Piketty Pickets Titanic Teutonic Ignorance

Watching the entire German political establishment (so-called “Socialists” from the SPD Schultz, Gabriel, etc…) threaten Greece with punishments not in their powers to inflict… One is reminded that some countries have a habit of lying (this is, basically, what Nietzsche already accused Germany of doing… 130 years ago).

I said the entire German establishment… But for, paradoxically, Angela Merkel. Instead she, correctly, went to take her orders in Paris (a good instinct). After his victory the Greek Premier called Hollande first… And Hollande told him that Greek finance Minister Varoufakis had to go. Varoufakis had gone a truth too far, namely that plutocrats and their agents are terrorists.

You Two Better Solve This By Cutting Greek Debt 30%, Or History Will Punish You

You Two Better Solve This By Cutting Greek Debt 30%, Or History Will Punish You

In August 1914, the German Socialist Party, the SPD, supported the wild attack of Prussian and filthy rich plutocrats against the rest of the world, and in particular, the French Republic. A month later, the entire German army got nearly annihilated east of Paris (the First Battle of the Marne).

Why is it that the SPD cannot learn? (Germany is governed by a SPD-CDU coalition headed by CDU’s Merkel; Merkel, just like Hitler, needs the approval of her Parliament. Differently from Hitler, she can’t just send the SS to help approval.)

Countries are not just affected by their own cultures, ideologies, systems of thought. They are also influenced by something more pernicious, systems of mood. The mood that welcomed Auschwitz and another 5,000 extermination camps in Nazi Germany, was not made by Hitler, contrarily to despicable legend. Hitler just accompanied the exterminationist mood. That, in turn, was implied by a great admiration for Luther, one of the worst men. Ever.

Martin Luther was one of the great thought criminal, ever, because of his vicious anti-Judaism (many others, more courageous than Luther had criticized Catholicism before, without hating the Jews).

This is a serious PHILOSOPHICAL problem. Friedrich Nietzsche (who had fought against France in the Franco-Prussian war of 1870-71, before realizing his mistake), wrote hundreds of pages on the madness of the German herd, and its strident anti-Judaism.

Somehow the Nazis turned around Nietzsche’s philosophy against himself.

I thank John Rogers, a commenter on this site to attract my attention to (French) economist Thomas Piketty’s interview below.

Piketty wrote “Capital in the XXI Century”, a book where he presents (part of the) problems in economy and finance long exposed on this site (and its ancestor), and a few of the solutions (although I go much further, as I consider the public-private fractional reserve system a fundamentally fascist system, which has, ideally, to be outlaed in the long run)

This interview with Thomas Piketty puts it all in perspective:

DIE ZEIT: Should we Germans be happy that even the French government is aligned with the German dogma of austerity?

Thomas Piketty: Absolutely not. This is neither a reason for France, nor Germany, and especially not for Europe, to be happy. I am much more afraid that the conservatives, especially in Germany, are about to destroy Europe and the European idea, all because of their shocking ignorance of history.

ZEIT: But we Germans have already reckoned with our own history.

Piketty: But not when it comes to repaying debts! Germany’s past, in this respect, should be of great significance to today’s Germans. Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted. The first lesson that we can take from the history of government debt is that we are not facing a brand new problem. There have been many ways to repay debts, and not just one, which is what Berlin and Paris would have the Greeks believe.

“Germany is the country that has never repaid its debts. It has no standing to lecture other nations.”
ZEIT: But shouldn’t they repay their debts?

Piketty: My book recounts the history of income and wealth, including that of nations. What struck me while I was writing is that Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.

ZEIT: But surely we can’t draw the conclusion that we can do no better today?

Piketty: When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.

ZEIT: Are you trying to depict states that don’t pay back their debts as winners?

Piketty: Germany is just such a state. But wait: history shows us two ways for an indebted state to leave delinquency. One was demonstrated by the British Empire in the 19th century after its expensive wars with Napoleon. It is the slow method that is now being recommended to Greece. The Empire repaid its debts through strict budgetary discipline. This worked, but it took an extremely long time. For over 100 years, the British gave up two to three percent of their economy to repay its debts, which was more than they spent on schools and education. That didn’t have to happen, and it shouldn’t happen today. The second method is much faster. Germany proved it in the 20th century. Essentially, it consists of three components: inflation, a special tax on private wealth, and debt relief.

ZEIT: So you’re telling us that the German Wirtschaftswunder [“economic miracle”] was based on the same kind of debt relief that we deny Greece today?

Piketty: Exactly. After the war ended in 1945, Germany’s debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece. Instead, both of our states employed the second method with the three components that I mentioned, including debt relief. Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.

“We need a conference on all of Europe’s debts, just like after World War II. A restructuring of all debt, not just in Greece but in several European countries, is inevitable.”
ZEIT: That happened because people recognized that the high reparations demanded of Germany after World War I were one of the causes of the Second World War. People wanted to forgive Germany’s sins this time!

Piketty: Nonsense! This had nothing to do with moral clarity; it was a

rational political and economic decision. They correctly recognized that, after large crises that created huge debt loads, at some point people need to look toward the future. We cannot demand that new generations must pay for decades for the mistakes of their parents. The Greeks have, without a doubt, made big mistakes. Until 2009, the government in Athens forged its books. But despite this, the younger generation of Greeks carries no more responsibility for the mistakes of its elders than the younger generation of Germans did in the 1950s and 1960s. We need to look ahead. Europe was founded on debt forgiveness and investment in the future. Not on the idea of endless penance. We need to remember this.

ZEIT: The end of the Second World War was a breakdown of civilization. Europe was a killing field. Today is different.

Piketty: To deny the historical parallels to the postwar period would be wrong. Let’s think about the financial crisis of 2008/2009. This wasn’t just any crisis. It was the biggest financial crisis since 1929. So the comparison is quite valid. This is equally true for the Greek economy: between 2009 and 2015, its GDP has fallen by 25%. This is comparable to the recessions in Germany and France between 1929 and 1935.

ZEIT: Many Germans believe that the Greeks still have not recognized their mistakes and want to continue their free-spending ways.

Piketty: If we had told you Germans in the 1950s that you have not properly recognized your failures, you would still be repaying your debts. Luckily, we were more intelligent than that.

ZEIT: The German Minister of Finance, on the other hand, seems to believe that a Greek exit from the Eurozone could foster greater unity within Europe.

Piketty: If we start kicking states out, then the crisis of confidence in which the Eurozone finds itself today will only worsen. Financial markets will immediately turn on the next country. This would be the beginning of a long, drawn-out period of agony, in whose grasp we risk sacrificing Europe’s social model, its democracy, indeed its civilization on the altar of a conservative, irrational austerity policy.

ZEIT: Do you believe that we Germans aren’t generous enough?

Piketty: What are you talking about? Generous? Currently, Germany is profiting from Greece as it extends loans at comparatively high interest rates.

ZEIT: What solution would you suggest for this crisis?

Piketty: We need a conference on all of Europe’s debts, just like after World War II. A restructuring of all debt, not just in Greece but in several European countries, is inevitable. Just now, we’ve lost six months in the completely intransparent negotiations with Athens. The Eurogroup’s notion that Greece will reach a budgetary surplus of 4% of GDP and will pay back its debts within 30 to 40 years is still on the table. Allegedly, they will reach one percent surplus in 2015, then two percent in 2016, and three and a half percent in 2017. Completely ridiculous! This will never happen. Yet we keep postponing the necessary debate until the cows come home.

ZEIT: And what would happen after the major debt cuts?

Piketty: A new European institution would be required to determine the maximum allowable budget deficit in order to prevent the regrowth of debt. For example, this could be a commmittee in the European Parliament consisting of legislators from national parliaments. Budgetary decisions should not be off-limits to legislatures. To undermine European democracy, which is what Germany is doing today by insisting that states remain in penury under mechanisms that Berlin itself is muscling through, is a grievous mistake.

“If we had told you Germans in the 1950s that you have not properly recognized your failures, you would still be repaying your debts. Luckily, we were more intelligent than that.”
ZEIT: Your president, François Hollande, recently failed to criticize the fiscal pact.

Piketty: This does not improve anything. If, in past years, decisions in Europe had been reached in more democratic ways, the current austerity policy in Europe would be less strict.

ZEIT: But no political party in France is participating. National sovereignty is considered holy.

Piketty: Indeed, in Germany many more people are entertaining thoughts of reestablishing European democracy, in contrast to France with its countless believers in sovereignty. What’s more, our president still portrays himself as a prisoner of the failed 2005 referendum on a European Constitution, which failed in France. François Hollande does not understand that a lot has changed because of the financial crisis. We have to overcome our own national egoism.

ZEIT: What sort of national egoism do you see in Germany?

Piketty: I think that Germany was greatly shaped by its reunification. It was long feared that it would lead to economic stagnation. But then reunification turned out to be a great success thanks to a functioning social safety net and an intact industrial sector. Meanwhile, Germany has become so proud of its success that it dispenses lectures to all other countries. This is a little infantile. Of course, I understand how important the successful reunification was to the personal history of Chancellor Angela Merkel. But now Germany has to rethink things. Otherwise, its position on the debt crisis will be a grave danger to Europe.

ZEIT: What advice do you have for the Chancellor?

Piketty: Those who want to chase Greece out of the Eurozone today will end up on the trash heap of history. If the Chancellor wants to secure her place in the history books, just like [Helmut] Kohl did during reunification, then she must forge a solution to the Greek question, including a debt conference where we can start with a clean slate. But with renewed, much stronger fiscal discipline.

***

I read, and approved what Piketty said. I would add this: only two countries, Denmark and deluded Britain, have an opt-out of the Euro currency. All other European countries are supposed to adopt the Euro (and Denmark is already pegged to the Euro… As the Swiss Frank basically is… by spurts). Thus, to kick Greece out of the Eurozone is a bit like wanting to kick it out of the Union. Interestingly, too, Greece has not breached some democratic aspects that other countries (namely Austria and Hungary nearly did, exposing themselves to sanctions… The Austrian case was resolved, Hungary is still under close watch).

Thus Greece really is making plutocrats and their obsequious servants furious. Some think the banks of the USA got 13 trillion dollars of money from the government (namely, the Fed). Europe’s ECB gave only one trillion Euros. It’s high time to write some huge checks to relaunch the European economy. In the case of Greece we are talking about making a 100 billion gift. Scaled to the entire European economy, that is ONLY five trillion Euros. Notice it’s smaller than the case in the USA.

Last, but not least: California, with many times the economy of Greece, got broke a few years back. It paid employees with IOUs (I Owe You). Now California has fully recovered, thanks, in great part, to its knowledge economy. So, no panic. Just keep money flowing to Greece’s necessary functions, such as science and education…

Patrice Ayme’

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31 Responses to “Piketty Pickets Titanic Teutonic Ignorance”

  1. gmax Says:

    You and Piety agree: a case of great minds who think alike. Piety said: NONSENSE! when he was given the usual lie that German debt after World War One caused World War Two, or Nazism.

    What caused Nazism is that the Germans were naturally born Nazis. No? I mean it’s what Nietzsche said, in so many words… And Nazis did not officially exist yet!

    Enough with German accusations. Funny thing is that the U.S., without saying anything aloud, has been creating $13 trillions of money for its own economy!!!!!#*&! $×!!!

    • Patrice Ayme Says:

      This is hilarious: your orthography correcting software changed “Picketty” into “Piety”…. Yes, indeed that bad turn of mentality of Germany is 20 centuries old, come to think of it. All the way back to Arminius (“Hermann”), who betrayed Augustus crack legions.

      The Franks were 100% opposed to tribalism, differently from other Germans, and that is why they defeated all of them (demolishing the Goths in 507 CE at Vouille’)

      • dominique deux Says:

        Since Bill Gates’minions force us to think of piety, let’s recall the parable of the unforgiving debtor (Matthew 18:21-35). German Pharisians would do well to reflect on it. They are precisely in the situation depicted.

        However it should be pointed out that the short-sighted unforgiving mood is not only, or even mainly, German. A cluster of small countries are parading their righteous indignation, and Germany essentially surfs on that wave, hoping to steer it and possibly mitigate its effects.

        On the other hand, Greece is not helping its cause by insisting it has a right to go on splurging.

  2. John Rogers Says:

    Patrice

    Thanks for the shoutout.
    The metaphor of medieval bloodletting doctors is marvelous.
    But it also occurred to me that this austerity ideology seems to be yet another example of groupthink.
    https://en.wikipedia.org/wiki/Groupthink

    If you want to sit at the table with the serious persons and fit in then you have to sign on for austerity.

    But what Piketty is doing is dissenting (groupthink hates dissent) and pointing out that there are better, indeed required, alternatives. And he has the temerity to ground it in actual history (as you so frequently do). Once again Santayana is right. And I think you’re right about this mood business.

    • Patrice Ayme Says:

      Thank for the mood of appreciation, John!
      The mood of Germany in 1870, or 1914 was the same: it was to destroy the French REPUBLIC (OK, in 1870, France was technically an “empire”, yet, just as with Napoleon in 1804, it was viewed as Republic + emperor… Same as what Augustus tried/was viewed as having set-up; the point was that Prussia was racist, big time, inside Europe, and France was (basically) not). Thus the trick of “reparations” in 1871, made, said Bismarck, to destroy France.

      In 1939, France was the aggressor, technically, because the Republic saw the writing on the wall… Hitler wanted war with France/Britain no earlier than 1945.

      The present mood in Germany has been too much to stick to technical details, giving now way to rage, as they could not get their way. Dr. Merkel has been more cool headed… But like Cameron in England, she has let too much of an anti-Euro mood develop. What Europe needs is a massive transfusion of many trillions of Euros, same as the USA got.

  3. Chris Says:

    This is the most ridicolous text about the greek situation. Why do you aim it against Germany; as there are 18 other countries.
    Also, you support a (Greek) government which has nothing done to tax the rich. First, fresh banks (mostly) got bailed out – and now you want a debt relieve on the cost of the eurozone taxpayers (the middle class mainly) afterwards: who do you think pays for (mostly) the fresh bail out then? The northern europeans!
    Fine, then Greece can get new credit (as they need around 10 bn EUR/a), a lot of financial managers can cram off boni for these new credits and finally we need a third! debt relive (do not forget that greece already had an dept relieve).
    So, your argumentation is for the plutocrats and the rich in the world.

    Not really thought through this time.

    • Patrice Ayme Says:

      Yes, Chris, Thomas Picketty and me are well known admirers of plutocracy.
      I aim it at Germany because I read German, I listen to German TV, and I cannot believe the degree of criminal idiocy, especially from Schultz and Gabriel (both SPD, and both that I used to like very much before this; BTW, Schultz speaks perfect French and English).
      The Greek government is led by a determined leftist (Tsipras). See my exchange with Sladjana. The problem they have with taxing the wealthiest are technical, and tens of billions of Pluto Greek money are in German and French banks, BTW…

      I am NOT proposing new credit for Greece, nor is Picketty, not is Dominique Strauss-Kahn. I propose first to directly remove the debt due to liquidities provided to foreign bank subsidiaries.

      Germany got 60% of its debt extinguished in 1955…

      And if you think Picketty is “ridiculous”, just give me the offending quotes. Start with one.

      • Chris Says:

        I do not think that it is only because you read German, that you attack Germany, as you speak a lot of different languages. Anyway, what has language to do with political positions.

        Taxing the rich has technical issues…? I do not think so either; and I believe this is an excuse to do nothing – otherwise please hint me to any move to tax the rich which is ongoing?

        That you are not an admirer of plutocracy, I know, of course. That makes me so stunned about this text. No idea about Thomas Picketty.

        Yes, they are left …. fine, but not on the cost of other people moneys. Let the Greek government do whatever it wants; but please not with other peoples money. Next time I go in a restaurant and ask for a ‘bail-out’…hey I am left as well.

        Btw, I said that the text is ridiculous. Again, no idea about Thomas Picketty.

        How does the Greek Government want to pay for the running cost if not taking another credit.

        Germany debt relieve again …. yes, so what…the most conservative at the moment are Finns and Spanish Governments. Why do you always come back to Germany?

        Please bring some meat to the bone and address some points I have mentioned, please.
        Thanks.

        • Patrice Ayme Says:

          Well, I have three independent family ties with Germany. An uncle, a French Communist famous astronomer married, of all people, Von Molkte’s daughter

          Germany is totally dear to my heart and part of me. I drive Bavarian cars, including the latest one, which has a mind of its own (so I contribute actively to German arrogance).
          What do you mean “no idea about Thomas Picketty”? I mentionned Piketty many times, Krugman and Stiglitz are all gaga about him, his book sold two millions.

          You seem not have read what I wrote on the Greek crisis. It’s all about banks. Banks still have $54 billion invested, but around 300 billions was taken over by institutions.

          Average Greek has nothing to do with banks’ loans to plutocrats. Average retirement went down 45%, already. UNEMPLOYMENT among YOUTH is 50%. What are the Greeks supposed to do? Immigrate to the USA where the Fed pumped 13 TRILLION dollars in the economy? And why is the Euro so high? It should go down 50%! And would, if more were created.

          Many conservative governments, as I said, are shills for plutocracy. They are deadly afraid the Greek revolt will propagate. BTW, I am not attacking Merkel personally right now (I have in the past long ago, in 2010, when the Greek crisis was easy to solve, and she postured idiotically). I am attacking the pseudo-socialists.

          Nietzsche was a true GERMAN patriot. Later he was so revolted, he wanted to be known only as a European, or even a Pole! So I am.

          You keep on saying “ridiculous” but you don’t mention specifics. The average Greek has NO debt due to France or Germany. They have done enough. Moreover no effort is made to recover money from banksters, some, coming from Greece, sitting in Franco-German banks.,

        • Patrice Ayme Says:

          One of my many essays mentioning Piketty:

          https://patriceayme.wordpress.com/2015/02/13/picking-piketty-peeks/

          More can be found with googling my name and Piketty next to it

        • gmax Says:

          Patrice has put meat, bone and brains to this subject for the last 7 years! Did you read last week’s essays?

          • Patrice Ayme Says:

            Excellent question, thanks! ;-)!

          • Chris Says:

            Please see my answer below; to pshakkottai.
            I think we all agree what should be done; but we just do not agree on the pre-requirements to build the EU.

            • gmax Says:

              According to Krugman, and other things I came across, north Europe is not doing that well: Finland is in big trouble. There are riots in Netherlands (doing worse than France), etc

            • Patrice Ayme Says:

              True. Only Norway is doing real well, thanks to oil and gas. Germany just established a minimum wage, and is losing cost advantage relative to France.

      • pshakkottai Says:

        Hi Patrice:
        Extinguishing Greek debt is equivalent to Europe being monetary sovereign which is what regarding all Europe as one country means. Greece would nor be subject to austerity, wouldn’t have large debt payments and can grow. The created money will save banks and the investors in those banks. There will be no panic. At this point many banks can be nationalized. Which nation owns what is a question to be decided.

        As it is Greece which needs energy will go with Russia and its own currency and will do well in a few tears. Energy was the only thing Greece was short of. This is a plus for Putin and a minus to EU.

        A lesson learnt late!
        Partha

        • Patrice Ayme Says:

          Thanks for the support, Partha, we agree 100%.

          Actually: Extending sovereign debt extinction to ALL of Europe would be a fraction of the total USA money creation snce 2008 to help its own banks

          The lesson does not seem to have been learned yet, I think you are over optimistic! 😉

        • Chris Says:

          I agree to the solution as well, but that means to transfer powers to Brussel to avoid moral hazard on the back of northern europeans.

          Some countries block this since years; and yes it is mainly, but not only, the French elite which does not want to lose any power and want to rule the political institution.

          No way that northern Europe agrees to pay without transfer!

          Everything else is a blame game; and not very civilized (thats what I hinted at when I said the text is not really thought through, therefore I wrote ridiculous).

          So, lets work on the different governments to transfer powers to Brussel: or lets shut down the eurozone. No other way, in my opinion.

          • Patrice Ayme Says:

            Schultz and Gabriel were totally uncivilized, ridiculous and grotesque. Besides their obvious corrupt anger, they had none of the powers they attributed themselves. They are actually backpedalling as fast as they can. I hope Tsipras chew whatever they use as their minds tomorrow at the European PARLIAMENT.

          • Patrice Ayme Says:

            The ECB is located in Franfurt, the fort of the Franks. Not Brussels. There is no moral hazard: Northern Europeans THROUGH Greek plutocrats transferred public money to their own plutocrats and banksters.
            The Euro is high, way too high, BECAUSE there are not Euro money circulating. The French elite is whatever it is, France is not Germany at this point, as she makes war in half a dozen countries (and is becoming the de facto hegemon in the Middle East, as the USA shrinks).

          • Chris Says:

            Last comment on this from my side:

            Lets have a look into the future, and please provide some solutions/ideas:
            How do you want to get funds for investment for whole of Europe (as you also mentioned, there are other countries In the eurozone in need of investment), without too high interest attached, as this would lay the seeds for the next bail-out? And who should pay for this?

            Of course, as we agree this investment should be paid by the elite of whole Europe – but how to set it up? Please some constructive help here, as I have no idea!

            If we just start debt forgiveness, starting QE2 or underwriting another bail-out program; it will be the elite who benefits on the cost of the middle class -> this would kill our middle class; and you do not really want that, don’t you?

            Do not talk about war with me as I see NO reason to kill a human being! There is no justification in my opinion, even murderers like the ones in the middle east (i.e. ISIS) should be sent to prison, not killed!!
            You might have a different view on this; but for me it is not understandable why people kill each other. So, I do not care what the France is doing in the Middle East, only to risk another Vietnam.

            Anyway, the Greek topic demands answers and ideas!

            • Patrice Ayme Says:

              That people kill people is a fact. That empires were built that way, another. Facts can’t be changed by attitude. Right now, France and the USA are engaged in massive man hunts over 10 million square kilometers or so. The lesson of Nazism is that the bad guys ought to be killed first, and fast. Israel understands that fully. Srebrenica was a demonstration that lightly equipped troops are no match for heavily armed dangerous opposition (I just watched a German documentary on the famous massacre in Bosnia).

              There is a Euro problem caused by too high a Euro coming from not enough Euros, as I said. I am not for debt forgiveness for those who can pay. Just for stopping to ask sacrifices from those who cannot pay. I am even for reverse gouging, namely that those who profited from the 2008 crash would be made to regurgitate.

              Asking Greece out of whatever, the EU, the EZ, etc. is infantile, offensive, self-destructive, and a return to Nazi like terror, accusations against the innocent, racism and lies.

              Just provide the EU with as much money as the USA got from the Fed. Proportionally to the economies, that would come to around 15 TRILLION Euros (15,000 billions Euro). (The ECB provided only one trillion.) That should bring the Euro where it belongs, around 80 dollar cents.

              I will developed and explain around what Partha said yesterday.

            • tom Says:

              [REPOSTED TO CIRCUMVENT NESTLING, the Russian Doll effect of comments…]

              Some numbers: Since last August Greece has repaid over 17bn (that is 10% of the GNP) in mainly interest, while receiving no funds. It was still about 5 bn short; this was known and the solution is that the institutions would give Greece that money to pay back … the institutions. In the process it had to, according to the proposal that was voted upon, destroy its tourism, pharmaceutical and agricultural industries and sell off any remaining profitable industries, like telco with a government share. There were outright lies by the Commission “we never requred cuts in wages and pensions”, at the same time when Olivier Blanchard of the IMF was explaining why the IMF was insisting on pension cuts. There were no provisions to improve the real problems, such as judiciary , corruption and tax evasion. To be honest, it would be a great plus if the greek government had focused on exposing a few important corruption or tax evasion cases and thus came with a record of success in 5 comnths compared to 40 years of failures by their predecessors. Some more numbers tell you that 2/3 of the loans owned by greek banks are probably bad. Who has these loans? Not lazy, irresponsible greeks, but media moguls, casinos etc. So the troika wants to put more power into the hands of the elite ‘enterpreneurs’ that have produced debt instead of profit.
              One of the troika ‘reforms’ back in 2012 was to have a law to unilaterally and with no compensation change existing private contracts. Right, the state intervening to change long-standing private contracts. How well would a german worker like this? And mind you, the net effect of that law was a loss of income for the state in direct and indirect taxes. To make it even clearer, say that a cheating greek mogul has a football team and makes the following offer to the top players: 100K the first year, 1M the second, 10M the thirs, 100M the 4th and 1bn the 5th year, then after everybody accepts, the troika intervenes after one year to void all contracts with duration larger than a year. And btw, a german company was the beneficiary of this photographic law.
              To make a long story short, this is not to blame Germany in any way. It is clear however that what was proposed was akin to an indebted farmer asked to sell off his land to pay interest. This would mean that he would NEVER be able to pay back the loand and would be eternally on welfare. There was a very clear question on the ballot and it was not about the euro. If it were a question about the euro, it would be like asking “do you want a new car”, to which the answer would be it depends on the price, there is no unconditional yes. The proposal rejected would keep going the same way of borring in order to pay interest and anyone can understand that this is a dead end.
              So should Greece get a debt relief? It is one solution, but perhaps not the only one. Another solution would be to have an interest moratorium, so that any surpluses can go to paying back debt, not interest, at least until the debt has shrunk to serviceable levels. But IMHO the real battlefield would be to combat corruption and tax evasion as well as limit the power of the economic elite that led the country to this. So it makes no sense when on the one hand people like the vice-Chancellor speak of how the problems were not created by the present government and that Germany did nothing about corruption, nepotism, a client state etc (for which I think there are others to blame) and on the other hand misses the fact that the proposals that were rejected would increase the power of exactly these evils.
              There are a number of ideas. The problem is that just like Germany correctly planned long-term, these ideas will not give immediate results, which are needed to pay money owned to the IMF and EFSF. I will only give one example on property tax. Greek private propert is largely fragmented. For instance you may own a piece of land about 500 square meters say 50km from where you live; this is too small to exploit, but you pay property tax for it nevertheless. This means money out of your bank deposits and to the government and ultimately the interest payments. What if this land which produces no income was actually used to increase the GDP? Say lease it via state to someone who will cultivate it or perhaps use it to produce and export honey and pay the property tax for you. Such a think would actually put resources to work and generate wealth not redistribute it and ultimately lose it.

            • Patrice Ayme Says:

              Excellent comment, Tom. I reposted it as an independent comment, and will comment further. I wish Chris reads this and meditates…

  4. Sladjana Josic Says:

    Tsipras joined greek communist party as a young man. All communist parties are more or less navigated from Moscow. It is legacy of global and powerful kominterna.

    • Patrice Ayme Says:

      Hmmm… Well, as a teenager, yes, but Tsipras soon joined what would become the main component of the COALITION OF THE RADICAL LEFT (Syriza). When the Communists left that, in 1991, Tsipras stayed. So he is more of a Trodskist-Centrist. I certainly do not believe he takes his orders from Moscow. AT ALL.

      Fact is 61% of Greeks are now in agreement with an ex-Trodskist. Trodsky, who commanded very successfully the Red Army, totally disagreed with Stalin about the necessity of dictatorship. Tsipras does not want to follow Putin (who is no communist). But the EC and ECB are doing their best to push him that way. France is perfectly aware of that.

  5. Sladjana Josic Says:

    Sladjana Josic: I notice some similarities between serbian socialist party and syriza. Both parties act in name of people-we do this or that in name of serbian/greek people. It is a sort of populist politics and it is bad. President of serbian socialist party was Slobodan Milosevic. He died in prison in Hague, but his wife lives in Moscow. She escaped from Serbia and found her new home in Russia.

    • Patrice Ayme Says:

      Patrice Ayme: I detested Serbian ultra nationalists in general and Milosevic, Vladic, Karazdic in particular. However Tsipras is not at all like them, in my vision of things.

      The Greeks were basically stolen by plutocrats, banksters and institutions shilling for them. Merkel’s Germany has made a comedy of errors I fustigated for 7 years. I explained all this in hundreds of pages on my site. I am happy to have in Tsipras a leader who is closer to the truth than to the lies everybody got used to.

  6. Patrice Ayme Says:

    {Sent to Krugman, July 7.]

    For a number of reasons having to do with European construction, definitive Grexit is not an option. It would make the situation way worse. And not only Greece has this situation, and not just the periphery. Much of the German population lived in misery, on one Euro an hour, to keep the Teutonic export machine roaring.

    Anyway, very nice quotes, thanks

  7. Tom Says:

    In reply to Chris.

    Some numbers: Since last August Greece has repaid over 17bn (that is 10% of the GNP) in mainly interest, while receiving no funds. It was still about 5 bn short; this was known and the solution is that the institutions would give Greece that money to pay back … the institutions.

    In the process it had to, according to the proposal that was voted upon, destroy its tourism, pharmaceutical and agricultural industries and sell off any remaining profitable industries, like telco with a government share. There were outright lies by the Commission “we never required cuts in wages and pensions”, at the same time when Olivier Blanchard of the IMF was explaining why the IMF was insisting on pension cuts.

    There were no provisions to improve the real problems, such as judiciary , corruption and tax evasion. To be honest, it would be a great plus if the greek government had focused on exposing a few important corruption or tax evasion cases and thus came with a record of success in 5 months compared to 40 years of failures by their predecessors. Some more numbers tell you that 2/3 of the loans owned by greek banks are probably bad. Who has these loans? Not lazy, irresponsible greeks, but media moguls, casinos etc. So the troika wants to put more power into the hands of the elite ‘enterpreneurs’ that have produced debt instead of profit.

    One of the troika ‘reforms’ back in 2012 was to have a law to unilaterally and with no compensation change existing private contracts. Right, the state intervening to change long-standing private contracts. How well would a german worker like this? And mind you, the net effect of that law was a loss of income for the state in direct and indirect taxes. To make it even clearer, say that a cheating greek mogul has a football team and makes the following offer to the top players: 100K the first year, 1M the second, 10M the thirs, 100M the 4th and 1bn the 5th year, then after everybody accepts, the troika intervenes after one year to void all contracts with duration larger than a year. And btw, a german company was the beneficiary of this photographic law.

    To make a long story short, this is not to blame Germany in any way. It is clear however that what was proposed was akin to an indebted farmer asked to sell off his land to pay interest. This would mean that he would NEVER be able to pay back the loand and would be eternally on welfare. There was a very clear question on the ballot and it was not about the euro. If it were a question about the euro, it would be like asking “do you want a new car”, to which the answer would be it depends on the price, there is no unconditional yes. The proposal rejected would keep going the same way of borrowing in order to pay interest and anyone can understand that this is a dead end.

    So should Greece get a debt relief? It is one solution, but perhaps not the only one. Another solution would be to have an interest moratorium, so that any surpluses can go to paying back debt, not interest, at least until the debt has shrunk to serviceable levels. But IMHO the real battlefield would be to combat corruption and tax evasion as well as limit the power of the economic elite that led the country to this.

    So it makes no sense when on the one hand people like the vice-Chancellor speak of how the problems were not created by the present government and that Germany did nothing about corruption, nepotism, a client state etc (for which I think there are others to blame) and on the other hand misses the fact that the proposals that were rejected would increase the power of exactly these evils.

    There are a number of ideas. The problem is that just like Germany correctly planned long-term, these ideas will not give immediate results, which are needed to pay money owned to the IMF and EFSF. I will only give one example on property tax. Greek private propert is largely fragmented. For instance you may own a piece of land about 500 square meters say 50km from where you live; this is too small to exploit, but you pay property tax for it nevertheless. This means money out of your bank deposits and to the government and ultimately the interest payments. What if this land which produces no income was actually used to increase the GDP? Say lease it via state to someone who will cultivate it or perhaps use it to produce and export honey and pay the property tax for you. Such a thing would actually put resources to work and generate wealth not redistribute it and ultimately lose it.

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