Eurokrisis, circa 2015: No to German Austerity, No to British Racism

For a time I commented at The Guardian about the Eurokrisis and particularly Greece’s part and parcel of it.  At first I was stunned by the extent of outright and nasty racism in the comments section there, which in retrospect looks like a prelude.  In the end I was shocked at the degree of editorial misinformation and censorship by the paper itself.  I’ll post these flashbacks once in a while to remind myself of what I thought then, and to see if it stands up at all now.

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Well well well…Another Guardian article on Greece followed on by a comments thread with more than its fair share of xenophobic piffle…

Before you continue outing yourselves as racist know-nothing shills for German ordoliberalism, do please try to get at least some facts right:

1) The OXI was not a vote to default, and it did not result in harsher austerity. Most Greeks did and still do want to remain on the Euro, but with a chance to grow their economy and emerge from the most damaging macro-economic regime in the post war era. What’s more, most actually want to honor the debt, despite the fact that much of the debt was obtained illegally and without their knowledge, much less their permission.

2) Greece itself has not cost “taxpayers” anything like what is being claimed here, to say nothing of the Greek people. German and French banks, among others, had committed to malinvestment which, in aggregate, was many times the GDPs of the banks respective countries. The malinvestment was, in fact, much worse than that in the United States.

In order to save themselves politically, their own banks, their economies, and quite likely the euro itself, Scheauble, Merkel, and DSK among others engineered back-door bailouts for their own banks, forcing them on unprepared and weak governments – particularly Greece. Thus it was that Dr. Scheauble bailed out French and German private investors, many of whom profited quite nicely, while transferring losses to the public sector – to European taxpayers at large.

3) Nevertheless, Syriza proposed a plan that would ensure both growth for Greece and repayment for the creditors. With the 2012 “bailout” the terms of Greek debt became much easier to manage with minimal growth – the definition of solvency. On the other hand, the so-called “reforms” forced on Greece ensure both that its economy would shrink to levels it could literally never recover from, and that its external debt ballooned in proportion to GDP.

Syriza’s solution for this was to focus on the solvency solution (one of two paths identified by the Pringle ruling, the other being austerity). With a restructuring of Greek debt and a pause in the rate of increase in austerity, the Greek economy could recover enough growth that it could service its debt without the wholesale destruction of its political economy.

4) The actions of the troika were not made due to a lack of trust. These are national level organizations, and do not operate on the basis of personal trust. Syriza offered an economical reasonable and feasible plan to repay all of the debt, and the creditors refused, foisting onto Greece an economically illiterate approach demanded by politics, not economics.

5) No country has benefitted more from the euro than Germany, and no country has more to loose from its dissolution. At the same time, Germany’s economy enjoys a significant trade advantage with every crisis that lowers the value of the euro, without actually endangering it.

Every move Germany and the ECB have made since the crisis began has been to extend the crisis into the future, doing as little as possible in the present to resolve it. This is usually and wrongly attributed to Merkel’s mercurial manner, but is in fact the point of the German involvement in the euro.

6) Germany’s economy is nearly 4 trillion in GDP, and more than 30% of that is from export. Nothing affects the German economy as much as its trade surplus, and nothing affects its trade surplus as much as currency policy. Germany, in pegging its currency to a basket of weaker currencies, effectively devalued its own when its currency should have, in a free market, appreciated. This policy, a sort of Reverse Remnibi, is at the heart of German policy in the crisis.

7) The ECB, Mario “Do whatever it takes unless it’s Greece” Draghi aside, is dominated by German ministers and German policies. It’s interest rate policy serves Germany’s interests pre-eminently, and its monetary policy has been revealed as entirely politicized in its extremely dubious decision to cut Greece off from its own funding. This in turn caused the solvency crisis in Greece which scotched Syriza’s plans for growth and debt repayment.

The result is that Greece and its creditors shall have neither. Those of you who imagine that, like Olivier Blanchard, Greece hasn’t done enough “reforms” to grow, must explain how that can be true of an economy which has enacted more such “reforms” than any other in Europe. The truth is Greece has succeeded all too well, and must be made to suffer for it.