I'd be ecstatic if only they acknowledged the work of Keynes, but even that seems too much to ask...

Short version: Fuchs is a hardliner in many regards. Like you say, his perspective on this matter stands seperate from the rest of the world (except this one particular country in central Europe), which is why I used to not pay too much attention to folks like him. Bad idea. As it turns out, lots of people support his view, many more than I ever thought possible, depressing as that may be.

The entire thing is a break with 70 years of post-war diplomacy, trying to become a part of Europe again. Adenauer (Brandt) received better treatment in Moscow (Warsaw) than Tsipras did in Brussels/Berlin. From a European Germany straight back to a German Europe in no time at all...

Edit: Habermas offers his take on this matter.

http://yanisvaroufakis.eu/2015/07/14/on-the-euro-summits-statement-on-greece-first-thoughts/

An interview with Varoufakis about the actions of Schäuble will be published on Thursday. With every additional interview, he seems to be less inclined to pull any punches, so it ought to be interesting.

Over all the years, the "alternative media" over here never even acklowledged the existence of MMT. Not a peep to be found, anywhere, aside from the occasional blog entry. One might think the current crises would have been the perfect timing to take a closer look at matters of macroeconomic finance.

This month, however, I came across at least half a dozen articles about the basics of MMT on the most widely read news sources outside the mainstream, including numerous links to the works of Randall Wray, Warren Mosler and Bill Mitchell. MMT might finally gain some recognition among my fellow citizens.

If the current Greek proposal is actually the one being published just about everywhere, they might as well sign it in the replica of Marshal Foch's carriage in Compiègne. It's even worse than the one they had their referendum on.

As if that wasn't bad enough, Jamie Galbraith substantiated AEP's claim that the referendum was horseshit to begin with.

They screwed the pooch, even I'd agree to that if they were to accept this unconditional surrender. The anti-austerity movement on the left would be compromised to such a degree, leaving only the anti-EU forces of the right credible in their opposition to austerity. The recession cult will have their permanent austerity -- and the bigots will have their revival of nationalism.

Mark Rutte (NED) went down a similar road.

What I'd like to know is if they are a) sucking up to Germany, b) hiding behind Germany, c) true believers or d) doing this to appease certain elements of their constituency.

They demand everyone to obey the financial rules (that Germany broke most of all) and conveniently ignore the social rules alltogether.

The unions sent an open letter as well:

https://www.etuc.org/press/etuc-open-letter-eu-heads-states-and-governments-and-eu-leaders

You would not believe how much attention the media over here spend on his appearance and overall attitude. Shaves his head, doesn't tug his shirt in, doesn't wear a tie, drives a motorcycle... a rockstar by every measure.

There were regular forecasts that the chicken would come home to roost for him any day now; that the public would recognise his responsibility in their suffering and that they would turn against them.

And every single time, the public cheered him on even more. The press couldn't understand it at all. What a glorious fella he is, throwing the entire establishment out of balance like this. Maybe someone should project his face onto the ECB monstrocity in Frankfurt at night, just to rub it in.

Anyways, I don't have a clue why he resigned. There are several rumours, but beyond that, nothing solid.

As for the comments: they are my way of processing my rage. Doesn't work particularly well though, I'm still pissed off. But it's nice to hear that it provides a different perspective for some folks.

Haven't seen this one in circulation yet:

Dear Chancellor Merkel,

The never-ending austerity that Europe is force-feeding the Greek people is simply not working. Now Greece has loudly said no more.

As most of the world knew it would, austerity has crushed the Greek economy, led to mass unemployment, a collapse of the banking system, made the external debt crisis far worse, with the debt problem escalating to an unpayable 175% of GDP. The economy now lies broken with tax receipts nose-diving, output and employment depressed, and businesses starved of capital.

The humanitarian impact has been colossal – 40% of children now live in poverty, infant mortality is sky-rocketing and youth unemployment is close to 50%. Corruption, tax evasion and bad accounting by previous Greek governments helped create the debt problem. But the series of so-called adjustment programs has served only to make a Great Depression the likes of which have been unseen in Europe since 1929-1933. The medicine prescribed by the German Finance Ministry and Brussels has bled the patient, not cured the disease.

Together we urge you to lead Europe to a course correction before it is too late for Greece and for the Eurozone. Right now, the Greek government is being asked to put a gun to its head and pull the trigger. Sadly, the bullet will not only kill off Greece’s future in Europe. The collateral damage will kill the Eurozone as a beacon of hope, prosperity, and democracy, and could lead to far-reaching economic consequences across the world.

In the 1950s Europe was founded on the forgiveness of past debts, notably Germany’s, which generated a massive contribution to post-war economic growth, peace, and democracy. Today we need to restructure and reduce Greek debt, give the economy breathing room to recover, and allow Greece to pay off a reduced burden of debt over a long period of time. Now is the time for a humane rethink of the punitive and failed programme of austerity of recent years and to agree to a major reduction of Greece’s debts in conjunction with much needed reforms in Greece.

We urge you to take this vital action of leadership for Greece and Germany, and also for the world. History will remember you for your actions this week. We expect and count on you to provide the bold and generous steps towards Greece that will serve Europe for generations to come.

Yours sincerely,

Heiner Flassbeck, former State Secretary in the German Federal Ministry of Finance;

Thomas Piketty, Professor of Economics at the Paris School of Economics;

Jeffrey D. Sachs, Professor of Sustainable Development, Professor of Health Policy and Management, and Director of the Earth Institute at Columbia University;

Dani Rodrik, Albert O. Hirschman Professor of Social Sciences at the Institute for Advanced Study in Princeton;

Simon Wren-Lewis, Professor of economics, Blavatnik School of Government, Oxford University

There are 100 issues to this EU mess, and 100 different angles to each issue. To stay on top of things or even just to keep a somewhat comprehensive overview is impossible at this point.

It's too complicated, charged with too much emotion, too blurred with power politics. A clusterfuck if there has ever been one.

And you can't even counter any single argument in a meaningful manner, because it would take a deconstruction of the whole thing to present a pursuasive case. The helplessness is infuriating.

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.

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.

I just watched Paul Mason's interview with Varoufakis and it's been rather depressing. Most of what he says is perfectly reasonable given the structural confines of the EZ. But it's all based on a belief in "mutual interests", a belief that negotiations can, and will, lead to a "mutually beneficial deal" with the financial inquisition.

Not sure if he's just adhering to his role as FinMin or if he truly believes it. I'd say it's a questionable assumption at best. From over here, it certainly looks like the creditors' position is "pay up, bitch!", end of story. Schäuble is not going to compromise, the majority of parliament is all in on neoliberalism and most of the electorate either doesn't care or even consents. Merkel might agree to a deal, given how she holds no convictions whatsoever except that being in power is better than not being in power. But Schäuble cannot be reined it with half the party being in lockstep with his actions.

No deal worth signing. Either full capitulation or they'll continue this charade with their buddies from PASOK and ND.

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.

Greece accumulated debt in a foreign currency (Euro). Had they been using a free-floating currency with Greece as the sovereign issuer, it would have been much less of a problem. But that's a different discussion.

You brought up retirement benefits. These benefits have been a major talking point over here in mercantilistic Germany. Unfortunatly, a lot of inaccuracies crept into the debate over time. A closer look reveals that it's not as black and white as it is made out to be. One point at a time...

The effective retirement age, if we look at OECD stats, is basically the same for men in Greece and Germany. The age of 56 is often thrown around as the expected average retirement age for workers in Greece, but that's only for the totally messed up public sector. The average for the private sector is significantly higher, as the OECD numbers indicate.

Yet the size of retirement benefits is even more controversial. There are, in fact, some very dubious practices going on in Greece, which result in rediculous retirement benefits for a select group of people, even at very young ages. Decades of nepotism, that's what it produces. But even so, pension expenditure as a % of GDP was not significantly higher in Greece before the GFC than in Germany. When Greek GDP collapsed, expenditures as a % increased, naturally. Some have gotten absurd benefits, but the majority got a pittance. And as if that wasn't bad enough, Greece doesn't have a social safety net, unlike Germany. There is no welfare. Many people have to take early retirement at reduced benefits to have any income at all.
So I'll say it's bad in Germany. Last decade's changes to our retirement system have a metric fuckton of people (~40% of workers) heading straight into poverty when they retire. It's social security for them, and nothing else. Still, it's bliss compared to what the plebs in Greece now ended up with.

However, even all those beautiful OECD stats have to be taken with a grain of salt. Germany has a working bureaucracy. Everything is documented. Greece is a mess. Therefore, all comparisons are guesstimates at best.

Finally, as long as the Greek economy produces enough goods and services, it is for them to decide how to distribute their wealth. If they want a lavish retirement system, so be it. Our governments opted to create a true underclass of the working poor, and gutted a retirement system that made it through two world wars unscathed. If German retirees want to bitch about their benefits, it should be aimed squarely at our governments and their intentional deconstruction of our social welfare state.