Monday, December 21, 2015

The port of Amsterdam - "De magie van het IJ"

One of the paintings by Aafke Steenhuis in "De magie van het IJ"
Few people know that Amsterdam is the fifth-largest port in Europe, after Rotterdam, Antwerp, Hamburg and Marseille. Nor do many people know that the largest shipbuilding yard of the world, NDSM, once was in the northern part of Amsterdam, the part of the city where I live.

My wife, Aafke Steenhuis, has just published a book, "De magie van het IJ" (The magic of the IJ), about the history of the northern part of Amsterdam that until 1921 was a separate municipality, Nieuwendam.

In the book, richly illustrated with her own paintings, Aafke gives a vivid picture of Amsterdam North, which is becoming increasingly popular, among other things, because of EYE, the film museum located at the northern border of the IJ, the water that divides Amsterdam from its northern part and is pronounced as 'eye'.

In the video below (filmed by me) you see Aafke's visit to Damen Shiprepair Amsterdam, located at the same spot where once the famous NDSM yard was building and repairing ships.

Wednesday, December 9, 2015

The French Socialist Party helped the FN to rise

When I said yesterday that neoliberal Europe helped the National Front win the elections in France (get more votes than any other party) I included the French Socialist Party which, just like other socialdemocratic parties, has embraced neoliberal policies.

Today I read that French political scientist Fabien Escalona said more or less the same in an interview with the French journal Challenge of 7 December 2015. When asked the question: "Can we say that the Socialist Party (PS) has contributed to the rise of the National Front (FN) in recent years?" he answered:

"The question may seem paradoxical, as the PS appeared since the 1980s as a republican and universalist "bulwark" against the FN of father and daughter Le Pen. However, you can say that the PS indirectly contributed to its progress, as a government party who is responsible for policies and options rejected by a growing number of voters.In this regard, however, the PS shares this 'responsibility' with the right of the RPR then UMP and recently renamed "Les Republicains" (LR). In fact, both the PS and the LR have themselves more or less aligned with a moderate neoliberalism, unable to address mass unemployment and imprisoned by supra-electoral and supranational constraints of European integration, an integration endorsed by the two major government parties. For reasons of law and humanity, immigration flows (around 260,000 people per year), modest but negatively perceived by FN voters, have never been drastically reduced either. For all these reasons and because the FN never took charge of national power, it can present itself as an attractive alternative for those who fear (or objectively suffer) an individual and collective declassing.

Tuesday, December 8, 2015

Neoliberal Europe brought victory to National Front in France

The victory of Marine le Pen's Front National in France is partly the result of the authoritarian, neoliberal policies of the European Union.

As I said in a speech in Paris on 29-30 October 2011, "there is the other danger that is already manifesting itself, the danger that the current capitalist system, with its privileges for business and political elites, creates anger and frustration among people and stimulates xenophobic, nationalistic, anti-establishment, anti-intellectual movements and parties like we already have in the Netherlands."

In my Paris speech I only mentioned the Netherlands, where Marine le Pen's colleague Geert Wilders (Party for Freedom, PVV) was becoming increasingly popular - in recent voting polls h e received the largest number of votes among the Dutch political parties - but I was obviously also thinking of the Front National in France.

Europe's authoritarian neoliberal policies foster nationalistic populist, anti-elite responses.

Strangely enough I have not yet read this view in comments in the European press. This morning, looking for similar views, the only article I found is one by Pierre Khalfa and Thomas Coutrot, "Après la Grèce : quelles leçons pour la gauche européenne ?"
Referring to the giving in of Tsipras to the Eurogroup's demands on 13 July 2015, they say:
"Disons-le sans fard, l’acceptation par le gouvernement Tsipras d’un nouveau mémorandum constitue une défaite politique majeure, non seulement pour Syriza, qui a immédiatement explosé, mais surtout pour le peuple grec et pour tous les peuples d’Europe. « Les propositions de l’Eurogroupe sont de la folie. Cela va au-delà de la sévérité, vers l’envie de vengeance, la destruction totale de la souveraineté nationale et aucun espoir de soulagement (…) c’est une trahison grotesque de tout ce que le projet européen était censé représenter ». C’est ainsi que le « prix Nobel d’économie » Paul Krugman a qualifié « l’accord » du 13 juillet. Alors que Syriza s’était engagé à restaurer la souveraineté populaire et en finir avec les politiques néolibérales, il a accepté des mesures d’austérité d’une violence inouïe et la mise sous tutelle du pays. Comprendre ce qui s’est passé, évaluer les possibilités d’autres chemins, en tirer les leçons pour l’avenir est une nécessité absolue sous peine de faire une croix définitive sur la possibilité d’une alternative au néolibéralisme en Europe et de laisser la voie libre aux forces d’extrême droite." (underlining by me, JJT)

Sunday, July 26, 2015

Is a more democratic Greece (and Europe) impossible?

Painting by Aafke Steenhuis
More emotional than analytical I'd like to tell you and myself why I am suddenly silent on this blog. (I did write on my other, less analytical and more emotional blog, in Spanish.)

When a new government in Greece was elected at the end of January of this year I was hopeful that things would change in Greece... and in Europe. I hoped that narrow-minded austerity policies and the lack of democracy in Greece and Europe would begin to end.

I also hoped that the reasonable and politically moderate, social democratic Greek government of Tsipras would receive support from social democratic leaders in other European countries, even though I knew there remained very little in those leaders' thinking and practices that you could call 'social democratic'.

Anyway, I hoped that social democratic European leaders would be inspired to take their social democratic or democratic ideals again seriously and help their brothers and sisters in Greece who were facing the enormous task to (a) change tide in Greece and (b) set an example that better policies would be possible, with a little help of friends in other European countries, be they member or not of the Eurogroup. *)

My hope was idle. Or worse, my hope has turned upside down. Instead of a beginning of change in Greece and Europe, of building a more social and democratic Europe, in the course of the 'negotiations' between Greece and its creditors we have seen the opposite: (social) democratic leaders were once again embracing and defending austerity and authoritarian policies, perhaps even more ferociously (and desperately?) than ever.

Did they do that to kill any hope that another Europe (than the one they shape every day) is possible?

Why would they want to kill that hope? Because they think they have the right vision? Do they really believe in their own, narrow-minded policies? Does François Hollande really believe in a Eurozone government?

Do they want to impose their idea of Europe upon its citizens (to the benefit of the richer part of them)?

And why do European leaders take democracy so little seriously?

*) Did social democratic leaders in other European countries not want that Tsipras engaged in real social democratic policies? And did they not want Tsipras cum suis to set an example? Are they jealous? Are they overly self confident? Are they scared of something, or many things? Should we try to understand their behaviour not only politically but also psychologically?   

Saturday, July 18, 2015

Dijsselbloem is a bad economist

Dijsselbloem is a bad economist. He is saying these days, after the Tsipras government has agreed to a package of policies it does not believe in, in numerous interviews in the Dutch media, that the "reforms" his Eurogroup is prescribing to Tsipras will be to the benefit of the Greek people.

Dijsselbloem is like a doctor prescribing a bitter medicine to a patient saying: "This will cure your disease."

But prescribing a medical treatment is different from prescribing political econmic "reforms". In the first you may believe (or not), in the second you should not believe unless you agree with it and history has shown there is reason to believe in it. In the Greek referendum 61 percent of the people have said they did not believe in the Eurogroup's medicine.    

Over the past five years we have seen that the Eurogroup medicine did not solve Greece's debt and growth problems. Therefore, Dijsselbloem should have known better.

Moreover, over the past five months his colleague Varoufakis has explained that the Eurogroup medicine would not work and that there is a better medicine. If he had been a good economist, Dijsselbloem would have listened carefully to the arguments of the new Greek government and explained why he did not believe in Varoufakis/Tsipras' plans and preferred to stick to the Eurogroup's Diktat.

In revising this post, I hesitated whether I should call the Eurogroup's medicine a Diktat, but former managing director Dominique Strauss-Kahn has no problem in using that term, I read this Sunday morning in Le Figaro: DSK dénonce le diktat que l'Europe a imposé à la Grèce.

Thursday, July 16, 2015

Greece shows the need for creating better European politicians and technocrats

Painting by Aafke Steenhuis
The failure to solve Greece’s debt problems over the past five years, notwithstanding and/or due to the intervention of the Troika, shows the failure of European politicians and technocrats, IMF management and Greek governments to do a proper job. They were responsible for the problems Tsipras had to face when he began his job six months ago.
The support Tsipras now has received from the Greek parliament to carry out a deal he himself does not believe in, is yet another step in an ongoing crisis that seems to have no end.
Moreover, the way European politicians and technocrats have handled and are still handling the Greek debt crisis has created disunity, cynicism and frustration among many people in Greece and Europe, rather than the unity and solidarity European authorities pretend to foster.
A new hope for a more prosperous and social society in Greece and Europe is urgently needed. For that to happen, we need to create more capable and visionary politicians and technocrats especially among the leaders. A number of things need to be done:

  1. a better training of economists and technocrats
  2. a better deal for Greece (that is, a viable road to solving its debt and growth problems)
  3. a better formula for creating a united, democratic and social Europe (rather than locking Europe in an austerity euro straitjacket).

I will try to address these three issues in next posts. I am aware that there are also politicians and technocrats doing a good job. But many of the political and technocratic leaders in Europe have done a bad job in handling the Greek debt problem. Rather than solving it, they have worsened it.

We have to create hope again in Europe, especially for the young people who cannot find a (proper) job and those who live in poverty and have no chances to improve their lives.

Tuesday, July 14, 2015

Does the IMF debt relief demand support Greece or support Tsipras' surrender?

France's former and current minister of finance agree on debt relief for Greece

You can see it as something positive that, finally, the IMF says that substantial debt relief or debt reduction for Greece is needed and puts it as a condition for IMF engagement in the envisaged agreement between Greece and its creditors.

Sure, it is something the new Greek government of Tsipras has asked for from the beginning, when it started negotiating a deal with its creditors. But I wonder why suddenly now, when the Greek parliament has to decide today (Wednesday) whether it will support the deal struck by Tsipras in which he himself does not believe, the IMF supports one of Tsipras' demands.

Is the sudden move of the IMF meant to convince the Greek parliament that it should support Tsipras' surrender to the creditors? Or, even if the masters of the IMF (Europe and the US) have not thought of the sudden switch to debt relief as a trick to influence the vote in the Greek parliament, does it not serve that purpose?

PS: I just read (Wednesday, 12:15) that France agrees with the IMF debt relief demand. Will that help making the Greek parliament support Tsipras' surrender? Don't forget that the French already helped the Tsipras government prepare the 'compromise' surrender... Does Tsipras hope he will regain policy space once he has the Greek parliament faithfully supporting him in a deal he himself sees as nonsensical, or only making sense to prevent worse?

PS2: I just read (Wednesday, 14:00) in Le Figaro that the central committee of Syriza rejects the deal between Tsipras and the creditors.

Le comité central de Syriza rejette l'accord
Le comité central du parti d'Alexis Tsipras a rejeté l'accord signé à Bruxelles, rapporte Stathis Kouvelakis, membre du comité central de Syriza sur sa page Facebook. Il publie une déclaration rédigée par 108 des 201 membres du comité central de Syriza.

Schaeuble wanted to kick Greece out of the eurozone

This is old news (14 May 2014) but it is still highly relevant today: Schaeuble wanted to kick Greece out of the eurozone already a couple of years ago, namely in July 2012. Who said so? Timothy Geithner, former minister of finance of the United States. Here is the story:

"Timothy Geithner reveals Schaeuble's plan to kick Greece out of the euro and 'terrify' the rest of Europe"

In his new book ‘Stress Test’ just released in the US, Timothy Geithner has revealed that in 2012 German Finance Minister Wolfgang Schaeuble had presented him with a plan to kick Greece out of the eurozone. This, he said, would appease German voters and terrify Europe.

“Germany will stand by you and the Greek people in the struggle to contend with our shared challenges in Europe and the eurozone." So said German Chancellor Angela Merkel to interim Prime Minister Lucas Papademos in November 2011. However around the time the chancellor was pledging solidarity, her Finance Minister was drawing up plans to kick Greece out of the eurozone.

That has been revealed by former US Treasury Secretary Timothy Geithner in his recently released book ‘Stress Test’. According to Geithner who, together with the rest of the Obama administration, had watched with alarm as the Europeans appeared unable to contain the sovereign debt crisis triggered by one of its smallest members, he met with Schaeuble on the island of Sylt in the North Sea in July 2012. 

Geithner states that during the meeting Schaeble presented him with a plan to kick Greece out of the eurozone. This, according to the German Finance Minister, would allow Germany to provide the financial support necessary to the Eurozone as the German people would no longer perceive the assistance as a bailout of the corrupt and profligate Greeks. Furthermore, according to Schauble’s logic, a Greek exit would scare the rest of Europe enough for them to commit to providing sufficient financial assistance in order prevent the system from collapsing.

Schaeuble told his US counterpart that there were many in Europe who considered this reasonable and even a desirable strategy. For his part Geithner called the idea ‘frightening’ writing that he felt that it would create a crisis of confidence that would be difficult to contain regardless of how much money the Europeans subsequently pledged to shore up bankrupt states. He adds that he could not see why the Germans would feel better about bailing out Spain or Portugal than they would Greece. 

In the book Geithner also once again highlights the disagreement between the Americans and Europeans in how the debt crisis should be handled at its outset in 2010. While European lenders remained doggedly committed to austerity and ‘rhetoric of the Old Testament’ Geithner writes he felt that imposing aggressive austerity too soon in Greece would be counterproductive as it would depress the economy and tax revenue, ultimately increasing the deficit. However the Europeans were not willing to listen to the advice provided by the Americans whom they blamed for causing the crisis in the first place.

Sunday, July 12, 2015

Paul de Grauwe: "Europe's monetary union will not last"

Paul de Grauwe is a real authority on European economic policies. Here is an interview with him published by The Huffington Post on 10 July 2015:

What's Behind Greece's Spectacular U-Turn On Austerity
 |  By

Every week, The WorldPost asks an expert to shed light on a topic driving world headlines. This time, we discuss the Greek debt crisis with Paul De Grauwe, a professor at the London School of Economics.
The Greek government surprised everybody on Thursday by submitting a proposal to Greece's international creditors that would implement severe austerity measures in return for new bailout funds.
Less than a week ago, Greek Prime Minister Alexis Tsipras' government had urged voters participating in a national referendum to reject a bailout deal that included similar austerity measures. Greek voters gave that deal a decisive "no" in Sunday's vote. Europe then gave the country's leaders until the end of this week to submit a new proposal or face potential bankruptcy and the risk of exiting the eurozone.
Under Tsipras' latest plan, Athens would commit to significant pension cuts and tax hikes in exchange for the possibility of debt relief and three years of financial aid worth nearly $60 billion, Reuters reports.
The WorldPost spoke with Paul De Grauwe, the John Paulson chair in European political economy at the London School of Economics, about the Greek proposal and what it would mean for the Greek economy in the years ahead.
The proposal submitted by Greek Prime Minister Alexis Tsipras on Thursday includes such far-reaching austerity measures, and it is being described as a complete U-turn. What are the biggest concessions in the new plan?
The Greeks have conceded on the whole line. One of the big questions and main points of contention was austerity, and in fact, Sunday's referendum was in large part about the degree of austerity. The Greek government has now completely surrendered and accepted the conditions of the creditors. It's remarkable they went all the way to the referendum opposing austerity and then fall on their knees.
What did the Greeks get in return for making such big concessions?
As far as I can see, nothing. I haven't seen anything about debt alleviation.
What do you think has prompted the Greek government to make such a U-turn?
Greeks have been pushed to the abyss. The European Central Bank has been an instrument of politicians to starve the Greeks from cash. What happened is like torture. When you torture somebody long enough, at some point most people will concede because they can't stand it any longer. I don't think we can be very proud.
What happened is like torture. ... I don't think we can be very proud.
What impact might these new proposed measures have on the Greek economy? Until earlier this week, the Greek government insisted that more austerity would never be able to put Greece back on its feet.
It's a continuation of austerity and we've seen that austerity doesn't work. It will continue to cause low growth, recession and high unemployment, which leads to misery for so many people. In addition, it won't reduce the debt burden because output will continue to decline, and therefore the burden of the debt level will intensify. All this has been tried for the past five years, and now they just want to continue to do the same thing.
What would have been a better approach?
There's no point in continuing something that doesn't work, so they would have had to stop austerity. Also, the debt burden should have been looked at. My criticism is that the creditor nations should acknowledge that there had already been a restructuring of Greece's debt and that it has reduced the debt burden of the Greek government. It's time to provide liquidity to the Greek government so it can start working again.
This is a union that will not last.
What's a crucial element for HuffPost's readers to understand about the current crisis?
If you're a member of a monetary union, you face big risks because you're on your own when you get hit badly by negative economic shocks. In this monetary union, everyone says, "If you have trouble, don't come to me." Therefore, this is a union that will not last.
This interview has been edited for length and clarity.

Austerity pushed nearly half of the Greek pensioners below the poverty line

A new weapon is used by the creditors of Greece after the Tsipras government finally gave in to the Troika's demands: how can you trust the Greeks will do what they promise?

Well, if this is what the creditors think, why on earth did they engage in debt negotiations and pushed the Tsipras government to the brink of its credibility by making it accept Troika's demands?

Remember: some of the creditors warned the Greek people before Tsipras was elected that they should not choose him. And remember what Paul de Grauwe said in May 2015 in an interview with the Spanish journal La Vanguardia: Paul de Grauwe: "I suspect they want to tumble the Greek government.

But there is obviously a tough task for Greek officials to implement the new austerity programme. They will have to explain to an already suffering Greek population why they continue the same austerity policies of previous Greek governments, even though Greek citizens elected a new anti-austerity government in January 2015 and voted massively NO to austerity (following the advice of the Tsipras government!) in the recent referendum.

Simon Shuster of the journal Time vividly described, in a reportage from Athens, the difficulties Greek officials are facing:

"At least once a week, the Greek Ministry of Labor opens its doors to hear the complaints of the needy. The visitors might represent a factory that has closed down, a neighborhood succumbing to rampant poverty, or a group of elderly people whose pensions have been slashed. But regardless of their plight, they are escorted into the fifth-floor office of Deputy Minister Rania Antonopoulos, who looks them in the eyes as they tell their stories and ask for help. It is not unusual during these meetings, she says, for the guests to break down in tears. “That is the hardest part of my job,” Antonopoulos told TIME during an interview at the end of June.
In the coming months, it will probably get a lot harder for her to manage these complaints if Greece moves ahead with its plan for another bailout from European creditors. In exchange for about $59 billion in loans over the next three years, the Greek government pledged this week that it would raise taxes and carry out painful reforms, including cuts to Greece’s bloated pension system. On Saturday, European Finance Ministers met in Brussels to discuss the Greek proposal, and many of them expressed grave doubts about whether it could be carried out in practice. “We will definitely not be able to rely on promises,” Germany’s Wolfgang Schäuble told reporters as he went into the talks.
He is right to question the plan’s feasibility. Unlike the European technocrats watching from afar, Greek officials will have to deal on a personal and political level with the plan’s impact on their fellow citizens, who have already experienced five rough years of austerity and recession. As those confrontations play out on city squares, at voting booths and in the offices of public officials across Greece, the government will face tremendous pressure to amend, delay and otherwise ease the measures it has promised to enforce.
Antonopoulos’ experience shows just how hard that pressure is to resist. Although Greece has already cut the average pensions by about a third in the last five years, pushing nearly half the country’s pensioners below the official poverty line, it’s not these cold statistics that drive home the pain of austerity. “It’s when you look at someone and you see the tears coming out,” said the deputy minister. “And that person could be my husband who has been laid off, my brother. That could be me.”

Saturday, July 11, 2015

"How the euro was saved by sinking Greece"

Below is the editorial of Canadian newspaper The Globe and Mail to which I agree, "Grexit postponed: How the euro was saved by sinking Greece". Who of you agrees too?

Now the question is (again): how can Europe change course?

It seems Europeans still have a long road to go, and the Germans, who are key in Europe's money muddle (this is the title of an early and famous book by Robert Triffin that suddenly props up in my mind, Europe and the Money Muddle) do not seem to be the most helpful partners in this challenging and urgent endeavour. Varoufakis wrote yesterday a sharp and alarming article about Schaeuble and his disciples published by The Guardian in which he warns that the Germans want France to obey to German (and Dutch and others) austerity rules: "Germany won't spare Greek pain -- it has an interest in breaking us".

Grexit postponed: How the euro was saved by sinking Greece

Europe has been in a state of economic crisis for so long that it has started to feel inevitable. It is not. The European Union went into a recession along with the rest of the world in 2008; unlike Canada and the United States, much of the continent has never come out. Two of the EU’s largest countries, Italy and Spain, have recovered so little that their economies are smaller than they were seven years ago. The same goes for Portugal.
The unemployment rate for the euro zone, the 19 countries using the common euro currency, is 11.1 per cent – higher, after all these years of supposed recovery, than the Canadian unemployment rate at the bottom of the recession. Italy’s unemployment rate was just 6.1 per cent in 2007; it has since more than doubled. Spain’s count, 22.5 per cent, is nearly triple the prerecession figure.
And leading the parade of the downtrodden, there’s Greece. Nearly 26 per cent of working-age adults are unemployed. More than half its young people are jobless. Gross domestic product has declined by a quarter since 2007. Even if Greece could return to a modest rate of growth, it wouldn’t regain its 2007 level of output and wealth until some time in the 2020s. No Canadian recession, not the stagflation of the early 1970s or the downturn of the early 1990s, even comes close.
None of this had to be. It is not some divine punishment for economic sins. The catastrophe is the product of a series of policy choices made by human beings. Different choices would have led to a different outcomes, and still could, but instead of figuring out how to get out of recession, Europe’s political class keeps turning to policies that have pushed large parts of the continent deeper into it.
Late last year, Greek voters elected a government that promised to go to war against the European establishment, and make it change course. Can you blame them? The status quo is clearly not working for Greece, or for a lot of other Europeans. It’s why, across the continent, we are seeing the rise of angry parties on the extreme right and left. The solutions they propose are often entirely off-base. But the problem they are responding to is real.
In Greece, that reality is extreme. The more the country’s government cuts spending and services, the more an economy in recession contracts further. Greece’s European partners have repeatedly demanded that Greece return to economic health by dramatically chopping public spending, and Athens has largely complied. It has not worked.
The more Athens cuts, the more its economy is shrunk by the cuts, and the more Greece’s unsustainable debt burden, now at 177 per cent of GDP, grows relative to a shrinking economy. This is not some fanciful theory. It’s just arithmetic. Absent other ways of stimulating the economy – say, a lower currency, or an export and tourist boom sparked by recovery in the rest of the euro zone – Europe’s cure for Greece always promised pain without gain.
As we went to press, Greece and the EU leadership appeared to be very close to an agreement to keep the country from defaulting on its debts, to prevent its banking system from collapsing, and to keep it from exiting the euro zone.
To get such an agreement, however, Greece’s leaders have had to capitulate. After months of negotiations, and even after convincing the Greek people to vote No in a snap referendum on Europe’s harsh demands for more austerity, Greek Prime Minister Alexis Tsipras is now bending his knee and saying, Yes. In return, his government is asking for what appears to be only modest debt relief.
It is a stunning climbdown. Mr. Tsipras’s Syriza party came to power aiming to convince Europe that a change of economic course was needed not just for Greece, but for all Europeans. Europe’s governing elite shrugged. If euro zone finance ministers accept the Greek offer – not yet a certainty, but likely – the result will not be the revolution Mr. Tsipras once hoped for. For the third time in five years, Greece will be signing up for the maintenance of the status quo.

Disappointment in Greece about Tsipras' austerity package

So after the NO there is now a YES by the Greek parliament to the recent proposals of the Greek government to the Troika that are almost similar to what the Troika demanded. Sure, there are nuances, and the battle will go on. And the main thing for the future remains that Greeks are allowed to take their destiny into their own hands.

But how much manoeuvring space do the Greeks have? And would it be better for Greece to free itself from the euro straitjacket?

These and other questions will continue to be debated both within and outside Greek territory (how independent can a country be?).

For now, I copy an article written this morning (Saturday) by Reuters journalists, "Euphoria swiftly dissolves in Greece as bailout plan emerges", which gives an impression of the mood in Greece after the Greek government's new proposals and the YES vote by the Greek parliament.

By Lefteris Karagiannopoulos
(Reuters) - The euphoria felt by many Greeks at telling Europe their country was rejecting austerity for good lasted less than five days.
On Friday, the population woke up to discover Prime Minister Alexis Tsipras had promised creditors a new bailout package with austerity measures almost identical to those a majority of Greeks had voted against in Sunday's referendum.
A cartoon in the Kathimerini newspaper summed up the swift change in the public mood: a group of Greeks joyously cheering with a 'No' on Sunday next to a shot of the same group on Tuesday collectively gasping 'Oh No!'.
With the government now ready to implement a package similar to one it had called a national vote to reject, 23-year-old speech therapy student Marios Rozis reckoned the situation had descended into farce.
"Everybody was happy on Sunday, it was a mature decision against austerity. Today I feel the referendum happened for no reason," he said as he sipped a coffee and worked away at a laptop. "It doesn't make sense."
His reaction of bitterness mixed with resignation and exhaustion reflects the souring public mood in Greece, where the jubilance of an overwhelming victory by the 'No' camp on Sunday swiftly dissipated in the face of an expected economic collapse before fading altogether as the new bailout plan emerged.
Even before the crisis-driven concessions were unveiled, fear had spread after Greek banks closed almost two weeks ago, freezing the economy and creating long queues at cash machines for withdrawals of a maximum of 60 euros a day while pensioners without credit cards besieged bank entrances.
Under the threat of a euro zone exit, Greece's government submitted the new package of tax and pension reforms to creditors late on Thursday in the hope of unlocking 53.5 billion euros ($59 billion) in aid and the promise of potential debt relief.
Newspapers on Friday reacted with a similar sense of drama, with the Left-wing Efimerida ton Syntakton headlining its front page "Negotiating in quicksand" while the centre-right Eleftheros Typos newspaper went on the attack, estimating the 'No' vote had raised the reforms bill by 4.5 billion euros in five days.
'I voted 'No'. And of course this new proposal doesn't correspond to that 'No'," said Vassilis Sika, a 20-year-old unemployed Greek in Athens' central square.
"I feel like a slave. They do what they want, and we can't participate."
The Communist-affiliated PAME group responded by calling for rallies across Greece on Friday evening, saying: "Everyone take to the streets! Battle now so that we can cancel the plans to bankrupt the people. We say NO to a new barbaric bailout!"
However, with banks running out of cash and the spectre of economic collapse looming if no deal is reached, Tsipras appears likely to win the support of a majority of deputies in parliament for the new plan, even though some in his Syriza party were critical.
He now dominates the Greek political scene after a referendum in which more than 61 percent of Greeks backed him by taking his advice to reject the bailout terms.
Acknowledging the failure of his campaign for the 'Yes' camp, former Prime Minister Antonis Samaras resigned as leader of the centre-right New Democracy party the night of the referendum and the party has given its backing to Tsipras to negotiate a new deal with creditors.
For all the resentment of the new bailout plans, Thomas Gerakis of the Marc polling group said Greeks were afraid of being kicked out of the euro zone and aware that painful reforms were the price for staying in.
"This issue (staying in Europe) needs to be resolved first - the majority of Greek people want that, even with a bad deal or a worse deal," Gerakis said.
Only if and when it fell into place over the weekend, he said, would the real recriminations and soul-searching begin. (Additional reporting by Costas Pitas, writing by Deepa Babington; editing by Philippa Fletcher)

Wednesday, July 8, 2015

Paul de Grauwe: "I suspect they want to tumble the Greek government"

Paul de Grauwe
I just read an 'old' interview with Paul de Grauwe originally published in the Spanish journal La Vanguardia of 17 May 2015 and republished on 22 May 2015 by the Italian oneuro, a think tank of eunews, "Lenders want to push Greece into default. Now everything depends on the ECB". The interview still is highly relevant today given the dangerous path taken by the Eurogroup and the ECB threatening to kick Greece out of the eurozone.

Here is a google-based translation of the Italian version of the interview with Paul de Grauwe:

Paul De Grauwe: "Lenders want to push Greece into default. Now everything depends on the ECB"
The Belgian economist Paul De Grauwe, a professor at the London School of Economics, has been one of the analysts that better than anyone else, in 2009, anticipated the crisis that was about to fall on the eurozone when Greece revealed its true financial situation. Since then he has also been one of the most implacable critics of the way in which the crisis has been handled. 
The Eurogroup accuses Greece of being irrational in refusing to give in to its demands. 
It is pure propaganda. It is obvious for years that austerity imposed on Greece has devastated the country's economy and has not done anything to reduce the debt / GDP ratio, but despite this the creditors insist that Greece must continue on the same road. This is irrational, and when the Greek government refuses to do so, they accuse it of being irrational. It's the world upside down. Some of the reforms asked to Greece, such as the reform of the tax system, are sensible. But others, such as insisting on privatization in the middle of an economic depression, are absurd. 
The European negotiators complain that when the Greek government proves willing to negotiate on a point then is not able to present alternative proposals, in part because they do not have their own experts and do not trust the experts of the [former] administration. 
It could be. It is a new government with little experience behind it, I can not deny it. But this is not a good reason to asphyxiate it. Yanis Varoufakis did not help much in this sense, I am afraid. But if I look at the contents of the rescue program, I understand the resistance of the Greek government. Following the restructuring that was done, I believe that today the Greek debt is sustainable, but only if you allow the country to return to growth. Today Greece has a liquidity problem, but the creditor nations are not going to give liquidity. They want to impose their conditions, which are very ideological. I suspect they want to tumble the government. 
Are they pushing Greece into default? 
It seems obvious. I would say that there are those who are trying to push the country out of the eurozone. The ECB's role will be crucial. Eventually it will decide whether a Greek default inside the euro will lead to an exit of the country from the eurozone, which is a terrifying prospect. It remains to be seen whether the ECB will be willing to provide the necessary liquidity to the Greek banking system so that it is not overwhelmed by a Greek default. If it does, Greece may refuse to pay, without this necessarily being a drama. The crux of the matter is totally political, the economy has nothing to do with it. It is clear that a debt restructuring, much broader than what has been done, should have been done because what happened is also the responsibility of the creditor countries, of European banks that have flooded Greece with liquidity. This restructuring did not happen and now the creditors want to impose on Greece the political conditions that have no economic foundation. 
The eurozone is now more prepared for an eventual default than it was a few years ago? 
In short, yes. There is no reason that a default or an exit of Greece from the euro should have important implications for countries like Portugal, Ireland or Spain, because today there are enough financial guarantees. The problem is in the long term. There will be more crises, another country will have difficulties ... and if it is clear that monetary union is not permanent, speculation will start.
If a Greek default does not lead to its exit from the eurozone, as happens in other monetary unions, would it not be a sign of maturity and strength of the project? 
Everything depends on the ability of the eurozone to circumscribe what is happening in Greece. If the State of California declares bankruptcy, it is manageable because it will have an impact on the banking system of California, who enjoys the guarantees of the federal system. Why in the US there is no risk of a domino effect, namely that a sovereign crisis from turning into a banking crisis. The question is whether this can be avoided in Greece or not. If you can not, Greece will have no choice but to exit from the eurozone. The country can not afford to allow its banks to fail, because this would drag down the rest of the economy, producing higher unemployment and political instability. The crux of the matter, therefore, is whether the ECB will be ready to support the Greek banking system in case of default on the public debt of the state.

Tuesday, July 7, 2015

Charles Wyplosz: "it is now or never to reduce Greece's debt"

Charles Wyplosz
It's good that thoughtful economists tell these day what they think about the conflict between Greece and its creditors. One of them is Charles Wyplosz, who is being quoted in the French journal L'Express of today in its edition of 20:13: "Ne pas réduire la dette condamne la Grèce à la génuflexion éternelle".

I quote from the article:
Après le "non" grec au référendum, l'Europe est dans l'impasse. Toutes les parties s'accordent sur la nécessité d'une reprise rapide des négociations qui montent en tension ce mardi soir avec la convocation d'un nouveau sommet européen précédé d'une réunion de l'Eurogroupe et d'une rencontre Tsipras-Hollande-Merkel. Mais en dépit des efforts de la France, dont l'exécutif se rêve en médiateur de la crise, les positions sont plus crispées que jamais. Côté créanciers, le ressentiment à l'égard de Tsipras culmine. Le Premier ministre est jugé coupable d'avoir rompu le dialogue en appelant les Grecs aux urnes. Des Grecs eux-mêmes responsables de leur propre malheur, pour n'avoir pas su se réformer à temps.
Sans présager de l'issue des prochaines discussions, l'économiste Charles Wyplosz estime au contraire que c'est aux créanciers de faire un geste en faveur de la Grèce. Contacté par L'Express, il considère que c'est la stratégie européenne qui a abouti à la situation actuelle. Pour le Français qui enseigne aujourd'hui en Suisse après avoir été conseiller auprès de la Commission européenne, l'Union aura beaucoup de chance si elle parvient à en sortir indemne. Ce spécialiste des crises monétaires estime que c'est le moment ou jamais de "réduire la dette grecque"

I translate the last paragraph:
... the economist Charles Wyplosz considers that it is for the creditors to make a gesture in favour of Greece. Contacted by L'Express, he considers that it is the European strategy that led to the current situation. For the French economist, who now teaches in Switzerland after having been an advisor to the European Commission, the Union will be very lucky if it manages to escape unscathed. This specialist of currency crises [Wyplosz] believes that it is now or never "to reduce Greece's debt".

And here is the interview with Wyplosz:

L'Europe a-t-elle été trop dure avec la Grèce?
Sans aucun doute, l'Europe a été beaucoup trop dure, et surtout pas assez consistante, dans son approche du problème grec. On a ajouté, six ans durant, de la rigueur aveugle à la dépression qui ravageait déjà l'économie hellène. On voit aujourd'hui à quoi cela a abouti: on vient d'enfermer la Grèce dans une situation sans issue et le Grexit qui menace serait une catastrophe pour toutes les parties.
Un rééchelonnement, voire un effacement de la dette, est-elle la seule solution?
Rappelons-nous que cette crise couve depuis 2010. Au moment du premier plan de sauvetage, on avait déjà ce débat sur la dette de la Grèce et sur sa capacité à rembourser. On savait qu'elle ne le pourrait pas et, déjà, la question d'une remise avait été bloquée pour des raisons qui n'ont rien à voir avec l'absence supposée de réformes dans le pays. Cela fait cinq ans qu'on aurait dû se résoudre à alléger le fardeau. Même le FMI reconnaît aujourd'hui que la dette grecque n'est pas soutenable. Il a aussi dit que toute discussion sur un nouveau plan d'aide devrait commencer par une réduction des créances. La seule décision européenne courageuse serait de s'y résoudre à son tour.
L'Europe, et notamment l'Allemagne, qui ont apporté d'importantes garanties n'ont-elles pas des raisons d'être exigeantes aujourd'hui, après deux coûteux plans d'aide, qui sont restés sans effets sur la situation grecque?
En prêtant massivement à la Grèce en 2010, on l'a enfermée dans le piège de la dette non pas pour la sauver elle, mais pour sauver les grandes banques allemandes et françaises qui étaient particulièrement exposées à un défaut de paiement. C'était deux ans après la faillite de Lehman Brothers qui avait traumatisé les Etats-Unis.
Depuis lors, les plans d'aide successifs à la Grèce ne visent qu'à protéger le reste du monde d'un risque bancaire systémique du même ordre. Jusqu'à présent, les seules remises obtenues en 2012 par la Grèce, ont été imposées aux banques grecques et chypriotes par l'Allemagne, la France et les Etats-Unis qui n'ont jamais cherché à protéger qu'eux-mêmes.
Pourtant la charge de la dette grecque est aujourd'hui plus faible qu'en Espagne ou en Italie. Qu'est-ce qui justifierait un tel traitement de faveur?
La relative faiblesse du service de la dette est un argument bidon. D'abord parce qu'elle ne se vérifie qu'à court terme en raison des périodes de grâce assortie au remboursement des aides européennes. Mais surtout parce que l'objectif des plans d'aide devrait être de permettre le retour de la Grèce sur les marchés auxquels elle n'a plus accès depuis 2010.
Au lieu de cela, on en a fait le prétexte pour imposer des réformes de structure qui n'auront servi, en annihilant la croissance, qu'à faire bondir l'endettement de 130 à 180% du PIB. Aujourd'hui, à un tel niveau d'endettement, on se rend bien compte que la Grèce ne peut pas espérer avoir de nouveau accès aux marchés pour emprunter. Les aides européennes la condamnent pour l'instant à la génuflexion éternelle. Si Tsipras a été élu en janvier, c'est justement parce qu'il avait promis de cesser d'être à genoux.
Le Fonds monétaire international n'a-t-il pas beau jeu de préconiser une réduction de la dette due aux Européens, quand lui-même ne procède jamais à aucun effacement?
Bien sûr, la position du FMI est teintée de cynisme puisque sa part de la dette grecque est "senior" (c'est-à-dire qu'elle bénéficie de garanties spécifiques et que son remboursement est prioritaire, ndlr). On peut y voir le signe d'un petit règlement de comptes entre le FMI et les Européens. Au passage, l'institution omet de rappeler, qu'en 2010, au moment du premier plan d'aide, elle a tordu les textes dans tous les sens pour débloquer des fonds, tout en refusant de signer la certification selon laquelle la probabilité d'un remboursement de la dette grecque était élevée.
Que répondez-vous à ceux qui en Europe acceptent l'idée d'un rééchelonnement, mais font des réformes un préalable à ce type de négociations?
Il est faux de dire que la Grèce refuse les réformes, elle est même en train d'en mourir. En cinq ans d'austérité violente, le pays est devenu un cas unique en ramenant de 15 à 4% du PIB son déficit budgétaire. Les Grecs ont entrepris de très grosses réformes, mais ils partaient d'une économie dysfonctionnelle. En cinq ans, les salaires ont baissé de près de 25%, le nombre de fonctionnaires a pratiquement fondu d'un tiers, et ils ont entrepris des réformes sur certaines professions protégées et sur les retraites. Aujourd'hui, la dureté rhétorique de certains de ses partenaires européens doit être interprétée comme une volonté politique de se dédouaner de leurs propres erreurs. Tous les efforts grecs ont réduit à néant la croissance et l'activité économique.
Dans le contexte actuel, réduire la dette grecque ne reviendrait-il pas à encourager d'autres mouvements similaires, en Italie au Portugal ou en Espagne?
Faudrait-il maintenir le frère grec en enfer au prétexte que l'Italie ou le Portugal ont, eux aussi, une dette élevée? Si l'Europe a peur de voir émerger d'autres Syriza en Europe, alors il est grand temps qu'elle s'attelle à la question de la dette excessive à l'échelle du continent. Je suis convaincu que cela pourrait se faire de manière indolore. Par exemple, en convainquant les banques centrales de renoncer aux bénéfices engrangés à chaque fois que la Banque centrale européenne émet des liquidités, pour les allouer à la réduction des dettes. Mais on en est pas là et vu le contexte, on aura beaucoup de chance si l'Europe parvient à sortir indemne de cette crise, c'est-à-dire à dire avec la Grèce en son sein.

Dutch prime minister insulted Greek government

Dijsselbloem and Rutte discussing the Greek referendum.
I live in the Netherlands, I have the Dutch nationality, I live with pleasure in a country that has known moments in history characterised by an open mind to the surrounding world and its people as well as to the 'foreigners' living on Dutch soil -- be they immigrants, tourists or refugees.

But listening to what Dutch prime minister Rutte said yesterday about Greece made me angry and feel ashamed. He plainly and arrogantly warned the Greek government to not come to Brussels today with a "flutverhaal". If you are not Dutch it is hard to understand the arrogant and derogatory connotation of "flutverhaal". I do not know if "rubbish story" is an adequate translation.

How did the Dutch prime minister dare to talk in such denigrate terms about a government that has over the past five months made serious proposals to get Greece on a sound and viable economic path -- more serious than the unintelligent, dogmatic recipes the Dutch government as a key participant in negotiations with Greece has advocated.

And why did Dijsselbloem, sitting next to Rutte when the prime minister uttered this insulting nonsense, not correct his colleague? Or has he not listened to the sensible proposals of his Greek colleague in the Eurogroup meetings he has chaired over the past five months?

Sunday, July 5, 2015

Varoufakis stepped down

Yanis Varoufakis stepped down as minister of finance of the Tsipras government and said the following about this on his blog:

"The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage.
Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached. It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms.
Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.
I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.
And I shall wear the creditors’ loathing with pride.
We of the Left know how to act collectively with no care for the privileges of office. I shall support fully Prime Minister Tsipras, the new Minister of Finance, and our government.
The superhuman effort to honour the brave people of Greece, and the famous OXI (NO) that they granted to democrats the world over, is just beginning."

At the same time, today, Monday, Yanis Varoufakis wrote an article on his blog about the NO vote of the Greeks:

Our NO is a majestic, big YES to a democratic, rational Europe!

On the 25th of January, dignity was restored to the people of Greece.
In the five months that intervened since then, we became the first government that dared raise its voice, speaking on behalf of the people, saying NO to the damaging irrationality of our extend-and-pretend ‘Bailout Program’.
  • spread the word that the Greek ‘bailouts’ were exercises whose purpose was intentionally to transfer private losses onto the shoulders of the weakest Greeks, before being transferred to other European taxpayers
  • articulated, for the first time in the Eurogroup, an economic argument to which there was no credible response
  • put forward moderate, technically feasible proposals that would remove the need for further ‘bailouts’
  • confined the troika to its Brussels’ lair
  • internationalised Greece’s humanitarian crisis and its roots in intentionally recessionary policies
  • spread hope beyond Greece’s borders that democracy can breathe within a monetary union hitherto dominated by fear.
Ending interminable, self-defeating, austerity and restructuring Greece’s public debt were our two targets. But these two were also our creditors’ targets. From the moment our election seemed likely, last December, the powers-that-be started a bank run and planned, eventually, to shut Greece’s banks down. Their purpose?
  • To humiliate our government by forcing us to succumb to stringent austerity, and
  • To drag us into an agreement that offers no firm commitment to a sensible, well-defined debt restructure.
The ultimatum of 25th June was the means by which these aims would be achieved. The people of Greece today returned this ultimatum to its senders; despite the fear mongering that the domestic oligarchic media transmitted night and day into their homes.
Today’s referendum delivered a resounding call for a mutually beneficial agreement between Greece and our European partners. We shall respond to the Greek voters’ call with a positive approach to:
  • The IMF, which only recently released a helpful report confirming that Greek public debt was unsustainable
  • The ECB, the Governing Council of which, over the past week, refused to countenance some of the more aggressive voices within
  • The European Commission, whose leadership kept throwing bridges over the chasm separating Greece from some of our partners.
Our NO is a majestic, big YES to a democratic Europe.
It is a NO to the dystopic vision of a Eurozone that functions like an iron cage for its peoples.
It is a loud YES to the vision of a Eurozone offering the prospect of social justice with shared prosperity for all Europeans.