This is my third blog post in 24 hours from here, and at the risk of repeating myself, I think the level of mismatch between perception and reality within the Eurozone is worrying. Because last year's protests were mainly leftist; and the strikes mainly token, a pattern of thinking has emerged that dismisses all Greek protest as essentially this.Or from an earlier post:
But a new situation is emerging: Greek people I have spoken to are beginning to express things in terms of nation and sovereignty - and this makes the Greek situation different, for now, to Ireland and Portugal.
While the centre right New Democracy would probably win any snap election, it is hard to find support for pro-austerity politics among ND's natural support base, the business class. Because austerity for them means getting hammered with a tax bill the like of which they have never dreamed, nor indeed paid.
The woman still tugging at my arm says, "We're not interested in media coverage. We've been here 22 days and this is the end of it. We've had enough".posted by Abiezer at 11:05 AM on June 15, 2011 [3 favorites]
An old man, aged 67, a sailor, says, "We don't want any more bailouts from the EU, we'd rather be poor and broke".
For all the leftist iconography plus the presence of that, by now familiar demographic, the Facebook youth - or "graduates with no future" - this thing has gone beyond left and right, it's no longer even a class thing. As the crowd around me erupts with the chant, "Greece, Greece, Greece!" it's clear that for many people it is the Hellenic republic versus the rest of the world.
Because they assumed that a sharp decline in output and employment would be rectified through emigration or a depreciation of the euro, the authors of the Maastricht Treaty saw no reason to create a fiscal analogue to the ECB, an institution that would bear responsibility for promoting growth and employment in the Eurozone. Instead, the political intention of the Treaty was to subordinate the role of fiscal policy, leaving it to the individual member nations to cope with a downturn by permitting only a modest increase in their deficits.posted by wuwei at 6:33 PM on June 15, 2011
The problem, as everyone now observes, is that an individual member nation can find it impossible to engineer a recovery on its own.
During a recession, the private sector retrenches, preferring to save or pay down existing debts rather than parting with cash or borrowing to finance new purchases. Without an offsetting increase in demand – from the public or foreign sector – unemployment will rise and GDP will decline. The Maastricht Treaty assumed that a small increase in the deficit, together with some emigration, would be sufficient to bring about a recovery. That was wrong.
The bottom line is this: the Euro system contains a serious design flaw. It failed to recognize that it was designing a system that would cause its members to become more like Alaska, California or Utah than Australia, Canada or the US. That is, it was stripping them of their capacity to use their budgets to stabilise their own economies.
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The fundamental problem is that member nations have no safe funding mechanism under the existing system. To fix the problem, the ECB should create the euros that its member governments, as USERS of the currency, cannot. It would do this simply by crediting bank accounts, just like the Federal Reserve does when it transfers money to cash-strapped states in the wake of a national disaster. The funds could go directly into the member governments’ accounts, or they could be routed through the European Parliament, which could distribute them on a per-capita basis to all seventeen members of the Eurozone. Because these are transfer payments – not loans – the ECB would not seek repayment. A back-of-the-envelope calculation suggests that an annual distribution of about 10 percent of Euroland GDP would be sufficient to eliminate the funding risk, reduce borrowing costs, permit the repayment of debt and help to restore growth.
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Would the center-right party leave the euro if they were in power?
posted by ennui.bz at 10:20 AM on June 15, 2011