards into darkness and squalor and appalling violence. The Romans gave us roads and aqueducts and glass and sanitation and all the other benefits famously listed by Monty Python; indeed, they were probably on the verge of discovering the wheely-suitcase when they went into decline and fall in the fifth century AD.

Conservatism Is Not an Ideology

And America is a country, not a creed.

By PATRICK J. BUCHANAN

In introducing his new book, Leo Strauss and the Conservative Movement in America, Paul Gottfried identifies a fundamental divide between neoconservatives and the traditional right. The divide is over the question: What is this nation, America?

Straussians, writes Gottfried, “wish to present the construction of government as an open-ended rationalist process. All children of the Enlightenment, once properly instructed, should be able to carry out this … task.”

For traditional conservatives, before the nation is born, ”ethnic and cultural preconditions” must exist. All “successful constitutional orders,” he writes, “are the expressions of already formed nations and cultures.”

To the old right, America as a nation and a people already existed by 1789. The Constitution was the birth certificate the nation wrote for itself, the charter by which it chose to govern itself. The real America had been born in men’s hearts by the time of Lexington and Concord in 1775.

In a recent issue of Modern Age, Jack Kerwick deals with this divide.

Ministry of [Un]Truth

Stop listening to them Now

By Eric Sprott

Speaking at a Brussels conference back in April 2011, Eurogroup President Jean Claude Juncker notably stated during a panel discussion that "when it becomes serious, you have to lie." He was referring to situations where the act of "pre-indicating" decisions on eurozone policy could fuel speculation that could harm the markets and undermine their policies' effectiveness.¹ Everyone understands that the authorities sometimes lie in order to promote calm in the markets, but it was unexpected to hear such a high-level official actually admit to doing so. They're not supposed to admit that they lie. It is also somewhat disconcerting given the fact that virtually every economic event we have lived through since that time can very easily be described as "serious". Bank runs in Spain and Greece are indeed "serious", as is the weak economic data now emanating from Europe, the US and China. Should we assume that the authorities have been lying more frequently than usual over the past year?

When former Fed Chairman Alan Greenspan denied and down-played the US housing bubble back in 2004 and 2005, the market didn't realize how wrong he was until the bubble burst in 2007-2008. The same applies to the current Fed Chairman, Ben Bernanke, when he famously told US Congress in March of 2007 that "At this juncture… the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained."² They weren't necessarily lying, per se, they just underestimated the seriousness of the problem. At this point in the crisis, however, we are hard pressed to believe anything uttered by a central planner or financial authority figure. How many times have we heard that the eurozone crisis has been solved? And how many times have we heard officials flat out lie while the roof is burning over their heads?

Once there was a stigma to going on the dole

Food Stamp Fiasco

“The Senate refuses to cut $20 billion out of $770 billion”.

By WSJ Editors

The next time someone moans about Washington "austerity," tell them about the Senate's food stamp votes on Tuesday. Democrats and a few Republicans united to block even modest reform in a welfare program that has exploded in the last decade and is set to spend $770 billion in the next 10 years.

Yes, $770 billion on a single program. And you wonder why the U.S. had its credit-rating downgraded?

When the food stamp program began in the 1970s, it was designed to help about 1 of 50 Americans who were in severe financial distress. But thanks to eligibility changes first by President George W. Bush as part of the 2002 farm bill and then by President Obama in the 2008 stimulus, food stamps are becoming the latest middle-class entitlement.

A record 44.7 million people received food stamps in fiscal 2011, up from 28.2 million as recently as 2008. The cost has more than doubled in that same period, to $78 billion, and is on track to account for 78% of farm bill spending over the next decade. One in seven Americans now qualifies.

Once there was a stigma to going on the dole, and it was seen as a last resort. But now the Agriculture Department runs radio and TV ads prodding people to get the free food, as in a recent campaign that says food stamps will help you lose weight. A federal website boasts about strategies that have "increased program participation" with special emphasis on Hispanics because "our data show that many low-income Latinos simply don't apply for [food stamps] even though they're eligible."

In the 1990s Bill Clinton boasted that welfare reform took Americans off the dole. The Obama Administration boasts about how many it has added.

You Can Lose Freedom Only Once

“Europe has crossed its peak.”

By Wolf Richter  

Poor Angela Merkel. The beleaguered German Chancellor just can’t catch a break. She has already committed hundreds of billions of German taxpayer euros to bailing out collapsing Eurozone countries, or at least their bondholders, which would be the ECB, various German and French banks, and the other usual suspects. In return, she wants these countries to live within their means and restructure their economies so that the bailouts would not have to continue ad inifinitum. While the ECB’s printing press—though it’s not supposed to have one—could solve the debt crisis in one fell swoop after the model of the US, Japan, the UK, and Zimbabwe, it would create a host of problems that Germans would rather avoid. Hence bailouts in return for structural reforms and efforts to whittle budget deficits down to some “sustainable level.”

Sounds reasonable. And yet, these laudable efforts have landed her in the company of Axis-of-Evil perpetrators and other maligned characters, according to the British magazine New Statesman, and it doesn’t appear to be, though it reads like, British humor:

Which world leader poses the biggest threat to global order and prosperity? The Iranian President, Mahmoud Ahmadinejad? Wrong. Israel’s Prime Minister, Binyamin Netanyahu? Nope. North Korea’s Kim Jong-un? Wrong again. The answer is a mild-mannered opera fan and former chemist who has been in office for seven years. Yes, step forward, Chancellor Angela Merkel....

And it came with this awesome Terminator-inspired cover art, which does, however, have certain humorous aspects:

Tinker Bell Economics in Europe

Truth is always politically painful after years of illusion

by Gary North

If you have seen the stage version of Peter Pan, you know the scene in which the audience is asked to clap if they want Tinker Bell to live. It's time.

Janet Daley wrote a provocative essay in London's The Telegraph on the day before the Greek election (June 16). She did her best to explain why the eurozone is in crisis. Europe's leaders are living in an illusion of their own making.

She began with what should be obvious to the financial markets by now. By entering into the eurozone, the politicians surrendered control over the money supply.

The problem is not that politicians surrendered control over the money supply. It is that they surrendered it to the European Central Bank. They should have surrendered it to the free market.

The politicians of Europe asserted control over the international money market in 1914, when they abandoned the international gold standard. They set the precedent. Everything that has followed has been one fiat money crisis after another. But only Austrian School economists teach this. In Europe, bureaucratic control over money has run the show ever since 1999.

The economy is now beyond the control of national governments, and therefore outside the remit of democratic politics. It has become truly global, and thus a law unto itself; nation states have gone broke in their attempt to feed its gargantuan appetites for consumption and debt.

Who owns you

Quote for the Day

“The free man owns himself. He can damage himself with either eating or drinking; he can ruin himself with gambling. If he does he is certainly a damn fool, and he might possibly be a damned soul; but if he may not, he is not a free man any more than a dog.”

                                                                  ~G.K. Chesterton

Abandoning Ship

The Eurozone Is Failing At An Accelerating Rate

by Alasdair Macleod

It will be no surprise to readers that the news coming out of the Eurozone just gets worse and worse. The reality is that Ireland, Portugal, Spain, Italy, Belgium, Greece, and France (in no particular order) are all in debt traps from which there is no escape. A debt trap is sprung when bankruptcy becomes the only outcome. With corporations, this usually becomes readily apparent and directors are forced by law to stop trading, but countries conceal this reality by printing money. Otherwise there is no difference in the two cases, despite what politicians and neoclassical economists would have us believe. This is why we are painfully aware that the Eurozone is in trouble, since nation states are unable to cover and conceal their obligations by printing money, having surrendered this role to the European Central Bank (ECB).

The ECB is meant to be independent of politics and political pressures. But the reality facing any central banker is that s/he cannot stand by and let politicians drown in their own mess. The politicians know this, and it's what is behind current attempts to move away from austerity towards Keynesian growth. The plea is exactly the same as that of the spendthrift who tells his bank manager that the only chance he has of getting his money back is to increase the overdraft to allow him to trade his way out of difficulty.

So the ECB knows, in its role as bank manager, that the argument is flawed. But unlike spendthrift individuals, politicians have real power, and the ECB has an ultimate responsibility not to upset the apple cart. And that is why the election of a new socialist French president is important. President Hollande is leading the charge away from austerity in Europe, and he has powerful allies, including President Obama in his own election year.

The greenest thing we can do is innovate

The Julian Simon Lecture

By Matt Ridley

It is now 32 years, nearly a third of a century, since Julian Simon nailed his theses to the door of the eco-pessimist church by publishing his famous article in Science magazine: “resources, population, environment: an oversupply of bad news”. It is also 40 years since The Limits to Growth and 50 years since Silent Spring, plenty long enough to reflect on whether the world has conformed to Malthusian pessimism or Simonian optimism.

Before I go on, I want to remind you just how viciously Simon was attacked for saying that he thought the bad news was being exaggerated and the good news downplayed. Verbally at least Simon’s treatment was every bit as rough as Martin Luther’s. Simon was called an imbecile, a moron, silly, ignorant, a flat-earther, a member of the far right, a Marxist. “Could the editors have found someone to review Simon’s manuscript who had to take off his shoes to count to 20?” said Paul Ehrlich.

Erhlich together with John Holdren then launched a blistering critique, accusing Simon of lying about electricity prices having fallen. It turned out they were basing their criticism on a typo in a table, as Simon discovered by calling the table’s author. To which Ehrlich replied: “what scientist would phone the author of a standard source to make sure there were no typos in a series of numbers?”

Answer: one who likes to get his facts right.

Greece Is A Monty Python Skit

Nothing will ever change in Greece

The new Greek cabinet ready for action

By Jeff Harding

It just keeps getting worse in Greece. With the leaders of the eurozone all exhaling after the election of “centrist” Antonis Samaras, thinking that maybe the Greeks will toe the line set by the Germans, they learn who the new Greek finance minister is:

"Antonis Samaras, the Greek centre-right leader, has made a surprise appointment to the post of finance minister, choosing a career public servant with a close knowledge of the country’s finances and a radical leftwing past.

Vassilios Rapanos will take the key finance portfolio and may attend to­day’s Luxembourg meeting of eurozone finance ministers. …

The Master Narrative Nobody Dares Admit

Centralization Has Failed

By Charles Smith

All centralized systems, open and shadow alike, act as heavy taxes on the society and economy. This is why they cannot compete with the forces of networked decentralization.

The primary "news" narrative may be the failure of the euro, but the master narrative is much, much bigger: centralization has failed. The failure of Europe's "ultimate centralization project" is but a symptom of a global failure of centralization.

Though many look at China's command-economy as proof that the model of Elite-controlled centralization is a roaring success, let's check in on China's stability and distribution of prosperity in 2021 before declaring centralization an enduring success. The pressure cooker is already hissing and the flame is being turned up every day.

What's the key driver of this master narrative? Technology, specifically, the Internet. Gatekeepers and centralized authority are no match for decentralized knowledge and decision-making. Once a people don't need to rely on a centralized authority to tell them what to do, the centralized authority becomes a costly impediment, a tax on the entire society and economy.

In a cost-benefit analysis, centralization once paid significant dividends. Now it is a drag that only inhibits growth and progress. The Eurozone is the ultimate attempt to impose an intrinsically inefficient and unproductive centralized authority on disparate economies, and we are witnessing its spectacular implosion.

The moralistic, Malthusian war against fat people

This degraded depiction of human beings is really about morally indicting people for the original sins of eating and breeding

by Frank Furedi 

Sometimes, I hear something on a news programme that catches me unaware and makes me think: ‘Surely this is an Ali G spoof?’

It is early Monday morning and a professor from the London School of Hygiene and Tropical Medicine is on BBC Radio 4’s Today programme, holding forth on the danger that human beings’ weight gain presents to the survival of the planet. ‘Having a heavy body is like driving a Range Rover’, he argues, with passion and conviction. Before you can even catch your breath, he is warning of the catastrophic things that will occur when ‘we are all as fat’ as people in America. After lecturing listeners about the need to factor people’s ‘body mass’ into all debates about the environment, he pauses and then reminds us again that fatness is an ‘ecological not just a health concern’.

I look across the breakfast table, and my wife affirms my suspicion that this must indeed be an Ali G moment. But alas, a few minutes later, the twenty-first-century equivalent of a Trollope-like, worldly cleric, the weight-conscious priest Giles Fraser, is on the air to give his ‘thought for the day’. He, too, is morally weighed down by the problem of body mass. His little homily on sustainability is on-message in this Ali G world of ours. When I hear him say that ‘bigger is not always better’, it becomes clear why theology is in trouble. But when he finishes by saying ‘economic growth is like getting fat’, I slowly start to realise that this is more than just a bad joke…

Greece Alone and Broke -- Again

History was never kind to the loud and proud but vulnerable Greeks

By Victor Davis Hanson 

The recent indecisive Greek elections could be summed up by two general themes: Greeks want to stay in, and expect help from, the eurozone. But they still do not want to take the necessary medicine to stop borrowing billions of euros from northern Europeans, who want a radical Greek reform of the tax code, deregulation of labor laws, fiscal discipline, massive cuts in bureaucracy, and greater transparency -- all unlikely given Greek history and contemporary culture.

So what lies in the future for Greece as it is slowly eased out of the eurozone and its civilization goes into reverse?

In theory, with the ability to devalue the drachma and be freed of enormous debts, the Greeks could return to business as it was practiced in the 1970s. In those sleepy days before the massive transfers of northern European money, I lived in a Greece that was a Balkan backwater without advanced surgery, autobahns, suspension bridges, sleek subways or a modern airport. In that era of genteel poverty, Greek divorce, abortion, drug use and crime were rare. Now, all are commonplace. Rural Greece outside Athens was more Middle Eastern than European.

How both right and left have infantilised Greece

The Greek election wasn’t a clash of visions but a competition between alternative forms of responsibility avoidance

by Brendan O’Neill 

Last weekend’s elections in Greece were depicted as a massive ideological punch-up of the sort we no longer see very often in politically bland Europe. On one side there were anti-EU leftists like SYRIZA, railing against Angela Merkel and her stringent bailout plans, and on the other side more right-leaning parties, who insisted that austerity is the only solution for deeply indebted Greece. Meanwhile outside of Greece, everywhere from Berlin to London, there was a seemingly sweeping divide between pro-EU people telling Greece it had to embrace austerity, and anti-EU people suggesting Greece should reject the bailout package and give Brussels the finger.

Yet for all the fantasies about a return of Politics with a capital P, the most striking thing was how much the two sides in the election debate shared in common. Both inside Greece and outside it, on both the right and left, in both the pro- and anti-EU camp, the overriding political instinct among all protagonists and observers was to infantilise Greece, to treat it as a hapless child. The right and the Brussels brigade did it by depicting Greece as an immature entity incapable of governing its economic affairs. And the left and the anti-Brussels brigade did it by painting Greece as the pitiable victim of ‘other people’s hubris’. These alternative forms of national infantilisation reveal a lot about what is wrong with the politics of the EU and with what now passes for being ‘anti-EU’.

In the Brussels set and also among right-wing political observers, there has long been a tendency to denounce Greece as unfit for governance, especially economic governance. The Greeks, in contrast to Germans, are a bit too feckless, emotional and corrupt to do economics properly, we’re told. In the run-up to the elections, one economic magazine reported that German officials and Brussels bigwigs, speaking anonymously, describe Greece as a ‘broken bureaucracy… incapable of implementing decisions taken at the top’. In short, it’s a wilful child, which needs clear rules and occasionally a firm slap from Mother Merkel and other outsiders in order to keep it chugging along.

Krugman’s Greek Temple of Keynesianism

The elephant in the living room

by William L. Anderson

A lot of people have weighed in on the Greek Morality Play, better known as the collapse of Greece's economy, and there is no shortfall of "wisdom" and advice. (For that matter, I made comments myself on the Greek situation during an interview on the RT network last March.)

Not surprisingly, Paul Krugman has weighed in again, and this time he not only claims that the problem is not enough inflation, but also deliberately ignores the real problem behind much of the Greek collapse: Greece's notorious and "bloated" (to use a term from Krugman's employer, the New York Times) bureaucracies led by its militant public employee unions. Instead, Krugman sets up other straw men and then claims that if only – If Only! – the Germans would crank up the monetary printing presses, Greece could be saved.

Before going into specifics, I would like to point out that Krugman is correct when he notes that a single currency union of many states indeed does impose certain fiscal restrictions. The examples he uses for the United States are dishonest, and even when explaining the European currency union, he does not tell the whole story, lapsing, instead, into his usual spate of accusations coupled with his demands for more inflation. (And, yes, I will explain my point later in this piece.)