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"How long before ... Greece, in its desperation, turns once again to the colonels?"
November 2, 2011 8:41 AM   Subscribe

Mired deep in financial crisis, the Greek government of George Papandreou has sacked the country's military leadership:
In a surprise development, Panos Beglitis, Defence Minister, a close confidante of Mr Papandreou, summoned the chiefs of the army, navy and air-force and announced that they were being replaced by other senior officers. Neither the minister nor any government spokesman offered an explanation for the sudden, sweeping changes, which were scheduled to be considered on November 7 as part of a regular annual review of military leadership retirements and promotions. Usually the annual changes do not affect the entire leadership.

Others had already worried with words about the potential problem the Greek government seems to be addressing with its actions. Janet Daley wrote in The Telegraph
When dissatisfied national populations become convinced that their democratic institutions are useless or irrelevant, they will take to the streets. How long before the resentments and the powerlessness ignite and Greece, in its desperation, turns once again to the colonels? Will we see tanks on the streets of Athens at the same time as growing neo-fascist movements in Germany and Italy?
The regime of the colonels took power in 1967 in the years of instability following the ouster of George Papandreou's grandfather of the same name as prime minister.

Novelist and literary historian Thomas Doulis offers an "an imaginative recreation based on fact" of the events of April 20 to 21, 1967 in "Night of the Coup d'Etat" (pdf) in the Journal of the Hellenic Diaspora, an excerpt from his book The Iron Storm: The Impact on Greek Culture of the Military Junta, 1967-1974.

Another account of the rise and rein of the junta, with a number of pictures can be found here.

The military government would last until 1974.

Inspired via Daniel Foster's, "Greek Government Suddenly Replaces Military Chiefs. It’s Probably Nothing."
posted by Jahaza (152 comments total) 17 users marked this as a favorite

 
Sounds like he doesn't want a military take over when Greece society starts to rebel.
posted by amazingstill at 8:47 AM on November 2, 2011


Papandreou's also decided to stare down Brussels: his referendum on the bailout package will be a referendum on whether Greece stays in the euro.
posted by chavenet at 8:52 AM on November 2, 2011 [1 favorite]


Sounds like he wants a military that'll fire on the people when Greek society starts to rebel.
posted by dunkadunc at 8:53 AM on November 2, 2011


Another opinion piece about Greece was making the rounds yesterday: Bravo Papandreou--

From the article:

Greek Prime Minister Georgios Papandreou startled Europe and the financial world Monday by announcing that he will be calling a referendum on the terms of the latest deal negotiated by European leaders and bankers.What is the Greek leader up to? On one level, Papandreou is simply weary of being the agent of his own country’s economic destruction at the hands of bankers. He also is tired of the political unpopularity that comes with the role of broker of austerity.But more important, Papandreou is resisting a double-cross already being cooked up by the bankers. He is playing the one card he has: If the bankers walk away from the partial debt relief committed in principle at the recent EU summit, Greece will default. And Papandreou wants that decision to be made, knowingly, by the Greek people and not by technocrats.
posted by gimonca at 8:54 AM on November 2, 2011


Sounds like he's trying to destabilize the global economy.
posted by awesomebrad at 8:56 AM on November 2, 2011


Greece certainly seems volatile and it seems like G.Pap is taking measures to secure his power. The thing I'm confused about is why did he ask for a referendum, and does that put him on the side of the massive protests or against them? And it seems the whole Greek Parliament, Right and Left, is against it. What am I missing here? Sorry if this is a dumb question.
posted by Skygazer at 8:58 AM on November 2, 2011


The problem is that people really don't understand the consequences of these actions.

Stay in the euro, accept lower wages, lower standard of living for a while.

Leave the euro, real wages decline on the back of massive inflation through printing fiat currency, lower standard of living for a while.

Except if they leave the euro they'll now find it more difficult to export to the eurozone, they'll recoup less because of currency overhead and be vulnerable to wild swings in the drachma as Greece prints more and more of the currency as debts falls due. Their interest rates will go sky high as Greece tries to attract hard currency back into the country causing business to falter and send living standards into a negative feedback loop.

But the Greek people will choose this because the other option is "accepting lower wages" and nobody wants to vote for a voluntary pay cut no matter what fate they seal themselves to.
posted by Talez at 8:58 AM on November 2, 2011 [15 favorites]


When dissatisfied national populations become convinced that their democratic institutions are useless or irrelevant, they will take to the streets.

Which is why the government decided on a referendum. Direct democracy on this question was the only way to maintain any sort of legitimacy for the government.

The bad news is that Greek voters (like those in Iceland two years ago) are almost certain to reject the austerity package. Unlike Iceland, this is likely to result in utter chaos because the Germans don't have a plan B and are not likely to support a Plan B and the Greeks don't even have a Plan A. Once the banks run of of money, the people run out of money, and the day to day life becomes impossible.

The Greeks will take to the streets, they'll burn their own bankrupt country down, but not because the government did something they didn't like. It will be the result of a democratic vote.

And what that says about democracy is just as worrying.

Sounds like he wants a military that'll fire on the people when Greek society starts to rebel.

Rebel against whom? Themselves? Germany? France?

Clearly unless he preemptively neutralized the military leadership, the chances that Greece would still have a PM by the end of the year looked pretty slim, but I still don't see how this does not end up in some sort of military take-over. You cannot have anarchy for very long.

Or what amazingstill said.

Sounds like he's trying to destabilize the global economy.

Cutting the nose off to spite the face is more like it. Greece is too small. German banks will take a hit, but they are big enough to absorb it and Germany has very little sovereign debt.

Hard times ahead for the Greeks. Anyway you slice it.
posted by three blind mice at 8:59 AM on November 2, 2011 [3 favorites]


The bad news is that Greek voters (like those in Iceland two years ago) are almost certain to reject the austerity package. Unlike Iceland, this is likely to result in utter chaos because the Germans don't have a plan B and are not likely to support a Plan B and the Greeks don't even have a Plan A.

Iceland is nothing like Greece. "Iceland's" debt was tied up in banks that Iceland (rightfully) refused to make itself responsible for. It's Plan B was "Screw you all. You all went along with the banks. You all knew the risks".

Greece's debt is wholly of its own creation by the government elected by its people.
posted by Talez at 9:01 AM on November 2, 2011 [3 favorites]


Preempting a coup by firing officers might work, if you made sure you got all the right officers. It could also help to cement the intentions of other officers sympathetic to the sacked ones. The purge could trigger the coup. Very dangerous play. It could be an indicator of just how desperate the government's position is.
posted by Edogy at 9:02 AM on November 2, 2011 [5 favorites]


This looks like the actions of a stable, guided democracy.
posted by glaucon at 9:05 AM on November 2, 2011


Um, the second link goes to the wrong Papandreou.
posted by Capt. Renault at 9:05 AM on November 2, 2011


My thoughts too, edogy. If I was thinking military coup, this would be the green light to go, which is why I'm fairly certain the new officers G. Papendrou picked have got to be his people.

(This is all pretty John LeCarre, right?)

But the Greek people will choose this because the other option is "accepting lower wages" and nobody wants to vote for a voluntary pay cut no matter what fate they seal themselves to.

So will that screw up the economic recovery here? And why does this mess with bailing out Italy (the big worry) as well?

This is fucked cos, in order to want a recovery here, and see that Obama has a recovery going into the election in Nov. 2012, it seems you have to side with the IMF and the 1%.
posted by Skygazer at 9:07 AM on November 2, 2011


Plan B is to allow inflation to creep up a small bit until the PIGS are out of the weeds. It's the simplest, most pain-free decision. Political dogmatism - the insistence of Northern European bankers that southern Europe be made to pay for the irresponsible behavior of Northern European banks - makes this a non-starter, and will sunder the EU irrevocably.
posted by Slap*Happy at 9:09 AM on November 2, 2011 [2 favorites]


This looks like the actions of a stable, guided democracy.

While sacking military officers to prevent a coup is indeed democratic, it's not the actions of a stable and guided democracy. Stable democracies don't have coup plots in the first place, certainly not ones by their service chiefs. And if there's not a coup plot, guided democracies don't sack their military chiefs when it would suggest a coup plot when there isn't one.
posted by Jahaza at 9:09 AM on November 2, 2011


"Iceland's" debt was tied up in banks that Iceland (rightfully) refused to make itself responsible for.

"Rightfully", my arse. Iceland's banks were entitle to operate throughout the European Economic Area under Iceland's membership of the EEA. One of the requirements for membership is that each country takes the necessary measures to oversee its banks and guarantee the deposits. Iceland did neither. Of course, the blame falls mainly on the shoulders of previous Icelandic governments and its central bank, but the voters who put them there and enjoyed the World's Best Standard of Living on credit while savings of much of Europe were funneled into their crooked banks are not exactly blameless.
posted by Skeptic at 9:11 AM on November 2, 2011 [8 favorites]


Greece's debt is wholly of its own creation by the government elected by its people.

Maybe so, but the fact that Greece was cleared to join the EU and its existing financial problems whitewashed, creating the current much more dangerous situation for the global markets, is wholly a creation of Goldman Sachs and the creative accounting practices of Wall Street. So your attempt to single out democracy as the root cause of these ills is noted (because it's creepy), but seems misleading at best.
posted by saulgoodman at 9:11 AM on November 2, 2011 [16 favorites]


Now I may be giving Papandreou too much credit, but this actually seems like a fairly gutsy populist move. Greece is screwed either way, so why should they knuckle down under austerity measures that don't really do anything but protect the banks?

I acknowledge that default is going to be hell, but I think we're underestimating how hellish the austerity measures are going to be if passed.
posted by Ickster at 9:12 AM on November 2, 2011 [5 favorites]


Ooops... sent the mods an e-mail.
posted by Jahaza at 9:12 AM on November 2, 2011


One of the requirements for membership is that each country takes the necessary measures to oversee its banks and guarantee the deposits.

Only demand accounts and only up to 20,000 euros.
posted by Talez at 9:17 AM on November 2, 2011 [3 favorites]


Sounds like he's trying to destabilize the global economy.

So, we'll be bailing him out, then?
posted by Thorzdad at 9:17 AM on November 2, 2011


What did people in the finance world think would eventually happen with the financial sector deliberately making its services too complicated for non-specialists to understand to justify those massive salaries? Most people don't have a clue about finance. And they shouldn't have to. That's why radio shows on finance always have that legal disclaimer about seeking the advice of a qualified financial advisor: laymen aren't expected to be able to understand finance anymore. That's supposed to fall to the specialists in the industry, acting in good faith.
posted by saulgoodman at 9:17 AM on November 2, 2011 [3 favorites]


I still believe the Greeks would benefit the most by replacing all the major political figures, including Papandreou, with new politicians who everyone believes actually plan on collecting taxes from the upper middle class. We're all been saying "confidence" for a reason, you know.
posted by jeffburdges at 9:18 AM on November 2, 2011 [1 favorite]


And they've hoped me
posted by Jahaza at 9:19 AM on November 2, 2011 [2 favorites]


Good on Greece. The death of the Euro is a thing that is going to happen and their is no reason that the people of Greece should suffer more than they are already going to trying to prop it up long enough for everyone else to get out. Large scale economic catastrophe is the order of the day, and it is a necessary order. For too long the biggest players in the global economic system have acted as if the actual laws of capitalism (It's a zero sum game and it always will be) were things that could be ignored and papered over. Welp, papers come due folks. So we've got as a globe a few decades of ugliness headed our way. People've survived worse. We can as well. Maybe the survivors will keep Capital in it's place next go round.
posted by Peztopiary at 9:21 AM on November 2, 2011 [2 favorites]


I acknowledge that default is going to be hell, but I think we're underestimating how hellish the austerity measures are going to be if passed.

Except that, in case of default, this will not prevent the austerity measures, since without them its government will still be spending far more than it earns. In case of default, the Greek government will no longer be able to raise money, so it will quite simply run out of money.

The only option it will have will be to start printing its own money again, but then, those new drachmas will hardly will be worth the paper they'll be printed on. They'll be worthless IOUs issued by a bankrupt government to its bankrupt employees and suppliers.

The mere prospect of Greece leaving the euro will trigger (is triggering) a massive run on the Greek banks, as the Greeks themselves don't want to see their euro savings suddenly converted into devalued drachmas.
posted by Skeptic at 9:21 AM on November 2, 2011


This reminds me of the 2001 fiscal crisis in Argentina. It got really ugly - by the end, all unions nationwide were on strike, bank runs had taken down all of the Argentine banks, the cabinet had resigned, all foreign debts and obligations were defaulted on, millions of people were suddenly out of work and cut off from their savings. They went through about six presidents in a two week period, if I recall.

Partway through the crisis, the government stopped paying all state workers - including hospitals, police, fire, utilities, and of course their military. Utilities shut down. Crime and fire spread through the cities. Doctors and nurses kept showing up to work, and started accepting farm goods in trade.

In particular, the military eventually abandoned their posts, but decided to take all of their guns and equipment with them when they joined the people rioting for food in the streets. Maybe this is a preemptive move to disarm the Greek forces before they turn into an independent militia?
posted by ceribus peribus at 9:21 AM on November 2, 2011 [1 favorite]


Only demand accounts and only up to 20,000 euros.
posted by Talez at 9:17 AM on November 2 [+] [!]


And Iceland refused to do even that.
posted by Skeptic at 9:22 AM on November 2, 2011 [1 favorite]


Greece's PASOK government has tried its best to fulfil its brief as a responsible government. But the severity of the crisis is overwhelming its ability to cope, and its referendum gamble has offended its masters in Europe. There is a continent of surplus value at stake. There is an imperialist super power at stake. There is decades of institutional construction and refinement at stake. There is a whole austerity formula at stake. For that reason, I suspect there'd be corks popping in Cannes if the government fell by one means or another.
Richard Seymour: Would European capital sacrifice Greece to protect profits?
posted by RogerB at 9:26 AM on November 2, 2011


Another alternative reading of replacing the military brass is that a coup has either already taken place or been threatened (or is underway). Do we know if the new appointments *are* G.Pap's people?

Man these are weird ass times.
posted by spitbull at 9:29 AM on November 2, 2011 [1 favorite]


Except that, in case of default, this will not prevent the austerity measures, since without them its government will still be spending far more than it earns. In case of default, the Greek government will no longer be able to raise money, so it will quite simply run out of money.

The Greek deficit is far more manageable if you take debt service out of the equation.

Also, to assert that Greece will be totally unable to borrow—or unable to borrow at reasonable rates—for a lengthy period of time after a default is completely ahistorical and at odds with what has happened in every other instance of sovereign default.
posted by enn at 9:29 AM on November 2, 2011 [3 favorites]


ceribus peribus, funny you mention that. NPR's Planet Money just did a podcast on the Argentinian default, calling it the worst case scenario for Greece.
posted by awesomebrad at 9:29 AM on November 2, 2011


I still believe the Greeks would benefit the most by replacing all the major political figures, including Papandreou, with new politicians who everyone believes actually plan on collecting taxes from the upper middle class. We're all been saying "confidence" for a reason, you know.

This is easy to say but Greek tax revenues are already 39% of GDP. They're really not that short on revenue unless you're comparing them against a nordic country.

Good on Greece. The death of the Euro is a thing that is going to happen and their is no reason that the people of Greece should suffer more than they are already going to trying to prop it up long enough for everyone else to get out.

Everyday Greeks will suffer far worse if their government defaults and pulls out of the eurozone. Declines in real wages are nasty and will hurt like hell in the short term but if they can get more money out to lower and middle classes and bring Greek wages back in line with GDP output it'll at least start the demand side of the economy for basic necessities moving at a reasonable level. Staying in the eurozone would retain some semblance of economic stability based on the fact that the economy is still trading in a hard currency.

Make no mistake, massive hyperinflation of a drachma would be the greater of two evils here.
posted by Talez at 9:32 AM on November 2, 2011 [1 favorite]


The Greeks will take to the streets, they'll burn their own bankrupt country down, but not because the government did something they didn't like. It will be the result of a democratic vote unprosecuted theft on a massive scale.

FTFY
posted by General Tonic at 9:33 AM on November 2, 2011 [3 favorites]


As best I can tell Greece really really really needs the Euro. Europe needs stability in the eurozone (which is a real herding-cats aspiration), which Greece has been fucking with since always.

The P gov is doing what it has to - making it seem like swallowing the bitter pill is their own choice. And frankly the extent of Greek tax fraud is not to be under-estimated. Annecdotally, I heard a great story about how 10,000 people on Kos have declared themselves as Blind for the benefits. Whenever tax men come around the call goes out from the airport when they land - 25% of the population is employed by the gov., so everyone knows someone who knows when the tax inspector comes around... but like I say this is heresy I picked up on vacation there last month.
posted by From Bklyn at 9:33 AM on November 2, 2011


Also, to assert that Greece will be totally unable to borrow—or unable to borrow at reasonable rates—for a lengthy period of time after a default is completely ahistorical and at odds with what has happened in every other instance of sovereign default.

Ahistorical? See Argentina. It's sometimes being bandied about as a positive example, but last I heard it had 30% inflation (and the president had sacked the boss of the statistical service for refusing to disguise it). Anyway, even if Greece was unable to borrow for "just" one year, I think that not being paid for one year would be austerity enough for Greek civil servants and all the government suppliers currently sitting on their debts.
posted by Skeptic at 9:34 AM on November 2, 2011 [1 favorite]


I agree with a lot that this article says:
Which do you trust more: democracy or financial markets?

Greek Prime Minister George Papandreou decided in favor of democracy Monday when he announced a national referendum on the draconian budget cuts Europe and the IMF are demanding from Greece in return for bailing it out.

...We’ve been here before, remember? Here in the United States, at the end of 2008 and start of 2009. Wall Street had made lots of bad loans, and the question we faced then was whether to bail out the Street.

The difference is, we didn’t hold a referendum. Instead, the Bush administration told Congress the nation risked “economic Armageddon” if it didn’t immediately authorize a giant bailout of the Street – with no strings attached. Of course Congress hastily agreed.

...But Americans weren’t really consulted. It was an inside job.

As a result, Wall Street has prospered but the rest of the nation hasn’t.
I think that the horror with which a lot of people are greeting Papandreou's decision to hold a referendum betrays the reality of the global situation: we are more ruled by financial elites than we are by democracy. It's an affront, a slap in the face to the power system, that ordinary people would get to vote on a massively important issue.

I think this shows the lie behind the rhetoric of things like "democratically elected officials". Commentators like to claim that sovereignty rests with the people but when push comes to shove it's always the (wealthy, elite, highly connected aka corrupt) "experts" who are the only ones who should be allowed to make such an important decision.

So who really has the power? I think a crucial part of being empowered is having the ability to make mistakes--because if you can only choose the "correct" option, it's not really a choice at all, is it? So even if the Greek people would be making a mistake by voting differently than the technocrats prefer--and pardon me if I find myself a wee bit skeptical about the claims of economists at this point in time--I think they should be allowed to make the decision for themselves. Assuming they live in a democracy, that is, and not a state governed by unelected, wealthy, transnational interests.
posted by overglow at 9:39 AM on November 2, 2011 [27 favorites]


The military leadership gave Papandreou a choice. Referendum and exit from the Euro, or military government.

Papandreou chose wisely. The dismissal of the military leaders is part of the agreement (they got what they wanted).
posted by CautionToTheWind at 9:41 AM on November 2, 2011 [2 favorites]


saulgoodman

An even more cynical take on this entire affair is that GS both engineered the entry of Greece into the EU, and also engineered its exit. If you take a long hard look at the number of ex-GS employees who are currently at the top of the EU financial world, the weighting is... somewhat heavy. Examine the Italian bond market, for instance, and there's a striking correlation between the big Bunga-Bunga not playing ball & MSM hit-piece stories that then act as self-fulfilling prophecies. [see here for instance].

Western media, at this point, is providing rumours of rumours of rumours to provide lift to stock markets, when even commentators like Krugman are now convinced of a collapse (if you want to see a man looking into the abyss, try this or this)

Couple this with the notion that G-Pap's family & friends all dealt in CDS', and you have a less than whiter-than-white reason for the referendum: that the crisis (which has many causes, but essentially falls onto the cold hard reality that over-leveraging within a small (5) monopoly of banks incestuously is always going to end badly) is caused by Capitalism, and Democracy will take the fall for it. As for the military changing hands - you need to get up to date with your rumour mill. It did not happen. It was a proposal, and hasn't happened yet (and indeed, has been rejected).

In the game, I suppose you'd call it an emotional double-blind.

As for the back story - there's some very hard ball being played by the financial world, between the three great currencies of our time, and small things like 'Sovereign States' (unless followed by 'Debt') and 'Democracy' are of little importance.


Or do we all still cling to the idea that two party Republics with gerrymandered voting districts with both sides of the 'spectrum' financed by the same people is a democratic nation? Same goes for Europe, Europe just has much older power structures in place which muddles the water.


Bottom line: Democracy is taking the fall here, for systemic stupidity - that's not to say that the entire first world isn't being re-adjusted into a model that more accurately reflects the economics of 7 billion people, but that's what's at stake - not just a small European country.
posted by Cheradine Zakalwe at 9:43 AM on November 2, 2011 [8 favorites]


I think that the horror with which a lot of people are greeting Papandreou's decision to hold a referendum betrays the reality of the global situation: we are more ruled by financial elites than we are by democracy.

The horror of many is because the mere announcement of the referendum may make it pointless. If the Greek government runs out of money before the referendum is held, or if Greeks empty their bank accounts before, or if pressure increases so much on other weak European countries that they can't cope anymore, the Greek voters may not have a choice left by December. That is the real horror of the situation.
posted by Skeptic at 9:43 AM on November 2, 2011 [2 favorites]


I think that the horror with which a lot of people are greeting Papandreou's decision to hold a referendum betrays the reality of the global situation: we are more ruled by financial elites than we are by democracy. It's an affront, a slap in the face to the power system, that ordinary people would get to vote on a massively important issue.

Well not really. It's a cop out more than anything. Democracy is placing a trust in a leader not some American Idol popularity contest. Being a leader sometimes involves doing what they think is right for the good of what they're leading even if the people don't know it either through ignorance or misunderstanding.

To respond to the populist desire to commit hara-kiri makes him the electorate's bitch not their leader.
posted by Talez at 9:46 AM on November 2, 2011 [3 favorites]


Way to go Greece, leading Democracy for 2500 years.
posted by stbalbach at 9:47 AM on November 2, 2011


The thing I'm confused about is why did he ask for a referendum, and does that put him on the side of the massive protests or against them?

He asked for a referendum because it will provide a loaded question that will help him hold on to power: Either you go along with my policies, or the Euro gets it. Everybody understands that, at a point where the economy is hanging on a string, a No vote would be destructive to the whole process simply because there is no time to have any sort of sane reaction to it.

It is amusing at least to think that after almost two years of talks and negotiations, wildly unpopular measures and zero results - for example, not one euro worth of privatizations has been completed under the current government - they suddenly decided they need to hear the voice of the people. Note also that, according to some legal interpretations, the Greek constitution actually forbids holding a referendum on fiscal matters.

The changes in the military may be related to this whole mess, but probably at a more mundane level - I haven't had the time to read up on it, but my guess is it has more to do with internal power plays or military reaction to cost-cutting measures than any serious thought of a coup.
posted by Dr Dracator at 9:56 AM on November 2, 2011


It is unthinkable that the military did not squeeze this referendum out of the government.
posted by CautionToTheWind at 9:59 AM on November 2, 2011


You know, comrades," says Stalin, "that I think in regard to this: I consider it completely unimportant who in the party will vote, or how; but what is extraordinarily important is this — who will count the votes, and how.

Skeptic - you've hit the central issue. If this was October 2010, then there'd be a chance that this was a genuine democratic solution. It isn't, and most commentators and people in the game seem to think that Greece doesn't have two months, let alone the political stability to organise elections at this point.

Rumour of a rumour of a rumour: EU police (probably these guys) will be brought in once things get really wild, as the military is unlikely to be wanted as a solution. There's accounts that EU units (French) have been active in Greece during the last few months - at the very least providing training.

Then again, Greece is #3 in the wolrd as a global arms importer: so while the country has been sliding into financial oblivion, they've been stockpiling hardware.


Their imports have been this high for a five year period [they were #4 during the first couple of years] so the really cynical might see this as some kind of insurance policy. Spending $1.4 billion on shiny new toys during a push for austerity is a really sensible move, after all. (And being in the EU, they're already covered by NATO - although you might want to ask the French & Germans about ship contracts and so on).
posted by Cheradine Zakalwe at 10:08 AM on November 2, 2011


It is unthinkable that the military did not squeeze this referendum out of the government.

Nonsense. As Dr Dracator points out (check his location), this is probably a much more mundane matter of the generals being annoyed by not being allowed to splurge in nice new toys anymore. Greece, because of its continued enmity with neighbouring (and much bigger) fellow NATO member Turkey, has always had a particularly high level of military spending.
posted by Skeptic at 10:10 AM on November 2, 2011 [1 favorite]


Rumour of a rumour of a rumour: EU police (probably these guys) will be brought in once things get really wild, as the military is unlikely to be wanted as a solution. There's accounts that EU units (French) have been active in Greece during the last few months - at the very least providing training.

That's complete and utter tinfoilhattery. There isn't any real "EU police force", nor anybody to command it.
posted by Skeptic at 10:12 AM on November 2, 2011 [5 favorites]


As for the military changing hands - you need to get up to date with your rumour mill. It did not happen. It was a proposal, and hasn't happened yet (and indeed, has been rejected).

Do you have a source for that claim?
posted by Jahaza at 10:13 AM on November 2, 2011


Their imports have been this high for a five year period [they were #4 during the first couple of years] so the really cynical might see this as some kind of insurance policy.

This was mostly during the previous conservative government, notorious for its prickly nationalism and quite busy hiding the debt.
posted by Skeptic at 10:14 AM on November 2, 2011


The European Gendarmerie Force (EGF) is an initiative of 5 EU Member States - France, Italy, The Netherlands, Portugal and Spain – aimed at improving the crisis management capability in sensitive areas.


I see I'll have to use /sarc tags, and explain the 'rumour of a rumour of a rumour' joke (its related to MSM reporting on the crisis). Hint: 4 out of 5 of those countries are likely to face similar problems to Greece very shortly.
posted by Cheradine Zakalwe at 10:16 AM on November 2, 2011


Nonsense. As Dr Dracator points out (check his location), this is probably a much more mundane matter of the generals being annoyed by not being allowed to splurge in nice new toys anymore.

So a country is rioting, striking and facing a task that impossible. A country that saw a military government not long ago. Suddenly, there is a complete reversal of policy, and all 3 top military leaders are peacefully fired.

That is a gentlemen's coup.
posted by CautionToTheWind at 10:17 AM on November 2, 2011


While sacking military officers to prevent a coup is indeed democratic, it's not the actions of a stable and guided democracy. Stable democracies don't have coup plots in the first place, certainly not ones by their service chiefs. And if there's not a coup plot, guided democracies don't sack their military chiefs when it would suggest a coup plot when there isn't one.
posted by Jahaza at 12:09 PM on November 2 [+] [!]


I was kidding, Jahaza. Dead pan sarcasm doesn't really show through sometimes - sorry about that.

This portends bad things for Greece.

One analysis I heard talked about how if Greece does this, then Italy will definitely try to pull a similar stunt, and the EU can't really afford that right now.
posted by glaucon at 10:18 AM on November 2, 2011


Ah, glaucon, sorry about that.
posted by Jahaza at 10:20 AM on November 2, 2011



“Under no circumstances will these changes be accepted, at a time when the government is collapsing and has not even secured a vote of confidence,” an official announcement by the opposition conservative New Democracy party said... The New Democracy party, however, has refused to accept the new nominations, saying it will take its own decisions on the leadership positions of armed forces if it comes to power at the upcoming elections.

General elections are expected to take place in Greece if the government loses the vote of confidence on Friday night.


That's my source for the military changes not happening yet - the annual changes are usually on the 7th Nov, and the vote of no-confidence is on the 4th; I expect a lot of cat fighting and midnight meetings before the changes come into place.


G-Pap has his referendum though
posted by Cheradine Zakalwe at 10:26 AM on November 2, 2011


A one time conversion of the bonds to a new national currency along with a floating exchange rate and acceptance of inflation seems like the only way out of this situation.
posted by humanfont at 10:36 AM on November 2, 2011


Overheard yesterday in a local (Vancouver) cafe:

"Well, you know, Greece is the cradle of our western civilization. I guess if anyone gets to bring it all down it's them."
posted by philip-random at 10:44 AM on November 2, 2011 [7 favorites]


/watching crisis unfold placeholder comment
posted by angrycat at 10:59 AM on November 2, 2011


This was mostly during the previous conservative government, notorious for its prickly nationalism and quite busy hiding the debt.

Eh, it also has a little bit to do with previous talks with the EU - they had this this uncanny tendency to coincide with new orders for Eurofighters and German submarines.
posted by Dr Dracator at 11:03 AM on November 2, 2011


". Andreas Papandreou was arrested at around the same time after seven soldiers with fixed bayonets and one with a machine gun forcibly entered his home. Andreas Papandreou escaped to the roof of his house but surrendered after one of the soldiers held a gun to the head of his then 14-year old son George Papandreou."

Via Wiki on the Greek Coup And, yes, that is the current Greek PM. Maybe this has something to do with a man remembering being 14 years old with a gun to his head the last time the army really didn't like what was happening?

The only way this ends well for Greece is if it leaves the Euro, and then defaults. It'll be painful, but it won't be permanent debt slavery.
posted by Grimgrin at 11:05 AM on November 2, 2011 [2 favorites]


Democracy is placing a trust in a leader...

I see...

[backs away slowly]
posted by Trurl at 11:17 AM on November 2, 2011 [9 favorites]


In short, rather than an exercise in participatory democracy, the referendum is a shoddy, strategically ill-fated, morally corrupt and politically damaging ploy. Contrary to what is implied by the Greek PM’s minders, the referendum was never meant as a means of strengthening Mr Papandreou’s bargaining power over his European colleagues and the IMF. Had he cared to oppose the October Agreement, he ought to have done so in Brussels. No, the referendum is a means of extracting, first, a vote of confidence from his party’s battered MPs and, secondly, to impose upon the Greek people a hideous dilemma which identifies consent to the terrible October Agreement with a continued commitment to remaining in Europe. Rather than a gesture of granting Greeks a voice, this referendum is an attempt to gag the electorate.
Yanis Varoufakis: Time to resign, Mr Papandreou
posted by RogerB at 11:18 AM on November 2, 2011 [4 favorites]


To be clear, the referendum will only happen if the government survives Friday's confidence vote, which isn't very likely.
posted by mek at 11:22 AM on November 2, 2011 [2 favorites]


A Greek in Greece here: a) the military leadership thing is a sideshow; the government has been trying to restructure the military and this was just cleaning house to make that happen. The timing was horrible, another example of incompetence, b) the problem with the referendum is that it will block the next tranche of EU money (purely due to legal reasons) and it will jeopardize everything we've put up with for the last 2 years. It is a stupid maneuver done for political and party reasons only, not because it will legitimize anything, c) Greece is a special case: unlike the other PIGS we did overborrow and overspent: austerity does make sense here, only the current political leadership (both main parties) hasnt had the balls to actually cut the state properly. They pushed across the board wage cuts which have basically stalled all state services.

I feel like I am on board the Titanic, all the passengers can see the iceberg, but half of them plus the crew are screaming 'full steam ahead' hoping it will get split in two or something.
posted by costas at 11:28 AM on November 2, 2011 [11 favorites]


I was just thinking that if Greece had put all of the money that they do have into shorting the Euro before Papandreou announced the referendum then they'd have just about enough now to cover their debt.
posted by FunGus at 11:49 AM on November 2, 2011 [3 favorites]


There is no easy road out of Greece's economic situation. But people are going to stomach hardship better if they feel empowered to determine their own future somewhat.

Other than that, everything that overglow said.
posted by Stagger Lee at 11:51 AM on November 2, 2011 [2 favorites]


It's not hard to see how people look at countries that ignore global finance's demands and default, and compare them to countries that decide cow-tow to the IMF, and wonder if bailouts are always the right option. For Greece in particular it is clear that the outcome for the people of Greece is not the number one priority of EU leaders: they're much more worried about the consequences for PIGS if G drops out. It might very well be in Greece's long term benefit to do just that, and if the eurozone is fatally wounded as a result, is that Greece's fault? Isn't there a central bank in charge of Europe or something?

If the entire eurozone can be destroyed by a minor country's fiscal recklessness in the wake of a global recession, well, it wasn't going to last anyway. And if the history books blame it all on Greece it's because the bankers wrote them.
posted by mek at 11:57 AM on November 2, 2011 [6 favorites]


Imho, all the talk about the eurozone collapsing exists solely to scare northern europeans into bailing out the banks once the Greeks default. There simply isn't any reason for northern european countries to separate their currencies because Greece drops out.
posted by jeffburdges at 12:09 PM on November 2, 2011


The Greeks don't want no freakonomics.
posted by kirkaracha at 12:09 PM on November 2, 2011


General realization here, and is simply that, the power elite of this country, Europe, and indeed the whole world has never been so dangerously identified, exposed and naked from the elaborate machinations it puts in place to camoflouge itself within the illusion of orderly, logical, righteous, democratic political structures.

And it's validity is being questioned as never before. It would seem to me the power elite rarely fucks up so badly that this happens, but indeed they over-extended and exposed themselves.

Historically, this has got to be something akin to the appearance of Hailey's Comet or some such once a century or so phenomena, except of course this is a man-made geo-political occurrence of astonishing rarity, and I can't help think the harbinger of a huge shift on so many fronts it's a bit unnerving.

It's like the world has caught a rare exceedingly crafty semi-mythic creature and holds it pinned down under an ever more probing and powerful microscope.
posted by Skygazer at 12:11 PM on November 2, 2011 [6 favorites]


Pa-Pa-Pa-Papandreou (NSFW)
posted by goodnewsfortheinsane at 12:16 PM on November 2, 2011 [2 favorites]


I feel like I am on board the Titanic, all the passengers can see the iceberg, but half of them plus the crew are screaming 'full steam ahead' hoping it will get split in two or something.

You know, current theory is that the Titanic would have made it if they'd rammed the berg. It was trying to avoid the inevitable and getting a long, drawn-out and more painful alternative that did for it.

Which is probably apt considering how we've been behaving since 2008.
posted by fightorflight at 12:31 PM on November 2, 2011 [2 favorites]


From my far away vantage point the austerity measures don't seem to be having much of an impact in terms of resolving the crisis. The measures seem to punish the population, protect the wealthy and let the existing political elite stay in power. The result is the the status quo is maintained with no one in power yielding real concessions.
posted by humanfont at 12:35 PM on November 2, 2011 [7 favorites]




From my far away vantage point the austerity measures don't seem to be having much of an impact in terms of resolving the crisis. The measures seem to punish the population, protect the wealthy and let the existing political elite stay in power. The result is the the status quo is maintained with no one in power yielding real concessions.
posted by humanfont at 12:35 PM on November 2 [1 favorite +] [!]


Funny, that's exactly what my employers are doing. I could send that quote to our union mailing list and nobody would have any idea I was talking about Greece.
posted by Stagger Lee at 12:43 PM on November 2, 2011


Should I stock up on Kalamata olives?

I really love them.

posted by mmrtnt at 12:49 PM on November 2, 2011 [1 favorite]


This from Bloomberg, reported by zerohedge.com, completely ignored by the MSM:
"Five banks -- JPMorgan, Morgan Stanley, Goldman Sachs, Bank of America Corp. (BAC) and Citigroup Inc. (C) -- write 97 percent of all credit-default swaps in the U.S., according to the Office of the Comptroller of the Currency. The five firms had total net exposure of $45 billion to the debt of Greece, Portugal, Ireland, Spain and Italy, according to disclosures the companies made at the end of the third quarter. Spokesmen for the five banks declined to comment for this story.

The CDS holdings of U.S. banks are almost three times as much as their $181 billion in direct lending to the five countries at the end of June, according to the most recent data available from BIS(Bank for International Settlements). Adding CDS raises the total risk to $767 billion, a 20 percent increase over six months, the data show. BIS doesn’t report which firms sold how much, or to whom."
posted by newdaddy at 1:46 PM on November 2, 2011 [1 favorite]


The CDS holdings of U.S. banks are almost three times as much as their $181 billion in direct lending to the five countries at the end of June, according to the most recent data available from BIS(Bank for International Settlements). Adding CDS raises the total risk to $767 billion, a 20 percent increase over six months, the data show.

Goddamn CDSes.
posted by elpapacito at 1:49 PM on November 2, 2011


So, in reference to my just prior post, what happens in the US if Greece defaults, with or without a wider collapse of the European banks and/or the Euro? Are we back to bailing out TBTF American banks? Because I can't imagine a lot of enthusiasm for that now.
posted by newdaddy at 1:51 PM on November 2, 2011


BIS doesn’t report which firms sold how much, or to whom.

"To whom" is the one-trillion-dollar question. Somebody stands to make a killing from this turmoil, and I really would like to know who.
posted by Skeptic at 2:00 PM on November 2, 2011 [1 favorite]


>they're much more worried about the consequences for PIGS if G drops out
They become the "PIS". Nobody wants journalists to get hold of that acronym.
posted by rongorongo at 2:01 PM on November 2, 2011 [4 favorites]


"To whom" is the one-trillion-dollar question. Somebody stands to make a killing from this turmoil, and I really would like to know who.

That's only true if the counterparties can pay up. If the counterparties just put up their hands and say "whoops! Out of cash. But hey, taxpayers, we're Too Big To Fail" I would expect the public, at least the majority, to refuse to allow any further bailouts. Am I misjudging popular opinion?
posted by newdaddy at 2:11 PM on November 2, 2011


You might be misjudging our politicians willingness to ignore public opinion, newdaddy.
posted by jeffburdges at 2:26 PM on November 2, 2011 [2 favorites]


Week, see, that's really the question I'm asking - is it going to come down to that kind of choice? I'm taking at face value several assertions that have appeared online in the last little while, but I can't from my vantage evaluate the probability of any of them.
posted by newdaddy at 2:37 PM on November 2, 2011


I wouldn't be at all surprised to see BoA finally implode sometime soon.
posted by mek at 2:41 PM on November 2, 2011


There isn't any real "EU police force", nor anybody to command it.

There is too a french EU police force but it is still trying to book some rheumes in Greek hotels.
posted by srboisvert at 3:07 PM on November 2, 2011


CDSs aren't on the "official" books" I hope the Greeks vote "NO" in the referendum, and the banks go down. That's what needs to happen. Greece will suffer from inflation, assuming it will print its own money. Note that the Euro does create inter-economic efficiencies, but also note that when the Euro came in prices went WAY up, for many consumer goods.

I'd love to see a return to the old system; it's far more diverse and less likely to break. Yes, there are inefficiencies, but at least there are not efficiencies that the big boys are so able to manipulate.

This isn't about the Euro, or Europe, or the European Union - it's about the survival of a bunch of too-high risk takers and their CDS's. There are recent papers (one by a Nobel prize winner) that go into great detail about spreading too much risk. That's what has happened, and it happened because politicians have been bought off with big money.

Flush the crap out of the system. Let the hedge funds fail; let the banks fail, and let there be a time of instability. That's better than driving austerity to a fare-thee-well and creating structural disadvantage for the people, for years, while the big boys get bailed out. Bring 'em down!
posted by Vibrissae at 3:26 PM on November 2, 2011 [2 favorites]


I wouldn't be at all surprised to see BoA finally implode sometime soon.

Outlasted Wikileaks though.
posted by Trurl at 3:28 PM on November 2, 2011


@ the people mis-labeling things.

It isn't PIGS

It is PIIGS. Port.Italy.Ire.Gree.Spain.


That is all.
posted by Cheradine Zakalwe at 3:46 PM on November 2, 2011 [1 favorite]


It's fascinating to live history as it unfolds. I keep wondering what the powder keg moment will be, something on the order of the assassination of Franz Ferdinand or the invasion of Poland. Because that's really where all this ends up, doesn't it? Will it be a coup in Greece? Or maybe a reinvigorated Russia decides to start taking back some former territories? Not sure what, but I don't see any of this ending without another large, extended war to reshape Europe and maybe the rest of the world.
posted by dave78981 at 4:00 PM on November 2, 2011 [1 favorite]


Bankers, corruption, tax policies etc. - yes, but these have always existed. The problem was admitting Greece (and Italy) into the Eurozone under false pretenses. Once in the Euro, none of the problems were fixed, but it did allow excessive borrowing that now has Greece (and Italy) in a real fix. Think of it this way: Greece is like the drunken uncle - everyone knows he's a drunk, so nobody lends him much money, he continues drinking, but most of the financial damage is limited because he just has such a poor rep; then one day some sharpies come along and claim that the uncle's relatives will vouch for his financial stability and imply that in a pinch, they'll bail him out - now the uncle is flush with great credit, and of course he goes to town, drinking up every last penny; all of a sudden, when it comes time to pay up, the relatives are shying away from making good on all the debt the uncle incurred, demanding that the drunken uncle pay all of it back himself (ha!), and pretending not to have known that he was a drunk in the first place.

What to do now? I think it's quite obvious that what really needs to happen is a special Marshall Plan for Greece, where EU funding is provided so that the country does not collapse, BUT it must be coupled with a demand for deep economic reforms (including the taxation system), reforms which must be overseen by outside accountants - it cannot be left to the corrupt Greek politicians to oversee such reforms or it will all fail. Paradoxically, I believe that will be cheaper than either pouring good money after bad, or abandoning Greece and allowing it to collapse catastrophically. Keeping Greece in the EU with at least a semi-functioning economy is far preferable compared to seeing Greece become a basket case with a collapsed economy - preferable on purely financial grounds - EU will be healthier economically with a functioning Greece. How likely is such a Marshall Plan? I'm afraid not very.

What's likely to end up happening is a long struggle to keep bailing them out with no reforms, which will only destroy whatever political capital is still left in the EU, a domino collapse of Italy, and eventual Greek withdrawal from the Euro.

The people who will be really hurt will be ordinary citizens of Europe, especially Greece. No lessons will be learned. The same corrupt system that allowed Greece and Italy into the Euro in the first place, precipitating this crisis, will continue on - just take a look at the U.S., we've learned nothing from the banking crisis, the same actors are in place, not at all chastened, indeed emboldened.

It is blindingly obvious that the financial crises around the world are all due in large part to regulatory failure. Until we act on that, we will continue to lurch from one disaster to another.
posted by VikingSword at 4:16 PM on November 2, 2011 [3 favorites]


It is blindingly obvious that the financial crises around the world are all due in large part to regulatory failure

Yes, money influencing politics. End that, or the charade will continue.

What to do now? I think it's quite obvious that what really needs to happen is a special Marshall Plan for Greece, where EU funding is provided so that the country does not collapse, BUT it must be coupled with a demand for deep economic reforms (including the taxation system), reforms which must be overseen by outside accountants - it cannot be left to the corrupt Greek politicians to oversee such reforms or it will all fail.

This is just passing the buck, because the reason the Eurozone is in trouble is because so many CDSs rest with Greece. Who holds that paper? Hedge funds (some of them shoring Greece!!) and banks. Let them fail! The Euro has all along been a slick willy play to enable bankers and hedge funds to have more advantage. The Greeks and Italians will NOT let themselves be governed by outside interests. It just isn't going to happen. The Euro is - I hope - going to die. So be it. I miss individual currencies, and the diversity of commerce and possibility that they bring. The Euro has been nothing more than a tool to profit bankers and hedge fund, who buy policy through contributions. The system is rotten to the core. Bankrupt the biggest players and clean out the crap. THat's the only way. Greece and Italy will suffer, but not as much as they would under some ill-conceived "austerity" that crimps their culture and potential for DECADES. On with the defaults! The Euro is dead, long live the Italian Lira and the Greek Drachma!!
posted by Vibrissae at 4:33 PM on November 2, 2011


No-one has mentioned the implosion of MF Global. Not that the 8th largest bankruptcy in US history should make the evening news or anything. Nope, keep buying APPL. Nothing to see here. Not to mention Jon Corz was a bright star in Obama's financial portfolio.

Currently leaving $1.5billion (we think) of real people's money (that they weren't supposed to touch) in never, never land. Money that they broke the fundamental rule over - which is, you never use client's money to protect your own exposure. Not to mention the vast % overcaps they were charging said clients against the market.

But it isn't important: its only your pension funds.


MF Global is the US story of Greek default. 1/22 primary dealers down, I suspect... a few more to follow due to CDS exposure [hint: if you buy 'insurance' and you can never collect, then you're naked, and even being forced to take a 50% (read 23%) cut then the entire market implodes].
posted by Cheradine Zakalwe at 5:07 PM on November 2, 2011 [1 favorite]


I wouldn't cheer so loudly for the Euro's demise. Something tells me that the fiscal tension between Greece and the rest of the Eurozone is just a dress rehearsal for whatever happens when the state of California's deficit becomes so large that it affects the entirety of the United States.
posted by ceribus peribus at 5:18 PM on November 2, 2011 [2 favorites]


whatever happens when the state of California's deficit becomes so large that it affects the entirety of the United States.

Hail and farewell, Aztlan!

I've fully expected that my California relations would someday show up with a few remaining possessions in a Vons bag for years.
posted by codswallop at 6:00 PM on November 2, 2011


Facebook will ipo eventually and California will pay off its debts with a onetime pop in revenues.
posted by humanfont at 6:03 PM on November 2, 2011


Dave78981: but I don't see any of this ending without another large, extended war to reshape Europe and maybe the rest of the world.

First world against first world? I just don't see it. And I include Russia and China it that class. But I definitely share your uneasiness and the sense of a large paradigmatic shift of sorts. Perhaps a re-alignment brought on by inner turmoil in the PIIGS nations, this country, and China has been squelching and sitting on a powder keg of dissatisfaction and rioting in it's provinces that are left out of it's "economic miracle" so far. But yeah, Putin is a Wild card. Ironically, he does not like these Wall Street/World bank uprisings.

But much like Soviet Russia crumbled under the weight of it's own hubris and unsustainable spending, and populations disillusionment, I do think the West's hyperbolic Capitalism has also burned itself out on it's hubris and sense of superiority and delusional sense of invulnerability.

Interesting times indeed.
posted by Skygazer at 6:51 PM on November 2, 2011 [3 favorites]


Meanwhile in Ireland…
posted by nfg at 6:59 PM on November 2, 2011


If the Greek government does not fall and the referendum goes forward as scheduled, it seems to me that the Greeks will reject the latest "bailout", triggering some sort of crisis in the EU. I don't see war in the future (but we've already seen wars over the past decade across Asia and Africa), but more of a widening gap between rich and poor in Europe.

Or maybe there will be war say, between Hungary (now an autocratic, chauvinist state) and Romania, because the EU will be too weak, divided, and poor to help mediate a political solution.

Or maybe Serbia will decide it wants Kosovo back.

On the plus side, maybe devolution will be good for some states. Look at Scotland - the Scottish National Party has done a great job managing Scotland's economic affairs during the downturn. Unemployment is lower in Scotland than in England. There's something to be said for regional autonomy.
posted by KokuRyu at 7:47 PM on November 2, 2011 [2 favorites]


First world against first world? I just don't see it.

Like starving dogs fighting over scraps, countries, even former allies, will turn on each other when times get tough enough. The question is, what is "enough"? Enough before WWII was (and, of course, this is a simplification) the crushing reparations imposed on Germany after WWI, leading to austerity then resentment and culminating in a virulent nationalism. Could that happen again? Will some other country devolve into a nationalistic death cult? Those centuries-old hatreds simmer right below the surface, waiting to bubble up at any time.

What if the EU is so destabilized by other worries that it fails to address some failing state lurching around madly? What if one or a number of the PIIGS decide to break from the EU which then destabilizes it? I think the prospects for war are high, especially given the relatively weak position the US seems to be in and the aspirations of other world players like China and Russia, or possibly even Pakistan and India.

Polish finance minister Jan Vincent-Rostowski recently said “after all these political shocks, economic shocks, it is very [unlikely] indeed that in the next 10 years we could avoid a war.”

That article goes on to dismiss the idea that Europe could wind up in an internal war but I am still not convinced that we can get through this mess without a major conflageration.
posted by dave78981 at 8:37 PM on November 2, 2011 [2 favorites]


It is an interesting point dave78981. If I had to nominate a country ripe for a death cult, I guess I'd have to say "USA, USA, USA!" Kind of frightening really.
posted by Chuckles at 9:48 PM on November 2, 2011


It's fascinating to live history as it unfolds. I keep wondering what the powder keg moment will be, something on the order of the assassination of Franz Ferdinand or the invasion of Poland. Because that's really where all this ends up, doesn't it?

You seem rather too excited about this possibility. I recommend you head downtown and help occupy something, making smoke a joint with some strangers.
posted by philip-random at 10:19 PM on November 2, 2011 [1 favorite]


maybe
posted by philip-random at 10:24 PM on November 2, 2011


Well Greece, could do what Ireland did and jump through all the hoops the financial markets and the EU want and let ordinary people suffer so we can prop up the banks. Because that's worked out really well for us.

(Not that I am bitter or anything about another lost generation of emigrants. Nor by the fact that Irish newspapers are trying to spin that as a good thing because now we have Skype and email and sure it's hardly like leaving home and losing a young generation that might remake our country one of these days.)
posted by lesbiassparrow at 11:00 PM on November 2, 2011 [2 favorites]


If the Greek government does not fall and the referendum goes forward as scheduled, it seems to me that the Greeks will reject the latest "bailout", triggering some sort of crisis in the EU.

I don't think so. While, according to opinion polls, 59% of Greeks disapprove of the austerity measures, 70% want to stay in the euro. The referendum is Papandreu's way of asking the Greek public to get real and choose. It's impressive in that it's the first act of real political courage by a world leader since the beginning of the economic crisis. It's a pity that it involves playing chicken with the world economy.
posted by Skeptic at 11:32 PM on November 2, 2011 [1 favorite]


I miss individual currencies, and the diversity of commerce and possibility that they bring.

"Diversity of commerce and possibility"? For banks and speculators, perhaps. Not for industrial companies who have to cope with the exchange risk. Don't you know where the "hedge" in "hedge fund" comes from? There's a reason why the City of London always opposed the euro.
posted by Skeptic at 11:38 PM on November 2, 2011


The referendum is Papandreu's way of asking the Greek public to get real and choose. It's impressive in that it's the first act of real political courage by a world leader since the beginning of the economic crisis.

As a member of the Greek public, I would have taken this more seriously if it was done before negotiating and signing both the July memorandum and the October agreement. As it is now, it looks more like an attempt to blackmail his MPs into submission, and produce an illusion of public support.

In other news, things are progressing at a dramatic pace. EU leaders made it clear to Papandreou that they will only accept one question for the referendum - whether to stay in the Eurozone or not. Finance minister and cabinet vice president E. Venizelos issued a statement against the referendum at 4:55 AM (!), essentially breaking with Papandreou. Several disgruntled MPs are expected to join him as the day progresses, it looks like he may not even make it to the vote of confidence tomorrow.
posted by Dr Dracator at 12:21 AM on November 3, 2011 [1 favorite]


My immigrant Greek boss says he reckons the referendum proposal is a sham to head off a coup and confidence vote, and will be ditched due to 'pressure' from the EU as soon as those issues are secured.
posted by bystander at 12:42 AM on November 3, 2011


I'm also astounded to see people like Vibrissae blame the euro for the austerity measures. In case nobody has noticed, non-euro-member Britain has had to swallow comparable austerity measures (trebling student fees, for instance), and despite the BoE driving the money-printing presses hot with QE, its growth figures are even more anaemic than Spain's or Italy's. It only has higher inflation. Considerably higher. The problem is not the euro. The problem is that, for the last 20 years, much of the Western world has been spending imaginary wealth.
posted by Skeptic at 12:57 AM on November 3, 2011 [2 favorites]


The Euro is dead, long live the Italian Lira and the Greek Drachma!!

I guess that's one way to solve income inequality, bring back denominations that made everyone a millionaire.
posted by unigolyn at 2:17 AM on November 3, 2011 [2 favorites]


Good on Greece. The death of the Euro is a thing that is going to happen and their is no reason that the people of Greece should suffer more than they are already going to trying to prop it up long enough for everyone else to get out.

Sorry, the people of Greece aren't propping up anything.

They should never have been admitted into the EU in the first place.

I don't understand the Mediterranean countries. You were on the western side of the Iron curtain, smack dab in the middle of the first world, with every opportunity available, yet you seem to try your very best to emulate a stereotypical South American banana republic.

Countries with a mere 2 decades to rebuild a capitalist economy are putting you to shame.

Stop being backwards fuckups, please.
posted by unigolyn at 2:32 AM on November 3, 2011 [1 favorite]


Britain didn't have to swallow austerity measures, they're just doing it because they're dumb. Not the British people of course, just the current government. Cameron et al have this magic belief that austerity will grow the economy, kind of like the medieval doctors that thought bloodletting would balance a body's humors. Europe, America, everybody is monumentally dumb right now, and that's the problem in a nutshell. It's not a huge, incomprehensible crisis, just a massive failure of leadership.

I don't know what Greece will do. This referendum and vote of confidence business sounds very fluid, so maybe things will look totally different next week. But they'd be better off long term if they dropped out of the Eurozone and took the deflation hit.
posted by Kevin Street at 2:37 AM on November 3, 2011 [3 favorites]


Britain didn't have to swallow austerity measures, they're just doing it because they're dumb.

Britain had a budget deficit of more than 10% of GDP in 2010. That means that, last year, the British government spent more than one-quarter more money than it got in revenue (UK tax revenue runs at about 40% of GDP). You can't cover such a shortfall just by printing more money without getting BIG inflation. Hence the austerity. If there's something to criticise in Cameron's approach is his ideological reliance on cuts rather than taxation, especially taxation of the financial sector.

Keynes was right that government spending has to be anti-cyclical to compensate for private sector weakness during recessions. However, instead of saving for a rainy day during the fat years, previous British governments spent as if there was no tomorrow. I have no sympathy for Osborne and Cameron, but I do reckon that the economic legacy that Blair and Brown left them was downright poisonous.
posted by Skeptic at 2:53 AM on November 3, 2011 [2 favorites]


I don't understand the Mediterranean countries. You were on the western side of the Iron curtain, smack dab in the middle of the first world, with every opportunity available, yet you seem to try your very best to emulate a stereotypical South American banana republic.

Countries with a mere 2 decades to rebuild a capitalist economy are putting you to shame.

Stop being backwards fuckups, please.


unigolyn, I'll be the first to criticise my fellow Mediterranean fuckups, but I should also point out that Greece, Portugal and Spain, despite being on "the right side" of the Iron Wall, were under dictatorships until only one decade earlier than those on the Eastern side. And that, during the Cold War, both Greece and Portugal were bled dry in wars (civil, in Greece's case, colonial in Portugal's) in which they were mere pawns of the superpowers. Finally, all three countries entered democracy in the middle of the oil crisis.

A bit less self-righteousness would do no end of good to everybody involved, East, West, North and South.
posted by Skeptic at 3:16 AM on November 3, 2011 [4 favorites]


As I understand it, there is a serious problem with the political system in the Mediterranean countries, although you have many different political parties, you cannot change their governance or create effective new parties. For example, Italy always reelects Berlusconi because they cannot fire the left-wing party bosses, even when they lose their own election, and said bosses cannot work together. All those Spanish protestors meant it when they named their movement Democracia Real Ya. etc.

There is a damaging lack of democracy throughout much of northern europe as well, but it isn't nearly so debilitating as in the south, i.e. the regular leadership changes mitigate the damage somewhat. America has democratic traditions that match northern europe of course, but its two party system has grown incredibly divisive by artificially projecting all political issues onto a one dimensional spectrum.
posted by jeffburdges at 3:54 AM on November 3, 2011


I recommend you head downtown and help occupy something, making smoke a joint with some strangers.

Eh, no thanks. Occupy is a distraction at best; a joke at worst. It won't bring about any real change. And before you go pointing to the Arab Spring, let me point out that the Arab Spring has managed to overthrow dictatorships, yes. But in their place, what has it brought about? In Egypt, military rule. In Libya, roaming death squads and the resumption of tribal strife. Where are the free elections? What do you think Occupy will bring about in the West? It won't topple the current corrupt economic system, nor will it bring about more justice for the poor or more, better paying jobs.
posted by dave78981 at 4:44 AM on November 3, 2011


But they'd be better off long term if they dropped out of the Eurozone and took the deflation hit.

Deflation? ITYM inflation. I'm finding it hard to imagine how they could drop the Euro. Even if their banks survived the debt default that would presumably go with that move, wouldn't everyone in the country be trying to get their money out before it's converted to New Drachma? Paper euros, gold, foreign bank accounts, whatever. Instant run on the banks, massive inflation, commerce moves to the black market, the government has no more ability to borrow and spend, and even less ability to collect taxes. Seems like it would be bad.
posted by sfenders at 5:02 AM on November 3, 2011


Where are the free elections?

In Tunisia?
posted by Skeptic at 5:13 AM on November 3, 2011 [1 favorite]




Greek crisis: Papandreou 'to offer to resign'

Greek Prime Minister George Papandreou is expected to offer his resignation within the next half-hour, sources in Athens have told the BBC.

Mr Papandreou will meet Greek President Karolos Papoulias immediately after an emergency cabinet meeting has finished.

He is expected to offer a coalition government, with former Greek central banker Lucas Papademos at the helm.



posted by longdaysjourney at 6:57 AM on November 3, 2011


Apologies: source article

Greek crisis: Papandreou 'to offer to resign'
posted by longdaysjourney at 6:58 AM on November 3, 2011


(Reuters) - Prime Minister George Papandreou said on Thursday a referendum on Greece's bailout lifeline would be scrapped if the conservative opposition agreed to back the package in parliament.
posted by Anything at 9:06 AM on November 3, 2011


He's not resigning, so they say. In fact, sort of the opposite since it now looks like the referendum idea was just a bluff made to gain political advantage, forcing the opposition to support this deal rather than pretending they could've come up some kind of better one. So it seems to me. He might as well have called for a referendum on whether or not to declare war and invade Germany.

"I will be glad even if we don't go to a referendum, which was never a purpose in itself. I'm glad that all this discussion has at least brought a lot of people back to their senses," he said in the text of his speech released to media.

"If the opposition comes to the table to back the bailout, a referendum is not needed," said Papandreou.

posted by sfenders at 9:08 AM on November 3, 2011


Dave78981: Occupy is a distraction at best; a joke at worst. It won't bring about any real change.

This is entirely false. It's already focused the public's attention on the abuses of Wall Street and the banks and gotten the attention of almost everyone, especially the media, and at the very least grumbling agreement, even from people like Cantor and Boehner.

It is a sea change in the culture of Wall Street, from one of indifferent arrogance to an understanding that greater accountability and responsibility will be necessary. Case in point, and I realize this is small potatoes, but I can't imagine BOA ever, ever going back on it's decision to charge it's customers $5 a month for the convenience of using a debit card even as early as a year ago.

The beginning to any change is always identifying and isolating the keys to change, and I think OWS (amongst other things, like Wikileaks, the Arab Spring, austerity protests in Europe, Progressive's frustration with Obama's unwillingness to aggressively call out Wall Street etc...) has been brilliant and hugely successful in doing that, and that focus is becoming sharper and and more effective.

As for the Arab Spring, everyone knew it would be messy once new power brokers stepped in, but you can't say that in each and every example you gave, Egypt, Libya, and so forth, this isn't a massive improvement in the ability of the people in those country's to have greater self-determination. The Right, is very gleeful, too gleeful really because the Arab Spring is a awesome refutation to the neo-imperialism of Neoconservatism, and military aggression they touted and continue to tout as the way toward greater Democracy in the Mideast, and their idea of "freedom" which sees that military aggression as the servant of big business, big oil so and so forth, not to mention the military industrial complex in which I include the oil companies.

This was not forced change, this is internal for all of those nations and that same paradigmatic shift is at the root of OWS and the anti-austerity and anti-world bank, anti-huge scheming concerns like Goldman Sachs making bank on the misery of others, while making it seem like they're providing a service.

I do think the Arab Spring is going to require a guiding stabilizing effect, something akin to the Marshall Plan after WWII used to keep Japan and Germany on a Democratic path of recovery, except in the case of the Arab Spring country's it's not recovery but development that's necessary and I do hope Obama jumps in front of that and creates a similar plan for ensuring the success of secular-esque democracies in those countries with U.S. companies providing the products, infrastructure guidance, heavy machinery needs to help them do that...

Of course the Right will scream bloody murder at the idea of growing the deficit, as always completely oblivious to the money they bled out of the country in the Aughties in ridiculous military adventures in Iraq and unnecessary criminal tax breaks to the wealthiest.

But the U.S. needs to get in there now and do business, no doubt. But I can bet you with this environment and the GOTP insanity determined to sabatoge the nation from recovery at every turn it will be the French and German's, Italian's maybe (Libya was former Italian colony with many Italian speakers) and China especially, who will get in there. And what a wonderful example for Free Enterprise China is to other nations!! The way it's proven Capitalism works incredibly well under totalitarian control of the population to keep labor costs at an absolute minimum.
posted by Skygazer at 9:15 AM on November 3, 2011 [1 favorite]


Democracy Now: Wall Street vs. Greece
World leaders are gathering in Cannes for the opening of the Group of 20 summit today. On the top of the agenda is the Greece bailout and the European debt crisis. On Monday, Greek Prime Minister George Papandreou angered many European leaders by announcing his support for a popular referendum—allowing the Greek people to decide if they want to accept the conditions of the $179 billion European Union bailout. After days of increasing criticism from European leaders, Greek Prime Minister George Papandreou is now facing calls from within his party to resign. The Greek debt scandal has also pitted U.S. banking interests against France, Germany and other European powers. "The Americans are putting immense pressure on Europe, saying, 'We will wreck your economy, if you don't wreck Greece’s economy,’" says economic analyst Michael Hudson. President Obama is "basically telling Europe, ’Don’t go the democratic route. Support Wall Street.’"
posted by homunculus at 9:43 AM on November 3, 2011


sfenders: "Deflation? ITYM inflation. I'm finding it hard to imagine how they could drop the Euro. Even if their banks survived the debt default that would presumably go with that move, wouldn't everyone in the country be trying to get their money out before it's converted to New Drachma? Paper euros, gold, foreign bank accounts, whatever. Instant run on the banks, massive inflation, commerce moves to the black market, the government has no more ability to borrow and spend, and even less ability to collect taxes. Seems like it would be bad."

Yeah, inflation, not deflation. Sorry about that. Deflation is what they're trying to achieve now with the austerity policies.

Leaving the Eurozone would be bad in many ways, but at least it would give Greece the freedom to make its own economic policy again, instead of being chained to the larger, more prosperous economies of northern Europe. My comprehension of all this is terribly shallow, but as I understand it Greece has two choices:

1. Deflation through austerity. Accepting the bailout packages under the terms of the European Union, which means many more years of declining prices and wages, until Greece's exports can compete with those of other nations. This is the current path, and it could stretch on for many years, leading to a "lost decade" or lost generation like they had in Japan.

2. Leave the Eurozone, bring back the Drachma. Default. The immediate consequences would be severe, yes. Bank failures, hyper-inflation, hardship on a massive scale. But the end result would be the same: effectively lower prices and wages that make Greek exports competitive against those of other nations. But this would happen quickly instead instead of being dragged out far into the future.

Greece has no good options available, really. It's a choice between long, slow pain with no guaranteed end in sight or terrible short term pain. The same result but two different ways to get there.
posted by Kevin Street at 2:46 PM on November 3, 2011


2. Leave the Eurozone, bring back the Drachma. Default. The immediate consequences would be severe, yes. Bank failures, hyper-inflation, hardship on a massive scale. But the end result would be the same: effectively lower prices and wages that make Greek exports competitive against those of other nations. But this would happen quickly instead instead of being dragged out far into the future.

Greece has no good options available, really. It's a choice between long, slow pain with no guaranteed end in sight or terrible short term pain. The same result but two different ways to get there.


You're missing the one important part. Inflating your debt only works if you have shit people still want to buy. Who cares if your local currency sucks if enough hard currency is coming in one way or another? Greek exports are 5% of GDP. They have nothing people want and they're not selling it anyway.

If Greek goes back to the drachma and inflates their way out of debt you're not going to see an Argentina; you're going to see a god damn Weimar Republic and it's going to go on for years if not decades.
posted by Talez at 3:18 PM on November 3, 2011 [1 favorite]


I appreciate your comments, Skeptic.
posted by goodnewsfortheinsane at 3:27 PM on November 3, 2011


all of a sudden, when it comes time to pay up, the relatives are shying away from making good on all the debt the uncle incurred, demanding that the drunken uncle pay all of it back himself (ha!), and pretending not to have known that he was a drunk in the first place.

Would be a better parable if you could fit in the role of the banking system, the arms industry, the countenance of corruption abroad, the economic interrelationship, the lack of leadership and the bad predictions of the relatives. ;)

However, every successive crisis has been cast as a failure of moral fiber while we're inching closer to Italy or Spain facing problems, which will bring about another round of recession or depression. Greece is small change compared to the trillions Italy & Spain would need let alone the influence that would have on burdened economies like the American and the British one.
posted by ersatz at 3:43 PM on November 3, 2011


This is entirely false. It's already focused the public's attention on the abuses of Wall Street and the banks and gotten the attention of almost everyone, especially the media, and at the very least grumbling agreement, even from people like Cantor and Boehner.

I want this to be true, but I am entirely pessimistic about any real change coming from OWS. I fully support it, but I can't help but wonder how long until there are OWS branded Nikes or some "protest" shirts show up in the tshirt collection at Target.

Also, I want the Arab Spring to bring about real, sustained change in the Middle East. But free elections haven't brought that. When allowed a choice, the people have voted in Islamist governments who are oppressive to women and minority tribes.(Tunisia) This isn't progress. (And if you think it is, then think about what a Christian government would look like in the states and tell me that's progress)
posted by dave78981 at 4:04 PM on November 3, 2011


Reuters:
One senior official told Reuters on condition of anonymity that the disorderly default that would result if Europe refused to give Athens more aid would lead to a bank run within 48 hours, a mass flight of capital and Greek citizens abroad, and instantly halt all money transactions by the Greek government.

That could force Europe to fund core services such as healthcare and water. A euro zone exit would make things even worse.

"You would have to ship truckloads of euros to Greece on the sly" to prevent social implosion, the German official said, noting the EU had been forced to take similar steps in Bosnia and Montenegro, and the United States in Panama.
Recent GDP per capita is roughly six times higher in Greece than in those countries.
posted by sfenders at 4:09 PM on November 3, 2011


Silly nightmare scenario question: would stabilizing Greece be within NATO's ambit, if requested by a faltering Greek government? (Since we were entertaining notions of state breakdown and the intervention of a pan-European gendarmeries upthread.) That would certainly make plain the Way Things Are Now.
posted by snuffleupagus at 7:04 PM on November 3, 2011


Setting aside such small concerns as Turkey's participation
posted by snuffleupagus at 7:04 PM on November 3, 2011


but as I understand it Greece has two choices:

1. Deflation through austerity. Accepting the bailout packages under the terms of the European Union, which means many more years of declining prices and wages, until Greece's exports can compete with those of other nations. This is the current path, and it could stretch on for many years, leading to a "lost decade" or lost generation like they had in Japan.

2. Leave the Eurozone, bring back the Drachma. Default. The immediate consequences would be severe, yes. Bank failures, hyper-inflation, hardship on a massive scale. But the end result would be the same: effectively lower prices and wages that make Greek exports competitive against those of other nations. But this would happen quickly instead instead of being dragged out far into the future.


No, there are not just two choices - these two are completely unacceptable, which is why the only sane option is #3: Marshall Plan for Greece coupled with deep economic reforms overseen by the EU.

We did it for Germany and we did it for Japan and we did it for Europe in general, and we'd have done it for the Soviet Union and their satellites had they accepted it. There is absolutely no reason that the EU cannot do the same for Greece. This is not charity, for crying out loud, anymore than the original Marshall Plan was charity. It's in the self-interest of the rest of the EU to do this, if for no other reason than to prevent Italy collapsing next. You cannot get blood from a stone - pounding the Greeks with austerity is insane, they are already at a breaking point. You must put people to work making productive things - Greece needs to grown its way out of this situation, and you can only do it by building the economy up with a massive investment (coupled with economic and tax reforms so the growth can be on a sound foundation); if you want a person deep in debt to pay back, they've got to be able to have gainful employment, you cannot say to a broke person "starve your way out of your debt" - with no income, you will never ever pay back anything through austerity.

Greece needs to build up an economy. It takes investment, reforms and time. A great deal of the economy in Greece is not productive, and on top of that, many people are out of work; whatever productivity is still happening, is in the underground economy not being captured by the state. All that needs to be cleaned up. People need to be put to work, and with time, they'll make enough to pay for their state and be a productive member of the EU. Asking them to pay back money they not only don't have, but have no way of getting is as failed as pressing the Germans to pay reparations which resulted in a world war - Keynes wrote a definitive treatise on the subject. The US wised up after WWII and elected to do a Marshall Plan - with great results for all. Yes, it'll take money and time and commitment, but believe me, it's chump change compared to what will happen if nothing is done and first Greece collapses, and then Italy and so on. Why aren't we learning from history? Why repeat failed policies? It's clear that any help along a Marshall Plan lines would need to be coupled with deep economic reforms, but that's also exactly what we did in Germany and especially Japan (where on top of that, we also forced through huge political and cultural reforms). It's doable. It's sensible. What's lacking is political will and forward thinking beyond the short term of individual politicians terms of office - the Marshall plan was a a strategic long term plan, something nobody seems to do any more, either in the U.S., or in the EU - everything is super short term. It's tragic.
posted by VikingSword at 10:05 PM on November 3, 2011 [4 favorites]


I agree with you, VikingSword. Some sort of Marshall Plan rebuilding of Greece would be the best solution. But there's nobody like George Marshall on the scene today. It's not just a lack of political will - the people in power in Europe (and elsewhere) wouldn't even agree that targeted intervention and economic planning is a good idea. They really think that deficits are the big problem right now, and that economic confidence (and then economic growth) can be restored by austerity measures. Imo, something drastic has to happen to shake their confidence and force them to look for new ideas.
posted by Kevin Street at 10:14 PM on November 3, 2011


Inflating your debt only works if you have shit people still want to buy. Who cares if your local currency sucks if enough hard currency is coming in one way or another? Greek exports are 5% of GDP. They have nothing people want and they're not selling it anyway.

Very good point. Argentina is a major exporter of food, oil, gas and other raw materials, and it benefitted from the commodity boom. Greece's only significant sources of foreign income are trading and tourism, which are unlikely to benefit from the mayhem which a default would unleash (sure, Greek holidays would become more affordable...but that would be pointless if the hotels are burnt to the ground and transport is disrupted by lack of oil).
posted by Skeptic at 4:23 AM on November 4, 2011


Umm, Germany and Japan were already major manufacturing powers too, VikingSword. Iraq didn't fair so well under American reconstruction, which admittedly we mostly aimed towards enriching Halliburton. Just say'n.
posted by jeffburdges at 7:49 AM on November 4, 2011


Umm, Germany and Japan were already major manufacturing powers too, VikingSword. Iraq didn't fair so well under American reconstruction, which admittedly we mostly aimed towards enriching Halliburton. Just say'n.

German industrial capacity was severely undermined in the aftermath of WWII, and what people don't remember is that the intentional deindustrialization of Germany continued until the 1950's. That was particularly true for the Eastern part under the Soviets, but also under Western powers:

"The much larger reparations from occupied Germany to Russia were to be paid not by goods or money but by the transfer of capital goods, such as dismantled manufacturing plants. A separate Reparations to the western victors consisted mainly of free coal deliveries as well as of machinery and dismantled factories, of which the majority went to France, with some going to Britain. Germany and Italy also paid in the form of POW-provided forced labor; 100,000 in Britain and 700,000 in France. The U.S settled for appropriating German patents as well as all German company assets in the U.S. The "intellectual reparations", such as patents and blueprints, taken by the U.S. and the UK amounted to close to $10 billion, equivalent of around $100 billion in 2006 terms.[1] The program of also acquiring German scientists and technicians for the U.S. was also used to deny the expertise of German scientists to the Soviet Union.[1]
The U.S. eventually stopped the shipment of dismantled factories from the U.S. zone of occupation east because of increasing friction with Russia, part of which was caused by Russian refusal to provide the western occupation zones with surplus food from the eastern occupation zone which had been the breadbasket of Germany. Western Allied dismantling of industry in the Saar area and Ruhr area was virtually completed by 1950.
"

Things got so bad, that Germany was not recovering at all, but continuing to sink into frank poverty and famine:

"In occupied Germany, the Morgenthau plan lived on in the U.S. occupation directive JCS 1067 and in the Allied "industrial disarmament" plans, designed to reduce German economic might and to destroy Germany's capability to wage war by complete or partial de-industrialization and restrictions imposed on utilization of remaining production population. The first industrial plan for Germany, signed in 1946, required the destruction of 1,500 manufacturing plants. The purpose of this was to lower German heavy industry output to roughly 50% of its 1938 level. By 1950, after the virtual completion of the by then much watered-out "level of industry" plans, equipment had been removed from 706 manufacturing plants, and steel production capacity had been reduced by 6,700,000 tons.[2]
The Joint Chiefs of Staff Directive 1067 (JCS 1067), which governed U.S. policy in Germany from April 1945 until July 1947, stated that no help was to be given to the Germans in rebuilding their nation, save for the minimum required to mitigate starvation
."

"The problems brought on by these types of policies became apparent to many after a year of occupation. Germany had long been the industrial giant of Europe, and its poverty held back the general European recovery. The continued scarcity in Germany also led to considerable expenses for the occupying powers, which were obligated to try to make up the most important shortfalls."

What finally drove the Western powers to alter the same policies which replicated the disastrous post WWI ones, was again, that reliable one - fear of communism:

"The Western powers' worst fear was that the poverty and hunger would drive the Germans to communism. General Clay stated "There is no choice between being a communist on 1,500 calories a day and a believer in democracy on a thousand".
After lobbying by the Joint Chiefs of Staff, and Generals Clay and George Marshall, the Truman administration finally realized that economic recovery in Europe could not go forward without the reconstruction of the German industrial base on which it had previously had been dependent.[3] In July 1947, President Truman rescinded on "national security grounds"[4] the punitive JCS 1067, which had directed the U.S. forces of occupation in Germany to "take no steps looking toward the economic rehabilitation of Germany." It was replaced by JCS 1779, which instead stressed that "[a]n orderly, prosperous Europe requires the economic contributions of a stable and productive Germany."[5]

[edit]Marshall Plan

In view of the continued poverty and famine in Europe, and with the onset of the Cold War that made it important to bring as much of Germany as possible into the western camp, it became apparent that a change of policy was required. The most notable example of this change was a plan established by United States Secretary of State George Marshall, the "European Recovery Program", better known as the Marshall Plan, which called for the U.S. Congress to allocate billions of dollars for the reconstruction of Europe. Also as part of the effort to rebuild global capitalism and spur post-war reconstruction, the Bretton Woods system was put into effect after the war.
"

Incidentally, there are many examples of pre-industrial mostly agricultural countries building modern competitive economies, particularly the Asian Tigers. Taiwan had zero history of industry - indeed it was a backward province with barely any economic activity of note. See also South Korea etc., etc. The Mediterranean countries, by contrast, have enormous advantages - cultural and historical resources of advanced economies for centuries, highly educated population, access to capital and markets, enormous networking effects of diasporas and on and on. There is absolutely no reason why Greece or Italy can't flourish with the proper investment and reforms. We know what doesn't work - and we've seen it repeatedly, particularly after WWI and initially after WWII; once we reversed course, we had a so-called economic "miracle". Note also, that this is well-understood by Germany, the same Germany that is so reluctant to do anything for the Greeks... Germany after re-unification didn't starve East Germany into parity and prosperity, but instead instituted massive investment and resource transfers that dwarf anything that would be necessary for Greece. They know - everybody knows - what needs to be done. What's lacking is political will and political capital.

For an interesting discussion of the post WWII economic recovery of Europe, see this: Post-WWII Western European Exceptionalism: The Economic Dimension.
posted by VikingSword at 11:28 AM on November 4, 2011 [1 favorite]


Interesting VikingSword. Isn't that just more argument that the U.S. and E.U. lack the political will though? I'm thinking any solution must actually come form the Greeks themselves, hopefully the protestors, not the military. I suppose an anarcho-communist party sweeping an election might change the playing field though.
posted by jeffburdges at 2:51 PM on November 4, 2011


Well yes, of course the U.S. and the E.U. lack political will. But that doesn't mean it's all 100% up to the Greeks - they can't pull themselves up by their bootstraps. And the difference here is that while the U.S. has a long term interest in European - including Greek - prosperity, the EU in addition has formal obligations and an immediate compelling interest in not having one of its member states fail. The economic collapse of Greece would be very bad for Europe, much more so than for the U.S., so at this point I think we can accept the U.S. standing on the sidelines, but the EU must not and cannot do nothing. Italy is next, and if Greece is not taken care of, the problem immediately becomes a threat to the very existence of the EU, never mind the Euro. At this point the EU is still in denial, trying to solve the issue with purely monetary measures - debt restructuring is barely a band-aid. What's needed is honest to god radical surgery, a transplant and reconstructive surgery. Either that, or watch the whole EU project slowly unravel. What the Greeks must do however is to start the conversation with the EU to lay the foundations of a Marshall Plan - only I wonder if such a caliber of politician is to be found in Greece today.
posted by VikingSword at 3:32 PM on November 4, 2011


The Greek parliament's confidence for the government is under vote right now.
posted by Anything at 3:51 PM on November 4, 2011


Government survives.
posted by Anything at 4:03 PM on November 4, 2011


All the "Italy is next" talk sounds laughable frankly. Isn't their GDP like 25% exports? Spain has a similar ratio. U.S.'s GDP is only like 8.5% exports. Italy does have an astronomical amount of debt thanks to Berlusconi, but their interest rates aren't anywhere near Greece's. Spain's debt ratio matches the U.S.'s. And nobody much cares about Portugal afaik.
posted by jeffburdges at 4:10 PM on November 4, 2011


I suppose the government surviving means they'll dump the referendum and impose austerity, yes?
posted by jeffburdges at 4:13 PM on November 4, 2011


Government survives.

.. Apparently under the promise to form a broader government, with Papandreou not necessarily remaining PM.
posted by Anything at 4:16 PM on November 4, 2011


BBC
posted by Anything at 4:17 PM on November 4, 2011


Mr Papandreou said the bail-out deal currently on offer by the EU had to be accepted, and it would be "historically irresponsible" to lose it.

He said immediate elections would be "catastrophic" for the deal, so proposed a new coalition to take charge until it had been agreed.

posted by Anything at 4:18 PM on November 4, 2011


Adjusted for inflation, the EU has already directed an amount of money to bailing out Greece that is a substantial fraction of the amount that the entire Marshall plan sent to Europe, and of course the 50% debt write-off will be worth quite a lot more.

Maybe they also need whatever the modern equivalent of a Marshall Plan would be, but first they need to survive the immediate crisis which in itself isn't so easy.
posted by sfenders at 4:21 PM on November 4, 2011


All the "Italy is next" talk sounds laughable frankly. Isn't their GDP like 25% exports? Spain has a similar ratio. U.S.'s GDP is only like 8.5% exports. Italy does have an astronomical amount of debt thanks to Berlusconi, but their interest rates aren't anywhere near Greece's. Spain's debt ratio matches the U.S.'s. And nobody much cares about Portugal afaik.

After Greece falls who are speculators going to attack to force a default?

The country with a corrupt moron at the helm carrying 118% of their GDP as debt? Sounds like a ripe target to send into the shitter. Northern European banks can blame most of it on Berlusconi being a corrupt asshole, media there will report on lazy italians (lazy eye-talians in the states).

Italian yield has just started climbing past 6% (>4% above Germany's bonds) on the back of G20's little spat and the CDS spread has hit 495bps. The shorting has started. It's just a matter of time before Italy hits serious trouble rolling over its debt and we're back in the same position we are now with Greece. The difference being that Italy could probably survive leaving the Euro without a complete collapse in society.
posted by Talez at 7:07 PM on November 4, 2011 [1 favorite]


I donno how directly "shorting" via CDSs influences the yields though, meaning the European banks might simply hold Italy's yield down while making a tidy profit and forcing Italy into reducing expenditures.
posted by jeffburdges at 8:16 PM on November 4, 2011


I donno how directly "shorting" via CDSs influences the yields though

You can short bonds the old fashioned way driving up the yield. You don't need to use a CDS. Nevertheless, the more expensive a CDS spread is the more it costs to safeguard Italian debt which turns more investors away which drives up the price of the CDS spread.

You can see where this is going?
posted by Talez at 8:22 PM on November 4, 2011


Are there more bond-like instruments that let you short the bond without paying the interest/coupons? I'd just assume that CDSs fulfilled this role, naively perhaps.

I suppose, if you were big enough to play hardball with nation states, then you could simply invent the desired instrument for yourself, well Black–Scholes proves all reasonable products exist after all.
posted by jeffburdges at 8:41 PM on November 4, 2011


Apparently under the promise to form a broader government, with Papandreou not necessarily remaining PM.

The promise to try - not the promise to succeed. Another amazing example of Greek politicians' finely honed survival skills.
posted by Dr Dracator at 12:01 AM on November 5, 2011 [1 favorite]


Spain's debt ratio matches the U.S.'s. And nobody much cares about Portugal afaik.

Many Spanish banks haven't done especially well at the past stress tests and if they end up needing help from the government, it could do a number on Spanish debt. Especially considering that Spanish banks are heavily exposed to Portuguese bonds.
posted by ersatz at 11:54 AM on November 5, 2011


Greeks agree coalition government without Papandreou
posted by Anything at 5:26 PM on November 6, 2011 [1 favorite]


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