Galbraith on Greece

[Polish_Silver]

Any place for diversity?

I think his ending paragraphs say a great deal:



This reads to me like Varoufakis has finally realized that the academic's conception of a unified European political culture, which all his previous actions assumed was already present, is really not in place yet, but still needs to be forged. . . ..

What is the fundamental reason why a "unified European political culture" needs to be forged? Will not that create a pan-european government, with the national leaders mere figureheads? And is this not a step towards a world wide government?

In the early days of the EU, the proponents claimed that it was a way to achieve greater cooperation, with the regions keeping their identity. Was that a "bait and switch" trick?

We say that we are tolerant, that we value diversity, but it seems in practice we want everyone to be alike.

[Thailandnotes]

Re: Galbraith on Greece

This doesn't fit the data. 15/19 nations are now considering Grexit as viable. That is an explicit acknowledgement that they would be repaid with a devalued currency. It is the exact opposite of getting 100 cents on the dollar. Only those nations whose foreign policy is directed mostly by strong Anglo-Saxon style banks, who are holding huge side-bets on the matter, are insisting that such an explicit private-sector default must never happen (as Trichet first did in 2010). In the EMU, that's France, Italy, and Cyprus. In the EU of course the UK is added to the list.

I can’t find numbers like that.
Countries = the public, the bankers, the politicians?

And actually some countries that have recently joined the "open to grexit" group are making one of the conditions payment in Euros in full first.

Many financial leaders may be admitting privately they do not expect to be paid in full, but none are advocating debt relief publicly in any way that I have come across.

One of your earlier comments sent me back to Lewis…

You wrote:

“But the ordoliberal nations can only earn a "win" for their own banking systems if the French banks, placed at risk by light-touch regulations, lose sufficiently dramatically that more tightly-regulated banking systems again look good by comparison. That's how they'd like to re-establish market share in international banking. They need to crush French banks, not save them.”

Lewis:

Asmussen agrees and then addresses the German question more directly. The curious thing about the eruption of cheap and indiscriminate lending of money during the past decade was the different effects it had from country to country. Every developed country was subjected to more or less the same temptation, but no two countries responded in precisely the same way. The rest of Europe, in effect, used Germany’s credit rating to indulge its material desires. They borrowed as cheaply as Germans could to buy stuff they couldn’t afford. Given the chance to take something for nothing, the German people alone simply ignored the offer. “There was no credit boom in Germany,” says Asmussen. “Real-estate prices were completely flat. There was no borrowing for consumption. Because this behavior is rather alien to Germans. Germans save whenever possible. This is deeply in German genes.

Perhaps a leftover of the collective memory of the Great Depression and the hyperinflation of the 1920s.” The German government was equally prudent because, he went on, “there is a consensus among the different parties about this: if you’re not adhering to fiscal responsibility, you have no chance in elections, because the people are that way.”

In that moment of temptation, Germany became something like a mirror image of Iceland and Ireland and Greece and, for that matter, the United States. Other countries used foreign money to fuel various forms of insanity. The Germans, through their bankers, used their own money to enable foreigners to behave insanely.

This is what makes the German case so peculiar. If they had been merely the only big, developed nation with decent financial morals, they would present one sort of picture, of simple rectitude. But they had done something far more peculiar: during the boom German bankers had gone out of their way to get dirty. They lent money to American subprime borrowers, to Irish real-estate barons, to Icelandic banking tycoons to do things that no German would ever do. The German losses are still being toted up, but at last count they stand at $21 billion in the Icelandic banks, $100 billion in Irish banks, $60 billion in various U.S. subprime-backed bonds, and some yet-to-be-determined amount in Greek bonds. The only financial disaster in the last decade German bankers appear to have missed was investing with Bernie Madoff. (Perhaps the only advantage to the German financial system of having no Jews.) In their own country, however, these seemingly crazed bankers behaved with restraint. The German people did not allow them to behave otherwise. It was another case of clean on the outside, dirty on the inside. The German banks that wanted to get a little dirty needed to go abroad to do it.

About this the deputy finance minister has not that much to say. He continues to wonder how a real-estate crisis in Florida could end with all these losses in Germany.

A German economist named Henrik Enderlein, who teaches at the Hertie School of Governance, in Berlin, has described the radical change that occurred in German banks beginning about 2003. In a paper in progress, Enderlein points out that “many observers initially believed German banks would be relatively less exposed to the crisis. The contrary turned out to be the case. German banks ended up being among the most severely affected in continental Europe and this despite relatively favorable economic conditions.” Everyone thought that German bankers were more conservative, and more isolated from the outside world, than, say, the French. And it wasn’t true. “There had never been any innovation in German banking,” says Enderlein. “You gave money to some company, and the company paid you back. They went [virtually overnight] from this to being American. And they weren’t any good at it.”

http://www.vanityfair.com/news/2011/09/europe-201109

[Chris Coles]

Re: Galbraith on Greece

I can’t find numbers like that.
Countries = the public, the bankers, the politicians?

And actually some countries that have recently joined the "open to grexit" group are making one of the conditions payment in Euros in full first.

Many financial leaders may be admitting privately they do not expect to be paid in full, but none are advocating debt relief publicly in any way that I have come across.

The point I wish to return to is one of "Leverage". If we return to the statement embedded within the speech by Mervyn King From Bagehot to Basil and back again http://www.bankofengland.co.uk/archi.../speech455.pdf

"While banks’ balance sheets have exploded, so have the risks associated with those balance sheets. Bagehot would have been used to banks with leverage ratios (total assets, or liabilities, to capital) of around six to one. But capital ratios have declined and leverage has risen. Immediately prior to the crisis, leverage in the banking system of the industrialised world had increased to astronomical levels. Simple leverage ratios of close to 50 or more could be found in the US, UK, and the continent of Europe, driven in part by the expansion of trading books (Brennan, Haldane and Madouros, 2010)."

I recommend reading the whole speech, but the above paragraph serves for this debate; particularly that which I highlight.

Which is that in fact, almost all of the debt created was leveraged "fake" money created on screen; and NOT the original deposits of real money from their customers.

Thus there are two separate, yet combined issues here; the use of a lending book as an asset, (indeed, the primary asset of a bank); in turn created with fake money. That by using leverage, all banks can increase their asset base; without any connection to their original holdings of deposited funds.

Surely, if we instead treated a loan book as a liability; none of this would have happened?

Again; in expanding their loan books with leveraged money; they have enormously increased the liabilities of the nations surrounding them; while not accepting the contingent responsibility of ensuring their ability to correspondingly increase prosperity to ensure repayment.

That the use of such leverage thus makes the repayment impossible; simply because the people of the nations have no corresponding potential to similarly leverage their own prosperity; in line with the leverage of the loan books.

That if we concentrate the debate on that use of leverage; we can see that the loans are always improper and thus must be reduced accordingly.

[astonas]

Re: Galbraith on Greece

I can’t find numbers like that.
Countries = the public, the bankers, the politicians?

The national finance ministers, voting in the Eurogroup, and representing their constituencies in their own countries, aligned 15/19 on the inclusion of Grexit language in the most recent Memorandum of Understanding. The only reason the clause was not included was that the EG insisted on trying for unanimous consent. (The EG also has the option of taking votes based on a qualified double majority.)

As an aside: Each of these Finance Ministers was democratically elected within their own countries, and represents a majority coalition there. Under these parliamentary systems, these coalitions could collapse at any point under a vote of no confidence, so the system actually provides for a more "democratic" (meaning shorter feedback loop) handling of foreign policy than for example the US, where the president is in charge of foreign policy, and does not need to fear abrupt removal from office. In his second term, he needn't even consider re-election, should he betray his mandate in international negotiations! Depending on one's political leanings, either the US's Iran deal or TPP can be cited as recent evidence of this.

So the implication that finance ministers weren't representing their constituents in the EG, or that the EU is more generally "undemocratic", are not easy to rigorously support. Yes, any elected official can of course deviate from the interests of their constituents. But Europe does not appear in general to be less democratic than other developed systems, and when compared to the US today, it actually appears far more democratic. It is hard to imagine a ruling like Citizens United occurring in any European state, let alone the EU as a whole.

In contrast, its largest challenges are still being addressed by comparatively democratic means, albeit still discretized at the nation-state level. When one particular national government does not gets its way, it is thus not "undemocratic" but rather an inevitable situation that must always arise when different states have different interests, and it is impossible for each to simultaneously get its own way. In other words, to whatever extent Europe is in conflict, that arises not because of specific flaws in its construction (though those certainly do exist) but rather inevitably from the fact that highly disparate nations are trying to place themselves into a single union, and make decisions collectively. A nation not getting its way can, will, and must happen, if any kind of "European Government" is to be formed.

In this way, while Varoufakis is incorrect to use the term "undemocratic" he was correct in recognizing that Greece will not get its way unless it can rally a pan-European political movement, capable of influencing national politics in many states, or even transcending national boundaries. As long as national interests are most dominant in the politics of Europe, Greece will remain a far-removed outlier, in an already minority political block. It will also be hard for it to have much influence more generally since it won't be a swing vote on many issues, and thus won't be a player in shaping European policies the way other small nations are. His path is the one to empower Greece within Europe, and it is not an easy one.

This is no doubt frustrating in Greece, and understandably so. But it is precisely what occurs in democratic systems when one is small, and isolated on a distant end of the political spectrum. Limiting the influence of the extreme minority's ability to set the agenda is what makes a successful democracy stable, and it occurs implicitly in all of them. In different cases, it may be a positive or negative, but in all cases it does happen.

I would guess that when Greece was fighting to join the EU, it may have underestimated just how far out of synch with the European center its own politics and policies were, but I have little first-hand knowledge of the sentiment on the ground there at that time.

And actually some countries that have recently joined the "open to grexit" group are making one of the conditions payment in Euros in full first.

As best I can tell, this is simply factually incorrect. The clause under discussion for the Memorandum of Understanding specifically referred to what would happen in the event that an agreement ratified by the Greek government could NOT be achieved. From its first introduction on, its wording was never altered to apply to any other circumstance.

If Greece and the remaining EMU could NOT come to terms, a 5-year switch to another Greek currency, under which devaluation could occur, would be applied before re-entry, which would happen under a new exchange rate, established after the markets had adjusted the exchange rates to better reflect the magnitude and nature of economic activity for both parties.

So there simply was not any attempt to have a Grexit AFTER payment was received.

When I think it through, I actually struggle to make sense of your assertion above. If Greece paid the debt in full first, there would be absolutely no need to even consider Grexit in the first place. The sole economic value in Grexit -- for both creditors and debtors -- is to permit fractional default through a market-based adjustment of currency values.

Many financial leaders may be admitting privately they do not expect to be paid in full, but none are advocating debt relief publicly in any way that I have come across.

As I clarified above, in this case the word "Grexit" implies devaluation default. They are indeed talking about it, advocating it, and even voting for this form of debt reduction, but are doing so using the only term available under the Maastricht and Lisbon treaties. "Direct" reduction is in this case illegal according to the combined terms of those treaties, so indirect default through Grexit is the only legally available option.

At this point the nations accepting this form of reduction are all of the EMU, with the exception of France, Italy, Cyprus, and Greece. This is not my opinion, but a matter of record from the Eurogroup meeting.

The part that is a matter of opinion (and we can certainly discuss the strengths and weaknesses of my take) is the question of motivation. I am suggesting that France and Italy are most likely opposed because their banking systems may have large remaining values of leveraged CDS's which would be hit hard by a default. I readily admit that this attribution is in part speculative, but it does appear very consistent with what has been reported concerning exposure levels to the crisis, and stress test results, and it appears to fit the rather dramatic capitulation of Hollande's otherwise socialist government to Anglo-Saxon banking interests. When it comes to Europe, he seems to be channeling Sarkozy these days.

One of your earlier comments sent me back to Lewis…

You wrote:

“But the ordoliberal nations can only earn a "win" for their own banking systems if the French banks, placed at risk by light-touch regulations, lose sufficiently dramatically that more tightly-regulated banking systems again look good by comparison. That's how they'd like to re-establish market share in international banking. They need to crush French banks, not save them.”

Lewis:

Asmussen agrees and then addresses the German question more directly. The curious thing about the eruption of cheap and indiscriminate lending of money during the past decade was the different effects it had from country to country. Every developed country was subjected to more or less the same temptation, but no two countries responded in precisely the same way. The rest of Europe, in effect, used Germany’s credit rating to indulge its material desires. They borrowed as cheaply as Germans could to buy stuff they couldn’t afford. Given the chance to take something for nothing, the German people alone simply ignored the offer. “There was no credit boom in Germany,” says Asmussen. “Real-estate prices were completely flat. There was no borrowing for consumption. Because this behavior is rather alien to Germans. Germans save whenever possible. This is deeply in German genes.

Perhaps a leftover of the collective memory of the Great Depression and the hyperinflation of the 1920s.” The German government was equally prudent because, he went on, “there is a consensus among the different parties about this: if you’re not adhering to fiscal responsibility, you have no chance in elections, because the people are that way.”

In that moment of temptation, Germany became something like a mirror image of Iceland and Ireland and Greece and, for that matter, the United States. Other countries used foreign money to fuel various forms of insanity. The Germans, through their bankers, used their own money to enable foreigners to behave insanely.

This is what makes the German case so peculiar. If they had been merely the only big, developed nation with decent financial morals, they would present one sort of picture, of simple rectitude. But they had done something far more peculiar: during the boom German bankers had gone out of their way to get dirty. They lent money to American subprime borrowers, to Irish real-estate barons, to Icelandic banking tycoons to do things that no German would ever do. The German losses are still being toted up, but at last count they stand at $21 billion in the Icelandic banks, $100 billion in Irish banks, $60 billion in various U.S. subprime-backed bonds, and some yet-to-be-determined amount in Greek bonds. The only financial disaster in the last decade German bankers appear to have missed was investing with Bernie Madoff. (Perhaps the only advantage to the German financial system of having no Jews.) In their own country, however, these seemingly crazed bankers behaved with restraint. The German people did not allow them to behave otherwise. It was another case of clean on the outside, dirty on the inside. The German banks that wanted to get a little dirty needed to go abroad to do it.

About this the deputy finance minister has not that much to say. He continues to wonder how a real-estate crisis in Florida could end with all these losses in Germany.

A German economist named Henrik Enderlein, who teaches at the Hertie School of Governance, in Berlin, has described the radical change that occurred in German banks beginning about 2003. In a paper in progress, Enderlein points out that “many observers initially believed German banks would be relatively less exposed to the crisis. The contrary turned out to be the case. German banks ended up being among the most severely affected in continental Europe and this despite relatively favorable economic conditions.” Everyone thought that German bankers were more conservative, and more isolated from the outside world, than, say, the French. And it wasn’t true. “There had never been any innovation in German banking,” says Enderlein. “You gave money to some company, and the company paid you back. They went [virtually overnight] from this to being American. And they weren’t any good at it.”

http://www.vanityfair.com/news/2011/09/europe-201109

Yes, Lewis does a pretty good job of capturing the picture, thanks for citing him here. And here Lewis, Asmussen, and Enderlein aren't wrong, though perhaps space limits might have forced Lewis to leave out some salient details that are helpful in teasing out a few fine points.

Lewis makes allusions to one key point when he writes generalities like: "The German banks that wanted to get a little dirty needed to go abroad to do it." and "What Germans did with money between 2003 and 2008 would never have been possible within Germany" and even "In their own country, however, these seemingly crazed bankers behaved with restraint." The bit left out by Lewis concerns the impact of the fall of Glass-Stegall on the competitive landscape of the international banking industry.

International businesses, particularly in finance, have the opportunity to shop around, by conducting business of any given type in whichever jurisdiction it can find or form a subsidiary. When financial regulations change in one country, particularly the Goliath US, that is not a local effect, but a worldwide effect.

Furthermore, remember that when we say "German banks" we are talking not just about bank branches physically located in Germany, operated by people with a strongly ordoliberal mindset, and a culture of (at times excessive) rules-following. Instead, we also include any bank whose headquarters is registered in Germany. That means we are also talking about branches and/or subsidiary banks in New York and the City of London, generally staffed by locals, who hold the associated Anglo-Saxon worldview, and operate mostly under domestic (US and City of London) banking laws.

It is of course fair to point out that German banks are not immune to errors, even misconduct. But it is also pertinent to point out which set of laws, and which cultural forces, are relevant in enabling these errors. That is, which nation's laws and culture are permitting and benefitting from the misconduct, and which are opposing it.

This allows us to easily reconcile Asmussen's and Enderlein's apparently contradictory statements:

The rest of Europe, in effect, used Germany’s credit rating to indulge its material desires. They borrowed as cheaply as Germans could to buy stuff they couldn’t afford. Given the chance to take something for nothing, the German people alone simply ignored the offer. “There was no credit boom in Germany,” says Asmussen. “Real-estate prices were completely flat. There was no borrowing for consumption. Because this behavior is rather alien to Germans. Germans save whenever possible. This is deeply in German genes.

And:

A German economist named Henrik Enderlein, who teaches at the Hertie School of Governance, in Berlin, has described the radical change that occurred in German banks beginning about 2003. In a paper in progress, Enderlein points out that “many observers initially believed German banks would be relatively less exposed to the crisis. The contrary turned out to be the case. German banks ended up being among the most severely affected in continental Europe and this despite relatively favorable economic conditions.” Everyone thought that German bankers were more conservative, and more isolated from the outside world, than, say, the French. And it wasn’t true. “There had never been any innovation in German banking,” says Enderlein. “You gave money to some company, and the company paid you back. They went [virtually overnight] from this to being American. And they weren’t any good at it.”

It was only in 2003, after four years of international consolidation that was hammering German banks, that they decided that if they couldn't beat them, they had better join them, or be wiped out. Here's a brief summary of what was happening in the industry at that moment:

In November 2003 the Federal Reserve Board and the Treasury Department issued to Congress a report (Joint Report) on the activities of the “financial holding companies” (FHCs) authorized by the GLBA and the effect of mergers or acquisitions by FHCs on market concentration in the financial services industry.[12] According to the Joint Report, 12% of all bank holding companies had qualified as financial holding companies to exercise the new powers provided by the GLBA, and those companies held 78% of all bank holding company assets.[13] 40 of the 45 bank holding companies with Section 20 affiliates before 2000 had qualified as financial holding companies, and their securities related assets had nearly doubled.[14] The great majority of this increase was at non-U.S. based banks. Such foreign banking companies had acquired several medium sized securities firms (such as UBS acquiring Paine Webber and Credit Suisse acquiring Donaldson, Lufkin & Jenrette).[15]

So from the 1999 end of Glass-Stegall until 2003, non-US banks worldwide had a feeding frenzy in trying to capture market share in a series of US battles, often in their New York branches. As Enderlein points out, after 4 years of taking a tremendous beating by trying to be the only remaining "safe" banks of the world, German banks capitulated as well, and joined the fray.

At Deutsche bank, for example, its New York branch hired large numbers of ex-Citigroup executives and traders, and tried to recover market share. When the German government responded with its own (far stronger) version of Dodd-Frank, and started to crack down on these activities in German-registered companies, the "Deutsche" guy in New York fled to join the UK government.

When German-registered banks capitulated to joining the Anglo-Saxon game due to loss of market share after the end of Glass-Stegall, it's true that they didn't do very well. They certainly weren't practiced at it. And they arrived too late to the party to hope for much in the consolidation feeding-frenzy.

In Germany, all these business failings are generally seen as evidence that Anglo-Saxon practices needed to be further wrung out of foreign branches as well as domestic ones, through (the usual German response of) more regulation and aggressive pursuit of individual problematic bankers. Since associated losses of banking jobs are not domestic to Germany it has relatively little economic impact there, and does not meet with much internal political resistance at all. Quite the contrary. The only political party that might have objected (the FDP) doesn't even get a single seat in the German parliament today.

So it is in the interests of both German banks, and the German government, to crack down on worldwide Anglo-Saxon banking practices to whatever extent they can. It has been demonstrated pretty definitively that German banks aren't well suited to play in that game successfully, and they have now been reigned in to a greater extent than most banks by their home government.

But the German government's ability to have a meaningful impact on such practices through purely domestic regulation is fairly limited, and the more they apply limits to any German-registered bank subsidiary oversees, the more it places such banks at a competitive disadvantage when it comes to international market share.

Since the greater banking game is now being played by looser rules than benefit German-style banking, German banks can only really win market share back by convincing the rest of the world to reign things in as well.


Stepping back from these details, we see that TARP did not just save the US banking industry from the immediate problem of bank closures. It ALSO gave US-based banks and branches a huge advantage in the race-to-the-bottom of regulatory environments. Here was proof positive that any and all dangerous behaviour on the part of US banking was entirely free of consequences, so no bank's failures need ever actually affect their business practices going forward. Not only could too-good-to-be-true deals offered by American banks actually BE true, but they were now assumed to backed by the full faith and credit of the US government!

This has been described, in extreme understatement, as "moral hazard".

For customers, it translates into the ability to look ONLY at the terms offered, and not the stability of the counterparty. German banks, which had historically relied on stability as precisely their strongest selling point, had basically lost their whole sales pitch.

Why would a customer ever choose to go to the "safe" bank, when the unsafe ones can offer better terms, and are protected by unlimited bailouts (should things ever go bad) at the expense of the US taxpayer? The US response to the American Financial Crisis made it irrational to ever choose the safer bank.

The US bailout ensured the export of a race-to-the-bottom regulatory approach everywhere in the world. And THAT is what the ordoliberal nations are struggling to counteract in Europe.

In some ways, the European struggle for control is less about whether Europe will be "more German" "more French" or even "more Greek". It is about whether the whole of Europe, together, will be forced to be "more American" when it comes to being exploitable by banking interests. Some nations are further along on the path to capitulation than others.

I suppose that's what being a hegemon does for you. Your interests are a presence in the room, even when you are not physically there at all.

[Chris Coles]

Re: Galbraith on Greece

The US bailout ensured the export of a race-to-the-bottom regulatory approach everywhere in the world. And THAT is what the ordoliberal nations are struggling to counteract in Europe.

In some ways, the European struggle for control is less about whether Europe will be "more German" "more French" or even "more Greek". It is about whether the whole of Europe, together, will be forced to be "more American" when it comes to being exploitable by banking interests. Some nations are further along on the path to capitulation than others.

I suppose that's what being a hegemon does for you. Your interests are a presence in the room, even when you are not physically there at all.

Say what you will against Yanis Varoufakis; he can present a fine speech.

Britain, Greece & the Struggle for a Decent Future – Emmanuel Centre, London, 14th September 2015 by yanisv

Jump to 1:04:50 for my address

[Chris Coles]

Re: Galbraith on Greece

Double post deleted

[gnk]

Re: Galbraith on Greece

This is Greece. It is in its own category. It has many other problems that also need to be addressed, yet Varoufakis rarely discusses these issues and how they affect the economy.

(Google translate does a decent job)

[Chris Coles]

Re: Galbraith on Greece

This is Greece. It is in its own category. It has many other problems that also need to be addressed, yet Varoufakis rarely discusses these issues and how they affect the economy.

(Google translate does a decent job)

From what I can glean from his recent utterances; he recognises that the "Left wing" debate must change direction. That the origins of socialism were misplaced by forms of thinking that are today discredited and need to be revised. In which case, in a very real sense, you are correct; he is not addressing the problems of Greece; instead, he has raised the debate above present problems, to address the need for completely new thinking about the intellectual foundations of socialism.

Today, socialism is discredited due to the lack of a sensible economic platform. That must change if socialism is to have any future. That is a profound change in thinking that must be recognised and encouraged.

[astonas]

Re: Galbraith on Greece

From what I can glean from his recent utterances; he recognises that the "Left wing" debate must change direction. That the origins of socialism were misplaced by forms of thinking that are today discredited and need to be revised. In which case, in a very real sense, you are correct; he is not addressing the problems of Greece; instead, he has raised the debate above present problems, to address the need for completely new thinking about the intellectual foundations of socialism.

While Varoufakis is certainly changing focus to a more international view, I'm not sure exactly what in his statements addresses "the need for completely new thinking about the intellectual foundations of socialism." The more international flavor of socialism is hardly something new. If anything, it represents the original form of that political philosophy, and Varoufakis appears to me to be preaching a "back to basics" version, in which he appears to actively avoid or even criticize the fresher ideas available for consideration. I certainly haven't heard a new one concept from him yet (though if a good example is pointed out to me, I'd be happy to acknowledge my misunderstanding).

As I've said, he doesn't appear to me to be evil, though he does seem a bit naive, and perhaps misguided, in trying to transfer his academic idealism directly into the real world. Remember that he's only lept from being an obscure academic (by his own description) to the center of European politics, just a matter of months ago. That's a pretty big change of gears to make, especially without a clutch.

Today, socialism is discredited due to the lack of a sensible economic platform. That must change if socialism is to have any future. That is a profound change in thinking that must be recognised and encouraged.

I would perhaps use slightly different wording, though I'm not sure if it captures the same message you intend: Socialism appears discredited from certain self-serving political vantage points, because the term remains closely associated in many minds with spectacular (Soviet-era) failures that were conducted under that banner.

But to say that Scandinavia, which is arguably more proximate to "socialism" than the totalitarian communist failed states ever were, is "discredited due to a lack of sensible economic thinking" just doesn't pass the smell test.

There isn't a lack of economic thinking about how to make modern socialist democracies (present-day "socialism") economically strong. There's just a fairly broad ignorance in the popular press of the of this thinking, which already exists. (It serves no convenient or profitable narrative to discuss it, and so it simply never comes up. And thus the public clings to the false conflation of "socialism" with "Soviet Russia" like a souvenir of times past, just another decrepit relic of the Cold War.)

Perhaps what irks me most about Varoufakis is that while he appears well-intentioned, he is actually trained as an academic economist, so he has to be aware of this literature's existence, even if he doesn't embrace it. And thus, one is left wondering why he keeps pretending it doesn't exist at all.

Why, in other words, does he appear to be insisting on returning to a form of socialism more reminiscent of the old failed states than the modern successful ones, in spite of the abundant evidence that Scandinavia appears to be working much better today than the Soviet Union ever did. Whenever people point out to him anything that Greece might learn from socialism's success stories, he responds with dismissive hostility.

If this is due to ignorance, it represents a considerable failure of rigor in a person with his background. If due to idealism, then a profound lack of pragmatism.

I certainly respect Varoufakis' passion to make the world a better place, but I still question whether he is on sufficiently firm intellectual or practical ground to succeed in his mission. There are incongruences, still unexplained, that trouble me greatly.

[Chris Coles]

Re: Galbraith on Greece

As I've said, he doesn't appear to me to be evil, though he does seem a bit naive, and perhaps misguided, in trying to transfer his academic idealism directly into the real world. Remember that he's only lept from being an obscure academic (by his own description) to the center of European politics, just a matter of months ago. That's a pretty big change of gears to make, especially without a clutch.

You obviously have not been following his line of thinking as his, (and Stuart Holland's) Modest Proposal for Europe has been laid down since 2010 http://yanisvaroufakis.eu/euro-crisis/modest-proposal/ that link for a 2013 review.

Again the Modest Proposal for Europe received the backing of five retired European Prime Ministers.

As for my own perception, I have long been aware of Scandinavian socialism. The basis for my own view stems from a belief that government driven socialist economies do not fully address the need for an underlying free enterprise economy to blossom; without and apart from government.

None of us has all the answers; but the debate rolls forward. As I see it, it is not a matter of individual intellectual prowess; more a matter of classic innovation, where every mistake closes one door, while yet another opens in it's place.

You do seem to be able to easily find fault with others; can you now deliver your own proposed solution, so that we can judge that as your own input?

Certainly, Varoufakis has been doing his best to deliver positive proposals for at least the last half decade; where are yours?

[don]

Greece Reverts to the Classics

Trading Meat for Tires as Bartering Economy Grows in Greece

By LIZ ALDERMANSEPT. 21, 2015


ATHENS — Thodoris Roussos stood in his butcher’s shop and pointed to a large white delivery truck at the curb. For months, he had put off replacing the tires, because Greece’s financial crisis had cut into business. But recently, he upgraded the van with a set of good wheels at a price that could not be beat.

“Normally, the tires cost 340 euros, but no money changed hands,” Mr. Roussos said, beaming. “I paid the guy in meat.”

As Greece grapples with a continued downturn, bartering is gaining traction at the margins of the economy, part of a collection of worrisome signs for Prime Minister Alexis Tsipras who was re-elected on Sunday.


Graphic artists are exchanging designs for olive oil. Accountants swap advice for office supplies. In the agricultural heartland and on the Greek islands, informal bartering, which has historically helped communities survive, has intensified as more people exchange fruits, vegetables, other crops, equipment, clothing and services.

“In Greece there’s a major liquidity problem,” said Mr. Roussos, who met the tire vendor and scores of new clients through an Athens-based online barter club, Tradenow, which created its own currency called tradepoints. “People are finding it more convenient to trade because money is not readily available.”

“The economy continues to deteriorate,” said Yiannis Deligiannis, the founder of Tradenow. “The capital controls were the last bullet to the head. People have to find other ways to make things work. We are offering them an alternative.”

http://www.nytimes.com/2015/09/22/bu...in-greece.html

[shiny!]

Re: Greece Reverts to the Classics

Trading Meat for Tires as Bartering Economy Grows in Greece

By LIZ ALDERMANSEPT. 21, 2015


ATHENS — Thodoris Roussos stood in his butcher’s shop and pointed to a large white delivery truck at the curb. For months, he had put off replacing the tires, because Greece’s financial crisis had cut into business. But recently, he upgraded the van with a set of good wheels at a price that could not be beat.

“Normally, the tires cost 340 euros, but no money changed hands,” Mr. Roussos said, beaming. “I paid the guy in meat.”

As Greece grapples with a continued downturn, bartering is gaining traction at the margins of the economy, part of a collection of worrisome signs for Prime Minister Alexis Tsipras who was re-elected on Sunday.


Graphic artists are exchanging designs for olive oil. Accountants swap advice for office supplies. In the agricultural heartland and on the Greek islands, informal bartering, which has historically helped communities survive, has intensified as more people exchange fruits, vegetables, other crops, equipment, clothing and services.

“In Greece there’s a major liquidity problem,” said Mr. Roussos, who met the tire vendor and scores of new clients through an Athens-based online barter club, Tradenow, which created its own currency called tradepoints. “People are finding it more convenient to trade because money is not readily available.”

“The economy continues to deteriorate,” said Yiannis Deligiannis, the founder of Tradenow. “The capital controls were the last bullet to the head. People have to find other ways to make things work. We are offering them an alternative.”

http://www.nytimes.com/2015/09/22/bu...in-greece.html

The Greeks are resourceful- good for them! It's a comfort to know that my EOTWAWKI stash of toilet paper might come in handy for barter someday.

[jk]

Re: Greece Reverts to the Classics

The Greeks are resourceful- good for them! It's a comfort to know that my EOTWAWKI stash of toilet paper might come in handy for barter someday.

it won't really be the eotwawki until you've run out.

[don]

Re: Greece Reverts to the Classics

The Greeks are resourceful- good for them!

These are classic responses to failing times. In high school we were told when taxation exceeds a certain level people will hide their incomes (it was more innocent times). When inflation is ripping apart an economy, barter will spring up, like spontaneous generation. Go Greeks!

[Woodsman]

Re: Greece Reverts to the Classics

...Go Greeks!

So classic it's Classical.



http://numismatics.org/Store/CoinHoardsX