Moon of Alabama Brecht quote
July 07, 2015

Countdown To Grexit

The Greek referendum seemed to have given some push towards a compromise. But the powers that rule the Euro did not agree. The European Central Bank continues to starve the Greek banks. In a few days they will be toast and a Greek exit from the Euro will be inevitable. That seems to be what the hardliners in Berlin around the psychopathic Finance Minister Schaeuble want to achieve.

The Greek Prime Minister Tzirpas managed to get the backing of the people and most other political parties for a compromise offer. But the promises he made before the referendum already fall apart. The banks did not reopen, a deal is not in sight and given the fast deterioration of the real economy the situation will soon be immensely more difficult.

He will have to answer questions. Why can't he present a written proposal in Brussels today as he promised to do? Why hasn't he anticipated the assault on the banks by the ECB and the powers behind it? Why hasn't he prepared for an exit from the Euro? Why was there no scenario planning anticipating the current situation?

The German media and politicians have villainized the Greek so much, based on crude propaganda a denial of the on facts, that a Grexit seems to be the now favored public opinion in Germany. The public opinion in other northern and eastern European countries is very much the same. People do not want to "give more money to the Greek" even though hardly any money was given to them so far. What was given in taxpayer guarantees was given to German and French banks. The consequences of a Grexit seem to be beyond the realm of discussions.

Supporting some partial debt jubilee now, hardly noticeable when stretched over decades, and giving the Greek economy the ability to grow out of debt would be much cheaper for European taxpayers than a complete Greek default which will trigger the payment of hundreds of billions of guarantees. With an exit from the Euro such a default is very likely. Greece would then have no debt at all. It could again borrow from maybe Russia and other sources who would be happy to make some money lending to a then nearly debt free country.

On top of the catastrophic results of a five years austerity program the carnage in Greece from a hasty, unplanned bankruptcy and exit from the Euro would be huge. But the example of other cases of state bankruptcy show that the recovery is usually quite fast and the long term possibilities much more favorable than the slow death a continued austerity program would guarantee.

(I am still under an unusual workload but the end is in sight.)

Posted by b on July 7, 2015 at 12:19 PM | Permalink

Comments
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Two left Greek economists who should be read by all are costas lapavitsas and stathis kouvelakas. Both profs in the UK.

Posted by: John | Jul 7, 2015 12:53:20 PM | 1

i enjoyed hoarsewhisperer's post on the last thread -
Interesting tweet over at Xymphora...

Shafik Mandhai
‏@ShafikFM

The money Greece owes, $370 billion, compared to the taxpayer-funded bailouts banks got...

Citigroup - Citigroup $2.513 Trillion
Morgan Stanley - $2.041 Trillion
Merrill Lynch - $1.949 Trillion
Bank of America - $1.344 Trilliom
Barclays PLC - $868 Billion
Bear Sterns - $853 B
Goldman Sachs - $814 B
Royal Bank of Scotland - $541 B
JP Morgan Chase $391 B
Deutche Bank - $354 B
UBS - $287 B
Credit Suisse - $262 B
Lehman Bros - $183 B
Bank of Scotland - $181 B
BNP Paribas - $175 B
Wells Fargo - $159 B
Dexia - $159 B
Wachovia - $142 B
Dresdner Bank - $135 B

Posted by: Hoarsewhisperer | Jul 6, 2015 11:22:25 PM | 160

Posted by: james | Jul 7, 2015 1:03:49 PM | 2

Why the Greek elite doesn't want Grexit

Posted by: nmb | Jul 7, 2015 1:04:25 PM | 3

Joseph Stiglitz usa today article from today.. "Most bailouts (for instance, the Mexican bailout) are not bailouts of the country but of the Western banks who didn't do adequate due diligence. It could be nice that the German and other European governments bailed out their banks (though whether that is good policy is another matter); but the Greeks rightly asked, why it should be done so much on their backs."

Posted by: james | Jul 7, 2015 1:17:28 PM | 4

James @4: Did the moron give the answer?

Posted by: Comrade X | Jul 7, 2015 1:25:41 PM | 5

The German media and politicians have villainized the Greek so much, based on crude propaganda a denial of the on facts, that a Grexit seems to be the now favored public opinion in Germany. The public opinion in other northern and eastern European countries is very much the same.

Qui bono?

"The imposition of the euro had one true goal: To end the European welfare state." Maybe it needed a push?

Posted by: Comrade X | Jul 7, 2015 1:35:10 PM | 6

Thanks james #2 & Horsewhisperer,

Yeah, kind of puts it into perspective doesn't it. The $370 billion the predatory-mob-owned-banks suckered Greece for after the economic hit men sold them the Brooklyn Bridge that now got issued back to them vs the upward of $10 Trillion the American regular joe taxpayer got hoodwinked for. The Greeks hit back against the corporate welfare state. About time someone stood up to the international syndicate.

Posted by: juannie | Jul 7, 2015 1:52:36 PM | 7

Thanks james #2 & Horsewhisperer,

Yeah, kind of puts it into perspective doesn't it. The $370 billion the predatory-mob-owned-banks suckered Greece for after the economic hit men sold them the Brooklyn Bridge that now got issued back to them vs the upward of $10 Trillion the American regular joe taxpayer got hoodwinked for. The Greeks hit back against the corporate welfare state. About time someone stood up to the international syndicate.

Posted by: juannie | Jul 7, 2015 1:52:36 PM | 8

Recent History.

Papandreou in 2011 wanted to program a referendum to refuse the bail-out. It was known (easy) that the Greeks would vote OXI, clear as day. (As in the vote last week.) The ‘institutions’ convinced Papandreou to not do it, or he capitulated, or was never serious about it, who knows.

BBC article, Nov 2011, Paul Mason, details the consequences of the referendum (had it taken place), and actually outlines the future a bit. Yes, pretty much what did go down in 2015. The same arguments, discussions points, themes.

Greek referendum is coin-flip on euro exit.

http://www.bbc.com/news/business-15539350

Private debt was shunted to the public. The Guardian, for ex. (April 2015) lists the massive debts and hides who the creditors are (except for some well know names like IMF) and hints that Greece does not want to pay:

http://tinyurl.com/pfed8wm

The Council on Foreign Relations (hardly to be taxed with a pro-Gr. or left attitude), July 2015:

Greece Fallout: Italy and Spain Have Funded a Massive Backdoor Bailout of French Banks one page.

http://blogs.cfr.org/geographics/2015/07/02/greecefallout/

> See the nos. for France and who holds Greek bonds today.

Grexit is now possible, or at least not as dangerous as in 2011. Which was all planned, of course.

Posted by: Noirette | Jul 7, 2015 2:33:26 PM | 9

In 2011, because the EU had not yet prepared for Grexit, Greece would have had far more bargaining power after an OXI vote in a referendum.

Posted by: lysias | Jul 7, 2015 2:40:03 PM | 10

b:

FYI, Yves Smith at nakedcapitalism.com claims that almost all of the debt is non-dischargeable (because it is made under a legal regime that makes discharge virtually impossible). She also points out that 'odious debt' is a term that has not yet been recognized by courts as a means of discharging debts.

RBS did a study, however, that agrees with your assessment. They estimated that the cost to the Eurozone of a GRexit is about 220bm Euro vs. 130bn to keep Greece in the Eurozone (writing down debt, etc.).

Notably, EU countries that have not adopted the Euro are doing fine. And Greece deposits of natural gas have reported to have been discovered in Greek waters (which doesn't seem to get talked about much). With that and other commercial opportunities, I'd think that they would recover from a GRexit fairly quickly.

Posted by: Jackrabbit | Jul 7, 2015 2:40:28 PM | 11

Note: I say "Yves Smith ... claims..." because it's hard for me to trust what she writes with respect to Greece.

Posted by: Jackrabbit | Jul 7, 2015 2:49:29 PM | 12

claims that almost all of the debt is non-dischargeable (because it is made under a legal regime that makes discharge virtually impossible).

Yes, the last (center-right) govt passed a law to that effect. I don't know if the Syriza coalition has changed it...?

Posted by: okie farmer | Jul 7, 2015 2:53:46 PM | 13

But the example of other cases of state bankruptcy show that the recovery is usually quite fast and the long term possibilities much more favorable than the slow death a continued austerity program would guarantee.

Fuckin' A right! Never give up! Never surrender! Damn the resonance cannons! Full speed ahead!

Posted by: Some Guy | Jul 7, 2015 2:57:36 PM | 14

Noirette @9,
Hasn't this transfer and redistribution of debt largely come about by the EFSF and ESM (which the CFR post appears to neglect)? Greece was "too big to fail" so the Italians and Spanish had to be "bailed in" to ensure their misdirection.

What fucking crapitalist abuses we must endure.

Posted by: Comrade X | Jul 7, 2015 2:59:03 PM | 15

U.S. common law may not recognize odious debts, but it does recognize the idea of unconscionable contracts, which a court may refuse to enforce:

Unconscionability (known as unconscionable dealing/conduct in Australia) is a doctrine in contract law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience. Typically, an unconscionable contract is held to be unenforceable because no reasonable or informed person would otherwise agree to it. The perpetrator of the conduct is not allowed to benefit, because the consideration offered is lacking, or is so obviously inadequate, that to enforce the contract would be unfair to the party seeking to escape the contract.

Unconscionability is determined by examining the circumstances of the parties when the contract was made, such as their bargaining power, age, and mental capacity. Other issues might include lack of choice, superior knowledge, and other obligations or circumstances surrounding the bargaining process. Unconscionable conduct is also found in acts of fraud and deceit, where the deliberate misrepresentation of fact deprives someone of a valuable possession. When a party takes unconscionable advantage of another, the action may be treated as criminal fraud or the civil action of deceit.

Posted by: lysias | Jul 7, 2015 3:04:15 PM | 16

The evil German elites have an overall plan but more recently in reaction to a Greek democratic vote as well as a nation not willing to fully submit to its domination, by using the tactic of starvation and depredation to force a greater surrender of Greece's sovreignity, humanity and wealth. Hi again is only one food, but you must hyenas want subjugation and human souls to consume.

German and other European elites will now wait on the sidelines while Greeks starve to death in greater numbers, which the European elites a criminally complicit in. That waiting game will be a PR tactic lie, to try to convince idiots of the belief that they can wash the evil European elites hands from the upcoming humanitarian disaster.

Posted by: tom | Jul 7, 2015 3:21:11 PM | 17

That's hyenas want only food, but human hyensas...

Posted by: tom | Jul 7, 2015 3:22:56 PM | 18

Yeah, except both German compradors and the supposedly baying German proles are trained hyenas,

Posted by: Comrade X | Jul 7, 2015 3:27:03 PM | 19

"The German media and politicians have villainized the Greek so much, based on crude propaganda a denial of the on facts, that a Grexit seems to be the now favored public opinion in Germany. The public opinion in other northern and eastern European countries is very much the same."

The only reason for this is so they can enjoy watching 'the Greeks' suffer - they think Tispras will come begging, publically for their "psychopathic" (quite so) "deal"...I hardly wish for more suffering of the Greek people but leaving behind the EU is the only way forward...The EU exists only to facilitate the superexploitaion of the European working classes.

Posted by: psakiwacky | Jul 7, 2015 3:36:50 PM | 20

@jackrabbit @12

Yes I agree 100% ..'Yves Smith' is a fairly reliable defender of finance capital and the globalism status quo , and has been particularly shrill WRT Greece.

Posted by: psakiwacky | Jul 7, 2015 3:41:12 PM | 21

psakiwacky: "The only reason for this is so they can enjoy watching 'the Greeks' suffer". No, the motive of the German media is a factor and the Germans' own suffering under crapitalism is a factor.

Abuse likes company. This is how crapitalists spread the blame, by getting compradors to project punishment for fraudulent moral reasons.

It's a dated fantasy that the ejecta of the EU will automatically thrive.

Posted by: Comrade X | Jul 7, 2015 3:49:08 PM | 22

176 victimes of the bombings in the last 24 hours in Yemen
what Yemen?

Posted by: Mina | Jul 7, 2015 4:01:49 PM | 23

The Greek Vote and the EU Miscalculation

Geopolitical Weekly
July 7, 2015 | 08:00 GMT

By George Friedman

In a result that should surprise no one, the Greeks voted to reject European demands for additional austerity measures as the price for providing funds to allow Greek banks to operate. There are three reasons this should have been no surprise. First, the ruling Coalition of the Radical Left, or Syriza party, is ruling because it has an understanding of the Greek mood. Second, the constant scorn and contempt that the European leadership heaped on the prime minister and finance minister convinced the Greeks not only that the scorn was meant for them as well but also that anyone so despised by the European leadership wasn't all bad. Finally, and most important, the European leadership put the Greek voters in a position in which they had nothing to lose. The Greeks were left to choose between two forms of devastation — one that was immediate but possible to recover from, and one that was a longer-term strangulation with no exit.

The Europeans' Mistaken Reasoning

As the International Monetary Fund noted (while maintaining a very hard line on Greece), the Greeks cannot repay their loans or escape from their economic nightmare without a substantial restructuring of the Greek debt, including significant debt forgiveness and a willingness to create a multidecade solution. The IMF also made clear that increased austerity, apart from posing an impossible burden for the Greeks, will actually retard either a Greek recovery or debt repayment.
https://www.stratfor.com/weekly/greek-vote-and-eu-miscalculation?utm_source=freelist-f&utm_medium=email&utm_term=Gweekly&utm_campaign=20150707&utm_content=readmoretext&mc_cid=fe84a80645&mc_eid=3c4d5cecfc

Posted by: okie farmer | Jul 7, 2015 4:08:58 PM | 24

Shit I messed up the tread. Sorry.

Posted by: okie farmer | Jul 7, 2015 4:24:18 PM | 25

Expressions like "Greek elite", "German elite" and "European elite" seem inappropriate for a class of people who could care less about national or regional interests. Where they live is merely a matter of convenience, habit or personal preference.

Posted by: SingingSam | Jul 7, 2015 4:32:33 PM | 26

An important point that b makes in his post is the building momentum in Germany to not just hold the line on austerity but actually crush Greece. Schauble now outpolls the sainted Merkel. This from today's NYT:

That stance puts pressure on Ms. Merkel domestically, emboldening politicians who believe that Germany has erred not by pushing too hard for austerity in Greece but by tolerating modest steps toward softer terms. When German lawmakers were last called upon to vote on extending the Greek bailout in February, 29 deputies from her center-right bloc broke ranks and opposed the government.

Since then, conservatives’ fury at Greece has only mounted. Mr. Schäuble, who last week for the first time bested the chancellor in a well-regarded political popularity poll, is an essential partner for Ms. Merkel in keeping the anger under control.

Tsipras with that 61% "Oxi" under his belt is going to have to start issuing drachmas soon.

Posted by: Mike Maloney | Jul 7, 2015 4:37:10 PM | 27

Posted by: okie farmer | Jul 7, 2015 4:08:58 PM | 24

No information in Friedman's "Strategic Forcasting".

Posted by: Comrade X | Jul 7, 2015 4:41:53 PM | 28

Oh my goodness, Mr Maloney, you look to the NYT for your "information"?

[Schaeuble] has surged to a new high in popularity at home, with 70 percent of Germans saying they approve of the job he is doing.

A survey for public broadcaster ARD showed the 72-year-old Schaeuble is more popular than his boss, Chancellor Angela Merkel, who had a rating of 67 percent.


Publicized 3 days before the referendum.
Top-selling daily Bild, which has campaigned for the euro zone to cut the Greeks loose, included a picture of Schaeuble in a superhero costume in its Thursday edition last week, declaring him "Euroman" and praising him for defending the currency in the face of the "Greek rescue circus".

Fucking pandering bullshit; hard to believe any self-respecting German would fail to notice the propaganda. How about you, Mr Maloney?

Posted by: Comrade X | Jul 7, 2015 4:56:26 PM | 29

As an Ives Smith fan I was really disappointed when she wrote in the comment section that the no vote was a vote against democracy. WTF

Noirette | Jul 7, 2015 2:33:26 PM | 9

William Black on bbc propaganda.
http://neweconomicperspectives.org/2015/07/bbc-propaganda-war-v-greece-reaches-new-low-after-no-vote.html

Posted by: jo6pac | Jul 7, 2015 5:11:41 PM | 30

Yves Smith is a ------ reliable defender of looking at issues in a realistic way. She, or better they, are free to think and express their ideas. She is quite consistent in her assessments of the Greek tragedy and pointing out the culprits.
Nobody is perfect and her opinion counts for me on many critical twisted conundrums and real life situations small and big

Posted by: c | Jul 7, 2015 5:41:16 PM | 31

sounds like an insider to me.. i agree with jackrabbit.

Prior to the blog, Webber/Smith had graduated from Harvard College and Harvard Business School and had close to 20 years of experience in the financial services industry. She had worked for Goldman Sachs, McKinsey & Co., and Sumitomo Bank.[3] She has written articles for the New York Times, Bloomberg, and the Roosevelt Institute.[4][5]

comrade x.. not sure who you are referring to with your question @5.. which moron.. plenty of them around, lol.. ps - i don't imagine mike takes the nyt as gospel.. more the opposite, but it is an interesting bit of propaganda to add to the view here..

@23 mina - overview here.. amazing how saudi's and the usa are happy to help isis anyway they can to create murder and mayhem where-ever they decide..

Posted by: james | Jul 7, 2015 5:59:38 PM | 32

Well, Comrade X, I think that was one of the points that b makes in his post. Propaganda works. Re-read what b wrote:

The German media and politicians have villainized the Greek so much, based on crude propaganda a denial of the on facts, that a Grexit seems to be the now favored public opinion in Germany. The public opinion in other northern and eastern European countries is very much the same. People do not want to "give more money to the Greek" even though hardly any money was given to them so far. What was given in taxpayer guarantees was given to German and French banks. The consequences of a Grexit seem to be beyond the realm of discussions.
Whenever I read the comments sections in the NYT I'm surprised how many people accept the pro-austerity mantra when the paper's celebrated top columnist Paul Krugmam has done nothing but trash austerity for the last six-plus years.

Posted by: Mike Maloney | Jul 7, 2015 6:04:05 PM | 33

@30

I was a staunch supporter of Yves Smith for years but broke ranks with her over private finance this year. To her private finance is a TINA along with inheritance and accumulating private ownership of property. I feel that all those things must change structurally if we are to move forward, since getting stuck with these assumptions during the Enlightenment period.

I didn't like being called crazy pants by Yves because I pointed out in comments at NC that the MMT concept does not address the private finance issue . While MMT may work well for a country with entirely sovereign government finance, it can't work in countries like the US/UK that have private finance hooks into the government structure without addressing the realities of that private/public model directly. MMT does not do this.

Posted by: psychohistorian | Jul 7, 2015 6:04:39 PM | 34

Ask the questions, Mr Maloney. Why would the Germans' treasonous capitalist press want to cause Greece's exit if it will cost the EU more?!!! Why would the assholes at NYT want to blame Germans' gullibility for that damage?

"The imposition of the euro had one true goal: To end the European welfare state."

Posted by: Comrade X | Jul 7, 2015 6:20:11 PM | 35

MMT ... is ... what it says it ... is ... : Modern Monetary Theory. I repeat Theory. As far as I can tell it describes on the basis of scientific and statistical analysis the way money functions. However the insights it provides make a lot of politicians, officials and the media sound like utter fools or monstrous sociopaths. Take your pick! A old world definitely has to make way for something more solid and caring.

Posted by: c | Jul 7, 2015 6:25:23 PM | 36

Mr Maloney @32, PKrudman is a "left" gatekeeper. All those stupid compradors (but not the mercenaries) are satisfied they're encountering and defeating the enemy with a blog comment. Don't mistake NYT idiots and mercenaries for public opinion.

Posted by: Comrade X | Jul 7, 2015 6:29:45 PM | 37

@24

<a href="https://www.stratfor.com/weekly/greek-vote-and-eu-miscalculation?utm_source=freelist-f&utm_medium=email&utm_term=Gweekly&utm_campaign=20150707&utm_content=readmoretext&mc_cid=fe84a80645&mc_eid=3c4d5cecfc">The Greek Vote and the EU Miscalculation</a>

All you hafta do is what is says to do right over the space you paste those bare naked urls into ... wrap 'em in

<a href="url">linkname</a>

undies. Even busy people like yourself can take the time to do so ... rather than wham/bam cut/paste thank you ma'am ... IBGYBG bankster style :)

Type the <a href=""></a> first and then just paste at the appropriate spaces. Paste the linkname first, to avoid terminal disorientation, it's often shorter than the url ... and comes after it anyway, leaving the url position intact and a discernable target for the second paste. Save the little template and cut and paste it first ... use

<a href=""></a>
<blockquote>
</blockquote>

as your template ... or ... just notice that all the crap after the '?' in the url is marketing bullshit and completely inessential ...

<a href="https://www.stratfor.com/weekly/greek-vote-and-eu-miscalculation">The Greek Vote and the EU Miscalculation</a>

works great ...

Do somethin'. Not just yourself, of course, but all of us url 'flashers' who occasionally mess up the threads.

Posted by: jfl | Jul 7, 2015 6:30:16 PM | 38

E@31

It's hard to take anything Yves says seriously after she claimed that Greece faced mass starvation if they voted no on the referendum, supposedly information from her contacts in Greece. When I challenged this hyperbole she also stated that Greece wasn't a First World nation and summarily banned me.

Posted by: Wayoutwest | Jul 7, 2015 6:30:18 PM | 39

According to Professor Bill Mitchell (MMT), the ECB has no choice but to provide Greek banks with liquidity, as that is their mandate…to provide price stability. If it chooses to cut of funding it is a political decision that is contrary to their legislated responsibility.

"The ECB has to maintain liquidity in the Greek banking system. If it refuses then Greece would have to immediately issue its own currency and recapitalise the banks accordingly. That is, the ECB would take the political act to force the nation from the Eurozone without any rules in any European treaty suggesting that is part of its mandate.

More particularly, what would the decision to end the Emergency Liquidity Assistance (ELA) for Greek banks indicate? It would indicate that the ECB has failed in its primary role to maintain financial stability in the Eurozone, of which Greece remains one of 19 Member States.

I remind everyone that the – Tasks – (the Charter) of the ECB within the Euro system is well-defined by the Treaty of the Functioning of the European Union."

http://bilbo.economicoutlook.net/blog/?p=31294

Posted by: paulmeli | Jul 7, 2015 6:32:49 PM | 40

c @35, making compradors sound like utter fools is no achievement.

Posted by: Comrade X | Jul 7, 2015 6:32:50 PM | 41

With the exception of Varoufakis and his follower Euclid Tsakalotos both of whom have PhDs in economy, NONE of the EU debt negotiators are economists.....Schauble of Germany is a Lawyer, Christine Lagarde of the IMF is a lawyer, and Jeroen Dijsselbloem of the Netherlands, the financial head of the EU is an agricultural engineer(unelected) . Go figure! They are a group of clueless wonders with demands. They have strong armed and looted Greece. Greece should have defaulted in 2010. Their debt would be a whole lot less. But the ECB made a few billion on this racket, as did the banks.
Austria will have a referendum on whether to stay in the EU.....If Greece exits the EU, so will Spain, Italy, Ireland and hopefully Austria and the Netherlands. This is the Soviet Union of Europe. 17 UNelected people running the Continent for the benefit of the elite. Democracy has gone. The pitchforks are coming soon. People are fed up.

Posted by: Gerry1211 | Jul 7, 2015 6:33:40 PM | 42

@38

Doctrinaire purity has always been the concern of the 'Vanguard of the people' ... lookin' out for us free-thinkin' 'lumpen' proles.

Marvelous to relate I've found myself more in line with your comments than with the new proselytes who've flocked like flies to the Greek fest.

Posted by: jfl | Jul 7, 2015 6:37:25 PM | 43

"The imposition of the euro had one true goal: To end the European welfare state."

Does that mean also ending the welfare state vis-a-vis corporations, which can't grow without the creation of new Euro's, or some other currency from countries/states that run a trade deficit??"

What nonsense.

It's pretty easy to see why the eurozone has always been on a path to self-destruction. Capitalism needs capital, all of which is created by the state in one way or another.

Posted by: paulmeli | Jul 7, 2015 6:37:27 PM | 44

"The imposition of the euro had one true goal: To end the European welfare state." -- If that is the conclusion you want to accept, Comrade X, I accept it. What is interesting is how Europe's friendly capitalism and superior growth rates were as recently as 2004 being hailed as the future of the West, replacing the red in tooth and claw hegemony of the U.S. I'm thinking here of Jeremy Rifkin's The European Dream.

Posted by: Mike Maloney | Jul 7, 2015 6:41:54 PM | 45

pm @39, what to make of an act of criminal neglect which appears political? Could that be called sabotage?

Posted by: Comrade X | Jul 7, 2015 6:45:41 PM | 46

"The Greek referendum seemed to have given some push towards a compromise."

CAN YOU ELABORATE THAT?

Anybody knows what the Greeks exactly rejected?

Thanks

Posted by: neretva'43 | Jul 7, 2015 6:46:07 PM | 47

@42, see, it works.

Posted by: Comrade X | Jul 7, 2015 6:47:15 PM | 48

@41: "UNelected people running the Continent for the benefit of the elite." "Soviet Union"? Some people gotta live in the past.

Posted by: Comrade X | Jul 7, 2015 6:51:13 PM | 49

@46: "exactly"? Uh-huh.

Posted by: Comrade X | Jul 7, 2015 6:57:52 PM | 50

Europe gives Greece 5 days to avoid bankruptcy.

Posted by: lysias | Jul 7, 2015 6:58:19 PM | 51

@43

One of us (Palast, an economist by training) has had long talks with the acknowledged “father” of the euro, Professor Robert Mundell. It’s important to mention the other little bastard spawned by the late Prof. Mundell: “supply-side” economics, otherwise known as “Reaganomics,” “Thatcherism” – or, simply “voodoo” economics.

The imposition of the euro had one true goal: To end the European welfare state.

For Mundell and the politicians who seized on his currency concept, the euro itself would be the vector infecting the European body politic with supply-side Reaganomics. Mundell saw a euro’d Europe as free of trade unions and government regulations; a Europe in which the votes of parliaments were meaningless. Each Eurozone nation, unable to control neither the value of its own currency, nor its own budget, nor its own fiscal policy, could only compete for business by slashing regulations and taxes. Mundell said, “[The euro] puts monetary policy out of the reach of politicians… Without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.”

"[All capital] is created by the state in one way or another." Nonsense. Capitalists make capital, otherwise they wouldn't own it.

Posted by: Comrade X | Jul 7, 2015 7:08:45 PM | 52

Mr Maloney @44:
Looks like Rifkin's diagnosis was mistaken:

According to Rifkin, the "European Dream" is one in which individuals find security not through individual accumulation of wealth, but through connectivity and respect for human rights.

He missed the neoliberalizing component of EU crapitalism but he also missed the looming inter-crapitalist warfare.He's kinds glitchy. Can you tell me how he got from "The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era" to "The Age of Access: The New Culture of Hypercapitalism, Where all of Life is a Paid-For Experience"?

Posted by: Comrade X | Jul 7, 2015 7:29:15 PM | 53

The UK is out of the eurozone...

Posted by: Virgile | Jul 7, 2015 7:48:32 PM | 54

@30

Black mansplains how fraudulent yields were a management tactic to goose their own income, but neglects to note that this was endemic fraud, a virtual system of fraud. It is almost certain some realized this system of fraud was ultimately backstopped by the government and that it could be used in a neoliberal attack on government. Black, in his dotage, focuses blame on the Troika:

The troika, however, while purporting to be neoliberal, is actually an old-fashioned means of bailing out German and French banks that make bad loans.
Is this in any way credible? He acknowledges widespread "control fraud", but instead of arguing that this disease is exacerbated by neoliberalism he implies the rectification of "old fashioned means of bailing out banks" with their commitment to neoliberalism was neglected.

Bullshit.

Posted by: Comrade X | Jul 7, 2015 8:14:52 PM | 55

@30

Black mansplains how fraudulent yields were a management tactic to goose their own income, but neglects to note that this was endemic fraud, a virtual system of fraud. It is almost certain some realized this system of fraud was ultimately backstopped by the government and that it could be used in a neoliberal attack on government. Black, in his dotage, focuses blame on the Troika:

The troika, however, while purporting to be neoliberal, is actually an old-fashioned means of bailing out German and French banks that make bad loans.

Is this in any way credible? He acknowledges widespread "control fraud", but instead of arguing that this disease is exacerbated by neoliberalism he implies the rectification of "old fashioned means of bailing out banks" with their commitment to neoliberalism was neglected.

Bullshit.

Posted by: Comrade X | Jul 7, 2015 8:17:11 PM | 56

The "negotiations" are quite funny, actually. Greece negotiators pretend to go through the motions (but don't really) of trying to get further loans to pay off old loans (which they don't really want) whilst lenders pretend to put hard conditions on further loans they desperately want to push on Greece instead of writing off the debt, whilst preparing to pay for a "humanitarian programme". And everybody's aim to keep out of the blame game for the default that is sure to happen if nothing gives.

Posted by: somebody | Jul 7, 2015 8:44:14 PM | 57

"The Greek referendum seemed to have given some push towards a compromise."
"Anybody knows what the Greeks exactly rejected?"


He, he, he....Of course, nobody has a slightest idea, you are clueless.

Posted by: neretva'43 | Jul 7, 2015 8:54:22 PM | 58

Comrade X at 55:

First of all your age-ism sucks. Leave those thoughts unexpressed. Secondly, your comment is nonsense. Black is probably the world's leading critic of systematic banking fraud, but only when there is actual. French and German banks making unsecured loans to Greek banks was not fraudulent. The investment bankers who sold mortgage-backed securities they knew were 'crap' were engaging in fraud.

And your decontextualized quote needs to be remedied:

The neoliberal “modern finance” theories such as the “efficient market hypothesis” are premised on lenders providing “private market discipline.” That, in turn, is premised on the assumption that when lenders make bad loans (whether for reasons of fraud or incompetence) they will suffer the resultant losses rather than being bailed out. The troika, however, while purporting to be neoliberal, is actually an old-fashioned means of bailing out German and French banks that make bad loans.

The context of the preceding couple of sentences shows that obviously Black was exposing the hypocrisy of 'neoliberals' who spout about 'the discipline of the market' and then use the government to bail out well-connected, thoroughly corrupting corporations and banks whenever they get a chance.

Posted by: fairleft | Jul 7, 2015 8:57:28 PM | 59

https://en.wikipedia.org/wiki/Who,_whom%3F

кто кого?

Lenin is supposed to have stated 2nd All-Russian Congress of Political Education Departments, on 17 October 1921,

Весь вопрос — кто кого опередит? in English "The whole question is — who will overtake whom?"

The shortened form was invoked by Joseph Stalin in 1929, in a speech to the Central Committee of the Communist Party of the Soviet Union, which also gave the formula its "aura of hard-line coercion" (while Lenin's phrase indicated a willingness to embrace economic competition)
"The fact is, we live according to Lenin's formula: Kto-Kovo?: will we knock them, the capitalists, flat and give them (as Lenin expresses it) the final, decisive battle, or will they knock us flat? ".

It came to be used as a formula describing the inevitability of class struggle, i.e. who (which of two antagonists) will dominate the other. In this view, all compromises and promises between enemies are just expedients — tactical manoeuvres in the struggle for mastery.

The Struggles of the Greek People - Mikis Theodorakis
https://youtu.be/Xf5sNI1h3AM

Posted by: neretva'43 | Jul 7, 2015 9:15:15 PM | 60

Some good description of the madness involved

Everybody knew what a fight would mean. The inner cabinet had discussed the details a week earlier at a tense meeting after the European Central Bank refused to increase liquidity (ELA) to the Greek banking system, forcing Syriza to impose capital controls.

It was a triple plan. They would "requisition" the Bank of Greece and sack the governor under emergency national laws. The estimated €17bn of reserves still stashed away in various branches of the central bank would be seized.

They would issue parallel liquidity and California-style IOUs denominated in euros to keep the banking system afloat, backed by an appeal to the European Court of Justice to throw the other side off balance, all the while asserting Greece's full legal rights as a member of the eurozone. If the creditors forced Grexit, they - not Greece - would be acting illegally, with implications for tort contracts in London, New York and even Frankfurt.

They would impose a haircut on €27bn of Greek bonds held by the ECB, and deemed "odious debt" by some since the original purchases were undertaken by the ECB to save French and German banks, forestalling a market debt restructuring that would otherwise have happened.

"They were trying to strangle us into submission, and this is how we would retaliate," said one cabinet minister. Mr Tsipras rejected the plan. It was too dangerous. But a week later, that is exactly what he may have to do, unless he prefers to accept a forced return to the drachma.

...

The two sides are talking past each other, clinging to long-entrenched narratives, no longer willing to question their own assumptions. The result could be costly. RBS puts the direct financial losses for the eurozone from a Greek default at €227bn, compared with €140bn if they bite the bullet on an IMF-style debt restructuring.

Posted by: somebody | Jul 7, 2015 9:20:01 PM | 61

"Capitalists make capital, otherwise they wouldn't own it."

They'own' it because the natural flow of funds is inexorably towards profits and savings, which accumulates at the top of the income spectrum. The design of capitalism insures that capital flows to the capitalist. It is and alway has been a one-way flow…that is a consequence of the arithmetic…the tyranny of the arithmetic if you will.

As a point of logic, before (financial) capital can exist it must be created (spent) into economic system(s). TINA. That is done exclusively by the state in modern capitalism. Capital may exist in many forms other than money but the accumulation of wealth and non-financial capital starts with the accumulation of nominal wealth.

Posted by: paulmeli | Jul 7, 2015 9:22:45 PM | 62

Posted by: neretva'43 | Jul 7, 2015 9:15:15 PM | 59

The problem with that is who is defining whom. It is a recipe for murder.

Posted by: somebody | Jul 7, 2015 9:26:25 PM | 63

Wayoutwest @38

In my case, I simply argued that Syriza was not incompetent but noncooperative because the 2-step process that the Troika forced upon them would put Greece in a poor position negotiating position during future debt restructuring talks.

Greece was being asked to describe how they would service the debt before the Troika would talk about any restructuring. Greece had been promised debt restructuring/forgiveness before but it never materialized.

I was told that there was no evidence for this logic and that debt restructuring was irrelevant because Syriza had signed the February agreement! I replied that Syriza gained nothing by making their noncompliance public.

When I pointed out that Greece may be willfully noncooperative with the Februrary Agreement, Yves decried such 'bad faith' - but could not bring herself to see that the Troika's threats to Greek banking to force a 2-step process was also a form of 'bad faith'.

It was apparent to me (and I think others as well) that the view that Syriza was incompetent and that Greece would eventually give-in was not an innocent misreading by the media. It deterred potential Syriza allies and increased pressure on Greece to capitulate.

Note: Yves has been critical of the Troika from time to time but not nearly as much as she has been critical of Syriza, Tsipras, and Varoufakis.

=

I was a frequent commenter for over 5 years and I've never seen any issue that drew as much push-back. Yet Yves continued, telling her readers that:

- Greek polls that favor the Euro (the referendum shows that that preference has limits);
- that Syriza had agreed to austerity (a claim which ignores Syriza call for debt restructuring and new investment);
- that Tsipras called the referendum only to save his political career (but he could've capitulated many times before);
- that Tsipras' "alliance" with centrist parties is a sell-out (but it clearly appears to be a move for Greek UNITY a head of talks NOT the break with Syriza's left that Yves had mused about a few weeks ago).

AFAICT, Yves has still not acknowledged Syriza's stunning achievement: to unite the Greek nation and strengthen their negotiating position. This will likely mean a "managed GRexit" (European support during the transition to dracma) if negotiations with the Troika fail (as now seems likely)

Note: The above is just a summary that doesn't do justice to the arguments on both sides. Yves answered much of the push-back but not always fully or satisfactorily. The push-back continues to this day as can be seen in Yves latest Greek post. To get a better understanding, see that post and/or the archives at nakedcapitalism.com.

=

Lastly, this is not the first time Yves has been on the wrong side of an important issue. For example: prior to confirmation hearings, Yves was enthusiastic about the nomination of Mary Jo White (“MJW”) when others immediately viewed the nomination very negatively (Yves reasoned that MJW's early career indicated some promise for fighting corruption and that her subsequent experience gave her the skill to be effective). Not surprisingly MJW has been a disaster (and Yves is now anti-MJW).

Posted by: Jackrabbit | Jul 7, 2015 9:50:46 PM | 64

Darn blockquotes again. Grrr...

Posted by: Jackrabbit | Jul 7, 2015 9:55:16 PM | 65

@somebody

Yea...but whose murder? "White Liberal" murdered over 120.000 in ex Yugoslavia, 700.000 in Iraq, 70.000 in Libya and counting.


Posted by: neretva'43 | Jul 7, 2015 9:57:30 PM | 66

God...

This article was published 2012, wow how time fly. Nevertheless, it is mandatory reading.

By Greg Palast

http://www.theguardian.com/commentisfree/2012/jun/26/robert-mundell-evil-genius-euro

"Robert Mundell, evil genius of the euro"

The idea that the euro has "failed" is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do.

That progenitor is former University of Chicago economist Robert Mundell. The architect of "supply-side economics" is now a professor at Columbia University, but I knew him through his connection to my Chicago professor, Milton Friedman, back before Mundell's research on currencies and exchange rates had produced the blueprint for European monetary union and a common European currency.

Mundell, then, was more concerned with his bathroom arrangements. Professor Mundell, who has both a Nobel Prize and an ancient villa in Tuscany, told me, incensed:

"They won't even let me have a toilet. They've got rules that tell me I can't have a toilet in this room! Can you imagine?"

As it happens, I can't. But I don't have an Italian villa, so I can't imagine the frustrations of bylaws governing commode placement.

But Mundell, a can-do Canadian-American, intended to do something about it: come up with a weapon that would blow away government rules and labor regulations. (He really hated the union plumbers who charged a bundle to move his throne.)

"It's very hard to fire workers in Europe," he complained. His answer: the euro.

The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.

"It puts monetary policy out of the reach of politicians," he said. "[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business."

He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace – or the plumbing.

As another Nobelist, Paul Krugman, notes, the creation of the eurozone violated the basic economic rule known as "optimum currency area". This was a rule devised by Bob Mundell.

That doesn't bother Mundell. For him, the euro wasn't about turning Europe into a powerful, unified economic unit. It was about Reagan and Thatcher.

"Ronald Reagan would not have been elected president without Mundell's influence," once wrote Jude Wanniski in the Wall Street Journal. The supply-side economics pioneered by Mundell became the theoretical template for Reaganomics – or as George Bush the Elder called it, "voodoo economics": the magical belief in free-market nostrums that also inspired the policies of Mrs Thatcher.

Mundell explained to me that, in fact, the euro is of a piece with Reaganomics:

"Monetary discipline forces fiscal discipline on the politicians as well."

And when crises arise, economically disarmed nations have little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the European welfare state down the drain.

Thus, we see that (unelected) Prime Minister Mario Monti is demanding labor law "reform" in Italy to make it easier for employers like Mundell to fire those Tuscan plumbers. Mario Draghi, the (unelected) head of the European Central Bank, is calling for "structural reforms" – a euphemism for worker-crushing schemes. They cite the nebulous theory that this "internal devaluation" of each nation will make them all more competitive.

Monti and Draghi cannot credibly explain how, if every country in the Continent cheapens its workforce, any can gain a competitive advantage.
But they don't have to explain their policies; they just have to let the markets go to work on each nation's bonds. Hence, currency union is class war by other means.

The crisis in Europe and the flames of Greece have produced the warming glow of what the supply-siders' philosopher-king Joseph Schumpeter called "creative destruction". Schumpeter acolyte and free-market apologist Thomas Friedman flew to Athens to visit the "impromptu shrine" of the burnt-out bank where three people died after it was fire-bombed by anarchist protesters, and used the occasion to deliver a homily on globalization and Greek "irresponsibility".

The flames, the mass unemployment, the fire-sale of national assets, would bring about what Friedman called a "regeneration" of Greece and, ultimately, the entire eurozone. So that Mundell and those others with villas can put their toilets wherever they damn well want to.

Far from failing, the euro, which was Mundell's baby, has succeeded probably beyond its progenitor's wildest dreams.

Posted by: neretva'43 | Jul 7, 2015 10:03:35 PM | 67

all the euro bashing come from anglo-saxon elite controlled media, they fear an alternative world reserve currency will dethrone the USD

Posted by: meofio | Jul 7, 2015 10:20:30 PM | 68

To fairleft @58:

Black always admits only a limited comprehension of the capitalist crisis.

As to the quote, he blames the Troika for representing itself as neoliberal when it wasn't AND neglects that this "old fashioned" bailout was extraordinary (and attributable to systemic fraud, as were the FED bailouts). You say Black is blaming the fraudster investment bankers but he is clearly denigrating the Troika for being "old fashioned". This is just bullshit. I suppose Black believes the MMT in his hip pocket would cure all these ills, but first of all he should be forthright in his diagnosis; he is not.

Since neoliberalism and "private market discipline" are frauds, and Black is criticizing a public, EU institution for being caught in fraud (triggered by Wall Street fraud), the onus of his diagnosis is misplaced.

Does Black admit that neoliberal strategic finance is a weapon against governments? Does Black explain how systemic fraud is a symptom of capitalist crisis and not cause? If he is going to cure public management of markets, he must represent what they are up to. He does not.

Posted by: Comrade X | Jul 7, 2015 10:38:21 PM | 69

Interesting article on Zero Hedge. It seems after all Merkel is the winner and Tsipras the loser
http://www.zerohedge.com/news/2015-07-07/greferendum-shocker-tsipras-intended-lose-and-now-trapped-his-success

Posted by: Wullf | Jul 7, 2015 10:39:26 PM | 70

To neretva'43 @59: Yes, the authoritarians will always represent their domination as "winning". The world is a contest, and we must win. Lenin's goal was the elimination of that fraudulent struggle.

Posted by: Comrade X | Jul 7, 2015 10:49:38 PM | 71

The Zero Hedge article linked at 69,.is clear disinformation and bullshit.

Nowhere is Tsipras directly quoted; and it's merely the familiar boilerplate slander that deserves to be flushed on first sight.

It's laughable and weak.

Posted by: Copeland | Jul 7, 2015 10:59:25 PM | 72

To pm @61: Not the tyranny of the arithmetic, the tyranny of ownership. I realize you are obligating capitalists to the state, as if they weren't already aware of an obligation (though differently conceived from yours.) In a time when capitalist fraudsters so clearly own the state, I find your remonstrations ludicrous.

As to the "creation" of financial capital, TIAnA. It can be primitively acquired, ie. stolen. It can be privately fabricated, i.e. through the manipulation of "asset" values. Examples abound, yet you insist that capitalists are obligated to the state for their assets. They don't believe that and neither should we.

Posted by: Comrade X | Jul 7, 2015 11:06:48 PM | 73

Should be "e.g. stolen" and "e.g through he manipulation ..."

Posted by: Comrade X | Jul 7, 2015 11:18:54 PM | 74

@71,
Varoufakis and Costas Lapavitsas are among the sources for the article. It was posted at the Telegraph.

Posted by: Wullf | Jul 7, 2015 11:28:25 PM | 75

@63 Jackrabbit
Just to give your view some support -- yes and yes and yes again. Big NC reader, only occasional poster. Yves et Lambert are harsh comment taskmistresses, all gender aside. And I need beatings so seldom... Ha. I can deal with that. What gave me the piss is the status quo-ism of her and Lambert's Greece opinion. (Not just that.) Because it's just not done often seems to be the nut of Yves' Argument. But gawd help you if you should say so. The papercuts!! And then Lambert weighs in with Being Realistic which usually involves a "winning the war" meme. And if you disagree, you're a Bad Leftist.

How can you have any pudding if you don't eat your meat?

Makes me think of the phrase "herding cats" in a not-nice propaganda way. S'why I come here to gnaw the bone. A different flavor.

Re Greece: Quite the microcosm of war-as-finance. Same as it ever was. Unfortunately.

Greece should flee the bandits. Flee!

Posted by: Benu | Jul 7, 2015 11:33:23 PM | 76

Wullf @74: First Varoufakis does a job for them, then they stab him in the back.

I could be kidding.

Posted by: Comrade X | Jul 7, 2015 11:47:18 PM | 77

Tsipras has said that he is going to the European High Court, which is his chosen way to challenge an expulsion of Greece by bureaucratic fiat. And If the German government really is committed to Grexit now; then there has to be a negotiation that signifies some kind of legal structure, if that is to happen. Tsipras has neither disrespected Varoufakis, nor does he disrespect the mandate, the "OXI". He has simply brought someone, the new FinMin, Euclid T. in whom he trusts to close the deal. The new man is the right person for the next phase in this struggle.

Let's remember that on Friday the Greek PM addressed the "OXI" gathering in Syntagma, where his obvious sympathy was communicated to the Greeks. Tsipras got the mandate he wanted. The referendum was worded in such a way as to make the choice crystal clear.

Posted by: Copeland | Jul 8, 2015 12:43:48 AM | 78

http://www.thenation.com/article/austerity-has-failed-an-open-letter-from-thomas-piketty-to-angela-merkel/

Austerity Has Failed: An Open Letter From Thomas Piketty to Angela Merkel

Five leading economists warn the German chancellor, “History will remember you for your actions this week.”

By Thomas Piketty, Jeffrey Sachs, Heiner Flassbeck, Dani Rodrik and Simon Wren-Lewis

Posted by: okie farmer | Jul 8, 2015 1:29:37 AM | 79

The world financial systems rely on a whole lot of faith to operate.

It is an understatement to say that the faith in the current Western financial system is being challenged both internally and externally.

Will any of the machinations going on diminish the power and control of the global plutocrats that own private finance? We can only hope so for the future of our species.

I am encouraged by the conscious movement of Greece toward the EU exit, however ugly that might be. It won't happen overnight and will cause further global financial conflict but represents a serious challenge to continued private Western financial hegemony. If the global plutocrats don't take us to extinction over losing their control of global finance, the new, more inclusive agreements with countries of the world will hopefully help form the basis for government/economic cooperation over other global challenges like climate change.

Bless Greece for having the will to say no to the private gawds of Mammon. May they stay the course.

Posted by: psychohistorian | Jul 8, 2015 1:35:56 AM | 80

jeffry sachs, the guy who advised russia to implement shock therapy writing letter to Merkel is rich

Posted by: meofio | Jul 8, 2015 1:49:35 AM | 81

Wullf @74

Their comments are taken out of context and spun into a fact-free narrative that makes no sense.

Posted by: Jackrabbit | Jul 8, 2015 1:54:42 AM | 82

Jackrabbit and Psychohistorian- thanks for the posts on NC. I followed some of both of your back and forth with Yves on their threads. Disregarding that I've lost a lot of respect for a blog I really like- it's kind of comical. I keep thinking she owns a crap load of Greek bonds...I know, she does a lot of good work.

Posted by: Nana 2007 | Jul 8, 2015 3:47:25 AM | 83

jeffry sachs, the guy who advised russia to implement shock therapy writing letter to Merkel is rich

I don't know why, but he has changed a lot since those days. Back then he was a supply side economist, wanted to privatize everything - not any more.

Posted by: okie farmer | Jul 8, 2015 3:48:31 AM | 84

Comrade X at 65:

You're just misrepresenting Black as exactly the opposite of what his career over the last 20 years has been about. Leaving out the out of context quote, let's go back to your statements in comment 55:

"Black mansplains how fraudulent yields were a management tactic to goose their own income" ... No, he doesn't indicate those yields were fraudulent but that, though the yields were real they also came with a very high degree of risk, so investors in Greek bank bonds should've demanded collateral. And what the h@ll does any of the preceding have to do with 'mansplaining'?

"but [Black] neglects to note that this was endemic fraud, a virtual system of fraud." For years Black has been one of the leading 'sayers' that the phenomenon of investing in high yield, high risk bonds with a certain bailout if things turn bad is endemic. It's the cornerstone of his entire output over the last 10 years.

"It is almost certain some realized this system of fraud was ultimately backstopped by the government and that it could be used in a neoliberal attack on government." Not sure what "it" means here, but you're saying neoliberal bankers' secret motivation was to 'attack government' and not to make mountains of money? I suppose that is a possible motive, but surely a very minor one compared to the greed is good one.

"... [Black] acknowledges widespread "control fraud", but instead of arguing that this disease is exacerbated by neoliberalism he implies the rectification of "old fashioned means of bailing out banks" with their commitment to neoliberalism was neglected."

No, it's the opposite: he argues that the 'control fraud' disease is exacerbated by neoliberalism. How can anyone not read that in Black? In response to the final two clauses of that long sentence, and ignoring the problem you're having with the word 'rectification', Black is saying that two phenomena are taking place: (1) when it serves the bureaucracy's masters, use of the neoliberal faith to close off government regulation; (2) violation of supposed neoliberal principles and active government whenever that serves a corrupt bureaucracy's benefactors. (2) is the fundamental obligation, and a bureaucrat who doesn't realize that is a short-lived one.

Posted by: fairleft | Jul 8, 2015 3:53:18 AM | 85

It didn't take long to realize Sachs' advice to Russia was a failure. Maybe that's why he changed.

Posted by: okie farmer | Jul 8, 2015 4:07:33 AM | 86

The US are not amused - the guy writing this is former US ambassador to Berlin

The threat of Greek exit from the euro comes at a very delicate time when Europe needs the support of both Greece and the US through Nato for assistance on myriad dangerous security issues it is facing in the Mediterranean.

However, security co-operation between the US and EU members has been sliding for many years. If Greece suddenly refused to work with the EU on issues such as refugees, it is not at all certain that the US would come to the rescue. Germany in particular has been berating the Americans regularly in recent months on issues such as the activities of the National Security Agency and on sending weapons to Ukraine and troops to the Baltic.

Angered by the heavy insolvency payments which US taxpayers would incur if Greece defaults on IMF loans, a European call for help from Nato might fall on deaf ears. The US could easily tell the Europeans to take care of the Mediterranean by themselves. It no longer maintains a carrier battle group in the area, for example. The vaunted sixth fleet has been shifted – to Asia, of course.

Posted by: somebody | Jul 8, 2015 5:02:57 AM | 87

Greece: We need to talk about the debt

Merkel: You are radical left

Greece: We accept austerity! We want to pay!

Merkel: Germans won’t pay for Greeks, not a cent

Greece: Debt restructuring is essential

Merkel: You need VAT at 23%

Greece: Austerity doesn’t work the debt can’t be repaid see the IMF we need to talk

Merkel: Varoufakis is a rude person

Greece: The debt has to addressed

Merkel: Greeks are lazy

Greece: bis repetita

Merkel: Nobody will pay for free riders, certainly not industrious thrifty Germans

Greece: bis repetita

Merkel: You have cartels you need reform

……………………….. :)

Posted by: Noirette | Jul 8, 2015 5:27:34 AM | 88

Posted by: Noirette | Jul 8, 2015 5:27:34 AM | 87

Merkel is famous for taking herself out of the game till the very end and then changing track quickly if necessary. Tsipras might win this by repeating the same stuff in an endless loop.

German - transatlantic - media have switched reporting dramatically the last few days. Tabloid Bild covers Tsipras speech on the front page - and - at the same time - the refugee crisis in Greece.

She - and CDU conservatives - are in a tight spot as she seems to plan to stand for the next elections - and basically this is an election campaign now threatening to split her party.

There is something else - Merkel backed the Bush Iraq war against Chancellor Schröder and used to have best contacts (as her party) with US republicans. Austerity, non state intervention used to be ideology of the German Conservative young guard. She had to tone it down, as German society was not prepared to vote for it, despite of the toning down she needs coalition governments. German conservatives have now given up on US republicans as hopeless and against the values of their voters, the chemistry with the Obama administration is not good, though.

Wikileaks came out a few days ago with the content of a - relatively harmless - phone tap of Merkel. I understand this as a threat to get out some real damaging stuff.

German Social Democrats are too stupid to profit. Germany will - again - have a right and left field playing against the center. Though, luckily, German society has changed.

The US seem to have called the end of "Pax Americana" in Europe.

Posted by: somebody | Jul 8, 2015 5:56:16 AM | 89

"... [Black] acknowledges widespread "control fraud", but instead of arguing that this disease is exacerbated by neoliberalism he implies the rectification of "old fashioned means of bailing out banks" with their commitment to neoliberalism was neglected."

No, it's the opposite: he argues that the 'control fraud' disease is exacerbated by neoliberalism. How can anyone not read that in Black?

Posted by: fairleft | Jul 8, 2015 3:53:18 AM | 84

Yeah

Kind of hard to take seriously anyone that could read something bill black wrote and come away with the ridiculous totally-ass-backwards nonsense that X is trying to attribute to Bill Black

Why, by golly, it's almost as if ol comrade x there is talking out of his ass

Posted by: X Factoring | Jul 8, 2015 6:11:39 AM | 90

http://blogs.channel4.com/paul-mason-blog/yanis-varoufakis-economist-play-politics/4081

First, though he came from the centre-left towards Syriza, Varoufakis ended up consistently taking a harder line than many others in the Greek cabinet over the shape of the deal to be done, and the kind of resistance they might have to unleash if the Germans refused a deal. Second, because Varoufakis is an economist, not a politician. His entire career, and his academic qualifications are built on the conviction that a) austerity does not work; b) the Eurozone will collapse unless it becomes a union for recycling tax from rich countries to poor countries; c) Greece is insolvent and its debts need to be cancelled. By those measures, any deal Greece can do this week will falls short of what he thinks will work. On top of that, politicians are built for compromise. Tsipras has to work the party machine, the government machine, the machine of parliament. Varoufakis’ machine is his own brain. If he wound up the creditors it was for a reason: they’d convinced themselves that Tsipras was a Greek Tony Blair and would simply betray his promises and compromise on taking office.

Posted by: okie farmer | Jul 8, 2015 6:23:10 AM | 91

http://www.zerohedge.com/news/2015-07-06/who-biggest-winner-greek-tragedy
Back in June 2012, the ECB, whose head was the recently crowned Mario Draghi who had less than a decade ago worked at none other than Goldman Sachs, was sued by Bloomberg’s legendary Mark Pittman under Freedom of Information rules demanding access to two internal papers drafted for the central bank’s six-member Executive Board. They show how Greece used swaps to hide its borrowings, according to a March 3, 2010, note attached to the papers and obtained by Bloomberg News. The first document is entitled “The impact on government deficit and debt from off-market swaps: the Greek case.” The second reviews Titlos Plc, a securitization that allowed National Bank of Greece SA, the country’s biggest lender, to exchange swaps on Greek government debt for funding from the ECB, the Executive Board said in the cover note. From Bloomberg:


In the largest derivative transaction disclosed so far, Greece borrowed €2.8 billion from Goldman Sachs in 2001 through a derivative that swapped dollar- and yen-denominated debt issued by the nation for euros using a historical exchange rate, a move that generated an implied reduction in total borrowings.

“The Greek authorities had never informed Eurostat about this complex issue, and no opinion on the accounting treatment had been requested,” Eurostat, the Luxembourg-based statistics agency, said in a statement. The watchdog had only “general” discussions with financial institutions over its debt and deficit guidelines when the swap was executed in 2001. “It is possible that Goldman Sachs asked us for general clarifications,” Eurostat said, declining to elaborate further.

The ECB’s response: “the European Central Bank said it can’t release files showing how Greece may have used derivatives to hide its borrowings because disclosure could still inflame the crisis threatening the future of the single currency.”

Considering the crisis of the (not so) single currency is very much “inflamed” right now as it is about to be proven it was never “irreversible”, perhaps it is time for at least one aspiring, true journalist, unafraid of disturbing the status quo of wealthy oligarchs and central planners, to at least bring some closure to the Greek people as they are swept out of the Eurozone which has so greatly benefited the very same Goldman Sachs whose former lackey is currently deciding the immediate fate of over €100 billion in Greek savings.

Because something tells us the reason why Mario Draghi personally blocked Bloomberg’s FOIA into the circumstances surrounding Goldman’s structuring, and hiding, of Greek debt that allowed not only Goldman to receive a substantial fee on the transaction, but permitted Greece to enter the Eurozone when it should never have been allowed there in the first place, is that the person who oversaw and personally endorsed the perpetuation of the Greek lie is none other than Goldman’s Vice Chairman and Managing Director at Goldman Sachs International from 2002 to 2005. The man who is also now in charge of the ECB. Mario Draghi.

Posted by: okie farmer | Jul 8, 2015 6:36:30 AM | 92

Posted by: okie farmer | Jul 8, 2015 6:36:30 AM | 91

First Lagarde, then Merkel, now Draghi under attack ...

In other news Greece is still able to raise 1.6 billion in treasury bonds. Which incidentally is the sum they refused to pay to ECB.

Athens: Greece on Wednesday raised 1.6 billion euros ($1.8 billion) in a sale of 6-month treasury bonds at a rate of 2.97 percent, unchanged from the last issue a month ago, the Greek Debt Agency said.

Such sales occur every month in Greece as part of a rollover of treasury bonds. With further issues to Thursday, the agency aims to raise a total two billion euros in 6-month bills as part of the rollover.


Posted by: somebody | Jul 8, 2015 7:02:41 AM | 93

fairleft @84: "You're just misrepresenting Black as exactly the opposite ..." You mean as a bad guy instead of a good guy?

It is common for the CEOs of the lenders to agree to lending terms in which the interest rate on the loan is higher than the banks’ typical yield on a loan – and for that “spread” still to be grotesquely inadequate relative to the true risks of making the loan. The resultant paradox is that the worse the underwriting (and underwriting is the first foundation of prudent, honest banking), the higher the (fictional) nominal yield, the higher the (falsely) reported profits, and the greater the bonuses to the elite bankers in the near term.

Black's blames the lack of underwriting here, not collateral. The fraudsters used false risk evaluation to set the yields. There is no paradox; it's fraud. He mansplains by complexifying his explanation in order to deflect a more thorough representation. This is a technocratic disease sympathetic to the fraudsters in this way: the fraudsters would claim their instruments were so complex that it was difficult to evaluate the risk. In fact they complexified them in order to mask the risk.

It's not just that fraud is endemic, fraud is a business model. It is a key component of neoliberal political economy. Black fails to represent that adequately, partly because he's busy mansplaining finance.

You say "you're saying neoliberal bankers' secret motivation was to 'attack government'"; this is not what I say. Is this inability to see the obvious akin to psychological denial? The manipulated population do not all understand the objective, some perform their function unconsciously. Some perform it collusively. In this case, the neoliberal attack on government was an outright agenda and, at some level, the tool of fraudulent risk assessment was allied to the goal of drowning the government in a bathtub. Can Black admit such a "conspiracy"?

I recently came upon a term used to describe how conservatives write about left topics, which I don't have at my fingertips. In essence, they slyly denigrate the left criticism. Black's language denigrates the EU bankers (for using old-fashioned mechanisms) when the blame should be laid on the fraudsters, including US fraudsters. If he "argues that the 'control fraud' disease is exacerbated by neoliberalism", he should be acknowledging that the EU was defrauded and that it's banking system was attacked by fraudsters, not deploying bullshit, fair and balanced, technocratic mumbo-jumbo.

The avoidance of strategic analysis makes Black a gatekeeper.

Posted by: Comrade X | Jul 8, 2015 7:29:23 AM | 94

To okie farmer @83: The price of his "education" was too high ... and wasted.

Posted by: Comrade X | Jul 8, 2015 7:34:08 AM | 95

To X Factoring @89: Mine is clear of my head. Let's see if yours becomes so.

Posted by: Comrade X | Jul 8, 2015 7:46:45 AM | 96

To paraphrase fairleft: "Black is saying that the bureaucracy's masters use neoliberalism hypocritically." Euphemistic bullshit. It's not irony, or hypocrisy, or paradox, it's desperate, relentless fraud.

Posted by: Comrade X | Jul 8, 2015 8:01:34 AM | 97

To okie farmer @90: Varoufakis' stylish schooling is supposed to be superseded by the will of Greek demos so V can make his stylish exit. The infuriated Troika respects neither.

Makes good theater.

Posted by: Comrade X | Jul 8, 2015 8:21:27 AM | 98

Todays blog from Bill Mitchell is 180 degrees opposite of the argument has been presented at NC over the past months. Personally, I'm inclined to go with Professor Mitchell's analysis. That said, it doesn't mean that Greece will make the right choices.

A Greek exit is not rocket science

Posted by: paulmeli | Jul 8, 2015 8:29:43 AM | 99

somebody @86:
The Germans are already being encouraged to militarize. The threat is a misdirection.

Posted by: Comrade X | Jul 8, 2015 8:36:30 AM | 100

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