Greece: Driven into Crisis  

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ZCommunications | Greece: Driven into Crisis | Ingo Schmidt:


his is ironic inasmuch as the IMF, currently headed by Dominique Strauss-Kahn who served as finance minister in Lionel Jospin's socialist government from 1997 to 1999, recently relaxed its long-time opposition against capital controls. An IMF policy paper published in February 2010 declared that countries that have capital controls in place fared much better during the financial crisis than countries that did not have them. Moreover, IMF chief-economist Olivier Blanchard openly plays with the idea of raising the inflation target for central banks to give them more leeway for monetary policies and also to ease debt burdens at least to some extent. Not surprisingly, the European Central Bank (ECB), which has neoliberal monetarist principles enshrined in its statute, rejects this Keynesian brew served by French economists

Mark Weisbrot, "Greece: Who Needs 'Success Estonian Style'?"  

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Mark Weisbrot, "Greece: Who Needs 'Success Estonian Style'"

The European Union and the IMF have the money and the ability to engineer a recovery based on counter-cyclical policies in Greece as well as the Baltic states. If it involves a debt restructuring -- or even a haircut for the bondholders -- so be it. No government should accept policies that tell them they must bleed their economy for an indeterminate time before it can recover.

The Ugly Math That Shows Why Saving Greece Is Mission Impossible  

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Here's The Ugly Math That Shows Why Saving Greece Is Mission Impossible

Rick Wolff: "Greece, Again: Demystifying 'National Debt'"  

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Rick Wolff, @ MRZine "Greece, Again: Demystifying 'National Debt'":

"...Yet again, business leaders, politicians, academics, and media are blowing smoke around Greece's efforts to cope with "national debt" problems. Something far more important for the world than this small country's financial travails is at stake. Indeed, what is at stake affects us all. What is happening in Greece parallels developments everywhere; only details and timing vary...
...Today, the employer class is anxious that its long-successful use of national debts to avoid taxes is in difficulty. The risks of that indirect way to manipulate states into serving its class needs while charging the working classes have risen sharply. Employers now reckon that states must restore their credit worthiness first, before new lending can resume. And the way for states to do so -- in the employers' view -- is to levy more taxes on the working classes and/or cut state programs serving those classes. The alternative, taxing employers and the rich while cutting state supports for them, is largely omitted from public discussion.

That is the meaning and content of today's Greek debt crisis and tomorrow's parallel crises in Ireland, Spain, and Portugal and future crises in most other capitalist economies. In each case, particular conditions and past histories will shape the specifics. Most important, the political organization and mobilization of the working classes will shape how far (and perhaps whether) those crises get resolved at the workers' expense."

Rainer Kattel, "Should Greece Follow Estonia's Example?"  

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Rainer Kattel, "Should Greece Follow Estonia's Example?":

...Simply put, the eurozone assumed and still tacitly assumes either growing German wages or growing productivity in the rest of Europe. Neither has been the case.

The Baltic economies with pegs, and with its insistence on keeping the pegs, have simply tied the noose around their own necks, trading monetary stability for, first, high financial fragility, and second, very probably long-term high unemployment and debt deflation in the private sector. This will probably result in waves of emigration, growing social problems, and the like. In other words, the costs have been shifted to the future, and they are more than likely to equal Greek troubles in fiscal terms. Estonia is Greece in disguise. It remains to be hoped that the EU and the IMF recognize that and refrain from simplistic fiscal retrenchment that makes problems only worse as the Greek domestic demand and, accordingly, government fiscal position will only weaken further. This results, as we have seen in Estonia, in real economic depression, which is GDP contraction in double digits.

Pixel Armageddon  

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"Pixels" by Patrick Jean:

Karl Marx on public debt  

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Karl Marx: Economic Manuscripts: Capital Vol. I - Chapter Thirty-One:

...The only part of the so-called national wealth that actually enters into the collective possessions of modern peoples is their national debt. Hence, as a necessary consequence, the modern doctrine that a nation becomes the richer the more deeply it is in debt. Public credit becomes the credo of capital. And with the rise of national debt-making, want of faith in the national debt takes the place of the blasphemy against the Holy Ghost, which may not be forgiven.

The public debt becomes one of the most powerful levers of primitive accumulation. As with the stroke of an enchanter’s wand, it endows barren money with the power of breeding and thus turns it into capital, without the necessity of its exposing itself to the troubles and risks inseparable from its employment in industry or even in usury. The state-creditors actually give nothing away, for the sum lent is transformed into public bonds, easily negotiable, which go on functioning in their hands just as so much hard cash would. But further, apart from the class of lazy annuitants thus created, and from the improvised wealth of the financiers, middlemen between the government and the nation-as also apart from the tax-farmers, merchants, private manufacturers, to whom a good part of every national loan renders the service of a capital fallen from heaven-the national debt has given rise to joint-stock companies, to dealings in negotiable effects of all kinds, and to agiotage, in a word to stock-exchange gambling and the modern bankocracy.

Zizek's Joke  

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Includes greek subs:

Mark Weisbrot, "Central Bank Independence: From Whom?"  

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Mark Weisbrot: Central Bank Independence: From Whom?:

There is no obvious reason why monetary policy -- the central bank's decisions with regard to interest rates and money supply -- is so different from other major policy decisions that it should be specially insulated from the electorate. There is no valid analogy, for example, to the independence of the judiciary -- which is based on a theory of separation of powers, or checks and balances, ostensibly to limit abuses of power or infringements on civil rights and liberties.

The argument for an independent central bank is more purely an elitist argument. It really boils down to the idea that monetary policy is too important for the "uneducated" masses to have an influence over it.

Ironically, the reality is quite the opposite: monetary policy is an area where pressure from the majority is sorely needed. There is a grand conflict of interest between the financial sector and the rest of society.


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