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Syriza to govern with Independent Greeks, who oppose Austerity but also oppose Culture War, from Peter Myers

(1) Syriza to govern with Independent Greeks, who oppose Austerity but
also oppose Culture War
(2) Syriza to govern with Independent Greeks, who oppose immigration &
(3) EU Showdown: Greece Takes on the Vampire Squid - Ellen Brown
(4) Syriza will return to the Drachma; Greece Eurozone Exit is in the Wind
(5) Troika Punches Panic Button on Greece and Spain
(6) Protection in 1930s benefited Deficit countries - Michael Pettis
(7) Panicked super rich buying boltholes with private airstrips to
escape if poor rise up
(1) Syriza ally with Independent Greeks, who oppose Austerity but also
oppose Culture War
  - by Peter Myers, January 28, 2015
I recently backed Syriza, even though they are Trotskyist or allied to
My reasoning was that, in the economic emergency, they would dispense
with Culture War.
This has now been borne out. They will govern with a minor party,
Independent Greeks, which opposes Austerity but also opposes the Culture
War (immigration, multiculturalism, Gay Marriage).
(2) Syriza to govern with Independent Greeks, who oppose immigration &
Independent Greeks: Who are Syriza's right-wing coalition partners and
what do they want?
Monday 26 January 2015
Socialist party Syriza might have won a surprising victory in Greece's
elections but it will only be able to govern with the help of the
Independent Greeks, an unlikely coalition partner described by some as
the country's equivalent of Ukip.
Who are the Independent Greeks?
The party was founded in early 2012 by leader Panos Kammenos, Greece's
former shipping minister who defected from the centre-right New
Democracy party along with several fellow MPs.
Its founding declaration vowed to end the "national humiliation and
violent economic attack" on Greece in measures imposed by the European
Commission, European Central Bank, and International Monetary Fund.
The party immediately took a socially right-wing stance, supporting
patriotism and the role of the Greek Orthodox Church in family life and
The Independent Greeks vocally oppose immigration and multiculturalism,
emphasising the importance of "Greek history and culture".
Have they been successful?
Moderately. The Independent Greeks started with 13 MPs in 2012 - 10
incumbent defectors from New Democracy and one from the Panhellenic
Socialist movement. Read more: Greece forms new coalition government
Everything you need to know about Syriza Euro falls to 11-year low amid
Greek election fears
In its first parliamentary election of May that year, the party gained
almost 11 per cent of the vote and 33 MPs, but quickly lost out in the
snap legislative election called just a month later, where it received
7.5 per cent of the vote, slashing its group to 20 MPs.
The result yesterday was worse again, with 5 per cent of the vote and
just 13 MPs. But the number was just enough to make the Independent
Greeks an attractive coalition partner for Syriza, with their combined
representation of 162 seats giving the new government a slim majority in
Greek's parliament of 300.
Independent Greeks leader Panos Kammenos talks to media after his
meeting with Alexis Tsipras at Syriza's headquarters in Athens on
January 26, 2015. Panos Kammenos' Independent Greeks have been described
as a 'conspiracy-prone nationalist party' What are their main concerns?
Apart from the ultimate aim of throwing out Greece's loan agreement, a
key issue is immigration, with the party's manifesto dictating a maximum
figure of 2.5 per cent of the country's population as long as the number
of migrants is "economically and socially sustainable".
It does not state how such a figure would be enforced.
The Independent Greeks want to re-claim war repatriations the party
claims the country is owed by Germany, dating back to the Axis
occupation in the Second World War.
It also wants to lift the legal immunity protecting ministers,
parliamentarians, and officials who bear the blame for the economic
crisis from prosecution.
Mr Kammenos has emphasised the role he sees in Greek life for the
Orthodox Church in speeches, in contract to the leader of Syriza, who is
an atheist.
The Independent Greeks' founding declaration says members believe in the
"values and the timelessness of Orthodoxy", potentially contributing to
a conservative stance on issues such as gay marriage.
Do the Independent Greeks want to leave the EU?
No, but the party claims it wants to see "a united Europe of solidarity
and cooperation, where all Member States are equivalent, while
maintaining their national status and dignity".
The founding declaration claims the alliance has been turned into a
vehicle to further the interests of "the most powerful countries and the
global banking system", in a thinly-veiled stab at Germany and the troika.
Syriza party leader Alexis Tsipras Syriza party leader Alexis Tsipras
will be the head of the coalition Are there many differences with Syriza?
The opposition to Greece's loan agreement and forced austerity is one of
the only areas in which the two parties agree.
Syriza has a socialist foundation, while the Independent Greeks favour
the free market. Syriza's former manifesto pledges vowed to withdraw all
Greek troops abroad, quit Nato and dramatically reduce military
spending, while the Independent Greeks want to strengthen defence and
stay in Nato.
Syriza has a broadly liberal outlook on social issues, while its
coalition partner's commitment to the Orthodox church could cause
arguments. [...]
(3) EU Showdown: Greece Takes on the Vampire Squid - Ellen Brown
EU Showdown: Greece Takes on the Vampire Squid
Ellen Brown
Posted on January 6, 2015
Greece and the troika (the International Monetary Fund, the EU, and the
European Central Bank) are in a dangerous game of chicken. The Greeks
have been threatened with a “Cyprus-Style prolonged bank holiday” if
they “vote wrong.” But they have been bullied for too long and are
saying “no more.”
A return to the polls was triggered in December, when the Parliament
rejected Prime Minister Antonis Samaras’ pro-austerity candidate for
president. In a general election, now set for January 25th, the
EU-skeptic, anti-austerity, leftist Syriza party is likely to prevail.
Syriza captured a 3% lead in the polls following mass public discontent
over the harsh austerity measures Athens was forced to accept in return
for a ?240 billion bailout.
Austerity has plunged the economy into conditions worse than in the
Great Depression. As Professor Bill Black observes, the question is not
why the Greek people are rising up to reject the barbarous measures but
what took them so long.
Ireland was similarly forced into an EU bailout with painful austerity
measures attached. A series of letters has recently come to light
showing that the Irish government was effectively blackmailed into it,
with the threat that the ECB would otherwise cut off liquidity funding
to Ireland’s banks. The same sort of threat has been leveled at the
Greeks, but this time they are not taking the bait.
Squeezed by the Squid
The veiled threat to the Greek Parliament was in a December memo from
investment bank Goldman Sachs – the same bank that was earlier blamed
for inducing the Greek crisis. Rolling Stone journalist Matt Taibbi
wrote colorfully of it:
The first thing you need to know about Goldman Sachs is that it’s
everywhere. The world’s most powerful investment bank is a great vampire
squid wrapped around the face of humanity, relentlessly jamming its
blood funnel into anything that smells like money. In fact, the history
of the recent financial crisis, which doubles as a history of the rapid
decline and fall of the suddenly swindled dry American empire, reads
like a Who’s Who of Goldman Sachs graduates.
Goldman has spawned an unusual number of EU and US officials with
dictatorial power to promote and protect big-bank interests. They
include US Treasury Secretary Robert Rubin, who brokered the repeal of
the Glass-Steagall Act in 1999 and passage of the Commodity Futures
Modernization Act in 2000; Treasury Secretary Henry Paulson, who
presided over the 2008 Wall Street bailout; Mario Draghi, current head
of the European Central Bank; Mario Monti, who led a government of
technocrats as Italian prime minister; and Bank of England Governor Mark
Carney, chair of the Financial Stability Board that sets financial
regulations for the G20 countries.
Goldman’s role in the Greek crisis goes back to 2001. The vampire squid,
smelling money in Greece’s debt problems, jabbed its blood funnel into
Greek fiscal management, sucking out high fees to hide the extent of
Greece’s debt in complicated derivatives. The squid then hedged its bets
by shorting Greek debt. Bearish bets on Greek debt launched by
heavyweight hedge funds in late 2009 put selling pressure on the euro,
forcing Greece into the bailout and austerity measures that have since
destroyed its economy.
Before the December 2014 parliamentary vote that brought down the Greek
government, Goldman repeated the power play that has long held the
eurozone in thrall to an unelected banking elite. In a note titled “From
GRecovery to GRelapse,” reprinted on Zerohedge, it warned that “the room
for Greece to meaningfully backtrack from the reforms that have already
been implemented is very limited.”
Why? Because bank “liquidity” could be cut in the event of “a severe
clash between Greece and international lenders.” The central bank could
cut liquidity or not, at its whim; and without it, the banks would be
As the late Murray Rothbard pointed out, all banks are technically
insolvent. They all lend money they don’t have. They rely on being able
to borrow from other banks, the money market, or the central bank as
needed to balance their books. The central bank, which has the power to
print money, is the ultimate backstop in this sleight of hand and is
therefore in the driver’s seat. If that source of liquidity dries up,
the banks go down.
The Goldman memo warned:
The Biggest Risk is an Interruption of the Funding of Greek Banks by The
Pressing as the government refinancing schedule may look on the surface,
it is unlikely to become a real issue as long as the ECB stands behind
the Greek banking system. . . .
But herein lies the main risk for Greece. The economy needs the only
lender of last resort to the banking system to maintain ample provision
of liquidity. And this is not just because banks may require resources
to help reduce future refinancing risks for the sovereign. But also
because banks are already reliant on government issued or government
guaranteed securities to maintain the current levels of liquidity
constant. . . .
In the event of a severe Greek government clash with international
lenders,interruption of liquidity provision to Greek banks by the ECB
could potentially even lead to a Cyprus-style prolonged “bank holiday”.
And market fears for potential Euro-exit risks could rise at that point.
{endquote} [Emphasis added.]
The condition of the Greek banks was not the issue. The gun being held
to the banks’ heads was the threat that the central bank’s critical
credit line could be cut unless financial “reforms” were complied with.
Indeed, any country that resists going along with the program could find
that its banks have been cut off from that critical liquidity.
That is actually what happened in Cyprus in 2013. The banks declared
insolvent had passed the latest round of ECB stress tests and were no
less salvageable than many other banks – until the troika demanded an
additional €600 billion to maintain the central bank’s credit line.
That was the threat leveled at the Irish government before it agreed to
a bailout with strings attached, and it was the threat aimed in December
at Greece. Greek Finance Minister Gikas Hardouvelis stated in an interview:
The key to . . . our economy’s future in 2015 and later is held by the
European Central Bank. . . . This key can easily and abruptly be used to
block funding to banks and therefore strangle the Greek economy in no
time at all.
Europe’s Lehman Moment?
That was the threat, but as noted on Zerohedge, the ECB’s hands may be
tied in this case:
[S]hould Greece decide to default it would mean those several hundred
billion Greek bonds currently held in official accounts would go from
par to worthless overnight, leading to massive unaccounted for
impairments on Europe’s pristine balance sheets, which also confirms
that Greece once again has all the negotiating leverage.
Despite that risk, on January 3rd Der Spiegel reported that the German
government believes the Eurozone would now be able to cope with a Greek
exit from the euro. The risk of “contagion” is now limited because major
banks are protected by the new European Banking Union.
The banks are protected but the depositors may not be. Under the new
“bail-in” rules imposed by the Financial Stability Board, confirmed in
the European Banking Unionagreed to last spring, any EU government
bailout must be preceded by the bail-in (confiscation) of  creditor
funds, including depositor funds. As in Cyprus, it could be the
depositors, not the banks, picking up the tab.
What about deposit insurance? That was supposed to be the third pillar
of the Banking Union, but a eurozone-wide insurance scheme was never
agreed to. That means depositors will be left to the resources of their
bankrupt local government, which are liable to be sparse.
What the bail-in protocol does guarantee are the derivatives bets of
Goldman and other international megabanks. In a May 2013 article in
Forbes titled “The Cyprus Bank ‘Bail-In’ Is Another Crony Bankster
Scam,” Nathan Lewis laid the scheme bare:
At first glance, the “bail-in” resembles the normal capitalist process
of liabilities restructuring that should occur when a bank becomes
insolvent. . . .
The difference with the “bail-in” is that the order of creditor
seniority is changed. In the end, it amounts to the cronies (other banks
and government) and non-cronies. The cronies get 100% or more; the
non-cronies, including non-interest-bearing depositors who should be
super-senior, get a kick in the guts instead. . . .
In principle, depositors are the most senior creditors in a bank.
However, that was changed in the 2005 bankruptcy law, which made
derivatives liabilities most senior. In other words, derivatives
liabilities get paid before all other creditors — certainly before
non-crony creditors like depositors. Considering the extreme levels of
derivatives liabilities that many large banks have, and the opportunity
to stuff any bank with derivatives liabilities in the last moment, other
creditors could easily find there is nothing left for them at all.
Even in the worst of the Great Depression bank bankruptcies, said Lewis,
creditors eventually recovered nearly all of their money. He concluded:
When super-senior depositors have huge losses of 50% or more, after a
“bail-in” restructuring, you know that a crime was committed.
Goodbye Euro?
Greece can regain its sovereignty by defaulting on its debt, abandoning
the ECB and the euro, and issuing its own national currency (the
drachma) through its own central bank. But that would destabilize the
eurozone and might end in its breakup.
Will the troika take that risk? 2015 is shaping up to be an interesting
(4) Syriza will return to the Drachma; Greece Eurozone Exit is in the Wind
Greece Eurozone Exit Is In The Wind. Is it A Harbinger of EU
Disintegration Process?
Valentin KATASONOV | 13.01.2015
Greek debt – core problem to affect Athens-Brussels relationship
One of the issues to hit the news in early 2015 is the possibility of
Greece leaving the eurozone, or, even, the European Union. German weekly
Spiegel reported that Chancellor Angela Merkel now believed that the
eurozone could cope with Athens leaving the common currency in case the
Coalition of the Radical Left (SYRIZA) wins the January 25 parliamentary
election. Rejections followed (allegedly Chancellor Merkel said
something else) but there is no smoke without fire. The Greece eurozone
exit has been in the wind since a long time. On the one hand, it can
remedy the eurozone economic situation. On the other hand, the very fact
of such a possibility being discussed could be perceived as a harbinger
of EU disintegration process about to kick off. There will be mixed
consequences for Greek economy in case the conjecture becomes a reality.
The core problem to affect the relationship between Greece and the
European Union is the Greece’s government debt (see the graphic below):
The relative amount of Greek sovereign debt by far exceeds other
eurozone countries and members of the European Union. As of 2013, Italy,
the second largest debtor in eurozone, had the debt equal to 132, 6% of
GDP, Portugal was the third with the debt equal to 129, 0% of GDP.
According to the estimates of Greek government, the country’s debt was
to be 318 billion euro at the end of 2014 but media reported in early
2015 that it went up to 322 billion euro. It’s worth to note that
external (or foreign) debt of the eurozone and other EU member-states
(the debt includes private and national debt) is hardly ever mentioned.
By the way, Greece is far from being the largest external debt holder.
By the end of 2012 the Greek external debt was $568, 7 billion or 234%
of GDP ($52 thousand per capita). At the very same time the external
debt of Great Britain was $10 trillion or 400% of GDP. But, as they say,
Quod licet Iovi, non licet bovi or what is permissible for Jove is not
permissible for an ox. Greece is not even an ox, it’s rather a
scapegoat. In the 2000s it got mired in public and government debts. The
global lenders wanted to make this South European country a milking cow.
They went too far. The cow could not give milk anymore. Now it’s good
only for the role of scapegoat.
How the Troika – the IMF, the ECB and the European Commission -
«rescued» Greece
During a few years world financial circles have been tried to make the
Greek «cow» bounce back. In the spring of 2010 the European Union in
concert with the International Monetary Fund introduced unprecedented
measures, including the loan of €110 billion granted to Greece. It did
not work. Then they launched a new bigger aid package equal to €130
billion. Actually a large part of sovereign debt was written off then.
The International Monetary Fund and the European Union had to reason it
out and find arrangements with the major Greek bonds holders who agreed
to «forgive» a part of the debt. It was a fait accompli for minor bonds
holders. By the end of 2013 the IMF and Brussels started talks with
Athens on the third aid package but the economic situation in Greece did
not improve. The government did not fully comply with the conditions put
forward by creditors to make the money flows slow down. Greece cannot
receive the next €7 billion tranche. The creditors (the big three
including the International Monetary Fund, the European Central Bank and
the European Commission) tend to believe that the «cow» is not good for
milking anymore.
Disillusionment became overwhelming in Greece too. The country keeps on
plunging into the money pit. Neither austerity measures, nor
privatization of remaining state property, nor the attempts to attract
investors by bringing down taxes – nothing works. Even according to
official data, unemployment exceeds 20%. The figure is 40% for the young
people. In 2014 around €6 billion (11%) out of €56 budget expenditure
was spent to service the public debt. Partly the debt was paid off at
the expense of profits received from privatization. But Greece managed
to scrape together only €2, 5 billion from this source. Many politicians
and people understood that the «debt restructuring» was nothing but a
trick. Proportionally the debt was not reduced: over €100 billion were
written off while the debt in 2011-2013 decreased only by €52 billion. A
half of the written off debt was immediately replaced by new debts to
pay off. So called privileged creditors and lenders took no part in the
restructuring and writing off. They continue to receive all the money
Greece owes to them. For instance, the International Monetary Fund.
Grexit – a symbol of «pure relationship» between Athens and Brussels
As far back as 2010, Greeks lost hope to find a way out of the dead end
as the crisis set in. Those days the first calls for eurozone (and even
the European Union) exit were voiced. A new term appeared – Grexit
(Greece and exit). They threatened Brussels with the prospect of holding
a referendum on leaving the eurozone. The European Union did its best to
quell such sentiments. It realized there would be serious implications
for the European Union. But today the situation is different in Greece
and elsewhere.
The eurozone exit idea has gained great support inside Greece. Yes,
it’ll be hard at first, but he return to drachma (Greek national
currency before the euro) would allow adopting independent fiscal and
economic policy. Greeks are fed up with control exercised over their
country by Washington (the International Monetary Fund), Brussels (the
European Commission), Frankfurt (the European Central Bank) and Berlin
(the German government calling the shots in the eurozone).
At the same time the «big three» and Germany are tired of shouldering
the problems of Greece – a cow to feed with no prospects for milking in
the foreseeable future. According to the opinion of Angela Merkel and
Brussels officials, the eurozone has become stronger in the recent two
years. Of course, the withdrawal of Greece from the eurozone will have
negative consequences, but it won’t be the end.
Syriza and its economic program
The main provisions of the Syriza economic program envision the
withdrawal from the eurozone and return to the national currency –
drachma that existed in the days of ancient Hellade to be back in
circulation after the country got rid of Turkish yoke in 1832. This
measure will allow adopting national fiscal policy, something Greece
sacrificed in order to enter the eurozone on January 1, 2001. Then the
nationalization of all strategically important enterprises and banks
will follow.
The Syriza leaders understand well that even the restoration of Central
Bank’s national status is an imperative, but it’s not enough for
implementation of independent national fiscal policy. They propose to
introduce capital controls to prevent financial speculators from
entering the country. Instead of lowering the taxes as recommended by
the IMF and Brussels, they want to raise them and restore the social
programs cancelled by the International Monetary Fund.
As the debt problem exacerbated in recent years Syriza started to study
the ways to tackle the issue. It has rejected the traditional
recommendations of the International Monetary Fund like privatization of
state property. Instead it offered …reparations to be used as an
alternative. Syriza raised the issue of the reparations underpaid by
Germany to compensate Greece for the WWII losses. True, Greece has
received some reparations from Germany. The first tranche was received
in late 1940s – early 1950s. Mainly the reparations included industrial
products (equipment, machines) for the total sum of 105 deutsche marks
(the sum equals around $25 million or €25 billion at current prices).
The second tranche of reparations arrived in the 1960s. In 1960, Greece
and the Federal Republic of Germany signed an agreement whereby 115
million marks were given to Greek victims of Nazism. The payments were
tied to the Greeks’ abandoning any additional claims for individual
compensation. In 2013, the National Council for German War Reparations
headed in Greece by war veteran Manolis Glezos put the amount of damages
at half a trillion euros. In March 2014, Greek President Karolos
Papoulias once again demanded that Germany pay reparations for damage
inflicted on the country during the war. Greece is claiming €108 billion
euro as compensation for damages and €54 billion for loans issued to
Nazi Germany by the Bank of Greece and never repaid. The total amount of
reparation claims by Greece stands at €162 billion. At current price
levels, this equals 5,000-6,000 tons of gold. The sum is enough to repay
a half of current debt.
Syriza vs. world money lenders
The most radical measure offered by Syriza is writing the debt off. At
least 50% of it. Once in power the coalition plans to hold talks with
the main creditors and bond holders. At first glance, it resembles the
restructuring of 2012 but there is a big difference. Back then the
process was guided from «top», now it is to be initiated from «bottom»
by Greece itself. In June 2012 the center-right New Democracy has won
the election. It gave its consent to implement the policy of economic
strangulation imposed by Washington and Brussels. Back then Syriza
raised the issue of writing the debt off or at least imposing a
moratorium on payments. Vangelis Apostolou, an MP and a Syriza activist,
said before the 2012 parliamentary election that the party stood for
debt restructuring. Syriza believes that a large part of the sum is the
result of illegal international operations. The party calls for
establishing a special international commission to assess the state of
Greek economy. If Greece agrees to repay what is left, then a moratorium
on interest payments will take effect for the period of three-four
years. Apostolou said it was the only way to carry out the obligations
before people and the only acceptable solution to make Greece remain in
the eurozone. Then the amount of payments would be pegged to the
economic growth indicators. The priority would be social needs, not
interest payments. Greece would pay if it can and not pay if it can’t.
According to other statements coming from Syriza members, the moratorium
and restructuring are not the only viable options on the table. A
sovereign debt default is not excluded. According to Greek politicians,
it’s not the first time - the country saw defaults on government debts
in 1898 and 1932. Actually there is only a relative difference between a
moratorium, a debt restructuring and a default. It all boils down to
warning about the upcoming default. Restructuring may imply a temporary
suspension (grace period) of interest or principal repayments.
The most resolute Syriza representatives say if Greece fails to reach an
agreement with creditors and money lenders on restructuring then a new
government would take a unilateral decision on moratorium and partial
writing off the debt.
In early January Alexis Tsipras, the Syriza party leader, said, «What we
demand is a European conference, to tackle this European problem
together, and there cannot be a solution without writing off a large
part of the debt, a moratorium on repayments and a growth clause.» He
said coordinated technical measures could be used to avoid a solution at
the expense of Europeans. Syriza vows to write down most of the nominal
value of Greece’s debt once elected. «That’s what was done for Germany
in 1953, it should be done for Greece in 2015,» Tsipras said in a speech
delivered this January. He added that an agreement will include an
amendment to make debt payments tied to the indicators of economic
growth, not state budget surplus. The party will ask for a grace period
or a moratorium to accumulate money for economic development and
restructuring. * * *
Today the legendary Manolis Glezos is the informal leader of Syriza. On
May 30, 1941, he and his friend climbed on the Acropolis and tore down
the swastika, which had been there since April 27, 1941, when the Nazi
forces had entered Athens. Before the 2012 election said that «all the
agreements concluded with loan sharks, not partners or creditors, but
loan sharks – as that’s what they are – will be nullified...We’ll say
from the very start we don’t owe you anything». Today he repeats the
same thing. Greece owes them nothing. Manolis Glezos hopes to see his
party win the election and tear up the shackling agreements imposed on
Greece by the European Union and the International Monetary Fund.
There is some similarity between the events in Greece and Russia. Before
the New Year Member of Russian State Duma Committee on Budget and Taxes
Yevgeny Feodorov had prepared amendments to the Civil Code providing for
the freezing of Russian debt servicing in force majeure circumstances.
The list of conditions to justify the measure includes the economic
sanctions that impede the functioning of Russian companies and
organizations making impossible to service foreign debts.
Many experts believe the introduction of such measures would be timely.
It will allow to introduce a moratorium on foreign debts repayments. No
doubt, it would be expedient for Russia to take a page out of the Greek
book and see what it’s like to declare a moratorium on sovereign debt
payments. It’ll be possible if the Syriza coalition wins in Greece on
January 25.
D.Sc. (Economics), Economist and the chairman of the S.F. Sharapov
Russian Economic Society
(5) Troika Punches Panic Button on Greece and Spain
by Don Quijones * January 24, 2015
After four years of inflicting economic pain and misery on Europe's
semi-bankrupt periphery, the Troika (IMF, ECB and European Commission)
is suddenly in a lather over the potential political consequences of its
disastrous economic policies: "I wouldn't like extreme forces to come to
power. I would prefer if known faces show up," said European Commission
president Jean-Claude Juncker regarding the upcoming Greek elections.
Speaking at a press conference in Pekin, the IMF's Chief Economist
Oliver Blanchard warned that unemployment in Spain remains too high,
fueling a surge of support in "populist movements" and "political
parties that do not want to form part of the euro."
Blanchard's words were a barely veiled reference to the phoenix-like
rise of Podemos, a stridently anti-establishment but far from
Eurosceptic political party. In recent polls of voter intentions for the
upcoming municipal elections (March) and general elections (September),
the new party, now in its second year of existence, has consistently
commanded between 25% and 30% of the votes - more than either of the two
main parties.
The fear among the political elite, both in Madrid and Brussels, is
palpable. In the last few days, Prime Minister Rajoy dispatched his
Vice-President, Soraya Sáenz de Santamaria, and Minister of Industry,
José Manuel Soria, on a vital mission to persuade Spain's biggest media
conglomerate, Grupo Planeta, to adopt a more critical tone in its
reporting on Podemos. In return the government will offer the
broadcaster more licenses for more channels. Bienvenido a España!
The Troika Effect
It no longer matters what dastardly ploys the Rajoy government tries to
pull off in its desperate bid to hold onto power; with the exception of
hardcore PP voters, the Spanish electorate has had enough. Like Samaras'
party in Greece, all the Rajoy government can serve up is a continued
diet of fear, lies, and distortion. Podemos, by contrast, offers the
prospect of change, for better or worse.
Senior business executives, small business owners, teachers, lawyers,
doctors, nurses, civil servants, hijos de ricos en el paro (the
unemployed children of rich parents), even their rich parents... all
have told me that they intend to vote for Podemos in the upcoming
elections. Their main reason? The current government's naked corruption,
criminality and its shameless resurrection of the ghosts of Spain's
Francoist past.
The Troika's austerity regime comes a close second. As in Greece, the
people of Spain are tired and weary of paying for the excesses and
failings of a corrupt, self-serving political and economic elite. The
austerity measures the Troika has imposed on countries like Greece,
Portugal and Spain - in return for bailout funds that in the main have
gone toward buttressing Europe's too-big-to-fail banks - have done
nothing but exacerbate the underlying economic conditions on Europe's
In late 2011, Rajoy's government took to austerity with barely concealed
glee. Since then, unemployment has failed to budge under 24%; essential
public services, drained of vital resources, are being amputated limb by
limb; and wages in both the public and private sectors continue to
slump. Meanwhile, the country's public debt has increased by more than
half, from 60% of GDP in 2011 to 92% today. So much for austerity!
Naturally, the compound interest on that debt has also swollen: in 2007,
the interest payments represented 4.4% of total public spending; by 2013
they had reached a whopping 9.3% - more than the government spends each
year on education. What's more, the amended version of Article 135.3 of
the Spanish constitution - a prerequisite of the Troika's 2012 bailout
of Spain's bankrupt saving banks - gives "absolute priority" to the
payment of interest above all other areas of public spending.
As for Greece, its total public debt has grown from an already
staggering 126 percent of GDP in 2010 to 175 percent today - and that
despite two de facto defaults and ruthless bond haircuts! More than
three-quarters of that debt now consists of bailout loans from the Troika.
In other words, both Greece and Spain remain on wholly unsustainable
economic paths, despite all the economic misery and pain inflicted by
the Troika's economic shock therapy.
A New Age or Another False Dawn?
Whatever your opinion of Syriza or Podemos or their respective leaders,
Alexis Tspiras and Pablo Iglesias, it is clear that an electoral victory
for either party would represent a significant blow against the raggedy
status quo. According to Yanis Varoufakis, a university professor of
economics hotly tipped to be Syriza's first ever finance minister, a
Syriza government's first task would be to "destroy the Greek oligarchy
If Syriza wins enough votes to control parliament and its leadership
honors its electoral pledges - granted, a massive if! - then perhaps,
just perhaps, the country might have a slim chance of getting off
rock-bottom as well as setting a more socially inclusive standard of
economic governance.
As for those shrieking about Greece's sacred duty to pay off all its
debts, I present Michael Hudson's mantra of perfect logic:
"Debts that can't be repaid, won't be repaid."
It is the overriding dilemma of our times. As Australian economist Steve
Keen says, the only sane and effective response to this dilemma is to
ask ourselves "not whether we should or should not repay this debt, but
how we are going to go about not repaying it."
If the Syriza bloc does win a landslide victory it will be placed under
almost unbearable pressure to toe the Brussels line. The ECB's choice of
timing for its virgin round of Quantitative Easing, just four days
before the Greek elections, was surely no coincidence. Nor was the
central bank's decision not to extend its QE program to Greece unless,
that is, it concludes the pending Troika review.
As if that were not enough, the ever-dependable U.S. rating agency
Standard & Poor's just issued a statement that it may downgrade the
rating of European countries where Eurosceptic parties may assume power.
According to the rating agency, the most "credit negative" parties are
SYRIZA and Podemos, since they both favor increasing public spending and
restructuring their debts.
Pro-Euro, Anti-Austerity: A Perfect Paradox
The irony is that neither SYRIZA nor Podemos are Eurosceptic - at least
not openly! Instead, what they represent is a manifestation of popular
rejection of Troika-imposed austerity. As Tspiras said in a public
address yesterday, "The bailout is over. Blackmail is over. Subservience
is over."
Unfortunately, Tspiras is either badly mistaken or he's knowingly
misleading voters. For as long as Greece is in the euro, subservience
will forever be its fate. As I wrote many moons ago, the introduction of
the single currency had one primary purpose:
To slowly, almost imperceptibly, weaken nation-state institutions to the
point of total dependence on Brussels and Frankfurt; and ultimately have
them supplanted with EU institutions. It is the financial equivalent of
death by a thousand cuts.
It was ever thus and all by design. As Robert Mundell, the Nobel
prize-winning father of the euro, admitted to Greg Palast, the euro is
what allows congresses and parliaments to be stripped of all power over
monetary and fiscal policy. Bothersome democracy is removed from the
economic system as the wholly undemocratic and Goldman-compromised
European Central Bank is gifted the reins of economic power. "Without
fiscal policy, the only way nations can keep jobs is the competitive
reduction of rules on business."
As such, if SYRIZA genuinely sought to save the Greek people from the
Troika's kiss of economic death, their only option would be a dignified
exit from the single currency. Either that or accept the occasional
ECB-provided crumb of sustenance (a little shot of QE here and there)
and the slight - and no doubt temporary - loosening of the monetary
strait jacket. Meanwhile, Brussels' ever opportunistic elite would no
doubt exploit this new crisis to claw its way that little bit closer to
its ultimate goal: fiscal and political union. By Don Quijones.
And a watertight means for multinational corporations to trump national
legislatures? It's close to becoming reality, but people are starting to
open their eyes.
(6) Leaving the Euro; Protection in 1930s benefited Deficit countries -
Michael Pettis
Some things to consider if Spain leaves the euro
By Michael Pettis · May 25, 2014
It might seem almost churlish to wonder what would happen if Spain were
to leave the euro. The official European position is that the battle of
the euro has been pretty much won, and anyone who argues otherwise will
be accused of being a euro hater, an Anglo-Saxon or, even worse, a
writer for the Financial Times.
But there is more than one “battle” around the euro. While the battle of
liquidity seems to have been won, the solvency and the unemployment
battles (the latter of which is really a battle of unbalanced demand)
have not even been addressed. [...]
How much longer is the rest of Europe willing to maintain high
unemployment in order to support the German economy? [...]e.
For now the policy-making elite in peripheral Europe continues to insist
that there will be absolutely no flexibility on the matter of the euro.
But in the 1920s the British policy-making elite, who insisted then that
there would be absolutely no flexibility on the matter of free trade,
was forced to abandon its principles as high unemployment and voter
revolt forced it into devaluing sterling and setting up tariffs. There
is huge controversy on the sequence and causality (not surprisingly),
but there is little doubt that after these occurred the British economy
improved significantly and unemployment dropped. Meanwhile it was
trade-surplus America that suffered mightily from the rise of global
protection, not trade-deficit England.
What does this mean for the survival of the euro? Perhaps that when the
policy-making elite is determined to act “responsibly” and maintain its
highest principles (protect the bankers), but mainly at the expense of
the working and middle classes, policymakers are eventually forced into
retreat by an angry electorate. And perhaps it also means that the
electorate isn’t quite as stupid about economic policymaking as the
elite might think. [...]
By refusing to allow the introduction of any flexibility into the
discussion of the long-term outlook for the euro, Brussels is forcing
Europeans to choose among two absolutes: stay in the euro as it is, or
break the currency union permanently. [...]
What does withdrawal look like?
Along those lines I have been thinking about what would happen if Spain
were to leave the euro. I confess I know very little about the legal and
political implications about a euro exit, and although I have heard
often enough that it is impossible to leave the euro, I don’t think
anything such thing can be true about a sovereign nation. It may be
difficult, it may be messy, and it certainly will be unpleasant, but it
can happen.
But aside from legal issues, there are a number of economic and
financial considerations that I base on my fifteen years of trading the
sovereign debt of defaulted and restructured countries and my addiction
to financial history. Here are the things I considered as being relevant
to any breakup.
1.First and most obviously if Spain leaves the euro its debt burden will
soar. If Spain left the euro and returned to the peseta, the peseta will
immediately fall, and as it does the peseta value of the
euro-denominated debt will rise commensurately. Let us assume that when
this happens Spanish external debt is 110% of GDP. In that case a 20%
decline in the value of the peseta will immediately raise the debt to
137.5% of GDP and a 50% devaluation of the peseta will raise the debt to
220% of GDP. [...]
Spain can replace debt claims with a different set of claims whose
payment schedule is positively correlated with economic performance.
Instruments that pay according to GDP growth, the performance of the
stock market, or land prices, for example, are the right way to line up
the interests of the Spanish economy with those of the creditors. These
are not unprecedented – Argentina provided GDP warrants on its defaulted
2001 debt – but they are used far too little. If a devaluation plus a
sharp cut in Spanish debt causes Spain’s economy to come roaring back,
as it most certainly will, creditors will be paid on the basis of how
well the economy does, and can eventually recover a substantial part of
the value of their original claims. [...]
(7) Panicked super rich buying boltholes with private airstrips to
escape if poor rise up
Jan 26, 2015 12:14
By Alex Wellman
Hedge fund managers are buying up remote ranches and land in places like
New Zealand to flee to in event of wide-spread civil unrest
Super rich hedge fund managers are buying 'secret boltholes' where they
can hideout in the event of civil uprising against growing inequality,
it has been claimed.
Nervous financiers from across the globe have begun purchasing landing
strips, homes and land in areas such as New Zealand so they can flee
should people rise up.
With growing inequality and riots such as those in London in 2011 and in
Ferguson and other parts of the USA last year, many financial leaders
fear they could become targets for public fury.
Robert Johnson, president of the Institute of New Economic Thinking,
told people at the World Economic Forum in Davos that many hedge fund
managers were already planning their escapes.
He said: “I know hedge fund managers all over the world who are buying
airstrips and farms in places like New Zealand because they think they
need a getaway."
Mr Johnson, said the economic situation could soon become intolerable as
even in the richest countries inequality was increasing.
He said: "People need to know there are possibilities for their children
– that they will have the same opportunity as anyone else.
"There is a wicked feedback loop. Politicians who get more money tend to
use it to get more even money."
His comments were backed up by Stewart Wallis, executive director of the
New Economics Foundation, who when asked about the comments told CNBC
Africa: "Getaway cars the airstrips in New Zealand and all that sort of
thing, so basically a way to get off.  If they can get off, onto another
planet, some of them would."
He added: "I think the rich are worried and they should be worried. I
mean inequality, why does it matter?
"Most people have heard the Oxfam statistics that now we’ve got 80, the
80 richest people in the world, having more wealth that the bottom
three-point-five billion, and very soon we’ll get a situation where that
one percent, one percent of the richest people have more wealth than
everybody else, the 99."