Why Won’t Germany Turn? Joseph Halevi’s insightful analysis, circa 1995

The question οn almost everyone’s lips is: “How long before Germany recognises that a new architecture is necessary to keep the Eurozone together?” Implicit in the question is a mistaken premise: that Germany’s view of the Eurozone is wrong, that its stance is predicated upon a mistaken analysis concerning the nature of Europe’s macroeconomy. Recently, I posted an insightful paper by Heiner Flessback which depicts the peculiar case of German mercantilism within our common currency area; a strategy that has paid off in the short run for Germany but which will most certainly be the death knell of the common currency from which it benefitted. Today I want to dig deeper with the help of a great economist, a reliable friend and an infuriating co-author: Joseph Halevi. More precisely, I shall draw on a remarkably prescient paper that he wrote in the early 1990s and which was published in 1995 as part of a long-forgotten volume edited by Victoria Chick. In the chapter-paper entitled The EMS and the Bundesbank in Europe, Joseph mapped out Germany’s strategy for the Eurozone in a manner that throws crucial ‘new’ light on Europe’s current trials and tribulations.

In the paper (a scanned, and rather heavy, version of which you can download and print here), Joseph argues that the Bundesbank’s commitment to monetarist orthodoxy has very little to do with either a psychological leftover of Weimar or some theoretical view on the universal merits of a strong currency as a prerequisite for long term growth. Instead, Halevi argues that to understand the Bundesbank time-honoured determination to tight monetarist policy even in recessionary times, we must first grasp the structure of German capitalism and, in particular, the shifting, agonising, closely-knit relationship between German industry, German finance and, of course, the Bundesbank. Such a close reading of the German economy, and its interaction with the Rest of Europe, with Japan (and later China) and the United States, reveals a clear picture of a major economy that operates as a source of deflation for the Rest of Europe (RoE henceforth).

Halevi’s analytical perspective is mainly based on two insights. The first is John Maynard Keynes’ view, which he expounded with all the strength he could muster in the Bretton Woods Conference (in 1944), that if the burden of adjustment falls (during a recession) primarily on the deficit members of a currency union, the result will be that the recession will spread to the surplus countries and the union will come to a grinding halt. The second is Michal Kalecki’s view (expressed eloquently in a 1946 paper entitled ‘Multilateralism and Full Employment’[1]) that a recession in the deficit countries may never result in a restoration of the balance of payments (between deficit and surplus countries) even if the exchange rates are fully free-floating and thus adjustable. It all depends, argued Kalecki, on the extend to which the surplus countries’ exporters exercise oligopoly power not only within the nations where they are based but also depending on their capacity to extend such price-setting power beyond their borders. It was, in other words, as if Kalecki was writing about the Germany that was to emerge, following the Marshall Plan, in the mid-1950s.

Halevi, standing on the shoulders of these two substantial insights by Keynes and Kalecki, goes on to suggest that the German post-war economic miracle must be divided in three phases: The first fifteen years after Bretton Woods (1945-1960), during which Germany’s reconstruction was contributing to a virtuous cycle for the whole of Europe (courtesy of the strong influence of US-controlled institutions), a second short phase that spanned the 1960s (during which a mighty tension emerged within the European Economic Community’s balance of payments), and another phase after the end of Bretton Woods (when Germany’s role as a deflation-exporter (to the RoE) was firmly established.

Halevi’s strength lies in his analysis of the nexus linking German industry’s oligopolistic structure with the German banking sector. During the first two phases (1940s to 1971), German banks were borrowing short and lending to industry long, thus making its necessary for the Bundesbank to keep inflation on a very tight leash so as to facilitate this form of financing of the German miracle; a form of financing that made it possible for German manufacturers to retain a degree of price and output inflexibility (at times of mild reductions in demand) not available to their American, British and French competitors. In short, a tight monetary policy by the Bundesbank was a prerequisite for the maintenance of the industrial-financial complex that propelled Germany to a dominant role within Europe at a time when the western word lived under, effectively, fixed exchange rates linked to the dollar.

When Bretton Woods died, in 1971-2, and the DM rose in value (as it would now if the euro breaks down), the Bundesbank oversaw a large shift in German finance from what Halevi describes as ‘extensive’ to ‘intensive’. From a situation where Germany was exporting industrial goods and importing labour (including Greeks) plus finance capital from abroad, it shifted to a new posture: it exported advanced industrial products plus financial capital (now that the DM had appreciated) while importing low level industrial goods. It was indeed the Bundesbank that, during that transition, pressurised German companies to turn to financing external to their usual ‘comfort zone’. How? By guiding Frankfurt, i.e. Germany’s large banks, to extend the length of their money contracts.

Halevi warns his readers time and again against the mistake of associating causally the impressive productivity of German industry with a normative evaluation of its price stability. He challenges the views of two great scholars that he evidently admires: R. Hilferding and J. Schumpeter. The two men had presumed that, because German capitalism had utilised effectively corporatist structures for planning markets, Germany’s ‘trustified’ capitalism would be immune to crises of aggregate demand. Halevi challenges this view, arguing with Kalecki that, while trustification and corporatism did give German capitalism a capacity to accumulate and hoard productive capital over and above the level of its neighbours, it does not shield it, in the end, from recessionary forces. Indeed, German corporatism generates recessionary forces from within and has a tendency to export them without.

Turning again to the Bundesbank’s crucial role, Halevi argues that during the post oil-crisis global stagnation, the Bundesbank was dead keen to avert a situation in which German foreign direct investment abroad was financed through liabilities against Germany itself. So, the only way that German industry could extend its reach, and establish foreign productive facilities, without such liabilities, was to finance their outward expansion through aggressive trade surpluses with the RoE. Halevi’s interesting point was that this did not simply transpire; that it was not just a result of markets-at-work, but that it was an outcome designed and directed, to a large extent, by a Bundesbank dead keen to preserve German finance under strict German (and Bundesbank) control.

The strategy worked well from 1980 to 1985, at a time when the dollar was rising and the US was sucking in Germany’s net exports. In the meantime, with Germany sitting on its surpluses and with European currencies pegged on the DM, the RoE was becoming a source of increasing demand for Germany while transforming itself into Germany’s periphery. And what does periphery mean in this context? Halevi’s answer is: an economic vital space that provides demand but which grows slower (than Germany) during the good times and contracts faster during the downturn.

Then, in 1989, came reunification. And with it came new challenges for the Bundesbank’s game plan. Germany, almost overnight, lost its surplus position (like the US had in the late 1960s). The RoE could no longer finance the expansion of German multinationals abroad. At that point, they turned to the financial markets for a source of financing, as well as to squeezing their own labour, in a manner so vividly explained by Heiner here. Throughout this phase, the Bundesbank was tightening more and more monetary policy in a bid to deflect deflation, via the circuits of German oligopoly power, to France and to Italy. Alas, one obstacle came in its way: competitive devaluations by the Bank of Italy and the Bank of France. It was these devaluations, and the threat they posed to the capacity of German capital to accumulate, that are at the heart of Germany’s decision to accept the French (Mitterand-inspired) plan for a currency union (which was, it must be noted, first hinted at by Helmut Schmidt).

The first step was the European Exchange Rate Mechanism, ERM, or European Monetary System, the EMS. Its primary purpose, from the Bundesbank’s perspective, was to secure Germany’s capacity to maintain its competitiveness in the face of the dollar’s wild fluctuations through internally coordinated restructuring and free of the fear that France’s and Italy’s competitive devaluations will undercut these efforts. In short, the Bundesbank’s plan was simple: a fixed exchange rate mechanism would help restore the RoE’s incapacity to keep financing German accumulation.

The problem was that speculators, with George Soros the better known amongst them, could see that the currency pegs of the ERM/EMS were unsustainable given the pressures on the balance of payments of Germany’s European partners. So they bet massively against it, until the EMS broke down. At that point the Bundesbank understood that nothing short of a currency union will allow it to see its grand plan through. It was a gamble. And it came with a sizeable  psychological cost, given the voluntary abandonment of the DM. But it was deemed essential given the greater ‘good’ to be had from turning the RoE into the economic zone onto which Germany’s shifted the burden of its adjustment, thus allowing German oligopolistic multinationals to maintain ad infinitum their net exports (of goods and production units) to the rest of the world.

This is, basically, the story that Joseph Halevi told in his 1995 paper. It is an intriguing tale. As always, since economics is not a science, whether one agrees with Joseph’s thesis or not is a matter of judgement (as opposed to empirical or analytical proof). Suffice to say that, if he is right, we have a fascinating explanation of Germany’s resistance to coming to terms with the need to shore up the currently collapsing euro-system by means of establishing a Surplus Recycling Mechanism within the Eurozone (as our Modest Proposal suggests). For if Joseph’s thesis holds water (and I, for one, think it does) the whole point of monetary union was to avoid surplus recycling between Germany and the rest of Europe. Trouble is that, given the state of European disintegration that we find ourselves in, Germany’s impressive commitment to a plan that is now thirty years old threatens to bring down not only the rest of Europe but Germany too.

Of course most German policy makers do not see this. They think that they can pull the same rabbit out of the hat twice. That just like they managed to do in the early 1980s, they can once more pave the ground for German companies to accumulate productive capital (and to expand far and wide) through a careful dose of deflation for the rest of Europe and growth further beyond (China comes to mind here). What they are purposely ignoring is the missing elephant or, to be more ‘precise’, the missing Minotaur: The US deficits which are no longer able to generate the global demand that the current German experiment requires. And when they reply that China will play this time round the role that the United States played in the past, they miss the simple point that, unlike the post-1971 United States, China is an oversize Germany; a monolith whose economic fortunes also rely on net exports. The results of this miscalculation will, I submit to you, be a long Crisis that, in the end, will derail Germany’s European and global plans with detrimental effects on everyone: including Germany’s squeezed middle and working classes.


Joseph Halevi with Riccardo Belliofore have produced a number of papers building on the above ideas. Two were published in this blog (click here and here). Another can be found here.

[1] See his Collected Works, Volume 1, pp.403-16, published by Oxford University Press


  • Very interesting.
    I would like if you could translate the main idea, in short and in Greek.
    Also today in your twitter, somebody asked about
    “Yanis you are talking about the Eurozone disintegration but the euro rate against $ is high at 1.32. ”
    Your answer.
    “Because it reflects the expected value of euro which are in German banks/bonds. Namely the new DM ! ”
    Can you explain it more, please ?

  • Well, the euro has been a gamble from day one.

    “Yet imposing the primary cost of recovery on deficit countries in the form of austerity is likely to fail both pragmatically and politically. Economies without growth cannot support or sustain debt reduction or structural reform. This is why even Mario Monti, the technocratic Italian prime minister, recently made clear that the deficit countries could embrace austerity and reform only if Germany changed its policies to accept a greater adjustment burden in the form of domestic spending and inflation, as well as appropriate E.U. policies.”


  • This all sounds like a rather paranoid conspiracy theory about a German masterplan.

    And as for the insights of John Maynard Keynes: there are countless examples of deficit spending during recessions but virtually none where the deficit was reduced afterwards in better times. So it appears his theory doesn’t stand the test of reality.

    • The solution to not reducing deficit spending is inflation. We see what happens when the ECB tries to hold that down. And no, no deficit spending is not a viable alternative.

    • yep, and the Holocaust – the historical evdence that germans are collectively insane – is a conspiracy theory too

    • Allow me to protest. The fact that many Germans died in Auschwitz due to their resistance to the Nazis disproves your generalisation. Thankfully.

    • To Salvo – what a stupid comment from you. The Holocaust was carried out by a dictatorship in wartime and in secret (no public coverage) and without any popular consultation or backing for it as such. What Germans saw was their own cities being bombed to rubble, not the proceedings in Auschwitz. And as programs of mass killing were also carried out in the Soviet Union and some other places, presumably you will smear those peoples as ‘collectively insane’ too?

  • Prof. Varoufakis, I am great admirer of your work!

    I completely agree with this analysis by you and Joseph Halevi!

    Of course the Euro-crisis is not just a coincidence and didn’t happen because of prifligate P.I.G.S.!

    There was even a book written in 1997 The Rotten Heart of Europe: The Dirty War for Europe’s Money by Bernard Connelly.

    Aiming to destroy illusions about what lies at the heart of Europe, this book provides answers to questions about European monetary union. The author, who is head of the Commission unit responsible for monitoring and servicing the ERM, offers a portrait of the motives of many Euro-propagandists. The book addresses topics such as the real motives underlying the Franco-German determination to suck European countries into the monetary union, why the French and Germans are applying intense pressure to recreate an exchange-rate agreement despite the political conflict and economic disarray that its earlier incarnation caused, and how so determined a leader as Margaret Thatcher could find herself forced into submission on the ERM.

  • Wow, great analysis. Lots of questions in my mind. Some of them:
    1. “(about 1940-1971) … financing that made it possible for German manufacturers to retain a degree of price and output inflexibility not available to their … competitors.”
    Can you explain that a bit more in detail? What would have happened if the Bundesbank had let things evolve? Was did happen to the competitors? What is the “output inflexibility”?

    2. “the Bundesbank pressurized German companies to turn to financing external …”
    Do you have an example to illustrate this, how this happened?

    3. then after reunification “the Bundesbank was tightening monetary policy in a bid to deflect deflation, vis the circuits of German oligopoly power to France and Italy.”
    How did that happen practically? Can you explain the oligopoly power of German corporations?

    And a personal question: The analysis only sparsely includes German politics. What about the “independence” of the Bundesbank? How much of it is truth and how much myth and image for the public? Is it not the German politics behind the actions of the Bundesbank?

  • If you believe in this explanation, why are we still talking about Europe?
    The idea of Europe holds water if there is mutual interest among the member states.
    If someone wants to keep this alliance alive, he must feed this mutual interest. In a way what you suggest in your proposal. The opposite is evident nowadays.

    Reading the underlying logic of german industrialists, and assuming that it remains the same, why is what Mr Kazakis predicts wrong? That Germany will try to gain as much as possible while weaken its future competitors in a disintegrated Europe. Why not destroy Italy’s industrial capacity first? Two years of “greek” recession in Italy will do the work. Germany’s way of thinking leads to a free for all war. And if their logic doesn’t change, we must protect ourselves however possible. Greece is bleeding because of the belief in this european idea. And i really mean it. Still a percentage of greek people are blackmailed by the “government” that we will not be a part of Europe unless we suffer big time.

    In my hometown Heraclion last week we had 4 suicides which is unprecedented.I can not believe it. We have to make a choice as greek people. We can no longer see our friends and relatives die and suffer. And you know it very well that migrate to other countries is not an option for everyone. With the unemployment at that heights through out the south of Europe, and the underinvestment in Europe, there are no jobs available in other countries as well. Fifty years ago or hundred years ago, people migrate to places that there was growth. Now where to? Greek must do that for themselves i am afraid. There is no future otherwise i am afraid. Our life can not be depended on when Merkozy will change their minds.

    • To my logic, exactly because no economist can predict what will happen in such a globalized economy, Germany and other member states takes as granted the worst possible scenario.
      It’s like the example in game theory with the prisoners, that each of them assumes that the other will betray, so he decides to confess first.
      In this logic, Germany to ensure its future, it takes the worst possible scenario and see the other member states as opponents rather than players.
      Following this way though, you have a certainty instead of uncertainty. Betting on the worst character of Europe. And if you have bet on it and planned on it. You strive to make things worst, so that your plan goes as scheduled.

      And they are fool enough to delay elections or cancel them, ignoring that no policy can be implemented without the will of the majority. And i am not talking about Greece.

      I don’t know if i make any sense, but mistrust is such a bad advisor!

    • “That Germany will try to gain as much as possible while weaken its future competitors in a disintegrated Europe.”

      BS! Why should the Germans want to destroy a big chunk of their customer base? You think they are stupid?

    • “Why should the Germans want to destroy a big chunk of their customer base? You think they are stupid?”

      Hmm…YES (the gvt not the people)!Arent they destroying their customer base already?Whats up with that PMI ?

    • @ Crossover
      I am talking about the governments and their policies, not the people. Thank you for this correction. Sometimes it’s easy to be misunderstood.

      Generally, i am trying to find out what’s best for Greeks. I am trying to find an interpretation of reality in terms of logic. And this is very difficult for all of us, because apparently there are many realities, many parameters that can either interfere constructively at a given time and destructively at another moment.
      Based on the facts though, I find it extremely stupid and dangerous the fact that current political think tank in power does not even think as a possibility of protecting the interests of Greece in a very bad scenario for all of us, which is the disintegration of Europe. The costs is in human lives. Either existing or prospects.
      On the other hand, German government don’t even think the possibility of modest proposal. And all their actions are towards defending Germany’s interests only.
      Apparently, this can not go on for long. Eventually these decisions will be taken. And those who are not prepared will suffer the most.
      With the current greek political regime, if going back to national currency is needed, they will still have no plan, and therefore they will adapt a proposal by some german or american think tank. That’s why the political regime in Greece is dangerous for Europe and Greece.
      I have written it before and i ll say it again. The majority of Greeks have hostile feelings against their own politicians, not the dark foreign powers. Even though, a neo-fascist party is said to enter the parliament in the forthcoming elections, extreme right wing parties have far less power in Greece than any other european country.

    • @Ilias Trou

      You got it wrong my friend.I was replying to Very Serious Sam.
      I agree with everything you said but:
      “I have written it before and i ll say it again. The majority of Greeks have hostile feelings against their own politicians, not the dark foreign powers. ”
      As i have said before,my personal opinion is that individual (countrywise) policies have little to do with the financial storm europe finds itself in.I blame the european policy in general regarding the design of the euro which i consider the main (if not the only) reason for this storm.Having said that,it doesnt follows that Greece (and maybe other countries too) dont have imminent political problems that must be solved.Financial Crisis or not,its wrong to steal the public’s money.Financial crisis or not,its wrong to get bribed by Siemens in order to get its given tender offer accepted.Financial crisis or not its wrong to evade taxation.Financial crisis or not, its wrong to oppress people,lie to people and the list goes on.About time we realise this has been going on for 30-40 yrs.Its not a new phenomenon,nor is it a product of the crisis or vice versa.So while i see Greeks having hostile feelings against our politicians every day,i have seen few (if any) having hostile feelings towards themselves first.
      “Mazi ta fagame” might not be true especially for the majority of people,but they surely had the majority’s consent gia na ta fane monoi tous!And i repeat this is not even about money…[email protected] the money…

    • Ilias, if things are as bad as you describe them, why would the two dominant parties, together, get anywhere near 20% in next months election. The way I see it, if the Greek’s give those two parties enough votes to form a government, then they want more austerity.

    • @Crossover I agree with what you say. The thing though is that in Greece of unemployment, famine and suicide rates there is no place for calm thoughts. For me, it is important to get rid of this corrupt regime ruling the country first. There is no future with the current political regime. If other european countries want to save Europe, it’s time for them to act, don’t expect too much from Greece.

      @Jim You are exactly right. Those two major parties had 80% of votes for at least 3 decades. And now they will not form a government even if they join forces. It’s like Tories and Labours in Uk take 20% in the next elections.

      And gallops are not trustworthy, don’t believe them. Reality is much worse for them. An example: when they were thinking that six parties were possible to enter parliament, “gallops” yielded about 30-32% for both, with the rate of Pasok very low. Now that it is evident that almost 8-9 parties will enter the parliament, the gallops changed, showing an increase in pasok (??!!) stats to justify the overall increase of the coalition PASOK-ND to 40% which is the limit to form government. So you see, gallops serve the purpose of giving false hopes that PASOK-ND will form a government.

      How do i know that? If you can walk in Greece, it is evident. In previous elections, candidates of PASOK and ND had extravagant campaigns, fighting from door to door and in public spaces. Now they are confined, they can not walk in streets without police protecting them. They can not use their most valuable weapon (door to door) and campaigning to catch up, where as anti-memorandum parties are having a party. That’s why i expect an even further decrease of PASOK, ND the remaining time before the elections.

  • Sigh. More conspiracy theory. No single human being on this planet is as single minded and consistent as this fiction imagines groups to be. Have you guys ever met a bona-fide human being outside the ivory tower? or just looked in a mirror? Institutions and countries are the messy product of messy people, so if you can be sure of only one thing, is that grand über logical narratives like this do not reflect reality. You can always construct such narratives from a bunch of historical facts (curve fitting as the quants say), it’s cheap and easy, but they are pointless; and worse, by being so totally remote from human reality they diminish one’s understanding of history, and more broadly of humanity.

    • Do try to explain why it is so obvious to you that it is “conspiracy theory” in another way than by providing procedural arguments (which nearly always hold).
      And while you’re at it, please define meaningless phrases like “remote from human reality”, and “understanding of history”. Because if there’s one thing I despise, it’s covering up elite corruption by arguing that “messy people” could not be pushing policy in certain directions.

    • @Foppe, of course people are pushing policy. The point is that unless you have a total dictatorship where every decision is made by a single person, and even then; this pushing is all over the place and results in a big mess, where there simply cannot be a consistent grand plan.

      A related idiocy is when pundits say “the market thinks…”. The market never thinks. It’s just a number that’s the messy sum of lot of inconsistent, often exogenously random, actions. This is true within any human group, starting from two people onwards. A family doesn’t think. A country doesn’t think. It’s true in groups of one sometimes, lot of people are not so single minded as to have an unchanging world view, and they change their mind depending on who they last met in the lift, or what they had for breakast, or who they think they can get laid with this week.

      Go and become a board member of the Bundesbank, and you will see: like everywhere, it’s a mess.

      Abtruse Goose covered this very subject just yesterday, maybe that’ll work better than my feeble attempt at explaining it:

  • “BS! Why should the Germans want to destroy a big chunk of their customer base? You think they are stupid?”

    If the accusation is correct, the customer base in Southern Europe is of lesser importance to the German industry than the emerging middle classes in China, India etc.
    Therefore, a permanently-impoverished Southern Europe would be useful in keeping the common currency’s value down and enable better export to the Asian markets.

    Of course, such a vision of Europe would be abhorrent.

    • But the German elites do not want the euro down: that’s anathema: with a strong euro they buy oil and components relatively cheap and can still sell expensive (because they produce mostly high-value low-competition products).

      The problem is to whom are they going to sell once all their markets have been blow up to pieces like Greece? If workers do not make money, they do not buy cars, not even aspirins.

      Bringing the value of the euro down would be useful for most of Europe: nearly all but Germany. But the RoE elites are being bribed somehow and do not stand up to Germany (in theory they could force Germany to accept their conditions… or lose their markets/providers and crash their economy – but they do not).

    • Why would any company chose customer A over customer B based on country? If the market in Asia & South America is larger, growing more & on top the cusotmers pays on time (and in cash as opposed to PFIGIBS bonds) anyone would neglect Southern Europe.

      On top of that the German voter/worker doesn´t give a damn about markets, he cares about his wallet. So far the Euro and the EU made him poorer while others had a party.

  • “BS! Why should the Germans want to destroy a big chunk of their customer base? You think they are stupid?”

    It is all about political domination in the EU! That’s why Germany has introduced the famous “Agenda 2010”. To break the power and the will of the people in Germany first and afterwards to introduce the same price dumping – poverty creating – mechanism into the whole Eurozone! It is the Bundesbank telling both the German governments as well as all the other EMU governements what they have to do or in German: “Wo der Hammer hängt”
    What is stated in the article about German corporatism isn’t wrong at all, in Germany there is a famous saysing about this “Die Deutschland AG!” which translated literally to the German Inc.

  • Yannis: why do you think that the “national” elites of Latin Europe (mostly) do not stand up to Germany and force them to accept a more balanced Eurozone with a weaker euro?

    • An initiative of the CluMed countries to start their own currency would be better! Then you can devalue, politicians can rob you through inflation and the French can lead this block to compensate their notorious inferiority complex!

    • No EU dictatorship said this: “An initiative of the CluMed countries to start their own currency would be better! Then you can devalue, politicians can rob you through inflation and the French can lead this block to compensate their notorious inferiority complex!”

      Mr. first of all you should learn some basic economics before you start publishing your lousy theories here! If you had any economic knowledge you would aknowledge that inflation is mostly hurting the big riches and devalues also at the same time the loans of private households, public sector and companies. So to speak it robs the rich and the banks in the first instance and at the same time produces more employment through the reduction of debts!

      Also not the French have a notorious inferiority complex but some others. Psychologists tell us that people who suffer of inferiority complex also swing to the other extreme namely superiority complex. You just need to study history in order to see who fits this kind of notorious behaviours, its not the French!

  • Also, i would like to inform our fellow europeans, that the legislations passing in greek parliament under the inspection of the german supervision have nothing to do with help or solidarity or anything of that sort.
    In short, it is very similar to what happened after the unification of east and west Germany and the buy out of east Germany by west Germany. That means that everything will be sold at a mere fraction of its value.
    It is expected next month, as it is rumored, that the regulation objecting the confiscation of the primary residence will be canceled. Even for a mere debt the confiscation of your house is possible.
    There is an ongoing plan for building concentration camps all over Greece, to host the so called immigrants.
    That’s not a greek logic, believe me. Even if the majority of people acknowledges the problem of immigration in Greece as a major one, i can not find even one supporting such a solution. Who thought of that? Nevertheless this plan is progressing against mass protests.

    You must understand that sovereignty is not something only of legal power. Basically it is of unwritten nature that has been added in the constitution of all countries in West.

    What ever the reaction of Greeks will be, please don’t take it personally …

  • For as long as Merkel is around, Europe will be a contrived mess by an atrocious and premeditated German design. Every time there is a crisis in Europe:

    1. the euro goes down favoring German exports
    2. Germany gets financing rates close to 0% (the latest auction was at 0.14%) for its sovereign debt and
    3. All Europe is drained of liquidity as all investment capital flees from European countries into Germany.

    When all EU countries wake up one day and realize that Germany has been systematically eating their breakfast, lunch and dinner not even God will be able to save Germany from the wrath of its victims.


    • Actually, the average German voter would probably be ecstatic if Germany left the failed experiment known as the Eurozone. Of course, many of you will argue that the average German voter doesn’t know what’s good for him. But it is up to him. And right know, by an overwhelming margin, the German voter wants less, not more, Europe.

    • The average Dutch also wants less Europe. Even the French rejected the idea of a centralist socialist European superstate when they were asked.

      The ECB how it is at the moment is much worse for the average person than the Bundesbank ever was. Strong currencies with low inflation are good for the people. High inflation is dirty robbery of the people!

  • “As always, since economics is not a science, whether one agrees with Joseph’s thesis or not is a matter of judgement (as opposed to empirical or analytical proof).”

    Professor, is there any theoretical possibility of Economics (aka how we run this planet) ever becoming scientific? Or is it logically impossible, in which case us scientists can all go for cryonic hibernation while you guys sort it out?

    • There is no possibility for economics to ever become scientific. One tried hard and failed: Marx. Keynes understood very well that as soon as we project ourselves into the longer period we know nothing. But economics if it becomes a historically and legally grounded discipline than it an say something. That is the strength of Marx’s contribution, after all. No historian can avoid being somewhat Marxist as she/he has to look at the articulation of classes in relation to both the economic basis and to the institutions coordinating that very basis. But economics as prediction is dead in whatever shape or form. Kind regards, joseph halevi

  • Well, I still hope the German establishment will eventually accept your modest proposal or something similar which goes in the same direction, but if the analysis you posted here holds true, well, your proposal as well as many similar ones will continue to be rejected.
    If this will be the case then the only option will be to “forcefully” break into the bundesbank-caveau mind attitude. Every lock has a key for opening it, but if they won’t give us the key we need to find the breaking point. So which is the breaking point of the present pervasively destructive pattern?
    Well, going back to national currencies is a way to break the caveau, of course, but it’s like detonating it with a nuke: nothing will remain alive.
    So we need a bit of a more skilful mean, and this could be getting two currencies, euro1 and euro2, or northern-euro and southern-euro, or whatever we want to call them.
    This could be not so bad as going back to national currencies, I mean there will be a bit of a runaway as with the total breakout, but not as much as in that case, it will not be like with Drachma, Lira or Peseta each one alone and it will give the group much strength in renegotiating debt currency denomination and so on, and eventually a competitive devaluation of this whole area could leave enough space to rebalance the flows.
    Of course this route entails a great risk, but perhaps we could use it as a deterrent at present. I mean: if the hypothesis you posted here is true, then it follows that German establishment WANTS the euro to remain unbroken in order to avoid competitive devaluations. Of course they feel confident to threaten Greece to be kicked out as mush as they like, because Greece doesn’t count as a potential competitor in the exporting sector, but Italy and Spain together today with the potential of other countries (aka France) joining in the (near) future could be a strong deterrent in the hand of the south.
    And I guess also we could reach the double currency area model without a treaty change: if nine countries decide to leave the euro and create the euro2 at the very same moment that would just figure out as an enhanced cooperation, the euro (of Germany and few others) will still remain the currency of the EU while the euro2/southern-euro will be an enhanced cooperation between those countries which are not ready to stay in the core currency with the idea to join back the core currency one day, ehm, in the long run. Of course there will be the problem of creating a BCE2 but if it eventually became a matter of survival this wouldn’t be a major obstacle.
    I am not sure if this can really work, but maybe we’ll be left with just this option or the total break apart… So maybe if we’re able to put such a kind of proposal together in a credible way, maybe the German establishment will change their mind before it is too late…

    • The only possible ‘key’ to forcing sanity on the neo-liberal insanes running Germany and the ECB (as well as leaders of Greece, Italy, Spain, NL and others) is for one or more to default IN EUROS, as Yannis suggested months ago. AND, Spain might be better ‘key’ than Greece would have been.

  • “Allow me to protest. The fact that many Germans died in Auschwitz due to their resistance to the Nazis disproves your generalisation. Thankfully.”

    sorry most Germans did indeed support the regime to the bitter end, and contrary to the other countries having suffored the rule of fascism there has been no broad opposition to its historical form in Germany. I live in Germany, be myself half-German and know the country, contrary to you, very well

    • The Holocaust was carried out by a dictatorship in wartime and in secret (no public coverage) and without any popular consultation or backing for it as such. What most Germans saw was their own cities being bombed to rubble, not the proceedings in Auschwitz. And as programs of mass killing were also carried out in the Soviet Union and some other places, presumably you will smear those peoples as ‘collectively insane’ too?

    • My grandfather also died in a concentration camp. He fell drunk off a watchtower! – Sorry could not resist!

  • Another way to look at the European Monetary Union (and earlier attempts at fixed exchange rate regimes, such as the Exchange Rate Mechanism and ERM2) is as a way for the Bundesbank to have other Central Banks incur the cost of defending Germany’s currency against appreciation. In a sensible exchange rate mechanism countries would be responsible from defending their own currency against appreciation (which they can always do by purchasing foreign reserves with newly created fiat currency as the Swiss National Bank has been demonstrating for 6 months) and they should never be forced to defend their currency against depreciation (which can only be done to the extent that they have foreign reserves to sell, which is limited and can be defeated as Soros did with Sterling in 1992).

  • Dear Yanis,

    in one of your postings, would you care to comment on the “The European Redemption Pact ” (http://www.sachverstaendigenrat-wirtschaft.de/index.html?&L=1) which is being discussed more and more intensively in public in Germany?
    It is the official proposal of the official “German council of economic experts” and is still being demostratively ignored by the government.

  • Interesting, but there’s a simpler explanation. The Bundesbank’s primary mandate is to preserve monetary stability and control inflation. Germany requires export surpluses to maintain its economic wellbeing, due especially to the large costs of the wars in territory reparations and reconstruction, of which reunification was the last phase, and the German economy is geared towards this of necessity. German goods are high quality and in worldwide demand, and the world market large and needy enough to sustain this exchange ad infinitum practically. Germany did not design or impose the system, which as a country of limited power it has to compete within. If it is successful within that system, due to discipline and innovation, then it is nothing to be held against it. The Euro was not a German program per se, and if it happens to benefit Germany in some ways, that’s the way it goes, people complain when Germany benefits but not when it doesn’t. But Germany’s primary responsibility is to itself, as with all nations. And if it does well under competition and ‘comparitive advantage’, then so be it. If it grows faster than ‘the periphery’ this is a function of its industrial base and other legitimate characteristics of its achieved makeup, and vice versa with the others, not some devious scheme. And it was competing quite well with the D-Mark. The problem with the Euro is that is was expanded too far too fast, Greece in particular was not ready for it, and did not use the opportunity cheap credit (perhaps) provided to improve competitiveness. That is not Germany’s fault, although letting Greece in partly was. But in the end Germany cannot be expected to penalise itself greatly in favour of the others in a global marketplace that is fiercer every year – it’s up to the others to either increase productivity and efficiency in their sectors of advantage or get out, despite export success Germany is not so rich either and can’t afford much more than is being done in various ways. It’s sad that some in Greece and elsewhere are suffering but that is more the fault of their own governments and privileged sectors than Germany which is just playing by the rules as best it may in a ‘game’ set by others. The Euro will probably need to shrink a bit to be more stable, although it would then rise a bit too, but that can be lived with on the part of the remaining stronger economies. Unless the Greeks and other scan achieve their own ‘miracle’ within.

    • But the problem of the euro is not limited to Greece: it is actually harming the economy of most of the Eurozone, the only exception by the moment being Germany (Netherlands is already succumbing as well, France, Belgium and others, including major partners like Italy and Spain, have been hurt for years now).

      The main problem of the euro is that its design is way too Germano-centric, when the economy of most Europe is not at all like that of Germany but something much more modest and common.

      A too strong euro, coupled with the idiotic austerity programs, is hurting the European economy up to the point of collapse: we can’t export because our products are too expensive and we can’t import because we don’t earn enough money anymore… and we can’t even consume our own production either because imports from, say, China, Latin America or North Africa are much cheaper and comparable in quality.

      The only possible policy in EU is controlled devaluation of the euro couple with much larger direct state intervention in order to dynamize a dying economy. But that’s of course anathema in Berlin, Frankfurt and sometimes it seems that also for some Anglosaxons (maybe because a weaker euro = stronger Eurozone would mean increased, normalized, competition for the USA and even Britain instead of the free fall dead weight that is now Europe).

    • I don’t agree that the Euro per se is harming all the rest, a number of those economies are reasonably competitive, but they allowed themselves to fall behind by not undertaking the globally necessary reform Germany did (or finding some other way to improve). And there is such a thing as specialisation and comparitive advantage. And a degree of ‘austerity’ is unavoidable in this general climate, and given that too much of the previous conditions were debt-financed to an unsustainable degree. But it shouldn’t be hitting the poor so much, that’s for sure, and that’s partly the fault of the governments that impose the cuts. Also the Euro is probably too strong for small economies like Greece which do not have the industrial base to compete, or any other sufficient natural advantage to make up for it (eg oil). Yes it would be better if it was lower, even for Germany after all, but one thing preventing that is the monetary policies of the US other competitors, who you are absolutely right do not want the competition, even though a healthier Europe could buy more of their exports also.

      It’s a tough situation that can only be resolved one step at a time, and by feeling the way as it develops. Greece and one or two others may need to leave, but on the other hand they also desperately need the reform that it in some ways encourages. But that is ultimately a question for them to resolve, the idea that Germany can solve it all is false, it has a fragile enough position itself that it has to protect, and has said that Greece can leave if it really wants to, but of course the costs will be huge. And Germany has assented grudgingly to some QE type measures on the side, but will not accept that the whole basis of its competitiveness and (modest enough) prosperity be imperilled by irresponsible policies that have led to this impasse (overloose money and excess debt) and that has ruined it in the past. It faces stiff competition from the countries you mentioned too. Nor can it bail everyone out or fund their rise to its level, East Germany is still well behind the West in some ways. And Keynesian type measures depend on the ‘periphery’ demonstrating they won’t make the same mess of it that currently exists, which so far is not clear.

      How to resolve it I’m not sure, but Germany bashing is not it. Perhaps Yanis has some ideas (I know he has but have not read up much on them yet), but they would have to take into account the things I have laid out, as they are pretty much the German position, which I doubt will change much, least of all as a result of abuse that ignores what Germany HAS done to help, and what it can realistically afford.

    • No. Germany did some reforms and “sacrifices” (the people did, not the oligarchs) for the sake of unification. Something to which the rest of Europe contributed generously, as we did with the expansion to the East, another of the German ill-thought pet projects.

      Now these contributors have troubles and all the German leaders can babble is “give us Corfu!” The selfishness and neocolonial reform of the EU collaborative project by the German leadership as evidenced in such an outrageous imperialist sentence: they do not see other Europeans as partners but as pawns of their imperialist game. For that reason I think Germany should be expelled from EU (and I’m not kidding at all: EU would be better without Germany, Germany would be much worse without EU).

      But anyhow: let’s compare Germany and the “non-reformed” states: German salaries are much higher, German welfare is much better, German productivity is generally lower or similar at the best and they work less hours. When you look at the macroeconomic figures (check Eurostat), Germany sucks big deal in terms of what is claimed the basis of its success.

      It’s all a Goebbelsian lie: a falsehood repeated once and again by the media becomes a “truth” of sorts. And you believed it acritically: I guess that the Holocaust could be happening at your backyard and you’d believed nothing unusual was happening at all with your eyes stuck at the propaganda in TV.

      Don’t worry: it happens even to the best… sometimes. But they wake up eventually.

      “a degree of ‘austerity’ is unavoidable”

      Maybe, let’s cut in NATO-military, in subsidies to the religious sects, in expenditure of the Royal Family, in politicians’ salaries, in excess police and jails, in bailout packages for the banksters… Why have precise the most essential social services to be cut? Why are we expected to live on salaries that do not even pay the rent, never mind food? Even a Nazi ultra-Capitalist like Henry Ford could understand that workers needed decent salaries, even if only to buy their merchandise.

      Austerity is just being used as a pretext for a class war offensive of brutal almost unprecedented dimensions. Mediterranean European countries, and Greece specially, are being Haitianized, so to say. They are being pushed to truly the worst colonial extremes we know of. I often say that Greece is between the rock of Haiti (accepting the Troika’s irrational dictates that are destroying society and the economy) and the hard place of Cuba (trying their hand at some sort of revolutionary socialism in which everybody is poor but dignified – Cuba has some of the best ecological and social measures in many aspects worldwide). I sometimes imagine a third way, a “Venezuelan option”… but Greece has no oil and Turkey is not Brazil, so probably not.

      “… the idea that Germany can solve it all is false”…

      I doubt anybody wants Germany to “solve it all”. But at the very least not to make things worse. Germany in any case has the collective responsibility of being the natural leader of EU and is being a total ass at that role. A leader can’t be selfish but has to watch for the good of all.

      And, when they do not, they are deposed or their coalition breaks apart. That’s what is happening now, as the euro as-it-is does not serve the broader interests of the Eurozone, damaging everyone but Germany (so far). The effective result is that Germany is plundering the rest of Europe and will then drop them as junk when exhausted.

      Naturally more and more people in the rest of Europe is growing a grudge against Germany for that reason and also against their own leaders who are unable to defend the national interests in any meaningful way. And when national interests are not defended within EU, the relevant states will eventually walk out of EU, what is what Germany expects and hopes for (otherwise they might ally against Germany).

      So I say: kick Germany from EU or at least the Eurozone now, before it’s too late.

      “And Germany has assented grudgingly to some QE type measures on the side, but will not accept that the whole basis of its competitiveness and (modest enough) prosperity be imperilled by irresponsible policies that have led to this impasse (overloose money and excess debt) and that has ruined it in the past”.

      They know where the exit is. We, the rest of Europe, do not get benefits anymore from using the Deutsche Mark, so to say. The policies of Europe as a whole can’t be designed with only Germany in mind, we have to consider the interests of, say, the Portuguese textile industries, the Spanish toy industries or the Greek tourism industry which has to compete with the much cheaper Turkish neighbor. We need a euro that helps those industries and not just Bayer and Hugo Boss.

      “How to resolve it I’m not sure, but Germany bashing is not it”.

      If the German leadership, media and much of the citizenry would not be so arrogant and selfish, nobody would be bashing Germany. They have earned their prize of hatred with their egoism and lack of pan-European vision (and the Anglosaxon media has helped a lot, mind you: it’s obvious that London and Washington are pleased with this exacerbation of European divisions).

      However the true problem is lack of serious leadership in Southern Europe. If Papandreu would have got the guts to declare a bankruptcy and show the middle finger to the Torika, if Italy or Spain could elect a leader that is not an outright jerk subservient to the Capitalist International and not national interests, if France at the very least would not have been ruled by that annoying bug that is Sarkozy… then maybe things would not have degenerated so fast nor so badly. Maybe the situation would be quite smoother with less dramatic consequences for the common European citizen.

      I truly blame Latin Europe for the mess (France, Italy, Spain – in this order). Not for demanding a weaker euro but for not imposing it right away, for not being able to elect statesmen as leaders but just petty shortsighted politicians easy to bribe or to seduce. If Latin Europe would have forced Germany to concede not in 2012 but in 2008, then we would not be as we are now.

    • That last post of yours is too long to answer properly in the time I have. But it reveals a pretty nasty level of anti-German feeling. You attribute a whole lot of things to Germany that are not its fault. The expansion to the East? A pan-European idea, backed (even driven) by the US, and the countries concerned. The German leaders have not said ‘give us Corfu’, that’s sheer nonsense. They did say, write off 100 billion of Greek debt, and a lot of other sympathetic things (along with some not so sympathetic, but you can’t have it all one way). And they certainly do see other Europeans as partners, but that doesn’t mean, business is charity. German ‘success’ a Goebbelsian lie? Many others would love to live that ‘lie’. And your Holocaust reference is gratuitous and objectionable.
      As for the cuts, they are determined specifically by the Greek government primarily, which was also largely responsible for their needing to be enacted. I agree they should not hit the worst off, but if many things in Greece had been done differently, including proper taxes collected, things would be different. Greece borrowed the money, and has had 100 billion written off so far. You can’t expect to pay nothing back, especially as much of the money was spread around to voters who accepted it. Blaming everything on Germany is just a cop out. And comparing to Haiti is sheer hyperbole. It’s still in Europe, with social provision.
      Germany has no responsibility to lead the EU, unless it is elected and appointed to do so, which of course no one has ever done or is likely to. Germany is always viciously attacked for showing any power or leadership ambitions, how on earth is it supposed to lead? And it’s not ‘plundering Europe’, it gets money only from free trade, and interest on loans of its own money, which it is now attacked for having been too little, yet being now too much! It can’t win. And the leadership and media and citizenry have been quite sympathetic by and large (Bild is just a tabloid), but still get called Nazis for it. So why should they bother?
      Germany should be kicked out? For lending lots of money, much now lost, building infrastructure, selling quality goods, providing interbank support worth over half a trillion, now acceding to higher inflation, and so on? I don’t think so. You are just looking for someone to blame than the ones primarily responsible, and the Germans are the easy target.
      It’s pathetic frankly, and really makes one wonder, why Germany should bother trying to help anyone, when it cops so much hate, for the failings of others, and its efforts to help solve them.

      And try to keep it a bit shorter if you must reply.

    • “The German leaders have not said ‘give us Corfu’, that’s sheer nonsense.”

      What you say is bollocks, the German Bild newspaper has written this! And the Bild is a political opinion leader in Germany isn’t it?

      “They did say, write off 100 billion of Greek debt, and a lot of other sympathetic things (along with some not so sympathetic, but you can’t have it all one way). ”

      Mr. Papandreou says that when he asked German Chancellor Angela Merkel for gentler conditions in 2010, she replied that the aid program had to hurt. “We want to make sure nobody else will want this,” Ms. Merkel told him.

      While everyone accepted that Greece needed fiscal retrenchment, the IMF argued for giving structural changes priority and making the spending cuts gradual, to protect the economy.

      Germany said no: Structural reforms would take place at the same time as drastic austerity.
      You see the selfless and sympathetic Germans wanted to do Greece a favor and MAKE IT SUFFER MUCH MORE THAN NEEDED!

      If you doubt what I say than why don’t you read the WSJ my German propagandist?


      ” And the leadership and media and citizenry have been quite sympathetic by and large (Bild is just a tabloid), but still get called Nazis for it.”

      You want to take us for idiots here! I live in Germany and I have witnessed firsthand the “sympathetic” response of the Germans! Yes you Germans have insulted us repeatedly, you called us fraudster-Greeks, you insulted not just the Greek politicians but all Greeks plus our history and our sacred. You dared even compare your Lutheran religion with our Orthodox believe and boasted that your economies are superior because of your protestant work ethos!
      Even your Merkel didn’t shy away from insulting the Greeks and implying that the Greeks have been lazy and profligate. Plus many of your nationalistic right wing political, lousy buggers.

      So don’t try to fool anybody here. There are many Greeks who speak perfect German and follow carefully what happens in German politics and media!

    • And as for the Euro, if it’s truly too high for a country like Greece (which it probably is), then Greece should leave. The Euro was designed primarily for the core economies, and Greece came in later and by fudging its figures, apart from being a small country on the periphery. The Euro does not exist for Greece’s benefit per se, if anything it’s a guest in it. It’s up to Greece to decide, as Germany has said, and anyone else too, not Germany, and it’s just pure anti-Germanism to always put the onus and blame on Germany, for the problems of others.

    • “And as for the Euro, if it’s truly too high for a country like Greece (which it probably is), then Greece should leave. The Euro was designed primarily for the core economies…”

      Yes the Euro was designed primarily to fit the needs of Germany and its Bundesbank!

      Not even France is benefitting from the Euro and none of the other Mediterranean and peripheral countries! So either the Euro changes to benefit all or all have to leave and let Germany with its DM2-like Euro to feel the heat of revaluation! That would be a dream for you and the others living in Germany, isn’t it my Teutonic friend?

      “The Euro does not exist for Greece’s benefit per se, if anything it’s a guest in it.”

      Does it exist just for Germanys benefit? Is this what you really mean Mr. Deutschland Deutchland Über Alles! This time is over and the Euro will have to become a really COMMON currency or simply just break up just like the EU itself if it continues being just a Teutonic hegemonic monster institution!

    • Steve I will try to be brief, so I will use some external links for documentation:

      “We give you cash, you give us Corfu” was what “Josef Schlarmann, a Senior Member of Merkel’s Christian Democrats, and Frank Schaeffler, a Finance Policy Expert in the Free Democrats” said some two years ago, when the Geek financial crisis was opening. Source: http://eu.greekreporter.com/2010/03/04/%E2%80%98we-give-you-cash-you-give-us-corfu%E2%80%99-german-mps-suggest-greece-sell-its-islands-and-the-acropolis-to-pay-off-its-debt/

      They also asked for the Parthenon.

      They essentially marked the unhelpful arrogant imperialist tone of all German policy in regards not just to Greece but to all Europe. We then realized that it was not anymore the European Union but the IV Reich.

      “Germany has no responsibility to lead the EU”…

      The EU is a loose confederation, it has no elected government. Someone has to lead and Germany is the most natural candidate after reunification. Of course they have forfeited their leadership by now many times, or rather they have abused their dominant position for their selfish benefit, reason why they should be kicked out of EU (not that is going to happen, but should).

      “For lending lots of money”…

      All the money lent is only intended to prevent bankruptcy and save core-European PRIVATE banks. Forced loans like those are known as hateful debt and there is an ethical consensus that they should be left unpaid. When Papandreu finally came to reason and proposed a referendum on this mafioso extortion, they got him out and raised a national unity that could enforce such imposition by the Bankster International, politically led by Merkel and her rabid pet Sarkozy.

      “And as for the Euro, if it’s truly too high for a country like Greece (which it probably is), then Greece should leave”.

      I wrote this some time ago: http://forwhatwearetheywillbe.blogspot.com.es/p/whats-wrong-with-eurozone.html

      The hyper-rigid euro is bad for most of EU in this time of crisis (and possibly before). It’s not just Greece, but Spain, Italy, France, Portugal, Belgium, Ireland and even the Netherlands now. The Eurogroup should have loosened the grip on the euro since 2008 (or earlier) but instead all they worry is about “inflation”, what is not but a pretext to squeeze the popular classes.

      It’s not just Greece but all the Eurozone who are (we are) being squeezed by the idiotic and tyrannic rigidity of a currency that should be at parity with the dollar, not really much higher.

      Also the euro was not designed for… anything. The EMS has been working for decades now in all EU but the snobbish Britain and it’s legal duty of all EU members to join it. Of course, there are no hurries anymore but the design is for all EU. Sadly the control of the ECB is not democratic nor serves the general interests of the citizens of the European Union like myself (only those of certain big companies, who play a destructive role).

    • Aristoteles,

      What YOU say is bollocks. Bild is a tabloid ffs. Papandreou is not exactly the most credible guy in the world is he. But even if Merkel said that, it makes sense. If everyone carried on like the Greeks are Europe (the EU) and the Euro would be over. You ignore that the ‘austerity’ is still more, with the loans you are getting, than what you would have otherwise. Your country is bankrupt and living on credit effectively. And many Germnas have expressed sympathy nevertheless, and Merkel pushed for the 100 billion writetoff, for which she just gets more abuse. Maybe she should not have bothered. Then you get potty with nonsense about religion. Whatever.

      As for the Euro, it was originally a compromise between German and French requirements, and Germany made some sacrifices, like yielding to French insistence on no automatic penalties for Maastricht budget transgressions, and converting at a rate favourable to the others, who also benefited by having access to cheaper credit than before, thanks to th German anchor, improving their positions and service costs early on. That they blew it later is their fault. And the Euro only exists because of Franco-German cooperation, as does the current bailout and conditions for Greece (so blame France too if you don’t like it). Greece is by comparison a minor guest, and if it’s just going to cause endless trouble, then it’s better it leave.

      As for your “Teutonic” references and Nazi implications (stated openly in Greek discourse), they are irrelevent and pathetic, apart from reprehensible. And only bear out the sense that this is just a con for Northern money (a hundred billion so far at least). Collect your own taxes properly for a start.

    • “Aristoteles, What YOU say is bollocks. Bild is a tabloid”

      Bild and the whole Axel Springer Publishing Group is THE political mouthpiece of the nationalistic German right-wing parties and political interests (CDU, CSU plus some nationalistic liberals)!

      Bild, Axel Springer media group and some other conservative news papers and magazines started a massive agitation and elaborated smear campaign against Greece in particular in order to create a scapegoat for the German masses and so to justify the subsequent punishment of all Greeks! That alone reminds many of Reichspropagandaminister Goebels and the way Nazi-Germany instituted its ferocious antisemitic hate campaigns and agitation!

      Sorry, you might not want to hear it but this is what the Germans remind many Europeans of again. The ugly past of Germany and that in a way Germany is again behaving like a madman.

      “And many Germnas have expressed sympathy nevertheless,”

      Its pathetic how the Germans have reacted, I am about to cry about so much sympathy from the Germans 🙂

      I want to thank all Germans for their sympathy and for all the insults and the punishment of all Greeks and all sufferings which the Greek people have to sustain.

      “Then you get potty with nonsense about religion. Whatever.”

      I don’t get potty, it was a stupid German agitator in a newspaper talking about diligent protestant work ethics versus lazy catholic/orthodox Mediterraneans!!!


      “Greece is by comparison a minor guest, and if it’s just going to cause endless trouble, then it’s better it leave.”

      I guess in your mind the EU and the Euro just exist to satisfy German desires?
      So why do you complain when others talk about the Fourth Reich? You behave just as if the EU is Germanys new Lebensraum! Incredibly arrogant and dictatorial.


      “Collect your own taxes properly for a start.”

      You are absolutely right with that my Teutonic collocutor (Teutonic, is just another word for German, I didn’t mean to insult anybody 😉
      Now we won’t stop there. After collecting all taxes properly, we will collect all outstanding war reparations plus the forced loan which Nazi-Germany imposed on Greece.
      Thanks for your advice indeed it is time that Greece collects all its outstanding receivables!

    • Maju,

      So two guys maybe said that, perhaps it was a bit of a joke, but anyway assets for money is standard practice, even if the sites mentioned are not exactly such a good idea. But in theory Greece could lower its debt by some sort of exchange, of less vital assets (apart from the usual privatisations), or some temporary rights. Not that it has to, but it could. To equate that principle to the 4th reich is just foul hyperbole. The real problem is that Greece has racked up massive debts without any other way to pay it back, than the current program (and that only with a huge writeoff).

      Germany could never lead because the others, France especially, won’t let it. You just don’t understand the politics.

      By lent money I meant the original loans at good rates, far better than Greece could have gotten otherwise. But Greece did not use them well, and the government lied about how much it was borrowing. And no loans were forced, not even the bailout funds – they had to be passed by your parliament. And 100 billion for free, remember? Not ‘odious debt’, sorry. To claim so just makes you seem like swindlers.

      The Euro was indeed designed to be a stable currency for the core economies, and any others that could converge their finances could join. The problem was that the original German proposals for strict discipline (like in the current Fiscal Pact) were blocked by France especially, and then other members that squeezed in abused it, and now attack Germany, because it’s an easy target, and to get out of their obligations. It’s sheer hypocritical nonsense. The only fair complaint is that possibly some at the bottom are hit too hard, but that is decided by the Greek government also. And caused by it to start with.

      The anti-German rants just don’t cut it – Germany was always clear about its approach, and terms.

    • “So two guys maybe said that, perhaps it was a bit of a joke”…

      The German political stablishment set the tone of the process with that statement. In fact they are just short of getting Corfu in exchange of… nothing – because all the money goes back to core-Europe’s bankers. They have got every single profitable public company in Greece, reducing the income of the Greek state by a lot with that: it’s total plunder.

      Greek citizens are not idiots (most aren’t) so they are voting for options that challenge that neocolonial plundering.

      “To equate that principle to the 4th reich is just foul hyperbole”.

      Not at all: it’s exactly as the plunder of Namibia and the genocide of the Herero people, it’s exactly as Hitler’s invasion of Poland first and the USSR later in search of resources and slaves to save the German way of life, whichever that is.

      Surely Greece can’t provide enough to satisfy the greed of the core-European bankster establishment but that’s why they are also plundering Italy and Spain and Ireland and Portugal and even France by the West, and Poland and Hungary and Latvia and all the rest by the East.

      “Germany could never lead because the others, France especially, won’t let it.”

      Are you joking? In the last decade-plus all what Germany said was God’s Word, so to say. France just acted as foreman or at most minor partner, never ever questioning the German impositions: the euro must be like this, the EU decision making system must be like that, what happens if the people says no in referendum? ignore them, what happens if 75% of the Eurozone is collapsing because of the new DM, aka euro? punish them with austerity for the poor and more wealth for the rich.

      This predatory oligarchic model we are suffering as of late is ethically wrong and conceptually short-sighted as mole – and is collapsing as we speak. But you will defend the Berlin Consensus… fine: you are not the only short-sighted one, but don’t expect the bulk of us European citizens to put up with all this class war from top down.

      “You just don’t understand the politics”.

      I understand them all too well. It’s you who either do not understand anything about class war in Europe or pretend not to.

      We, workers-citizens of the European Union, expect that, if bank stockholders get some benefits from all this social arrangement, we citizens and workers do too. This model of “social capitalism” is being sabotaged from above (apparently now that the USSR collapsed all concessions of the last decades are not necessary anymore – or so they dream). Now stockholders and managers get more benefits than ever but we are being squeezed to pay for that, even at the cost of the destruction of our national economies and even the overall economy of the EU.

      This is obviously asking for a revolution and Greece is the main lab. And the result is quite clear: c’est fini!

      “But Greece did not use them well”…

      Since two years ago Greece has been ruled by an administration imposed by the Troika and controlled by it in all aspects. Greece has done nothing but revolting against such imposition almost day after day.

      “… they had to be passed by your parliament”.

      I’m not Greek, I’m Basque!

      We know well that the Greek Parliament has been illegitimate since Papandreu began applying austerity policies against his electoral program. You can’t be elected on a social spending ticket and pretend that such support allows for the most draconian neocolonial plunder ever! No!

      The result is that, if everything goes as normal, a Left government will be organized after June elections and undo all the farce imposed in these two years, or most of it. This is important in order to sanitize European politics: the Troika, formed by non-elected banksters, can’t rule EU: we need a democratic government that controls the ECB and not vice-versa.

    • Aristoteles,

      I repeat, Bild is a tabloid, they only just took the tits off the front page. They are on the level of the Sun at best. And some Greek media have engaged in equal or worse tactics.

      Regarding your sarcasm about Germany, it is rather pathetic. First Germany (along with France etc) lends you vast amounts of money at cheap rates, then when you can’t repay, you get a massive writeoff, and more money to help pay your bills. So what exactly is your problem? That you can only run a 5% deficit instead of over 10? That the debt funded welfare has to be cut, because you can’t borrow so much, due to a slight repayment problem? When Greece actually funds its own expenditure it can do what it likes, until then, creditors will have some influence (and btw France was a bigger creditor than Germany, and backed the same policies).

      And the Euro was designed for the core economies primarily, not Greece or other peripheral latecomers, that’s just a fact.

    • Technically, I recently found that I’m not Marxist (although I am indeed communist or radical socialist or something in that line) because I have major theoretical differences with Karl Marx on economy: he, like you, seems to believe that money is real value and not, as I do, a mere counter with only very relative value. He also seems to think that value is created out of work (only) instead of understanding that wealth like energy can only be transformed and transferred but never created ex nihilo.

      But well… the key issue #1 here is how much of that debt was acknowledged by the Greek People and is therefore legitimate and how much was induced to the Conservative government to borrow on bribery and manipulations and is therefore hateful debt and not legitimate.

      The key issue #2 is that Greece, like everybody has the right to bankruptcy: our society considers that there are ethical limits to what can be extracted from someone because of debt (no slavery, no slaughterhouse and not to take the basics for a dignified life).

      The key issue #3 is that Greece is a sovereign nation that can dictate its own terms ultimately.

      And the key issue #4 is that the first responsibility of Greece as a society and state is with its own people. For example, nobody asks Germany to pay its debts (and Germany did never pay war reparations to Greece, mind you, even if it did occupy Greece quite brutally) at the expense of the German People, just out of the surplus, because otherwise we’d get into a decadent and destructive spiral like that of the 1920s and 1930s.

      But then Greece does not have the economic and military might of Germany, so they can be squeezed till the last drop without contempt (plus they are not a Germanic nation like Britain or the USA), that’s what you mean, right?

      Those are the real issues.

      While it’s possible (and likely true) that France and others also bear some responsibility, that does not exempt the current German regime from being the less tactful and less diplomatic (and also less solidary) leader (co-leader if you wish) in the history of the European Union. Even Helmut Kohl apparently said that Merkel was “destroying my Europe”, although he later denied saying that.

      “And Germany has paid reparations to Greece”…

      That’s not true. In another gesture of disdain for everything Greek, the allies persuaded Greece not to insist on claiming war reparations after WWII.

      “but if you are a typical example [of Basque], I do not think I will bother”.

      I don’t think I’m typical at all of anything. What I meant is that other European citizens, Basque or whatever are indeed deeply worried about the direction of all this misgovernment in EU, misgovernment largely emanated from Berlin.

      I don’t think you are even European citizen yourself anyhow. So let us Europeans solve our own problems. We do not need any more Goldman Sachs meddling.

      “you can’t be elected on a social spending ticket and spend lots of borrowed money, borrowed in bad faith at that (with false figures) and expect not to pay any back either”.

      This waste is all blame of Nea Demokratia (I don’t think they had any “social spending” program but they did waste the money in their private corruption affairs). Sadly this corrupt pro-Troika party still gets some 20% of the vote. The other culprits are Goldman Sachs (but they are being rewarded with the BCE and Italy and what not) and the EU itself that tolerated and even promoted all the scheme.

      None of them is in prison but instead you and your kind are trying to make the Greek People pay for the guilt of these.

      I say: let’s expropriate Goldman Sachs’ assets and those of all the businessmen who have benefited from the corruption promoted by ND. Let’s not make the Greek People pay for the crimes of a few. It’s governments and businessmen who are responsible (guilty possibly), not a whole nation!

    • Maju,

      Your Marxist rhetoric can’t disguise the fact that Greece borrowed the money and incurred the debts freely. When one borrows, one has to repay. Greece has gotten a huge writeoff, 100 billion, so it’s not even repaying the full amount by a big margin. And assets for cash is “exactly as the plunder of Namibia and the genocide of the Herero people, it’s exactly as Hitler’s invasion of Poland first and the USSR later in search of resources and slaves to save the German way of life”??? You gave the game away there with that piece of outer space nonsense. What complete and utter tripe. You clearly have not got a grasp of reality.

      Beyond that I can’t be bothered arguing with such nonsense anymore, but I will point out that Germany has never had the overall authority in Europe, and it had to accept French demands re the Euro. And your attacks on it bear out my point, it cannot even begin to lead or even exert influence, without being attacked viciously. There’s nothing plunderous about expecting some repayment of freely incurred and spent debts, and Greece got 100 billion written off, which is far from plunder. And Germany has paid reparations to Greece, as well as EU transfers, and Greece also received funds after the war effectively paid for by massive exactions from Germany by the Allies, amounting to trillions in today’s money (ie taken in total).

      As for your being Basque, I had an interest in it, but if you are a typical example, I do not think I will bother.

    • Sorry the bit about reparations should have been addressed to Aristoteles, this thread is getting too long to read and respond to properly, and it’s not set up very well for it.

    • And Maju, you can’t be elected on a social spending ticket and spend lots of borrowed money, borrowed in bad faith at that (with false figures) and expect not to pay any back either.

    • Steve: I think we are beyond facile repetition of the standard neoliberal propaganda, now. Nor does your insistence that Germany “is playing by the rules” make any sense at all — since it is not doing so. The reality is that there is a global banking crisis, and it has impacted very heavily on the eurozone. The cause of and the solution to the problem have nothing to do with Greece, and those who persist in pretending that the problem is Greece show their ignorance of the economics of Europe. Equally, if Greece should be forced out of the eurozone by the rabid German right wing, then it is almost certain that the euro and the EU itself cannot survive. The glib jargon word “ringfencing” is now being used by stupid journalists, who just use words instead of dealing in concepts and practical policies. The concept is invalid, unworkable.

      If my analysis is correct, and I am fairly sure that it is, then all of your rants here are completely irrelevant. Whatever it takes, whoever has to lose money (including Germany), and however many banks have to fail in order that some banking survives, — this is all that matters. So, just cut out the propaganda: it is boring to read and completely stupid to write it.

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