Friday, March 20, 2015

Grexit looms over the Eurozone, 6th Edition

It's 2012 all over again.  This heated argument over at NakedCapitalism in 2012 could have been written today. Read all the comments, it gives a great exposition of the context of how Greece was taken to the brink.  Commenter Hugh makes some of the best pithy analyses, like this one:

  2. HughHow is Greece that much different than Iceland? Iceland has even fewer resources than Greece. So how would an Icelandic solution for Greece be so beyond the bounds?
    Greece is in a massive depression precisely because it is in the eurozone and has kept the euro. An exit won’t be easy but even if things got worse for a while with an exit, they are already getting worse without one.
    And just to repeat, Europe of the eurozone has 6 problems:
    1) Lack of a democratic fiscal and debt union
    2) An insolvent predatory banking sector
    3) An ineffective central bank
    4) Mercantilist trade patterns with in the zone
    5) Corrupt political classes
    6) Rich kleptocrats calling the shots
    Varoufakis’ program for Europe addresses only partially the first 4 of these. All must be dealt with for any solution to succeed.
    Forward to this week, and the International Business pages of the New York Times paint a very Greek unfriendly view of the Grexit "threat."  Reading this made me very angry, and motivated to seek out alternative views like the above.

    Here's a very different take on Varoufakis from Counterpunch last month.  Is this the same guy Yves Smith was referring to in the top link?  Has he changed as much as comparing the two OP's would suggest?

    NakedCapitalism had an updated discussion of Varoufakis' latest, which is a must read.

    But there are even more problems with Euro.  And one of them is the lack of region wide military socialism.  Instead, there's client mercantilism, where under equipped Greece has to buy it's own equipment, from taxes on hotel staff.  In the US, many cities rely on military socialism, the returns to local industry and direct employment from national revenue.

    Capitalism not only starts from unpardonable theft, it continues unstable on it's own terms.  The US is actually stabilized somewhat by military socialism, and other systems of social democracy, including social security and medicare (also essential to some communities…).  It could be stabilized even more, and made more prosperous, with more social democracy.  The #1 missing element is a jobs guarantee.

    German and other bankers relying on "the market" either in amazing belief or cover for predatory practices should have known about the investments not going to go well in Greece.  If one looks at these things as a morality play…default would be what they deserve for their lack of total diligence.

    What Greece needed, was international industrial development, say, of the kind going on in Asia.

    But that kind of thing takes patients, the kind of patience that only governments can provide in their own currency, but what it may on the world market.

    Banks have taken on the role that really must be taken by social collectives.  The profit motive is not the correct way to guide industrial development.  It has to be shaped by social needs, abilities, and aspirations.

    The Euro itself is pure neoliberalism, the notion that a currency can be shared only on an economic basis, and not one of social trust and ultimate authority.

     
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