I'm surprised at Grey. There are no buffalo in America (the continent). Those are Bison.

Buffalo live in Africa and Asia.

Pure quality by John, as usual.

There are a few points I'd like to add, in order of appearance.

5:10 – Greek default or Grexit could be manageable by the rest of the EZ, economically. Italy looks a bit shaky and Spain still looks like shit, so things could spiral out of control, but chances would be better now than they were in, say, 2010.

However, Grexit would be a political nightmare. EZ membership is supposed to be irreversible, so Grexit would reduce the Euro from a common currency to a peg when viewed from the outside. That's open season on the rest of the PIIGS. If Greek then rebounds, other people might very well decide to give Germany the finger and leave as well. If Greece fails, you have a NATO member turn into a failed state, which not only gives NATO the shivers, but also buries any notion of solidarity within the EU. This union survives because of the promises it makes, which include increasing standards of living and solidarity among different peoples. Without it, we're left with... what exactly?

And nevermind the humanitarian catastrophe taking part in Greece. We've conditioned ourselves to block out the pain and suffering of people in Africa. We even manage to shrug at the cesspool of corruption that is Kosovo. But if we do that to Greece as well, what little moral authority Europe might still have left would be gone then.

5:32 – The last payment Greece received was in August, long before Syriza took over. The previous government was in disagreement with the Troika and therefore transfers were frozen.

5:57 – Troika payments are required to service previous debt obligations. They are separate from what the Greek banks require to maintain their liquidity. That would be Emergency Liquidiy Assistance (ELA) from the ECB, which is a different thing entirely, even though it comes from a member of the Troika.

The ECB is bound by law to maintain and ensure the stability of the banking system(s) within the EZ. If a bank runs into liquidity problems, support is provided by the national bank of the respective country, which funnels funds from the ECB to the troubled bank. That's ELA, and a limit on ELA is a limit on the amount of funds that banks can draw from through this process. If an illiquid bank is cut off from ELA, it goes belly up. Bad idea.

Some argue that the ECB should not provide ELA to those Greek banks anymore, since they are insolvent, and ECB rules forbid ELA to insolvent banks. But as Varoufakis said, even the ECB's own Single Supervisory Mechanism (SSM) department, which is the new banking oversight, declares the four large Greek banks to be solvent. So there is no reason for the ECB to cut ELA to Greek banks. It's all political, and the ECB is designed to be outside of politics. That's also a reason why its membership in the Troika is so controversial.

The political argument for cutting off ELA is that Germany et al. are on the hook for the total amount should Greece itself go belly up. Somewhere along the line, someone made the glorious decision to install the ECB as a currency issuer without providing it with the attributes of a regular currency issuer. If the Bank of Japan or the Bank of England racks up losses, noone cares. They issue their own currency, they cannot go bankrupt, whatever debt they have in their books is irrelevant, for this discussion anyways. But the ECB has to balance its books, it has to receive funds from its members to balance losses, and in proportion to their economic size.

They made sure that politicians can scare the demos by pointing out how they have to foot the bill for this shit, even though it's the one entity where debt truly doesn't matter at all.

By the way, the funds that Greece is hoping to acquire are meant, primarily, for two purposes: making debt payments and to provide financial room to convert ECB(?) debt into EFSF debt (4% interest down to 1%). That's all. No spending.

6:54 – "Printing" money is generating demand out of thin air. There is a shortage of demand throughout the entire continent. So yeah, if the folks at the ECB could type in a few numbers, that would be swell.

Even Germany has a shortage of demand. We are merely hiding it behind the €200b+ of demand that we steal from other countries, i.e. our current account surplus. But the infrastructure and investment spending over here is at all time lows. We'd need an additional €200b+ just to get the infrastructure back to the state it was in a decade ago.

There is no productivity growth in Europe. The UK actually lost a lot of productivity by its introduction of zero hour jobs and other forms of slavery. Without sufficient demand, there is no need to improve production capacities – they can't even sell what they could produce right now.

Pretty decent.

The Eurpean States would be a big leap for europe.

"...and it's still not a continent"

First of all, Flassbeck is the only(!) prominent economist in Germany arguing strictly against the madness of austerity. But he's living in the border region between France and Switzerland, so he's a European more than a German.

Among all the economic think tanks in Germany, only the union-sponsored IMK makes a credible case against this madness. Everyone else is more or less in line with the neoclassic perspective. Not a Keynesian in sight, much less a post-Keynesian group.

But now to the meat of the issue. There will be no major political shift in Germany in the near future. As Flassbeck stated, only a single party opposes the financial inquisition commonly known as the Troika. Unfortunatly, it's the socialists, and despite overwhelmingly popular policies, they are still an absolute no-go for large swaths of the demos thanks to the authoritarian regime in East Germany. Sucks, but it is what it is.

So it's up to the French people once again to save the continent from itself. Noone else has the balls or the influence to put an end to this misguided union. How likely is it for the French government to openly challenge German hegemony soon? I wouldn't bet on it. Which means the Greeks are fuuuucked².

In any case, what would it take for Greece to stabilise? And by stabilise I'm talking about a return to a manageable level of unemployment, a working healthcare system and social safety net. A conservative guesstimate would be a public deficit of ~10% of GDP for at least 5 straight years. Alternatively, the EIB would have to prop up Greece with €50b a year for the same number of years. To get a working bureaucracy, to undo four decades of nepotism, Greece would basically need a generation to reestablish itself as a state – and it would require appropriate financing.

Now remember which of Syriza's demands is painted as most controversial right now: debt restructuring. Debt restructuring, while neccessary at some point, is entirely pointless as long as the fiscal policy remains contractionary. Greece needs austerity to stop, right the fuck now. Greece needs to provide income-generating jobs for its people. All the talk about debt is utterly pointless, because at 25% unemployment, we're looking at permanent damage in every way imaginable. The social toll alone should be completely unacceptable within Europe if we truly gave two shits about human dignity.

So, even if Syriza get their way tomorrow, Greece would still be flushed down the shitter. Syriza's proposal is contractionary. Any primary surplus in this situation is contractionary.

Greece is done within the Euro. The use of a foreign currency makes it impossible to use appropriate fiscal policy on their own. Unfortunatly, but also intentionally, the currency issuer, the ECB, is placed outside the democratic control of the European Parliament, or any national parliament for that matter. Fiscal policy within the EZ was taken out of the control of our elected representatives to ensure that the neoclassic/neoliberal approach was irrevocably built into the system. We can thank Germany for that, by the way.

There is a shortage of spending in Greece. There is a shortage of spending in Spain. There is a shortage of spending in Portugal, Ireland, Italy, France. There is a shortage of spending in Germany, for fuck's sake. Put the ECB under control of the EP, add full employment (2-3% unemployment) to its mandate, and have them finance the appropriate programs at the national level. The output gap in Europe is so massive, the un(der)employment so vast, they could spend a trillion Euros and inflation would still not reach the agreed upon target value of 2%.

All it would take to change the rules is consent from every national parliament in the union. Might as well go skinny-dipping instead.

Keynes and others made the same argument against the Treaty of Versailles. You mentioned how that turned out.

Folks did in fact learn from that mistake, but after everything is said and done, it was the Soviet expansion that made the case. Germany was the frontier and to turn it into some shithole or even a failed state would have made it worthless in the struggle against Soviet expansion. Germany was expected to a) keep them in check, and b) serve as a prime example of how much better life is within the realm of capitalism. If it hadn't been for T-34s in Berlin, I'm not entirely sure we would have been treated as favourably as we were.

In any case, even after much of the debt was written off, the remaining payments were stretched out over decades, so as to not be too much of a drain on the economic development of the country.

Still, it's not the same with Greece. We only torched half the continent, but they dodged their taxes. That's a million times worse, it seems.

While we're on the subject of tax evasion: Luxembourg alone accounts for about €20b-€30b a year of lost tax revenue in Germany. Yap, the tax system implemented by none other than troika member Jean-Claude Juncker is more of a drain on the public budget in Germany than Greece could ever be.

First, it's 'your head' and not 'you head'. I believe using proper english is considered a norm in society. We don't speak 'gangster' here.
Second, both Groups, slaves and jews, were marginalized parts of society who got treated badly because it was normal for the majority to do so. Then we grew up and started to understand that you shouldn't act this way. So far, only some of us managed that.
Third, I'm on a different continent than you are, it doesn't matter where I go. Also, Peter Pan is my Idol, I'll never grow up. I thought a man who is into clowns would understand.

Good lord -- it's like ASIA crawled its way out of the grave!

(the band, not the continent)

You are absolutely right, the results of elections in Greece do not create an obligation for fiscal transfers from other European countries.

But that plays right into what Varoufakis has been saying for years, doesn't it? The program over the last seven years has reduced Greek output by a quarter, and thereby its ability to service and reduce its debt. The troika is offering more loans, loans that cannot be payed back, in return for a further reduction in Greece's ability to pay back those loans in the first place. Extend and pretend, all the way. Nevermind the humanitarian cost or the threat to democracy itself.

It is either counter-productive or aimed at a different goal entirely. Greece wants an end to those loans, and all the loss of sovereignty that comes with it, while the Eurogroup in particular wants to stick to a program that only increased Greece's dependency to a point where they can throw the entire country into unbearable misery at a moment's notice (e.g. cut ELA access).

Take the privatisation demands as an example. The program demands that Greece agrees to sell specific property at a specific price. Both parties are keenly aware that this price cannot be realised during a fire sale, yet they still demand a promise by the Greeks to do so. Any promise would be a lie and everyone knows it.

Same for the demanded specificity of Greece's plans. After decades of nepotism, a fresh government made up entirely of outsiders is supposed to draw up plans of more detail than any previous government came up with. And they cannot even rely on the bureaucracy, given that a great number of people in it are part of the nepotic system they are trying to undo in the first place.

Taxes, same thing. The first king of Greece (1832'ish) was a prince of Bavaria who was accompanied by his own staff of finance experts, and they failed miserably. Greece went through occupation, military junta and decades of nepotism, and the new government is supposed to fix that within months.

Those demands cannot be met. The Greeks know it, the troika knows it, the Eurogroup knows it.

Zizek called it the superego in his recent piece on Syriza/Greece:

"The ongoing EU pressure on Greece to implement austerity measures fits perfectly what psychoanalysis calls the superego. The superego is not an ethical agency proper, but a sadistic agent, which bombards the subject with impossible demands, obscenely enjoying the subject’s failure to comply with them. The paradox of the superego is that, as Freud saw clearly, the more we obey its demands, the more we feel guilty. Imagine a vicious teacher who assigns his pupils impossible tasks, and then sadistically jeers when he sees their anxiety and panic. This is what is so terribly wrong with the EU demands/commands: they do not even give Greece a chance – Greek failure is part of the game."

Aside from all that, the entire continent is in a recession. Not enough demand, not enough investment, unsustainable levels of unemployment. Greece was hit hardest, Greece was hit first. It's not the cause of the problem, it is the canary in the coal mine. And Italy is already looking very shaky...

Four months of limbo for Greece, if this holds.

They really know how to hold a continent in a permanent state of emergency, don't they...

I'm going to be devil's advocate here and take the side of fearful American white trash:

Dear gays,

You're ruining the last good thing we had going on here in this country. We took care of the natives, forcing them into small communities where they slowly became psychologically oppressed and fraught with addiction.

But then we lost our control over niggers, who had their places down on our plantations. No matter, we can still push asians around because they're our bitches. But then we started to take them seriously. I don't even understand that.

I can't tell the difference between India people (Indians? Like our natives?) and allah-la-las -- and, really, I suspect because they're all in a similar area of the globe, they're the same. I might even believe Asia and India/Middle East are separate continents or somehow not entangled socially, economically and politically.

I think that's all the colored people, so lastly, addressing devil worshipers and homosexuals, who are really very similar in their connection to Satan. I can't tell you how disgusted I am about a penis going into an anus. It's just so gross. Hot lesbians are alright, but even that goes a little far, as I'm uncomfortable talking about that with people and church says no. Yes, that's bad too... and my wife definitely doesn't need to know anything about what I just said about lesbos. Now, a dyke, on the other hand, I think men are technically allowed to punch dykes.

I've already said too much. I feel gross.

In conclusion, it's been a downward spiral into immorality. Starting with the freedom of black people, who slowly made us lose sight on what is right and decent in the nation which God granted us. From negroes, came homosexuality.

@RedSky

Selling assets and, to a certain degree, the reduction of public employment is an unreasonable demand. There's too much controversy about the effects it has, with me being clearly biased to one side.

Privatisation of essential services (healthcare, public transport, electricity, water) is being opposed or even undone in significant parts of Europe, since it generally came with worse service at much higher costs and no accountability whatsoever. Therefore I see it as very reasonable for Syriza to stop the privatisation of their electricity grid and their railroad. There are, of course, unessentials that might be handed over to the private sector, but like Varoufakis said, not in the shape of a fire sale within a crisis. That'll only profit the usual scavengers, not the people.

Similarly, public employment. There's good public employment (essential services, administration) and "bad" public employment. Troika demands included the firing of cleaning personnel, who were replaced by a significantly more expensive private service. And a Greek court decision ruled the firing as flat out illegal. For Syriza to not hire them back would not only have been unreasonable financially as well as socially, it would have been a violation of a court order. Same for thousands of others who were fired illegally, according to a ruling by the Greek Supreme Court.

Troika demands are all too often against Greek or even European law, and while the previous governments were fine with being criminals, Syriza might actually be inclined to uphold the law.


On the issue of reforms, I would argue that the previous governments did bugger all to establish working institutions. Famously, the posts of department heads of the tax collection agency were auctioned for money, even under the last government. Everything is in shambles, with no intent of changing anything that would have undermined the nepotic rules of the five families. Syriza's program has been very clear about the changes they plan to institute, so if it really was the intent of the troika to see meaningful reform the way it is being advocated to their folks at home, they would be in support of Syriza.

Interventions by the troika have crashed the health care system, the educational system and the pension system. Public pension funds were practically wiped out during the first haircut in 2012, creating a hole of about 20 billion Euros in the next five years.

I would like to address the issue of taxation specifically. Luxembourg adopted as a business model to be an enabler of tax evasion, even worse than Switzerland. In charge at that time was none other than Jean-Claude Juncker, who was just elected President of the European Commission. He's directly involved in tax evasion on a scale of hundreds of billions of Euros every year. How is the troika to have any credibility in this matter with him in charge?

Similarly, German politicians are particularly vocal about corruption and bribery in Greece. Well, who are the biggest sources of bribery in Greece? German corporations. Just last week there was another report of a major German arms manufacturer who paid outrageous bribes to officials in Greece. As much as I support the fight against corruption and bribery, some humility would suit them well.


As for the GDP growth in Greece: I think it's a fluke. The deflation skewers the numbers to a point where I can't take them seriously until the complete dataset is available. Might be growth, might not be. Definatly not enough to fight off a humanitarian crisis.

Surpluses. If everyone was a zealous as Germany, the deficit would in fact be considerably narrower, which is a good thing. Unfortunatly, it would have been a race to the bottom. Germany could only suppress wage growth, and subsequently domestic demand, so radically, because the other members of the Eurozone were eager to expand. They ran higher-than-average growth, which allowed Germany to undercut them without going into deflation. Nowadays, Germany still has below-target wage growth, so the only way for Greece, Spain, Portugal and Italy to gain competetiveness against Germany is to go into deflation. That's where we are in Europe: half a continent in deflation. With all its side effects of mass unemployment (11%+ in Europe, after lots of trickery), falling demand, falling investment, etc. Not good. Keynes' idea of an International Clearing Union might work better, especially since we already use similar concepts within nations to balance regions.

Bond yields of Germany could not have spiked at the same time as those of the rest of the Eurozone. The legal requirements for pension funds, insurance funds, etc demand a high percentage of safe bonds, and when the peripheral countries were declared unsafe, they had nowhere to go but Germany. Also, a bet against France is quite a risk, but a bet against Germany is downright foolish. Still, supply of safe bonds is tight right now, given the cuts all over the place. French yields are at historic lows, German yield is negative. Even Italian and Spanish yields were in the green as soon as Draghi said the ECB would do whatever it takes.

The current spike in Greek yields strikes me as a bet that there will be a face-off between the troika and Greece, with very few positive outcomes for the Greek economy in the short run.

QE: 100% agreement. Fistful of cash to citizens would not have solved any of the core issues of the Eurozone (highly unequal ULCs, systemic tax evasion, tax competition/undercutting, no European institutions, etc), but it would have been infinitely better than anything they did. If they were to put it on the table right now as a means to combat deflation, I'd say go for it. Take the helicopters airborne, as long as it's bottom-up and not trickle-down. Though to reliably increase inflation there would have to be widescale increases in wages. Not going to happen. Maybe if Podemos wins in Spain later his year.

Same for the last paragraph. The ECB could have stuffed the EIB to the brim, which in return could have funded highly beneficial and much needed projects, like a proper European electricity grid. Won't happen though. Debt is bad, even monetised debt during a deflation used purely for investments.

In the current situation, "structural reforms" is used to subsume two entirely different sets of measures.

The first is meant to remove what you previously mentioned: corruption in all the shapes and forms it takes in Greece, from a (intentionally) broken tax system formed over decades of nepotism to a bankrupt national media in the hands of oligarchs. The institutions of the Greek state are precisely what you expect when a country has been run by four families (Papandreou, Samaras, Mitsotakis, Karamanlis) for basically five decades.

This kind of structural reform is part of Syriza's program. Like you said, it'll be hard work and they might very well fail. They'll have only weeks, maybe a few months to undo significant parts of what has grown over half a century. It's not fair, but that's what it is.

The second kind of "structural reform" is meant to increase competitiveness, generally speaking, and a reduction of the public sector. In case of Greece, this included the slashing of wages, pensions, benefits, public employment. The economic and social results are part of just about every article these days, so I won't mention them again. A Great Depression, as predicted.

That's the sort of "structural reforms" Syriza wants to undo. And it's the sort that is expected of Spain, Italy and France as well, which, if done, would probably throw the entire continent into a Great Depression.

I'd go so far as to call any demand to increase competitiveness to German levels madness. Germany gained its competitiveness by 15 years of beggar-thy-neighbour economics, undercutting the agreed upon target of ~2% inflation (read: 2% growth of unit labour costs) the entire time. France played by the rules, was on target the entire time, and is now expected to suffer for it. Only Greece was significantly above target, and are now slightly below target. That's only halfway, yet already more than any democratic country can take.

They could have spread the adjustment out over 20 years, with Germany running above average ULC growth, but decided to throw Greece (and to a lesser degree Spain) off a cliff instead.


So where are we now? Debt rose, GDP crashed, debt as percentage of GDP skyrocketed. That's a fail. Social situation is miserable, health care system basically collapsed, reducing Greece to North African standards. That's a fail.

Those are not reforms to allow Greece to function independently. Those are reforms to throw the Greek population into misery, with ever increasing likeliness of radical solutions (eg Golden Dawn, who are eagerly hoping for a failure of Syriza).

So yes, almost every nation in Europe needs reforms of one sort or another. But using austerity as a rod to beat discipline into supposedly sovereign nations is just about the shortest way imaginable to blow up the Eurozone. Inflicting this amount of pain on people against their will does not work in democratic countries, and the rise of Syriza, Podemos, Sinn Féin, the SNP and the Greens as well as the surge of popularity for Front National and Golden Dawn are clear indicators that the current form of politics cannot be sustained.

Force austerity on France and Le Pen wins the election.

Meaningful reforms that are to increase Europe's "prosperity" would have the support of the people. And reforms are definatly needed, given that the Eurozone is in its fifth year of stagnation, with many countries suffering from both a recession and deflation. A European Union without increasing prosperity for the masses will not last long, I'm sure of it. And a European Union that intentionally causes Great Depressions wouldn't be worth having anyway.

Yet after everything is said and done, I believe you are still absolutely correct in saying that the pro-austerity states won't blink.

Which is what makes it interesting, really. Greece might be able to take a default. They run a primary surplus and most (90%+) of the funds went to foreign banks, the ECB and the IMF anyway, or were used to stabilize the banking system. The people got bugger all. But the Greek banking system would collapse without access to the European system.

Which raises the question: would the pro-austerity states risk a collapse of the Greek banking system and everything it entails? Spanish banks would follow in a heartbeat.

As for the morality of it (they elected those governments, they deserved it): I don't believe in collective punishment, especially not the kind that cripples an entire generation, which is what years of 50+% youth unemployment and a failing educational system does.

My own country, Germany, in particular gets no sympathy from me in this case. Parts of our system were intentionally reformed to channel funds into the market, knowing full well that there was nowhere near enough demand for credit to soak up the surplus savings, nowhere near enough reliable debtors to generate a reasonable return of investment without generating bubbles, be it real estate or financial. They were looking for debtors, and if all it took was turning a blind eye to the painfully obvious longterm problems it would create in Southern Europe, they were more than eager to play along.

Not the entire rest, actually. Just the pro-austerity forces currently running the show (Germany, Finland, Netherlands, Austria, etc). Syriza have strong support in Spain (Podemos), France and Italy, the three major countries on the receiving end of austerity.

If Varoufakis' analysis of the situation in Europe is correct, almost everything the troika (ECB, IMF, European Commission) has done since the beginning of the crisis was counterproductive and the underlying economic theories were wrong, plain and simple.

It would be an open challenge to conservative ideology in European governments and to a sort of market fundamentalism that has been the overwhelming drive behind most major policies enacted over the last two decades, particularly in the last seven years.

Can't have that. The Emperor is not naked. Greece is not bankrupt, austerity leads to growth and deflation poses no risk.

25% unemployment, 50+% youth unemployment, GDP down by 25%, poverty through the roof, dumpster diving on the richest continent on the planet -- whatever led to this (hint: austerity) needs a special place on the wall of things never to be done again.

Yet they want to implement it in France and Italy as well, which is why the conflict with Greece is actually a high stakes game about the future of the entire Eurozone.

Like I said, my own views are heavily biased against austerity for a multitude of reasons. And to see my own government forcing it upon significant parts of the continent makes me sick.

You gave a few examples, I did not ever disagree that it happens, I disagreed that it's happening today in Africa (or worldwide) at a level that's worse than the lack of water on a global scale. I will concede that, in certain areas, it is, but worldwide, even continent wide, it's less of an issue than useable water by far.
You give up pretty easily.
Historically, there have not been 'men with guns'. Guns are a fairly new construct. If it were historical fact that men with 'overwhelming force' (so forget the guns quip) drive farmers out of farming, why are we still here farming?

Yes, the two statements about technology are not mutually exclusive...your point? You 'give up' a lot.

Yes, and I clearly stated I believe they ignored some factors to get their numbers, as most 'predictions' I've seen in the last 20 years have done. I also clearly stated that even their lower range numbers were disastrous and unsurvivable and their high numbers even more so, I just went on to say my educated guess is that they are likely also on the low side because they don't account for everything AND they assume we'll stop rushing to make things worse at some point. I just think that's wishful thinking, based on my estimations of human behavior.

I do listen to fact, reason, data, hypothesis, innuendo, lies, insanity, and more (proven by the fact that I'm still here discussing this, and it's funny that you now wish to no longer 'listen' to facts or reason yourself because you 'give up'), then do my best with my degree in science and scientific mind to work out what hypothesis is closest to the data, and see if I can determine where it's imperfect and why. You can call it 'personal belief', I call it educated guess work, because I've paid attention and most models were on the low side of reality because they don't include all factors (they can't, we don't know all factors involved yet to program them into the models) and because they all expect humans to stop adding to the problem at some point in their equations, which I say from experience is wishful thinking and bad science/math, and I think it's nearly always added to actual science lately for political reasons on one side or the other.
EDIT: For instance, I've never seen a model that includes 'global dimming', but it's a factor that has kept up to 3 degrees C of warming from happening. it happens when particulates in the upper atmosphere deflect sunlight, stopping it from entering the system as light or heat. It has also added to a decline in global food production, but I've yet to see a climate study that includes it in their model. If we shut down all coal plants and combustion engines tomorrow, we would see a rapid spike in temperature as a result, another thing no one ever mentions.

I note you aren't defending your 'facts' about Texas producing more food than California, were you as certain of that as you are about these 'facts'? If so, perhaps more research could be warranted?

Oh, never mind, I forgot you decided to stop listening to facts and hypothesis and give up. I think your children would be disappointed you care so little about their future....I have none, so I have no dog in the fight. Nothing done today will effect things either way in my lifetime. As I see it, that means I'm one of the few with no agenda either way, I'm only interested in reality, and the data I have seen has consistently been worse than the worst predictions when everything is considered in totality (not cherry picked).