Saturday, July 4, 2015

Analogies to Ed Deform - Greece is the Word 2: Krugman, Galbreath -- If the left falls, can neo-nazis be far behind?

8. A “Yes” vote will save Europe. “Yes” would mean more austerity and social destruction, and the government that implements it cannot last long. The one that follows will not be led by Alexis Tsipras and Yanis Varoufakis – the last leaders, perhaps anywhere in Europe, of an authentic pro-European left. If they fall, the anti-Europeans will come next, possibly including ultra-right elements such as the Greek Nazi party, Golden Dawn. And the anti-European fire will spread, to France, the UK and Spain, among other countries..... James Galbreath, Politico
If you think the world is a dangerous place now, just wait. When Michael Fiorillo sent around a Galbreath piece on  9 myths, I noticed 8 - which makes this exact point.

Tomorrow is the referendum in Greece and the rest of the world has tried every means to force a YES vote, which would lead to the fall of the Tsipras party. I've been thinking about what that would mean and went back into post WWI history for an analogy. Germany was saddled with such horrific reparations that a crippled unstable economy was guaranteed. And we know where that led.

Greece argues that imposed drastic austerity - like blood letting until you die - is unsustainable without debt relief (Yes screw those hedge funds). Europe says no -- keep paying us those billions and eat out of garbage cans. In fact they finally admitted that the plan they offer to Greece  will never remove the debt. So this is in perpetuity. Greece might as well bite the bullet now.

What does Greece have to do with the assault on public education? Well, given that this assault is taking place world-wide by some of the same forces - note the hedge fund involvement in both Greece and Puerto Rico as just one chip in the attack -- I see analogies. Starve the public schools to degrade them to the point where privatization - the removal of controls over public monies - becomes the only option.

Austerity for schools, removal of unions (or buying them off, alla Gates and the AFT and NEA) as an obstacle - which they haven't been too  much of -- "freeing" teachers to be contract workers, etc. -- and why we need a more activist union - and sorry you guys, a social justice oriented leadership has the political analysis that leads to activism - especially in its core value of bottom vs top down of the current leadership.

Take Greece under a leftist government that fights more for the common man than the bankers (again an analogy to the UFT) and make a decision it must be smashed and that government removed (also an analogy to Chicago where a left-leaning union must be undermined - see the 1400 layoffs a year before the Chicago union election). They do this by using an economic squeeze play since they can't do it externally - well they can just by having America invade -- or use the CIA to overthrow the government -- and by the way, there is some history of America instigation in Greece since WWII.

I wrote about Greece and the Paul Krugman column last Monday: Greece is the Word = Ed Deform Agenda, Krugman Endorses Leaving Euro, Why We Need Tsipras Party Running UFT.

On Friday, Krugman once again touched on Greece and the general austerity "solution" imposed by European leaders - and advocated by the conservative/tea party wing here in the states.  See: Europe’s Many Economic Disasters which opens with:
It’s depressing thinking about Greece these days, so let’s talk about something else, O.K.? Let’s talk, for starters, about Finland, which couldn’t be more different from that corrupt, irresponsible country to the south. Finland is a model European citizen; it has honest government, sound finances and a solid credit rating, which lets it borrow money at incredibly low interest rates. It’s also in the eighth year of a slump that has cut real gross domestic product per capita by 10 percent and shows no sign of ending. In fact, if it weren’t for the nightmare in southern Europe, the troubles facing the Finnish economy might well be seen as an epic disaster.
Holy shit: Finland too? The bastion of education nirvana?
Why are there so many economic disasters in Europe? Actually, what’s striking at this point is how much the origin stories of European crises differ. Yes, the Greek government borrowed too much. But the Spanish government didn’t — Spain’s story is all about private lending and a housing bubble. And Finland’s story doesn’t involve debt at all. It is, instead, about weak demand for forest products, still a major national export, and the stumbles of Finnish manufacturing, in particular of its erstwhile national champion Nokia. What all of these economies have in common, however, is that by joining the eurozone they put themselves into an economic straitjacket.
Krugman feels the Euro was a major mistake, given that there was no political alignment to go with it.

Given that today is July 4th, let's think about the 13 original states in 1781 from 1787-9. The same kind of debates took place - the US could have been separate states and we would be like Europe -- and there still might be slavery in the south. Imagine New Jersey money - Christie could be president of New Jersey. Oh, what a world we missed out on.

I am a Krugman fan, and he is proved right so often - like his call in 2009 for much higher spending not austerity to kill the depression -- and Obama went only halfway which is why things are taking so long. An interesting piece yesterday by The Daily Howler pointed out how mainstream media acts like Krugman doesn't exist as they feign ignorance -- I'll do a follow-up later with the points The Howler makes as he castigates so-called commentators like Chris Matthews.
.....there are many European officials and politicians who are opposed to anything and everything that might make the euro workable, who still believe that all would be well if everyone exhibited sufficient discipline. And that’s why there is even more at stake in Sunday’s Greek referendum than most observers realize.

One of the great risks if the Greek public votes yes — that is, votes to accept the demands of the creditors, and hence repudiates the Greek government’s position and probably brings the government down — is that it will empower and encourage the architects of European failure. The creditors will have demonstrated their strength, their ability to humiliate anyone who challenges demands for austerity without end. And they will continue to claim that imposing mass unemployment is the only responsible course of action.

Krugman is the possibly the only mainstream commenter urging a NO vote.

What if Greece votes no? This will lead to scary, unknown terrain. Greece might well leave the euro, which would be hugely disruptive in the short run. But it will also offer Greece itself a chance for real recovery. And it will serve as a salutary shock to the complacency of Europe’s elites.
Or to put it a bit differently, it’s reasonable to fear the consequences of a “no” vote, because nobody knows what would come next. But you should be even more afraid of the consequences of a “yes,” because in that case we do know what comes next — more austerity, more disasters and eventually a crisis much worse than anything we’ve seen so far.
Now on to the Galbreath piece, which does a little wiffle waffle.

The citizens of Greece face a referendum Sunday that could decide the survival of their elected government and the fate of the country in the Eurozone and Europe. Narrowly, they’re voting on whether to accept or reject the terms dictated by their creditors last week. But what's really at stake? The answers aren’t what you’d think.

I have had a close view of the process, both from the US and Athens, after working for the past four years with Yanis Varoufakis, now the Greek finance minister. I've come to realize that there are many myths in circulation about this crisis; here are nine that Americans should see through.

1. The referendum is about the Euro. As soon as Greek Prime Minister Alexis Tsipras announced the referendum, Fran├žois Hollande, David Cameron, Matteo Renzi, and the German Deputy Chancellor Sigmar Gabriel told the Greeks that a “no” vote would amount to Greece leaving the Euro. Jean-Claude Juncker, President of the European Commission, went further: he said “no” means leaving the European Union. In fact the Greek government has stated many times that – yes or no – it is irrevocably committed to the Union and the Euro. And legally, according to the treaties, Greece cannot be expelled from either.

2. The IMF has been flexible. IMF Managing Director Christine Lagarde claims that her institution has shown “flexibility” in negotiations with the Greeks. In fact, the IMF has conceded almost nothing over four months: not on taxes, pensions, wages, collective bargaining or the amount of Greece’s debt. Greek chief negotiator Euclid Tsakalatos circulated a briefing on the breakdown that gives details, and concludes: “So what does the Greek government think of the proposed flexibility of the Institutions? It would be a great idea.”

3. The creditors have been generous. Angela Merkel has called the terms offered by the creditors “very generous” to Greece. But in fact the creditors have continued to insist on a crushing austerity program, predicated on a target for a budget surplus that Greece cannot possibly meet, and on the continuation of draconian policies that have already cost the Greeks more than a quarter of their income and plunged the country into depression. Debt restructuring, which is obviously necessary, has also been refused.

4. The European Central Bank has protected Greek financial stability. A central bank is supposed to protect the financial stability of solvent banks. But from early February, the ECB cut off direct financing of Greek banks, instead drip-feeding them expensive liquidity on special “emergency” terms. This promoted a slow run on the banks and paralyzed economic activity. When the negotiations broke down, the ECB capped the assistance, prompting a fast bank run and giving them an excuse to impose capital controls and effectively shut them down.

5. The Greek government is imperiling its American alliance. This is a particular worry of some US conservatives, who see a leftist government in power and assume it is pro-Russian and anti-NATO. It is true that the Greek Left has historic complaints against the US, notably for CIA support of the military junta that ruled from 1967 to 1974. But in fact, attitudes on the Greek Left have changed, thanks partly to experience with the Germans. This government is pro-American and firmly a member of NATO.

6. Alexis Tsipras called the IMF a “criminal” organization. That was, charitably, an overheated headline slapped by Bloomberg onto a very moderate parliamentary speech, which correctly pointed out that the IMF's economic and debt projections for Greece back when austerity was first imposed in 2010 were catastrophically optimistic. In fact, every letter from Tsipras to the creditors has been couched in formal and respectful language.

7. The Greek government is playing games. Because Finance Minister Varoufakis knows the economic field of game theory, lazy pundits have for months opined that he is playing “chicken” or “poker” or some other game. In Heraklion two weeks ago, Varoufakis denied this as he has done many times: “We're not bluffing. We're not even meta-bluffing.” Indeed there are no hidden cards. The Greek red lines – the points of principle on which this government refuses to budge – on labor rights, against cuts in poverty-level pensions and fire-sale privatizations – have been in plain view from day one.

 8. A “Yes” vote will save Europe. “Yes” would mean more austerity and social destruction, and the government that implements it cannot last long. The one that follows will not be led by Alexis Tsipras and Yanis Varoufakis – the last leaders, perhaps anywhere in Europe, of an authentic pro-European left. If they fall, the anti-Europeans will come next, possibly including ultra-right elements such as the Greek Nazi party, Golden Dawn. And the anti-European fire will spread, to France, the UK and Spain, among other countries.

 9. A “No” vote will destroy Europe. In fact, only the “No” can save Greece – and by saving Greece, save Europe. A “No” means that the Greek people will not bend, that their government will not fall, and that the creditors need, finally, to come to terms with the failures of European policy so far. Negotiations can then resume – or more correctly, proper negotiations can then start. This is vital, if Europe is to be saved. If there ever was a moment when the United States should speak for decency and democratic values – as well as our national interest – it is right now.
 James K. Galbraith holds the Lloyd M. Bentsen Jr. Chair in Government/Business Relations at the Lyndon B. Johnson School of Public Affairs, the University of Texas at Austin. He has followed the Greek drama in Greece, Brussels, Paris and Berlin since January. His most recent book is “The End of Normal: The Great Crisis and the Future of Growth.”

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