Galbraith on Greece

[Thailandnotes]

Re: Does Greece need to borrow?

and for the recap....

https://www.youtube.com/watch?v=tigaryz-1y4

[gnk]

Re: Does Greece need to borrow?

The economy and tax revenues are collapsing right now. The surplus has been kissed goodbye for some time now.

Greece is beyond broke and is bordering on third world soon.

[gnk]

Re: Galbraith on Greece

No country wants the basket case known as Greece. Russia and China, logically, prefer the Germans be stuck with Greece. Russia and China want Germany to keep Greece in working order so China has a port, and Russis has a gas terminal.

They're both too smart to play the disciplinarian role for the out of control child.

the above article is laughable for too many reasons.

Here's the real story about Greece. Take off your bankster glasses, open your mind. (I used to think like many of you do now)

[vt]

Re: Galbraith on Greece

You are damned if you demand austerity and damned if you don't:

"James Mackintosh at the Financial Times summarizes: "If the Greeks are allowed to walk away from that debt, Spaniards, Portuguese, Italians and Irish will quite reasonably say they should be let off, too." Thus, Germany and other core nations can't indulge Greece's demands for fear of fueling similar anti-austerity political movements such as Podemos in Spain and the Five Star Movement in Italy."

Then there is clientalism:

"Guy Verhofstadt, a leader of the European Parliament, urged Greece leaders to come forward with “a credible reform package” that included a clear calendar and efforts to stamp out clientalism.


The latter term may be new to many readers. It is a type of government that was largely introduced to Greece following the end of a seven-year military dictatorship in 1974. We would call it a "patronage" system in which politicians distribute benefits to individuals or groups in exchange for electoral support.
"Clientalism" is often used interchangeably with corruption, but that is not always the case. Corruption involves dishonest or fraudulent dealings, whereas clientalism typically involves straightforward grants of government jobs for electoral support. Clientalism has been blamed for a vast ballooning of employment in the public sector in Greece at unproductive jobs.


Basically the European Union is asking the Greek government to take tens of thousands of people off the public payrolls as a step toward reforming its financial structure. The eurozone leaders are afraid that one more bailout package is just going to disappear right down the same drain as previous bailouts -- into the hands of self-serving political appointees.


So you can see why it is too simple to group all of the European Union's demands under the label of "austerity." The EU is asking the Greeks to fundamentally change a manner of political organization that has become embedded in their way of life -- and suits the leadership most of all.


It would be as if overseas holders of U.S. debt suddenly demanded that they would stop buying Treasurys unless powerful American politicians stop earmarking congressional bills in ways that send borrowed government money to their districts in the form of new military or highway construction contracts. The politicians in Washington know that their financial support would dry up if they could not dole out riches to their campaign backers, so they would fight such rules tooth and nail."

Jon Markman

[don]

Re: Galbraith on Greece

JULY 8, 2015
The Financial Attack on Greece: Where Do We Go From Here?

by MICHAEL HUDSON


The major financial problem tearing economies apart over the past century has stemmed more from official inter-governmental debt than with private-sector debt. That is why the global economy today faces a similar breakdown to the Depression years of 1929-31, when it became apparent that the volume of official inter-government debts could not be paid. The Versailles Treaty had imposed impossibly high reparations demands on Germany, and the United States imposed equally destructive requirements on the Allies to use their reparations receipts to pay back World War I arms debts to the U.S. Government.[1]

Legal procedures are well established to cope with corporate and personal bankruptcy. Courts write down personal and business debts either under “debtor in control” procedures or foreclosure, and creditors take a loss on loans that go bad. Personal bankruptcy permits individuals to make a fresh start with a Clean Slate.

It is much harder to write down debts owed to or guaranteed by governments. U.S. student loan debt cannot be written off, but remains a lingering burden to prevent graduates from earning enough take-home pay (after debt service and FICA Social Security tax withholding is taken out of their paychecks) to get married, start families and buy homes of their own. Only the banks get bailed out, now that they have become in effect the economy’s central planners.

Most of all, there is no legal framework for writing down debts owed to the IMF, the European Central Bank (ECB), or to European and American creditor governments. Since the 1960s entire nations have been subjected to austerity and economic shrinkage that makes it less and less possible to extricate themselves from debt. Governments are unforgiving, and the IMF and ECB act on behalf of banks and bondholders – and are ideologically captured by anti-labor, anti-government financial warriors.

The result is not the “free market economy” it pretends to be, nor is it the rule of economically rational law. A genuine market economy would recognize financial reality and write down debts in keeping with their ability to be paid. But inter-government debt overrides markets and refuses to acknowledge the need for a Clean Slate. Today’s guiding theory – backed by monetarist junk economics – is that debts of any size can be paid, simply by reducing labor’s wages and living standards, plus by selling off a nation’s public domain – its land, oil and gas reserves, minerals and water distribution, roads and transport systems, power plants and sewage systems, and public infrastructure of all forms.

Imposed by the monopoly of inter-governmental financial institutions – the IMF, ECB, U.S. Treasury, and so forth – creditor financial leverage has become the 21^st century’s new mode of warfare. It is as devastating as military war in its effect on population: rising suicide rates, shorter lifespans, and emigration of the age-cohort that always have been the major casualties of war, young adults. Instead of being drafted into the army to fight foreign foes, they are driven from their homes to find work abroad. What used to be a rural exodus from the land to the cities from the 17^th century onward is now a “debtor exodus” from countries whose governments owe unpayably high sums to creditor governments and to the banks and bondholders on whose behalf they impose their policy.

While pushing the world economy into a state of war internationally, high finance also is waging a class war against labor – and ultimately against governments and thus against democracy. The ECB’s policy has been brutal toward Greece this year: “If you do not re-elect a right-wing party or coalition, we will destroy your banking system. If you do not sell off your public domain to buyers we will make life even harder for you.”

No wonder Greece’s former Finance Minister Janis Varoufakis called the Troika’s negotiating position “financial terrorism.” Their idea of “negotiation” is surrender. They are unyielding. Official creditor institutions threaten to isolate, sanction and destroy entire economies, including their industry as well as labor. It transforms the 19^th-century class war into a purely destructive meltdown.

That is the great difference between today and 1929-31. Then, the world’s leading governments finally recognized that debts could not be paid and suspended German reparations and Inter-Ally debts. Today’s the unpayability of debts is used as leverage in class war.

The immediate political aim of this financial warfare in Greece is to replace its elected government (supported by a remarkable July 5 referendum vote of 61 to 39) with foreign creditor control by “technocrats,” that is, bank lobbyists, factotums and former Goldman Sachs managers. The long-term aim is to impose a war against labor – in the form of austerity – and against the power of governments to determine their own tax policy, financial policy and public regulatory policy.

Fortunately, there is an alternative.


Here is what is needed. (I outlined my proposals in a presentation before the Brussels Parliament on July 3,[2] following an earlier advocacy at The Delphi Initiative in Greece, convened by Left Syriza the preceding week.[3])

A declaration reaffirming the rights of sovereign nations

Sovereign nations have a right to put their own growth ahead of foreign creditors. No nation should be obliged to impose chronic depression and unemployment or polarize the distribution of wealth and income in order to pay debts.

Every nation has the right to the basic criteria of nationhood: the right to issue its own money, to levy taxes, and to write its laws, including those governing relations between creditors and debtors, especially the terms of bankruptcy and debt forgiveness.

Economic logic dictates what was recognized by the end of the 1920s: When debts reach the level that they disturb basic economic balance and derange society, they should be annulled. Another way of saying this is that the volume of debt – and its carrying charges – must be brought within the reasonable ability to pay.

Rejecting the “hard money” (really a “hard creditor”) position of anti-German, anti-labor economists Bertil Ohlin and Jacques Rueff, Keynes argued that creditors had an obligation to explain to Germany just how they would enable it to pay its reparations.[4] At that time, Keynes meant specifically that France, Britain and other recipients of reparations should specify just what German exports they would agree to buy. But today, creditors define a nation’s ability to pay not in terms of how it can earn the money to pay down the debt, but rather what public domain assets it can sell off in what is essentially a national bankruptcy proceeding. Debtor countries are compelled to let their public infrastructure be sold off to rent-extractors to create a neofeudal tollbooth economy.

Under international law, no nation is legally obliged to do this. And under the moral definition of nationhood, they should not be forced to do so. Their right to resist this form of debt blackmail is what makes them sovereign, after all.

It is true that the principle of the European Union was that individual nations would cede their rights to a larger entity. The union itself was to exercise the rights of nationhood, democratically on the basis of a pan-European constituency.

But this is not what has happened. The EU has no common ability to tax and spend; those powers remain local. The one area where it does govern taxes is dysfunctional: EU ideologues insist on taxing consumers (via the Value Added Tax, VAT) and labor via pension set-asides.

More fatally, the eurozone has no ability – or at least, no willingness – to create money to fund deficit spending. What it calls a “central bank” is only designed to provide money to domestic banks and, even worse, to lobby for the interest of private bankers against the principle of public central bank money creation.

The EU does not even have a meaningful legal system empowered to fight fraud and financial crime, prosecute or clean up insider dealing and corrupt oligarchies. In the case of Greece, where the ECB at least insisted on the need to clean up such behavior, it was only to “free” more revenue for foreign investors from public agencies scheduled to be privatized to pay debts to the ECB and its crony institutions for the money they had paid private bondholders and banks in the face of economies shrinking from a combination of debt deflation and fiscal deflation.

Taken together, these defects mean that the Eurozone and EU were malstructured from the start. Control was placed so firmly in the hands of bankers and anti-labor ideologues that it may not be reformable – in which case a new start must be made.

In any event, here are the institutional reforms that are urgently needed. In view of the financial sector’s control of the main institutions, these reforms require entirely new institutions not governed by the pro-rentier logic that has deformed the eurozone. The most pressing needs are for the following institutions.

An international forum to adjudicate the ability (or inability) to pay debts

What is needed to put this basic principle into practice is creation of a new international forum to adjudicate how much debt can reasonably be paid – and how much should be annulled. In 1929 the Young Plan (which replaced the Dawes Plan to deal more rationally with German reparations) called for creation of such an institution – what became the Bank for International Settlements (BIS) in 1931 to stop the economic destruction of Germany by bringing its reparations back within the ability to pay.

The BIS no longer can play such a role, because it has become the main meeting place for the world’s central banks, and as such has adopted the hardline “all debts must be paid” position that it originally was intended to oppose.

Likewise the IMF no longer can play this position. It is hopelessly politicized. Despite its technical staff ruling in 2010-11 that Greece’s foreign debts could not be paid and hence needed to be written off, its heads – first Dominique Strauss-Kahn and then Christine Lagarde – acted in blatant conflict of interest to support the French bankers demands for payment in full, and U.S. demands by President Obama and Wall Street lobbyist Tim Geithner to insist that there be no writedown at all. That was the price for French bank support for Strauss-Kahn’s intended bid for the French presidency, and more recently backing for Lagarde’s rise to power at IMF.

Given the U.S. veto power by Wall Street and the insistence that right-wing anti-labor ideologues (usually French) be appointed head of the IMF, a new organization representing the kind of economic logic outlined by Keynes, Harold Moulton and others in the 1920s is necessary.

Creation of such an institution should be a leading plank of Euro-left politics.

A Law of Fraudulent Conveyance, applicable to governments

The private sector has long had laws that prevent money-lenders from lending a borrower more funds than the debtor can reasonably be expected to pay back in the normal course of business. If a lender advances, say, $10,000 as a mortgage loan against a house worth more (say, $100,000), and then insists that the debtor pay or lose his home, the courts may assume that the loan was made with this aim in mind, and annul the debt.

Likewise, if a company is raided by borrowers who load it down with high-interest junk bonds, and then seize its pension funds and sell off assets to pay their debts, the company under attack can sue under fraudulent conveyance rules. They did so in the 1980s.

This lend-to-foreclose ploy is the very game that the Troika have played with Greece. They lent its government money that the IMF economists explained quite clearly in 2010-11 (and reaffirmed this year just before the Greek referendum) could not be paid. But the ECB then swooped in and said: Sell off your infrastructure, sell your ports, your gas rights in the Aegean, and entire islands, to get the money to pay what the IMF and ECB have paid French, German and other bondholders on your behalf (while saving U.S. investment banks and hedge funds from losing their bets that Greek debts would indeed be paid).

Application of this principle requires an international court to rule on the point at which debt service becomes intrusive, and write down debts accordingly.

No such set of institutions exists today.

Creation of Treasuries as national central banks to monetize deficit spending

Central banks today only lend money to banks, for the purpose of loading economies down with debt. The irrational demand by bankers to prevent a public option from creating credit on its own computer keyboards (the same way that banks create loans and deposits) is designed simply to create a private monopoly to extract economic rent n the form of interest, fees, and finally to foreclose on defaulting creditors – all guaranteed by “taxpayers.”

The European Central Bank is not suited for this duty. First of all, it is based on the ideology that public money creation is inflationary. The reality is that central bank money creation has just financed the greatest inflation of modern history – asset price inflation of the real estate market by junk mortgages, inflation of stock prices by junk bond issues, and central bank Quantitative Easing to create the fastest and largest bond market rally in history. The post-1980 experience with central banks has removed any moral or economic logic in their behavior as lobbyists for commercial banks, defenders of their special privileges, deregulator of financial crime, and extremist right-wing blockers of a public option in banking to bring basic services in line with actual costs. In short, if commercial banking systems in nearly every country have become de-industrialized and perverse, their enablers have been the central banks.

The remedy is to replace these central banks with what preceded them: national Treasuries, whose proper function is to monetize government spending into the economy. The basic principle at work should be that any economy’s monetary and credit needs should be met by public spending and monetization, not by commercial banks creating interest-bearing credit to finance the transfer of assets (e.g., real estate mortgages, corporate buyouts and raids, arbitrage and casino-capitalist gambles).

Summary

Every nation has a right to defend itself against attack – financial attack just as overt military attack. That is an essential element in the principle of self-determination.

Greece, Spain, Portugal, Italy and other debtor countries have been under the same mode of attack that was waged by the IMF and its austerity doctrine that bankrupted Latin America from the 1970s onward. International law needs to be updated to recognize that finance has become the modern-day mode of warfare. Its objectives are the same: acquisition of land, raw materials and monopolies.

A byproduct of this warfare has been to make today’s financial network so dysfunctional that nations need a financial Clean Slate. The most successful one in modern times was Germany’s Economic Miracle – the post-World War II Allied Monetary Reform. All domestic German debts were annulled, except employer wage debts to their labor force, and basic working balances. Later, in 1953, its international debts were written down. The logic prompting both these acts needs to be re-applied today.

With specific regard to Greece, Syriza’s leaders have said that they want to save Europe. First of all, from the eurozone’s destructive economic irrationality in not having a real central bank. This defect was deliberately built into the eurozone, to enforce a monopoly of commercial banks and bondholders powerful enough to gain control of governments, overruling democratic politics and referendums.

Current eurozone rules – the Maastricht and Lisbon treaties – aim to block governments from running budget deficits in a way that spend money into the economy to revive employment. The new goal is only to rescue bondholders and banks from making bad loans and even fraudulent loans, bailing them out at public expense. Economies are obliged to turn to commercial banks for loans to obtain the money that any economy needs to grow. This principle needs to be rejected on grounds that it violates a basic sovereign right of governments and economic democracy.

Once an economy is fiscally crippled by (1) not having a central bank to finance government spending, and (2) by limiting government budget deficits to just 3% of GDP, the economy must shrink. A shrinking economy will mean fewer tax revenues, and hence deeper government budget deficits and rising government debt.

The ultimate killer is for the ECB, IMF and EC to demand that governments pay their debts by privatizing public infrastructure, natural resources, land and other assets in the public domain. To compound this demand, the Troika have blocked Greece from selling to the highest bidder, if that turns out to be Gazprom or another Russian company. Financial politics thus has become militarized as part of NATO’s New Cold War politics. Debtor economies are directed to sell to euro-kleptocrats – on terms financed by banks, so that interest charges on the deal absorb all the profits, leaving governments without much income tax.

Notes.
[1] This is the theme of my Super Imperialism: The Economic Strategy of American Empire (1972, new ed., 2002).
[2] The video of the day can be found here: http://www.guengl.eu/news/article/pr...utions.-2-july (I’m at about 37 minutes.)
[3] http://www.counterpunch.org/2015/06/...i-declaration/
[4] I summarize this debate between Keynes and his antagonists in Trade, Development and Foreign Debt (new ed. ISLET 2009), chapter 16.

Michael Hudson’s book summarizing his economic theories, “The Bubble and Beyond,” is now available in a new edition with two bonus chapters on Amazon. His latest book is Finance Capitalism and Its Discontents. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. Hudson’s new book, Killing the Host, will be published this summer by CounterPunch Books. He can be reached via his website, mh@michael-hudson.com

[Fiat Currency]

Re: Galbraith on Greece

actually euro notes, currency not electronic totals, are printed by the national central banks, including the greek national bank. they will have a Y in their serial numbers to identify that it was the greek bank that printed them. i can imagine people all over europe examining every piece of currency they get in an exchange.

Yes - and if they leave the Euro, all those Y notes will get marked with a red Sharpie, trade on par with the IOUs, eventually trade on par with the new drachma, and then be taken out of circulation and destroyed with a percentage being kept by a few people for nostalgic and numismatic reasons.

They should just mint a 50 drachma coin with 1/2 oz of silver in it.

[ProdigyofZen]

Re: Will We All Be Greeks?

Many worthless pundits, may I add, with their own agendas, good intentions or not. Too many theoreticians that are immune to the consequences either way, and with little local knowledge.

I don't see many posters here posting articles written by Greeks actually living in Greece - both pro and con articles.

And to think, we live in the "information age" where everything is accessible.

My question for you GNK is and don't take this the wrong way, "what do you stand to lose if Greece exists the Euro?" "What is your line of business in Greece?"

[ProdigyofZen]

Re: Does Greece need to borrow?

The economy and tax revenues are collapsing right now. The surplus has been kissed goodbye for some time now.

Greece is beyond broke and is bordering on third world soon.

A Central Bank is never broke, nor is a nation. The sooner you go back to the Drachma and a Greek Central Bank the sooner things will get better. Admittedly not until after inflation and devaluation.

[santafe2]

Re: Does Greece need to borrow?

A Central Bank is never broke, nor is a nation. The sooner you go back to the Drachma and a Greek Central Bank the sooner things will get better. Admittedly not until after inflation and devaluation.

You touch on a key point PoZ. The day Greece joined the EU they ceased to be sovereign. They traded their sovereignty for economic convenience without the sort of support a poor unsovereign state in the US would expect to receive. Greece is the Mississippi or New Mexico of Europe. We give our states cute little states rights, but only as long as those rights follow directives from Washington DC. As Americans, we get that this is how our economic and political system works. The folks in Mississippi don't agree with the folks in Massachusetts but they love the subsidy. Massachusetts isn't imposing austerity on the Magnolia State and California isn't demanding reparations from us in New Mexico. We never pay our fair share. The good people of California and New York and other net contributors to the federal government never complain when we take their money to support our under performing states.

Greece was a trophy for the EU but the net economic contributors are still stuck in the early 19th Century where they could pimp the entire world and none of them are smart enough to understand the value Greece offers the EU. It's the seat of Western civilization. In the US, Mississippi and New Mexico take $3 for every $1 we pay in. Where's the German style outrage in the US? Why didn't we hear about German outrage when they took on East Germany? I like Germany well enough but they have spreadsheet intelligence and they've always been the worst sort of racists. This economic experiment isn't going to end well if they don't grow up.

[gnk]

Re: Does Greece need to borrow?

A Central Bank is never broke, nor is a nation. The sooner you go back to the Drachma and a Greek Central Bank the sooner things will get better. Admittedly not until after inflation and devaluation.

That's the economic theory, and I agree on a theoretical basis. BUT:

1) We have some very extreme Marxists in government right now that want to create a Soviet style republic, nationalizing just about everything they can. We're not talking a soft socialism Swedish model here, but a Venezuelan model. What value will the international markets place on a currency managed by such a government? Keep in mind, Greece's top imports are petroleum and medicine and it currently runs a trade deficit.

2) No matter what government is in power, it will be corrupt. They all are. Furthermore, there are billions of Euros held by Wealthy Greeks in offshore accounts. That money will come back after the severe devaluation of assets, (which will be followed by a likely overthrow of the current government) and many of these investors will be the new (old?) oligarchs. They will bribe government officials first, and then bring in their money and buy everything on the cheap.

We will witness in just two years what took decades to occur in the old Soviet republics.

My point is, you can't just apply sterile economic theory. You have to know the political situation.

[don]

Does Greece need China?

BY FRANCESCO SISCI on JULY 8, 2015

ROME — As stock exchanges tumble worldwide, pundits try to apportion blame. Some weigh the momentous impact of the Greek referendum that rebuffed a debt settlement offered by the European Union. Others ponder the problem of the Chinese Stock Exchange which lost about a third of its value in a matter of a few weeks. The fact that China’s Shanghai-Shenzhen Index lost the equivalent of ten times Greece’s debt, by some lights, shows that China’s current stock turmoil is far more ominous than Europe’s malaise.

I beg to differ. Behind the roller coaster ups and downs of the Chinese stock market lies a solid national economy and state, rich in foreign currency reserves and armed with many institutional instruments for intervention.

Behind the Greek tragedy, on the other hand, lies a motley collection of states which are a European Union barely in name. Days after the Greek referendum, it’s still unclear if a compromise between Athens and Brussels can still be struck and under what conditions. And though the total volume of Greece’s losses appears much smaller than China, a Greek exit from the Euro zone could trigger the end of the euro as a currency as we now know it. Its demise could also spark the reshaping of the global financial order, where the euro currently plays a key role.

Nothing of this scale is happening at the moment inside China — though the present crisis points to the need for a deep restructuring of the Chinese financial system which is still too dominated by state-owned companies and unsavory insider trading practices.

In Europe the crisis is more complex and goes beyond simple economic accounting. The common people who voted “no” in Greece to the EU offer most likely didn’t understand the deal. They didn’t grasp the concept of Europe as the grander idea behind the euro. Yet no European politician, so far, seems willing to speak on behalf of that European ideal. And in the absence of trust between countries and their peoples, the process of finding a solution to the Greek crisis reverts to a vicious cycle. That is: Brussels tries to puts mounting pressure on Athens and Athens reacts in kind, inviting a revolt of other “delinquent” nations in Southern Europe who already see themselves as suffering under the “German yoke.” This results in more mistrust and bad bargains. This is what is happening in Europe.

There is less maneuvering room for an agreement in Europe right now, especially with respect to Greece. The most ruthless opponents of the EU do not want the euro or want only selfish special conditions.

One note of optimism can perhaps be found in the bizarre story of two ports — both of Greek origin. One is under the rule of Rome and the other under that of Athens.

The ports are Taranto and Piraeus. The two are distinguished by different conclusions in negotiations with their investor, logistics giant Hutchinson Whampoa (Hong Kong). After failed attempts over a decade to transform Taranto into the logistics hub for the Mediterranean and Southern Europe, Hutchinson decided to move from Italy (in theory on the road to recovery) to Greece (in theory on the road to bankruptcy).

None of this celebrates Greek luck in the face of Italian misfortune or vice versa. But it does show the different attitudes the two countries have toward the future.

Greece clearly recognized that it must engage with Asia, the economic dynamo of the world today. It also recognized that such engagement would come at minimal cost, especially when compared with what would be extracted on the European side.

Italy, on the other hand, for reasons still incomprehensible to many, rejected engagement with Asia. Whether a sign of indifference or a short-term strategy, the result for Italy is likely to be very harmful in the long term.

The history of Piraeus perhaps is also a sign that Greek politicians, despite their ostentatious radicalism, may be more pragmatic and strategic than they appear. The Greeks — whether voting “yes” or “no”— wish to remain in Europe. This contrasts with an alleged move by Italy’s Berlusconi government in 2012 to sneak out of the euro zone and return to the lira without warning the rest of the EU.

Greece’s leaders desire a new European pact, beginning with the heavy restructuring of their debt. But this is not just a question for Greece. It is for all of Europe to decide. All parties must first decide in what direction they want the European economy to move. Will Greek premier Alexis Tsipras be in charge or Brussels? In the six years since the 2008 US financial crisis and the current troubles affecting the euro, Ireland has recovered, Spain seems on track, Italy gives positive signals. But despite these upbeat examples, Greece has glaringly destroyed 25% of its national wealth.

Other issues complicate the picture. Young people in Europe don’t understand the orders emanating from Brussels. There is a question of European trust. There is also a lack of democracy since technocrats make most decisions and impose them on elected politicians. There is also the growing populism of demagogues. This is because the financial issues at stake are incomprehensible to most voters, who want simple answers instead.

However, most of this sorry state of affairs, where half of Europe blames the Greek government, is really due to a dearth of European ideals and political unity. Brussels only asks states for numerical financial/economic results and doesn’t care about how those targets are achieved in each country. This is Europe’s biggest weakness: You can’t be unified just because accountants tell you to be.

It takes a project, a common ideology, which for Europeans is absent. Couples don’t stay together to better balance their bank accounts or save on rent. They stay together first and foremost, because they love each other. Accounts must also balance, but you don’t put the cart before the horse. Where is the love in Europe?

In the absence of such ideals, Greece has tried a strategy of brinkmanship, blackmailing Europe and the world on the issue of its financial accounts. It’s unjust and it’s expensive. But in the worst extremity, the EU can still afford to pay off the Greek debts or expel Greece from the euro.
Italy does not have the luxury of such brinkmanship. Its economy is too big to fail and too big to be kicked out of the euro. If Italy tried to do half of what Greece is doing, it would put everyone at risk.

This means Italy has less room to maneuver than Greece. But it’s still likely to be damaged by whatever happens with Athens. A Greek exit from the euro or a major restructuring of its debt puts Italy on the firing line of international speculation. In addition, the campaign of demagogic Tsipras, although it was in vain, incites easy populism in the vein of political party leaders Beppe Grillo and Matteo Salvini, who dream of playing similar roles in Italian politics.

Europe also lacks a common language, since every country speaks its own language, while in Asia all the political elite and intellectuals speak English. The old community of coal and steel, the forefather of the EU after World War II, was created to ensure a Europe free of the threat of a fascist past and the present communist threat. What should Europe really be today? It was not about money in the past it cannot be about money today.

Yet the shadow of money extorted with violence and threats is what present European negotiations over Greek debt seem to be about. Regardless of any agreement that may be reached, Greece has tarnished Europe. The present predicament also shows why the EU must rise above its current battle over accounts in order to survive.

Today, how does a European leader try to define European ideals and the region’s geopolitical boundaries? Where are the limits? In Ukraine or beyond? In Turkey, Morocco, or farther away? In theory the Chinese project to recreate a new Silk Road and relaunch the Mediterranean ports could help shape a new European identity. The project would serve as a terminus of a great economic exchange and social and political system that would give meaning to all the different parts of Eurasia along the Silk Road.

These are ideas that Brussels should consider when talking to Athens. But it may be that Athens is setting the terms of its union with Europe and that larger issues such as greater engagement with China will fall by the wayside. Tsipras’s electoral victory shows Greek voters are scared, unemployed, and impoverished. It is a victory of weakness, not of strength, and this weakness could bring down everything.

Angela Merkel, the virtual heir of archduchess Maria Therese of Austria, must find a voice to speak to the hearts of her people, the European people, and not to their wallets. Meantime, in very practical terms, she and President Francois Holland of France, must quickly find a way out of this mess. History will judge them all.

[don]

Re: Does Greece need China?

4 minute demolition . . . .

[jk]

Re: Does Greece need China?

sisci is wrong when he says couples don't stay together to pay the rent. happens all the time- couples stay separated in the same household because they can't afford to maintain 2 households.

[ProdigyofZen]

Re: Does Greece need China?

That was a great speech.

[gnk]

Re: Does Greece need China?

What many British and outsiders don't understand is that the EU is not just a (currently faulty, yes) monetary union. It is much more than that. It is an idea. An identity.

The British, due to geography, may never get it. They still have yet to come to terms with the handing over of global power to the USA, and can never stomach a strong Germany or France at the heart of Europe.

The fact that most Europeans believe in the EU, despite the post bubble turmoil, and most politicians are spending countless sleepless nights to ensure a viable EU, to me, speaks volumes.

Arguments within the EU zone are not about questioning the existence of the EU, but on how to move the grand project forward.

I hope Greece stays in - for the EU, and for Greece.