Saturday, July 18, 2015

GERMANY OUT OF EUROPE? GEREXIT!

GEREXIT GERMANY DOES NOT BELONG IN EU?

The long simmering and ugly Greek Crisis had brought many changes in perceptions. As the crisis unfolded over the last few months this author has revised his concept of the German Republic. Perhaps it is Germany who should leave the Euro? From evidences of their behavior in this crisis, it appears at least to this observer, that the German character (at least of some of its top leaders) has not altered much since the mid-20th century. The beneficiaries of the Marshall Plan and the massive post WW II loans have now become the economic heavyweight on the continent...a place they continue to attempt to dominate. Not with brutal military might this time, but with their economic clout. In these last few weeks we have seen their lack of compassion for the suffering of their European cohabitants in Greece. They have expressed disdain for the southern Europeans. The double edged sword of their social structure and mental rigidity, great for paying their taxes, but it also inhibits them from making more creative and flexible decisions which in certain situations might alleviate pain and suffering and likely even help solve problems of Europe such as the economic crisis in Greece . Even in the face of economic facts supported by the IMF asserting that austerity imposed on Greece would not work, they could not alter from their original plan or their rote thinking. One could not help imagining that perhaps it was not GREXIT that was needed to save Europe..but perhaps what was needed to return Europe to its progressive and humane ideals was GEREXIT! Can it be that it is Germany which does not belong in the Europe of our modern day?

The behavior of German overlords pushing around suffering Greeks, showing no empathy, increasing the pain of innocent children and the elderly, and deaf to words of compassion and reason from more moderate sources, was too much like the black and white news clips from Movietone News seen in theaters of the War era. It was particularly hard to watch for someone who remembers the ugly history of the Second World War.

Then too there is the specter of the German Finance Minister Wolfgang Schaeuble, who is confined to a wheelchair and who resembles too closely for comfort the character "Dr. Strangelove" (played by Peter Sellers) an ex Nazi wheel-chair-bound scientist in Stanley Kubrick's masterpiece film of that name. Schaeuble, who was one of the few in Europe who supported President George Bush's Iraq War, also stands out with the far-right fringe of our own GOP in actually DEFENDING the concept of maintaining Guantanamo as an exlegio prison camp for terrorists. At home he is known as the "law and order" minister. His far right conservative positions makes it easy to tag him as Germany's Dr. Strangelove. All he needs is that movie character's sunglasses, trick hand and a glove to make the uncomfortable transition complete.

Schaeuble who is claimed to be Madam Prime Minister Angela Merkel's secret alter ego, made it apparent that he was in favor of a "Grexit" even before the greek elections which brought to power the so called "far left" Syriza government. Schaeuble and Merkel apparently believed they could punish the Greeks so severely that they would exit the Euro. Grexit was a means to cow the other southern Euro states into submission to German "law and order". US Treasury Secretary Tim Geithner testified to that effect, and he also claimed that during the crisis negotiations Schaeuble had not bargained in good faith with the Greeks. His testimony indicated that when the Greek negotiators agreed to one of his tough austerity proposals, at the very next meeting, he would simply move the goal posts further away and insist on even higher VAT taxes, or more cuts in pensions. He toyed with the desperate Greeks like a cat with a trapped mouse.

The economic results of Schaeuble and Merkel's economic ministrations and impositions on Greece were a disaster. As a result of the austerity program insisted on by the Germans as a condition for further loans, the Greek economy contracted by 25%, to war time levels, more than a quarter of the adult work force were unemployed and half of the youth population were out of work. Tens of thousands of hungry people flooded soup kitchens in Athens daily. It was apparent to any and all professional economists that no level of austerity was going to resurrect the moribund Greek economy. The IMF agreed that austerity was not working and that the only solution was massive debt relief or debt restructuring. But even after the referendum and the bank closings and the capitulation of PM Alexis Tsipras, Merkel and Schaeuble continued on their rigid course of even more harsh austerity programs which were so severe as to permit some to describe Greece as now not an independent state but a virtual German colony. So it is that the violent history of German invasion of Greece in WWII replays itself again.

Will the other states of the Union fall to German domination. Do we need a Gerexit?

GREED, BANKS AT CORE OF GREEK CRISIS

GREEKS AND GERMANS BOTH AT FAULT IN FINANCIAL CRISIS

There are a few misperceptions about the Greek situation commonly accepted here in the USA as fact. The Greeks are not lazy. The idea that they sit around all day in cafes, talking politics and sipping black syrupy coffee is off the mark. From my nine seasons working there and years of observations, I know the vast majority of them rise very early, work hard all day, and return home late in the evening. They do take a mid day siesta...but if you count up all the hours they work...you would find it is as much or more than American standards---about 40 hours a week. While it is the Germans who work less than 30 hours per week! The Greeks are a tough, hard working, frugal people who have carved out a living for eons from a harsh climate and an unyielding rocky land.

The other misperception is that they are profligate spenders. No one I knew in Greece over my many years there or any of my Greek friends here in Vermont, fit that description. Then you may ask how did they borrow all that money and get into such a pickle?

They had help from the northern european, and German bankers and investors!

The circumstances for the Greek crisis are reminiscent of what happened here in the USA during the run up to the Great Recession of 2007-8..when banks made huge profits on loans. Lenders in those days would give massive loans to anyone coming in off the street. If the prospective client was breathing and had a pulse they sat him or her down to sign a few papers, and in minutes the borrower or mortgagor left the bank stuffing greenbacks in their pockets. The banks profited massively by making these loans, so they aggressively marketed them. But even those Crassus-like sums were not enough for them, so they devised ways to generate even more profits...by selling bundled mortgages (derivatives) to eager investors, knowing full well that poor-risk borrowers were included in all these derivatives. The "hidden bad paper" was the trip-wire that brought the entire financial system down. Thus it was the banks, eager to make big profits on lending, who were the main cause of America's path into debt. By being too greedy, making poor decisions, agreeing to high risk loans and making too many loans our here in the USA initiated the dreadful and painful Great Recession. The economic downturn in USA financial sector caused a global contraction. Those events were mirrored elsewhere and in Greece they caused a collapse of the tourist industry upon which that nation was highly dependent and that event (and others) precipitated the Greek financial collapse and European recession.

Events in the U.S. A and in Greece prior to the financial collapse were very similar. In Europe it was the big German, Danish and Dutch banks which aggressively marketed and encouraged Greek borrowing, because it was highly profitable. The lure of big profits caused too many lenders to become careless about to whom they made loans. The Greeks could not have gotten into this mess all by themselves. As in the USA, the banks, in this case the German and northern European banks, were to blame too. ( I should note here that as the specter of recession raised its ugly head here at home, both Mr. Bush and Mr.Obama were mightily frightened. Not for the pain and suffering of our citizenry, but for the paralyzing fear that the financial structure upon which their financial supporters and their careers were based might fail. Thus without much thought they just "bailed the big banks out". This "bail out" is not the "bail out" the Greeks got...those exchanges of Euros were loans. The USA "bail out" was a freebie---a give away of trillions of dollars directly to the culprits who were the cause of the problem---- the careless, greedy lending institutions. Those "give away" "bail out" funds all taxpayers are still paying back.)

So the Greeks are not lazy, they are not improvident, any more so than Americans who got themselves (and the rest of the world) into a similar debt problem. So it is my thesis here that that both the German banks AND the Greek borrowers are at fault in this crisis. So why are we smearing and maligning only the poor Hellenes? It is not only fair that those institutions which were so greedy or careless as to make loans available to unsuitable borrowers should also suffer for THEIR misdeeds. The solution to the Greek crisis should take that into consideration...pain for both borrower and lender.

And to the Germans and their Angela Merkel...you should have a little more compassion. Don't let that old enmity between north and south..Protestant and Catholic, conservative and liberal, highly structured northern and more fluid southern societies undermine and weaken one of the great, wise and humane projects of the late 20th century! A United Europe.

Tuesday, July 14, 2015

IRAN NUCLEAR DEAL...A TRIUMPH FOR DIPLOMACY AND OBAMA

Today as New Horizons space ship flew by the most visible and distant body in our solar system--the dwarf lanet Pluto, our mastery of science and techology for once seems to have been matched or even eclipsed by just plain old common sense! The less common, it seems, life sense of humans who yearn for a safer more sane and sustainableable world. For on this date we were witness to both the pinnacle of human technical mastery in the form of the Pluto fly-by AND a triumph of human earth-bound common sense in the form of diplomacy over the folly of saber rattling and nuclear holocaust. The event: President Obama with VP Biden at his side announcing the accord with Iran on its nuclear technology ambitions and the relief from sanctions imposed by the US and P5 nations.

As expected, elements from the left tail-end of the IQ bell curve, particularly those in the running for the GOP nomination for the top office of this land, were all dead set against this logical, sane accord. On the Democrat side, the top contender, Mrs. Clinton described the agreement as "an important step" not even a "good" important step! Mrs Clinton's response only reinforces the perception that she is not trustworthy or honest. Senator Bernie Sanders on the other hand was among those few who spoke clearly and honestly in open support.

Mr. Netanyahu, the sole nuclear hegemon in the Middle East, remains, as expected, vociferously opposed to this accord, greeted almost unanimously around the world with optimism. He would prefer a war, preferably one in which the USA was engaged and did the heavy lifting. This accord makes that human and economic disaster less likely. But as a bully boy in the ME, Mr. Netanyahu's objections are at least understandable.

But what of the Republicans? What are they against? Or with Mrs. Clinton, why is she undecided?

According to the NY Times, July 14, 2015, "Crucial Provisions of the Accord" this is what we know so far about the treaty:

Iran will reduce its stockpile of enriched Uranium to only 300 Kg (660 lbs) and keep this cap on its stockpile for fifteen years.

Iran will cut the number of centrifuges which it operates to enrich uranium by two thirds. They will be limited to only the early models of centrifuges they already have. The decommissiioned centrifuges will be stored and continuosly monitored by the IAE. The accord limits on fuel (above) and the limit on centrifuges will make it impossible for Iran to make a quick "break-out" (at least one year) to build a bomb should that nation abandon the accord.

Finally, Iran is restricted from research in ballistic and nuclear-related technologies.

On the US and allies side, the anctions against Iran will be lifted. Iran will again be able to sell its oil and trade on the international market and use the global financial system. Its frozen cash assets will be released.

The international arms embargo against Iran will gradually be lifted, the pace being dependent upon IAE inspections of its nuclear facilities.

A "Snap Back" provision for sanctions is incorporated into the accord to be implemented if it is deemed by an established international body that Iran is not abiding by the accord.

The results of the accord in a few words: Iran does not have now and will not have the capacity to produce a nuclear weapon for fifteen years and beyond! It's ability to break out of the accord and begin weapons making would be impossible for at least a year. Diplomacy has won over war, over threats of bunker busting bombs, asssination of Iranian nuclear scientist and computer virus attacks. Obama and his team have put together an accord that makes peace a possibility in the chaotic Middle East and in the world in general. It will stand as a testament to his vision and perseverance in the face of overwhelming opposition.

So what is there to object to? Perhaps it is only that the GOP, like the kid who will cut off his nose to spite his face...wants to undermine anything that Obama accomplishes. Let us not let them do that this time.

CLINTON WEASEL WORDS ON IRAN DEAL--NOT TRUSTWORTHY

Weasel Words From Mrs. Clinton on Iran Deal

According to "National Journal" (July 14, 2015) during a brief press conference on Capitol Hill Clinton called the P5 -Iran Deal on nuclear weapons "an important step". She added that the US should now focus on preventing more of Iran's "bad actions". She did not define Iran's bad actions. She added cryptically: "What I know of it now, we must seriously evaluate it carefully....it is an important step."

Our Vermont Senator Bernie Sanders spoke more plainly. "This is a victory for diplomacy over saber rattling and could keep the US from being drawn into another never-ending war in the Middle East". it is clear where Bernie stands. He supports the deal.

Clinton was using "attorney" speech, parsing each word like she was writing a legal contract. She is following play book of her morally challenged husband who famously could not decide what the word "is" meant during the Monica Lewinsky scandal,

Clinton will not reveal her position (if she has one) until she decides where her own political advantages lie. So we do not know where Mrs. Clinton stands on this critical deal. If she wants the support of the Democrats and progressives in this tired-of-war nation one of the most critical questions they would ask of her is..."are you going to lead us into another quagmire in the Middle East (like you did with Iraq with your "yes" for war in the Senate)?" In this telling instance she reveals nothing about her position... The statement:"it is an important step" means nothing. A step where? Into the abyss or toward a safer nuclear free world? Does she know where she stands? All she knows is that she would like to get back into that White House. This is why so few trust or believe her.

Thursday, July 2, 2015

Ελλάδα Όχι Κράτος Σκλάβος GREECE: NO TO SLAVE STATE

Μεγάλο προβλέψιμο στιν Ελλάδα (Big problem in Greece)

Γερμανοί κάνομε τιν Ελλάδα ένα κράτος σκλάβων

The Greek government was forced to take on an enormous debt burden (of almost $300 billion dollars) in installments beginning in 2007 after the global economic collapse, first centered in the U.S. housing and mortgage market. Most of the money came from Eurozone investors , with smaller amounts from the IMF, European Central Bank, and smaller amounts from Greek Banks.

Back in January when the new, left-leaning Syriza party, led by Prime Minister Alexis Tsipras took over. The new government made it known that they thought that it was near impossible for Greece to pay back the enormous debt, which at that time represented more than 180% of the Greek nation's GDP. They were correct. But letting their intentions be known to their creditors may have had grave consequences.

Almost every economist knows instinctively that you can not grow an economy by reducing cash flow. But after the Great Recession years of 2007 that was what the Greek governmenτ did. They were forced to borrow money to pay debts. But the Eurozone investors and politicians who loaned the money, had other ideas. They were fixated not on growing an economy but remodeling the Greek economy to their own conceepts. As a consequence, they insisted that the Greeks cut expenses and reduce their budget deficit. These programs of economic reform were termed: "austerity programs". To get the desperately needed cash the Greeks had to implement the austerity plans sent down to them by the German master planners. But austerity measures made it impossible for the already weakened economy to recover. Restricting pensions, cutting salaries, reducing the number of government workers, raising taxes, closing down municipal facilities, cutting pay and overtime, cutting out bonus money and forcing people to work longer for less money, all were demanded from the Central European bankers and German politicians before they would release needed loan money. All of these policies reduced cash in the hands of the citizens and lowered demand for goods and services. This was a sure way to spiral down into a deeper recession. Each desperate loan request came with a requirement for further austerity measures. The Greeks were caught up in a vicious cycle of loans and austerity measures which only intensified the depressed state of the economy and made it necessary for another round of loan requests and further austerity measures. The German plan was no way to help a country out of an economic downturn. The fear of deficit spending in the German psyche was being acted out on Greek victims to the detriment of an the Greek economy and the well being of an entire nation. The meticulous, efficient Germanic methods of bookkeeping ostensibly instituted to pry the Greeks out of an economic valley instead managed to dig them into a massive, Hibbing-Minnesota-size open pit mine and there to bury the Greeks and Greece. I am sad to say, their methods remind me too much of the policies of the Germans of the last century in their interactions with other ethnic and religious minorities.

There were a total of seven (7) austerity packages that previous Greek governments had to accept before receiving bailout funds. The first loan and austerity package of February 2010 was for a loan of 80 billion euros. It required a freeze in the salaries of all government workers, a 10% cut in bonuses, cuts to overtime, and the restriction on work-related travel. The second package (March 2010) included more cuts to salaries, a doubling (then quadrupling)of the VAT tax, and increased taxes on imported cars. The economy did not respond positively to these early measures, the economy did not expand and the Greek government soon needed more loan money. The third austerity package (May 2010) required the privatization of 4000 public owned companies, more controls on salaries of public workers, a 3% cut of pay for utility workers, a decrease in the number of designated municipalities from 1000 to 400, limits to pensioner's pay, increase in the retirement age from 60 to 65, changes in the laws governing overtime-pay and lay-offs. The fourth austerity package (June 2011) took place during a period of discontent with many strikes and demonstrations. The new austerity package required raising 50 billion euros from selling off government property, and among other changes, and higher taxes (again) now on those earning more than the modest annual salary of 8,000 euros. Further, it called for a decreased of pension payments of up to 14% of pre 2007 amounts! It added a new tax on any and all structures. The owners of any structure, a home, barn, shed or garage was to pay a "structure tax" which would be paid by way of the owner's electricity bill. And due to the more common demonstrations and strikes, the German overlords demanded that Greek laws permitting collective bargaining be weakened or rescinded. The Parliament was forced to comply with all these demands. The results of these massive changes and increased taxes was not positive. At the close of this period, instead of savings and budget surplus, government revenue had gone down 2 billion euros and spending went up 3 billion euros. Some government officials expressed the idea that the austerity measures were not working and were "irrational". They were right.

But the Greek Parliament and its German, Danish and Dutch masters did not care about rational or irrational. They were bent on squeezing blood out of the dry, limestones and marbles of the Greek lands. Three more loans and austerity packages more forced on the Greek Parliament and duly agreed to which were more of the same and with much the same effects.

By 2011, the Greek GDP had its worst annual decline, falling by 7%. By 2012, the GDP had dropped 17% from its level of 2008. While at about the same time, the seasonally adjusted industrial output fell by nearly 30% lower than it was in 2005. More than 100,000 Greek companies had gone bankrupt by this date. And by July 2012 unemployment had surged to an unprecedented 25%, while More than half of Greek youths who wanted employment were without jobs. The suicide rate, once the lowest in Europe, increased by 40%. Twenty percent of the shops in historic central Athens were closed and boarded up as of 2012, and about 400,000 residents of central Athens were visiting a soup kitchen daily. Twenty thousand (20,000) people were homeless and slept rough At night in corrugated boxes in dark. Athenian alleyways. A UN official cautioned the Greek Parliament just prior to the the imposition of the fourth austerity package, that its implementation could potentially pose a violation of human rights under the UN charter. The effects on Greece was that the global Great Recession which had by this time played out its course in the rest of the world, continued on unabated in Greece. And due to the intervention of the German, Dutch and Danish bankers and German politicians there it grew into the magnitude of the Great Depression of 1930's. This tragedy was not necessary. The collapse of the economy began as a global recession but became a man made economic depression in Greece.

The story is not over yet. The new prime minister, Alexis Tsipras and his government have tried to formulate a compromise with the Germans which would extend and modulate their payments, ease up on austerity and permit the Greeks a period of time to grow their economy, yet keep Greece in the Eurozone. Tsipras tipped his hand early...he wanted to stay in the zone, but was asking for a helping hand. He was looking to ease the suffering of his people. But as each fraught bargaining session ended, the Greek representatives had to give ground and accept more of the same onerous austerity. The German creditors held their ground and even appear to have moved the goal posts as the Tsipras team came closer and closer to agreement. The Germans seem determined not to find a middle ground but to discredit and undermine the Syriza government and its youthful leader who was elected to oppose the irrational and impossible situation they had imposed on Hellenes. Perhaps they would rather see Greece with a new, more amenable government, a government which will more readily do the bidding of the German masters, muzzle the justified discontent of the citizens, and continue to squeeze euros from the poor and hard working Greeks to line the pockets of wealthy German bankers.

My neighboring next-door state of New Hampshire has a motto...."Live Free or Die"...I have seen it often on license plates on our country roads....but...as I write this now, I can now fully understand what that line really means.

The Greeks must decide to live free, or forever be under the lash of the Germans as a κράτος σκλάβος.