POLITICS CORNER

[PanBiker]

What is abhorrent in all this is that our MP's are contemplating spending two to three times more on refurbishing the Palace of Westminster than the Greeks need to stave off a meltdown. It's wrong and the get out should be a write off of the debt and structured investment to kickstart their economy. This has shades of how Germany was treated between the wars and we know where that led. The "victors" gleaned something from their mistakes by 1945 and put in place the Marshall Plan to avoid that trap again to get Germany out of the mire after WWII. I think all can see that the plan worked, what's the difference now with Greece? I doesn't matter how they got there, the principle is the same, you either screw them down to the point of starvation or offer a hand to do it right.

No Weal Save Common Weal.

[Tizer]

The reasons they give for not doing it are (a) the countries who asked for such treatment early in the credit crunch and didn't get it will be very angry, and (b) other countries running into such trouble in the future will expect to get the same treatment as the Greeks. I'm not saying I agree with this attitude, just that it's the reasons given officially. What is most ironic is that the people most against helping the Greeks are those Germans who benefited most from the Marshall Plan.

[PanBiker]

Yanks could ask for all the investment back and the profits made since from Germany. Give that to the Greeks and anyone else that needed a leg up. I thought the idea of the Eurozone was that it was made to go round, we are all in it together. Can't have it all ways you have to take the rough with the smooth. The "better off" shall we say, could solve this overnight but unfortunately the solution is a bit too much like Socialism, there's that nasty word again.

[Stanley]

What good intelligent posts... we should be advising them. The point about the Marshall Plan is well made but the Germans don't like to be reminded of that, too closely attached to the inter war years during which exactly the same attitudes of 'they must pay' decided at Versailles condemned Germany to financial chaos which resulted indirectly in the conditions that allowed Hitler to seize power. John Maynard Keynes wrote 'The Economic consequences of the Peace' in 1919 which forecast the results and it could be applied here. Strangely enough we didn't benefit from the Marshall Plan and it took over 30 years to climb out of the hole. Fortunately we had Atlee and not Hitler...... The dreaded Socialism (and a lot of luck) rescued us. We have a front seat on history being made.
The thing that strikes me and which hasn't been linked directly is that there will be a lot of pressure behind the scenes from the US because like us they have a fragile economy boosted only by their internal Marshall Plan. They can see what the effect could be of the failure of the EU Project on global trade. Perhaps the reason for this is that a blind eye is being turned by the EU on this aspect of the 'Consequences of the Grexit' to coin a phrase. It is the circumstance which must not be named.....
Unfortunately we are short of historically aware politicians and those that are aware are ruled by short term political affects more than the long run. Keynes said that in the long run we are all dead, Merkel et al know that in the long run the dreadful mistakes of setting up monetary union without political and budgetary controls are the rot at the heart of the Project and if not addressed will be the downfall. To act as statesmen and women and address this would, at the moment, be political suicide.
One more lesson from history. Look at the evolution of the Federal System in the US. When the Union was threatened by the schisms between North and South it took a Civil War to start a correction which some would argue is not yet fully effective. I'm not forecasting Civil War in the EU but a political version of it.

[Stanley]

From the NY times this morning....



Greece Over the Brink JUNE 29, 2015 [Paul Krugman]

It has been obvious for some time that the creation of the euro was a terrible mistake. Europe never had the preconditions for a successful single currency — above all, the kind of fiscal and banking union that, for example, ensures that when a housing bubble in Florida bursts, Washington automatically protects seniors against any threat to their medical care or their bank deposits.
Leaving a currency union is, however, a much harder and more frightening decision than never entering in the first place, and until now even the Continent’s most troubled economies have repeatedly stepped back from the brink. Again and again, governments have submitted to creditors’ demands for harsh austerity, while the European Central Bank has managed to contain market panic.
But the situation in Greece has now reached what looks like a point of no return. Banks are temporarily closed and the government has imposed capital controls — limits on the movement of funds out of the country. It seems highly likely that the government will soon have to start paying pensions and wages in scrip, in effect creating a parallel currency. And next week the country will hold a referendum on whether to accept the demands of the “troika” — the institutions representing creditor interests — for yet more austerity.
Greece should vote “no,” and the Greek government should be ready, if necessary, to leave the euro. To understand why I say this, you need to realize that most — not all, but most — of what you’ve heard about Greek profligacy and irresponsibility is false. Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes. Government employment has fallen more than 25 percent, and pensions (which were indeed much too generous) have been cut sharply. If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus.
So why didn’t this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it. And this collapse, in turn, had a lot to do with the euro, which trapped Greece in an economic straitjacket. Cases of successful austerity, in which countries rein in deficits without bringing on a depression, typically involve large currency devaluations that make their exports more competitive. This is what happened, for example, in Canada in the 1990s, and to an important extent it’s what happened in Iceland more recently. But Greece, without its own currency, didn’t have that option.
So have I just made the case for “Grexit” — Greek exit from the euro? Not necessarily. The problem with Grexit has always been the risk of financial chaos, of a banking system disrupted by panicked withdrawals and of business hobbled both by banking troubles and by uncertainty over the legal status of debts. That’s why successive Greek governments have acceded to austerity demands, and why even Syriza, the ruling leftist coalition, was willing to accept the austerity that has already been imposed. All it asked for was, in effect, a standstill on further austerity. But the troika was having none of it. It’s easy to get lost in the details, but the essential point now is that Greece has been presented with a take-it-or-leave-it offer that is effectively indistinguishable from the policies of the past five years. This is, and presumably was intended to be, an offer Alexis Tsipras, the Greek prime minister, can’t accept, because it would destroy his political reason for being. The purpose must therefore be to drive him from office, which will probably happen if Greek voters fear confrontation with the troika enough to vote yes next week.
But they shouldn’t, for three reasons. First, we now know that ever-harsher austerity is a dead end: after five years Greece is in worse shape than ever. Second, much and perhaps most of the feared chaos from Grexit has already happened. With banks closed and capital controls imposed, there’s not that much more damage to be done.
Finally, acceding to the troika’s ultimatum would represent the final abandonment of any pretense of Greek independence. Don’t be taken in by claims that troika officials are just technocrats explaining to the ignorant Greeks what must be done. These supposed technocrats are in fact fantasists who have disregarded everything we know about macroeconomics, and have been wrong every step of the way. This isn’t about analysis, it’s about power — the power of the creditors to pull the plug on the Greek economy, which persists as long as euro exit is considered unthinkable. So it’s time to put an end to this unthinkability. Otherwise Greece will face endless austerity, and a depression with no hint of an end.

[Tizer]

[I wrote this before seeing Stanley's post so it shouldn't be seen as a response to his post! ]
Judging by comments on the Today programme this morning we could see civil war in Greece. The tensions are great and are pulling in several different directions - between those who support and those who oppose the government, between rich and poor, between left and right. In the background, Putin will be scheming and looking for the best ways to get some leverage against the EU and NATO.

Talking of the Russians, it's interesting to note that Ioannis Kapodistrias, who became head of state for Greece when the Ottomans were thrown out in 1827, although Greek-born had been Alexander I of Russia's Foreign Minister. He was one of Europe's most respected politicians at the time but was a threat to Metternich's dominance. With the fall of Ottoman rule Greece fell into a bad time of civil war between different clans, factions etc - very similar to what we see happening now in many countries where the leader is overthrown. As the Greek leader, Kapodistrias quelled the civil war and brought about reforms. However more rebellion occurred and Kapodistrias was assassinated in 1831, whereupon the European powers turned Greece back into a monarchy by establishing a king (from Bavaria), followed later by a second king (from Denmark!). Trouble with the various factions still bubbled away in the background and came to a head in WW2 with the Marxist and non-Marxist resistance groups fighting each other as well as fighting the Germans, Italians and Bulgarians. No wonder it's still a hotbed of unrest!

[Tizer]

Krugman will now realise that the Greek people will vote NO because he will have seen the wording of the referendum. It's bound to be NO because they are going to be presented with a question that they don't understand:
As reported by the BBC:
The question which will be put to voters on Sunday will not be as simple as whether they want to stay in the euro or not - instead it asks Greeks to approve or reject the specific terms laid out by Greece's creditors:
"Should the agreement plan submitted by the European Commission, European Central Bank and the International Monetary Fund to the June 25 eurogroup and consisting of two parts, which form their single proposal, be accepted? The first document is titled "Reforms for the completion of the Current Program and Beyond" and the second "Preliminary Debt sustainability Analysis."
"Not approved/NO
Approved/YES"

As the BBC notes, "The two appendix documents - `Reforms for the completion of the current programme and beyond' and `Preliminary debt sustainability analysis' - don't sound much more easily digestible than the ballot. There is still a question over when and how voters will be presented with those documents, and whether world-class economists will be on hand at polling stations to explain them."

Also, it is the convention that a referendum should have YES as the first option with NO second. The Greek government is putting them the opposite way around to suit its own wishes.

An analysis, with some interesting historical details of other referendums, is on the Beeb's web site: LINK

[Stanley]

Interesting stuff Tiz and typical of the whole Balkan area in the 19th C. In Greece, even now, one of the deepest areas of suspicion is between Greece and what was Macedonia, old feuds persist!
Alexis Tsipras is openly declaring a NO vote as a negotiating ploy with the EU. The EU say they are not negotiating any more so it looks like the end game. However, you can never be sure in politics. Do not discount a last minute accommodation. All sorts of pressures are at work that we know nothing about.
[You and I listen to the same programmes.... I listened to that analysis of the question as well....]

[Tizer]

China is spooked by the current crisis with Greece and the eurozone. It has made large investments in Greece as well as in other eurozone countries but there is more to it than that. It sees Greece as a southern gateway to Europe in its attempts to move its influence west, over land and by sea. LINK

[Stanley]

See THIS BBC report for a concise explanation of where we are and an analysis. A Greek financier on World Service this morning said that all imports and exports will cease and shortages will start to hit the shops in a week. Another report focuses on the high historical incidence of suicide in Greece and the fact that it is rising sharply. In another short report I heard there was a fleeting reference to the destination of the vast majority of cash already borrowed by Greece. It goes straight out in interest payments. Someone somewhere is making a fortune out of this tragedy. The thought strikes me that if this was an individual, common sense would prevail and they would declare bankruptcy..... One thing is certain, the bankers will do better out of this than the Greek people.... It's a tragedy and an indication of how badly our present systems cope with events like this.
Is Osborne re-writing his budget speech?

[Tizer]

"It goes straight out in interest payments. Someone somewhere is making a fortune out of this tragedy."
That's why I'm always ranting about the `moneymakers', they make it all ways, in good times and in bad times.

"...if this was an individual, common sense would prevail and they would declare bankruptcy..."
Like a fever, it's best to get it over with as fast as possible, don't let it drag on. But this fever has lasted for years.

[Stanley]

Thanks Tiz. I said many times long ago that the accountants ruled business. They appear to have taken over the world now.....

[plaques]

It's bound to be NO because they are going to be presented with a question that they don't understand:

I would add that it could equally be YES because of the same reason. Readers of the 'Pendle Core Strategy' postings may remember that this document covered several hundred pages of convoluted historical data wrapped round two basic themes:- How many houses needed to be built and how much industrial land needed to be allocated. Both these were based on totally fictitious population increases. Even when this was pointed out and another set of figures were pulled from thin air Pendle Council ignored the now flawed logic and carried on virtually unchanged.
Reading across to the Greek austerity plan exactly the same illogical process is being trotted out. The IMF loan agreement will be written in a language that only corporate lawyers can understand and the implications will be so wide ranging that the Greece will eventually own no capital assets and their politicians will be told what to do from Brussels. Alexis Tsipras has pointed out the flows in the current payback conditions but is being ignored because there is no profit in this approach. What is becoming increasing clear is that fairness and justice based on any reasoning that includes the needs of the Greek people is being totally ignored by the IMF.

[Stanley]

Nice clear post and I agree with you P. I was struck last night by the fact that BP are paying out squillions in compensation. Enough to keep Greece going for a year or two.....

[PanBiker]

There is this picture that is being shared in Facebook land of the 1953 London Conference:



The caption along with it reads:

"Here's a picture of Greece's finance minister at the London Conference of 1953, signing a treaty agreeing to cancel 50% of Germany's debt. Because it was the right thing to do."

[Bruff]

The English Votes for English Laws (EVEL) is turning into a dog’s breakfast as I rather suspected it would once the PM waded in about an hour after the Scottish Referendum result was declared to announce to us all that all this was in reality all about England.

Westminster is the UK’s Parliament and the MPs there are UK MPs, not English MPs or Welsh or whatnot. What is proposed downgrades some UK MPs and in effects carves out a part of the UK’s Parliament as an English Parliament. If the English are so exercised about EVEL then they should get off their backsides and demand an English Parliament, to sit alongside the Scottish Parliament and the Welsh and Northern Irish Assembles, to which they can elect Members of the English Parliament (MEPs!) by proportional representation, the voting system used for the Devolved Assemblies. Westminster can then remain the UK Parliament dealing with matters of defense and other UK-issues, and populated as now by UK MPs.

This would need the ‘Constitutional Convention’ Mr Milliband mooted. But instead we appear to be getting some procedural change to Standing Orders. It does rather give the impression that the current Government see this as nothing more than equivalent to the running of the management committee of Barlick Civic Hall and frankly the sort of bar stool-philosopher-appeal-to-common-sense shallow posturing we should all have come to expect from them.

Richard Broughton

[Tizer]

An article on Greece in the Independent by Robert Fisk...
`Greece debt crisis: What happened to democracy when it's a case of 'Vote Yes or else'?'
LINK

[Stanley]

Richard, straight to the point as usual. It would appear that we are being governed by arrogant, incompetent decrees from people who don't understand anything that wasn't in yesterday's briefing.
I love the picture from 1953.... As I write there is an extended report on World Service in which the reporter is interviewing six bright young people who have a very clear view about what is happening to them, 3 will vote yes and 3, no. They understand the history and the problems and amongst many interesting views the main one is that this is an ideological argument rather than an economic question.
Tiz, I read the Fisk article and found it spiky and confused, he lays out the problems but says nothing constructive.
I must admit to bias, I have Greeks in my extended family, Big Harry was Greek. I see Greece as being a very similar case to where Poland was in the past, a pawn in power politics in Europe. I feel sorry for their plight and do not see it simply as the fault of their profligacy. The root cause as I keep banging on about is the fatal flaw of the mistakes made when the single currency was set up. The EU collectively is ignoring this aspect of the problem entirely and this may be the biggest mistake we are seeing at the moment as, in the long run, it could be fatal for the Project.
The one good thing about the referendum is that it will excise some of the uncertainty but I am afraid that whichever way it goes, the ordinary Greek people will be the losers. It's another version of the wave of inequality which is engulfing us, some nations are more equal than others.....

[Tizer]

"I read the Fisk article and found it spiky and confused, he lays out the problems but says nothing constructive." - Stanley
That's exactly how I found it too, which is why I simply posted the link and didn't comment. I was wondering if it was just me. I looked up Fisk on Wikipedia and he seems to have won lots of awards for his reporting. Yet to me this article was a dog's breakfast. I read it through because I believe the last 200 years of Greek history is pertinent to the present crisis and I thought Fisk was going to enlighten me further. I do wonder what Greece would be like now if it had been scooped up into the Soviet Bloc at the Yalta conference and then released from Soviet rule like so many East European countries when the Wall came down. There might be less of a leaning towards Putin and communism if they had been under the Russian heel for all those years.

[Stanley]

Good Tiz. I wondered whether I was being a bit too critical but his article contributes nothing to the debate, surely the mark of good editorial writing. You make an interesting point about the decisions arrived at after the war, we'll never know for sure of course but experience teaches that arbitrary allocation of boundaries and spheres of influence are invariably flawed.
The Greeks go to vote today on a question that is already out of date. In effect it will be a protest against austerity and the rising tide of inequality. In a very informative series of interviews yesterday on World Service it was obvious that almost all the people want to stay in the EU but see Greece as being very badly treated. In this respect they are expressing the same reservations about the Euro Project that we saw in the European elections and therein lies what I see as the danger. There are many in Europe who recognise the flaws in the present setup and in the original implementation of the single currency. They also recognise that austerity is not the best economic policy to get a stable currency let alone a stable project.
These same doubts are abroad in the UK as well yet George Osborne is going to go even further with the Tory project to decouple government from responsibility for society. The usual process of pre-budget leaks and dribbles is in full flow as we are softened up for what is going to be a regressive budget based on flawed economic principles but even though I am sure they are aware of this it is seen to be an acceptable price for preserving that part of the status quo which interests them most, the economic viability of their class.
I make no apology for using the word 'class'. We are told that it doesn't apply any longer and anyone using the term is derided as an Old Lefty and a dinosaur. That doesn't worry me because I am almost certain that I am right when I say that the structure of class has changed. At one time it was easily sub divided into labouring, middle and upper and we all knew where we were. Today it is simpler, it is the haves and the have-nots, the privileged and the underclass. What the government hasn't grasped yet is that over 80% of the electorate are worse off in terms of disposable income and opportunity for advancement than they were ten or twenty years ago. I can remember when contributing to a company pension fund was a cast iron guarantee of some measure of security in old age. To be 'superannuated' was the mark of the white collar and middle classes. Even that has been eroded by manipulation of pension funds, there is no security there any longer. Job security is at an all time low, the concept of a living wage in return for full time work has vanished. Now we see the safety nets of welfare payments and the NHS being eroded day by day. Even the public services like Justice and the police are being cut.
One thing we can be certain of is that this government support of the bones of society is essential to its preservation and the present course is eroding society itself and in the long run we shall all pay for it, including the wealth holders. In short, we are looking at a mess and nobody can predict the outcome of events in Europe. Worst case is that the Project will either fail or enmesh itself in endless arguments about federalisation and common budget control. "Events Dear Boy". I hope Ossie has factored this in to his calculations.....

[Stanley]

The Greeks have put down a marker by voting NO. This morning there are arguments going on about what they voted no to... I think it's fairly obvious, it was no to increased austerity and the sooner this is accepted the better. For better or worse, we have a fixed point in the current Euro mess.
Seven years ago the US Fed made the sensible economic decision based on current thinking to let Lehman Brothers go to the wall. That triggered a reaction in the banking system and led to the credit crunch. We can argue until we are blue in the face as to the causes and the rights and wrongs but the base fact remains, the financial system was out of control and the regulatory system had failed. Apply this to the situation in Greece, bad Greek governments took the easy way out and instead of reforming the Greek economy they accepted the unlimited funding from the system designed to keep the system going., in this case the Single Currency. As in 2008, this strategy has failed and is just as much the fault of the EU as Greece. Note that in all this the Greek people were largely innocent.
So, what happens now? Nobody can predict the outcome but one thing seems certain, what the ECB does in the next few days will be crucial. Factor in the political consequences in Europe and we are looking at a can of worms.... All we can do now is sit back and watch the train wreck. No matter which way this goes, the basic flaws in the Euro Project remain and that is the elephant in the room. Events Dear Boy......
Later, interesting that some commentators are following my line and saying that this is not only a disaster for Greece but a wake up call to the EU to re-examine the Euro Project and admit the flaws. Dead right...... (But then I would say that wouldn't I....)

[plaques]

This morning there are arguments going on about what they voted no to...

It reminds me about times in my youth when the best part of a sunday afternoon was spent playing cards. The school I played with were all experts but I was a complete novice. In one game at Solo whist. I went a Misère ouverte, (Misère ouverte the bidder attempts to lose every trick with no trumps and their hand face up on the table.) but in this case the first card was played as normal. Much to my surprise I won. But at the inquest afterwards I was told in no uncertain terms that I had played the wrong card. We will now hear from all sorts of 'experts' that standing up to the Troika was a big mistake not because it was the right thing to do but because it exposed their weakness. Brussels will now go flat out for regime change and try to get rid of Tsipras.This is not because he is wrong but a more compliant Prime Minister will keep the Euro fudge going a bit longer.

[Tripps]

Not politics - forgive me.

I'd heard of something called 'miseraverre' (sounded like) in my youth and knew it came from a card game, but knew no more and had never seen it written down.
Here we have another instance of things you had forgotten that you had forgotten, for which this site is famous. It was of course 'misere ouverte'. Another mystery solved. Thank you Plaques.

I mastered Crib (Cribbage), but another mystery to me was Nap (Napoleon). I know you had to get five tricks, and there were regular newspaper headlines when United got five goals - 'United go Nap'.

[Stanley]

Brilliant post P. Exactly right but I doubt id Brussels can do much about Alexis at the moment, even the opposition is supporting him and the result on the grounds that this is what democracy is all about. I was impressed by the mutually agreed resignation of the maverick Finance Minister. He was put in as the hard man and his job was to be difficult and wind the Troika up, a job he did well. Alexis can now go in with a softer approach based on staying in the EU to limit the damage all round. The split between France and Germany is now being exposed. This affair has exposed the dislike of Germany in Greece and could be having the same effect in France. France is for a softer line as is Merkel on the evidence so far, she can see the dangers for the EU but is constrained by the hard liners in her opposition. Some of the opinions coming out of Berlin yesterday were to say the least, non diplomatic and vitriolic against Greece. The ECB is playing hard line and by refusing to provide any further security for the banks. This is in effect forcing them out of the Euro and hence the EU. This is what the EU meeting will be about today, even now there are statements coming out of member countries recognising the dangers to the Project and encouraging honesty and dignity.
My reading is that there are many in the EU who recognise that this is now not about Greece but the survival of the EU itself. The flaws in the Single Currency are being exposed even if nobody is openly voicing this. Looked at in this way, the threat of 'Grexit' could be one of the most constructive results in EU politics for years. One thing is certain, Greece is solid and has a clear moral position, the same cannot be said for the EU.
As for cards, we played Solo Whist as well and I never pulled Misere Revere off myself, I managed Misere occasionally but never reached those heights. My dad taught me cribbage and I still have a board somewhere.... I used to go with my mother to whist drives and my god, those old ladies were frightening! The main game I played with my mates was Bezique. As I remember it it was a bit like Solo but with two packs of cards and when you had used them all up you played again with the discards without shuffling. The big problem was that one of the two brothers I played with, Tony, had a photographic memory..... That was interesting.
You're right David, these occasional off piste exchanges are brilliant. I'd forgotten about Bezique until this morning.....

[Tizer]

Something that hasn't been much mentioned about the Greek referendum...of those eligible to do so, only 62.5% voted. We might think that isn't a bad turn-out but there is a darker side to it. Many people living in the rural areas of Greece wanted to vote but couldn't. Ironically they couldn't afford to travel to the towns to the polling stations because they've got so little money. To make matters worse, many now can't afford to travel to the towns to get money out of the bank, even when it's been available. So much for democracy in Greece. We don't know how those rural folk would have voted. And they were not the ones who were getting the big pensions and retirement at 50 in the halcyon days of Greece's eurozone membership.

Another point. The (now former) finance minister Varoufakis is on record in 2010 as saying he wanted Greece to default on its loans. It hasn't helped, having someone with that objective in the negotiating team. Of course, he perhaps was right and things might have been better if Greece had got it over with early on. I was earlier reading an email message from a friend who lives in a village in the Republic of Ireland and it reminded me of how much pain the Irish (and Icelanders) went through immediately after the start of the credit crunch. She lost her job as a reporter on the local paper; her husband, a long-distance lorry driver, lost his job and is now recovering from a hip operation. But they are in a better situation than the Greeks.