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Note: this is about the European debt crisis, but the parallels with the USA are obvious

"Bild" is impressed with Greek reform efforts

Until now mass circulation daily Bild has distinguished itself by ridiculing or humiliating the Greeks in its reporting on the country's crisis. But yesterday's announcement of deep cuts in retirement benefits and the number of government officials seems to have impressed the editors of newspaper. "Fewer retirement benefits! Fewer officials! Now the Greeks really have to bleed" is Bild's headline against the backdrop of the Acropolis under the sunset's light.

Thrifty Northerners are offended by corrupt Southern free riders and want payback! (Replace "Northerner" by "Teapartiers" and "Southern free riders" with "welfare queens" or similar and you get the idea) - that article is a good example of what's been happening for a while now in terms of how the crisis is perceived - the crisis is no longer about economics (see here a list of potential solutions to the crisis) but about something else: a group smugly thinks they're working hard and weathering the crisis and sees no reason to help those that are struggling, seeing them as lazy or cheats or both - even if the result of such policies is to make things worse for everybody.

Some would call it morality, some would call it simply politics, but this is certainly not about rational decision-making.

But isn't it? I'm pretty sure most Germans would be ok with the solution to the current crisis which comes through higher wages for them. Their sense of righteousness at having sacrificed and thinking that these sacrifices are going to be taken advantage of by the profiteering Greeks is being whipped and promoted and inflated for a very good reason: it's a distraction from the real profiteering taking place: that of the investor class abusing the middle class in multiple ways and not sharing the fruits of growth anymore.

As I wrote a while back:

Germans should be pissed off (i) at their politicians for squeezing their wages to create profits for multinationals and their owners, (ii) at their banks for blowing off that money in stupid casino bets in US subprime and Spanish real estate, (iii) at their politicians for bailing out the banks at no political or practical cost to bank managers and bondholders, (iv) at their elites for blaming Greek laziness for the stagnant wages.

There is a "euro" crisis only because bond investors have taken the euro hostage, and claim the worst will happen if Greece defaults - and they've managed to impose sacrifice on the hapless Greek population and the other European taxpayers in order not to take any hit on their reckless investments. But this is not necessary (we could let Greece default, let investor take their losses and nationalise banks that fail as a result) - indeed it is economically catastrophic, as we enter a vicious circle of deflation and recession, but it can be made to look satisfying to those who can be encouraged to feel smug about this, because they get others to suffer more than them.

Again: replace "Germans by "middle class Americans," "bankers and investors" by "bankers and investors", "Greece" by "DoD" and "Greeks" by "Social Security recipients" and you get the idea...

In other words: propaganda works. And as usual it works by tapping into our worst instincts.

Originally posted to Jerome a Paris on Thu Sep 22, 2011 at 06:39 AM PDT.

Also republished by In Support of Labor and Unions and ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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Comment Preferences

  •  The "sinner" moniker comes from this: (181+ / 0-)
    Recommended by:
    TomP, One Pissed Off Liberal, skillet, DRo, Azazello, gchaucer2, blueoasis, gerald 1969, Land of Enchantment, frandor55, qannabbos, Dartagnan, artisan, Clem Yeobright, nyceve, Egalitare, cosmic debris, jfromga, wayoutinthestix, ask, MKinTN, PeterHug, outragedinSF, milkbone, 2laneIA, Julie Gulden, bythesea, J M F, cassandraX, ricklewsive, blue armadillo, squarewheel, jguzman17, leftist vegetarian patriot, implicate order, ARGeezer, maybeeso in michigan, millwood, ExStr8, Crider, TheOrchid, Youffraita, DailyDrew, Snud, Sun Tzu, drewfromct, PBen, Gustogirl, bnasley, Mnemosyne, Euroliberal, Tracker, aggieric, greengemini, boadicea, Jagger, side pocket, jnhobbs, semiot, filby, esquimaux, greatferm, Ray Pensador, Karl Rover, MinistryOfTruth, Lupin, Preston S, coquiero, Marie, Sandino, coolbreeze, Lily O Lady, Bernard, historys mysteries, The Hindsight Times, bmaples, Involuntary Exile, sleipner, cpresley, Assaf, bronte17, Eddie C, Stwriley, pat bunny, Wife of Bath, Dr Colossus, basquebob, lotlizard, sockpuppet, joe shikspack, Mimikatz, yoduuuh do or do not, chuckvw, oldcrow, ColoTim, Susan from 29, fhcec, tegrat, wu ming, MartyM, reddbierd, An Affirming Flame, petulans, SuWho, Nulwee, lineatus, cotterperson, 3goldens, UncleCharlie, mofembot, pgm 01, wxorknot, mikidee, dotsright, Gowrie Gal, maggiejean, Randtntx, Ckntfld, Lefty Coaster, Habitat Vic, profh, Sunspots, happymisanthropy, Ed in Montana, camlbacker, luckydog, myboo, edsbrooklyn, x, left of center, LamontCranston, Anthony Page aka SecondComing, Orj ozeppi, CenFlaDem, legendmn, Joieau, HeyMikey, ferg, Shadowmage36, doingbusinessas, Lightbulb, Ken in MN, sb, zerone, bluesheep, roadbear, Floande, huttotex, forgore, Pluto, Shockwave, Seamus D, carpunder, Clytemnestra, Anne was here, Granny Doc, Miss Jones, Teiresias70, Dauphin, chimene, Dianna, dewey of the desert, psyched, mjfgates, Larsstephens, roses, alizard, Mentatmark, BYw, melo, monkeybrainpolitics, Creosote, Superskepticalman, Unbozo, seriously70, FishOutofWater, RWood, jjellin, glenj, Jesterfox, irate
    Germany's EU Commissioner Oettinger: 'Deficit Sinners' Flags Should Fly at Half-Mast' (Spiegel, September 9, 2011)

    Greece clearly needs help escaping from its financial quagmire, according to German European Union Energy Commissioner Günther Oettinger. In fact, the EU should consider using some "unconventional" methods to increase motivation among Greek officials for solving the country's problems, he told daily Bild on Friday.
    "There has been the suggestion too of flying the flags of deficit sinners at half mast in front of EU buildings," the member of Chancellor Angela Merkel's conservative Christian Democrats told the paper. "It would just be a symbol, but would still be a big deterrent."

    Another tactic for pulling the debt-stricken country out of crisis could be replacing "the obviously ineffective administrators" there, he added. Because Greek officials have failed at collecting outstanding taxes and selling state-owned assets as planned, Oettinger alleged, experts from other EU nations should be sent in to do their jobs instead. "They could operate without concern for resistance and end the inefficiency," he told Bild.

    •  Merkel is the new Thatcher. What is going to (18+ / 0-)

      happen to the German middle class when the investor class insist that German production be moved to China so they can receive more profit.  This should be interesting.

      •  Reeeeaaaaaally? Merkel deftly led Germany to avoid (6+ / 0-)

        most of the recession that hit the world, which included tax increases to offset losses of revenue and Germany has a really smart unemployment support system. Thatcher? Really?

        Justified anger does not grant you unrestricted license.

        by GoGoGoEverton on Thu Sep 22, 2011 at 07:50:55 AM PDT

        [ Parent ]

      •  Why blame Merkel? (1+ / 0-)
        Recommended by:
        northsylvania

        The vast majority of Germans don't want a permanent fiscal transfer to the northern European countries.  Should Merkel ignore the wished of her constituents?  Are the Germans too "ignorant" to know what's good for them?

        Why not blame the Greek pols?  What's preventing the Greek president from declaring a moratorium on the debt and leaving the EuroZone.  At this point, 90% of Greek debt is subject to Greek law.  That means that Greece could pull out of the EuroZone, pay creditors 10 cents on the dollar, and there's nothing that the creditors could do to Greece in any court of law.

        Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. http://www1.hamiltonproject.org/es/hamilton/hamilton_hp.htm

        by PatriciaVa on Thu Sep 22, 2011 at 08:59:29 AM PDT

        [ Parent ]

        •  Come back to us (6+ / 0-)
          Recommended by:
          Nulwee, 3goldens, PrahaPartizan, BYw, melo, Creosote

          when Germany pays the 165 Billion it owes Greece and take an anti-amnesia pill so that Germans might remember that they were the beneficiaries of the biggest bailout in history; in fact several bailouts over their history.

        •  You can't put it on one or the other (3+ / 0-)
          Recommended by:
          alizard, BYw, Euroliberal

          when they're all in it together. I personally think the notion that they are abiding by their constituent wishes is not true, since if both parties were, they wouldn't be in this mess at all. They are servicing the oligarchs that run European policy.

          Your question about why the Greek leader doesn't declare default is just the flipside of people accusing him of blackmailing them with default. For him, there's a reverse blackmail. That's having Greek banks cut off. It's also lack of political backing for things like wars (as Turkey has been sending warships along Greek territory).

          There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

          by upstate NY on Thu Sep 22, 2011 at 12:30:31 PM PDT

          [ Parent ]

          •  It would be the Right thing to Do (2+ / 0-)
            Recommended by:
            Seamus D, alizard

            The Greek president shouldn't even couch it in terms of, We'll stop paying our obligations unless...

            He should simply say, my team has decided that the best path for the Greek citizens is for us to pay 10 cents on the dollar, and readopt the Drachma as the national currency.

            At that point, the new Greek Central Bank would recapitalize the banks.

            Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. http://www1.hamiltonproject.org/es/hamilton/hamilton_hp.htm

            by PatriciaVa on Thu Sep 22, 2011 at 01:41:24 PM PDT

            [ Parent ]

            •  There's a question of importing enough food & gas (0+ / 0-)

              They are much closer to a primary balance than they are to having enough raw materials to prevent collapse.

              There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

              by upstate NY on Thu Sep 22, 2011 at 02:43:14 PM PDT

              [ Parent ]

      •  "Mitbestimmung" (co-determination) would stop that (5+ / 0-)

        By law, German labor unions appoint a certain number of members of the board of large companies.

        48forEastAfrica - Donate to Oxfam The Dutch kids' chorus Kinderen voor Kinderen wishes all the world's children freedom from hunger, ignorance, and war.

        by lotlizard on Thu Sep 22, 2011 at 09:50:24 AM PDT

        [ Parent ]

      •  Germans... (3+ / 0-)
        Recommended by:
        roadbear, PrahaPartizan, alizard

        ...are probably well-enough educated to know that German firms would instantly take a hit in terms of the very things they're known for -- quality, precision, longevity, etc. -- by moving manufacturing to China.

        I'm surprised enough that they let us hillbillies make BMWs in South Carolina.

        Does German law require publicly-owned firms to do whatever is necessary to improve the stock price, regardless of other factors, such as moral ones, as in the U.S.?

        -5.38 -4.72 T. Atlas shrugged. Jesus wept.

        by trevzb on Thu Sep 22, 2011 at 01:18:21 PM PDT

        [ Parent ]

        •  Well, the "hillbillies" (13+ / 0-)

          don't actually make the engines; those are made in Germany and shipped through Charleston to Spartanburg.  The "hillbillies" just put the thing together.

          Shipped through Charleston, you say?  Didn't I recently hear something about DeMint, Graham and Nikki Haley begging for Federal money to dredge said port so that those BMW engines (and Boeing components) could come ashore there, you say?  Why yes, yes you did.  Damn socialists, those three.

          That "hillbilly" labor is second-world labor to the Germans.  They don't want to pay the first-world labor costs to have cars made completely in Germany that they are going to ship to the US anyway, but as you say they don't want to take the quality risk of outsourcing the thing to a third-world nation.  They get a tolerably educated but still cheap labor workforce by doing it in the US (more accurately, the non-union South).  The precision stuff they REALLY care about still gets made by their own labor force before shipping it out for installation here.

          The US, and in particular the non-union states, have become what countries like Argentina, Uruguay or Taiwan once were to us--a place with a reasonably well educated workforce to do the non-precision stuff, but not organized enough to have living-wage labor costs--or labor costs at all comparable to what we used to have here.

          There is a lot of angst here about the descent into a third-world nation status (some of it justified), but the real issue is that we are already a second-world nation in large parts of the country...and smarter countries are taking advantage of that much as we once did to others.

          I like lemurs -6.50, -4.82

          by roadbear on Thu Sep 22, 2011 at 02:05:20 PM PDT

          [ Parent ]

    •  How about making them wear scarlet letters? (7+ / 1-)

      Or, you know...yellow stars?

      Do German politicians and bankers really want to go there?

      •  The key point I took from this diary (21+ / 0-)

        is that the powers that be are effectively keeping the populace polarized, just as we have been polarized in this country by Fox and others.

        A polarized populace is less likely to revolt.  You need a certain amount of unity in the people to fight back.

        Bottom line is, we aren't that different from the Tea Party.  They are just misinformed, and easily led to scapegoating.  We need to co-opt them.

        Government of the people, by the people, for the people, shall not perish from the earth - Abraham Lincoln

        by Gustogirl on Thu Sep 22, 2011 at 08:30:38 AM PDT

        [ Parent ]

        •  "we need to co-opt them" (0+ / 0-)

          I agree with your basic point, but how the hell do you herd lemmings away from the cliffs and the sea?

          And even that understates the problem, since I suspect that lemmings are probably more intelligent, better educated, and less instinct-driven than the average teabagger.

          Peak Oil is NOW! Looking for intelligent energy policy alternatives? Try here.

          by alizard on Thu Sep 22, 2011 at 06:30:14 PM PDT

          [ Parent ]

      •  What's with the German Hatred? (5+ / 0-)

        I'll tell you who's to blame.

        Decades ago, the architects of this ill-conceived currency union realized that it was not viable, not without full fiscal union.  At the time, the overpaid EuroCrats in Brussels (i believe that only Mexican bureaucrats earn more than those in Brussels) believed that by the time a crisis forced their hand, that Greeks and Germans would consider themselves more European than citizens of their own country.  They actually believed that!!!!!

        Therefore, they figured that when the southern European nations needed a permanent fiscal transfer (very much like the permanent fiscal transfer from California to South Carolina), Germans would eagerly support it.

        Not going to happen.

        Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. http://www1.hamiltonproject.org/es/hamilton/hamilton_hp.htm

        by PatriciaVa on Thu Sep 22, 2011 at 09:05:43 AM PDT

        [ Parent ]

        •  Ummm...I'm of German-American heritage, and... (7+ / 0-)

          it doesn't qualify as 'German hatred' to recognize the underlying classism/racism here. There has always been a very disagreeable strain of contempt for Southern Europeans on the part of those from further north. The current Euro crisis is uncovering some of this.

          I firmly believe that Europe & NATO's unbelievable dithering in the face of ongoing murderous Serbian action right in their own backyard was because the conflict and the victims were confined to Europe's version of 'brown people'.

        •  Just curious... (2+ / 0-)
          Recommended by:
          3goldens, democracy is coming

          ...what permanent fiscal transfer from California to South Carolina are you referencing?

          -5.38 -4.72 T. Atlas shrugged. Jesus wept.

          by trevzb on Thu Sep 22, 2011 at 01:21:44 PM PDT

          [ Parent ]

        •  half true (1+ / 0-)
          Recommended by:
          Euroliberal

          Daily Kos: Bleed, you sinners!

          that Greeks and Germans would consider themselves more European than citizens of their own country.  They actually believed that!!!!!

          well for the Erasmus generation, they may not yet feel more european, but equally to their nation-state, i think so.

          which is the real tragedy here if the eurozone project founders because of the idiocy, immoral and very dangerous, propagated by the tabloids here, amidst a growing chorus of young unemployed and undereducated prole class, who traditionally make the best blackshirts.

          i sincerely hope the social aspects of the EU will have passed the point of no return, and it will be like fitting bigger feet into old smaller shoes, the very idea of going back to the petty squabbling, rigid borders, 1000 lira coffees and fraternal genocide of the last centuries.

          so many noble ideals enshrined into EU legislation, and acted on too, viz standing up to MS, GM, and the host of similar viral BS attempting to foist itself upon us through neo-con/lib infiltration.

          where EU failed: privacy, rendition, banksters... :(

          why? just kos..... *just cause*

          by melo on Thu Sep 22, 2011 at 09:34:24 PM PDT

          [ Parent ]

      •  During the Reich (0+ / 0-)

        Everybody had to wear a "uniform" of some kind.  It was the patriotic thing to do.

        "Love the Truth, defend the Truth, speak the Truth, and hear the Truth" - Jan Hus, d.1415 CE

        by PrahaPartizan on Thu Sep 22, 2011 at 03:30:53 PM PDT

        [ Parent ]

    •  From the Wall Street Journal (9+ / 0-)

      this morning:

      The figures indicate Europe's private sector is retrenching at the same time as governments in many countries are slashing their expenditures in a bid to cut debt levels and ward off a long-running sovereign debt crisis.

      Business activity in Germany, Europe's biggest economy, slowed to a near-standstill. Its preliminary composite Purchasing Managers' Index fell to 50.8 from 51.3, the lowest reading in more than two years and the eighth straight month of slowdown.

      ....
      September's flash PMI data suggest that the recovery in Germany's private sector economy is teetering on the brink," said Tim Moore, senior economist at Markit. He said the readings for the third quarter as a whole were the weakest since Germany recovered from recession around two years ago.

      The European Banks are far more leveraged than the US Commercial Banks were, which should scare the hell out of everyone.  

      I think they will get through the crisis, but the more they beat the south, the more the north makes a default by a country like Greece more attractive.

      The bitter truth of deep inequality has been disguised by an era of cheap imported goods and the anyone-can-make-it celebrity myth - Polly Toynbee

      by fladem on Thu Sep 22, 2011 at 08:03:00 AM PDT

      [ Parent ]

      •  Private sector and governmet both retrenching. (8+ / 0-)

        Per three sector national accounting this is possible only to the extent of a country's trade surplus, if any.

        PRIVATE SECTOR BALANCE + PUBLIC SECTOR BALANCE + TRADE BALANCE = 0

        If a country has balanced trade, including capital flows, then the public sector must increase debt in order for the private sector to reduce debt. Trying to reduce both public and private debt simultaneously is like trying to compress water.

        It is one thing to attempt to impose one's moral sensibilities on economic activity. It is another to attempt utter impossibilities in the name of one's moral sensibilities.  Unfortunately, that thing is all to common.

        As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

        by ARGeezer on Thu Sep 22, 2011 at 08:17:12 AM PDT

        [ Parent ]

        •  It only makes sense if you believe (3+ / 0-)
          Recommended by:
          Nulwee, happymisanthropy, melo

          the world is going to hell. Then you keep extracting stuff from taxpayers in order to order more guns.

          There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

          by upstate NY on Thu Sep 22, 2011 at 09:01:33 AM PDT

          [ Parent ]

          •  that's the main reason governments exist (5+ / 0-)
            Recommended by:
            UtopianPablo, SuWho, upstate NY, Seamus D, melo
            Then you keep extracting stuff from taxpayers in order to order more guns.
            Warfare is arguably the reason government and perhaps even social hierarchies in general first emerged: i.e. the biggest caveman got to call the shots because he was most able to hurt both you and your tribe's enemies.  The medieval aristocracy emerged from Late Roman military men who were given ownership of land in return for defending it and passing the land and the obligation to defend it to their descendants in the hope of securing the empire against its collapse.  Between fear and pride, people will put up with a much bigger, more powerful, and more expensive military machine than you might think.
            It only makes sense if you believe the world is going to hell.
             This is pretty much the foundation of all military thought.
      •  So what's ur Recommendation? (3+ / 0-)
        Recommended by:
        Involuntary Exile, Nulwee, techno

        And be specific, please.

        Should Germany ignore the wishes of its electorate and unconstitutionally support the EuroBond.

        or

        Should Greece reintroduce the Drachma and leave the EuroZone, paying creditors 10 cents on the dollar.

        I vote B.

        Better for everyone involved.

        And much better for President Obama that it happens in the next two months, instead of midway through next year.

        Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. http://www1.hamiltonproject.org/es/hamilton/hamilton_hp.htm

        by PatriciaVa on Thu Sep 22, 2011 at 09:08:37 AM PDT

        [ Parent ]

        •  I would (9+ / 0-)

          bail Greece out, and back off the austerity demands.  At the same time I would create a European TARP to deal with the leverage issue in the European Banks.

          I would fire the head of every bank that needs the European TARP, and I would develop a plan to lower the European Bank's leverage over time.

          An alternative would be for each country to institute it's own mini TARP.

          In either case they should use the opportunity to re-structure the banking system, which the US did not do.

          A Greek default is going to cause unknown secondary effects as Lehman did.

          The bitter truth of deep inequality has been disguised by an era of cheap imported goods and the anyone-can-make-it celebrity myth - Polly Toynbee

          by fladem on Thu Sep 22, 2011 at 09:15:13 AM PDT

          [ Parent ]

        •  I disagree (4+ / 0-)
          Recommended by:
          fladem, trevzb, melo, Euroliberal

          Germany doesn't need to do a fiscal transfer with a Eurobond. That was one conception of a Eurobond going through the ECB. But that's not even necessary. Someone mentioned a eurobond would require the backing of each individual country, but that assumes that investors would not have any appetite for a pan-European eurobond financed by something like the EFSF issuing bonds guaranteed by the ECB. Germany's pay for that would be a tad more inflation and higher interest, but it would keep their currency low and allow their economy to keep its current advantages.

          The reverse of course is seeing the German economy crater with its export zone in the dumps and its currency sky-high.

          But, beyond that, you have to realize that the diary is really responding to the ugly racist things that people of influence, gov't ministers, have been saying in Germany, from Merkel on down.

          There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

          by upstate NY on Thu Sep 22, 2011 at 12:36:27 PM PDT

          [ Parent ]

          •  I'm certain that there's racism in Germany.... (1+ / 0-)
            Recommended by:
            techno

            ....just as there's a visceral dislike (among many) in California against anyone from the South.

            And you're right about the German economy being negatively impacted were the EuroZone to fall apart.  But it would be Germans helping Germans.

            The problem I have with the Eurozone is that a few OverPaid Bureaucrats in Brussels, against the wishes of the people, have tried to impose a United States of Europe.  They seem to believe that the people are too ignorant to realize the "value" of a Brussels-headed European government.

            Let's put it up for a vote.  Let the Germans decide if they want Merkel to be a governor, and not a head of state.

            Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. http://www1.hamiltonproject.org/es/hamilton/hamilton_hp.htm

            by PatriciaVa on Thu Sep 22, 2011 at 01:33:34 PM PDT

            [ Parent ]

            •  It's happened already though (1+ / 0-)
              Recommended by:
              alizard

              The customs borders are down, the banks are interlocked, currency is there. Going backward may be worse than the fact that authority was ceded. Let's be clear though, the Eurocrats never made any of this a secret. They said from the start that they were going for ever more integration.

              The public ratified the treaty.

              Personally, I don't think the problem is that the Europeans don't want integration. I think the problem is that the system they set up doesn't work. Greece is below their per capita right now that they had prior to joining the euro. It's been a bum deal.

              There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

              by upstate NY on Thu Sep 22, 2011 at 02:41:29 PM PDT

              [ Parent ]

      •  Where Have You Been? (2+ / 0-)
        Recommended by:
        fladem, melo

        I haven't seen a comment from the very astute "fladem" for ever so long. Have I just been reading the wrong diaries?

        He/she has such a low #, 932, that I've read his/her comments from the beginning of my joining Daily Kos - my #5476. I'm kind of proud of having a fairly low # as my enlightenment started that far back.

        We must be the change we wish to see in the world. - Gandhi

        by left of center on Thu Sep 22, 2011 at 12:41:51 PM PDT

        [ Parent ]

      •  yes BUT (0+ / 0-)

        they're all insured by american finance

        Daily Kos: Bleed, you sinners!

        The European Banks are far more leveraged than the US Commercial Banks were, which should scare the hell out of everyone.  

        and AIG would never default on us right?

        scares the hell out of anyone with a functioning brain!

        why? just kos..... *just cause*

        by melo on Thu Sep 22, 2011 at 09:38:09 PM PDT

        [ Parent ]

  •  Good post Jerome. (25+ / 0-)

    Neo-Hooverism in Europe will cause great pain and cost the Northern Europeans grealty in the not so distant future.

    The American people must wise up and rise up!

    by TomP on Thu Sep 22, 2011 at 06:44:21 AM PDT

    •  In the era of "globalization" we're all ultimately (23+ / 0-)

      going to suffer pain.  While I'm generally not much of a TNR fan, this John B. Judis piece is highly enlightening:

      TODAY’S RECESSION does not merely resemble the Great Depression; it is, to a real extent, a recurrence of it. It has the same unique causes and the same initial trajectory.Both downturns were triggered by a financial crisis coming on top of, and then deepening, a slowdown in industrial production and employment that had begun earlier and that was caused in part by rapid technological innovation. The 1920s saw the spread of electrification in industry; the 1990s saw the triumph of computerization in manufacturing and services. The recessions in 1926 and 2001 were both followed by “jobless recoveries.”

      In each case, the financial crisis generated an overhang of consumer and business debt that—along with growing unemployment and underemployment, and the failure of real wages to rise—reduced effective demand to the point where the economy, without extensive government intervention, spun into a downward spiral of joblessness. The accumulation of debt also undermined the use of monetary policy to revive the economy. Even zero-percent interest rates could not induce private investment.

      Finally, in contrast to the usual post-World War II recession, our current downturn, like the Great Depression, is global in character. Financial disturbances—aggravated by an unstable international monetary system—have spread globally. During the typical recession, a country suffering a downturn might hope to revive itself by cutting its spending. That might temporarily increase unemployment, but it would also depress wages and prices, simultaneously cutting the demand for imports and making a country’s exports more competitive against those of its rivals. But, when the recession is global, you get what John Maynard Keynes called the “paradox of thrift” writ large: As all nations cut their spending and attempt to devalue their currencies (which makes their exports cheaper), global demand shrinks still more, and the recession deepens.

      If you're looking to sleep well at night, do NOT read this article.

      Some men see things as they are and ask why. I dream of things that never were and ask why not?

      by RFK Lives on Thu Sep 22, 2011 at 07:45:59 AM PDT

      [ Parent ]

  •  It's gonna get Worse, before it gets better. (8+ / 0-)

    Notice: This Comment © 2011 ROGNM

    by ROGNM on Thu Sep 22, 2011 at 06:50:03 AM PDT

  •  The obvious question seems to me: (4+ / 0-)

    What happens when Greece defaults and no one is willing to lend it money?

    Inside Greece, that is.

    "[R]ather high-minded, if not a bit self-referential"--The Washington Post.

    by Geekesque on Thu Sep 22, 2011 at 06:57:02 AM PDT

    •  Or Russia (47+ / 0-)

      I remember how in 1998, after they defaulted, people were saying "never again" - and 3 years later, bankers were rushing to Moscow to lend to the country again.

      The ironic thing is that a country which has defaulted has a lower debt burden and is thus a better risk - so it becomes an attractive client again...

    •  meanwhile what is happening in Ireland (3+ / 0-)
      Recommended by:
      happymisanthropy, Sychotic1, alizard

      How is that former Rush fave country faring with its record low corporate taxes now?

    •  Because that's not what happened. (0+ / 0-)

      Iceland didn't default.  And the crisis had nothing to do with the "investor class" (the Icesave dispute was mainly about overseas retirement accounts).  Iceland had no national debt crisis before this conflict.  The "investor class" (including the IMF) played a critical role in getting the loans needed to restructure their banks after the crisis hit.  And on and on.  Basically, everything most people think they know about the kreppa is completely inaccurate.  Please spent some time reading about what actually happened.

      •  I googled "Iceland default" (0+ / 0-)

        I got 4,400,000 results. Here is the first result:

        http://www.businessinsider.com/...

        I'd be happy to see any other sources you'd suggest.

        •  Read the second paragraph (1+ / 0-)
          Recommended by:
          artisan

          The part in bold:

          Instead of bailing out its banks using taxpayer funds like the United States did, Iceland let its bank default.

          Seriously, reading comprehension, people.  When they bold the part that you're missing and you still miss it... that says something.  They had banks default.  Iceland itself did not default.  Iceland did not have much debt.  They just had some runaway private banks that dragged the country down with them.

          And yes, lots of people like you are spreading bad information about Iceland.  Which is why it's so much work to correct it.  Heck, even that article is wrong; they wrote "let its bank default".  There were multiple banks that went down, and none of them were government-owned (as implied by "its bank").  They were all privately owned -- Landsbanki, Glitnir, Kaupþing, etc.  I think there's some confusion on this front because Landsbanki/Landsbankinn literally means "The Nation's Bank".  But that's just a name, like "Bank of America".

          Here's a good article from The Reykjavík Grapevine about the misconceptions.  Heck, even Wikipedia gets it right.

          •  Your block quote (0+ / 0-)

            (with bank(s) instead) is the whole point, right? We bailed out our private banks but they didn't. Didn't they even hold a plebiscite with 90 some % voting not to? Iceland seems to be recovering while countries like Ireland and Greece keep spiraling down. Conflating private bank debt with the country as a whole is what the PTB want us to do. Let them fail.

            I don't see how we're in disagreement.

            •  Also wrong. (0+ / 0-)

              First off, back to the frame of reference: this article is arguing about how Greece shouldn't default.  Greece has a national debt problem, not a banking crisis.  Also, it's on the Euro, it's in the EU, and a whole bunch of other things that make it totally non-analogous with Iceland.

              Furthermore, even if we want to be comparing it to the US.  You write:

              "We bailed out our private banks but they didn't."

              Yes, they did.  As much as they were able.  They refused to cover the debt obligations to foreign citizens (the bank obligations were so big that there's no way they could have), but they bailed out their domestic citizens.  The country invested nearly a year's worth of GDP, going from one of the lowest debt countries in Europe to one of the highest (per-capita).    Unlike Greece, of course, this debt isn't the result of a systemic problem, but of a one-time series of really big loans in order to buy up the assets of their failed banks and guide them through restructuring.  Yes, Iceland took foreign loans, IMF loans, etc.  

              As for the banksters... well, check out how, say, Björgólfur Þór is doing these days.  Not only is he still free, and wealthy, he even still has a diplomatic passport.

              Once again you compare Iceland to Ireland and Greece, which is once again a ridiculous comparison, because Iceland Did Not Have A National Debt Problem.  Iceland acquired national debt to resolve a banking crisis.  Greece and Iceland are turning to bankers to resolve a national debt crisis.  Iceland's problem was truly unique globally because how vastly larger their banking obligations were compared to their economy.

              No, "90 some % voting no" to bailing out the banks did not happen.  Did you even read the article I linked?  As previously mentioned, the government did buy up the banks' assets.  But by refusing to insure the accounts (which, by the way, were mostly people's retirement accounts) for British and Dutch citizens, the British and Dutch filed suit against Iceland in the EFTA.  It was a legal squabble; their argument was that Iceland had claimed they would insure the accounts against default, while Iceland claimed they had never done so.  Britain in particular was really provocative, seizing Icelandic assets with an anti-terrorism law.  The votes that were held were over whether to settle this squabble out of court.  There were two votes over different repayment plans.  The first was really grossly unfair terms, and it was rejected by about 90%.  The second was much more reasonable; it initially looked like it was going to pass, but ultimately failed, with just under 60% voting no.   BTW, it was their new, leftist government who was pursuing this repayment plan.  The repayment plan rejected, the situation was pushed back into the ball of the EFTA court system.  The latest twist is that with the slow restoring of order to the Icelandic banking system, the banks which the government bought up now seem to be worth enough to pay off their overseas debt obligations.  But Britain and the Netherlands are still filing suit to recover damages for the delay in repayment.

              Let's reiterate the key points here:

               * Iceland did NOT default, like people are wanting Greece to do.
               * Iceland had a unique banking crisis which was not and cannot be applied to anywhere else in the world, due to the size of their banking sector compared to the size of their economy.
               * Iceland is neither on the euro or in the EU, and is not major world economy.
               * Iceland's banks were private, and the funds under threat were largely individual retirement accounts ("Icesave"), not investments of monied interests.
               * Iceland's government did bail out their domestic accounts, just not the international accounts.
               * Iceland's government did buy up the banks during receivership.
               * Iceland now has significant debt because of all the loans it took (including from the IMF) to do this.
               * Iceland has instituted austerity measures, and salaries were effectively halved by the deliberate collapse in currency.
               * Most of the bank officials involved are still walking free.
               * The main dispute Iceland has been involved in is an international legal battle, involving provocative actions by old rivals, about whether or not Iceland ever claimed to ensure the accounts.
               * The referendums had nothing to do with buying up the banks, but trying to end the international squabble by partially compensating them over a period of time for the losses of the Icelandic banks.
               * It was their new, celebrated liberal government who did most of the pursuit of this deal.
               * The battle is not over.

              People here have this fake image in their mind of what happened with Iceland.  If you need an analogy for what you want Greece to do, pick something that's actually analogous and describe it in a way that concerns things which actually happened.  Leave Iceland out of it.

            •  I'll add... (1+ / 0-)
              Recommended by:
              artisan

              that I apologize for how I may come across in this discussion.  But after the 8.000th time of having to correct misinformation, well, it gets rather frustrating.  Please just agree to not spread misinformation, to correct it where you see it being spread, and leave it at that.  I'm probably more sensitive than usual because it's my new country that people are spreading misinformation about.  It's weird, to actually feel patriotic about something.

              •  Many of the points (0+ / 0-)

                you're making, I didn't disagree with in my short comments, maybe others are. I don't think the distinction you make about the national debt problem and the banking crisis is all that different. The players are the same. The only difference is who gets to be the victim. The Greeks are refusing to play the role. The Argentinians have prospered since they quit playing too.

                It seems you are well informed on this but the issue has been framed (maybe incorrectly) in a shorthand way- Iceland let the foreign investors fail to the benefit of it's own citizens. I think the main source that formed my opinion was a piece (I can't remember from where) about the modest guy they put in charge of the investigation who rose to the occasion. Maybe not as successfully as the article implied.

                Misinformation is never good, of course, but Iceland has come out looking good. I am disappointed in my fellow citizens. I am always looking elsewhere, hoping that it's different there. The people of Iceland seemed to handle the crisis well. At least that's the impression I got.

                I remember you now, you did that beautiful photo diary. And right, you're moving there. It made me want to go too.

  •  asdf (9+ / 0-)
    Another tactic for pulling the debt-stricken country out of crisis could be replacing "the obviously ineffective administrators" there, he added. Because Greek officials have failed at collecting outstanding taxes and selling state-owned assets as planned, Oettinger alleged, experts from other EU nations should be sent in to do their jobs instead. "They could operate without concern for resistance and end the inefficiency," he told Bild.

    Boy does this state attitudes of the Bankers/German elite about the Greeks and those not like the Bankers/German elite.  It's saying that the bankers are the adults, know how to manage things and the Greeks are but sloth and laziness.  The Bankers need a serious lesson and the sooner the better.

    •  Moral hazard is a one way street (8+ / 0-)

      And it's also the reason Greece should default. After default, you get to point the finger at others because your balance sheet looks so rosy!

      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

      by upstate NY on Thu Sep 22, 2011 at 07:25:22 AM PDT

      [ Parent ]

    •  Selling state-owned assets... (4+ / 0-)
      Recommended by:
      3goldens, nchristine, JuliaAnn, alizard

      ...in Greece.

      Which bankster gets to own the remains of the cradle of Western Civilization? The Goldman-Sachs Parthenon? The Citi Oracle of Delphi?

      I guess the bigger question is: Is nothing sacred?

      -5.38 -4.72 T. Atlas shrugged. Jesus wept.

      by trevzb on Thu Sep 22, 2011 at 01:36:35 PM PDT

      [ Parent ]

    •  heavy handed (1+ / 0-)
      Recommended by:
      Euroliberal

      tax collectors, coming to a shopowner in greece the other day, were chased off by shopowner and customers!

      you can't get blood out of a stone, and all but a few megapowerful families in greece's oligarchy are backs to the wall.

      there is great pressure from other euro states for greece to settle its debts by buying arms from their export stockpiles.

      nice mix, huh? that's really going to go down peachy with turkey and cyprus, let's pour gasoline on that smouldering pile of tinder, shall we?

      much of europe is disaffected, if ATM's stop working i give it three days before we have martial law in the more 'excitable' countries.

      ever wonder what 'short and curlies' can mean?

      the iconisation of material success and the fetishisation of money as a magical medium have put whole populations under a codependent spell, and now those who manage the manna have the way to pull the rug from under reality-as-we-know-it.

      pressure's on.... something's gotta give. international casino banking has over-defied gravity and is a house of cards already shuddering. tsunami watchtowers are blinking warnings, which way to jump?

      but at what price Jubilee? military tax collectors from other countries? what does that remind you of?

      why? just kos..... *just cause*

      by melo on Thu Sep 22, 2011 at 10:07:51 PM PDT

      [ Parent ]

  •  I think we're at the end of the rope. (17+ / 0-)

    Fed's basically saying nothing is going to pull us or the rest of the world out of this.

    http://www.nytimes.com/...

    “The initial and follow-up reaction from the equity market is likely the realization that the Fed has little left to offer, that Washington is a mess, and their only hope is to “ride it out” over a long period of time,” said Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan & Company.

    “This is about to get ugly and there is very little anyone can do about it,” he added in a research note.

    This is just about the time you'd expect to see certain metaphorical beasts slouching towards Bethlehem to be born.

  •  "Greece. Lowest standard of living in Europe." (6+ / 0-)

    -- Randall,  Time Bandits,  1981

    Oh, they were living high off the hog,  those evil fishermen.

    It's not a fake orgasm; it's a real yawn.

    by sayitaintso on Thu Sep 22, 2011 at 07:16:46 AM PDT

  •  Time to build a garden (10+ / 0-)

    Oxford Economicsdowngraded their already bleak global outlook.

    Global headwinds bring lower growth forecasts The past three months have seen developments that have not only led us to lower our central forecast for the world economy but which have also increased the uncertainty surrounding that forecast, particularly the probability attached to the downside risks. In this analysis, we map out our main scenario for the world economy, in which global GDP
    growth is now seen at 3.7% this year, but the probability attached to this scenario is now only 45%. The downside scenarios, including a disorderly Eurozone debt default, a
    possible US recession and a hard landing in China (and other leading emerging markets) now have an increased probability, reflecting the headwinds currently facing the world
    economy following the recent financial market volatility, the problems in the US and the deepening Eurozone debt crisis. The probability of the upside scenario, that of a corporate
    re-awakening, has been reduced to just 10%, highlighting the intensifying downside risks to the outlook for the global and Eurozone economies.

    Downside risks to world growth continue to rise The past three months have seen developments that have not only led us to revise down our central forecast but which have also increased the uncertainty around that forecast – particularly the probability attached to downside risks. Global financial conditions have deteriorated sharply in recent weeks. Global stocks are still are over 10% off recent peaks despite some rebound in August, spooked by weak data, the Eurozone sovereign debt crisis and the downgrade of the US’s AAA credit rating. These developments alone could have substantial negative effects on growth. However, if trends on equity and bond markets are symptomatic of a wider reassessment of short- and medium-term growth prospects, then this will also impact upon business planning and, in particular, businesses’ intentions relating to investment and employment. The business sector was seen as the main driver behind the steady acceleration in growth expected over the next couple of years and this now seems likely to be more laboured.

    Against this background, we have downgraded our growth forecasts. US growth is now seen at 1.6% this year and
    2.3% next, down from 2.5% and 2.9% three months ago. A key feature of the US forecast is the anticipation that a
    weak 2011H2 will initiate further policy support– at least a scaling back of the degree of fiscal tightening previously
    expected for 2012. This is likely to take the form of QE3 and maintaining payroll tax cuts that were due to expire at
    the beginning of 2012.

    This support to growth is expected to remain absent from the Eurozone – countries are either unable or unwilling to
    implement fiscal measures, while the most that can be expected from the ECB seems to be a delay in the next
    interest rate hike until 2012. The prospects for growth in the Eurozone are more subdued than in the US: we now
    expect the Eurozone to grow by 1.6% this year and 1.1% in 2012, compared with 2% and 1.6% respectively in June.

    US growth at 1.6% still seems generous.

    For decades, it's slow to stalled growth and high unemployment for the foreseeable future in most economies and bumpy in the growth areas no matter where you look. The chances of greater sharing of wealth during persistent contraction must be very low. Those with capital are being hounded to fund entrepreneurial and new investments. The haves will have and the have nots will increase in number as a new generation ages into sluggish local economies.

    Retirements still continue to be underfunded. It should be a crime. Those with families, a garden, and a few chickens will be well positioned.  

    Imagine the possibilities if those DoD funds were redirected to renewable energy, a world's supply of food or water distribution...

    Eliminate the Bush tax cuts Eliminate Afghan and Iraq wars Do these things first before considering any cuts

    by kck on Thu Sep 22, 2011 at 07:23:44 AM PDT

  •  This didn't get much mention. (8+ / 0-)

    But Eric Schmidt (dip#$%-Google) was on This Week and said that the US should adopt that groovy German plan because it is better to have lower wages and a job (even if you had a job at higher wages) than higher wages and no job.

    Yay! The US always gets the worst exports from around the world.

    Number 1 thing I do not want to hear: "Are you satisfied" (uttered by Chuck Todd).

    by AZphilosopher on Thu Sep 22, 2011 at 07:27:06 AM PDT

  •  and they're hungry again. (16+ / 0-)

    corporategods

    Propoganda works best when people want to believe.

  •  Deutsche Welle and BBC report that markets (7+ / 0-)

    are down due to bankers' insecurities over EU bond markets.  Seems they are displeased that the Greeks are not yet selling their children yet  

  •  I mostly see your point but not entirely. (3+ / 0-)
    Recommended by:
    Mariken, UtopianPablo, melo

    There are certainly structural reasons of importance behind it rather than cultural stereotypes, but Germany has in fact been thrifty while Greece has been profligate.  It's not arbitrary that Greece is in trouble while Germany's being tapped to bail out Greece.  

    The Rent Is Too Damn High Party feels that if you want to marry a shoe, I'll marry you. --Jimmy McMillan

    by Rich in PA on Thu Sep 22, 2011 at 07:58:31 AM PDT

    •  you realize the Greec is profligate meme is (5+ / 0-)
      Recommended by:
      artisan, esquimaux, Marie, wu ming, 3goldens

      exactly the sort of disinformation that Jerome is trying to draw attention too.

      for your reading pleasure:

      OECD data

      I don't think they're profligate.

      I also think that Jerome should have included some hard numbers about Greece relative to the rest of Europe since they are the punching bag of the year.

      big badda boom : GRB 080913

      by squarewheel on Thu Sep 22, 2011 at 08:08:42 AM PDT

      [ Parent ]

      •  That info sheet supports the profligacy meme. (2+ / 0-)
        Recommended by:
        UtopianPablo, squarewheel

        It shows that while Greece doesn't spend a lot relative to the EU norm, it takes in even less.  I think we're dealing with two competing definitions of profligacy here and Jerome would be right to contest the notion that Greece gives out huge benefits to its people.  The question is whether the non-huge benefits it does give out are sustainable in a country that would in no way be considered an advanced economy if not for the fact that it's in the EU.  

        The Rent Is Too Damn High Party feels that if you want to marry a shoe, I'll marry you. --Jimmy McMillan

        by Rich in PA on Thu Sep 22, 2011 at 08:34:01 AM PDT

        [ Parent ]

        •  I looked at it again and you are correct (0+ / 0-)

          as you said they have a revenue problem.

          however the proportion of people in govt and the amount of money they consume seems to be in-line with the rest of europe.

          however I still think it's unfair to make them into a punching bag.

          they are being used as an excuse for austerity everywhere by enforcing it on Greece.

          big badda boom : GRB 080913

          by squarewheel on Thu Sep 22, 2011 at 07:15:03 PM PDT

          [ Parent ]

    •  yes (12+ / 0-)

      Greek debt is unsustainable, and the country is not the poster child of good management (but that does not justify the meme that Greeks are lazy or living off the other Europeans - a lot of Greeks have been the victims of their corrupt government as well).

      The fact is - even if that is true, we are cutting off our nose to spite our face in pursuing deflationary policies for moralistic reasons.

      The other fact is - in any group of countries, not all can have a positive trade balance within the group (same as saying: "not everybody can be above average). So if these countries have a monetary union, there needs to be a way to recycle funds from the surplus countries to the deficit ones - via fiscal union, financing of investment, transfer of assets... or debt forgiveness. The creators of the euro were counting on the more positive kind of transfer (structural funds to boost growth and reduce the gap), but these have been reduced in recent years.

      •  This seems so obvious to me - (4+ / 0-)
        The fact is ... we are cutting off our nose to spite our face in pursuing deflationary policies for moralistic reasons.

        Yet that's the point so many teapotters/"germans" seem to miss. There must be some kind of hormonal rush felt by those who leap toward moralistic judgments - but I'm just not feeling it.

        "I only have so much time left. I'm not going to ruin it now by getting religion." Becky's Mom.

        by mikidee on Thu Sep 22, 2011 at 11:15:36 AM PDT

        [ Parent ]

    •  Are all southern countries profligate? (4+ / 0-)
      Recommended by:
      wu ming, Euroliberal, PatriciaVa, melo

      Unmentioned here is that the total debt balances are worse than has been mentioned. Portugal, Spain and Ireland, for instance, have a combined debt that's much worse than Greece's when you include private debt. Try applying austerity there and see what happens to the holders of that private debt. Is that profligacy? What makes the southern countries profligate?

      Does it have anything to do with Germany's policies? Tamping demand at home as CEO's get richer (like the USA) while exporting credit to lift demand, and then having the taxpayer foot the bill when inevitably the debtor countries become unproductive and lose their ability to pay you back?

      I have other theories for what's going on. Something is being missed here. We saw the Greek debt crisis began with German and French banks having 75 billion at least of debt exposure to Greece. Given the fact taht Greece has not yet received the last few tranches (including the almost due 8 billion) of the initial 110 billion loan, we can assume then that there is absolutely no way in heaven that Germany and France have bailed out their banks (using Greece as a conduit) to the tune of 75 billion. Instead, the drop in exposure to Greece was a gift from OTHER European countries. I think Finland, Austria, Slovakia and Holland realize this. The only fiscal transfers are from OTHER eurozone countries to France and Germany. That's the game, and it's the entire reason why Germany and France are incentivized to use Greece as a conduit in the first place. because it's not JUST German and French taxpayers who are saving French and German banks, not to mention the 5.75% interest Greece was paying on the loans until just recently.

      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

      by upstate NY on Thu Sep 22, 2011 at 09:06:05 AM PDT

      [ Parent ]

  •  your quote iv from your former diary (3+ / 0-)
    Recommended by:
    Nailbanger, semiot, melo
    Germans should be pissed off:(iv) at their elites for blaming Greek laziness for the stagnant wages.

    says it all.

    You can wait on it like you wait for an alarm clock to wake you up... if your own profits are at stake, racist arguments crawling out of the closets for justifications of your own immorality with a certainty of a rising sun. Unfortunately the sun doesn't enlighten our views, nor does the alarm clock never wake us up on time and we sleep into the disasters to come.

    Thanks for the diary and the older one. Can you give the link to the older one again? I would like to reread it.

  •  Too bad for the Greeks... (0+ / 0-)

    ...that their government was, for much of the 2000s, a criminal enterprise.  Greek officials flatly lied to EU officials about the state of the Greek economy in order to get loans.  The EU found out only later that most, if not all, of the economic numbers Greek officials had handed them were fictitious, at best.  I have som esympathy for the Germans here.

    (This doesn't apply to the Italian, Spanish or Portuguese situations, however, as I haven't seen any reports of fraud, particularly on the scale of Greek officians', on the part of those countries.)

    We reach for the stars with shaking hands in bare-knuckle times.

    by TheOrchid on Thu Sep 22, 2011 at 08:15:06 AM PDT

    •  Can't agree with this. (6+ / 0-)

      First off, they didn't flatly lie to the EU officials. If you read the Eurostat report of January 8, 2010 on Greek statistics, you'd realize that Greek "projections" were always off each year, forcing Eurostat to conduct audits in Greece. Yes, Eurostat was annoyed, but each year Eurostat reported numbers that showed Greece's debt to GDP was hovering around 100%. So, the projections were off, but the actual numbers with revisions, each year, were on. This is exactly why Eurostat and the IMF were warning about Greek debt long long ago before the crisis.

      If you're referring to Greece getting into the eurozone because of off the book transactions such as the currency swap where they traded dollars for euros (and made a killing) you should know that this was all done out in the open, announced in the trades, that the Goldman package was immediately sold to a bank in Greece which published a report on it back then, the web site is still up with a description of the deal under the name Titlos SA. At a time when Greece was running a 4% deficit, the deal shaved off 1% and allowed Greece under the 3% figure.

      Eurostat knew of the deal, and suggested to Europe that accounting be revised to include debts from currency swaps. The year AFTER Greece's entry, the accounts were revised, and that debt from the Goldman deal was reflected. Thus, there is no question that suddenly the Goldman deal popped up and surprised everyone in 2010 when it was announced to all initially and then reflected in the new guidelines in 2005.

      Besides that, realize that many countries in Europe did the same thing, especially Italy which has many such deals, and even Germany did the same deal for $50 billion which is 50x greater than the Greek Goldman deal. Also realize that Germany and France blew through the 3% budget deficit limit a while back and thereby lifted the rules against running a high budget, so that even if Greece hadn't made the initial 3% hurdle, it would have qualified in the next year regardless when the 3% barrier was lifted due to Germany and France broaching it.

      Right now in Greece, there is an investigation of the statistics bureau where statisticians are claiming that Greece was forced to inflate its debt by the torika through adding the debt of utilities and municipalities to the total number forcing the deficit number to rise from the officially given (by Eurostat) 12.9% to 15.3%, thereby leapfrogging Ireland's dire 14% to set off the alarms of austerity.

      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

      by upstate NY on Thu Sep 22, 2011 at 09:19:16 AM PDT

      [ Parent ]

  •  Quoting "Bild"? (1+ / 0-)
    Recommended by:
    Caipirinha

    Since when did they get respectable? Was this meant snarky or are you slipping, Jerome?

    Muslims, Christians we're all Egyptians.

    by mint julep on Thu Sep 22, 2011 at 08:17:48 AM PDT

  •  Change or die (2+ / 0-)
    Recommended by:
    PrahaPartizan, melo

    Unfortunately our elites have chosen the second.  And their seppuku will take most of us with them.

  •  That's not sufficiently apportioning blame: (1+ / 0-)
    Recommended by:
    melo

    There's no amount of finger pointing at anyone else that can make the Greeks, or the Greek government, into a recipient of a completely transparent government program like social security.

    The Greek government was a willing accomplice to the banks, and frankly, the governments who all knew damn well that the books were being cooked.  I don't know who much to blame the Greek people, but it seems to me that the Greeks, like the Ameircans, are getting the broken polity that many are asking for.  "Hapless" is largely wrong, and in any case, nobody who is "hapless" gets to live large.

    So with that, I don't blame the Germans for ruling out direct transfers to Greek accounts, and that it's being done mostly to have Greece pay banks doesn't help.

    Inland: A privately held corporation spun off from the Womb Division of MomCo a half century or so ago.

    by Inland on Thu Sep 22, 2011 at 09:00:56 AM PDT

    •  What do you mean by live large? (1+ / 0-)
      Recommended by:
      Euroliberal

      That's just more of the racist branding we're dealing with. The gay happy Greeks lazing away.

      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

      by upstate NY on Thu Sep 22, 2011 at 12:38:37 PM PDT

      [ Parent ]

      •  You've just made my (smallest) point for me: (0+ / 0-)

        "Hapless" makes people poor, just like being lazy makes people poor.  Being "hapless" is a cause but the diarist seems to think it's an excuse or an entitlement despite the complicity of the greek governments in creating the problem.

        It's weird how you picked that out, rather than noting the amazing equivalence of the greek state with a social security recipient.  Rick Perry couldn't have done it better.

        Inland: A privately held corporation spun off from the Womb Division of MomCo a half century or so ago.

        by Inland on Fri Sep 23, 2011 at 11:03:44 AM PDT

        [ Parent ]

  •  This is a really great diary but the title of it (1+ / 0-)
    Recommended by:
    melo

    gives absolutely no clue as to what it is about.  The tags are too generalized.  It will be lost forever after today.  The point of the diary is rather sharp, "Again: replace "Germans by "middle class Americans," "bankers and investors" by "bankers and investors", "Greece" by "DoD" and "Greeks" by "Social Security recipients" and you get the idea..."  but it will die here because the title will bury the content.
    I guess that this is a "meta" comment.
    The point of the diary is just so important.

    •  The title refers to the linked (1+ / 0-)
      Recommended by:
      melo

      Oettinger comment that sinners should be occupied and their flags fly at half mast.

      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

      by upstate NY on Thu Sep 22, 2011 at 12:39:15 PM PDT

      [ Parent ]

  •  At least we can count on Jerome to say the truth! (2+ / 0-)
    Recommended by:
    Egalitare, left of center
  •  the cold war (0+ / 0-)

    the iron curtain enabled west europeans to build
    a paradise . they worked extremely hard and made
    tremendous sacrifices . the curtain is gone and
    slowly slowly the paradise is coming undone

    when i was a child attending catholic school
    a repeated theme was when the communists
    accept god the virgin mary will return and
    bring a holy paradise . in the secular world
    politicians of both american political parties
    railed against the godless commies and taxed
    and spent to bring their system to an end

    the religious and secular dreams have come true
    and so has the admonishment of being very very
    careful of what you desire dream and wish for    

  •  Glad to see you posting again. I always learn so (8+ / 0-)

    much from your diaries, whether about economics or energy.  Thanks.

    There is nobody in this country who got rich on his own. Nobody. - Elizabeth Warren

    by Susan Grigsby on Thu Sep 22, 2011 at 11:33:04 AM PDT

  •  I'd like to know how much of the overall (2+ / 0-)
    Recommended by:
    Sychotic1, melo

    European sovereign debt crisis was caused by the banking crisis. AFAIK, nearly the whole of Ireland's problems can be traced back to the government bailing out Irish banks.

    So, what about other countries?

    Help us to save free conscience from the paw Of hireling wolves whose gospel is their maw. ~John Donne

    by ohiolibrarian on Thu Sep 22, 2011 at 11:40:43 AM PDT

  •  Agree w/your parallel analogy. (2+ / 0-)
    Recommended by:
    Sychotic1, melo

    Even though I'm not a finance or economics expert I feel confident I've been reading the broad strokes correctly.

    It's like the U.S. is standing directly in the path of this gigantic tsunami wave of economic destruction and we ain't running for safety!  (Making any corrective measures.)  I suppose that's because the very people that have created and continue to perpetuate this collective global thievery plan to use us - the middle class - as their wall, or shield against the wave's crushing and utterly destructive effect.  Again. Sheesh.

    Wake the fuck up American middle class!

    When everybody talkin' all at once no one can hear the wise one speak, So just be still and silence will provide the wisdom that you seek - by Tori del Allen

    by Dumas EagerSeton on Thu Sep 22, 2011 at 12:52:27 PM PDT

  •  Glad to see you posting again, Jerome. (2+ / 0-)
    Recommended by:
    Lightbulb, melo

    I've missed your diaries very much.

    "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

    by HeyMikey on Thu Sep 22, 2011 at 01:09:03 PM PDT

  •  An elegant parallel that reveals more (1+ / 0-)
    Recommended by:
    Larsstephens

    ...than I had realized. Thanks Jerome.

  •  Good Diary, but "Bild" doesn't represent "Germany" (0+ / 0-)

    And just as a general reaction to the comments to this diary and not to the diary specifically:

    A lot of folks here in my corner of Germany (and in many others where socialists (die Linke), social democrats (SPD) and greens may or may not have majorities but represent significant portions of the population) see things quite differently and will only touch a Bildzeitung to remove it from the last free seat on the train.

    Germans are as racists as Americans are - that is to say some are and some aren't, and that to varying degrees.

    I get just as annoyed when people here in Germany assume that what comes out of Fox News is representative of a homogeneous American public opinion.

    I do get the point of the diary, and I agree with it. I just regret the comments I've read implying that all Germans think the Greek are lazy.

    Germany has conservatives that say racist conservative shit just like any other country does. Of course you'll likely never hear a German conservative gay-bashing or wanting to take away reproductive rights. And they pretty much all believe in evolution and global warming.

    Maybe just maybe our foremothers and our forefathers came to this land in different ships. But we're all in the same boat now. - John Lewis

    by bluesheep on Thu Sep 22, 2011 at 02:46:35 PM PDT

  •  Just a question. (1+ / 0-)
    Recommended by:
    PrahaPartizan

    What would happen if Greece and Italy, and Spain and Ireland did what Iceland is doing?

    Iceland pretty much told the European banks to get stuffed.

    Downwardly Mobile on purpose.

    by KatGirl on Thu Sep 22, 2011 at 02:47:06 PM PDT

    •  Not true. (0+ / 0-)

      Iceland told the UK and the Netherlands to stuff it.  Iceland was the country with the banks that caused a problem (they took in tons of investment accounts, largely from overseas (mostly individuals' retirement accounts), then went bankrupt).  The UK and Netherlands tried to make Iceland back up their banks' accounts -- but the banks were leveraged to many times the size of the whole Icelandic economy.  Iceland refused (they really had little choice) and simply bailed out their domestic accounts, leaving the international accounts to (partially) hang.  The UK and Netherlands started an EFTA squabble in response.

      It's absolutely nothing like what's going on elsewhere in Europe.  Iceland had no national debt crisis.  They're not on the Euro.  They're not in the EU.  Just, totally different.  The Icelandic case was really unique.  And, FYI, it's still ongoing.  Apparently now that their economy has recovered some, the banks are now worth enough to cover the overseas accounts.  But the UK and Netherlands are still going after them in the courts for the delay in repayment.  The UK in particular has been really provocative; they seized Icelandic assets in retaliation using a law designed for terrorists.

      Iceland now has significant national debt, but that's a result of the kreppa, not a cause of it.  Oh, and the IMF is pulling out of Iceland now, satisfied with how things are resolving themselves.  The IMF played a big role in loaning Iceland the money needed to restructure their banks during receivership, along with a bunch of other countries.

  •  anyone curious (0+ / 0-)

    can go to www.eurotrib.com and read talos and other commenters on this.

    why? just kos..... *just cause*

    by melo on Thu Sep 22, 2011 at 10:23:48 PM PDT

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