Interviewed by Telepolis (German and English versions)

24/03/2012 by

Telepolis just published an interview of mine under the title Die Europäische Union zerbricht. For the original article, in German, click here. Below I copy my original answers in English.

Have the powers that be already decided to let Greece go bankrupt? In your interview with Doug (nb. click here), you hinted to the French elections ….

Greece is bankrupt and has defaulted. The question is whether the powers that be are willing to push Greece out of the eurozone. No, I do not believe they have come to such a decision yet. From my discussions with key decision makers in Germany, it seems that there are sharp differences of opinion between at least three centres of power: the financial sector players, centred around Frankfurt, Berlin politicians and the representatives of industrial interests. Frankfurt is almost united in its assessment: Greece and Portugal must be severed from the eurozone just after the French Presidential elections are over, with the European Central Bank simultaneously pumping more than €2 trillion of fresh money into the banking sector of the rest of the eurozone in order to keep Italy and Spain within the Union. Berlin is not that keen on the idea but is running out of options, in view of the calamitous failure of the Greek and Portuguese bailouts. Mrs Merkel is unconvinced. She knows that, beyond the fresh liquidity for the banks that the severance of Greece and Portugal will necessitate, there are another two bills, plus a systemic risk. The two bills are, firstly, the monies owed by the Central Banks of Greece and Portugal, under Target2, to the Bundesbank and to the rest of the European System of Central Banks and, secondly, the money that the EU must deliver to Greece’s and Portugal’s banks to keep them functioning after their return to their old/new currencies. Meanwhile, German industry is fearful that such a move would be the first step toward a gradual reinstatement of the DM; a prospect that they are keen to avert, yet one that they are increasingly resigning to. In short, while it is all up in the air, powerful forces within Germany are pushing in the direction

What can you say about the current socio-economic situation in Greece?

That this is the winter of our discontent. This is Greece’s Great Depression. If Steinbeck were alive he would have wanted to write a fresh version of the Grapes of Wrath, one tailor-made for a Greek tragedy in the making.

In the German media discourse there is a lot of talk about ‘saving Greece versus wasting German taxpayers’ money’. Who actually profits from the bail-outs?

No one really, except of course for the major shareholders of banks that would have lost their control over ‘their’ institutions had the EU and the IMF not stepped in to ensure that they receive their money is paid by German and Dutch taxpayers against the interests of all taxpayers (northern and southerner). It is a scandal that German taxpayers are told that it is an act of solidarity for them to fork out monies for the Greeks that the Greek government is not allowed to stimulate the dying Greek social economy.

How do you see the economic future for Greece and the EU?

Under the current policy mix, I do not see a future for the EU. Europe is in a process of disintegration in the hands of utterly irrational policies that are boosting the centrifugal forces that are tearing the Union apart. If this breakup eventuates, then Greece will be only one of the many victims of a postmodern 1930s.

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