Wednesday, July 25, 2012

Greece: Germany Determined To Punish 'Wastrels'

Yves Smith at Naked Capitalism, in a post about the increasing massive failure to solve the "EuroCrisis," points to Germany's apparent determination in the face of the continuing downward spiral of Greece, a spiral which Greek Prime Minister Antonis Samaras compares to the American Great Depression, to force Greek acquiescence to continued severe austerity measures not so much as a solution but as a punishment for imagined bad behavior. Here's Smith's assessment:
But as conditions in Greece become even more desperate ..., German threats are becoming more dire:
“If Greece doesn’t fulfill those conditions, then there can be no more payments,” German Vice Chancellor Philipp Roesler told broadcaster ARD yesterday, adding that he is “very skeptical” Greece can be rescued and that the prospect of its exit from the monetary union “has long ago lost its terror.”
The immediate trigger is inspectors from the Troika are due back in Greece this week to “assess” progress towards meeting targets. Since there is no way for a patient in an intensive care ward to stave himself back to health, it is not at all obvious how Greek leaders can convince their new economic lords and masters that they can do the impossible. The Wall Street Journal sets forth the critical dates over the coming months:
But without a green light from the troika, Athens risks being cut off from badly needed aid and could run out of cash as early as August. It has sought emergency funding from Europe to cover a looming bond redemption in late August.

Greece faces a much more important deadline in September, when international creditors are due to make their next aid payment, which they delayed in June as the elections played out. Extending the deadline could require even more aid to support Greece while it delays more cuts.
An unnamed EU source told Der Spiegel [Greece] won’t reach its goal of lowering government debt to 120% of GDP by 2020 (quelle surprise!). The article states that falling short means Greece would need €10 billion to €50 billion more in funding, which the IMF and certain Eurozone governments (read Germany) will nix.
Smith then examines the economic and political consequences of various courses of action from the perspective of a number of major players; please read those in the original. Smith's conclusion sounds about right to me:
It’s hard to foresee how this ends, but if the powers that be are balking at another €10 billion to €50 billion for Greece, they will not pony up the hundreds of billions that many analysts see as necessary for Spain. The Eurocrats are running out of runway, and there’s no sign of a Plan B. If we didn’t all have a stake in the outcome, this would make for great theater.


  1. And so begins the next great Depression.

  2. Europe's slow-burn disaster continues:

    A Foolish Lack Of Terror:

    The Radicalizing Effect of Euro Disaster:

  3. 'Europe Is Sleepwalking Toward A Disaster Of Incalculable Proportions':

    Confidence Continues To Collapse In Germany:

  4. off topic

    Greek athlete kicked off Olympic team after racist tweets: "With so many Africans in Greece, the West Nile mosquitoes will be getting home food!!!"

  5. The Troika effect on the cuts in the budget of the Ministry of Health and Welfare:
    -for hospital care a roof of $151.7 per month per person.
    -for drugs a roof of $27.9 per month per person.
    For the rest, whoever has the money can pay, the others die.

  6. Enfant, that is truly inhumane. My daily medications, which are all previous-generation meds (I am fortunate that they are effective in my case), nonetheless cost more than twice that amount. And the one time I've been hospitalized in the past five years, even at the public hospital (a truly unpleasant experience), it cost more than 10 times that amount. How do you think this situation will end?

  7. Steve, like that:

    1. With a drastic reduction in life expectancy at birth: the rich are exempted

    2. Rise in TB Is Linked to Loans From I.M.F.:

    3. How the IMF Has Undermined Public Health and the Fight Against AIDS:

    4. With the abandonment of the European project "Frankenstein", named by mistake "euro".

    5. Greece Is Down 6.6%(chart:

    6.Our only hope of salvation for the storm of markets:
    So I wish that by August 20, 2012 nobody hands us any other loan, so that we will be allowed to officially bankrupt, as we should have done already.
    This is the hard way and the only one that leads to real improvements.
    Also I hope that we quit the euro or we are evicted or the euro is destroyed.
    I hope the markets to continue to beat like octopuses the Dodgers of the euro and restore order, since our thieves-politicians and the wealthy criminals who finance those politicians around the world can not do so.
    I wish the markets to attack again and again and again, until the final restoration of macroeconomic and political balance.
    The only thing I fear is the intervention of states to calm markets.
    I also fear, that perhaps the "troika of the exterior" change their minds at the last minute and give us new loans.
    I also fear, that the government could resign at the last minute before we Grexit, and since leaving the country really ungovernable 1 day before Grexit or shortly after.
    And I say this, because it is well known that Greek politicians are just handing out borrowed money to their buddies and not for difficult special missions.

  8. .. and the internal devaluation has no visible end, till we reach the Chinese or Bulgarian wages..

    Thousands of Greeks have already left the country.

    Thousands of foreign migrants have already done so..

  9. Enfant, I first encountered the term "structural adjustment" perhaps 20 years ago, and quickly came to understand that it meant a disaster for the nation on which it was enforced... emphasis on the "forced" part. In America, we have our own currency and are more nearly (theoretically) self-governing, but all that means is that the super-wealthy determine the economic ground rules for everyone else. And they damned surely do that.

    Earlier in my life, I was a capitalist. I started and ran a business for about 20 years; it was moderately "successful" by American standards. I also invested in the market. I worked hard and played by the rules as I was taught them, and now, late in life, with my medical conditions requiring ever more attention, America has effectively discarded me. "If you can't work anymore, just go away," says a voice in my mind that sounds a lot like Mitt Romney.

    I am no longer a capitalist. Been there; done that; bought the result... and paid for it. I don't think there's any "-ism" for which I can in good conscience advocate now. All of the -ism's are just different names for different schemes by which the rich take from the poor and, increasingly, from the middle class. To hell with all the -ism's.

    My heart goes out to Greece and to its people. We are all Greek now.



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