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Marv Gandall wrote
Despite the predictable hardline posturing by Germany, the ECB, and the
EU, this weekend’s sympathetic comments by French finance minister Sapin
and US President Obama can’t help but reinforce the Syriza leadership’s
conviction that it can exploit strategic divisions at the top concerning
austerity and the debt crisis.
I noted several weeks ago that “the likeliest outcome is an eventual
compromise which limits, but does not entirely impair, Syriza’s ability
to provide jobs, income support, and debt relief to Greece’s beleaguered
population. Such an outcome would be in keeping with the growing
conviction of the European elites that its brutal austerity regime is
undermining economic growth and political stability throughout Europe
and that some accommodation to mass distress and discontent is necessary.”
France Supports Greece in EU Debt Battle
By MARCUS WALKER, INTI LANDAURO and ANDREW ACKERMAN
Wall Street Journal
Feb. 1, 2015
(Behind a paywall)
(...)
------------------------------------------------------------------------
Lemme see if I have this right:
First of all, Europe as the second or third largest economic player has
a heavy bearing on the global economy and appears to be in a very
tenuous state which is partially concealed by its opaque structure.
I'm wondering, if Germany begins to get pressure from other governments
that it doesn't feel it can accommodate for whatever reasons having to
do mainly with its net export position, with the position of the
Bundesbank and the moral hazard effect on other indebted governments,
what do we think is the likelihood (I've read that it is a probability)
- and the effect - of a complete pull-out of Germany from the Eurozone,
re-instituting the Deutschmark or a similar separate German medium of
exchange?
As you say, an eventual compromise at a low level of debt relief appears
as the likely prospect, but 80-90% of the bail-outs the Greeks have been
getting go to pay interest and principle on outstanding indebtedness at
the expense of Greek (and European) taxpayers, which is why Syriza
concludes that more loans at anything like existing terms are less than
useless, and that they absolutely cannot pay them with a shrinking
economy anyhow.
There seems to be no question that Syriza's approach owes more to Keynes
than to Marx, that the effort is being characterized as first allevating
the most acute points of domestic distress and then advancing proposals
to save European capital from itself, especially since other European
taxpayers are paying for this debacle as well - - but look, Syriza only
obtained 36% of the participating electoral vote, their parliamentary
plurality of 49% exists as an anomaly of the rules of apportionment of
seats, they cannot propose that a socialist government will expect the
Greek people to agree to cut their economy loose from its European
moorings and share a dwindling nothing, they cannot survive without
external aid at this point, no one, other than other European states
(collectively) that fear penumbral effects on their own financial
prospects of Greek collapse, will willingly invest in a faileing state
-- and the Greek people in the light of all this are not regarded by
Syriza as ready for a socialist revolution - nor given the options do
they see a viable plan for such a situation. And when anyone suggests
that you let Greece crash completely, and then there will be conditions
ripe for revolution, and autarky, we have to remember that they do not
have anything like the resources available to Argentina which, with its
vast land and relatively large productive infrastructure for providing
inputs and for growing soybeans for China was able to recover from
default. Even Ireland, which has had some recovery from imposed
austerity under terms similar to those imposed on Greece has a
historical relationship as a platform for plant and investment by
international capital that Greece lacks.
From what I'm also learning, one of the main impediments to a
restructuring of the Eurozone, in order to construct a recycling or
redistributive mechanism which does not leave each individual state
responsible for its own indebtedness - where one state (Germany) is a
net exporter and most others are net importers (think the US, with the
federal government being able to distribute say Boeing plants to
strapped states when Boeing asks Congress for a subsidy for expansion,
or when Congress distributes venues for military bases) - is that many
other European nation's finance ministers seem to know full well that
the present structure is untenable and prefigures disintegration of the
Euro, but if they say so publicly that immediately suggests their
nation's weakness and affects their credit-worthiness.
So where is the essential European leadership for a restructuring? It
seems hopeful that the French finance minister is sticking his neck out,
but Merkel has so far resisted everything the US proposes and seems not
too likely to pay attention to a weaker France. Also though, the IMF has
committed a mea culpa, saying now that, in effect, austerity has been a
failure in stimulating growth.
Still, rock and hard place, and possibly insurmountable difficulties -
for Syriza's efforts to convene a conference of Euro nations, although
that seems a sensible way through - and therefore ultimately to maintain
the present Syriza coalition in office. And the hopes and confidence of
the strapped Greek people? To recap and repeat, their economy has
dropped something like 27% in the last five years, the unemployment rate
is 25% and among those 16-25, 55%. I read somewhere that when Greeks
form a queue at the power company offices, it's not to pay their bills,
but to disconnect their power, because they need the scant funds they
have to buy food. And then? Golden Dawn, whose share of electoral
support now probably exceeds that of PASOK?
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