Saturday, February 25, 2012

Why Should Europe Care About Greece?

If Europe could be sure that a Greek collapse would entail no contagion, should it still care about what happens to Greece? Or, to put it differently, besides the stability of banking and of the currency union, what are Europe’s interests in Greece? My sense is that there is one obvious interest and one less obvious one.

The obvious interest is that contagion takes many forms. High unemployment is already prompting another emigration wave, and many of these immigrants will land in Western Europe. The economic and social implications for the recipient countries can be severe given their own economic problems. More generally, a worst case scenario for Greece can be very bad. Greece is the border between Europe and the Middle East and North Africa, and a weaker Greece could destabilize SE Europe by increasing the flow of people and goods crossing into Europe. Worse still, a weak Greece could be unable to contain rising social tensions and enforce the law in its own borders, paving the way for its territory to be used as a haven for illegal activity. Europe has an obvious interest to prevent this scenario from playing out.

The less obvious interest is the impact of a Greek collapse on the European brand. I don’t mean, merely, that a prolonged and unsolved crisis damages one’s reputation in the same way that the Yugoslav wars of the 1990s damaged Europe’s claim to have a common foreign policy (though as I disagree with the claim that the European leadership has mishandled the economic crisis – but that’s another matter). Rather, I mean something deeper that goes to the core of what Europe stands for. If America’s brand is “life, liberty and the pursuit of happiness,” Europe’s brand is “rules and institutions lead to peace and prosperity.” From the European Coal and Steel Community to the accession of Greece, Spain and Portugal in the 1980s to the 2004 accession of the 10 new member states, Europe has fashioned itself as offering a rules and institutions-based path to peace and prosperity. Even when dealing with Ukraine or Turkey, Europe sees itself as an anchor – follow the playbook of the acquis, it says, and all will be good.

That brand will take a severe beating if Greece fails. Most obviously, there is the question, are rules enough? Greece (nominally) checked off lots of boxes, but as the rest of Europe is finding out, there was much rotten beneath the surface. Of course, one has to also ask, do the rules help? Where is the European growth model? Where is Europe’s capacity to create growth and induce productivity? What good are all these common rules if you can end up with the market distortions and with the corruption that one sees in Greece? But the more existential question is, how much common purpose and solidarity have these rules created? This crisis has made plain that while there is much desire to work together at the political level, at the social level, we are not far off from a recrimination yelling match of “you lazy Greek,” “I founded democracy, you Nazi.” These alarming attacks and bickering show how easily we can erase decades of goodwill by reverting to old or new stereotypes about other people.

These are the deeper stakes for Europe. A belief that the human and political condition is malleable and that history and even culture can be contained through rules and institutions. If Greece truly fails, that idea will need serious life support to remain alive.

70 comments:

  1. A rule is by definition a dividing line between two choices ... the choice to follow the rule and the choice to break the rule.

    We know that plenty of people are speeding on the roads every day. We know people buy and sell drugs, or all sorts of illegal activity. Some small number of these people get caught, and they might say, "Oh I'm not the only one who does it."

    The police will say, "Well, you are the one who got caught, if you followed the rule, then someone else would have got caught instead of you."

    So of course the Maastricht Treaty had plenty of rules, fiscal fules, debt rules, GDP rules. Lots of countries have slipped around and not followed the rules, we know that, but for whatever reason Greece was the country that got herself into trouble. People only show respect, "yes there really is a rule here", when someone gets themselves into trouble for breaking the rule.

    Seems like Greece will be the one who proves the rule for the rest of Europe, and that will strengthen the European brand, not weaken it.

    Any political brand has to stand for something -- you cannot please everybody. As soon as you stand for something you say, "These people are better than those other people, because of what they do, and how they behave."

    To say, "Oh, any people are OK, regardless of what they do," is really to stand for nothing. If you start saying that then you don't have a brand anymore.

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  2. The EU functions in many ways as an empire, expansionist and encompassing many nationalties as result, while simultaneously trying to subdue nationalist instincts.

    As with all empires it stubbornly hangs onto all its territories, to avoid giving the appearance of a chink in the armour. For this reason the EU is unwilling to cut off Greece wiothout a fight. Of course a corollary of this is that nationalities have a way of asserting themslevs bloodily when an empire finally loses its authority.

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    1. I think you know almost nothing about the EU and how it functions. It is not a state and it does not attempt to be an empire. How could it ?Decision making is slow and cumbersome. The EU is more characterised by powerlessness than by forceful acts.

      I would assume that you are British. The British struggle to accept that they are no longer calling the shots in Europe. They villify "Brussels" in their frustration. But Brussels is only a synonym for collective decision making. If that irks you you have clearly not understood the last 50 years of European history.

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    2. If I have not understood 50 years of European history, then you have not understood what I have written, and constructed a giant strawman as a result.

      I never claimed that the EU was an empire, merely that one of its defining traits was the suppression of nationalism that has led to a peace dividend for Europe. The unravelling of this system would be a grave threat to European security.

      Hardly a villification.

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  3. By a quite remarkable coincidence, Helmut Kohl has a column in Bild today (yes! the xenophobic-about-greece german tabloid Bild) saying much the same thing.

    But you've put it better than he did. He was far too waffly about "keeping our eyes on the goal (of european unity) and suchlike.

    Plus: Kohl is trying to distract attention from the fact that he signed off on such a flawed eurozone structure, despite warnings.

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  4. Greece's exit from the Euro or even the EU would kill the dream of a peacefully united Europe from Iceland to Cyprus, from the Acores to the North of Finland.

    But this dream was never realistic. It was always used for Sunday speeches only.

    The British (or rather the English) never shared this dream, the Yugoslav wars (where Greece by the way came down on the wrong side and still does today) showed clear limitations of EC/EU power, and the situations in Belarus and Ukraine today prove that there is no such thing as a linear development in history.

    At some point one has to be honest and face the facts.

    And it is a fact that Greece never qualified for the European project, let alone for the Euro. It still breaks more EU rules than I can count. It still struggles to share European values as shown last week when Greece opposed sanctions against Syria because some Greek shipowners want to continue trading with a fascist regime.

    From a northern European perspective Greece is a Balkan state and the interest in that region is down to the fear that the crazy people of this part of the world could start another big European war. If we could only finally unwind the Otttoman Empire, we would simply forget this region.

    My view is that the EU must progress and progress fast in the face of globalisation. We cannot wait until Greeks have found out that 1 Mio. state employees with very low productivity are not a workable idea, that you cannot have 4 times the number of teachers per kid compared to Finland and still end at the bottom of the OECD table, that not paying taxes is not a funny folklore.

    We already have a multi-speed Europe and things are very much drifting apart in many areas. It may be better if Greece joins an EU periphery, closely associated with the EU, but not part of it. In this environment Greece can develop and learn the long-overdue lesson of good relations with the neighbours. Maybe it can then catch up with the northern EU later.

    I personally would consider this scenario a defeat. But sometimes you have to lose a battle to win the war. Without Greece the EU would show that membership needs to be earned and can be withdrawn. Without Greece the Euro would be stronger and taken seriously around the world.

    There is a very small window of opportunity left for the Greeks to show that they only got a few things wrongs and are able to fix them. If, however, Greece further descends into denial (e.g. by voting the extreme left into office) or continues to play the game of blaming the Germans in a very unintelligent and rather vulgar way, it will simply disqualify itself from the EU. As an EU insider in Brussels I can tell you that there is no sympathy left for Greece.

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    1. Ah,yes,we appreciate your helpful "Northern European" insight.Let me guess,and your sources in the Brussels tell you that Europe sells armaments to Greece at the cost of billions fearing that a weakened EU member in the Balkans might precipitate another war?

      By the way,your post is also misleading.Lord knows how much it's going to cost Greece,Italy and Spain now that they're in no position to import oil from Syria and Iran any more.

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  5. Hey, don't you think that the useful life of this blog is over?

    Greece has defaulted already thanks to people like you sleeping on the switch.

    Dinos Plassaras

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    1. Have you ever wondered what life would be like when it isn't someone else's fault?

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    2. Uh, what's your name, really, Dean or Dinos, Plassaras? Isn't it good enough for you to troll at Yanis Varoufakis blog, with comments that are full of rants but short on facts and reasoning? Do you want to annoy the folks here, too, with complaints that don't make any sense at all? D'oh.

      Just ignore that guy, Nikos! We others know that his accusation is ridiculous.

      Delete
    3. Dear Nikos,

      I have followed your blog for some time with great interest. There are many very good articles which have given me new insight.
      In a way, your blog represents for me "the other Greece", different from what we see in the media, with a rational view on developments, and trying to analyze the problems in an unbiased way.
      So, don't be discouraged. Your blog continues to be very useful.

      Delete
    4. Yes Gray:

      Dean and Dinos is all the same.

      BTW, I can see why you like this and Varoufakis' blog. An endless theretical discussion whose only pupose is the self-promotion of the blogger.

      In terms of practical results: zero. Anticipatory capacity: subzero.

      Just an endless passive conversation after German vultures have eaten your lunch.

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    5. Anonymous 6:51, imho discussions serve a very important role in a democracy: They create insights into the thinking and the motives of the different sides involved in a problem, they infomr the public about facts that are downplayed or even missing in the media reporting, and they introduce ideas about possible solutions into the public discourse, among other advantages. I, for one, am very sceptical of people who discourage debates. Imho most of such folks come from the extreme sides of the political landscape, and they typically favor radical authoritarian solutions. If those radicals prevail, the consequences much too often is a dictatorship. !No pasaran!

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    6. Btw, afaik nobody is forced to read this blog that of Varoufakis, or any other one, and there's no obligation whatever to participate in the discussions. So, what exactly is your point at all? If you don't like the blog post and/or the debates, don't read them! Period. It's as easy as that.

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  6. Dear Nikos,

    "Why Should Europe Care About Greece?" is a good question for which I don't have an answer yet. Your article is right, I agree. But there are trade-offs to be made and other "costs" (not only financial) for keeping Greece in the Eurozone in its current state and with its current mentality.

    Why are troubled people from Portugal, Ireland and poor Eastern European countries behaving so much better (e.g. civilized, smart and cooperative) even though they have very hard times as well? My dissappointment about Greece is growing almost every day. I do not only mean the economic facts, the corrupt politicians and all that. I also mean the people. I find their actual behaviour and attitude disgusting. I have three different European passports, have lived in different European countries with entirely different cultures and travelled a lot. I know Europe very well. And I am convinced that the Greek mentality does not have much in common with any other European country's mentality. Greece is showing its true face in this crisis. It is confirming how Nikos Dimou described it already several decades ago. And that's not ment positively. If you have time, please have a look at that: http://www.spiegel.de/international/zeitgeist/0,1518,817995,00.html

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    1. Quite good drawing of the famous "Tiger" tank of Nazi Germany at that Spiegel slideshow. However, of course that terrifying weapon usually wasn't delivered with the bottom plates missing. That looks more like Greek than German product quality and attention to detail to me! :D

      No, seriously now, the most problematic issue with these cartoons isn't that they're drawn at all (freedom of speech, it's a free country) but that so many major Greek newspapers apparently see no problem in publishing those examples of hatespeech! Makes me wonder how many of the 79% of Greeks who have a negative view of Germany have been strongly influenced by their media. Some may say that deserves us Germans well, it's the boomerang of our horrible sins of the past, but it's still a disturbing behaviour for a nation's media. I really thought we had left this way behind us in 21st century's Europe.

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    2. When I see pictures like that, I think that if I were German I'd be putting my hands (and my money) in my pockets and simply walking away.

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    3. "Why are troubled people from Portugal, Ireland and poor Eastern European countries behaving so much better (e.g. civilized, smart and cooperative) even though they have very hard times as well?"

      In other words, why are the Greek people not doing what they are told ...and too shut up and take just take what is served to them?

      Because the Greek people understand Tyranny in whatever 'ism'(Communisim, Fascism, Marxism etc) it falls under.....

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  7. Greece needs a referendum ... like the Irish get it now. It needs it as fast as possible, before the bailout money is given to them. Let them decide: a) Memorandum or b) Default. And let them live with the consequences.

    Some seem to believe that they could default without leaving the EZ, that they could just tell everyone "sorry, but you won't get your loans back but we keep on enjoying the membership." I doubt it. It seems to be legally and practically impossible. For example, wouldn't everything they tried to trade with be confiscated abroad in such a case? Leave alone the necessary capital controlls etc. But it's up to them. With such a referendum, it is impossible for the Greeks to continue all these cheap excuses that we here everywhere today. Let them decide their fate, they have to learn that anyway... to take responsibility for their own decisions and behaviour.

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  8. Scapegoating must be in the genes of the Greek culture.

    Let's look at an example:

    "Many Greeks have been badly hit by austerity measures demanded by the debt-wracked nation's foreign lenders."
    http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_01/03/2012_430577

    This formulation is 100% shifting of any responsibility. A respectable and serious journalist would have writen: "... badly hit due to the economic crisis." And we all know who is responsible for the Greek mess.

    Believe me, this is just one example. It's the same all over the Greek media. And Ekathimerini is supposed to be the most serious of them. That's so embarrassing. Congratulations, Greece, you are a wonderful country.

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    1. Ok, but it has to be said that Ekathimerini usually seems to be better than other Greek media sites. I have read lots of insightful columns and editorials there that showed healthy self-criticism and didn't try to deivert the responsibility. As a left winger, I of course can't support all of that conservative papers proposals (lowering the taxes? Come on!), but I agree with many of their views, for instance about the state of the administration. I'm sure there are much worse papers in Greece than the Kathimerini.

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    2. Well, just compare the before mentioned embarrassing formulation of the Greek author to what Reuters' journalists write:

      "but the country's debt problems, and a reluctance among many Germans to act as the eurozone's paymaster for its bailout, have sparked anti-German protests in Athens."

      http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_06/03/2012_431411

      Funny though that it's published in the same newspaper, just the authors' differ... what a coincidence (or rather not). ;)

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    3. Good point, Anonymous 7:30. We should always apply a healthy scepticism to the media's reporting. There's a whole lotta framing going on!

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  9. For all of you "well meaning" foreigners, commenting on the Greek situation.

    Why this obsession with Greek finances? Why?

    So, that Germany may cut its exposure?

    Are there no limits to German tight fisted and other geriatric concerns? Under what logic exactly are you asking a sovereign state to reform to your liking? Since when free states have to respond to such exogenous nonsense?

    Dean Plassaras.

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    1. Because Greece is not planning to spend its own money, it is asking other countries to spend their money. The one who pays the music decides the music. If Greece doesn't like it, it shouldn't ask for other people's money.

      Like every other member, Greece voluntarily gave up a part of its souvereignity when it entered the EU and the EZ! As a member of such unions, it must commit to the unions' mutually agreed rules, which means it is not fully souvereign.

      Moreover, it is influencing other members' fate due to mutual dependences. Right now, Greece' economy is a danger for the economies of other members because it messed up and broke some of the unions' rules. As a result, the other members have the duty and the right to protect themselves. Moreover, Greece has proven to be incapable of reforming itself. It's governed by a self-serving mafia.

      But Greece is still souvereign enough to decide to leave the club. Then it is free like a bird again. It would be a relief for most other members.

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    2. Ano:

      That's not a good reply. Greece is not using OPM. Greece is getting loans from the ECB at above market rates (or at least at above what is needed to remedy the situation).

      The loans received simply are used to retire loans maturing (this in the language of finance is called a rollover)

      So you want us to allow Germany to come in and wreck the Greek economy and then walk away free?

      Have you ever heard of the Pottery Barn rule? When you break something, you then own it and you have to pay for it?

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    3. So "loans" are not "other people's money"? If so, please, could you give me a loan... I mean, it's not your money so you cannot say "no". LOL

      And btw, EZ countries and the IMF are both lending to Greece and guaranteeing some loans ... you are not really informed.

      As far as I can see no country is "coming in" anywere. Greece has wrecked its own economy, not any other nations. It can call itself lucky that it gets help.

      And if I were a creditor, I would also make sure that my loans are used to replace maturing bonds only instead of letting Greek politicians use the money. They cannot handle money, they'd put it in their own pockets. Greece has to learn to live without other people's money.

      You should grow up and take responsibility. You are confirming what some commentators here say about Greek people. It's a shame!

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    4. Ano:

      Can you please state your education and level of experience? It will make the conversation go a lot faster, I promise.

      You see, I don't think it is my responsibility to educate anonymous people on a blog that seems to have already a predisposed bias (via its headline).

      If you come here to post slogans, like sports fans do that's o.k. I guess. But such does no make for an intelligent conversation.

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    5. OPM? Opportunistic Mesh? The Official US Playstation Magascene? Other People's Money?
      I guess the last explanation is meant, but the statemtnt still doesn't make any sense. Greece can't finance it's expenses right now without additional money from other Eurozone nations. Even if Greece defaulted it would still run a deficit. And the interest rates of the troika credits are WAY below market rates for the very risky Greek bonds! The investors demand rates ABOVE the Portuguese (which are at 12-15% now) from Greece. THAT's the ugly reality, and it's far away from your wishful thinking, Phoevos.

      As for Germany allegedly wrecking Greece's economy - come on, there isn't much to wreck, really! When was the last time yourt nation had a positive trade balance, do tell? NOT in the last ten years, that's for sure! Germany's economy, on the other hand, is highly competitive despite the harsh conditions of globalization. So, what's the right course now, more of the same, or learning from people who evidently have a better recipe?

      And lastly: Germany didn't break anything, that responsiblity goes to the past governments in Greece (elected by the people). Sorry, but your whole comment is delusional, from start to end. Please wake up and face reality!

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    6. To educate? you mean trolling, don't you?

      Only people without proper arguments but with a minority complex perceive it as necessary to counter a statement with a reference to their own (wanna have) experience. They don't notice that they loose the argument in exactly that moment.

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    7. Mr Plassaras seems to think that foreign creditors are stupid and insolent: stupid, because they lend money to the Greek government, and insolent, because they expect it back at maturity.

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    8. O.k. 3 Anonymous and a Gray.

      How am I supposed to address you? Even if I call you Ano1, Ano2 and Ano3 how do you know which is which?

      Can you please identify yourselves instead of addressing a German mob?

      Don't you fellas understand that the design of the euro had inherent flaws and these flaws have manifested themselves in Greece and a few other EZ members?

      Why are you asking Greece to pay for German flaws and supreme German execution incompetence?

      Since when Greece has become a guinea pig in Euro governance because your incompetent leaders are the laughing stock of the world? Do you have any idea what pronounced embarrassment the term Merkozy invokes? Try synonymous with amateurism for starters.

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    9. The major flaw of the Euro was that Greece was allowed in. But for this, the government of Konstantinos Stephanopoulos bears the major responsibility. Its officials knaw that they didn't even have the necessary statistic data for the application to Euro membership, and that the numbers they presented to the EU were largely made up and much too optimistic, but they apparently didn't vare that that country wasn't ready for the difficult conditions of the new currency.

      The other later Eurozone nations, with Germany being just one of them, can be blamed for being too credulous even though there was reason to suspect the Greek numbers had been sugarcoated, but they had only very limited means to verify the data, and virtually nobody expected deception on such a large scale. In most other European democratic nations, such a fraud would lead to a major scandal and topple the government, after all. It's rather understandable, imho, that other goverments didn't seriously expect Stephanopoulos to risk this.

      So, it's a total distortion of reality to balme the victim (the other Eurozone nations, who engaged in good faith negotiations) and at the same time not even to mention the role of the offender. But such behaviour, fingerpointing at a convenient scapegoat while ignoring the own responsibility, sadly seems to be typical for many Greeks. Hellas has a myriad of problems today, after delaying urgent reforms for way too long, but as long as so many citizens show no ability for self criticism, there can't be much hope for a positive change. And without radical change, the middle class and lower incomes in Greece will continue to pay the highest price for the continuing misery. That's the ugly reality, and fingerpointing won't make it magically disappear.

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    10. Gray:

      After all you are financially illiterate, right? What are you talking about? What are you people smoking?

      Do you have any exposure in modern finance or do you make things up as you go along?

      It is precisely such incoherent and disjointed statements like yours that make Germans the laughing stock of Europe. Where do you people learn such self-serving inaccuracies?

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    11. Well, the readers will make up their own mind about who presented the better arguments and made more sense.

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    12. You are right Gray.

      Let the readers rescue your ignorance because you are totally naked.

      BTW, who invited you and other geriatric Germans to develop an obsession with Greek affairs?

      Are your Bunds in danger or what?

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    13. Phoevos, the only "exposure in modern finance" your country has is knowing the telephone number of Goldman Sachs.

      Gray, maximum respect that your country (and other northern) are still supporting such a fail and morally devastated country. Phoevos should thank you and your fellow citizens. Otherwise wages wouldn't be cut by 20-30%, but by 100%.

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    14. Anonymous 8:36, many thanks for your very kind words! They are almost too kind, but very much appreciated in this current climate when so many paint Germany as the evil villain of the Eurozone. Of course, our advice may no always be the best (what works here doesn't necessarily have to work in Greece, too, after all) but if those critics would actually follow the political discourse here, they would have to admit that we're acting in good faith. And that we actually don't like to be pushed into the lead of the rescue efforts at all.

      Post war Germany was successful because it broke with the delusional international grandstanding of the past and instead concentrated on its own affairs. And we Germans would love to return to that lower profile sooner rather than later. As the current situation shows, there's nothing to be gained for us from the increased responsibility now, we mostly get insults and additional problems in return. Thanks again for being a refreshing exception from that rule!

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  10. Around 6 months ago the German economy minister visited Greece with around 70 representatives of German companies. They discussed obstacles that companies are facing in Greece and what should be done to increase foreign investments. Also discussed was the founding of a credit institute that would work similar to the German KfW and which would help Greek companies a lot in dealing with the credit shortage which they are facing with private sector banks right now.

    Now, 6 months later, almost none of the bureaucratic obstacles were improved or even touched and the KfW that was ready to support Greek authorities don’t even know who to speak with anymore since responsibilities are unclear and obviously there is no political will to get this done.

    It was Berlin’s choice to buy Greece time with rescue packages I + II. It was Athens’s choice to waste the first two years of this time with political games and not even halfway completed reforms.

    It was Berlin’s choice to offer Greece additional help with knowledge, technocrats and even with the founding of a credit institute designed especially for the needs of small to medium-sized companies. It has been Athens’s choice not to take these offers so far. And Greek tax union officials have sent a letter to the government saying that hard-working Greek tax officials did not want foreign help.

    It is the choice of the Greeks in which direction the country will go after the elections, but unfortunately none of the Greek parties has offered any clear and honest answers, concepts or visions of what they want to do after they get elected.

    In March, in all likelihood, the EU will decide to enlarge the ESM financial help umbrella in order to construct a bigger firewall against possible domino effects in case of a Greek disorderly bankruptcy.

    This means time is running out on Greece. Soon, fears of the consequences of a Greek bankruptcy will evaporate. As will the willingness to continue granting money to Athens.

    It is one minute to midnight for Greece to reach for the last straw.

    No time for inaction and vain pride.

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    1. Don't even think about it.

      There is no room for German investment in Greece after your hideous crimes committed against the Greek people and the Greek economy.

      Pack tour bags and disappear, never to be seen again.

      FRench companies, Yes. American companies, Yes. German companies, No way! No way!

      Delete
    2. BTW, Ano:

      And Nick here will know best since he is a energy consultant.

      Greece, together with Israel and Cyprus, are about to become the new energy EU portal based on vast O&G discoveries in the East Med and soon the sea around Crete.

      And in fact isn't this the source of the German resentment?

      That Germany is basically shut out of Greece, with Greece becoming a key US ally and moving as far away as possible from the German sphere of influence?

      Take it from me. You are history as far as Greece is concerned. Don't even raise the possibility of rapprochement with Greece. Never again. Been there done this.

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    3. Greeks are hit hard enough nowadays. Please do you fellow countrymen a favour and don't let them feel embarrassed because of your ridiculous comments.

      Why don't you troll back into your cave and dance around your fireplace to sing "uga uga" or to scratch your balls instead of wasting valuable space on this blog?

      Delete
    4. I take it you are fine specimen of German unsophistication. An inarticulate citizen of sorts. Which is precisely what I am trying to say.

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    5. Phoevos, for your dreams of punishing the Germans to come true, Greece would have to leave the EU (because EU laws expressely forbid such discrimination). Well, I guess you'll be very disappointed, since a majority of your countrymen is against such a move. They don't even want to leave the Eurozone!

      So, sorry, but you're quite alone with your schizophrenic views. Tough luck.

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    6. Gray:

      Let's play the game based on what each side is better at. Germans are good at receiving and executing orders. Greeks are good in master planning.

      So, here are the rules:

      1. When I say jump, you say how high.
      2. When I tell you I want zip lock mouths from the German side, I mean it.
      3. You are now alone against the world.

      So, let me help you save you hide and whatever is left from your pathetic German pride.

      Ist das klar?

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    7. I propose to ignore comments by "Phoenos". They are just arrogant and insulting and do not correspond to the level of this blog.

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    8. Good ol' Dean (or, now, Phoevos, I guess). Having seen your comments over the past few days, I wanted to say it's good to have you back. If one treats your comments as hyperbolic satire (that's how I see them), they're actually quite comical. Imagine a person actually believing the things that you write! Honestly I am surprised that serious people bother to argue with you - don't they get you are a parody (you are, aren't you?). Anyway, since I never respond to your comments (or will again) I wanted to say a quick welcome back.

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    11. Niko:

      Is this your background? Do you mind telling us how you have developed your expertise on the Greek economy?

      You seem to be a young professional at the early phase of your career(guessing 30ish). You have not achieved senior management status yet, and you have a BA in international relations from BU. All of this is good. But what exactly is the background of your readership here? who do you think you are addressing yourself to?

      http://www.linkedin.com/pub/nikos-tsafos/12/252/b70

      Is your company involved with the Noble/Aphrodite find off the coast of Israel and Cyprus? How deeply are you involved with Kassinis et al?

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    12. Once again, you resort to an ad hominem attack when you're running out of factual arguments, Phoevos. How pathetic!

      Well, Nikos, I don't know if that guy's comments are meant in a satirical way, if he's only trolling to get folks in rage (ha! Failure. He's laughable.), or if he's into a paranoid (and quite xenophobic) world view that searches for offenders everywhere else, but never sees himself or his peers responsible for anything. Who cares, really. When I respond to him it's to show the readers that there are reasonable answers to the issues he raises (like Eurobonds, for instance). Well, of course this inflates the threads considerably, and diverts attention from the original topics. So, if you say I should rather ignore that guy, I will do that, no problem!

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    13. Gray:

      Where did you get the ad hominem part? Everything that I said about Nikos is factual. He is a young guy who is learning the ropes in an energy company.

      Why is this an insult or an attack?

      And what this says about you using a young and inexperienced guy to spread your German propaganda of incredible and laughable nonsense?

      Answer this question: Why you, a supposedly experienced German of Leftist persuasion, would use Niko's blog to obsess on issues involving another country for which you have neither voting rights nor a qualified opinion?

      Why?

      Dean Plassaras.

      P.S. Do you mind telling us what your credentials are in this conversation on economic issues and matters of modern finance?

      Delete
    14. Dinos, now don't try to act as if you haven't questioned Nikos' motives and tried to paint him as someone who has hidden interests in mind!

      And, yes, I do mind telling you or the rest of the world personal informations! Engage the arguments in my comments, my resume has nothing to do with that. Actually, I'm surprised that you, a guy who obviously hides behind a multitude of pseudonyms, question my right of privacy.

      Delete
  11. And this is the morony of Merkel's doing:

    http://www.businessweek.com/articles/2012-03-02/europe-is-stuck-it-cant-cut-and-grow-at-the-same-time

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  12. Dear Nikos,
    You ask why Europe should care about Greece. I do not disagree with your arguments, but I would like to add some considerations.
    You did not elaborate on the cost of a prolonged rescue operations. There is not only a (very big) direct financial cost, there are also indirect financial costs: They can take several forms. For example, increasing guarantees for Greek debt can lead to a deterioration of the ratings of the guarantor countries; and that Greece has ex post changed the conditions of its bonds will negatively impress investors in the bonds of other European countries as well. The historical event that for the first time an EU country does not service its debt will have negative repercussions for all of us. There will also be negative effects on the tax receipts of the other countries, due, for example, to losses of banks in their Greek investment. While estimating the direct financial cost is very difficult, estimating the indirect cost is even harder, but I think it can be safely assumed that this cost is considerable.
    There are questions that go beyond financial interest. Among the non-financial costs of the continued bailouts, a major negative effect is that the belief in the usefulness of European rules is shattered. For example, great store had been made at the time of the introduction the euro of the no-bail-out clause. That clause was sold as a guarantee that there would never be a transfer union. As we see now, in practice that clause was not worth the paper on which it was printed. Much the same can be said of the ban of government financing by the central bank (the ECB now holds more than 200 bn € in government bonds) or of the rules of the Stability and Growth Pact: does anybody still remember that sanctions were envisaged in the case of excessive deficits (“excessive” meaning higher than 3 percent!)?
    Rules that are not followed and promises that are not kept are not just irrelevant, they undermine the trust in institutions. The reputation of the European institutions has suffered and continues to suffer. All those promises that the Euro would not lead into a transfer union have lost their credibility. It is not surprising that opinion polls show an increasingly skeptical attitude towards the EU, when for two years people see a series of crisis meetings where each time a “historical” solution is proclaimed, only to be followed by a yet another crisis meeting a few weeks later, which comes up with an even bigger “umbrella”, with figures that can only frighten the ordinary citizen, and for which the European taxpayer has to guarantee, whether he likes it or not.
    I am afraid that there could be also a moral hazard. If one country gets away with ignoring the rules, why should other countries respect them? If an uncontrolled accumulation of debt in one country does not lead to default, but to a big haircut and subsidized new credit, could that become a convenient way out for other countries as well?
    Do all the bailouts and “umbrellas” lead to a better sense of community in the EU? I have the impression that quite the contrary is happening. In the northern countries, the bailouts are increasingly unpopular, and in Greece a large part of public anger (taking a rather drastic form sometimes) is directed against foreign institutions and countries (preferably Germany). Taxpayers in the rest of Europe feel it is unfair that they have to bear the cost of the financial disaster that elected Greek politicians have created. For how much longer can this go on without permanent damage to European integration?
    The point I want to make is that, yes, the EU should care, must care, about Greece, but it must also care about the other members, and it must care about itself. In a continued bailout it must be checked whether the damage to the community does not become bigger than the benefits, and whether the chances outweigh the risks. Otherwise Europe could end up in bankruptcy, not only Greece.

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    Replies
    1. The entire world(knowledgeable practitioners of modern finance) has already decided that the only way out of the crisis are ECB sponsored bonds.

      So, please spare us your geriatric thinking and get on with the job. And I mean NOW.

      Delete
    2. Not the entire world, and especially in the countries that would have to guarantee ECB bonds, there's a lot of doubt if this is a good idea (non-Eurozone nations, like the US, of course don't worry that much, it's not their money and their risk, after all!). And it has to be seriously asked, why do the proponents of those ECB bonds claim an unlimited guarantee for those papers would convince the markets, when it's so very obvious that the Eurozone doesn't have the corresponding unlimited economical power to fulfill that grandstanding promise?

      In reality, right now that plan would largely boil down to Germany providing the backbone for those bonds, but Germany's credit line isn't unlimited. So, why should that inspire confidence in investors when those well informed guys know damn well that the Krauts can't reasonably guarantee the borrowing of all others, and that the only other alternative, the ECB printing fresh money, would result in the bonds losing lots of their value? Do all those ECB-bond advocats think bond buyers are stupid???

      No, that Eurobonds idea is simply a grand delusion. You can't fool the markets with empty promises, no matter how much spin you apply to that pseudo-solution. When all is said and done, it's still only a return by the Eurozone nations to fiscally responsible policies that will end the Eurodebt crisis. There is no free lunch, no bond fairy, and no Santa Claus who will deliver more cheap money to nations that live beyond their means. Forget about that.

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    3. You are totally right, Gray, it may not be politically correct to say so, but Eurobonds have only the purpose to provide cheap credit to irresponsible governments. In the short term, they will lead to higher interest rates for the countries that have so far made a sound financial policy, and they will the reduce the pressure for fiscal discipline in the other countries. In the end all participating countries will become unable to pay their debt, unless it is cancelled by inflation.

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    4. Indeed, Anonymous 1:47, I, too, am afraid that Eurobonds would actually remove the incentive for governments of struggling nations to get their finances in order. I seriously doubt that politicians who have faced strong (and sometimes violent) opposition to admittedly painful reforms could and would resist the temptation to improve their standing with election gifts paid by borrowed money. For those guys, their political survival (and their comfy income!) is at stake, after all. But a return to the generous policies of the past would erase all the progress (in Greece, rather small progress) made under huge sacrifices so far, destabilize the last pillars of the Eurozone, result in high inflation and thus trigger an even more disastrous crisis. No, the risk is much too high, Eurobonds are a Pandorra's box that shouldn't be opened under any circumstances.

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    5. Now that's a model debate!

      Where John serves and John drinks.

      Two proper Germans, financially illiterate, posing questions and answering themselves proving conclusively for all the world to see the nakedness of their argument and the abominable depth of their ignorance.

      Bravo! Let me clap my hands. How do you do this in Germany?

      For the Nth time. State your credentials if you want to be taken seriously. Have you had any schooling in modern finance? degrees? From where?

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    6. Absolutely none of your business, Dinos, and what would this have to do with our arguments, anyway? Are you a proponent of an extreme kind of meritocracy, maybe? Only people with a degree shall be allowed to participate in discussions? Well, try to impose those rules on your own blog. Looks like Nikos has different ideas about freedom of speech. You're only guest here, like everybody else, it's rather brazen that you make demands and try to order people around!

      Delete
    7. Oh, now it is a perverted "freedom of speech" a la Germania.

      So you and others of your brethren, attach yourselves like a virus to a a well-meaning but inexperienced person of Greek heritage in the US (trying to prove himself and make something of himself professionally) and then you proceed to contaminate with your mono-culture of whatever self-serving nonsense you deem appropriate.

      And that is democracy for you. So, in your version of democracy any German of anonymity is allowed equal space in thought and debate until the other side gets overwhelmed by sheer numbers and gives up.

      How nice! And when did you guys learn that? at what school? or is to presumptuous to assume that you have any formal education?

      I tell you what Gray. Why don't you go back to Varoufakis' censored blog when you get maybe an opinion a day and try using his pacifist bias of Ghandi non-violence as well as his desire to build a brandname for himself and maybe you can score some cheap points there. That would last for a day or two that is before the new wave of censorship begins and overcomes your poorly defended opinions.

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    8. Ok, Dinos, I'll tell you my super secret strategy for convincing readers of the validity of my self-serving nonsense: I just talk about facts and offer my interpretation of them! Apparently inevitably, this will enrage some other guy with opposing views so much that he will make a total fool of himself, insulting everybody else on his amok run. Winning!
      :D

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    9. Gray:

      I am sure in your mind you can construct this and other fantasies. After all you are who you are. And we all know what this means.

      Facts. Pffffffffffffffffffffffff

      Delete
  13. Socialist oligarch dynasties drove their Trojan Horse to Brussels and now resort to preSocratic sophistry to talk their way out. How can Greece grow is simple business software costs fivefold due to kleptocratic taxation?

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  14. Phoevos, when you ask for credentials, what you're really doing is engaging in a logical fallacy known as Argument from Authority. Personally I find their arguments compelling based on their merits. I don't care what letters they attach to the ends of their names. How about engaging the arguments and not the people?

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    Replies
    1. What's the argument Ano?

      Whether German amateurism and lack of financial depth is endagering the global economy?

      The answer is an unqualified YES.

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    2. "an unqualified YES", from the guy who suggests that unqualified people shall not take part in the discussions!
      LOL

      Delete
  15. Greeks are spending and enjoying on other people's money. why should the world pay for the laziness and enjoyment of Greeks? let Greece get dooomed, enough of the alms given for their partying. they should earn before they spend.

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