Moderators: Elvis, DrVolin, Jeff
by eyeno » Fri Jul 01, 2011 5:53 pm
Greek Army threatens coup
Jose Manuel Barroso, President of the European Commission, last year a prescient when he said to fear that several Southern European countries may fall prey to civil war and their democracy would be lost? Several Greek troops have now indeed threatened a military coup against the government because the Greek people, according to the union officer ANEAD feel “to foreign powers to be sold”.
http://blog.alexanderhiggins.com/2011/0 ... ope-31181/
by Jeff » Sun Jul 03, 2011 1:02 pm
Greek sovereignty to be massively limited
By Erik Kirschbaum
BERLIN | Sun Jul 3, 2011 8:07am EDT
BERLIN (Reuters) - Greece faces severe restrictions on its sovereignty and must privatize state assets on a scale similar to the sell off of East German firms in the 1990s after communism fell, Eurogroup chairman Jean-Claude Juncker said.
In an interview published after euro zone finance ministers in the Eurogroup approved a further 12 billion euro ($17.43 billion) installment of Greece's bailout, Juncker said he was optimistic that measures agreed with Athens would help to resolve the country's problems.
"The sovereignty of Greece will be massively limited," he told Germany's Focus magazine in the interview released on Sunday, adding that teams of experts from around the euro zone would heading to Greece.
"For the forthcoming wave of privatizations they will need, for example, a solution based on a model of Germany's 'Treuhand agency'," Juncker added, referring to the privatization agency that sold off 14,000 East German firms between 1990 and 1994.
The Greek parliament voted on Thursday to set up a privatization agency under austerity plans agreed with the European Union and IMF which have provoked violent protests on the streets of Athens.
Greeks are acutely sensitive to any infringement of their sovereignty or suggestions of foreign "commissars" getting involved in running the country.
...
by vanlose kid » Sun Jul 03, 2011 7:06 pm
Jeff wrote:Greek sovereignty to be massively limited
By Erik Kirschbaum
BERLIN | Sun Jul 3, 2011 8:07am EDT
BERLIN (Reuters) - Greece faces severe restrictions on its sovereignty and must privatize state assets on a scale similar to the sell off of East German firms in the 1990s after communism fell, Eurogroup chairman Jean-Claude Juncker said.
In an interview published after euro zone finance ministers in the Eurogroup approved a further 12 billion euro ($17.43 billion) installment of Greece's bailout, Juncker said he was optimistic that measures agreed with Athens would help to resolve the country's problems.
"The sovereignty of Greece will be massively limited," he told Germany's Focus magazine in the interview released on Sunday, adding that teams of experts from around the euro zone would heading to Greece.
"For the forthcoming wave of privatizations they will need, for example, a solution based on a model of Germany's 'Treuhand agency'," Juncker added, referring to the privatization agency that sold off 14,000 East German firms between 1990 and 1994.
The Greek parliament voted on Thursday to set up a privatization agency under austerity plans agreed with the European Union and IMF which have provoked violent protests on the streets of Athens.
Greeks are acutely sensitive to any infringement of their sovereignty or suggestions of foreign "commissars" getting involved in running the country.
...
http://www.reuters.com/article/2011/07/ ... vrit=56943
Netanyahu's big fat Greek Wedding
Netanyahu has invested in his relationship with Greece over the course of the past year-and-a-half, and his gamble has finally paid off as Greece blocks Gaza-flotilla-bound departures from its ports.
By Barak Ravid
Prime Minister Benjamin Netanyahu sometimes seems almost too arrogant and self assured for his own good. However, unlike in most instances, this weekend he actually has justification for his haughtiness.
Netanyahu’s personal investment in his relationship over the past year-and-a-half with Greek Prime Minister George Papandreou in which he increased diplomatic ties with the floundering European nation seems to have put the final nail in the Gaza flotilla’s coffin.
In his speech Thursday night for the Israeli Air Force Flight School graduation ceremony, Netanyahu discussed diplomatic efforts being made to prevent the Gaza flotilla from setting sail. The only leader that Netanyahu mentioned by name in his address was Greece’s George Papandreou.
Just a day earlier, the prime minister spoke with his Greek counterpart, imploring him to issue an order preventing ships from disembarking from Greece toward the Gaza Strip. Unlike in the past, Papandreou responded positively, and a top Israeli official involved in the talks between the Greek prime minister and Netanyahu said that Israel knew as early as Thursday afternoon that Greece was planning to block ships from leaving its ports toward the strip.
The romance between Netanyahu and Papandreou began in February of 2010, when the two met coincidentally at the “Pushkin” restaurant in Moscow. Netanyahu took advantage of their chance encounter to speak with the Greek prime minister about Turkish extremism against Israel and the two quickly became friends.
The Israeli and Greek leaders have spoken to each other at least once a week ever since they met in Moscow.
The Turkish flotilla to Gaza in May of 2010 led to serious concern among the intelligence and military ranks in Greece, who began pressuring the government to strengthen diplomatic ties with Israel. Papandreou did not need much convincing.
In July of 2010 he arrived in Jerusalem, the first official visit of a Greek prime minister to Israel in 30 years. A few weeks later Netanyahu travelled to Athens, spending a whole day with Papandreou and other officials on a nearby island.
Israeli diplomats can attest that the budding friendship between the two countries over the course of the past year-and-a-half has been nothing short of dramatic. Intelligence communication has increased, the IAF has conducted a number of joint exercises with Greece’s air force and Netanyahu has requested Papandreou’s assistance in passing on several messages to Palestinian Authority Chairman Mahmoud Abbas.
Many of Netanyahu and Papandreou’s talks in the past few months have revolved around the severe financial crisis Greece is currently suffering. Netanyahu recently decided to come to the aid of his newfound friend in a meeting of foreign ministers and European leaders, imploring them to provide Greece with financial aid.
“Netanyahu has become Greece’s lobbyist to the European Union,” an Israeli diplomat said.
In recent weeks, as efforts to stop the impending pro-Palestinian flotilla to Gaza came to a head, Netanyahu reaped the benefits of his investment in Israel-Greece ties and his gamble on the European country paid off.
He was able to create a viable alternative to relations with Turkey in several regards, showing Erdogan that Israel will not hesitate to become close to its greatest enemy in the West.
And when the moment of truth came, Greece followed through and ordered all Gaza-bound departures be blocked from leaving its ports. Greece’s decision, along with the Turkish Humanitarian Relief Foundation's (IHH) announcement that it would not be sending the Mavi Marmara and the president of Cypress’s statement forbidding ships from sailing to Gaza sealed the fate of the flotilla almost entirely.
“The flotilla organizers did not take into account that Greece of July 2011 is not the Greece of May 2010,” said a top Israeli official that worked intensively in the past few months to prevent the Gaza flotilla mission from taking place.
“Today there is a different Greece when it comes to Israel,” he added. “The organizers of the flotilla did not understand this, and now they are paying the price.”
http://www.haaretz.com/news/diplomacy-d ... g-1.370794
by vanlose kid » Sun Jul 03, 2011 7:12 pm
Syria: Man appears to film himself being shot by sniper
Youtube video follows footage of 'activist and blogger' Diyya al-Najjar being shot in the head by security forces in Homs
Ian Black and Nidaa Hassan in Damascus
guardian.co.uk, Sunday 3 July 2011 22.36 BST
Shocking video footage has emerged from the Syrian city of Homs in which a young man filming against a background of gunfire in the streets appears to be shot dead in cold blood by the sniper he zooms in on.
A clip circulating on YouTube begins with a male voice describing "someone shooting at citizens in Karm al-Sham on July 1st without any reason and no demonstrations."
The cameraman is filming from an upper floor against a background of slogans being chanted. Jerky images of the street and balconies are followed by a blurred glimpse of a man in olive green, standing in the shadows, carefully moving forward and raising and firing a weapon – followed by a single shot, moaning, and distraught voices pleading for help.
The cameraman's identity is not known. Foreign journalists and human rights groups are largely banned from Syria and it has not been possible to authenticate the video.
The caption describes the gunman as a member of the Shabiha, a militia used by the Assad regime. Last Friday's demonstrations were described as the biggest yet during the three and half month uprising.
Human rights groups say the death toll in Homs, Syria's third city, is continuing to rise as security forces and gangs loyal to the Assad regime seek to crush protesters who come out in growing numbers in separate neighbourhoods on a daily basis. Tanks remain positioned in the city.
Separate films posted online on Saturday and Sunday appear to show the killing of a young man named as Diyya al-Najjarwhen security forces opened fire on protesters gathered in the al-Qarabis neighbourhood of Homs.
Crowds are seen running and scattering as gunfire rings out. One young man is shot in the middle of the street, as two men point weapons from the cover of parked cars. On Friday a witness told Human Rights Watch. "I saw Diyya al-Najjar shot by a sniper in his head right in front of me. The sniper was in a Land Cruiser car four or five meters away from protesters."
Al-Najjar was being described by some Syrian sources as an "activist and blogger."
His body was taken to al-Barr hospital in Homs, where a doctor confirmed to Human Rights Watch that he died from a bullet to the head. According to the doctor, 10 protesters wounded by bullets had arrived at his hospital by 6pm on Friday.
Video showed the bodies of two men identified as al-Najjar and Bassam Saqeene. Al-Najjar's face was surrounded with flowers, his body wrapped in the Syrian flag. Saqeene was killed in Homs on Thursday, according to Syrian opposition sources.
• Nidaa Hassan is a pseudonym for a journalist in Damascus
http://www.guardian.co.uk/world/2011/ju ... hot-sniper
by Gouda » Mon Jul 04, 2011 6:06 am
Manolis Glezos, a widely respected politician who tried to intervene when the first clashes broke out, was transferred to hospital with Panagopoulos, due to respiratory problems caused by tear gas.
On May 30, 1941, he and Apostolos Santas climbed on the Acropolis and tore down the swastika, which had been there since April 27, 1941, when the Nazi forces had entered Athens. That was the first resistance act that took place in Greece. It inspired not only the Greeks, but all subjected people, to resist against the occupation, and established them both as two international anti-Nazi heroes.
by vanlose kid » Mon Jul 04, 2011 10:11 am
Barclays Releases Updated Report On Top 40 Greek Debt Holders
Submitted by Tyler Durden on 07/04/2011 08:29 -0400
A few weeks ago Barclays compiled a useful chart representing the largest holders of Greek debt. Today, the bank's Laurent Fransolet has issued an update "of the table “Top 40 holders of Greek government bonds and Greek debt” (Figure 1), in which we show updated holdings for Q4 10 for AXA and add KA Finanz from Austria to the list. We also clarify that the holder EFG in previous versions is Eurobank EFG." Not surprisingly, despite the refining drill down of secondary exposed parties, the top holders remain central bank and affiliated institutions, explaining the ongoing prerogative to not impair central banks' Greek holdings as a result of a rating agency event of, even selective, default.
From Barclays:In our previous research on the holders of Greek debt (see for example Euro Themes: Implications of Greece restructuring for banks and CDS, 3 June) we highlighted that these holdings are actually quite concentrated (with the top 30 holders accounting for 70%+ of the total). In this report, we update these numbers and show the details of the biggest holdings on a name-by-name basis. The vast majority of the information comes from disclosures by the companies themselves (for private sector holders, mainly banks and insurance companies), or some official data (for public sector holdings or loans data). In fact, there are only a few holdings that are not up to date as of Q4 10 or Q1 11 or that we have had to estimate (eg, the ECB SMP holdings or some of the central banks holdings, although admittedly, these are probably among the biggest holders). We would also highlight that this data/information has been in the public domain for some time, and so should not be a particular surprise to financial markets, rating agencies and commentators.
This, naturally assumes, anyone still does any diligence instead of just blaming the end of the world on the CDS market because it is an acronym, and it sound scary to all those who have no clue how it actually works.
So what does the data tell us?
The high concentration of holdings, and the type of institutions involved, suggests that some kind of voluntary rollover/Vienna initiative might have more take-up than one might expect at first glance. Having a participation of €25bn in such an initiative (as has been mentioned in the press) over the coming three years seems plausible, in our view.
Certainly, the Greek holders would have a natural incentive to roll over their debt. The Greek pension and social security funds (managed by the Bank of Greece) would clearly be in that case, although it may not have much debt maturing in the coming years. Greek banks are likely to have a mix of maturities in their portfolios, but we would think that probably more than a third of it is maturing in the coming years. One concern on the banks side has been the ECB stance that it would not accept Greek collateral anymore if any private sector involvement was not fully voluntary and/or would trigger a default, and that Greek banks would therefore have to reduce their holdings. We believe one potential way around this would be for the ECB to announce some kind of medium-term ‘addicted banks facility’ that would cover Greek, Irish and some Portuguese banks. This is something the ECB has been mulling for some time, and is linked somewhat to the decision on full allotment in open market operations. Such a facility could provide more security in terms of availability of ECB funding on a medium term to these banks (which will provide or have already provided medium-term liquidity and deleveraging plans to the ECB), and be more flexible in terms of the collateral it accepts than the ‘single list’ that the ECB is using for OMOs (whether or not rolled over debt is considered in default or not seems to vary depending on the rating agency). Such a separate facility would obviously come at a price, in terms of bigger haircuts and potentially a premium interest rate which may be linked to the regular OMOs (which may, or may not, at the same time, revert to variable rate tenders for 3m maturities; the ECB is likely to keep full allotment on the weekly MRO for longer in any case). Over the past few weeks, a number of statements and signs suggest that the ECB might be nearing a decision on this, something which could possibly be announced in September or even earlier (the decision might be precipitated by the downgrade by S&P of Greece and Greek banks to CCC recently). Independently, though, it could be that there would still be the problem of financing of Greek bonds by non Greek holders, if the ECB were to exclude GGBs from its single collateral list (unlikely if there is a simple rollover).
In any event, any additional NPV loss inflicted on Greek banks would require further recapitalisation of these institutions. Under the original EU IMF programme, EUR10bn has been ear-marked for bank recapitalisation. Given the weaker macroeconomic performance and more rapid increase in NPLs than anticipated under the programme, any additional NPV losses associated with public debt rollover at below market rates will require almost a onefor-one capital increase in the context of a new EU/IMF programme.
Rating agencies have been mixed on whether a roll over would constitute a default, a selective default or have limited influence. The bar, though, seems to be quite high for it not to constitute a default on their criteria.
The exact way to involve the private sector and/or do bond rollovers is clearly what the Eurogroup will be focusing on in the coming weeks: this is obviously something that, if done, needs to be done correctly and not rushed through, as a large number of unintended consequences could have a dramatic impact on financial markets. In this regard, we believe different views between Germany and other EU countries on burden sharing by bondholders are likely to be resolved in the coming days, with Germany possibly moving towards the voluntary roll-over proposed by other EU members (and that the ECB appears to support), most likely one based on the principles of the Vienna Initiative.
http://www.zerohedge.com/article/barcla ... bt-holders
by gnosticheresy_2 » Sat Jul 09, 2011 6:53 pm
Once Greece goes…
John Lanchester
The economic crisis in Greece is the most important thing to have happened in Europe since the Balkan wars. That isn’t because Greece is economically central to the European order: at barely 3 per cent of Eurozone GDP, the Greek economy could vanish without trace and scarcely be missed by anyone else. The dangers posed by the imminent Greek default are all to do with how it happens.
I speak of the Greek default as a sure thing because it is: the markets are pricing Greek government debt as if it has already defaulted. This in itself is a huge deal, because the euro was built on the assumption that no country in it would ever default, and as a result there is no precedent and, more important still, no mechanism for what is about to happen. The prospective default could come in any one of several different flavours. From everybody’s perspective, the best of them would be what is known as a ‘voluntary rollover’. In that scenario, the institutions that are owed money by the Greek government will swallow heavily and, when their loan is due to be repaid, will permit their borrowings to be rolled over into another long loan. There is a gun-to-the-side-of-the-head aspect to this ‘voluntary’ deal, since the relevant institutions are under enormous governmental pressure to comply and are also faced with the fact that if they say no, they will have triggered a proper default, which means their loans will plummet in value and they’ll end up worse off. The deal on offer is: lend us more money, or lose most of the money you’ve already lent.
This is, at the moment, the best-case scenario and the current plan A. It reflects the failure of the original plan A, which involved lending the government of George Papandreou €110 billion in May last year in return for a promise to cut government spending and increase tax revenue, both by unprecedented amounts. The joint European Central Bank-EU-IMF loan was necessary because, in the aftermath of the financial crisis of 2008, Greece was exposed as having an economy based on phoney data and cheap credit. The cheap credit had now dried up, and Greece was faced by the simplest and worst economic predicament of any government: it couldn’t pay its debts.
There is a good moment in one of the otherwise terrible Star Trek movies, in which Spock quotes an ancient Vulcan proverb: ‘Only Nixon could go to China.’ Similarly, it is probably true that only George Papandreou could confront the fundamental economic structure of the modern Greek state, since his father Andreas did more than anyone else to build it. Greece joined the EEC in 1981, the same year that he became prime minister, and subsequently the Greek government created a client state in which direct subsidies and transfers from the EEC were supplemented by easy loans from Western European banks. Money poured into Greece, and was used to fund a huge boom in public-sector jobs, most of them linked to political patronage. Various forms of corruption permeated the system, where cash gifts in fakelaki or ‘little envelopes’ were a fact of life, and where, crucially, the rich regarded paying tax as something that only the poor and stupid would ever choose to do. This latter fact meant that Greece was in certain vital respects a country without a functioning version of the social contract. To outside observers, all this was largely familiar, but the younger Papandreou, on becoming prime minister in 2009, was the first prominent Greek politician to admit it and promise to challenge it head-on. ‘Corruption, cronyism, clientelistic politics; a lot of money was wasted basically through these types of practices.’ Papandreou’s admission was jaw-dropping: everyone knew it was true, but since when do prominent politicians say very unpopular things which everyone knows to be true? The EU lent Greece the money to see Papandreou through his programme of cuts and crossed its fingers that this would buy enough time for the deficit to narrow – the deficit being the gap between what Greece was spending and what it was raising in tax.
That was the old plan A, and it didn’t work. Papandreou made deep cuts across public-sector spending, but two things went wrong. One, the Greek economy kept crashing. Economists have varying theories about the practical effects of ‘austerity’, meaning sharp cuts in public spending. To an outsider, it’s a little alarming how they differ about something so big and basic as the effect of large public spending cuts. But if you ignore the economics and look at the history, it seems to be the case that you can’t simply cut your way to growth. (There are a couple of contentious counter-examples, but this is the broad rule.) Holding public spending flat while other parts of the economy grow is historically a more valid model – and, by the way, holding public spending flat is in itself a huge struggle, being roughly what Mrs Thatcher did in the UK. So the first problem was that the Greek cuts led to a worsening of the Greek predicament: the economy kept contracting, and unemployment hit a record high of 16.2 per cent. The second problem was that those richer Greeks who had never fancied paying their taxes showed no increased desire to do so, and, much worse, the state showed no new ability or desire to make them. Without the ability to raise more tax, the old plan A was invalid.
So this is the new plan A: the Greeks borrow another €120 billion, the bondholders allow their debt to be rolled over, Papandreou’s government introduces further austerity measures and privatisations, rich Greeks start paying their taxes, the Greek economy recovers, and by the time the next huge chunks of debt repayment are due – from mid-2012 – Greece can afford to pay back its lenders and the crisis is over.
Does that sound plausible? It shouldn’t. This scenario is somewhere on the spectrum of unlikely to impossible, because while nobody questions Papandreou’s intentions – he is the only politician I’ve ever known to tell his electorate so consistently things they don’t want to hear – the Greeks are showing clear signs that they are unwilling to submit to the programme. Protests against the measures began with furious far-left agitations of a sort with which ordinary Greeks are weary, and which consequently may even have helped Papandreou, but the protesters now include the ‘Indignati’, middle-class Greeks who have had enough austerity already, thanks, and who take a Dario Fo attitude to Greek debt: can’t pay, won’t pay. The vote on the latest round of austerity measures took place in the middle of a 48-hour general strike.
The Indignati are not stupid, and are well aware of two salient points. First, the ‘bailouts’, as they are always called, are no such thing. Taxpayer-funded capital injections into otherwise bankrupt banks were bailouts. The Greek ‘bailouts’ are loans, pure and simple. The money will have to be repaid, and repaid at ungenerous rates of interest: 5.2 per cent for Greece, 5.8 per cent for Ireland. These short-sighted and grasping interest rates, motivated by the need to provide political cover for other governments, make an already critical problem significantly worse. The Greeks know they are being lent money just so they can work very hard for lower wages and higher taxes in order to pay it back at great cost. This arrangement is in place because of the second thing the Indignati know well, the fact that the outstanding Greek debt is mainly owned by French and German banks. This is why the Western European governments are especially keen on the ‘bailout’: it’s helping to keep their banks solvent. The Indignati do not find that a compelling reason to embrace a decade or so of abject misery. They want the Greek government to default, and the banks to accept losses for loans they shouldn’t have made in the first place.
It is that prospect which spooks everyone else in the EU, and the world economic order generally. A ‘voluntary’ rollover would be a polite form of default, which would give the European Central Bank, the IMF and EU governments time to draw up their real plan, whatever that might be. Any abrupt form of Greek default, caused by the lenders’ failing to lend or the Greeks’ missing a bond payment, would be what is known as ‘disorderly’, an eventuality that would play out as anything from a mild local spasm to a full-scale continent-wide meltdown, featuring the collapse first of the euro and then of the EU itself. The collapse of Lehman Brothers in September 2008 was one of these ‘credit events’. It is in their nature that they are chaotic and unpredictable, and all the more so because the fundamentals of the economic order, as constituted in 2008, are still intact. Who owns that Greek debt? As I’ve said, mainly French and German banks. Yes, but banks insure their debt via the use of complex financial instruments. Insure it with whom? Don’t know: some of it is insured with British banks as counter-parties to the risk, but that risk will be insured in its turn, so that the identity of the person holding the parcel when its last layer of wrapping comes off is a mystery. That mysteriousness was the thing that made Lehman’s collapse turn instantly into a systemic crisis.
It isn’t the consequences for Greece of a Lehman-type ‘credit event’ that worry the central bankers and governments: the risk of ‘contagion’, as they call it, throughout the Eurozone is what preoccupies them. The euro was not designed to default, so when Greece does, other European countries who have had to ask for non-bailout bailouts – Ireland and Portugal – will have their ability to repay their debts questioned. If one or other of them undergoes a ‘rollover’, or ‘restructuring’, or ‘rescheduling’ of its debt – all polite words for default – the next country in line will be Spain, and that is where everything changes. The ECB/EU/IMF ‘troika’ can write a cheque and buy the Greek economy, or the Irish economy or the Portuguese economy. But Spain is the world’s twelfth-largest economy, and the ECB can’t just write a cheque and buy it. A Spanish default would destroy the credibility of the euro, and quite possibly the currency itself, at least in its current form.
This is why the current situation has developed, in which governments are reluctant to lend Greece money because they don’t think they’re going to get all of it back, but they’re determined to do so anyway because they need to buy time. The euro was launched with a fundamental democratic deficit, which didn’t trouble the European elite behind it because they had come to believe in a version of manifest destiny. The idea seems to have been that the new currency would in and of itself lead to a gradual convergence of economies, institutions, banking laws, fiscal policies and national cultures. The currency had a bank but no government and no laws except for allegedly binding fiscal rules that were immediately and very publicly broken by participating governments, with no consequences or sanction. The system had no enforcement, and no reality principle other than the value of the euro on international currency markets, and the rating value of euro government debt.
The need for the Eurozone to have a more robust institutional structure and crisis planning has been obvious since its creation, and especially so since the 2008 implosion. The governments established a €750 billion ‘financial stability facility’ – basically an emergency bailout fund – last year, but fiscal union and political structures to match the monetary ones are still distant. An obvious next step would be the creation of Eurobonds, or packages of debt backed by the Eurozone as a whole. That would look (and be) less like a loan from the strong Euro economies to the weaker, and would also be a step, but a usefully deniable step, towards some form of fiscal union. As for crisis planning, well, we’re about to find out. A great deal of thought must, surely, have been given to the question of a Euro default – how to minimise its consequences, how exactly to execute the ‘restructuring’ or ‘rescheduling’. Surely? And if a country were to be forced to leave the Eurozone because it simply couldn’t any longer pay its debts, how would that work? This isn’t something a country can announce in advance. If Greece said it was going to leave the euro, every single adult in the country would run, walk or crawl to the nearest bank and withdraw all their money – that’s because if they leave their euros put, the euros turn into drachmas which are worth, say, half as much. The mass withdrawal would make every bank in Greece go broke the same day. So the government would have to declare a ‘bank holiday’, i.e. a total freeze on all bank accounts, as the first step towards starting a new currency. But what would happen to all those overseas debts, still denominated in euros? They would immediately be twice as expensive now that they would have to be repaid in devalued drachmas. So maybe the government would have no choice but to declare all its debts void.
That might sound like a recipe for disaster, but Argentina defaulted in 2002, froze the banks, declared its foreign debts void, and cut itself off from IMF funding – and since then, it’s been the fastest-growing economy in fast-growing South America. (The Indignati, by the way, are well aware of this example.) But this is an extremely high-risk strategy, not just for Greece but for the whole of Europe, and to attempt it would require that a lot of planning had already taken place. But we wouldn’t know if it had, because these plans need to be kept secret in advance if markets aren’t to bet on exploiting them. If this work hasn’t happened, extensively and at levels which carry the necessary political clout to execute the plans when the default happens, the euro is odds-on to fail. However complacent and oblivious the European political elite has been, it is hard to believe everyone will turn out to have been that soundly asleep at the wheel.
From the worm’s-eye perspective which most of us inhabit, the general feeling about this new turn in the economic crisis is one of bewilderment. I’ve encountered this in Iceland and in Ireland and in the UK: a sense of alienation and incomprehension and done-unto-ness. People feel they have very little economic or political agency, very little control over their own lives; during the boom times, nobody told them this was an unsustainable bubble until it was already too late. The Greek people are furious to be told by their deputy prime minister that ‘we ate the money together’; they just don’t agree with that analysis. In the world of money, people are privately outraged by the general unwillingness of electorates to accept the blame for the state they are in. But the general public, it turns out, had very little understanding of the economic mechanisms which were, without their knowing it, ruling their lives. They didn’t vote for the system, and no one explained the system to them, and in any case the rule is that while things are on the way up, no one votes for Cassandra, so no one in public life plays the Cassandra role. Greece has 800,000 civil servants, of whom 150,000 are on course to lose their jobs. The very existence of those jobs may well be a symptom of the three c’s, ‘corruption, cronyism, clientelism’, but that’s not how it feels to the person in the job, who was supposed to do what? Turn down the job offer, in the absence of alternative employment, because it was somehow bad for Greece to have so many public sector workers earning an OK living? Where is the agency in that person’s life, the meaningful space for political-economic action? She is made the scapegoat, the victim, of decisions made at altitudes far above her daily life – and the same goes for all the people undergoing ‘austerity’, not just in Greece. The austerity is supposed to be a consequence of us all having had it a little bit too easy (this is an attitude which is only very gently implied in public, but it’s there, and in private it is sometimes spelled out). But the thing is, most of us don’t feel we did have it particularly easy. When you combine that with the fact that we have so little real agency in our economic lives, we tend to feel we don’t deserve much of the blame. This feeling, which is strong enough in Ireland and Iceland, and which will grow steadily stronger in the UK, is so strong in Greece that the country is heading for a default whose likeliest outcome, by far, is a decade of misery for ordinary Greeks.
There is one country in particular where this disconnection between the political, the personal and the economic poses an acute threat to the world economic order. That country is Germany. The economists speak of ‘macro-economic imbalances’, the fact that German interests and, say, Greek or Irish or Spanish interests are not in alignment. The German economy is too big and too powerful for the health of its neighbours, unless European monetary policy is somehow ameliorated to help the smaller, weaker countries stay in step.[*] Interest rates which, during the first decade of the euro’s existence, suited German manufacturers, caused toxic credit bubbles to grow in Greece and Ireland and Spain. The consequences of those credit bubbles could take another decade to unwind, ten years of hard times for the citizens of those countries, who will spend most of it sweating to earn the tax money to pay back the German banks whose lending fuelled their bubble. German savings go to German banks to lend to other countries so that they can buy German goods from German companies who then save their earnings in German banks who lend it to … and so on.
This system is not elegant but it is probably sustainable, as long as German taxpayers are willing to pay for the busts and bailouts which will inevitably ensue. Their economy is so big that they can pick up these bills if they want to. As the euro’s troubles go on and the lineaments of this arrangement become clearer, however, the signs are that the German electorate is becoming steadily less eager to go along with it. The downmarket German press has been asking why Germans should work until 69 to fund the retirement of Greek public sector workers who knock off at 55. That’s a loaded way of putting the question, but it is a good question even so, and one to which Angela Merkel is manifestly sympathetic. She has spoken more than once about the need for the private bond-holders who own Greek and other debt to take losses from their holdings and for the entire burden not to fall on ever more reluctant taxpayers. (The markets hate it when she does that, and immediately begin to panic about Eurozone defaults.)
Ultimately, however, the new German attitude has the potential to destroy the Eurozone. If European monetary policy is run according to German national interests, huge structural imbalances will accumulate. The Germans will then either have to pay to correct those imbalances, or agree that the euro should not be run primarily according to German national interests. If they are unwilling to do either of those things, the euro can’t survive. It’s hard to tell exactly what Merkel thinks about all this. She is nobody’s idea of a caricature spendthrift, happily chucking money in the direction of the undeserving poor. Whenever the question of bailouts is mentioned, Merkel acts out an elaborate pantomime of reluctance to dish out more cash. It’s hard to tell whether she is really-o, truly-o this reluctant, or whether she’s hamming up her unwillingness for a domestic audience which strongly dislikes the idea of bailing out work-shy Southern Europeans. The fact is, though, that they are going to have to continue to do that, if the euro is going to continue to exist in its current form. Germany has to put the broader European interest on the same level as its own national interest, or the euro is toast. This, if you think about it from a broad historical perspective, is quite a reversal. During the 20th century, the greatest danger to European stability was Germany’s sense of its special destiny. During the 21st century, the greatest danger to European stability is Germany’s reluctance to accept its special destiny. If the German taxpayer manages, however grudgingly, to accept that it’s her duty to shoulder the burden, the euro will muddle through. But it won’t be pretty.
http://www.lrb.co.uk/v33/n14/john-lanch ... reece-goes
by vanlose kid » Sun Jul 10, 2011 8:05 pm
Sell, sell, sell: everything must go in great fire sale
Europe's most indebted countries – and Britain – have put prized assets up for grabs to bolster their creditworthiness. So what exactly is on offer?
Polly Curtis, Lisa O'Carroll in Dublin, Giles Tremlett in Madrid, John Hooper in Rome and Suzie Bird
guardian.co.uk, Friday 1 July 2011 20.17 BST
Greece
Europe's most ambitious sell-off is taking place in its most indebted nation: Athens plans to sell €50bn (£45bn) of state assets by 2015.
Looking at the sales list, it seems that very little has been left off the table. The government's stakes in the ports of Piraeus and Thessaloniki, 39 airports, a state lottery, a horse-racing concession, a casino, a national post office, two water companies, a nickel miner and smelter, hundreds of miles of roads, a telecoms operator, shares in two banks, electricity and gas monopolies and thousands of hectares of land, including coastal stretches, are among the host of assets on offer.
While a 50% stake in Athens international airport is probably the best-known asset on the block, when it comes to sheer beauty the Anavyssos saltworks could prove difficult to beat. The saltworks, an hour south of Athens, shut down in 1969, and is situated on a mile-and-a-half of beach.
However, while Greece's privatisation scheme apparently offers plenty of desirable assets, experts say the country will struggle to raise the hoped-for €50bn because investors are wary of the country's bureaucracy, strong unions, corruption and lack of transparency. Barely a year ago, Greece itself estimated that privatisation could raise, at best, €1bn to €2bn a year. Suzie Bird
Ireland
The national airline, ports, power stations and even the Irish National Stud, which hosted a visit by the Queen in May, face being broken up or sold off under plans to get Ireland out of the red. A government-commissioned review of state assets published in April said privatisation could raise about €5bn for the cash-strapped country.
Energy suppliers, transport and sporting assets were all earmarked for divestment. However, the plans could end up in the shredder. The Irish government is in no rush to sell off the family silver and the private equity company Terra Firma, which made an approach about the sale of Electricity Supply Board assets, was told that no talks could take place.
The economist Colm McCarthy, who chaired the Review Group that wrote the report, recommended the break-up of the electricity and the gas boards. Other assets he recommended putting on the block include Rosslare port, Dublin Bus and the government's 25% stake in Aer Lingus, which recently celebrated its 75th anniversary.
The Irish Aviation Authority, which regulates aviation and provides air traffic control services in Irish airspace and the north Atlantic, could be merged with the UK's National Air Traffic Services or other north-west European services, and the forestry commission should dispose of forests but the land they grow on should remain in state hands, McCarthy said.
On the sports front, the National Stud should be sold and Horse Racing Ireland should put racecourse interests up for sale. The greyhound racing body should also get rid of its stakes in dog tracks.
But the report was attacked in parliament and the government agreed there would be no "fire sale" of assets and certainly no sale until market conditions improve.
Joe Higgins, a Socialist member of parliament, branded the privatisation blueprint a "neoliberal huckster's deal which will involve pawning the assets of the people to pay off moneylenders".
So far little progress has been made and McCarthy has also said that he would be surprised if any assets could be sold this year. Top of the government's wish list is the sale of its stakes in the five bailed-out banks but until they emerge from the current wreckage there are unlikely to be buyers.
The country's biggest life insurance operation – Irish Life – is being prepared for a trade sale on government orders. It is expected to fetch about €1.6bn but this will be used to shore up losses at the bailed-out sister bank Permanent TSB, which will disappear from the high street. Lisa O'Carroll Dublin
Spain
The world's biggest annual lottery payout, Spain's famous Christmas El Gordo (Fat One), spreads joy to tens of thousands of winners – but the biggest winners of all may soon be investors who snap up part of the state company behind the lottery.
The country's State Betting and Lottery (LAE), which offers a series of prize draws, also brings a huge dose of Christmas cheer to the country's treasury. Of the €2.15bn Spaniards bet on the draw, almost a third is retained by the lottery administrator.
Spain is not as badly indebted as other European countries, but bond yields have soared as Greece, Ireland and Portugal have been forced into bailouts. Spain's socialist government, led by José Luis Rodríguez Zapatero, has set strict deficit targets to avoid the fate of its southern European neighbours. Sales of stakes in the state lottery and the country's airports authority form part of the plan for pulling safely back from the brink.
Some 30% of the state lottery will be sold as the organisation behind the 151-year-old El Gordo becomes what may be the world's biggest listed gambling company, valued at up to €25bn.
The company recorded €3bn net profit in 2009 on sales of €9.8bn – meaning the sell-off will reduce treasury income by about €1bn a year.
RBS recently won a contract to run the privatisation of up to 49% of Spain's airports authority, AENA, which has a book value of €2.6bn. The government also plans to auction off Madrid's Barajas airport and Barcelona's El Prat by the end of the year.
Reform of the country's savings banks means that many will also soon be seeking stock market listings. Giles Tremlett Madrid
Portugal
Neighbouring Portugal is in even starker need of money after accepting a €78bn bailout. On Thursday, the newly elected centre-right prime minister, Pedro Passos Coelho, announced a rush sale of state holdings in the utility company Energias de Portugal and the power-grid operator REN by October.
Passos Coelho recently told the Financial Times that he wanted to sell off up to 49% of water utilities as well as several state media interests, reportedly including television and radio channels, plus the national news agency Lusa.
The state airline TAP and the airport owner ANA – which runs airports in Lisbon, Faro, Oporto and the Azores – are also due to be sold along with the insurance business of the state-run bank CGD, although the government had not given a time frame. Portugal will also be selling off real estate belonging to its civil governors' offices, which are being scrapped. Giles Tremlett
Italy
There had been talk of Silvio Berlusconi's debt-laden government raising cash by means of privatisation. But a package of fiscal adjustment measures being finalised in cabinet this week appeared to include only one sell-off.
The government was expected to clear the way for radio frequencies to be auctioned off to telephone companies. The frequencies, made available by the shift to digital radio, were expected to bring in €2.4bn.
The package of cuts, which has yet to be approved by parliament, aims to trim €47bn from the projected budget deficit but the bulk of the squeeze – €40bn – has been deferred until after 2012. John Hooper Rome
Britain
The coalition government in Westminster is in the process of selling off the 49% state stake in the air traffic control service Nats, decommissioned naval ships and its own collection of fine wine.
In the March budget the chancellor, George Osborne, set a target of raising £2bn from asset sales to finance the Liberal Democrat's idea for a green investment bank. The bulk of that is coming from the sale of its remaining stake in Nats and the Tote, the government-owned bookmakers. The private bookmakers Betfred have been chosen to buy the Tote for a reported price of £200m.
Last week, the telecoms regulator Ofcom approved plans to sell spectrum for mobile broadband. Ministers will decide this summer whether to proceed with the sale of the student loan book and in the March budget, the Treasury indicated that plans for a new Public Data Corporation would involve selling public data to the private sector.
Plans in the budget to sell off government buildings have been stymied by the poor property market and many departments are opting to "sweat their assets" instead by squeezing more people into the buildings in order to get out of expensive leases elsewhere. The Treasury is renting desk space to the Cabinet Office to allow it to end an expensive lease.
Dozens of judicial buildings are due to go up for sale as the coalition pushes through its rationalisation of the courts service with a reduction in number by 142, including 93 magistrates courts.
The government is planning to sell off HMS Ark Royal, the aircraft carrier that was decommissioned in March after 25 years' service. The deadline for bids is next month, and among those bidding is someone hoping to sink it off the Devon coast and turn it into a wreck for divers.
The Commons has announced it will sell its wine cellar though the proceeds will not go to the Exchequer but to fund a larger stock of cheaper wine for official functions.
The British public's appetite for the sell-off of public assets has been sorely tested and other attempts have gone spectacularly wrong.
Plans to sell off as much as 150,000 hectares of forest and woodland in England in the biggest sale of public land for nearly 60 years were confirmed by MPs in October last year. The U-turn – after a huge groundswell of public opposition –came in February. Polly Curtis
http://www.guardian.co.uk/business/2011 ... NTCMP=SRCH
by vanlose kid » Mon Jul 11, 2011 6:18 am
by Allegro » Mon Jul 11, 2011 11:44 pm
Many MPs argue that the money should be found by simply selling off the assets illegally bought by shareholders and managers, including a gas distribution company, an airline and luxury villas in Dubai...
Credible prosecutions are vital, not just to appease public anger, but also because many of Kabul Bank's assets are in Dubai. Under United Arab Emirates law it is impossible to seize properties until criminal investigations have begun...
by stefano » Thu Aug 18, 2011 6:08 am
by hanshan » Wed Aug 24, 2011 5:06 pm
http://www.lrb.co.uk/v33/n14/john-lanchester/once-greece-goes
Once Greece goes…
John Lanchester
The economic crisis in Greece is the most important thing to have happened in Europe since the Balkan wars. That isn’t because Greece is economically central to the European order: at barely 3 per cent of Eurozone GDP, the Greek economy could vanish without trace and scarcely be missed by anyone else. The dangers posed by the imminent Greek default are all to do with how it happens.
I speak of the Greek default as a sure thing because it is: the markets are pricing Greek government debt as if it has already defaulted. This in itself is a huge deal, because the euro was built on the assumption that no country in it would ever default, and as a result there is no precedent and, more important still, no mechanism for what is about to happen. The prospective default could come in any one of several different flavours. From everybody’s perspective, the best of them would be what is known as a ‘voluntary rollover’. In that scenario, the institutions that are owed money by the Greek government will swallow heavily and, when their loan is due to be repaid, will permit their borrowings to be rolled over into another long loan. There is a gun-to-the-side-of-the-head aspect to this ‘voluntary’ deal, since the relevant institutions are under enormous governmental pressure to comply and are also faced with the fact that if they say no, they will have triggered a proper default, which means their loans will plummet in value and they’ll end up worse off. The deal on offer is: lend us more money, or lose most of the money you’ve already lent.
This is, at the moment, the best-case scenario and the current plan A. It reflects the failure of the original plan A, which involved lending the government of George Papandreou €110 billion in May last year in return for a promise to cut government spending and increase tax revenue, both by unprecedented amounts. The joint European Central Bank-EU-IMF loan was necessary because, in the aftermath of the financial crisis of 2008, Greece was exposed as having an economy based on phoney data and cheap credit. The cheap credit had now dried up, and Greece was faced by the simplest and worst economic predicament of any government: it couldn’t pay its debts.
There is a good moment in one of the otherwise terrible Star Trek movies, in which Spock quotes an ancient Vulcan proverb: ‘Only Nixon could go to China.’ Similarly, it is probably true that only George Papandreou could confront the fundamental economic structure of the modern Greek state, since his father Andreas did more than anyone else to build it. Greece joined the EEC in 1981, the same year that he became prime minister, and subsequently the Greek government created a client state in which direct subsidies and transfers from the EEC were supplemented by easy loans from Western European banks. Money poured into Greece, and was used to fund a huge boom in public-sector jobs, most of them linked to political patronage. Various forms of corruption permeated the system, where cash gifts in fakelaki or ‘little envelopes’ were a fact of life, and where, crucially, the rich regarded paying tax as something that only the poor and stupid would ever choose to do. This latter fact meant that Greece was in certain vital respects a country without a functioning version of the social contract. To outside observers, all this was largely familiar, but the younger Papandreou, on becoming prime minister in 2009, was the first prominent Greek politician to admit it and promise to challenge it head-on. ‘Corruption, cronyism, clientelistic politics; a lot of money was wasted basically through these types of practices.’ Papandreou’s admission was jaw-dropping: everyone knew it was true, but since when do prominent politicians say very unpopular things which everyone knows to be true? The EU lent Greece the money to see Papandreou through his programme of cuts and crossed its fingers that this would buy enough time for the deficit to narrow – the deficit being the gap between what Greece was spending and what it was raising in tax.
That was the old plan A, and it didn’t work. Papandreou made deep cuts across public-sector spending, but two things went wrong. One, the Greek economy kept crashing. Economists have varying theories about the practical effects of ‘austerity’, meaning sharp cuts in public spending. To an outsider, it’s a little alarming how they differ about something so big and basic as the effect of large public spending cuts. But if you ignore the economics and look at the history, it seems to be the case that you can’t simply cut your way to growth. (There are a couple of contentious counter-examples, but this is the broad rule.) Holding public spending flat while other parts of the economy grow is historically a more valid model – and, by the way, holding public spending flat is in itself a huge struggle, being roughly what Mrs Thatcher did in the UK. So the first problem was that the Greek cuts led to a worsening of the Greek predicament: the economy kept contracting, and unemployment hit a record high of 16.2 per cent. The second problem was that those richer Greeks who had never fancied paying their taxes showed no increased desire to do so, and, much worse, the state showed no new ability or desire to make them. Without the ability to raise more tax, the old plan A was invalid.
So this is the new plan A: the Greeks borrow another €120 billion, the bondholders allow their debt to be rolled over, Papandreou’s government introduces further austerity measures and privatisations, rich Greeks start paying their taxes, the Greek economy recovers, and by the time the next huge chunks of debt repayment are due – from mid-2012 – Greece can afford to pay back its lenders and the crisis is over.
Does that sound plausible? It shouldn’t. This scenario is somewhere on the spectrum of unlikely to impossible, because while nobody questions Papandreou’s intentions – he is the only politician I’ve ever known to tell his electorate so consistently things they don’t want to hear – the Greeks are showing clear signs that they are unwilling to submit to the programme. Protests against the measures began with furious far-left agitations of a sort with which ordinary Greeks are weary, and which consequently may even have helped Papandreou, but the protesters now include the ‘Indignati’, middle-class Greeks who have had enough austerity already, thanks, and who take a Dario Fo attitude to Greek debt: can’t pay, won’t pay. The vote on the latest round of austerity measures took place in the middle of a 48-hour general strike.
The Indignati are not stupid, and are well aware of two salient points. First, the ‘bailouts’, as they are always called, are no such thing. Taxpayer-funded capital injections into otherwise bankrupt banks were bailouts. The Greek ‘bailouts’ are loans, pure and simple. The money will have to be repaid, and repaid at ungenerous rates of interest: 5.2 per cent for Greece, 5.8 per cent for Ireland. These short-sighted and grasping interest rates, motivated by the need to provide political cover for other governments, make an already critical problem significantly worse. The Greeks know they are being lent money just so they can work very hard for lower wages and higher taxes in order to pay it back at great cost. This arrangement is in place because of the second thing the Indignati know well, the fact that the outstanding Greek debt is mainly owned by French and German banks. This is why the Western European governments are especially keen on the ‘bailout’: it’s helping to keep their banks solvent. The Indignati do not find that a compelling reason to embrace a decade or so of abject misery. They want the Greek government to default, and the banks to accept losses for loans they shouldn’t have made in the first place.
It is that prospect which spooks everyone else in the EU, and the world economic order generally. A ‘voluntary’ rollover would be a polite form of default, which would give the European Central Bank, the IMF and EU governments time to draw up their real plan, whatever that might be. Any abrupt form of Greek default, caused by the lenders’ failing to lend or the Greeks’ missing a bond payment, would be what is known as ‘disorderly’, an eventuality that would play out as anything from a mild local spasm to a full-scale continent-wide meltdown, featuring the collapse first of the euro and then of the EU itself. The collapse of Lehman Brothers in September 2008 was one of these ‘credit events’. It is in their nature that they are chaotic and unpredictable, and all the more so because the fundamentals of the economic order, as constituted in 2008, are still intact. Who owns that Greek debt? As I’ve said, mainly French and German banks. Yes, but banks insure their debt via the use of complex financial instruments. Insure it with whom? Don’t know: some of it is insured with British banks as counter-parties to the risk, but that risk will be insured in its turn, so that the identity of the person holding the parcel when its last layer of wrapping comes off is a mystery. That mysteriousness was the thing that made Lehman’s collapse turn instantly into a systemic crisis.
It isn’t the consequences for Greece of a Lehman-type ‘credit event’ that worry the central bankers and governments: the risk of ‘contagion’, as they call it, throughout the Eurozone is what preoccupies them. The euro was not designed to default, so when Greece does, other European countries who have had to ask for non-bailout bailouts – Ireland and Portugal – will have their ability to repay their debts questioned. If one or other of them undergoes a ‘rollover’, or ‘restructuring’, or ‘rescheduling’ of its debt – all polite words for default – the next country in line will be Spain, and that is where everything changes. The ECB/EU/IMF ‘troika’ can write a cheque and buy the Greek economy, or the Irish economy or the Portuguese economy. But Spain is the world’s twelfth-largest economy, and the ECB can’t just write a cheque and buy it. A Spanish default would destroy the credibility of the euro, and quite possibly the currency itself, at least in its current form.
This is why the current situation has developed, in which governments are reluctant to lend Greece money because they don’t think they’re going to get all of it back, but they’re determined to do so anyway because they need to buy time. The euro was launched with a fundamental democratic deficit, which didn’t trouble the European elite behind it because they had come to believe in a version of manifest destiny. The idea seems to have been that the new currency would in and of itself lead to a gradual convergence of economies, institutions, banking laws, fiscal policies and national cultures. The currency had a bank but no government and no laws except for allegedly binding fiscal rules that were immediately and very publicly broken by participating governments, with no consequences or sanction. The system had no enforcement, and no reality principle other than the value of the euro on international currency markets, and the rating value of euro government debt.
The need for the Eurozone to have a more robust institutional structure and crisis planning has been obvious since its creation, and especially so since the 2008 implosion. The governments established a €750 billion ‘financial stability facility’ – basically an emergency bailout fund – last year, but fiscal union and political structures to match the monetary ones are still distant. An obvious next step would be the creation of Eurobonds, or packages of debt backed by the Eurozone as a whole. That would look (and be) less like a loan from the strong Euro economies to the weaker, and would also be a step, but a usefully deniable step, towards some form of fiscal union. As for crisis planning, well, we’re about to find out. A great deal of thought must, surely, have been given to the question of a Euro default – how to minimise its consequences, how exactly to execute the ‘restructuring’ or ‘rescheduling’. Surely? And if a country were to be forced to leave the Eurozone because it simply couldn’t any longer pay its debts, how would that work? This isn’t something a country can announce in advance. If Greece said it was going to leave the euro, every single adult in the country would run, walk or crawl to the nearest bank and withdraw all their money – that’s because if they leave their euros put, the euros turn into drachmas which are worth, say, half as much. The mass withdrawal would make every bank in Greece go broke the same day. So the government would have to declare a ‘bank holiday’, i.e. a total freeze on all bank accounts, as the first step towards starting a new currency. But what would happen to all those overseas debts, still denominated in euros? They would immediately be twice as expensive now that they would have to be repaid in devalued drachmas. So maybe the government would have no choice but to declare all its debts void.
That might sound like a recipe for disaster, but Argentina defaulted in 2002, froze the banks, declared its foreign debts void, and cut itself off from IMF funding – and since then, it’s been the fastest-growing economy in fast-growing South America. (The Indignati, by the way, are well aware of this example.) But this is an extremely high-risk strategy, not just for Greece but for the whole of Europe, and to attempt it would require that a lot of planning had already taken place. But we wouldn’t know if it had, because these plans need to be kept secret in advance if markets aren’t to bet on exploiting them. If this work hasn’t happened, extensively and at levels which carry the necessary political clout to execute the plans when the default happens, the euro is odds-on to fail. However complacent and oblivious the European political elite has been, it is hard to believe everyone will turn out to have been that soundly asleep at the wheel.
From the worm’s-eye perspective which most of us inhabit, the general feeling about this new turn in the economic crisis is one of bewilderment. I’ve encountered this in Iceland and in Ireland and in the UK: a sense of alienation and incomprehension and done-unto-ness. People feel they have very little economic or political agency, very little control over their own lives; during the boom times, nobody told them this was an unsustainable bubble until it was already too late. The Greek people are furious to be told by their deputy prime minister that ‘we ate the money together’; they just don’t agree with that analysis. In the world of money, people are privately outraged by the general unwillingness of electorates to accept the blame for the state they are in. But the general public, it turns out, had very little understanding of the economic mechanisms which were, without their knowing it, ruling their lives. They didn’t vote for the system, and no one explained the system to them, and in any case the rule is that while things are on the way up, no one votes for Cassandra, so no one in public life plays the Cassandra role. Greece has 800,000 civil servants, of whom 150,000 are on course to lose their jobs. The very existence of those jobs may well be a symptom of the three c’s, ‘corruption, cronyism, clientelism’, but that’s not how it feels to the person in the job, who was supposed to do what? Turn down the job offer, in the absence of alternative employment, because it was somehow bad for Greece to have so many public sector workers earning an OK living? Where is the agency in that person’s life, the meaningful space for political-economic action? She is made the scapegoat, the victim, of decisions made at altitudes far above her daily life – and the same goes for all the people undergoing ‘austerity’, not just in Greece. The austerity is supposed to be a consequence of us all having had it a little bit too easy (this is an attitude which is only very gently implied in public, but it’s there, and in private it is sometimes spelled out). But the thing is, most of us don’t feel we did have it particularly easy. When you combine that with the fact that we have so little real agency in our economic lives, we tend to feel we don’t deserve much of the blame. This feeling, which is strong enough in Ireland and Iceland, and which will grow steadily stronger in the UK, is so strong in Greece that the country is heading for a default whose likeliest outcome, by far, is a decade of misery for ordinary Greeks.
There is one country in particular where this disconnection between the political, the personal and the economic poses an acute threat to the world economic order. That country is Germany. The economists speak of ‘macro-economic imbalances’, the fact that German interests and, say, Greek or Irish or Spanish interests are not in alignment. The German economy is too big and too powerful for the health of its neighbours, unless European monetary policy is somehow ameliorated to help the smaller, weaker countries stay in step.[*] Interest rates which, during the first decade of the euro’s existence, suited German manufacturers, caused toxic credit bubbles to grow in Greece and Ireland and Spain. The consequences of those credit bubbles could take another decade to unwind, ten years of hard times for the citizens of those countries, who will spend most of it sweating to earn the tax money to pay back the German banks whose lending fuelled their bubble. German savings go to German banks to lend to other countries so that they can buy German goods from German companies who then save their earnings in German banks who lend it to … and so on.
This system is not elegant but it is probably sustainable, as long as German taxpayers are willing to pay for the busts and bailouts which will inevitably ensue. Their economy is so big that they can pick up these bills if they want to. As the euro’s troubles go on and the lineaments of this arrangement become clearer, however, the signs are that the German electorate is becoming steadily less eager to go along with it. The downmarket German press has been asking why Germans should work until 69 to fund the retirement of Greek public sector workers who knock off at 55. That’s a loaded way of putting the question, but it is a good question even so, and one to which Angela Merkel is manifestly sympathetic. She has spoken more than once about the need for the private bond-holders who own Greek and other debt to take losses from their holdings and for the entire burden not to fall on ever more reluctant taxpayers. (The markets hate it when she does that, and immediately begin to panic about Eurozone defaults.)
Ultimately, however, the new German attitude has the potential to destroy the Eurozone. If European monetary policy is run according to German national interests, huge structural imbalances will accumulate. The Germans will then either have to pay to correct those imbalances, or agree that the euro should not be run primarily according to German national interests. If they are unwilling to do either of those things, the euro can’t survive. It’s hard to tell exactly what Merkel thinks about all this. She is nobody’s idea of a caricature spendthrift, happily chucking money in the direction of the undeserving poor. Whenever the question of bailouts is mentioned, Merkel acts out an elaborate pantomime of reluctance to dish out more cash. It’s hard to tell whether she is really-o, truly-o this reluctant, or whether she’s hamming up her unwillingness for a domestic audience which strongly dislikes the idea of bailing out work-shy Southern Europeans. The fact is, though, that they are going to have to continue to do that, if the euro is going to continue to exist in its current form. Germany has to put the broader European interest on the same level as its own national interest, or the euro is toast. This, if you think about it from a broad historical perspective, is quite a reversal. During the 20th century, the greatest danger to European stability was Germany’s sense of its special destiny. During the 21st century, the greatest danger to European stability is Germany’s reluctance to accept its special destiny. If the German taxpayer manages, however grudgingly, to accept that it’s her duty to shoulder the burden, the euro will muddle through. But it won’t be pretty.
30 June
[*] I first saw this point made by Philip Stevens in the Financial Times on 9 June.
Vol. 33 No. 14 · 14 July 2011 » John Lanchester » Once Greece goes… (print version)
pages 3-7 | 3583 words
ISSN 0260-9592 Copyright © LRB Ltd., 1997-2011
by Jeff » Sun Sep 25, 2011 5:01 pm
by Jeff » Mon Sep 26, 2011 12:47 pm
Greek police protest troika, German and French embassies
Today @ 17:53
By Leigh Phillips
The very people who have been charged with protecting the Greek parliament and politicians from furious crowds and who have even been criticised by Amnesty International for their heavy-handedness, the Greek police, have themselves now begun to protest EU-IMF austerity.
On Monday, police from the Special Guards unit climbed Mount Lycabettus, the highest point in Athens, to hang a giant black banner underneath the hill’s famous Chapel of St. George saying “Pay day, day of mourning”.
Some 50 striking police officers protected the banner from police who remained in service and who had been sent to tear the banner down.
Troops of police have also protested outside European Commission offices in the capital and the German and French embassies, with a banner reading: “Troikans Out!” and another from the Pan-Hellenic Federation of Police Officers declaring in English: “Greeks do not negotiate our national dignity.”
''We will not become escorts for drug-addict politicians to get their latest dose,'' said another in reference the police operation in June providing protection from mass protests for MPs to be able enter parliament to pass austerity measures. The Greek term for a tranche of a loan and for a dose of drugs is the same word.
The officers complain of cuts in wages and forced unpaid leave. Monday was a scheduled pay-day, but some wages are being withheld as part of a special 'solidarity tax' imposed on public sector workers.
They have said they intend to “massively” participate alongside other civil servant protests. Further police protests are scheduled for Tuesday evening near the parliament.
An angry declaration on the police union website from warned of an “escalation of our struggle” and that the security forces would “not uncritically accept the directives from emanating from the IMF, the European Union and the powerful countries.”
“We refuse to accept government conditions for occupiers of our land.”
...
by vanlose kid » Sat Oct 08, 2011 1:01 pm
Camila Vallejo – Latin America's 23-year-old new revolutionary folk hero
Chile has been engulfed by student protests – and their young leader has huge public support in her fight against the elite
Jonathan Franklin in Santiago
guardian.co.uk, Saturday 8 October 2011 16.59 BST
As the Friday afternoon sun dipped towards the horizon, some students at the University of Chile played ping pong or football and couples lounged and kissed in the last warmth of the day. But others had more serious matters on their minds: the wildly popular student uprising that has transformed the nation's political agenda. And for many of the protesters involved and those who sympathise with its aims, the face of the uprising is Camila Vallejo.
In a basement auditorium a group of 60 student leaders planned the next steps in their burgeoning revolution for free university education with Vallejo centre stage.
Vallejo sat behind her battered laptop, a small blue notebook on her desk and a rapt audience in front of her. When she speaks, her hands fly about, like birds snatching invisible prey. Her language is pointed and clear but, mixed with constant doses of humour and self-deprecation, she keeps her charges laughing.
As the second female president of Chile's leading student body, known as Feuc (Federación de Estudiantes de la Universidad Católica de Chile), Vallejo, a member of the Chilean communist party, has presided over the biggest citizen democracy movement since the days of opposition marches to General Augusto Pinochet a generation ago.
The government response has reminded many older Chileans of that same dark era. Three days ago, on Thursday, Chilean riot police ambushed Vallejo and a group of fellow student leaders just after a press conference in downtown Santiago. "They [police] targeted the leadership with violence," said Ariel Russell, a University of Chile student who witnessed the attack. "We had not even started the march and the police apparatus was upon us."
Vallejo, a 23-year-old geography student, was singing and marching with a hand-written sign when a squad of military vehicles closed in and attacked her with jets of tear gas. A pair of trucks mounted with water cannons unleashed a barrage of water fierce enough to break bones and scrape a person across the pavement. Vallejo was soaked, a cloud of tear gas was then blasted on to her body. With her skin wet, the chemical reaction was massive and incapacitating. Vallejo was paralysed. Her body went into an allergic reaction and welts from the gas erupted over it.
"At first, we resisted, but it was intolerable," she told the Observer. "You could not breathe, it was complicated, we had to run away from the carabineros [police] then another water cannon hit us in the face with a different chemical, this was much stronger … my whole body was burning, it was brutal."
Over the next four hours, journalists were beaten and 250 people arrested. Twenty-five police were injured as masked youths with paint bombs and handfuls of rocks counter-attacked. All Thursday afternoon, downtown Santiago was awash in running street fights between heavily armoured police units and hundreds of protesters decked in shorts and tennis shoes, with scarves to shield them from the gas.
As squads of police attacked students, pedestrians and even an ambulance, Vallejo huddled up in an office, receiving medical care and monitoring the situation through mobile phone reports from a team of scouts at the edges of what quickly became a riot.
The government blamed Vallejo for the chaos; after all, she had made the much publicised call, mobilising her followers to congregate at Plaza Italia, a public park and march along the Alameda, the nation's main thoroughfare which sits less than two kilometres from the lightly guarded presidential palace. Vallejo was quick to retort that public gatherings need no authorisation and that the police had illegally attacked students standing in a park.
Vallejo, an eloquent and attractive young woman who exudes self-confidence and style, took the violence in her stride and focused on what she sees as the positive achievements thus far. "For years, Chilean youth have been consumed by a neo-liberal model that highlights personal achievement and consumerism; it is all about mine, mine, mine. There is not a lot of empathy for the other," said Vallejo in her office, decorated with a large photograph of Karl Marx.
"This movement has achieved just the opposite. The youth has taken control… and revived and dignified politics. This comes hand in hand with the questioning of worn-out political models – all they have done is govern for big business and powerful economic groups."
In just a matter of months, Vallejo has been catapulted from anonymous student body president to Latin American folk hero with more than 300,000 Twitter followers. Type her name into Google and there are more than 160,000 results just from the past 24 hours. Brazilian students now parade her as a VIP guest at their marches, the Chilean president invites her to negotiate a settlement and when she calls for a show of strength hundreds of thousands of students throughout Chile take to the streets. As an adept and wildly popular social media phenomenon, Vallejo has risen to become the most recognisable face of the student protesters.
Throughout the six-month revolt, Chilean students – in many cases led by 14- and 15-year-olds – have seized the streets of Santiago and major cities, provoking and challenging the status quo with their demand for a massive restructuring of the nation's for-profit higher education industry. In support of their demands for free university education, since May they have organised 37 marches which have gathered upwards of 200,000 students at a time.
Police repression has been frequent. Vandals who often use the cover of student marches to attack banks, pharmacies and utility companies are met by an armed force of riot police who routinely attack pedestrians and tear gas crowds of innocent civilians.
What began as a quiet plea for improvements in public education has now erupted into a wholescale rejection of the Chilean political elite. More than 100 high schools nationwide have been seized by students and a dozen universities shut down by protest.
Classes for tens of thousands of students have been suspended since May, and the entire school year might have to be repeated. Polls show an estimated 70% of the Chilean public backs the students' demands and an equal percentage find the government's proposal insufficient according to figures from Chile's leading newspaper La Tercera.
Widely admired for her eloquent speeches on Chilean television, Vallejo has gathered a cult following around the world that ranges from German folk rock tributes to videos from Latin America's largest university, the Universidad Nacional Autónoma de Mexico (Unam). "This nationalisation of the movement has been very important to us," says Vallejo who receives a daily barrage of speaking engagements, seminar invitations and fan mail. "Here in Chile we are constantly hearing the message that our goals are impossible and that we are unrealistic, but the rest of the world, especially the youth are sending us so much support. We are at a crucial moment in this struggle and international support is key."
In stark contrast to the students' popularity, the once beloved coalition known as La Concertación which organised the overthrow of Pinochet and then ruled Chile from 1990 to 2010 has fallen into political obsolescence. La Concertación is now polling at just 11% approval. Sebastian Piñera, Chile's president, a billionaire businessman, has just 22% public approval ratings, the lowest ever in Chilean history.
"For 20 years they [La Concertación] reinforced the Pinochet model, they institutionalised it, modernised it without any profound changes. Now that this model is in crisis, they can't be part of the discussion as they are effectively comp- licit," explained the Santiago student Ariel Russell. "Camila has an ability to deliver a very wide populist message, not populist just in terms of communicating to the poor, but also to the middle class… The youth now have more credibility than the traditional politicians."
http://www.guardian.co.uk/world/2011/oc ... olutionary
Chilean girls stage 'occupation' of their own school in education rights protest
For five months, girls demanding free university education for all have defied police to occupy their state school
http://www.guardian.co.uk/world/2011/oc ... intcmp=239
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