A Hobson’s Choice for Europe? Reply to Tom Hirst’s piece on ‘What Needs To Be Done’ in the Eurozone

Tom Hirst, of Mindful Money, has posted a thoughtful piece on the Euro Crisis, with special emphasis on the deathtrap that Spain is now in. His analysis of the situation is spot on: so far, Europe’s responses to the Crisis have been piecemeal, disconnected from one another, and based on the denial that this is a Systemic Crisis (that requires a systematic approach) rather than a Greek Crisis that is separate from the Irish Crisis which is different to the Spanish Crisis etc. His apt conclusion is that: “The failure to frame the solution to the fiscal woes of Southern European countries as a common cause…is having real-world implications and is driving fractures in the union ever deeper.

In the last section of his article, Tom addresses “What Needs To Be Done”. Here is his verdict:

“Firstly, a campaign is required to candidly explain to the public what the consequences of a Eurozone collapse would be and allow them to vote on it. If they decide that it is a risk they are willing to take then they can choose either to continue with current policies or begin a discussion on a route to a more orderly dismantling of the monetary union. If, however, the majority wish to remain part of the euro then this would provide the democratic mandate to institute thoroughgoing reforms necessary for its long-term survival. These would have to include removing the conditionality from the ECB’s Outright Monetary Transactions to cap borrowing costs as well as some form of fiscal transfer from core to periphery. Only then would a comprehensive package, such as Yanis Varoufakis and Stuart Holland’s Modest Proposal for Resolving the Eurozone Crisis, become plausible. Contrary to what eurosceptics assert, it remains possible for structural weaknesses to be addressed and a democratic solution reached without the full or even partial destruction of the single currency. Yet, as the situation in Spain demonstrates, for policymakers to achieve this political timidity is no longer an option.”

I could not but agree with the general thrust here. But I do have one significant qualm. Tom seems to be assuming that a referendum on the Eurozone will be couched as a choice between (a) the current policies and (b) a rational alternative that would transform the Eurozone from an unsustainable to a viable currency union. Alas, this would require a German leadership that wants to resolve the Crisis and is prepared to bind Germany irreversibly to this re-designed currency union. And here is the rub: The very reason this awful Crisis was allowed to go on and on and on is that Germany’s elites have not resolved to do this. Indeed, if anything, they are shifting in the opposite direction, especially now that the Bundesbank has become the de facto champion of a Eurozone breakup. Thus, if a referendum is put to the German people, it will resemble more of a Hobson’s Choice, than any real dilemma on Europe’s future.

71 Comments

  • I agree. So what’s the solution? Germany exiting the Eurozone. This would spare the rest a lot of trouble. Fact is you can’t have a currency union with folks who don’t even understand their very own Goethe and his Faust 2nd part.

    • The solution? The first step would be to wake up and face reality. The Eurozone was never ment to be a transfer union, especially not for transfer recepients who refuse to take responsibility and reform properly so that transfers might stop one day. It was always ment to be a monetary union with a strong, stable currency and a Bundesbank-alike central bank. The second step would be to leave the Eurozone if a country cannot cope with these conditions or doesn’t like them. The Euro is simply too expensive for Greece anyway. Mr. Varoufakis is completely wrong about the motives of German leaders. They and most Germans are more prepared for more European integration than the citizens of most other countries. But they are not prepared to food the bills of countries which are so much less competitive, the bill would simply be too huge. It is 100% sure that Germany will not leave the Eurozone, but it is not so sure that the Eurozone will become smaller.

    • I may be well and truly wrong, deluded and erroneous in my analysis. My question however is: Why are you so interested in commenting on this blog? Well, this is not strictly speaking true: I am not that interested. So, I shall ask you courteously to take your views to some other blog that will benefit from them. As of now your presence is not welcome here. Good bye.

    • Probably this would be the optimal solution for peripheral Europe, but will never be accepted by the EU political elite (which is determined to have one Europe and one currency), nor will it be easily accepted by Germany which cannot compete if it returns to a high-value DM. Of course, these reasons are why the situation has dragged on and will continue to do so either until there is an adequate structural solution (unlikely from these idiots) or something very nasty happens.

    • “The Eurozone was never ment to be a transfer union, especially not for transfer recepients who refuse to take responsibility and reform properly so that transfers might stop one day. It was always ment to be a monetary union with a strong, stable currency and a Bundesbank-alike central bank.”

      Name one monetary union that didnt have to function as a transfer union and yet was sustainable.An automatic transfer mechanism is one of the 4 characteristics of Mundell’s optimum currency areas.So you are practically saying that the Eurozone was never meant to be an optimum currency area.
      Well if that is true, then i guess y’all cant complain.You got what you were looking for.And you cant blame specific countries for that either.

    • Crossover – You brought up something I had never heard of with Mundell but having done a bit of research I think you have failed to understand the point made by Stephan.

      Mundell/OCA has got absolutely nothing to do with Bundesbank philosophy. Zero.

      “Name one monetary union that didnt have to function as a transfer union and yet was sustainable.” – I don think anyone is saying there is anything wrong with a transfer union as long as it is done on an individual/person-by-person/entity-by-entity basis ie if it is voluntary.and controlled by the people through their day-to-day personal and business lives.

      The idea of an involuntary transfer union, ie one controlled by government/ECB is completely absurd.

      Let me see if I understand the principle correctly.

      German builds cars, exports to Greece, Greece sends money to Germany to pay for the Mercedes and then the Germans who built the car are supposed to hand a small part of their wages back to the Greeks who bought the Mercedes they made. So German workers are supposed to help Greeks buy the Mercedes they make.

      Is that the plan?

      And if so, wouldn’t it be much much easier if Mercedes simply gave a bigger discount on the cars it sends to Greece that way you don’t have to build up a bureaucracy to deal with the money transfers and you don’t need to take back the money that has already been given to the Mercedes workers?

      In other words, you help the Greeks by giving a bigger discount on the exports from Germany to Greece.

      Surely that is the logical process.?

      Which leads on to, why, if giving a discount to Greeks on their Mercedes helps Greeks buy more Mercedes why doesn’t Mercedes do this already?

      If you think Germany should be punished for its economic policy the transfer union is akin to price fixing. A transfer union is limiting the profits German businesses, as a whole, can make in Greece.

      If they take 100 million Euros out of the Greek economy the ECB or whoever, is going to step in and say that is not correct and that Germany must give back 10 million Euros? On what basis can they make that decision?

      Who is going to judge what an acceptable profit is and how are they going to calculate the figure?

      Please tell me I am wrong but the whole idea of a transfer union seems dangerous in the extreme as it leads all Europeans into a centrally controlled fascist government system.

    • @ Crossover

      “You got what you were looking for”

      In the case of Germany: no. The vast majority of the Germans wanted to keep the Deutsche Mark. Unfortunately, the Germans were never asked by their ‘elites’ if they want to join this completely unsustainable currency union. Which BTW was forced upon Europe by the French.

    • VSS – Which BTW was forced upon Europe by the French. – This is becoming more and more recognised

    • @VSS

      “In the case of Germany: no. The vast majority of the Germans wanted to keep the Deutsche Mark. Unfortunately, the Germans were never asked by their ‘elites’ if they want to join this completely unsustainable currency union. Which BTW was forced upon Europe by the French.”

      It really amazes me how easy it is for you to have double standards.Although i do believe it (and know it), when you say you were never asked, its crazy that you talk about us all the time as if we were asked about nearly everything.Further more,you even go as far as to exhibit Germany as a pawn of the French, but it is hard for you to accept that Greece is a pawn of the Germans and the French aswell.

    • @ Crossover

      The situation Greece is in, in a lot of respects but most of all w.r.t her ‘elites’ is comparable to the former German Democratic Republic in her final years. Not to nowadays, unified Germany.

      So, the Greeks should take as example what the eastern Germans did in ’89. Throw the ‘elites’ out of power.

      No double standards at all.

    • @VSS

      What is the conclusion?That both Greeks and Germans were never asked (or informed i may add) about anything that had to do with the euro and the implications of such change of currency.But it looks to me that you even have double standards regarding elites too.Greeks need to overthrow their elites but Germans dont.I guess you shouldnt say again you werent asked then, your last comment sounds like you dont have a problem with not being asked.

    • @ Crossover

      “Greeks need to overthrow their elites but Germans don”

      Which part of ‘take as example what the eastern Germans did in ’89’ is it that you don’t understand? When will you ever understand that the mailaise in Greece is Made in Greece? Stop pointing at others. Do the things only the Greeks themselves can do.

    • @VSS

      I only said that you keep chewing that “we were never asked” gum, but you only see a need for the Greeks to overthrow the elites.This must mean that in the end you dont really care for not being asked since you dont see a reason for YOU to do the same with YOUR elites.

      “When will you ever understand that the mailaise in Greece is Made in Greece? ”
      All this “mailaise” wouldnt have happened if we stayed out of the euro.AND WE WERE NEVER ASKED.Does this sound familiar at last?Please dont make me break it down for you even more.

    • Crossover – It wasn’t all roses and harp music with the Drachma. It was common for inflation to be 20% a year.

    • @ Crossover

      Stop whining like a baby.
      Don’t complain.
      Dont wait for a savior.
      Don’t accuse others for your failure to do something to change the situation.
      Do something to change the situation.
      Throw your ‘elites’ out, as the eastern Germans did it with their ‘elites’ in 89.

    • So you still want me to believe you dont have double standards?You say you werent asked about the euro and when i say that it was the same for us you say im whinning.Right.

  • “The very reason this awful Crisis was allowed to go on and on and on is that Germany’s elites have not resolved to do this”

    Well, no. The reason that this crisis started and persists is that so called ‘elites’ of certain countries permanently blame others, preferably the Germans, for the continuing failure of said elites to do what only they themselves can do, in their own countries, to improve the situation – structures, mainly. Public spending, also. Taxation, of course. And so on.

    It was not the Germans who brought the crisis to Greece et all and increased it, until the whole continent was in flames. It was local ‘elites’. In the case of Greece: Greek party leaders, Greek economists, Greek public ‘servants’, Greek tycoons… Get the point? Greeks, not Germans. Very simple, and very true.

    And locigally, also true is: only the Greeks themselves can do what is required to solve the problems the Greeks caused Greece. Face reality, Yanis.

    • Sorry, but you are just off your head. The eurozone crisis is not about taxes and public expenditure: it is exactly the opposite, since the fiscal problems of Europe derive from the international banking disaster and the consequent eurozone crisis.

      I presume that you read too many books like “Alice in the Looking Glass” as a child, which is why you get everything back to front.

    • VSS – Exactly on the money. The problem is simple to understand for some people and simple to solve. To get an idea of how crazy the Greek government is. To cut government by the amount asked for by the Troika they simply have to spend 96% MORE than they did in 2003. http://independence4wales.com/2012/greek-government-budget-cuts-answer-spend-96-more-than-in-2003

      The whole situation is an utter sham designed to manipulate the Bundesbank at the expense of the Greek taxpayer.

      “Guest” – “the fiscal problems of Europe derive from the international banking disaster and the consequent eurozone crisis.” – So you think it is okay for countries and their people to do be so vulnerable to disaster and crisis? If not then you need to sort out your taxes and expenditure, mainly reducing expenditure.

    • It takes two to tango. Corruption in Greece was encouraged by German companies (see recent Siemens settlement). Loans were hoisted upon Greece so that Greeks could splurge on German products (from automobiles to exclusivity of solar panels) and while the financial crisis was starting to unfold, Germany and France were selling tanks and navy frigates to a bankrupt state in need of financial help. Do not be so eager to throw the blame in one or the other direction.

    • “Richard”– pls get your numbers right, the source that you are quoting is quite misinformed. Look for some reliable source (e.g., the IMF’s web site) for better figures.

      If you analyze an economy in terms of nominal spending you could be seriously mislead. Besides the (obvious) effect of inflation over 10 years, there are other factors. For example, in 2003, Greece did not have to support its pensioners (and the rest of its public expenses, including unemployment benefits) with 30% of its workforce unemployed.

      But, you are quite correct that Greece could certainly return to the living standards of 2003 without it being so terrible. Unfortunately, this is not what is happening (I wish! I live in Greece).

      The average living standard has already declined to levels seen in the early ’90s for millions of people. But even this would be tolerable, if it was near “the bottom” for the Greek economy. What makes things look desperate for Greece is that, with the new measures implemented, many people (and businesses) will return to an economic level not seen since the 70’s.

      So, although I don’t really get what you mean by

      “…The whole situation is an utter sham designed to manipulate the Bundesbank at the expense of the Greek taxpayer…”

      all I can say is, don’t expect to get back those loans (the so-called “rescue package”) you gave Greece as a taxpayer. As the saying goes, “you will not receive from he who has no possession”.

      And if you think that Germany can take a loss from the “damn Greeks” and move on (after all, Greece is a “small” country) , I suggest that you take a look at the amounts lent by German banks to Ireland, Portugal, Spain and (maybe) Italy. Do you believe that German banks will get all of this money back? Hahahahaha…..

    • Vasilis – “pls get your numbers right, the source that you are quoting is quite misinformed.” – Okay, The Euro is worth 30% less than 2003 http://www.tradingeconomics.com/greece/inflation-cpi – So the Greek government has to spend 66% more than in 2003. I apologise.

      “For example, in 2003, Greece did not have to support its pensioners (and the rest of its public expenses, including unemployment benefits) with 30% of its workforce unemployed. ” – Your diggressing from the point. The fact is the Greek government is over 66% larger than in 2003 adjusted for inflation. Surely a high unemployment rate of 30% makes the Greek government look even more idiotic?

      About the situation in Greece. It has been self inflicted by the Greek politicians. I cannot think of measures the Greek government could have taken to make the situation in Greece worse than what it is today.

      Greek polticians are tools of France, USA and the EU. The end game here is to islolate Germany. The plan is going according to plan. I dont care about Germany, I care about personal freedom.

    • @ 2012GR

      “Loans were hoisted upon Greece so that Greeks could splurge on German products” is the funny saga of predatory loans again *g*

      In Germany and the rest of the world, the banks offer loans, and one can decide freely to reject them. And even if one decides to accept a loan, he still can freely decide, on which product to spend it.

      Greece must be the only place on earth where a) the banks can force the customers to subscribe to a loan and b) the money must then be spent on German products

    • Were Greece and individual Greeks forced to take out loans from Germany and France? Did Athens receive demarches from those countries demanding that the Greek state buy their weapons systems? Is Siemens responsible for the Greek tolerance of bribery going back decades?

    • 1. No Greek was forced to take loans from German banks. Just like no American was forced to take on subprime mortgages. However, when you actively encourage people that you know cannot afford your loans to take them, you bare at least 50% of the responsibility for the tragedy that ensues.

      2. Regarding defence systems, yes, the Greek government was put under enormous pressure to buy German weaponry. Unbearable pressure – often accompanied by implied threats regarding Cyprus, Turkey etc.

      3. Siemens: Since the late 1950s, Siemens has been actively bribing Greek politicians. In many cases, Siemens offered bribes even when they were not asked for by officials.

    • Yanis – 1. No Greek was forced to take loans from German banks. – This is not true, the Greek people had no say in the enourmous growth of the Greek government and the resulting debt which is in their name.

      2. Regarding defence systems, yes, the Greek government was put under enormous pressure to buy German weaponry. Unbearable pressure – often accompanied by implied threats regarding Cyprus, Turkey etc. – Pressure & threats from who? Probably NATO

      3. Siemens: Since the late 1950s, Siemens has been actively bribing Greek politicians. In many cases, Siemens offered bribes even when they were not asked for by officials. – this is a matter of public record. German companies have been paying off politicians round the world, this is not denied by German firms and it was not illegal under German law although this may have changed recently.

    • “and b) the money must then be spent on German products”
      Either you like it or not (im sure you liked it) the money was INDEED spent on German products.Thats why your economy has started to follow the same trend just like the rest of the eurozone.Thats what happens when you kill demand.Thats what happens when you shoot your own feet.

    • There is a notion here that the foreign debt of Greece might have built up in similar fashion as the US sub-prime debt built up. That is, of course, based on a confusion.

      In the American mortagage market, particularly in the sub-prime segment, debt was virtually placed on the shoulders of people who had no idea what they were getting involved in. To be a bit extreme: mortgage salesmen who lived off commissions told uninformed (if not uneducated; if not nearly illiterate) people, some even unemployed, that they were going to get rich by borrowing money.

      In Greece, instead, virtually the entire foreign debt was contracted by the state itself, by the Bank of Greece and by Greek banks. Only a tiny fraction was contracted by “other sectors” whereby most of that was probably large public sector corporations. The Greek foreign debt was therefore contracted by very few people and probably the financially most sophisticated people in the country.

      Greece’s Public Debt Management Agency as well as the Bank of Greece always had an extremely high reputation EU-wide for competence and professionalism (if I recall correctly, there were several former Wall Streeters employed there). I would like to think that Greek bankers who contracted foreign debt also knew what they were doing.

      My point is: the notion that there may have been naive borrowers who had been steamrolled by fast-talking foreigners into taking up debt which they actually did not want is a fantasy.

      Regarding the often-repeated notion that Greece was forced to buy arms and literally forced to take bribes, it would be helpful to be offered some specifics here. Switzerland has been buying arms for much longer than Greece and Siemens has been an important player in the Swiss economy for much longer than in Greece. It is not known, however (at least not to me), that Switzerland was ever forced to buy arms or that it was forced to accept bribes from Siemens.

  • The ironic thing is that had Germany intervened a long time ago – the cost to their nation and taxpayers would have been not far off the cost of integrating East Germany. The longer the can has been kicked down the road, the more zeros have been added onto the eventual cost.

    I don’t think any of the European leaders have been honest about the stark choices in front of us and they have been guilty of not co-operating and hoping it will just go away when we get growth.

    • Dear bluedeckshoe
      Just read your post including the sentence:
      “The ironic thing is that had Germany intervened a long time ago – the cost to their nation and taxpayers would have been not far off the cost of integrating East Germany”.

      I agree that had the crisis been dealt with earlier then overall fixing things would have been cheaper.

      But it would have been politically completely impossible for German leaders to tell their electorate in, say, 2009 that unfortunately we have to give Greece e.g. EUR 100 billion – and that this was a bargain because it was cheaper than the incredible transfers Western Germany paid for integrating Eastern Germany.

      The German reunification has not been handled efficiently – and that was probably also to some extent inevitable. Different background there: Eastern Germany suffered more than Western Germany from 1945-1989 both in terms of living under a dictatorship and in an economically inefficient system when both (East and West Germany) were equally to blame for World War II. So some sort of compensation, even if economically not efficient, was acceptable – and possible. But what was (just) possible to handle for 65 million West Germans in order to integrate 16 million East Germans can’t work for 65 million West Germans (the east is still economically weak and a receipient of West German funds) in order to “integrate” (?) hundreds of millions of fellow Europeans. This is way beyond Germany’s means.

      So the only way for Germany to politically and economically survive this is to help a little but make sure that the major part of the adjustment is actually handled in the individual countries.
      Spain, Italy and probably even Greece are nowhere near as run-down as Eastern Germany was in 1989 (believe me – I travelled there). They should be able to sort themselves out. With a little help from the ECB – and accepting realities such as that there is no way you can live beyond your means forever.
      Ultimately, Germany won’t accept permenent major transfers – and even if it was willing to accept that, it would never be enough. 65 milliion West Germans can’t lift hundreds of million other Europeans into economic heavens. Simply impossible. And would not be seen as fair from a West German standpoint: e.g. Italy is roughly on a similar level in terms of private wealth – why does Germany have to “save” them when it is no rocket science to adjust Italy into a system that is sustainable, efficient enough and able to carry on without transfers from outside?

      I guess higher inflation and some amount of debt monetarization by the ECB will have to be enough – the rest has to be done in the individual countries.

      Germans are being told that they benefit so much from the Euro. This may be true or not (I don’t really know) but the mood is that if the Euro is a win-win thing then fine. But if it means Germany will have to subsidize the rest forever, then Germany is better off without it. Germany was quite happy with the DM and a one-off massive blow to the economy for reintroducing the DM, loosing investments denominated in EUR because the new Peseta, Drachma, Lira, etc would depreciate are in most Germans’ eyes prefereble to paying others forever. Germany may even benefit mid- to long term: If Germany was more focused on the domestic economy and less export-driven, then this would probably be a lot healthier for everybody.

  • We can do many things but one thing that needs to be done wont happen , ever.

    That is kill the bankers first , then the politicians or just simply reconstruct the damn banks , goverment should take control of them after etc etc.

    Instead we get quantum easing , bailouts world recession and so on.

  • Your position, for some years now, that

    “The very reason this awful Crisis was allowed to go on and on and on is that Germany’s elites have not resolved to [bind Germany irreversibly to this re-designed currency union].”

    is, I believe true.

    But surprisingly, the follow-up question of “why shouldn’t Germans (elite or not) be
    reluctant to commit?” has only been answered on economic terms, basically along
    the argument that “if they do not commit, the EZ will collapse and that will lead them to
    recession (and the south to stagflation)”.

    If I were German however, I would also be thinking about democracy. The day Germany commits to the euro, Mr Draghi (and his gang, ECB’s governance bodies) becomes Germany’s de-facto overlord. It won’t matter what the people (or the elites) of Germany choose as the direction for their country in coming years (be that keynesian, neoliberal,
    socialist, fascist, whatever…), it will be Mr. Draghi’s political philosophy that will be implemented.

    In a nutshell, Germans should rightly fear that “bind(ing) Germany irreversibly to this re-designed currency union”, is just exchanging their democracy (such as it is) with bank(rupt)ocracy, until (and if) the EU evolves into a federation (with no certainty that it will be a *democratic* federation, given all the China-praising that proliferates among international elites these days).

    The same argument applies to Greece, and indeed any of the countries whose elites have enthusiastically committed irreversibly to the euro, via their “rescue plans”. In fact, the outcome of their commitment so far reinforces the message.

    So, Tom Hirst’s proposition that:

    “Contrary to what eurosceptics assert, it remains possible for structural weaknesses to be addressed and a democratic solution reached without the full or even partial destruction of the single currency.”

    remains to be proven. It seems to me that, unless the common currency is (fully or partially) destroyed, you can have either (a) structural weaknesses adressed, or (b) a democratic solution (or rather, governance), but you can’t have both.

    (Btw, what is the opposite of euro-sceptic? Euro-faithful? Euro-dementiac? )

    • What you are talking about is the heart of the European geopolitics for the last 150 years. Germany was asked to choose among these choices again and again. You know the results.

    • Vasilis, you’ve made some good points, however, Germany’s elites don’t give a fig for democracy, and they are working very hard to hang on to the power of the Bundesbank. The German people have been so misled by their leadership that they think like VSS, below, and other’s on this blog who believe that the banking crisis in US had nothing to do with EZ’s woes. The bankers’ coup that happened in the US has also happened in Europe; that’s right, “derivatives, weapons of mass economic destruction” in Warren Buffet’s memorable line were adopted as the wave of the future of finance everywhere in Europe, plus making ‘liars loans’ to sovereigns.

      The struggle that matters is between Bundesbank and ECB – bank against bank. The Germans or any other Europeans who might be “thinking about democracy” are mostly unaware of what is going on. Obviously, you’re thinking about democracy, but most are not – if they were they would have voted out the regimes in Europe who have taken the side of the bankers, particularly in Ireland and Greece. But Germany as well. Propaganda works.Since the very beginning of the Doha conference, US bankers and financiers have been preaching the same neo-liberal faith based economics to any and all who would listen, and many in Europe did. The neo-liberal Economist magazine has been on a rampage about ‘structural reform’ in Europe (read crushing labor) for 20 years. The issues can’t be addressed honestly, apparently, by any of the major players.

      I think the word you’re looking for is euro-supporter; I’ve seen euro-faithful used in opinion pieces by euro-skeptics.

  • “The ironic thing is that had Germany intervened a long time ago – the cost to their nation and taxpayers would have been not far off the cost of integrating East Germany:

    Germanys weakness is its arrogance. they thought that the crisis wouldnt touch them for some reason.

    They also thought that by increasing their exports to china by 5% wil no longer need european south.

    Thing is Germany not only did not manage that but the opposite happened. .

    China drop to 7% maybe 7,5% for 2012 the 20 year lowest and by that both germany and u.s export fall.

    now Germany for the first time will have a recession and surprisingly the last few days after these news , the Greece will leave eurozone nonsense stopped .

    Thats because Germany now needs south once again to boost their exports , too bad this wont happen , sooner or later Germany will have to face its own mess.

    This will be a good day for the south.

  • while await on of my comments to get approved , i have a naive question.

    Why cut 13,5bn to get 31 and no just get 17,5 wuthout cuts.

    Maybe because we get 31bn guarantees to banks as while we give 14bn real money

    • While im totally against the cuts (especially when it is going to be AGAIN the same people that will pay the most), i have to say you got it wrong.The 13.5bn cuts they want us to implement will be cut off for ever while the 31bil is a one time only payment.So the two are totally different things.

  • There might be Germans living in Germany but what of the elite , are they truely German , Italian , irish etc..I don’t think so – any self respecting Central banker does not consider himself such a zoo animal – thats was for Darby o Gill and the little people back in the d the O Gills were needed for something….a yield basically – now we cannot produce a Yield for the slave masters so by their metrics we are worthless.They obviously regard
    nationality as a fiction they created to break up the previous tribal structure.
    Witness the “Irish Central banker” – Honaghan.
    I remember reading a paper he wrote delighting in the post 1987 credit hyperinflation in
    Ireland as it would reduce the ratio of domestic wages to external capital thus sowing the seeds for the malinvestment crisis.
    Is he really a irishman ?
    The Euro is merely the advanced stage of another Frankestein experiment of theirs – the modern market state….you really really don’t want that to work out as it is the 9th cirlce of hell for sure

  • @Richard

    “Mundell/OCA has got absolutely nothing to do with Bundesbank philosophy. Zero.”
    On the contrary it has.Claming that the Eurozone was on purpose designed in such way that by nature ,its disabled from being optimum simply takes away from anyone the right to accuse specific countries for what is happening now.

    “I don think anyone is saying there is anything wrong with a transfer union as long as it is done on an individual/person-by-person/entity-by-entity basis ie if it is voluntary.and controlled by the people through their day-to-day personal and business lives.”
    First of all, you might have not realised it but you are part of a transfer union yourself and you dont just maintain it voluntarily on your day-to-day business.You pay taxes in your country and part of them goes to less developed regions of your country either you like it or not.Or maybe you live in one of the less developed regions in your country and you are actually a recipient of those transfers.In either case this surely doesnt happen voluntarily and for good reason..This flow of funds is what keeps an economy going.Its not just about solidarity and welfare.

    “In other words, you help the Greeks by giving a bigger discount on the exports from Germany to Greece.”In other words you help your own people.You can sit back and watch how unemployment in Germany will rise (if they decide to keep up with the current policies)
    because their “used to be customers” cannot buy from them anymore and theres no big enough market to cover these losses (A while ago they liked to think China will play that role,but just like them China needs to stimulate its own domestic demand for something like this to happen).But subsidizing consumption is not the only way to go.The MP talks about transfers in form of productive investments.They could also stimulate their own domestic demand (they on purpose supressed domestic demand in Germany by freezing wages in order to persue their beggar thy neighbor policy) so as to help increase the periphery’s exports.

    “If you think Germany should be punished for its economic policy the transfer union is akin to price fixing. A transfer union is limiting the profits German businesses, as a whole, can make in Greece.”
    Are you serious? Think about it,the flow of credit from the core to the periphery is what kept the EZ going all this time, and is what actually played the role of a transfer mechanism which should otherwise exist if the union was to function properly.Now that there is no form of transfer either in the form of credit,or subsidies or investments, have you checked German exports to Greece?They shrunk…..So German businesses are making more profits now in Greece? OK !

    Just to clear a few things up.Im not demanding any country to pay Greece or any other deficit country.Im only saying that if one wants the Eurozone to function properly,then thats the way to go.SIngle countries are also transfer unions (as part of being optimum currency areas).If you say that single countries are free to decide what they want to do with their money,thats fine and i respect that.But dont expect the EZ to function properly then and especially dont try to blame everything on certain countries.Its really a matter of whether you want a common currency or not.If you want it,there are certain things you have to do.If you try to bastardize it then this is what you get.
    I happen to agree with prof. Varoufakis.If they asked me if i wanted Greece to join the EZ i’d say a big NO.But now i feel i have more to loose from a return to drachma.And for that reason im pro Euro.

    • Crossover – You said the EZ was upposed to Bundesbank alike – The Bundesbank is Austrian not Keynesian, hence why your definition is completely wrong. If you want to say the EZ is a French central bank alike OCA, then okay, I would agree but you used the Bundesbank as an example and this is wrong.

      “You pay taxes in your country and part of them goes to less developed regions of your country either you like it or not.” – Exactly my point, taxes are not voluntary. And about the transfer. I give over half of my income in taxes, no way I get that half back through a transfer union even if I live in poorest place in my country. Also, if the poorest gain from the transfer union, why are they forced to participate? If it was such a beneficial system surely they would not need to be threatened with imprisonment?

      Crossover, basically it sounds like you are saying the Euro can only exist if there is a transfer union and a transfer union can only exists if there is an imblance of trade between the member countries. Is that your position?

      Would the EZ exist if there was a balance of trade between the countries of the EZ as a whole?

      And if each country has a balanced trade account would that mean the ECB would not have to get involved with sorting out who gets how much?

    • “Crossover – You said the EZ was upposed to Bundesbank alike – The Bundesbank is Austrian not Keynesian, hence why your definition is completely wrong.”
      I did not say anything like that.A-reader said the EZ was never meant to be a transfer union.And my reply to this was that this must mean it was designed so as to never be optimal.Read more carefully.

      “You pay taxes in your country and part of them goes to less developed regions of your country either you like it or not.” – Exactly my point, taxes are not voluntary. And about the transfer. I give over half of my income in taxes, no way I get that half back through a transfer union even if I live in poorest place in my country. Also, if the poorest gain from the transfer union, why are they forced to participate? If it was such a beneficial system surely they would not need to be threatened with imprisonment?”
      You are basically saying that the system is misdesigned (on purpose i might add) and im only saying no economy can function without transfer payments as long as not all regions of it are able to produce equal output.Two totally different things.

      “Crossover, basically it sounds like you are saying the Euro can only exist if there is a transfer union”YES.Unless you know of any country that either has no transfer mechanisms or it doesnt need one because all regions of that country produce equal output thus their trade is balanced.

      “and a transfer union can only exists if there is an imblance of trade between the member countries. Is that your position?”
      Whats the reason to have a transfer union if the trade is balanced?Do you know any fixed exchange rate regimes that manage to have balanced trade in the long term?Enlighten us if you do.

      “Would the EZ exist if there was a balance of trade between the countries of the EZ as a whole?”Yes.The thing is it cant happen.In an extreme case it can happen if you supress demand at the deficit regions.We have signs of this now.But i dont know why that is a solution.This will hurt both sides and we already see that.

      “And if each country has a balanced trade account would that mean the ECB would not have to get involved with sorting out who gets how much?”Yes again.BUt thats like saying…if nobody robbed,killed,raped,you name it, we wouldnt need police or we wouldnt need judges.True, we wouldnt.But i dont see this happening in this life.

    • Crossover – Thanks, I get the transfer union concept, do you grasp the Austrian opinion of them?

      About the USA, surely we should be running away from this model as quickly as possible and not holding it up as example to aspire to?

      The USA is the most indebted nation in the world, they have bigger financial problems than Europe. Why we would want to emulate that in Europe? Surely this is a big neon sign to Europeans saying “do not go down this road of a transfer union it will end in disaster”

      Just to reinforce the point, the USA Federal government has an almost 2 trillion dollar deficit this year alone! That equates to around 5000 dollars per person and this is your success formula for the EU and the EZ?

    • “Just to reinforce the point, the USA Federal government has an almost 2 trillion dollar deficit this year alone! That equates to around 5000 dollars per person and this is your success formula for the EU and the EZ?”

      First of all USA has a lower debt/gdp ratio than Greece.On the other hand Japan has a debt/gdp ratio even higher than that of Greece and its far better off than us.And no its not because they have a high savings ratio.Actually its exactly because they are “big savers”,why the government needs to run big deficits so as to avoid the infamous paradox of thrift.
      Both Japan and US have their own currencies thus they can never be insolvent when it comes to debts denominated in these currencies.Greece itself kept having a debt/gdp ratio above 100% quite often during the 90s and there werent any worries about becoming insolvent.

      But thats not even the point.You say we shouldnt look up to US and its fiscal transfer mechanisms because its (in your opinion) in worse financial condition than us.Fair enough.So you are basically saying that the fiscal transfers are the cause of America’s financial troubles?You definitely need a basis for that,Thats like saying you shouldnt look up to Russians if you want to make a nice vodka because they were destroyed by communism.

    • Crossover – Let me be crass for a moment. Your being an idiot “So you are basically saying that the fiscal transfers are the cause of America’s financial troubles?You definitely need a basis for that,Thats like saying you shouldn’t look up to Russians if you want to make a nice vodka because they were destroyed by communism.” – *You* are the one tying the economic health of the EZ to its lack of a transfer union/vodka to communism. Your own analogy highlights why your transfer union argument sucks and it also describes the point I am making.

      I’m saying the transfer union is akin to treating a broken leg with a pain killer. The need for a transfer union is a symptom of something else. It is not the cause of the problem and it is not the answer to the problem.

      I said Europe is stronger and you use Greece as an example??? “First of all USA has a lower debt/gdp ratio than Greece.” At least combine Spain and Germany. Anyway see this for the real picture.
      http://elleseconomy.com/2010/02/26/unfundedliabilities/

      “On the other hand Japan has a debt/gdp ratio even higher than that of Greece and its far better off than us.” – Japan is better of because it is the worlds largest creditor.

      “Both Japan and US have their own currencies thus they can never be insolvent when it comes to debts denominated in these currencies.” – We have been through this, hyperinflation or insolvency. The effect on the populous is the same.

    • Crossover – I love links, gives a lot more meat to chew on.

      Let me first just say that I do not disagree with your points about a currency union and how it can create stability. That is not my issue. My issue is that it will send us into serfdom and poverty for no reason other than politicians in certain countries would rather sink their citizens than lose their power.

      About the article, the author is a child. He thinks people in Alabama are faulty and that Californians are superior because he simply states it as a fact without attempting to explain why California is richer than Alabama.

      Going back to the US. Like I said in my previous comment. The USA has bigger problems than Europe. Much bigger. The debt is huge, their unfunded liabilities are a joke and they are printing like crazy. The dollar is going to implode. Turning the ECB into the Fed is not something we should be aiming for, ALL evidence shows it leads to disaster.

      But lets get down to the fundamentals. A Greek goes into a German convenience store, he buys a pack of smokes. What right does the Greek have to demand some of that money back from the store owner at the end of the year? And to cap it all, if the store owner refuses to comply you want to throw him in jail.

      And this is what the transfer union boils down to. I think the German store owner would seriously consider banning Greeks from his store! Why would he want to put himself in that position?

    • Ok i will stop the discussion if i have to be called an idiot by someone who thinks that a need of a trasnfer union is a symptom of something else.which something else (im taking a guess here) is the trade imbalances that can be fixed otherwise while we keep the exchange rates perfectly locked.I quit.And you will be ignored from me from now on.

    • Corssover – Your not making any sense.

      Your saying that the EZ needs a transfer union.
      Your saying a transfer union is not the cause of the USAs problems.
      Your saying a lack on a transfer union is the cause of the EZs problems
      Your saying the need for a transfer union in your eyes is not the symptom of something else

      They cant all be correct

    • Dear Crossover
      Regarding a currency union necessarily also always being a transfer union:

      I would see some similarities between the current Euro arrangement and the gold standard.
      Overall, that system was pretty stable from 1870 to 1914 – and had WW I not started, it would most likely have been able to carry on for a while (and in a modified version, it returned with the Bretton Woods agreement from 1946 to 1971).
      Back then, like today, there were countries that were not able or willing (or both) to have the fiscal discipline needed to remain in the gold standard. In their eyes, the disadvantes of participation outweighed the advantages. Those countries simply left and the others were able to carry on. That strikes me as a good solution.
      I don’t advocate going back to the gold standard but the fact that the system worked 1870 to 1914 without transfers between the participating countries in my eyes means that this would be possible for the Euro, too.
      Just like with the gold standard, the participants need to follow certain rules and have fiscal discipline. If they don’t want that, then either they need transfers (which by the way already are being provided in our EU system to some extent through the EU redistribution mechanisms of e.g. structural funds and farming subsidies) or they can amicably leave.

      To make it really clear that the Eurozone was not going to become an ATM for participating nations, there was the treaty of Maaastricht. So to sign that, then join the Euro and afterwards wanting to modify the Maastricht treaty on some core points is not how it is going to work.

      Dealing with this acute, major crisis is a different matter. It does require some transfers one way or another (and that is happening). But I don’t think it is fair or necessary to make that an official, continuous feature of the Eurozone. Once the current crisis is over (hopefully in a few years), the system should be modified so that it can work as intended, without additional transfers on top of the already painful structural funds and agricultural subsidies (which in the case of Greece were wasted anyway and probably did some damage to its primary and secondary sector from what I understood from some comments in this blog).

      What we had in the now troubled “periphery” was overinvestment in non-productive sectors (real estate in Spain, croney government system in Greece) or simply overconsumption by massive debt accumulation.
      This worked great for a while – but like every bubble before it, after having looked kind of sensible and sustainable for a while because it had some positive spillover effects to the rest of the economy by fuelling consumption, it eventually burst.
      This is nothing specific to a currency union. Overinvestment in silly sectors has happened in the past and will most likely happen again in the future, be it within a currency union out outside.
      The fact that due to a market malfunction, e.g. Greece and Spain were able to take on debt for too low interest rates after having joined the Euro contributed to the mess. E.g. Spain and Greece were beneficiaries of a leap of faith granted by the market based on the assumption that they would become “more like Germany”. Instead, the money got spent on unproductive investments or simply consumed. After a while and when credit dried up in the course of the financial crisis, the market malfunction ceased and now the market asks for interest rates that more accurately reflect the default risk of the countries following their debt binge (that has not much productive investment to show for).
      As markets do, this time it probably overdoes it the other direction, asking for excessively high interest after it asked for too low interest 2003-2007.

      There is no need for a permanent transfer union – it would just, of course, be really nice for the prospective receipients.
      😉

      A bit of common sense and everybody getting his/her own house in order would suffice.

    • @Richard

      I wonder who is the idiot:

      “Your saying that the EZ needs a transfer union.” YES

      “Your saying a transfer union is not the cause of the USAs problems.” YES

      “Your saying a lack on a transfer union is the cause of the EZs problems” YES

      “Your saying the need for a transfer union in your eyes is not the symptom of something else” YES

      “They cant all be correct”

      The only reason they couldnt all be correct would be IF the roots for USA problems were the same with the problems of the EU. ARE THEY?
      Did the American economy end up to the state we find it. due to local State indebtedness or due to inter-State trade imbalances?NO. Did i ever say a transfer union is the cure to all problems?NO. I only said this is what Europe is missing for its OWN problems.

      For fuck’s sake Proffesor Varoufakis has spoken at least two times about the story where in the early 90s,when euro was being desinged, Jacques Delors explained to Francois Mitterand the need for a transfer mechanism if the euro was to be sustained.His reply was that he is persuaded that there is indeed a need for such a mechanism to exist,but neither he nor Helmut Kohl had the political strength needed at the time to implement such a thing.He went on to say that after 10-15 years when a major crisis breaks up the then european leaders will have the option to either do what him and Kohl couldnt,or break the common currency up.

      Its all here: http://www.youtube.com/watch?v=iVxaTC7Qp44 AND in the latest interview proff. Varoufakis gave to Tom O’brien.

      In the end you either have to prove that countries (that from a currency prespective are common currency unions) have all their regions perfectly balanced regarding their trade (so they dont have/need a transfer mechanism), or that they dont have transfer mechanisms and their regions are not balanced and still they dont face major problems.Please prove that and we’re through.

    • Crossover – Love your passion.

      “Did i ever say a transfer union is the cure to all problems?NO. ” – Okay, because that’s what I thought you were saying and you were using the USA as a proof of concept.

      “In the end you either have to prove that countries (that from a currency prespective are common currency unions) have all their regions perfectly balanced regarding their trade (so they dont have/need a transfer mechanism),” – Ecuador, Panama. They have no transfer union with the USA and they use the US Dollar.

      I would argue that you could also use businesses as examples. They cant print their own currency and yet they balance their books.

      The issue here is not money transfers, the issue is the printing of currency. If you want the problems in the EZ to disappear in the form they do now you would have the countries go back to their own currency.

      That is the only solution where you can avoid the core problem.

      All other solutions require countries to balance their trade accounts, like individuals have to, like local businesses have to, like multinational businesses have to. A transfer union will take everyone in the union into poverty. That is inevitable.

      And going back to your quote “His reply was that he is persuaded that there is indeed a need for such a mechanism to exist,but neither he nor Helmut Kohl had the political strength needed at the time to implement such a thing” Could well be true, for the exact reasons I highlight. The majority of people in France and Germany would seem to agree with me that a transfer union is a dangerous and ill informed solution.

      But if you can explain to me how a transfer union would raise the financial well being of all Europeans I am all ears.

    • ” Okay, because that’s what I thought you were saying and you were using the USA as a proof of concept.”
      Im only using USA for several reasons such as its size (similar to europe),its federal style and ofcourse easy access to its info (for example i found the link with the chart that shows how certain states transfer funds to other states through the central gvt. in 5 minutes).With that said all countries have more or less effective transfer mechanisms.

      “Ecuador, Panama. They have no transfer union with the USA and they use the US Dollar.”
      Remember when i said,that actually its possible to create balanced trade in eurozone if you supress demand in the periphery, but i dont know why that is a solution since it will hurt both sides?Well ecuador does have pretty weak domestic demand and its an oil exporting company ie. high oil prices work in favor of its current account balance.
      On the other hand Panama currently has a 10% current account deficit, i dont know how this sounds sustainable in the long run to you.

      Furthermore even though these countries use the dollar,they can still impose import tariffs etc. to protect their domestic industries.In Europe,given the common market and given that eurozone countries mostly trade with each other rather than with the rest of the world, there are even less options to stabilize.And excuse me but if we have to become Ecuador then screw it.I didnt know Ecuador was a model country for you (the only thing we should copy from them is how they got rid of the IMF)..

      “I would argue that you could also use businesses as examples. They cant print their own currency and yet they balance their books.”Really?So businesses dont go bankrupt?Where?In wonderland with Alice?

      “All other solutions require countries to balance their trade accounts, like individuals have to, like local businesses have to, like multinational businesses have to. A transfer union will take everyone in the union into poverty. That is inevitable.” You still didnt show me one country with perfectly balanced regions.And with saying that all businesses are always balancing their books at the same time implies that they never go bankrupt.Thats a lie and you already know that.

      “The majority of people in France and Germany would seem to agree with me that a transfer union is a dangerous and ill informed solution.”
      I bet they do.Thats why the Germans are watching their economy slowing down.If this makes them happy then let it be that way.Keep the austerity going.You still havent figured out that all countries do that (recycling of surpluses).You will be shocked when you find out im sure.

      “But if you can explain to me how a transfer union would raise the financial well being of all Europeans I am all ears.”If increased growth/consumption/investment wont raise the financial well being of all Europeans then i dont know what will.You must be thinking that now the Germans are getting richer by having less and less clients that want to buy their stuff.Fair enough.

    • Crossover, thanks for taking the time – “in eurozone if you supress demand in the periphery,” – can you think of any other solution?

      With regards to everything else, Im not going to do all of the intellectual leg work in the conversation. When your ready to be more than a simple mirror focusing on imperfections without trying to identify and understand the reasons and the context of the imperfections let me know.

    • “Crossover, thanks for taking the time – “in eurozone if you supress demand in the periphery,” – can you think of any other solution?”

      One solution is supressing demand.The other is what is happening all over the globe with more or less effectiveness: Transfer mechanisms.There is no other way if you want to keep a fixed currency regime.

      You keep saying trade imbalances are the symptom.Go ahead then for ONCE and show me regions that are part of the same fixed exchange rate regime and they have perfectly balanced trade with each other.That doesnt require that much of intellectual capacity does it ? Show me that Athens doesnt have a trade surplus against Kastelorizo and without transfer of funds that originate in Athens, Kastelorizo can still keep the same level of demand for products/services that it gets from Athens.

      Your problem is that you keep thinking about nations and economies as if they are a single business or household.Macroeconomic theory is separated from microeconomic theory for a reason.You can start from there.Good luck with finding answers to my question (if you bother doing so).

    • Crossover – “Macroeconomic theory is separated from microeconomic theory for a reason.” – This is not the only theory in town. It is the dominant system and it is the system that is collpasing. There was another system in the USA pre 1913 which made the USA the worlds leading economy in a century. But again, I think we are going over old arguments. Let me just say macro is Keynesian, Austrians believes this is utter nonsense.

      To quote Peter Schiff. Austrian economics should just be called economics and everything is else should be called voodoo.

      Some real world examples as to why economics is superior to voodoo. Germany operates the closest thing in the world to economics, it is the worlds second or third largest exporter and it has a trade surplus.

      You can also use Japan if you focus on savings being the foundation to growth, I would not stretch the Japan example further than that.

      If you are not aware of Austrian economics I would encourage you to read “Road To Serfdom”, “How An Economy Grows And Why It Crashes”, “Crash Proof” as good intros to the subject.

      Here are some good videos.

      An entertaining critique of the worlds leading macroeconomic theorists http://www.youtube.com/watch?v=ptMrAgWqRfg

      Deals with macroeconomics directly, the start is building to a good punchline. http://youtu.be/9GlZFiCqIGo – Demonstrates the flaws in macroeconomic theory

      This is a good torpedo into the policies being practised by the worlds leading voodoo practioners. http://www.youtube.com/watch?v=UmYtyl8s05w&feature=plcp

      The sources I give are intended to show how macroeconomics is an utterly flawed concept. I think we need to be in a position where you can at least acknowledge the possibility that macroeconomics is a flawed theory for us to have a meaningful conversation.

    • “Germany operates the closest thing in the world to economics, it is the worlds second or third largest exporter and it has a trade surplus.”
      Germany is the worlds largest exporter and you may be right that its the closest thing to Austrian economics.But i dont know how this is a good thing.Why is it a good thing to be so much export oriented?
      Why is it a good thing to keep domestic demand supressed?Why is it a good thing to be exposed to global market volatility ?I dont know if you realised it yet, but Germany is going down because its clients cant buy no more and it is forcing them to stop buying even more.Not only that,it doesnt seem willing to boost its domestic demand in order to make up for its OWN losses. for the sake of its OWN economy.

      And on top of all,Germany managed to follow and maintain such policies because everybody else didnt try to do the same..Thats how sustainable this is.If we all try to be “Germanies” then nobody will achieve it.And thats exactly because macroeconomy doesnt work like single businesses do.

  • The secret of 3% finally revealed

    At a time when the countries of the Eurozone are presenting austerity budgets to ensure that public spending deficits do not exceed the 3% of GDP ceiling required for the single currency, Aujourd’hui en France reveals “the incredible story of the birth” of this limit. The daily has found “the man who, at the request of [former French president] François Mitterrand, hastily came up with the emblematic figure.”

    Guy Abeille, age 62, a former senior Budget Ministry official and “the inventor of the concept, endlessly repeated by all governments whether of the right or the left, that the public deficit should not exceed 3% of the national wealth,” told the newspaper –

    We came up with the 3% figure in less than an hour. It was a back of an envelope calculation, without any theoretical reflection. Mitterrand needed an easy rule that he could deploy in his discussions with ministers who kept coming into his office to demand money. […] We needed something simple. 3%? It was a good number that had stood the test of time, somewhat reminiscent of the Trinity.
    The daily remarks on the strange character of this anecdote: “In an irony of history, the technocrats in Brussels drew on the legendary 3% for inspiration when creating another rule [stipulated by the new Fiscal Compact], just as factitiously Cartesian, which obliges states to limit their structural deficits to 0.5%. Why not 1% or 2% ? No one really knows.

    http://www.presseurop.eu/en/content/news-brief/2776341-secret-3-finally-revealed

    Who is gonna argue with me now when i say the maastricht criteria is stupid and nonesesnsical ?

  • Greeks were not the creators of Christianity, but they liked it and spread it around. What the Greeks saw in Christianity was the democratic element and the community of brotherhood and self help. In the beginning of Christianity the function of the priest was provided by members that took turns and the Greeks loved it. Later on the Christianity was modified to serve the hierarchy, to be an instrument of power and later still a power itself.
    I don’t know if everybody realizes it, but just now is evolving a technological break that can be an instrument of prosperity or instrument of slavery. It is the development of robots that will work 24 hours a day seven days a week. Who will own them? Who will design them and program them to do the needed work?
    The problem in Greece and in many other countries is that the economical power, the political power and the intellectual elites collided to govern themselves without the participation of the public, they just taking turns between themselves.
    It is necessary to break the holding of power by the same families in perpetuity. It is necessary to break those powers without harming the public or creating hatred between groups of people, it is necessary to do that and the same time increase the knowledge of the people and the material wealth of all the people. It is necessary to increase the level of knowledge and wealth in all parts of Greece and in all our neighbors.
    What is needed is independent and continual higher education in every neighborhood managed by the neighborhood and public service as a tax by everyone. We should recreate the brotherhood of neighbors this time the church should be the university and the good deeds should be the public service for folks working four hours a week as groups of people designing products for Greeks to produce and make a living. It should apply for all Greeks in the world who want to keep a citizenship. We should return to old saying that the Greeks didn’t invent many things, but they made them better.
    People who don’t wish us well misuse our weakness to push us to the ground, to make us hungry and depended on others. This is a bed choice, it is humiliating for Greeks and it doesn’t help even those we are trying to starve us.

  • @Klaus

    ” it would be helpful to be offered some specifics here. Switzerland has been buying arms for much longer than Greece and Siemens has been an important player in the Swiss economy for much longer than in Greece. It is not known, however (at least not to me), that Switzerland was ever forced to buy arms or that it was forced to accept bribes from Siemens.”

    There go your specifics Klaus…and its only for just ONE person…
    http://en.wikipedia.org/wiki/Akis_Tsochatzopoulos#Economic_scandals

    • And although im not aware of switzerland’s military strength,if its arm purchases are anywhere close to those of Greece,then you bette be sure there are bribes involved.For Switzerland doesnt have even the half of the danger Greece has in its neighborhood (which sometimes is just created for this specific reason).

    • Dear Cross
      Don’t forget that Switzerland has a long border with Germany – if Germany is as aggressive as many people in this blog think then Switzerland needs all the arms it can possibly get to keep the evil Germans out!
      😉

      I can see that Greece’s border with Turkey is of concern for the Greek military. However, to hint that third parties (Germany of course, I guess) is behind the Turkish-Greek hostilities is really pushing it a bit far, don’t you think?

    • @ Martin

      I only provided proof about the bribes Greek officials have received in order to proceed with purchases of specific military equipment.Bribes in this specific case happen to involve German businesses.But im pretty sure Germany is not the only player around.If you ask me,the fabricated danger originates in US.That doesnt mean Germany (or France) doesnt enjoy profits from that, thus have no reason to stop it or at least help the situation at a diplomatic level.

      Btw the Troika didnt accept defense cuts, instead they wanted deeper cuts in wages and pensions.Maybe this will ring you some bells.

    • Dear Crossover
      I believe you that there have been bribes paid and arms manufacturers (some of them German) would have an incentive to contributing to keeping the tensions between Turkey and Greece high. However, I wonder how e.g. Siemens would do that. After all, a company won’t really be able to determine the general direction of Turkey’s or Greece’s foreign policy (“hey, be a little more daring and don’t let the silly Turks / Greeks have that rock of the Turkish coast” will not work, would it?). I would imagine that both countries have an interest in trying to push through their respective interpretation of the situation, i.e. Turkey will want to make sure they can get access to what they see as “their” territory and Greece wants the same.
      However, apart from Cyprus, I thought the situation is not hopeless and maybe, the military in both countries has a special interest in blowing the whole thing up so they can continue to receive funds for buying their expensive toys?
      I think overall, Greece is just a lot smaller than Turkey and it will become increasingly difficult / impossible to stay on a similar level of military power as Turkey. But luckily, Greece probably does not really need that? Both are in NATO and Greece is in the EU. I believe it is unthinkable that Turkey would violate internationally accepted borders. The price for that would be very high. NATO would not accept it. The EU would not accept it. The US would not accept it. Where the situation is unclear regarding some rocks in the aegean, maybe it would be a good idea to sort things out now – won’t get easier with a Turkey that is getting stronger and stronger in relative turns, don’t you think?

    • ” I believe it is unthinkable that Turkey would violate internationally accepted borders. The price for that would be very high. NATO would not accept it. The EU would not accept it. The US would not accept it”
      When did any of the entities you just named got actively involved in the tensions in order to ease them?Last time it was winter of ’96 when we came close to war and only the US got involved.But their intervention didnt really solve anything,actually it was their intervention and the way they wanted to resolve the conflict that turned what was Greek land and water to land and water of disputed sovereignty.

      We have EU land being occupied by Turkey (in Cyprus) and the EU has no problem entering into talks regarding its accession.Unfortunately foreing affairs are affected more from money than justice.

    • Dear Crossover
      I think Turkey’s membership in the EU is not high on the agenda at the moment, to say the least. They’re doing fine on their own – and are following a path towards some sort of “moderate” (I hope!) islam combined with trying to be a regional power.
      The EU does not really want Turkey to join but so far has avoided to clearly tell Turkey that in their face. Probably a good thing as making that explicit would weaken the pro-western parts of the Turkish society, I guess. Which would not be in the interest of the EU as a whole or Greece in particular.

      I am not an expert on Cyprus but I think the situation is difficult there and probably it was not the best idea to declare the whole island a part of Greece when there was a significant part of the population that considered itself Turkish without asking them what they wanted. The situation is as it is – and hopefully, it will be possible for both ethnic groups to live together again, in a united Cyprus.
      In the meantime, what would probably really help to achieve that was if Greece was a model that was attractive for the Turkish inhabitants of “Northern Cyprus” so that ideally, they would WANT to be reunited with the Greek part of Cyprus in order to get away from Turkish poverty and join western wealth. Unfortunately, the way mainland Greece and the Greek part of Cyprus has developed, this looks less of a probability now then, say, 15 years ago.

      I don’t think that it is wise for Greece to spend loads of resources (that it ultimately does not have) on arms. Turkey is bigger and Greece will not be able to (and does not need to) compete in an all-out war. So why bother – rather make sure you develop in a way that makes the Turks in Cyprus want to join and the mainland Turks want to become…
      …a little bit more like their neighbour across the Aegean.
      Better than an arms race that Greece will find difficult to win, in my humble opinion.

  • -Ὅταν πήγαινα μὲ τὸ ἀεροπλάνο στὴν Αὐστραλία, ἔρχεται ἡ κοπέλα ἐκεῖ καὶ μᾶς πρόσφερε καραμέλες. Πῆρα μία – θὲνκ γιοῦ (εὐχαριστῶ) μου λέει. Δηλαδὴ εὐχαριστῶ ποὺ δέχτηκες τὴν καραμέλα πού σου πρόσφερα.

    «Βρέ, λέω, αὐτοὶ ξεπέρασαν καὶ τὸν Ἅγιο Ἰσαὰκ σὲ εὐαισθησία καὶ λεπτότητα!» Μετά, προχωροῦσα μία μέρα στὸ δρόμο, βλέπω κόσμο μαζεμένο, πάω νὰ δῶ… τί εἶχε γίνει- ἕνα σκυλάκι τὸ καημένο, τὸ εἶχε χτυπήσει ἕνα αὐτοκίνητο καὶ μὰ-ζεύτηκε κόσμος γύρω, νὰ βοηθήσουν, ἄλλος νὰ πάρει τηλέφωνο, ἄλλος κάτι ἄλλο. Πολὺ εὐαισθησία καὶ ἐνδιαφέρον, θαύμασα.

    Μετὰ ἀπὸ μερικὲς μέρες, πάλι περπατοῦσα στὸ δρόμο, βλέπω ἕναν ἄνθρωπο πεσμένο στὸ πεζοδρόμιο νὰ βογγάει. Μεροκαματιάρης, δούλευε, ἔπεσε ἀπὸ τὴ σκάλα καὶ πρέπει νὰ εἶχε σπάσει τὴ μέση του… Κανένας δὲν….

    ἐνδιαφερόταν… Περαστικοί, ρίχναν μία ματιὰ ἀδιάφορα καὶ ἔφευγαν. Θὰ ἔρθει λέει τὸ ἄμπιουλανς (ἀσθενοφόρο) νὰ τὸν πάρει. Σοὺ λέει, δὲν εἶμαι ἐγὼ ὑπεύθυνος, θὰ φροντίσει τὸ κράτος… Ἄσε μὴν μπλέξω καὶ μὲ τραβᾶν στὰ δικαστήρια γιὰ μάρτυρα.

    Πῆγα νὰ σκάσω. Πά, πά…. τέτοια ἀδιαφορία γιὰ τὸ συνάνθρωπο… Τί πολιτισμὸ καὶ εὐγένειά μου λένε μετά; Βλέπεις οἱ Εὐρωπαῖοι ἔχουν μόνο μία ἐξωτερικὴ εὐγένεια, καὶ αὐτὴ ἐξ ἀνάγκης γιὰ νὰ μὴ σκοτώνονται μεταξύ τους… Κρύες καρδιές… ἐνῶ οἱ Ἕλληνες ἔχουν φιλότιμο, καὶ ἂς μὴν ἔχουμε εὐγένεια.