1. "Corruption, tax evasion, rule by a political kleptocracy are all, undeniably, characteristics of Greece. Always have been, in fact. They help explain why Greece was the first domino to fall in the Eurozone. They do not, however, explain the domino effect itself. The latter can only be explained in terms of the Eurozone’s faulty design. To prove this, consider Ireland and Spain. The state there was not corrupt and tax evasion was not a problem. Yet they are just as bankrupt as Greece. Regarding the high jacking of the state by a privileged class, you are of course right: this is at the heart of the problem. However, this is not specific to ‘failed states’ like Greece. It is also true for ‘successful’ states like Germany where, for instance, the Parliament and the people are misled into thinking that their loans to Greece are necessary in order to show solidarity to Greece – when, in reality, they are funds whose purpose was to flow back into the German and French banks while the Greek social economy was allowed to implode."
2. "Nevertheless, its recent ‘Fall’ has all the hallmarks of the massive Crisis that began in the USA before spreading to Europe; the Crisis which I explained in my book in terms of the metaphor of the Global Minotaur’s mortal wounding (i.e. the end of a global recycling system which involved: (a) the US deficits creating demand for European, Japanese and Chinese net imports, and (b) European, Japanese and Chinese net profits flooding to Wall Street and, therefore, paying for the US deficits). Greece’s recent tragedy can be usefully understood in the context of this global analysis: The massive flow of capital into Wall Street gave rise to financialisation; effectively the generation (by the big US banks) of huge quantities of private money (derivatives, options etc.). That private money then flowed back to Europe’s Periphery (Greece included), pushing growth rates up. Thus, countries like Greece went through a period of impressive (by Eurozone standards) growth, on the basis of capital flows into Greece from Wall Street, from the City of London and from French and German banks. While those capital flows kept coming, Greece was booming. But when, in the Fall of 2008, Wall Street collapsed, the private money that was maintaining capital flows in Greece, Ireland, Spain etc. disappeared. That ‘disappearing act’ meant the beginning of the Crisis. In places like Ireland, it was the private sector that went bankrupt (real estate developers in particular), before the losses were shifted to the state. In Greece it was the State that had borrowed directly during the ‘good times’ and, so, the Crisis took, in Greece, the form of a public debt crisis. Once it began, Europe’s denial that it was a systemic Crisis (that cannot be dealt with by means of loans and austerity) guaranteed that it would go on and on, with catastrophic effects."
On Mon, Apr 30, 2012 at 4:07 PM, Jordan Hayes <jmhayes at j-o-r-d-a-n.com> wrote:
>> what was the primary cause(s) of the crisis that Greece
>> et al find themselves in?
>
>
> I think Krugman would explain it this way:
>
> - Credit glut + common currency meant easy-to-close, large speculative
> lending to the "cheaper" countries in the Eurozone, leading to housing
> bubble
>
> - Housing bubble brought up wages and prices, which eventually must revert
>
> - Bubble burst: soaring unemployment, general indebtedness, no way to dig
> out
>
> - Forced austerity has made things worse; not having their own currency also
> limits options
>
>
>> To what extent did they bring this upon themselves?
>
>
> I don't think that's a useful question. What would you do with the answer?
>
>
>> How much of German motivation in the formation of the Eurozone was
>> farsighted interest in global good as opposed to nearsighted
>> self-interest?
>
>
> Are those the only two choices?
>
>
>> How much are Germany and France to blame for the state of Greece,
>> Spain, others (PIGS?), today?
>
>
> They are certainly almost entirely "to blame" for the difference between
> Greece three years ago and Greece today; whether they are "to blame" for
> Greece 2005-2008 is probably a harder question. But again: who cares about
> blame?
>
>
>> What can be done to help the PIGS (let’s make that SPIGs) today? By
>> Germany?
>
>
> Again looking to Krugman, Germany could allow the richer Eurozone to
> experience some inflation. That might not be enough, however. The other
> day he said this:
>
> --> What is the alternative? Well, in the 1930s — an era that
> --> modern Europe is starting to replicate in ever more faithful
> --> detail — the essential condition for recovery was exit from
> --> the gold standard. The equivalent move now would be exit from
> --> the euro, and restoration of national currencies. You may say
> --> that this is inconceivable, and it would indeed be a hugely
> --> disruptive event both economically and politically. But
> --> continuing on the present course, imposing ever-harsher
> --> austerity on countries that are already suffering Depression-era
> --> unemployment, is what’s truly inconceivable.
> -->
> -->
> http://www.nytimes.com/2012/04/16/opinion/krugman-europes-economic-suicide.html
>
>
>
>
> /jordan
> ___________________________________
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-- Wojtek
"Modern conservatism is just a neoliberal gloss on medieval domination."