But austerity has nothing to do with economics. It is religion: the
belief by the stern Lutheran Germans that Greeks have had too much fun,
spent too much money, and spent too much lazy time in the sun--and now
Greeks must pay a price for their sins.
Oddly, I hear this self-flagellating nonsense from Greeks themselves: we are lazy. We deserve our punishment. Nonsense. The average Greek works more hours in a year than any other worker in the 34 nations of the OECD; Germans the least.
The Euro's Father Describes his Little Bastard
Alexis Tsipras, the leader of Syriza, would like to pretend that austerity and the euro are two different things, that you can marry the pretty girl but not invite her ugly sister to the wedding. Apparently, the Syriza chief is blissfully ignorant of the history of the euro. The horror of austerity is not the consequence of Greek profligacy: it was designed into the euro's plan from the beginning.
This was explained to me by the father of the euro himself, economist
Robert Mundell of Columbia University. (I studied economics with
Mundell's buddy, Milton Friedman.) Mundell not only invented the euro,
he also fathered the misery-making policies of Thatcher and Reagan,
known as "supply-side economics" -- or, as George Bush Sr. called it,
"voodoo economics." Supply-side voodoo is the long-discredited belief
that if a nation demolishes the power of unions, cuts business taxes,
eliminates government regulation and public ownership of utilities,
economic prosperity will follow.
The euro is simply the other side of the supply-side coin. As Mundell explained it, the euro is the way in which congresses and parliaments can be stripped of all power over monetary and fiscal policy. Bothersome democracy is removed from the economic system. "Without fiscal policy," Mundell told me, "the only way nations can keep jobs is by the competitive reduction of rules on business."
Greece, to survive in a euro economy, can only revive employment by reducing wages. Indeed, the recent tiny reduction in unemployment is the sign that Greeks are slowly accepting a permanent future of low wages serving pià ±a coladas to Germans on holiday cruises.
It is argued that Greece owes Germany, the IMF and the European Central Bank for bail-out-billions. Nonsense. None of the billions in bail-out funds went into Greek pockets. It all went to bail out Deutsche Bank and other foreign creditors. The EU treasuries swallowed 90% of its private bankers' bonds. Germany bailed out Germany, not Greece.
Nevertheless, Greece must pay Germany back, Mr. Tsipras, if you want to continue to use Germany's currency, that is.
Greece: Goldman Sacked
Greece's ruin began with secret, fraudulent currency swaps, designed a decade ago by Goldman Sachs, to conceal Greek deficits that exceeded the euro zone's 3%-of-GDP limit. In 2009, when the truth came out, Greek debt holders realized they had been cheated. These debt buyers then demanded usurious levels of interest (or, if you prefer, a high "spread") to insure themselves against future fraud. The compounding of this interest premium brought the Greek nation to its knees. In other words, the crimes committed to join and stay in the euro, not Greek profligacy, caused the crisis.
The USA, Brazil and China escaped from depression by controlling their money supply, government spending and currency exchange rates--crucial tools Greece gave up in return for the euro.
Worse, once the Trojan hearse of the euro entered Athens, tourism, Greece's main industry, drained to Turkey where hotels and souvenirs are priced in cheap lira. This allowed Dr. Mundell's remorseless wage-lowering machine, the euro, to do its work, to force Greece to strip all its workers of pensions and power.
Greece fell to its knees, with no choice but to beg Germany for mercy.
But there is no mercy. As Germany's Schà ¤uble insists, democracy, this week's vote, means nothing. "New elections change nothing in the accords struck with the Greek government," he says. "[Greeks] have no alternative."
Ah, but they do, Mr. Schà ¤uble. They can tell you to take your euro and shove it up your Merkel.
Oddly, I hear this self-flagellating nonsense from Greeks themselves: we are lazy. We deserve our punishment. Nonsense. The average Greek works more hours in a year than any other worker in the 34 nations of the OECD; Germans the least.
The Euro's Father Describes his Little Bastard
Alexis Tsipras, the leader of Syriza, would like to pretend that austerity and the euro are two different things, that you can marry the pretty girl but not invite her ugly sister to the wedding. Apparently, the Syriza chief is blissfully ignorant of the history of the euro. The horror of austerity is not the consequence of Greek profligacy: it was designed into the euro's plan from the beginning.
The euro is simply the other side of the supply-side coin. As Mundell explained it, the euro is the way in which congresses and parliaments can be stripped of all power over monetary and fiscal policy. Bothersome democracy is removed from the economic system. "Without fiscal policy," Mundell told me, "the only way nations can keep jobs is by the competitive reduction of rules on business."
Greece, to survive in a euro economy, can only revive employment by reducing wages. Indeed, the recent tiny reduction in unemployment is the sign that Greeks are slowly accepting a permanent future of low wages serving pià ±a coladas to Germans on holiday cruises.
It is argued that Greece owes Germany, the IMF and the European Central Bank for bail-out-billions. Nonsense. None of the billions in bail-out funds went into Greek pockets. It all went to bail out Deutsche Bank and other foreign creditors. The EU treasuries swallowed 90% of its private bankers' bonds. Germany bailed out Germany, not Greece.
Nevertheless, Greece must pay Germany back, Mr. Tsipras, if you want to continue to use Germany's currency, that is.
Greece: Goldman Sacked
Greece's ruin began with secret, fraudulent currency swaps, designed a decade ago by Goldman Sachs, to conceal Greek deficits that exceeded the euro zone's 3%-of-GDP limit. In 2009, when the truth came out, Greek debt holders realized they had been cheated. These debt buyers then demanded usurious levels of interest (or, if you prefer, a high "spread") to insure themselves against future fraud. The compounding of this interest premium brought the Greek nation to its knees. In other words, the crimes committed to join and stay in the euro, not Greek profligacy, caused the crisis.
The USA, Brazil and China escaped from depression by controlling their money supply, government spending and currency exchange rates--crucial tools Greece gave up in return for the euro.
Worse, once the Trojan hearse of the euro entered Athens, tourism, Greece's main industry, drained to Turkey where hotels and souvenirs are priced in cheap lira. This allowed Dr. Mundell's remorseless wage-lowering machine, the euro, to do its work, to force Greece to strip all its workers of pensions and power.
Greece fell to its knees, with no choice but to beg Germany for mercy.
But there is no mercy. As Germany's Schà ¤uble insists, democracy, this week's vote, means nothing. "New elections change nothing in the accords struck with the Greek government," he says. "[Greeks] have no alternative."
Ah, but they do, Mr. Schà ¤uble. They can tell you to take your euro and shove it up your Merkel.
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