Greek Talks Continue

So again, I continue to have the same feeling about this whole line of thinking as I did on Obamacare, etc. Back then, a lot of you thought that single payer was just over the horizon if you just knock over the distracting element of Obamacare and public options. There was a whole lot of BATNAing going on then too.

In the meantime, here’s a Die Welt article more or less confirming what I thought was really going on, in the form of a fawning character study of Merkel during the Greek crisis, via the very capitulationist Greek journalist @yannikouts (in German, which I will translate because it is important):

Erst im Laufe des Vormittag spricht sich Merkels Meinungswechsel im politischen Berlin herum. Im Finanzministerium herrscht Entsetzen, in der Unionsfraktion blanke Wut. Ein führender Abgeordneter sagt: “Sie muss sich jetzt entscheiden: für ein bürgerliches Europa oder für ein sozialistisches.” Der Frust sitzt tief, vor allem über die Franzosen. Ein Artikel aus “Le Monde” wird herumgereicht: Unter der Überschrift “Griechenland, eine französische Hysterie” wird dort die Strategie des Élysée-Palasts erklärt: Ein Verbleib Griechenlands im Euro “führt dahin, die europäische Grundordnung infrage zu stellen, die in Deutschland 1949 begründet wurde und in Frankreich seit Mitterrands Wende zur Sparpolitik 1983 herrscht”. Dieses deutsche Europa, in dem die stolzen Franzosen Spar- und Reformzumutungen ertragen müssten, komme nun an sein Ende. Mit Griechenland werde der Präzedenzfall geschaffen. Nun müsse auch das große Frankreich sich nicht mehr an deutsche Regeln halten.

“First thing in the morning, Merkel’s shift in opinion became evident in political Berlin. Annoyance reigned in the finance ministry and blind rage in the CDU caucus. A leading member of Parliament said: ‘She has to make a decision: for a civic [this is from bürgerlich, which is tricky to translate — Mandos] Europe or a socialist one. Frustration settled in deeply, especially about the French. An article from Le Monde was passed around. Under the headline “Greece, a French hysteria”, the strategy of the Elysée Palace was explained: letting Greece stay in the Euro ‘would thus lead to the questioning of the fundamental European order that was established in Germany since 1949 and reigned in France since Mitterand’s turn to austerity in 1983.’ This German Europe in which the proud French must bear the effort of austerity and reform would thus come to an end. With Greece, the precedent would be established. Now great France herself would also no longer have to hew to German rules.”

That is exactly what I was saying in the previous thread. This is about containing a breakout attempt by Hollande. For this, Germany will push Greece out.

From the perspective of those chomping at the bit for a Grexit, I realize that a Greece pushed out is less emotionally satisfying than a proud Greece storming out, but if a Grexit scenario must occur, the best scenario is exactly this collateral-damage kind of Grexit, with the blame directly borne by German politicians.

However, these politicians are quite right to observe that if Greece gets any sort of deal without full regime change, the German economic order in Europe is deeply in danger. Apparently the famous Unnamed Senior Official claimed that Schäuble was shouting at the Italians for supporting a deal. That means that Grexit is almost inevitable unless Uncle Sam finds a way to bribe or threaten.

I wouldn’t necessarily give up on humanity, given the Greeks’ resounding vote in the referendum. That’s still a note of decency.

But Tsipras certainly turned out to be a lemon. At this stage, he’s looking more slippery and culpable than Schaeuble and Merkel. At least the latter two don’t attempt to disguise what they are.

I wonder about Yanis Varoufakis, though. I read his book “The Global Minotaur” and found it enlightening. Once this mess is all resolved, however lamentably, I’ll be eager to hear what he has to say. At this moment, though, I’d judge him only a bit less harshly than Tsipras.

Hearing that Citicorp “goofed” in issuing a drachma-based credit card transaction, I come to the conclusion that the Grexit will consist of a privately-owned & operated monetary system designed to insulate the EU from criticism while continuing austerity with the added benefit of a real life laboratory for testing out the next phase of our financial prison.

http://www.nakedcapitalism.com/2015/07/greece-beware-merchant-services-providers-bearing-ddcss.html

The banks got away with it years ago. Europe decided to make bank investors whole rather than wind up failing banks. The results sit on the balance sheets of national governments, giving ideologues a “hack” or financial “rootkit” to try out experiments on Greece.

Nope, nothing can be done within existing frameworks to transfer the debts back to the banks (and thus collapse them). Governments have to decide to stab their own clienteles, which they won’t do. Greece is to be treated like an insolvent household, with the bailiff coming by and repossessing the goods. There is no oversight, other than voters in other EU countries choosing to oppose it, if they do.

In the meantime, the EU has failed as an experiment. They should get rid of EMU and most of Brussels, and keep Schengen (there are non-EU Schengen countries). Instead, they’ll keep Brussels and get rid of Schengen, no doubt.

No madaha nothing will be done to control the banks, and frankly many common folk want nothing done to control those banks until their actions affect them personally in a very obvious way.I mean I have gotten people to see what the various “vampire squids” have done and are doing …do they what the system changed…no ,by and large they think it’s all great and just want in on the scam.It’s like the social darwinist clowns who can not get it through their thick skulls that in the end they are NOT John Galts or Ubermensch.

I haven’t seen any commenters here calling for Greece to storm out, just that they should be prepared for Grexit.

Maybe I’m mistaken but have I not seen it bruited about that Greece should have explicitly used the possibility of Grexit as a threat?

Nope it would not crash the banks, sadly. The banks were paid up by the taxpayers of e.g. Finland, by transferring Greek debt to their balance sheets. So the banks will come up fine and dandy from a Greek default…in terms of direct consequences. The banks have been paid, the crime committed and gotten away with.

The principal immediate “large scale” benefit of a Grexit would be to deny neoliberal experimenters yet another playground on which to conduct their experiments and to reassert the primacy of national democracy. That’s assuming that Greece could actually find the kind of financing it needs, actually find an export sector that would benefit from devaluation, etc, etc.

It is now absolutely obvious that Schaeuble’s weird temporary Grexit proposal was a planned move with Merkel to put Hollande back in his box and cooperating with Merkel. Having watched this for years now, including via German media, I know that it is absolutely the case that Germany will never permit the Eurozone to be run under the principles that even the mildest English-speaking neoliberal might meekly suggest are reasonable, and they have the full backing of the German public for this policy.

I might have written about this years before, but once on a layover I visited the Bundesbank Museum in Frankfurt. The Museum is no Museum, aside from a case or two of old coins — instead it is a thorough and rather honest hands-on exposition of the Bundesbank’s explicitly political perspective. A physical op-ed, in a sense. In one video, a literal elderly Swabian housewife is comforted by two professional banker types that on the introduction of the Euro, yes, Germany would be implicitly or explicitly setting fiscal policy for the profligate Southerners, not to worry. The possibility of Keynesian policy being implemented in the Eurozone is experienced in German media and public life as a visceral attack on all that is good and proper.

What is Russia offering? The game theory case was split.

Now I admit that I am taken a little aback by the openness with which the Germans are willing to display their strategy here. But the truth is, the referendum flushed all the players out into the open. When Tsipras announced the referendum, Merkel’s comment on him, according to the Unnamed Senior Official, is that he was driving his country with “sehenden Augen gegen die Wand” — with open eyes against the wall. In the open, it turns out Merkel must be seen to be punishing not only Tsipras but the Greek people in order to satisfy her own caucus. Because they voted to try to steal German money (by demanding a debt haircut).

That is why Eurocrats hate talk of mandates, hate referenda, etc. As I said in my front-page post, they believe that the people are to be circumvented whenever possible, and Tsipras and Greece are now living examples of this, the necessity of the primacy of bureaucracy over democracy. From their perspective, it’s what keeps the barbarians outside of the gate.

Parallel cases with Greece that involve Wall Street/Banker scams that built up debt until it can’t be paid back are Puerto Rico and College Student Loans. These debts also are held by government institutions and have not been written down. If Greece is the canary in the mine, all indications are that these debts will stay on the books until the debtors die or revolt. I can’t understand why the ECB or the US government doesn’t just wipe the debt off in the computer balance sheets (bankruptcy). My guess is that the financial house of cards is swaying and a sudden change in the valuation of the dollar or Treasury bonds would cause a derivatives payout that has no capital to pay for it just like AIG in 2008 The bankers wouldn’t get this year’s bonuses.

About the notion of Greece as the abused spouse and Europe as the abuser that Greece can not bring itself to leave, the actuality is close to the opposite. Greece was abused by its own oligarchs and many Greeks understand that full well. Europe is the abused-spouse shelter that Greece ran to in order to escape from its abusing spouse. That is why so many Greeks are so loathe to leave.
I am not saying this explains everything or even that this perception is accurate now, but it is how many Greeks see things. Understanding this makes their behavior more understandable and more sympathetic.
Remember also that the abusive Greek oligarchs were propped up by foreign military intervention three times (by the Nazis during WW2, by the British and US in the late 40s, and indirectly through the military regime of the late 60s and early 70s).

One other thing: if any of us were to say about any other nationality some of the things being said here (and elsewhere of course) about Germans, this would be instantly recognized and denounced as racist and we would understand that it was a diversion whose effect is to hide the actual responsibility for ill deeds.
Even if it is true that much of northern Europe and eastern Europe population has bought into the well-promoted narrative of Greek fecklessness, it is the German, French, and other elites who are the primary actors in all this.

and it’s also frustrating, if we’re talking about people being mischaracterized and stereotyped, something the Germans excel in, it’s the Greeks. All the even American political cartoons I’ve seen portray the Greeks as slothful, arrogant, grasping, “den pirazi” types. When that is NOT what is happening.

Headline: “Creditors Demand Tsipras Defile Mother’s Grave.”

Total capitulation on austerity targets is insufficient. He must scourge himself with a whip, and in a scene reminiscent of the Cultural Revolution of Maoist China, the Greek premier must repudiate all his former beliefs, denounce his friends and university professors as traitors, desecrate the Greek flag, burn a Bible and curse his family origins. Then it starts to get really serious.

“If he digs up his mother’s grave and commits unspeakable acts with her corpse,” Dr. Strangeschaeuble declared in a sometimes wavering raspy voice before the other finance ministers of Europe and a throng of press,”then and only then will Stability Fund monies be made available to Greece. But that can not be a substitute for any one of the required budgetary or labor market reforms, which must be enacted in law first and not merely pledged. Nor is it a substitute or shortcut for any of the lesser acts of personal penitence and self-criticism which he must also perform. Our trust has been violated! Mr. Tsipras must show us that though he is a debtor he wants to be a decent man bargaining in good faith, like the rest of us. We are seeking desperately to find good European character in him. Is the wood sound, or is it rotten? It is up to Mr. Tsipras to show us what he is made of.”

re. the quotes – the thing about “traumatic enough” doesn’t misrepresent Germans (though it is cruel in spirit) – it misrepresents human psychology.

The thing about “obedience” – that is well-recognized among Germans themselves, and used in self-deprecating humor.

Speaking of which, one difference between Germany and, say, France or UK or USA or … is the matter of credit, to which German consumers have a very different relationship. German creditors are very highly favoured and it is very hard to escape them and the rules are much less consumer/debtor friendly. It enables a lot more “pay later”-type online deals and so on. Cell phone contracts are much cheaper than the USA, yes, but getting out of them is much harder, they don’t go to month-to-month but autorenew and you’re stuck for two more years, and so on. Credit card usage is low, lots of merchants and restaurants still take only cash or, grudgingly, debit, although that is slowly changing. In France, you get electronic payment almost anywhere. So the idea of a Schuldenerlass for Greece doesn’t make too much cultural sense. You got into debt, you pay.

“…they seem to have thought they were having an economic fight…”

They thought they were negotiating, and the German government thought they were dictating.

at least I could buy my DB tickets online with credit, which was a blessing.

True that Lisa:

“they were having an economic fight…it’s about political power. So they have been fighting the wrong fight and with the wrong weapons, which is always a good way to get your head kicked in.”

It is interesting that a group of high schoolers got the idea that Greek leaving the euro was a bit of game theory, when a group of adults were being instructed on the same bit of game theory in the real world.

It should be obvious that the drachma/ euro is part of the game theory at work, and without explaining the class was divided 50/50 between leaving the euro and staying. Do they have buttons that the adults do not have?