8:18 – "Germany is very financially responsible".

The clip makes a few good points, twists others and omits some central issues. But I want to comment on the quote above most of all, because it forms the basis for all kinds of arguments and recommendations.

The claim that Germany is financially responsible stems from what has been paraded around domestically as the "schwarze Null" (black zero), meaning a balanced budget. Given how focused most economic debates are around the national debt or the current budget deficit, it shouldn't come as a surprise that not running a deficit evokes positive responses in the public. If there has ever been an easy sell, politically, it's this.

However, it's not that simple.

For instance, the sectoral balance rule dictates, by pure accounting identity, that the sum of public balance, private balance and external balance is 0 at all times. In case of Germany, this means that the balanced public budget (no surplus, just a fat zero) requires a current account surplus of the same size as private savings – or an accumulation of private debt. For someone to run a surplus, someone else has to run a deficit. In this case, foreign economies have to run a deficit vis-á-vis Germany, so that neither the German government nor the German private sector have to run a deficit.

The composition of each sector is another topic entirely, but the point remains: no surplus in Germany without a deficit in the periphery. If everyone is to be like Germany, Klingons have to run the respective deficit.

My question: is it financially responsible to depend on other economies' deficits to keep your own house in order? Is it responsible to engage in this kind of behaviour after having locked yourself into a monetary union with less competitive economies who have no way of defending themselves through currency devaluation?

Second point: capital accounts and current accounts are two sides of the same coin. If Germany runs a current account surplus of X%, it also runs a capital account deficit of X%. Doesn't explain anything, but it's the same for the countries at the other side of these trade imbalances. Spain's current account deficit with Germany meant a capital inflow of the same size.

Let's look at EuroStat's dataset for current accounts. Germany had run a minor current account deficit during the late '90s and a small surplus up to 2003. From then on, it went up, up, up. Given the size of Germany's economy within Europe, that jump from 2% to 7.5% is enormous. Pre-GFC, the majority of this surplus went to... yap, PIIGS. Their deficits multiplied.

Subsequently, capital of equals size flowed into these countries, looking for investments. No nation, none, can absorb this amount of capital without it resulting in a massive misallocation, be it stock bubbles, housing bubbles, highways to nowhere or lavish consumption. Michael Pettis wrote a magnificent account (Syriza and the French indemnity of 1871-73) of this and explains how Germany handled a similar inflow of capital after the Franco-Prussian war: it crashed their economy.

As Pettis correctly points out, the question of causality remains. Was the capital flow a pull or a push?

The dataset linked above says it all happened at just about the same time, in all countries. It also happened at the same time as Germany's parliament signed of on "Agenda 2010", which is the cause of massive wage suppression in Germany. Germany intentionally lowered its unit labour costs and undercut the agreed upon inflation target (2%). German employees and retirees were forced to live below their means, so the export sector could gain competitiveness against all the other nations, including those in the same currency union. Beggar-thy-neighbour on steroids.

Greece overshot the inflation target. They lived beyond their means. But due to their size, it's economically negligable. France stayed on point the entire time, has higher productivity than Germany and still gets defamed as the lame duck of Europe. Yet Germany, after more than a decade of financial warfare against its fellow members of the EU/EZ, is hailed as the beacon of financial responsibility.

Mercantilism always comes at the cost of others. And the EU is living proof.

Well, didn't see that coming.

Edit: Prime candidate for FinMin appears to be Stathakis, who was also present during the conference in Austin, 11/2013. Lapavitsas would be fun though.

Edit #2: "I shall wear the creditors’ loathing with pride." -- bwahahaha, Varoufakis DID channel his inner FDR.

Invisible Inc didn't always include the rewind mechanic and I don't think it was actually a planned feature. Later iterations probably balanced the game more around it, but I still think it is kinda amazing how well it works given it wasn't in the game until relatively late into development.

I'd actually very much like the game to penalise you for not using rewind. Or rather I'd like the game to be balanced with assumption you will use it. I like that rewind creates a nice middle ground between quick save scumming and iron mode. I think it allows for a more challenging game in other respects and that doesn't feel frustrating when a miss click puts your main girl in open ground surrounded by cyberdisks (especially when the UI was pretty bad when it came to different elevations...). It smooths the transition from too easy to too hard.

That said, there are a number of changes from Enemy Unknown that I'd like to have more priority. Borrowing from Invisible Inc again, the ever raising alarm level in that creates a sense of urgency that I never felt in XCOM, even in the bomb missions and with the meld resource. I never lost a soldier because I forced them to take an incredible risk for the sake of the mission, I really only lost people because an unlucky shot dinked them in head across the map when they were in heavy cover. It looks like they are perhaps addressing urgency with the threat of reinforcements, which is cool. The other frustration I had with XCOM:EU/EW is that it always seemed to punish scouting. You'd effectively "wake up" the aliens by finding them which really disincentivised spreading out to cover more ground. It was simply safer to move as ball and let the enemies run into you (with the possible exception of the terror missions). it looks like they might be addressing that by making you the insurgent force with ambush tactics etc.

So yeah. I'm hyped.

Let's ignore for the moment what led to this current mess within the Eurozone. You point out, correctly, that Greece is too poor to service its debt. And yes, for the German government to do whatever is required to get back their loans is to be expected. However, Greece was incapable of servicing its debt five years ago. Yet the subsequent programs, all supported or even demanded by the German government, reduced Greece's ability to pay back at least portions of its debt. At the end of the day, goods and services are what it's all about. And by dismantling the Greek economy, nevermind the Greek society, they actively undermined what they publicly claimed to be working for: a self-reliant Greek economy, capable of financing the needs of Greece. And capable of paying back what is owed.

The question inescapably poses itself: was it done intentionally or are they blinded by ideology?

One doesn't have to be as far left as I am to see that it didn't work, doesn't work, and never could have worked. Even the likes of Krugman and Stiglitz are perfectly clear about it.

Varoufakis, as you note, has been just as clear about this at least since late 2010, when he published the first draft of his Modest Proposal with Stuart Holland. There was a very good discussion about it in Austin in 10/2013 under the topic "Can the Eurozone be saved?" Participants included Varoufakis, Tsipras, Flassbeck, Holland and Galbraith, amongst others. I submitted a short clip back then.

His argument that Germany won't see a dime when Greece is shoved off a cliff, as correct as it is, never had any bite to begin with. The German government, and large parts of parliament, are operating in a parallel universe, economically. Over here, mercantilism is the road to success. Monetarism works. Surplus good, deficit bad. Saving good, spending bad. Everyone should have a current account surplus.

It's horseshit by the gallons, and it's the official economic policy of the largest economy in the EU.

And we're not even getting into the political aspects of it. Throwing a member of the EU into debt bondage, suspending its democracy to please the gods of the market... that's a travesty and a half. Yet it's also inevitable if they insist on going down the road of neoliberalism.

Worst of all, Greece is just the canary in the coal mine, as Varoufakis likes to point out. Greece had plenty of issues before they joined the EZ, but when they chose to adapt the same currency as a much larger economy hell bent on competitiveness, which is the favorite euphemism for Germany's beggar-thy-neighbour policies, they were doomed to be crushed. The rest of the PIIGS are next in line, unless this whole mess explodes beforehand. Maybe Rajoy's Franco-esque repression techniques fail, maybe le Pen wins in 2017, who knows. Maybe Schäuble finds the 100k of bribes that he conveniently forgot about back in the '90s and chokes on them.

Last but not least, 208 billion Euros – that's the projected current account surplus of Germany this year. That's 208 billion Euros of debt foreign economies have to accumulate, so that the German public and private sector can run a combined surplus of €208b. That's the elephant in the room. Systematic undercutting of the inflation target through suppression of unit labour costs and a dysfunctional focus on exports.

The Australian media have been pretty much ignoring the Greece crisis, except for a few brief summaries in the business news, but this week they've suddenly woken up to it. The stories have been Greek families bringing their relatives here during the uncertainty, but also some like this Bloomberg one critical of the EU:

http://m.theage.com.au/world/the-only-reason-the-eu-would-force-greece-to-leave-the-euro-is-to-punish-it-20150701-gi2zfc.html

The NYT discovered Spain's new system of repression:

http://www.nytimes.com/2015/07/01/world/europe/spains-new-public-safety-law-has-its-challengers.html?_r=0

600 bucks for telling a rozzer to piss off; 30k for filming the rozzers commit crimes; 600k for protesting at inconvenient places, even without torches and pitchforks. It would have General Franco's approval, no doubt.

Between Orban in Hungary, Rajoy in Spain and the warmongerers in Poland, Tsipras is the one damaging the EU.

Unknown.

If the ECB pulls ELA, the Greek banking system goes belly up. Again, consequences unknown, but Deutsche Bank for instance didn't seem particularly stable during the last months, so the denial of any contagion risk might have been premature. Additionally, Draghi is tasked with maintaining the stability of the Euro and taking away Greece's last lifeline might just be too far out of his mandate, even for him. Keeping ELA up without increasing the limit will achieve the same result within days though.

If Greece fails to make its payment to the IMF tomorrow, it's at the discretion of Lagarde whether she pulls the plug. Info has been somewhat contradictory, but there should be a 30 day window before the board has to call it a default.

If a default is triggered this week, it's up to the ECB and the EC again. They have shown unwillingness to let things go bust, all the recent months of muddling through should be testament to that.

They cannot have a failed state within Europe without feeding right into the anti-European parties on both ends of the spectrum; they cannot throw Greece out of the EZ; they cannot revitalise the Greek economy without doing a 180 against their own ideology; they cannot let Syriza pull Greece out of the shit without encouraging Podemos. It's an impasse alright.

Should the Greek people vote against the proposal, a proposal that is no longer on the table, it'll be back to negotiations. Should they vote in favour of it, and should it still be available to them at that time in the first place, Tsipras might even get a majority for it in parliament, but Syriza will blow apart right then and there. The left wing cannot agree to further enslavement.

If, however, everything goes sour and Greece does indeed exit the EZ, introduce a new Drachma, the whole shebang, then we're in uncharted terrorities. The situation in Greece would deteriorate even further, given how much they rely on imports, especially of fuel. And the EU, already shaky from the tens of thousands of bodies floating in the Med, the falling standard of living for tens of millions and the sustained unemployment of an entire generation; this fecking union cannot turn the cradle of democracy into a failed state and survive. The governments might be ok with it, but the French people would rip this shit to shreds one way or another, and rightfully so.

This guy is far too intelligent and reasonable to be a politician.
No wonder they cant find a common ground. Its complete and utter corruption of the EU vs. unbiased and reasonable newbies.

The thumbnail image for this video has been updated - thumbnail added by eric3579.

Japan was supposed to buy us out too at one point, don't get your hopes up.

I am not saying that the US is a great place vs the rest of the world, I am just saying that you don't get the 'utopia' that people claim Norway to be without huge sacrifices by the people and also being a net exporter of natural resources.

Norway has one of the highest tax rates and one of the highest VAT rates in the world. They are net exporters of Oil, Natural Gas, and Seafood, almost all profits of which are nationalized by the government and rerouted into pension funds.

They are one of the highest cost of living places in the world and that is not factoring the taxes, but goods and services. If you take your family out to eat and spend 100 dollars, you are going to pay an additional 25 in just taxes.

The society is conditioned to believe in Jante's Law, so this suits them because everyone is 'equal'. However, with the immigration rates rising from poorer EU countries, there are cracks appearing in the laissez faire attitude. Protests and even a mass atttack have happened once people realized that they are now supporting people that are lower than them.

The point is, you can't simply point to the nordic socialist countries and say "Oh, what a wonderful place, if only everyone was so enlightened!" because it won't work without a specific set of circumstances. Most countries don't have those circumstances and must forge ahead in their own path. Additionally, almost no other country has the unique set of challenges that the US faces due to our position as the supposed world leader. Personally, I've long wished we would back off and let the rest of you all figure out stuff on your own. I think, however, that it wouldn't be long before one or more countries would come bitching to us to fix something.

In addition to being $14/29 ( shipping auto added to pledge - $20 to the EU) on the kickstarter, it is also likely that selling this thing anywhere in the industrialized world is Illegal under copyright law.

Right now they have > 10x their required amount, they are going to have a hard time dealing with the new volume as is. So no benefit to joining at this point. It will likely be much cheaper to pick them up from newark/digikey or even sparkfun when they are actually in stock. assuming they actually ship and nobody with an IP claim to the linux kernel their chip supplier is stealing decides to sue them over it.

The thumbnail image for this video has been updated - thumbnail added by eric3579.

Straight from the Guardian's current article on the most recent shipwreck in the Med:

The deaths are likely to renew calls from campaigners for Europe to reinstate full-scale search-and-rescue operations in the Mediterranean. Last October, the EU opted not to replace the Italian-run Operation Mare Nostrum, which saved about 100,000 lives last year, amid fears that it was encouraging smugglers and migrants to organise more trips to Europe.

What they forgot to mention: Italy would have continued Mare Nostrum if the rest of this bloody EU had bothered to pitch in with a few bucks. The total bill was €114 million per year. Petty cash, by any measure.

The replacement, Frontex's Operation Triton, doesn't even have a mandate to save shipwrecked folks, just to keep them away from EU soil.

European values worthy of yet another Nobel Peace Price, I'd say...

Nazi? I'll accept idiot, but wanting the UK out of the EU doesn't make you a nazi.

EU health and safety regulations require that flags be fire resistant. Those Oligarchs in Brussels have taken away our right to protest! (with fire!)