Slavoj Zizek on Greece's 'No', and Greece's idealism vs EU's technocrats

[gnk]

Re: Slavoj Zizek on Greece's 'No', and Greece's idealism vs EU's technocrats

Just now, from The Guardian:

Official: Tsipras given "mental waterboarding" over reform plans

Alexis Tsipras was given a very rough ride in his meeting with Tusk, Merkel and Hollande, our Europe editor Ian Traynor reports.

Tsipras was told that Greece will either become an effective “ward” of the eurozone, by agreeing to immediately implement swift reforms this week.
Or, it leaves the euro area and watches its banks collapse.
One official dubbed it “extensive mental waterboarding”, in an attempt to make the Greek PM fall into line.
An unpleasant image, that highlights just how far we have now fallen from those European standards of solidarity and unity.

(I disagree with the author's last sentence. I think it is just the opposite.)

[astonas]

Re: Slavoj Zizek on Greece's 'No', and Greece's idealism vs EU's technocrats

"An unpleasant image, that highlights just how far we have now fallen from those European standards of solidarity and unity."

(I disagree with the author's last sentence. I think it is just the opposite.)

It depends on whether you are thinking of solidarity between national leaders, or solidarity between the people themselves, I suppose.

If a leader is hurting their own people (for example, by enabling looting and corruption) it can indeed be possible for conflict at that level to represent solidarity below.

But even in that case the press can fan the flames of legitimate disagreement at the top into blazing nationalist furor at the bottom. Letting this drag on for five years was a huge mistake. But that error, too, was baked into the first (2010) deal, which made extend-and-pretend the norm.

By now that fire has consumed what little chance of success there might have been. Your reading on the ground, again, is far better than mine. But from this vantage, even the most obviously true and beneficial suggestion would meet with a fiery reception in Greece, if it came from Merkel. And as we are seeing, even eventual capitulation from Tsipras isn't quite satisfying in the north.

As bad as the 2010 deal was to begin with, the delay and extensions managed to deepen the cultural divide even further.

The EMU is now a region divided by a common currency. It wan't always, and it didn't have to be. The right deal in 2010 could have made it continue as a unifying force, as it had been prior to that. But from 2010 on, its divisive influence only grew.

[gnk]

Re: Slavoj Zizek on Greece's 'No', and Greece's idealism vs EU's technocrats

It depends on whether you are thinking of solidarity between national leaders, or solidarity between the people themselves, I suppose.

If a leader is hurting their own people (for example, by enabling looting and corruption) it can indeed be possible for conflict at that level to represent solidarity below.

But even in that case the press can fan the flames of legitimate disagreement at the top into blazing nationalist furor at the bottom. Letting this drag on for five years was a huge mistake. But that error, too, was baked into the first (2010) deal, which made extend-and-pretend the norm.

By now that fire has consumed what little chance of success there might have been. Your reading on the ground, again, is far better than mine. But from this vantage, even the most obviously true and beneficial suggestion would meet with a fiery reception in Greece, if it came from Merkel. And as we are seeing, even eventual capitulation from Tsipras isn't quite satisfying in the north.

As bad as the 2010 deal was to begin with, the delay and extensions managed to deepen the cultural divide even further.

The EMU is now a region divided by a common currency. It wan't always, and it didn't have to be. The right deal in 2010 could have made it continue as a unifying force, as it had been prior to that. But from 2010 on, its divisive influence only grew.

Of all the austerity EU countries, why is it Greece that turns the world upside down every two years?

No program would have been good enough for Greece.

I hate to admit it, but Germany is the realist here. Greece's economy will always be a money pit, unless something severe is done, or I guess, something happens that causes the system to crash. Very few reforms were implemented in those five years, and Tsipras was basically asking for unconditional funding.

[astonas]

Re: Slavoj Zizek on Greece's 'No', and Greece's idealism vs EU's technocrats

I'll take your points in reverse order:

I hate to admit it, but Germany is the realist here. Greece's economy will always be a money pit, unless something severe is done, or I guess, something happens that causes the system to crash. Very few reforms were implemented in those five years, and Tsipras was basically asking for unconditional funding.

I don't disagree that the ordoliberals (not just in Germany, other Social Market states are also doing well with the same approach in Scandinavia and now Eastern Europe) were the realists. They did identify an approach that could have worked. But they were unsuccessful in getting a working ordoliberal debt structure implemented, in the desperate moments of Greece's crisis. The hard-driving French Anglo-Saxon personalities in the room got their agenda pushed through instead, while the more methodical ordos were still working out their plan.

So you're absolutely right that something severe had to be done, or even a system crash. The bailout prevented both of those, as does extend-and-pretend. A grexit would not.

I'm genuinely confused here. You want Greece to stay in the Euro, right? But you are also saying that you want ordoliberal reforms that have been blocked within the Euro since 2010. How are you suggesting applying the vastly higher ordoliberal pressure onto Greece that is necessary to reconcile these two positions?

If the ordo states could have applied more pressure, they would have. They were limited by the bailout structure. The external governmental pressure you're getting now is as high as it can get. And you've already made very clear that's nowhere near enough to be effective. Intergovernmental pressure is simply too limited (in democracies) compared to market pressure. It is too easy to dismiss such pressure domestically. So it might be enough pressure to steer the car (though it's not even doing that now) but it will never power the engine (as you seem to want). That requires markets to apply the pressure, swiftly and ruthlessly. People who think northern Europe is applying way too much pressure, haven't compared that to what pressures the markets would be applying, if all Greece's debts had never been taken out of private hands. It wouldn't even be close.

No program would have been good enough for Greece.

This is the part I really don't believe is true. If all the debt had been left with the original lenders, the market dynamic would have created a vastly higher pressure to make real reform happen. Any feedback for Greece's progress would be available minute-to-minute, by tracking bond yields. And no moral hazard for lending would have been created either.

Let's say the Greek government dropped the Cadastre program in that scenario. They wouldn't have heard disappointment about it months later, buried in a long list of other complaints, from people they could always dismiss as having their own flaws and biases. Instead, they might have seen yields surge the very hour of the announcement, as investors started to worry about their money once again. That's the kind of feedback that gives reformers the ability to find support. "We HAVE to change now. If we don't, we won't be able to pay salaries this month, since we won't be able to renew our loans." How hard will unnecessary government workers fight, to retain a job that might not pay them anymore, if the reform doesn't go through?

The idea behind social market economies is that while there are some things that are better socialized, things like motivation and price discovery are best left where those are most efficient -- in the markets.

It has been argued that private debt retention was not possible, that the marketplace was in fact collapsing. I'd suggest that there were other options that could have halted the panic first, short of simply buying the loans from banks. Temporary closures of markets, with ramp-up periods in which limited numbers of shares per holder could be traded, for instance. The bailout route was chosen because of a combination of blind panic and self-interest but not because it was the only conceivable path available to enhance stability in the short- or long-term.

Of all the austerity EU countries, why is it Greece that turns the world upside down every two years?

While it's true that Greece had longstanding prior corruption, other Mediterranean countries did as well. I honestly don't know enough to reliably enumerate exactly how dramatic corruption was elsewhere in the southern states. It's not exactly something that's easy to measure. So you might be right that Greece is entirely incomparable, and I'm not claiming to be able to judge that.

But I really haven't seen all that many places where culture stops dead at a border. I've read about a lot of crazy stuff that was happening everywhere in the south. Spanish airports in the middle of nowhere aren't too different from empty Olympic stadiums. Neither can happen without some measure of the kinds of corruption you describe seeing in Greece.

And more importantly I DO know that it was Greece that got an exemption to the "No More Argentinas" rule at the IMF, in a way that the others did not. That Greece's future (and not the other states') was consciously traded for bank industry stability, after DSK heard the word "no" from the group responsible for protecting Greece.

If that was, as your thesis suggests, because Greece was so hopeless it was doomed anyway, I can't say. I wasn't in the room. Maybe Greece WAS always doomed to fail, and banking interests were entirely justified in acknowledging that fact, and writing it off from the beginning. Perhaps they were deeply regretting that they were going to have to allow Greece to be looted by the world's wealthiest to save the marketplace, in Argentinian style.

But it seems a lot more likely that to me that the Goldman boys all over Europe were focused on protecting Goldman, and not exhibiting a profoundly deep understanding of the complex reality of Greece's vast and tumultuous history, as they were making desperate decisions at breakneck speed.

Both answers could explain the bailout choices and structure. But which is more likely?

[astonas]

Re: Slavoj Zizek on Greece's 'No', and Greece's idealism vs EU's technocrats

Reuters has gotten the list of line-items in the EG response currently under discussion:

The following is a summary of the paper, seen by Reuters.

* Greece to pass by Wednesday measures including simplifying VAT rates and applying the tax more widely, cutting back on pensions and making the national statistics agency independent.

* Greece to set clear timetable for following measures:
- ambitious pension reform;
- market reform including Sunday trading, pharmacy ownership and opening of closed professions such as ferries;
- privatize electricity transmission network;
- review collective bargaining, industrial action and collective dismissals;
- strengthen financial sector, including action on non-performing loans and eliminate political interference.

* Following actions to be taken:
- privatization, possibly involving transfer of 50 billion euros of assets to external and independent fund;
- cut costs of public administration and reduce political influence over it. First proposal to be provided in a week.
- seek creditor approval for key legislation before submitting to public consultation or parliament.

The above-listed commitments are minimum requirements to start the negotiations with the Greek authorities.

* Financing needs are 82-86 billion euros. Decision on new package urgently required given financing needs of 7 billion euros by July 20 and further 5 billion euros by mid-August.

* A possible new ESM program would have to include a 10-25 billion euro buffer for banks.

* Possible debt reprofiling but no nominal haircuts.

* If no agreement is reached, Greece could be offered “time-out” from the euro area, with possible debt restructuring.

There's also rumors of a last-second compromise, giving up some points at Greece's request. What's surprising to me about that is that it appears to imply that the EG is still trying to get a unanimous vote (i.e., even Greek representative agrees) on the declaration being made. It uses the same voting rules as the EC:

Depending on the issue under discussion, the Council of the EU takes its decisions by:

• simple majority (15 member states vote in favour)
• qualified majority (55% of member states vote in favour), or
• unanimous vote (all votes are in favour)

The Council can vote only if a majority of its members is present. A member of the Council may only act on the behalf of one other member.

So if they're negotiating for the last vote, that would mean that every other nation in Europe is willing to go along with the bullet points now on the table. I expected the ordoliberals would be willing to go along with bullet points like these. I wasn't expecting France and Italy to go along with most, as well. I believe they might privately agree most were necessary, but would never admit it publicly, given their recent posturing. Ireland, however, has already openly supported it.

I suppose France and Italy could always back out again if Greece doesn't get its wish though, to save face.