Monday, November 21, 2011

ECB Uber Alles

If you ever doubt your fellow Americans are wretched swine, just ask them about Greece. See, the housing implosion in this country is entirely Wall Street's fault, but the Greek crisis? "Aw, they're just so gash dang lazy!"

German and French banks have been paying their psy-ops divisions overtime to force the Lazy Greeks meme. And it works, as long as you don't actually look up anything. If you do, you quickly learn Greeks work the same hours, have the same retirement age, and collect the same benefits as your average American. Now there's certainly the issue of productivity but you're reading this at work right now, aren't you?

The reason the big boys of the Eurozone need to tar the Greeks - and the reason for all this wrangling over rescue packages - really has nothing to do with the Greek economy. Athens is just a cog in the larger scam machine here. The proposed rescue funds are not going to Greek government programs but to cover the Greek government's debts to foreign banks. French and German banks that were just as reckless as Goldman and Citi and all those familiar Stateside villains (seriously, how stupid do you have to be to loan to the Berlusconi government?). If Sarkozy and Merkel tried a big American style bailout, they'd be out of office faster than you can say "Marx" and those big Euro-banks would have to eat one hell of a loss. That would cause some economic pain throughout the EU but it's preferable to what's going on.

Because the success of the Eurozone has been driven over the past decade-plus largely from Germany being a net exporter to its neighbors. Yes, including Greece. And the austerity being pushed on Greece and the other, lesser Eurozone states - Ireland, Italy, Spain - is going to come back and bite Germany in the ass hard when those markets contract. This ain't rocket science folks, it's basic arithmetic. Consumer economies - and that's all we have - are driven by people buying things. Low wages, lost benefits, and raised taxes makes it that much harder for the majority of consumers to consume, leading to economic recession as the drop in sales forces employers to "trim the fat" - fire people - who then naturally cannot consume and you just get this downward spiral of economic collapse. That's not theory, that's demonstrated fact which anyone with a fancy accounting degree should be able to recognize while high on ether.

We must murder the shit out of Greece in order to save it!

And it won't just hurt Greece. Without those nextdoor markets for their products, the much vaunted German industry is going to tank. I'm repeating myself but that's because you all seem to be so fucking stupid - poor people cannot buy things. Basic, I know, but so much economic policy seems to forget this. The ECB has so far followed the failed neoliberal ideas so popular in the US - inflation bad, deregulation good - either because they're all very dumb... or because there's simply more money to be made in shorting the system.

Anyone who tells you this is about the dangers of welfare is full of it. Or a moron. Or both. There are excellent capitalist reasons for generous benefits and government spending as it fortifies the consumer base in the long term. Austerity cheerleaders don't care about that because they just want to get as much short term profit as possible, then bug out. The only thing different in this case is the ECB and its buddies have a convenient patsy.


  1. There is no short-termism here, mate. The objective is to impose so much intolerable austerity on the eurozone "periphery" that the euro disappears, the EU gets turned into a toothless free-trade area (no more ridiculous, bureaucratic things like EU working time limits!) and the Mediterranean and Eastern Europe become "Mexico/China" to Germany's "US".

    The solution against the corruption in Brussels and Frankfurt would be to fight to return the EU to its social-democratic roots and expand on them, but unfortunately all the hip kids are making "nationalist-populist" sounds, i.e. are lining up as useful chumps for the European neo-liberal establishment.

    Posted a comment in that vein in the latest exiled thread. Let's see if it gets past the censor.

    Love your blog, BTW.

  2. Let me add a fun fact that isn't readily available if you don't read the German press. On average a German worker earns in 2012 7,9% more than in 2009 (unfortunately only in nominal terms), while in the rest of the Eurozone it's only 3,7%, with a drop in Greece, Portugal and Ireland.

    In other words, the austerity is already putting pressure on the German worker, eating at an "advantage" that was itself originally earned with wage moderation. Now, add the collapse that would follow with the re-introduction of the neo-lira, neo-peseta or what-have-you (with respect to the neo-D-Mark, or a euro for the Northrons only), and the conversion of Yoorp in the green Jerusalem of wage arbitrage is complete.

    Kind of puts into perspective the breathless boosterism for "national currencies" on the part of the likes of the Krugman...but I assume you've already learnt not to trust the Krugman.