45 thoughts on “The Szasz Doctrine”

  1. The nuanced make up of the European Project is at odds with the certainty required by the holders of EZ debt and those who model it. Yields have to allow for this risk. And there is no value in promises. They can only be delivered according to circumstances. Fund values may fall as well as rise.

  2. Mody tries his hand at a little postmodernist de-construction …. of ‘words’

    The key word is ‘doctrine’ ….

    And when the doctrine is empirically ‘false’ … ?

    Words are of little use …. time for ‘action’ …

    … but from where? How?

  3. Re: A domestic economic-political analysis, in summary

    The nuanced make up of the European Project is at odds with the certainty required by the holders of EZ debt and those who model it. Yields have to allow for this risk.

    Cannot add much, or say that any better, . . . borrowers will have to pay, and what the Irish, ought to learn to do, is design around what their real cost of finance, will become. Not to become infatuated, with what the numbers, read like today.

    Not that this advice, or council, will ever reach any audio sensory organs, of the present government executives, in a way that it becomes digested.

    But one only has to look at the Irish government’s track record – of whatever shade or colour.

    In the 2000’s, Ireland was not running a surplus, or anything like it.

    It was barely breaking even.

    We carried along with such a whale, of a mis-calculation, and politicians, collectively had their escape hatches, their parachutes well prepared, inside that flight trajectory that was about to hit an obstacle.

    Sovereign bond yield stats in Europe, are now becoming just the same.

    Ireland’s representatives, do not wish to understand, it is not what Ireland, gets on a market right now, but what a market is prepared to give, to it.

    And one would be a fool, a fool, to build a plan around that.

    It is a distinction, which the overly eager, young government cubs, and junior ministers, are using as a stick, to try and beat their pre-election drums with, as loudly as they possibly, and choose to ride rough-shod over the truth. BOH.

  4. Update on Ordoliberalistan:

    Benchmarking the Greece/Eurogroup Bailout Memo and Process
    Posted on February 21, 2015 by Yves Smith
    Greece and the Eurozone have entered into what amounts to a letter of intent in the form of a memo released yesterday. It’s important to understand, even as a basis for further negotiations, what this document is and is not. Because this is not a definitive agreement, as in it explicitly states that Greece’s detailed structural reform proposals must be reviewed and approved by “the institutions,” the new name for the Troika, as well as approval by the Eurogroup finance ministers before any funds are released, there is still uncertainty as to how its deliberate ambiguity will be resolved.

    Read on:

    http://www.nakedcapitalism.com/2015/02/benchmarking-greeceeurogroup-bailout-memo-process.html

  5. To say that we’re still stuck with unrealism embedded in the Werner Report is a seriously incomplete reading of the evolution of thinking about EMU.

    Read the Tindemans report from 1976, pp 19-23. This was back when the senior European politicians could write clear and concise reports and come to some pragmatic recommendations, without feeling a need to please everyone.

    http://aei.pitt.edu/942/1/political_tindemans_report.pdf

    Tindemans (RIP) knew the problems with monetary union, and everyone at the top read his report.

  6. Re: A reality that isn’t noticed

    At least, he does, in this observer’s humble opinion.

    The Greek government is challenging three European premises: (a) debt relief is a “no, no;” (b) democratic mandates are not a serious basis for negotiation and action; and (c) words can smooth over real differences. Of these three, it is this unwillingness to agree on words that is most galling.

    Imagine if, every head of finance from every American state, flew in to some ‘central location’ (for argument’s sake, Las Vegas), for an emergency ‘chat’, three times in one week?

    What then would they say, on PBS Washington Week then?

    Imagine that the objective of the exercise was, so that the head of finance from Chicago, could agree with the head from California, what meaning of words like ‘trust’ and ‘honor’ meant.

    You’d assume, that it was a line from a hilarious movie.

    In PBS television’s Washington Week, I know that sometimes, they will complain that professional, full-time ‘Representatives’, can’t get it together.

    Imagine, if those same ‘Representatives’ treated ‘Washington politics’ as their side-line gig, and had a whole other thing going on, back home.

    Imagine that.

    What American’s refer to as their ‘cliff hanger’, doesn’t even measure up, to the knife edge that European try to walk on.

    The people, who ‘pulled something out of the bag’ in Europe on the 20th February 2015, all woke up on February the 21st, and and realized what had transpired, in some kind of psychedelic blurr-iness, a flying visit to spin a giant kind roulette wheel, was yesterday, and that they have to get out of bed, and do their real jobs.

    Men can do this sometimes.

    I mean, bite off more than they can consume.

    But this isn’t some ‘Universal Pictures’ comedy, called ‘Las Vegas’ (I feel, as if the world is spinning), starring four older gentleman movie stars, that we are talking about.

    This actually happened.

    And for all of the megawatts of electricity consumed in one enormous ‘gulp’, . . . by social media, new media, high definition media and simul-cast, global communications real-time cameras, . . . that is the point, that everyone missed. BOH.

  7. The Delors Committee on monetary union apparently got little attention in 1989, the year the Berlin Wall was breached.

    http://aei.pitt.edu/2747/1/002721_1.PDF

    German unification and the need to placate French worries gave momentum to the project.

    Of course there wasn’t serious concern about the potential massive enlargement of the market economy with the reemergence of China, economic reforms in India and the collapse of communism in Eastern Europe.

    There was a naive expectation that poor countries would rapidly converge towards the rich ones.

    However, large income disparities between the states that made up the former East and West Germany have persisted even after transfers of €2 trillion have been made to the former East. The population of the East has shrunk from 16m in 1989 to 12.5m now, while the West German population has grown to 64.6m from 60m. Former East German states have a per capita income that is 84% of the West German states, according to KfW, the German development bank.

    In the US, Mississippi’s per capita income is just 54% of Connecticut’s.

    It’s clear that in the Euro Area, crises will continue if long-term growth remains low.

  8. @ Seafóid: While since I read this –

    “Promises are given according to motive, but are fullfilled according to circumstances.” [Igor Gouzenko, “The Fall of a Titan”]

    Very apt! But what goes around, comes around. Cheers.

  9. Mody’s analysis is wide of the mark. The disagreement over the past few weeks was not a row over the meaning of words. Syriza made a tactical error by attempting to jettison the programme before they were ready to present detailed proposals of thier own, for either a modified programme or a replacement. Some say vagueness is a negotiating tactic but I think there’s a pattern emerging here. They worked through last weekend in an effort to identify the programme elements that they want to change. This weekend they are once again battling the clock to come up with proposals by Monday. A daft way to try to negotiate. If they had allowed the existing programme to run its course, they would have had funds and time to develop their own plans.

  10. I agree! Regrettably, the authors appears to have little grasp of how the Eurogroup functions.

    http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_21/02/2015_54753

    It will be interesting to see whether the Greeks will, as a delegation seeking to re-establish trust, clear the list that they intend to submit beforehand i.e. make the tele-conference of finance ministers on Monday evening a mere formality. If they do not, the depletion of bank deposits is certain to pick up on Tuesday.

    Tsipras, of course, is selling the outcome as “having won the battle, but not the war”. This is, of course, ridiculous but it has a nice, if familiar, ring to it. One suspects that most Greeks will not care i.e. they will rationalise their reaction – as many of their Irish opposite numbers have done – by cheering their defeated champion while secretly thanking their lucky stars that he did not win.

  11. I think Syriza almost certainly gained more than it lost from its bull-in-a-china-shop approach. With a non-aggressive approach, it would have lost credibility with its electorate, and would have been sunk like its predecessors.

    We’ll have to see how things pan out, but it looks to me as if it has already achieved a meaningful shift in the immovable “pacta servanda sunt” object, and set the stage for more fundamental movement. It has a small victory, but has set itself up for a larger one once it can establish a credible economic reform programme.

    It annoyed the German government in the process, but then again the German government annoyed a lot of people too.

  12. ‘As it stands, Greece can not continue in Eurozone’
    Colm McCarthy

    “The latest instalment of the Greek drama has provided a fresh opportunity to watch the Eurozone’s renowned crisis-management machine swing into action. Leaks, counter-leaks, threats to the banks, accusations of bad faith, grandstanding to domestic audiences, and late-Friday gatherings of tired officials and politicians in Brussels – it brings you back to the great days of the Cypriot crisis, the Spanish crisis, the Italian crisis, the second Greek crisis, the Portuguese crisis, the Irish crisis, and the connoisseurs’ favourite, the first Greek crisis.

    “Friday’s meeting at least produced breathing space and the opportunity to come up with something more coherent than the extend-and-pretend evasions of the last five years.”

    http://www.independent.ie/opinion/as-it-stands-greece-can-not-continue-in-eurozone-31011268.html

  13. Why is it Greece -> Others? How about the Others come up with a credible, economically sustainable and politically palatable set of proposals to short-circuit the EZ problem?

    “Oh! You mean they cannot do that?”
    “Ah! Now I understand.”

    “A daft way to try to negotiate.”

    When was the last time hostages successfully negotiated with their captors? I Thought so.

    Its over when Frau Merkel starts to sing. Not before.

  14. @ GK

    I extracted this from the comment by CMcC for the discussion on another thread.

    “The threat of an unplanned Greek exit from the Eurozone (unplanned by Greece that is) has been kicked to touch, presumably for the full four months of the credit extension agreed in Brussels on Friday. Minister Varoufakis must now return to Athens to complete his homework assignment from the Eurogroup – that is to conjure up a programme which will halt the Greek recession and build the foundations of a modern and competitive economy.

    This will not be achieved through hiring lots of public servants, mandating minimum wages that only the state (for now) can afford to pay, and dodging the restructuring of inefficient state enterprises.

    But there are items in the Syriza programme that will meet no resistance from the European powers-that-be, including better tax collection from wealthy Greeks and a crackdown on corruption.”

    Peter Spiegel on the harsh reality of Greece’s situation.

    http://www.ft.com/intl/cms/s/0/09ed05ca-ba93-11e4-945d-00144feab7de.html#axzz3STq4pkJB

    It is not simply a question of better tax collection from the rich but from the entire tax base, especially in relation to property and turnover taxes.

    What is not appreciated in Ireland is the ideological element at the core of the Syriza victory. Major factions in the party have a declared loyalty to Marxist economic policies. Tsirpas may want to try these out in Greece but the other countries of the EU are not going to pay for the privilege. If economist here can advance arguments for the approach of Syriza, by all means let us hear them. General condemnations of “austerity” as a catch-all description for fiscal consolidation and structural reform simply will not do.

  15. @ GK

    I posted this comment on another thread which helps clarify my point.

    I agree with the view that there is a deep divide emerging in societies across Europe. The question is where on the scale it is to be found. This item by a Belgian senator from Le Figaro will give a taste of the increasingly heated debate.

    http://www.lefigaro.fr/vox/monde/2015/02/18/31002-20150218ARTFIG00335-tsipras-vu-de-bruxelles.php

    The developments in Greece in the coming months will be decisive in terms of how the debate develops. In fact, it is down to a simple question; will the Marxist or the moderate elements in Syriza win out? This is leaving aside the role that will be played by the extreme right as represented in the current coalition.

    I am inclined to optimism because Greece is not Chile. There is no institutional structure in Latin America comparable to the EU.

  16. Re: The longest ever trail of broken hearts and absolute betrayal

    . . . . the Spanish crisis, the Italian crisis, the second Greek crisis, the Portuguese crisis, the Irish crisis, and the connoisseurs’ favourite, the first Greek crisis.

    Who needs small pox, the plague, or the flu of 1918? It’s all going on, right now.

    And all we’ve got to show for any of it, are richer rich people, smarter phones and more expensive apartments. You’d think that at some stage, the long and sickening trail of financial crises, would punch itself out.

    Would that be too much, to ask.

    An Irish economics professor when he was a guest on Irish television in September 2008, began a sentence something like, ‘it’s like you have a stupid kid, who keeps on smashing their car, . . .’. One of the great faults, of television, is that it sometimes leaves these tantalizing sentences, hanging in mid air, and like the ‘bad ending’ from an artistic movie, six years later everyone is still wondering, what he would have said next.

    We’ll never know, because some other Irish economist on the Irish television show, decided to intervene, at that very point. Economists, should stop doing that. I will speculate as to how the sentence would have ended, if we had been allowed to hear it. It’s like you have this stupid kid, who keeps on crashing his car, they spend their days on trading floors, playing video games and pretending to influence geo-politics. That game becomes extremely ‘real’, to them. You have other mature dudes, who get together in Brussels, and pretend to do finance.

    They fix the broken vehicle enough, so that it can be driven by the stupid kids, for a few miles more down the road, until they crash it again. Sound about right? BOH.

  17. @BeeCeeTee

    It is hard to see Friday’s outcome as a tactical retreat. Greece holding an ace card, about 380 billion in debt including ELA, bottled playing that card.
    They should have played it, and reverted to the Drachma. They would have difficulties for sure, but they would be about 380 billion better off, less their internal piece (say 50 billion) of that 380 billion.

    I do not think it over, by a long shot because domestically in Greece Schaeuble’s performance in the past week will raise the stakes again. It should be remembered, and will be remembered in Greece, that Distomo and Kalavryta, occurred in Schaeuble’s lifetime. The very idea that the country responsible for those events, should now seek to take the high moral ground mocks history itself.

    Germany clearly wants Greece out, and Greece with a hard default would be far better off out, as the debt is insurmountable in the new low growth/ stagnant creditor friendly Europe that has been constructed.

    The disdain shown to the Greeks by clearly well remunerated members of the fifth column is a far cry from the kind of policies pursued by Adenauer or Kohl, but it shows that Europe may not have come that far from Distomo after all.
    The words Eurozone and crisis are now more joined together than horse and carriage ever was, as amply demonstrated in Colm McCarthy’s piece.
    Unfortunately creditors and not statesmen are calling the shots, for now at least.

  18. The EZ is a long way from equilibrium, DOCM’s Schadenfreude notwithstanding.

    The bailout wars of words with Greece are a bit like Byzantium vs Persia around 600 AD – great wastes of political treasure and capital – with Deflation to come in and sweep all before it in the manner of the Arabs who were then inspired by Islam.

    http://en.wikipedia.org/wiki/Byzantine%E2%80%93Sasanian_War_of_602%E2%80%93628

    Anyway here’s what the EZ needs and won’t get in time, Greece or no Greece

    http://www.ft.com/cms/s/0/987e237c-5f81-11e4-a882-00144feabdc0.html

    “To avoid the cyclical stagnation in the eurozone turning into secular stagnation, four policies are required. The first is a proper AQR and stress test followed by a speedy recapitalisation of the capital-deficient banks and a wave of consolidation in the eurozone banking sector to bring higher profitability, and efficiency, to a banking sector with too many undersized banks. Cross-border consolidations would create more effective competition in each member state. Such radical measures might even boost confidence and optimism in the real economy.

    The second measure is a temporary fiscal stimulus (say 1 per cent of eurozone GDP per year for two years, concentrated in the countries with the largest output gaps, that is, in the periphery), which is permanently funded and monetised by the ECB. To make the mechanics of this helicopter money drop more transparent, the ECB could cancel the sovereign debt it purchases. This third measure would be economically equivalent to buying and holding the debt forever (rolling it over as it matures), but rather more dramatic. Should eurosystem regulatory capital go negative, this will be a reminder that the most important asset of central banks – the present value of future seigniorage profits – is off-balance sheet.

    Finally, to achieve debt sustainability for the eurozone sovereigns, radical supply side reforms are required that boost the growth rate of potential output to at least 1.5 per cent in Italy, Portugal and other sclerotic countries. The eurozone’s ‘no monetary financing of sovereigns’ fetish hamstrings the ECB. The instinctive anti-Keynesianism of the Teutonic fringe emasculates countercyclical fiscal policy. Domestic political paralysis inhibits structural reform. The AQR stress test was a fudge.”

  19. Another good point by Mody

    “It is also easy to sympathize with German citizens who have been repeatedly told that the euro conveys no costs to them.”

    Who told them that ?
    Deflation will be even more expensive

  20. This article by Hugo Dixon illustrates a point which seemingly gets very little attention i.e. the dysfunctionality of the Greek economy has been brought about by rentiers across the entire gamut of society.

    http://www.ekathimerini.com/4dcgi/_w_articles_wsite3_1_22/02/2015_547541

    The most important handicap is the lack of a functioning tax collection system. It is hard to blame tax evaders. Why should the pay tax to compensate for the fact that others do not and to fund under-employed public servants or those sitting in fictitious employments courtesy of the political cronyism endemic in all Greek political movements.

    Meanwhile, back on the emerald isle.

    http://www.independent.ie/irish-news/councillors-resist-calls-to-cover-leaflet-cost-31010013.html

  21. Europe is doomed to slow growth indefinitely regardless of whether the Euro continues or not. The only exceptions to this will be Ireland, the U. Kingdom (although not to the same extent as Ireland), and possibly a small handful of countries in eastern Europe that have abandoned the continental economic and social model.

    The Euro is simply being help up by left-liberals as the cause of Europe’s decline, whereas in fact Europe’s decline is caused by a host of other factors. most of which were introduced by the left-liberal revolution that has gradually strengthened its grip since 1968.

    The most important of these is Europe’s collapsed demographics. It was reported last week that Italy is now literally a dying country, with the number of deaths annually being 25 per cent greater than the number of births annually. But, Italy isn’t even the worst. Germany and 10 other EU countries are in the same boat.

    In Ireland today the proportion of the population aged 65+ is 11.5%. In the EU as a whole it is almost 20% and in the worst-affected countries it is almost 25%. As few children are being born, Eurostat predicts this percentage will hit 35% by 2050. In most EU countries (not Ireland), the actual number of people aged 20-65 is forecast to decline sharply year-by-year from now on. But, this reducing number of people of working-age is expected to support by 2050 almost double the number of persons aged 65+.

    Add in the bloated welfare systems and the retirement-at-55 policies in the public sector in some EU countries.

    Add in the collapse in the traditional family in Europe, and the explosion in the number of single-parent families requiring taxpayer-funded support.

    The reality is that the European economic and social model is finished and this is true regardless of whether there is a single currency or not. The focus on Greece is simply a distraction from the real causes of Europe’s decline.

    Fortunately, Ireland has to some extent escaped the trends highlighted above. It is because of that that we get announcements like this:

    http://www.rte.ie/news/2015/0223/682120-apple-investment-galway/

    However, it is foolish to think that Ireland is immune. The core objective of Dublin 4 left-liberalism is to send Ireland down the same disastrous route as continental Europe. Only time will tell if succeeds.

  22. “Add in the collapse in the traditional family in Europe, and the explosion in the number of single-parent families requiring taxpayer-funded support.”

    Single mothers, the bane of right wingers everywhere.

    You forgot to add the widespread use of garlic in continental cooking and the danger of driving on the right, JTO. Other causes of the continental malaise are gauloises, the use of vinaigrette instead of brown sauce and the outdated insistence on speaking unfashionable languages such as French and Italian instead of Ulster inflected English

  23. @ DOCM

    I fixed it for you

    dysfunctionality of the global economy has been brought about by rentiers across the top level of society.

    Global Debt is up by 40% since 2007 – growth has been rather flat. Where will the rent come from ?

  24. @ Seafóid

    Apologies. For “rentier” substitute “rent-seekers”.

    This explanation, culled from the Web, will serve. There are certainly probably better. Most people can recognise the activity when they see it without difficulty.

    http://www.econlib.org/library/Enc/RentSeeking.html

    We even have an authority to deal with it. And it has been doing something about it by prompting the necessary government action e.g.

    http://www.tca.ie/EN/Promoting-Competition/Market-Studies/Professions/General-Medical-Practitioners.aspx

  25. @ Joseph Ryan

    “It is hard to see Friday’s outcome as a tactical retreat. Greece holding an ace card, about 380 billion in debt including ELA, bottled playing that card.
    They should have played it, and reverted to the Drachma. They would have difficulties for sure, but they would be about 380 billion better off, less their internal piece (say 50 billion) of that 380 billion.”

    Eh, come up with a figure for the “wealth” (-> all domestically-fixed (ie cant export it) assets, including deposits, minus liabilities) of Greece. Multiply it by 40%. That’s the likely loss Greece would have faced on the day after re-introducing the Drachma. On top of that, subtract the impact of limited growth outlook on no longer being part of the EU/EZ/probably NATO too. Add in a few years of being chased through courts and international bodies by mix of official and private creditors.

  26. @ PQ

    from the link

    “The nineties saw the age-old issue of fractional reserve banking completely turned on its head”

    Leverage in excess of 25 and the overuse of repo mean a lot of capital is used to support multiple deals and nobody really knows who owes what. It is over 6 years since the fall of Lehman and the forensics are still figuring out stuff.

    The financial system is all about the distribution of risk and regulators have very little overview.

    http://www.ft.com/intl/cms/s/0/17bf33ca-9b3b-11e4-882d-00144feabdc0.html
    read the comments

    Paul W a few days ago

    http://www.irisheconomy.ie/index.php/2015/02/16/17443/
    “Many are assuming that the creditors are “firmly in control”, but that’s a load of croc. Unfortunately, the creditors will have little “physical” to grab in this virtual international (fiat money) economy”

    When Lehman went, trust broke down almost completely and next time won’t be any different.

  27. Fwiw, Capital Economics scored the negotiations last week on a combined 1-500 scale over 5 key themes, whereby 500 vs 0 would mean the EZ got everything they wanted and at Greece’s expense, 0 vs 500 would mean Greece got everything it wanted at EZ’s expense, and 250 vs 250 would mean a middle ground compromise.

    Near term austerity: EZ 70 – Greece 30
    Monitoring: 95-5
    Bailout payments: 90-10
    Support for Greek banks: 80-20
    Haircuts: 100-0

    That’s gives a total of 435-65 in favour of EZ, which sounds about how id make it too.

  28. @Seafoid

    “Single mothers, the bane of right wingers everywhere.”

    Dan O’Brien addresses this issue rather cogently yesterday:
    “Among the questions that need answering is whether a badly designed welfare system traps people into welfare dependency, causing Ireland’s highest-in-Europe rate of household joblessness.

    A hugely under-explored issue in this regard is why Ireland has proportionately more single-parent households – one in 10 of all households – than any other country in Europe….For a socially conservative country with low divorce rates (normally the main factor in the formation of single parent families), it is very puzzling that Ireland is such an outlier on its number of single-parent families.

    …If government actions, however inadvertently, are influencing people’s decisions on the kind of family structure they decide to form, there is a public policy issue worth discussing. That is all the more so in this case because the facts show clearly that children in single-parent households are much more likely to suffer poverty and deprivation – and that is despite the heroic and often very lonely efforts of single parents.

    The question must be posed whether the very high cash payments for single parents compared with other countries, but very limited childcare supports (which would facilitate finding paid work), have contributed to Ireland’s highest-in-Europe share of single-parent households and the very low employment rates of single parents (this grouping makes up a very large chunk of total jobless households).”

    http://www.independent.ie/opinion/columnists/dan-obrien/once-again-the-balance-is-wrong-in-equality-row-31011310.html

  29. I saw somewhere that Angie always takes the least risky option.
    But in the case of the bond market doing everything for them is the riskiest. They have no sense of collective danger. Chase yields down to minus 0.5% .
    WTF is that ? Deflation is going to hammer bonds.

  30. @Seafoid

    Your reply is extremely weak, bordering on the pathetic. If you think collapsed demographics will not affect future growth rates in Europe, you are badly mistaken.

    Eurostat gives the following figures for the ratio of births to deaths in 2012:

    Ireland 2.50
    Italy 0.87
    Greece 0.86
    Portugal 0.83
    Croatia 0.81
    Romania 0.79
    Germany 0.77
    Lithuania 0.74
    Hungary 0.70
    Latvia 0.69
    Bulgaria 0.63

    A value < 1.0 indicates a falling population (excluding migration).

    Related to these figures, Eurostat gives the following projections for population growth between 2013 and 2080:

    Ireland 2013: 4.6m – 2080: 5.9m (+28%)
    Greece 2013: 11.1m – 2080: 7.7m (-30.6%)
    Bulgaria 2013: 7.3m – 2080: 4.9m (-32.9%)
    Latvia 2013: 2.0m – 2080: 1.4m (-30.0%)
    Lithuania 2013: 3.0m – 2080: 1.8m (-40.0%)
    Romania 2013: 20.0m – 2080: 16.3m (-18.5%)
    Slovakia 2013: 5.4m – 2080: 3.9m (-27.8%)
    Portugal 2013: 10.5m – 2080: 7.1m (-32.4%)
    Germany 2013: 82.0m – 2080: 65.4m (-20.2%)
    Poland 2013: 38.5m – 2080: 29.6m (-38.7%)

    So, virtually the whole of southern and eastern Europe is forecast to experience massive depopulation for the rest of this century. This entire region is literally dying. Depopulation on this scale is unheard of in Europe since the Black Death, with the sole exception of occupied Ireland 1841-1922. That is the state to which various combinations of marxism, socialism, left-liberalism and militant secularism has reduced large parts of Europe.

    It is absurd to think that countries whose populations are declining on this scale are capable of experiencing high growth. This is true, Euro or no Euro, the issue of which is largely a distraction.

  31. @BEB

    @BEB
    “Eh, come up with a figure for the “wealth” (-> all domestically-fixed (ie cant export it) assets, including deposits, minus liabilities) of Greece. Multiply it by 40%…”

    I have a house (an asset in financialese). It is not wealth. It is a roof over my head. It cannot be physically exported, (at least I hope not). If house prices fall 50%, I still have the same roof over my head.
    The situation with deposits is not quite as solid, but those people who intend spending their money domestically, which they will be more prone to do following devaluation of the home currency, will not be substantially worse off, except those who splash out on fancy cars etc. Ladas from Russia can probably still be bought with local currency.
    But, I think you are correct in saying that the Greeks lost heavily in the ‘negotiations’.
    Austerity for them might be a burden worth tolerating, if there was a few small grains of humanity attached, and if it came without the sermons from the high moral priests and most importantly if there was any evidence that it worked for a country with such high debts as Greece, in the midst of depression.

    Default would come with big difficulties, capitulation would be accompanied by humiliation. One has to make a choice.
    As for a few legal wigs chasing Greece through the courts or trying to impound assets, I doubt it. Greece is a member of NATO and professor Sinn is unlikely to be able to persuade the German government or any other government ‘to send people into Southern Europe to get their money back’; debts that were private debts before being socialised to the peoples of Europe, including to the people of Slovakia, whose finance minister is now so adamant that they be paid.
    A pity the Slovakian finance minister did not keep his eyes open when, back in 2012, he agreed to bail-out private Greek bondholders with money provided by the citizens of Slovakia. He should have looked at the chart of EU income per capita, and asked himself why poor Slovakia was bailing out Deutsche Bank, BNP and such like.

  32. @ninap

    ‘Dan O’Brien addresses this issue rather cogently …

    Allow me a quiet smile – DanO & ‘cogent’ in the same sentence – Hope Steve Keen sees this … rem that little spat on the Vincent Browne show …

    @JtO

    Roight on! Make love – not war! Knew you were a child of the 60s … Blind Biddy spotted you (from the rear) on a recent Glastonbury Retrospective … and hit the record button!

    @seafóid

    The world is gone to pot. Keep up the good work.

    @Greek Citizenry

    In solidarity.

  33. @JR

    Slovakia did not participate in the first Greek bailout, exactly for the reasons you mention. They did participate in the second bailout but via the newly instituted EFSF, rather than as a bilateral creditor. Nevertheless agreeing to the EFSF brought down the Slovak government at the time.

    Although you may consider the Slovak PM a fool for joining the EFSF, it looks like he is at least a learnin’ fool, who don’t wanna bail out Greece no more. (Slovakia however is still a member of the ESM which replaced the EFSF, so will presumably remain on the hook if more “help” is provided to Greece).

  34. @ JTO

    Immigration and more support for women aged 20-40 would solve your nightmare scenario. If Europe wants more kids maybe it should stop worshipping bond markets.

    Consumer society/neolib economy with its focus on Cosmo and fake tan, high property prices, soaring rents and careers in hierarchies going nowhere is prolly a bigger problem than the 1968 lefty takeover but that wouldn’t fit into your Weltanschauung, would it ?

  35. @ DOCM: Who wrote that letter then?

    @ JtO: The Black Death de-population of Europe was very positive for positive economics. Re-distributed wealth and led to a strong increase in wages and the rapid introduction of new technologies. Europe “took off like a rocket!”

    Yesirina pestis is, like SF, “Not gone away.” Should we be optimistic? No pun intended.

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