Greece Steps Back from the Abyss

New Democracy leader Antonis Samaras became Premier on Wednesday, heading a three party pro-European government.

Last weekend the Greek people faced a decision on their future with their second election in as many months.   The first election, held May 6th, was a shocker.   Greek austerity, forced upon the country by the European Union, led to a massive deepening of the Greek recession and a significant drop in the standard of living and quality of life in Greece.   Few countries have seen such a dramatic and unexpected decline as Greece has.

The people felt humiliated.   They realized that their leaders had been lying and gambling with their country’s future, putting the country in tremendous debt, fostering corruption, and then leaving the Greek people holding the bag when everything fell apart.    On top of that the Germans and the rest of the EU needed to bail them out, helping not average Greeks, but the politicians and banks that created the mess.   That anger came out in the election results.

New Democracy, the conservative party, had the most votes with 18.85%.  That won them 108 seats, thanks to the bonus of the largest party getting 50 more seats than the percentage should earn them.   That was down from 33% in the previous election, though they gained 17 seats since in 2009 they were not the largest party.

The ruling party, PASOK (left of center) fell from 43% to 13.18%, losing 119 seat (and ending with 41).    The surprise winner was the radical left wing party Syriza, led by Alexis Tsipras.   Tsipras tapped into the anger and humiliation to rise from 4% to 16.8%, passing PASOK.   The result took Europe by surprise.   In a 300 seat parliament, even PASOK and New Democracy together couldn’t form a ruling coalition, as they controlled only 149 seats.   Talks with other parties made it clear that any government that they formed would be shaky and could easily fall, which is not a good thing when the country has to make very difficult decisions.

37 year old Tsipras signals a left wing challenge to Euro-orthodoxy. If the main parties can’t show real progress, he could emerge stronger in the next election.

In the uncertainty of the moment they decided that the most prudent course of action was to ask the voters if they really meant it.   A new election was planned for June 18.   As the campaigning grew it was clear that Greeks were reading the election as a referendum on the Euro and to some extent the EU.    Should Greece remain in the Eurozone?

Tsipras made a confident, powerful and emotional argument that they should not, unless they get real concessions from the EU.   Do the Greeks really want to have their sovereign decisions made according to German dictates?   Should the Greeks accept an austerity that requires them to see the recession cascading inward and causing more pain for average folk?   Shouldn’t the politicians of PASOK and ND (New Democracy) be punished for their corruption and willingness to drive up such debt with horrific fiscal policies? Shouldn’t the Greeks be in charge of their own destiny?   After all, the Europeans want to “save” Greece to save their own banks — doesn’t that mean Greece has more bargaining power than they realize?

As Tsipras’ popularity grew many assumed Syriza would end up on top in the June election, perhaps with enough votes to form a stable coalition.   The result would dramatically increase the odds of a Greek departure from the Eurozone, even though Tsipras coyly claimed he simply wanted to negotiate “fair” terms.

After early reports had Syriza as narrowly winning as the largest party, the actual results gave that honor to ND.  ND earned nearly 30%, up over 10% from a month before, now with 129 seats.  Syriza also increased its share to 27%, gaining 19 seats.   That means that compared to 2009 it rose in popularity by 23%.    Although they didn’t come out on top, it was still a remarkable performance for a radical party once seen as too extreme to be taken seriously.    PASOK fell further, losing 8 more seats and down to 12.3% of the vote.     The former ruling party was clearly being punished.

Yet PASOK and ND could combine for 162 seats for a clear majority in government.   To provide added stability they added the pro-EU Democratic Left, whose 17 seats gives the coalition 179 out of 300.

The first recorded moves towards democracy came in Athens; it was messy but voters show democracy still works.

So what does this mean?  The Greeks took a hard look at what Syriza represented and found it scary.   The party is Euro-communist, and its radicalism would put it in opposition to the rest of Europe.  Many fear that it would drift towards dictatorship, like past Communist parties did.   That seems unlikely, but many Greeks angry about the situation didn’t want to leap to the far left or the far right — those ideologies have a poor track record.

They also had time to digest what would happen if they brought back the drachma.   First, they’d see the value of their currency plummet, which would force them to default on loans.   Second, they’d not be able to get new loans, people would trust neither the Drachma nor Greece’s ability to pay them back.    That would either mean a fall into near third world status or, should Greece try to use monetary policy to stimulate the economy, a risk of hyper-inflation.

More importantly, they wouldn’t be part of Europe any more, at least not the civilized united and progressive Europe that the EU represents.   The Greeks know that a small backwards troubled economy south of the Balkans could drift farther from the prosperity and stability that northern Europe represents.   Independence and sovereignty sound good in theory but in practice they represent a fading era.  Greece without Europe would be a Greek failure.

The problems have not been solved.   The austerity program as currently structured is too harsh and has no growth aspect designed to help Greece truly restructure its economy.    With the rise of French President Francois Hollande as a foil and potential partner to Germany’s Angela Merkel, the EU has the hard task of formulating a new approach that isn’t so harsh on Greece in exchange for stricter monetary policy controls.    The banks are going to have to take loses – the problem can’t be solved by governments alone.

Tsipras (center) has allies in Germany in “die Linke” (the left), a party to the left of the Social Democrats. Here is talks with Klaus Ernst and Gregor Gysi in Berlin.

But some of the urgency has gone away.   They have time, and in Germany, Greece and elsewhere there is growing recognition that a contraction of the Euro to an inner core of wealthy countries would damage everyone.  And the longer this drags out, the less likely it is that things will fall apart.  The EU and the Euro are revolutionary, they are redefining what a “state” is, what “sovereignty” means and how economies are structured.   Such transformations are never easy, but most Europeans realize there is no turning back.

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  1. #1 by Black Flag® on June 21, 2012 - 15:28

    The longer this drags out, the worse it will get.

    German voters will not transfer their wealth to Greeks spendthrifts.

    Greek voters will not accept your version of austerity – your austerity being spending more than last year but not as fast as last year – nor mine, which is actually cutting government.

    You are bedazzled by the dance. But the musical chair game of believing that spending more and more will solve the spending problem is coming to a crashing end.

    The only question is when.

    • #2 by Scott Erb on June 21, 2012 - 20:16

      Both of us may be wrong – obviously the future depends on the choices people make, it’s possible that Greece will leave the Euro, possible that they’ll solve these.

      I think you make a common mistake – you are projecting on to German voters how American voters would feel. I think a lot of Americans think the Europeans still have the same views on sovereignty and independence as we do. They under estimate the level in which a sense of common European identity exists alongside national identity. Also, Germans understand the risk to their own economy if things go bad. They wouldn’t ‘just be transfering their wealth to Greek spendthrifts though — any deal would have to include limits on Greek fiscal policies.

      I’ve been studying German politics for thirty years, and following the EU just as long, my entire adult life. I am not bedazzled by the dance, I’m analyzing from my own experience researching and observing especially German politics. Most things I blog about are outside my area of expertise. But in this case my analysis is informed by having really studied this over the years.

  2. #3 by Black Flag® on June 21, 2012 - 15:28

    🙂

  3. #4 by Alan Scott on June 22, 2012 - 02:08

    Scott ,

    So you still insist that Greece can be saved ? I admire your faith . I fail to see why Greece continues to matter . Spain and Italy are more important . The EU might survive Greece . It will not last if Spain and Italy go belly up . Anyway the Whole EU has proven to be a failed model . It would be great for the German economy if the rest of Europe could only survive to buy their exports, but what does Southern Europe produce that they can trade ?

    • #5 by Scott Erb on June 22, 2012 - 03:21

      Of course Greece can be saved – it’s a functioning democracy and they are finally facing their problems head on. They might not do what’s necessary but recognizing and admitting the problem is the first step. So they can be saved – but it’s not a sure thing. Italy and Spain have real economies (Greece doesn’t produce much and unnecessary government jobs fueled the fake economy), so they would be a bigger problem. The EU will of course last — even if the Eurozone collapsed, it would collapse to a smaller Eurozone led by northern European countries and the fundamentals of the EU (free trade, labor movements, etc.) would continue. To remove free trade (which is what the end of the EU would mean) would be an economic disaster. They won’t do that. The open question is whether monetary union can be saved for a broad range of countries.

      I have no clue how you could call the EU itself a failed model. It has brought together countries that used to be at war. It has created massive growth and prosperity and borders have become virtually irrelevant. Capital and labor cross borders, there are no trade restrictions at all. There is no way you can undo all that without a massive economic contraction. The EU is a model for the future, sovereignty has already been transformed there. I think the EU will probably outperform the US in the 21st Century.

  4. #6 by Black Flag® on June 22, 2012 - 15:49

    The EU is not a model for anything but a disaster.

    It is the centralization of power and violence that creates the greatest systemic threats to human existence – from global nuclear war to global financial destruction.

    Centralizing even more so to solve the problems of centralizing is perverse.

    Further, you seem to fear “hyperinflation” in Greece if it moves to the drachma. But that is completely unlikely.

    Hyperinflation is such a small country will make its currency worthless, which will merely lead the country picking a different currency. Since the end result will be a choosing of a non-worthless currency, that should be the start point of your analysis, not the muddle in getting there.

    As such, the likelihood that the drachma will go hyperinflation is very low – what’s the point? The Greeks owe no one money in drachmas. They would default on all Euro-denominated debts.

    So what if no one loans them money? That is what is going to happen anyway – Greece will not get any more bailouts, even if they stay in the Euro.

    So shaken out, the Greeks will default, go to the drachma, and stiff the Northern banks, and go it alone and take whatever lumps come from that.

    …and then so will Spain, Portugal and Italy.

  5. #7 by Black Flag® on June 22, 2012 - 15:52

    Scott,

    You make the serious mistake in believing Germans are different from other people, and that the Greeks are different from other people.

    They are not.

    There is only a matter of time that the rich uncle cuts of the spendthrift nephew. The nephew will not change his ways until that day, and until that day the uncle grumbles when he cuts the check.

    But that day does come – and the later it comes, the hard it is on the nephew.

    • #8 by Scott Erb on June 22, 2012 - 16:46

      Cultures shape people. If you’ve traveled and studied world history and various cultures, you’d realize that people vary in tastes, interest, whether they think more individually or in a group mode, how they define identity, and what they believe. That shapes what they become. People are all different from each other, and culture plays a role in shaping psychology and the individual. If you had been born in Cairo and raised differently within that culture, you’d be a fundamentally different person than you are today.

      • #9 by Black Flag® on June 22, 2012 - 16:54

        Scott,

        I have traveled, and odds are, far far more than you. In fact, I have lived (not just visited) in India, Latin America, Africa and Central Europe – and not merely been, like you, an American tourist.

        People are the same everywhere.
        They love their kids, and they want to give meaning to their lives.

        You believe that people will, by an artificial construct, give up certain core values of each person -such as, each person should earn their own living.

        You believe that people will blindly give up their wealth and their kids future for a bunch of present spendthrifts.

        You believe this by your own necessities, and not by any real understanding of human social order.

  6. #10 by Black Flag® on June 22, 2012 - 15:57

    Alan,

    What do you and Scott mean by “Greece being saved?”

    Saved from what? Prevented from doing what?

    Greece will be saved by leaving the Euro. They got to live off stupid Northern Banks for two decades – for free! They get to abandon their debt … “Scott” free!

    If someone came to you, who is in millions of debt, and said “Well, you own nothing, but you get no more loans from us” … you’d cheer! Because you knew you weren’t going to get any more loans from “them” anyway and now you don’t have to pay back what you spent!

    Good times, not?

    That’s Greece … then Spain and the rest.

    Too bad if you invested in the Northern European Banks.

    • #11 by Scott Erb on June 22, 2012 - 16:51

      Saved from perpetual quasi-third world status due to a corrupt government that has fiscally unsustainable policies, towards a more productive economy with rule of law and economic policies that can give people a better future. If they leave the Euro, they’ll fall back into the abyss they were in back before they joined the EU.

      And if they get rid of their debts, they’ll be punished by the rest of the world, their currency will plummet in value, they won’t be able to get loans, and if the same corrupt leaders stay in power, they’ll resort to authoritarianism or extremism to try to keep control. And the northern banks have been building in protections (and it extends to US banks too – US banks are just as vulnerable). Spain and Italy have real economies, but while you like to predict things will fall apart completely, you’re doing it with smoke and mirrors. You’re making simplistic and false analogies (e.g., uncle paying for nephew) and ignoring the complex reality of the situation. Just watch – you’ll be surprised yet again!

  7. #12 by Black Flag® on June 22, 2012 - 16:59

    Scott,

    They are a quasi-third world nation, with a permanently corrupt government (where else is different?) that has and will operate on unstable fiscal policies – there is nothing here that will change.

    The world will not “punish” them – no more than the “world” punished the perpetual Latin American countries bankruptcies.

    There will be a time where no funds are lent, but eventually the “smart” money is perpetually stupid when it comes to lending to nations – and Greece will, as they have in the past, and so in the future, borrow money that other people are willing to lend.

    I am not predicting anything – I am saying exactly what will happen eventually. You are the one living in a fantasy believing that money comes from no where, that debts don’t matter, that people will repay what they cannot earn.

    I have not been surprised, let alone ‘again’. You have been wrong, so far, every time in your wild and crazy fantasy. Not one thing you have surmised has come to pass; you are the one depending on fairy tales and godmothers.

    Time to wake up, Scott – the nightmare is coming.

    • #13 by Scott Erb on June 22, 2012 - 17:09

      …And people are different. There are some very similar core values, but how these get expressed are altered dramatically by culture and history. When it comes to identity, nationalism is an artificial construct. But you seem to think national identity is somehow essential (you talk about Germans and Greeks as collective entities) but the EU is a fake identity. The reality – all such collective identities are fake, all are culturally constructed. I say you don’t get how the Europeans have shifted their notions of identity.

      Latin America never got out of perpetual economic crisis while they were declaring bankruptcies because of the response of the world. Only when they embraced better policies did they start to improve. The EU is in a position to help Greece move towards real productive first world status – if they falter, their future will be bleak for some time. You seem to think Greece will benefit by defaulting and not having to improve their fiscal policies and stay connected with the European market and financial system. That is not a belief that you can back with evidence — and analogies about uncles and nephews don’t cut it, that has nothing to do with how the political economy operates.

  8. #14 by Alan Scott on June 22, 2012 - 21:49

    Black Flag ,

    I see we appear to agree . As to what Greece is being saved from, saved from not being able to buy German goods . Saved from being kicked out of the EU . The Germans give them money to buy German stuff. That keeps German unemployment low and everybody is happy. Except that the absurdity of this EU model has now been exposed .

    Scott has been right about only one thing . The EU and the Euro have kept the Europeans from their age old pursuit of murdering one another . Economically the single currency has to rank up there with the Edsel and Carternomics as a disaster . I agree also that the Northern banks were stupid . About as stupid as fannie and freddie lending to American deadbeats .Just as fannie and freddie, the Northern banks were motivated by corrupt politics instead of business sense. Just like fannie and freddie they are being bailed out by their governments .

  9. #15 by Black Flag® on June 23, 2012 - 19:59

    Scott,

    It has nothing to do with ideology – it has to do with Human Action, which -of course for you- cannot exist without government force.

    You are arguing against such human action – you are arguing that Public Choice Doctrine is false. You are naive.

    The Greek vote has no merit – it is not the majority that is in charge anywhere. It is the minority, and those that are the most vocal and violent – those whose living standards are most vulnerable to government cut backs – who rule the day.

    The Greeks have made no cuts -period. Your bizarre math, where larger sums means less than more, merely shows how out of touch you are to reality. When you insist that a greater amount means a lessening amount, you have crossed over into the irrational.

    People are not stupid – they are self-centered. And, as usual, you are blind to the riots that occurred in Greece already – you deny that such a thing will occur in the future. Based on what? Nothing but fairy tales.

    There is no lazy thinking – there is blunt obvious cause and effect. You do not like the conclusions so you require fantasy and fairy tales to sooth the coming economic nightmare of Europe.

    There is no way the PIIGS can ever repay their debt. You pretend there is, but cannot offer any substance to your fantasy.

    There is no way the PIIGS will be funded in their spending for eternity. You pretend there is, but cannot offer any substance to your fantasy.

    All roads end at the same place – irrelevant twists and turns notwithstanding – and that end point is massive default.

    The PIIGS governments that wrote the IOUs to the banks in northern Europe are technically insolvent. When Greece defaults, which it will, there will be enormous losses sustained by some northern European banks. When Spain defaults, which it will, these losses will get far worse. When Italy defaults, which it will, the entire banking system of Europe will be busted.

    The only things that can save European banking system today are the European Central Bank, which has the power to create money out of nothing, and the taxpayers of Germany, whose national leaders are relentless in their desire to expand the power of the eurozone over all of Europe. These politicians are willing to write IOUs on behalf of German taxpayers.

    The problem is, the Northern European governments, including Germany, do not have any money to serve as lenders to Greece, Spain, or Italy. They are ALL (including Germany) borrowing money at rates not seen before in peacetime Europe. Germany’s debt is over 85% GDP!

    And you, in your intellectual naivety, believe Germany can borrow money to give to Greece to spend!

    Who is going to lend northern European governments enough money to bail out southern European governments?

    Which lenders think this is a good idea today?

    Angela Merkel can scream, yell, and hold her breath until she turns blue, but ultimately she has no power over the European Central Bank.

    This is why the European Central Bank is going to inflate, inflate, and inflate. The head of the bank can make all the comments he wants about the responsibility of politicians to intervene to keep the structure going, but he is ultimately the hangman of the system. He is the guy who has control over the printing press. He is the only person, along with his colleagues, who is in a position to keep the system afloat.

    No politician wants to be responsible for coming up with the money to bail out the largest banks in his country, all of which will be threatened with insolvency because of the default of Greece and Spain, because that will produce a domino effect by all of the PIIGS governments.

    So the end of the game, as any serious study of economics provides, is catastrophe. And all your wishful fantasy and fairy tales will not change this.

    • #16 by Titfortat on June 26, 2012 - 18:20

      The only things that can save European banking system today are the European Central Bank, which has the power to create money out of nothing,(BF)

      That sounds an awful lot like the ‘Federal Reserve’. 😉

      • #17 by Black Flag® on June 28, 2012 - 04:02

        Tat,

        It is EXACTLY like the Federal Reserve in that matter.

        It is rooted in the same banking theory – fractional reserve banking.
        It shares the same fundamental purpose – protection of the larger banks within the system from banking failures due to their lending policies.

        It shares every deficet and danger such as system creates.

        It provides every lower quality of money to spend-thrift nations that could not fund their government largess without oppressive and obvious taxation.

        Governments are enamored with such a system as they can avoid the heat of oppressive taxation and hide the economic destruction behing unseen debt.

        The banking system believed it could isolate the damage of such spendthrift governments by alternating economic policies of boom/crack up economics.

        It found that it could certainly make a boom, but governments strong armed banks to continue to provide cheap credit no matter the economic conditions as no government is safe if the economy is staggering – thus, demanded the banks refuel the economy with every more expansion at any threat of correction. But each refueling led to an ever decreasing expansion, until a refuieling of trillions of dollars at effectively zero interest creates no discernable effect…. than what?

        And, as I posted above, the eventuality which Scott must blind his mind and heart from – default by government.

        The consequence: widespread banking failures.
        The consequence: central bank inflation to protect its larger banks
        The cost: broad, deep, and long economic disaster and hardship.

        There is no other path.

    • #18 by Titfortat on June 29, 2012 - 12:06

      @BF

      As history shows us, even after anarchy the last one standing will be the money man. 😦

  10. #19 by Scott Erb on June 23, 2012 - 20:22

    I’m a social scientist, when you say ‘human action’ and public choice doctrine and act like these are some kind of law of nature, you are making one of the biggest errors in social science – you are over-determining and over-simplifying. Public choice theory is one of many theories, and one with many limitations, especially in that it is economistic and assumes interests and rationality formulas (when these are dependent on culture, beliefs, identity, etc.) The fact you seem to think these are straight forward shows a lack of understanding of the complexity of reality and social systems.

    You repeat assertions more vehemently with no support. You make bizarre statements that southern countries aren’t going to be financed forever. Well, yeah, that was my point! That’s the solution, a fiscal pact for Europe that the southern states have to accept in exchange for assistance in working out a way to minimize debt to a tolerable amount, through a mix of policies (monetary and fiscal), including bank write offs. The statements you make about political economy are a tad naive – no one is saying Germany is going to borrow to pay off Greece’s debt. Germany in fact has passed a balanced budget amendment. I recommend you actually learn more about the specifics and don’t assume that you have some theory or “doctrine” that gives you all the answers by over-determining and making economistic theories about interest and rationality. Social scientists realized that kind of thinking and theorizing had extreme limitations decades ago. Such theories can be useful, but have limited value. That’s why others don’t join you in thinking these theories give obvious answers.

  11. #20 by Alan Scott on June 23, 2012 - 20:41

    Scott,

    If I may, I want to back up BF in my own way . What are the austerity measures Germany wants the Greeks to make ? One of the big ones is shrink their bloated public sector. With so many Greeks on the public teat by either a public paycheck or public pension, this amounts to personal suicide for the average Greek. With the private sector overtaxed and shrinking, they sure as heck cannot go there .

    I agree with BF, just on human nature . No matter how they do it, the individual Greek cannot survive . They have to rebuild their private economy and that cannot happen if they stay in the EU. The EU was set up to give Northern Europe a competitive advantage. Or I should say the Euro was designed that way . The Southern nations simply cannot share a common currency with the North.

    • #21 by Scott Erb on June 23, 2012 - 20:51

      Alan, I agree with you that the Greeks cannot maintain the pensions system, the high level of inefficient public sector employment (which is really corruption) and needs to develop a private sector that is growing and productive and exploited by the government. I disagree that staying in the EU will make that harder. I think they need the EU and discipline enforced from the northern states to make it happen. Otherwise they’ll drift towards anarchy and authoritarianism. Without the north, the south will drift further behind and lose perhaps decades.

  12. #22 by Scott Erb on June 24, 2012 - 00:07

    I’d also point out that in 1981 when Greece entered the EC the reason was to help sustain their democracy. The military dictatorship had fallen and Greece seemed to be in danger of falling back into the same patterns. EC membership and the opening to Europe helped transform Greek political culture to one that could sustain democracy. Now they need Europe to help them overcome economic malfeasance. They may fail, but it’s not inevitable.

  13. #23 by Alan Scott on June 24, 2012 - 02:26

    Scott ,

    It was economic malpractice of the highest order to ever let Greece into the EU monetary union . There was no discipline, just the ability to borrow at the same rates as Germany . Kevin D. Williamson of National Review calls Greece ” the suicide bomber of European economies ” . Spain is far more important to the EU . Greece no longer matters . Even if by a miracle it was saved, it means nothing to the bigger issue . Merkel has got to save Spain .

  14. #24 by Black Flag® on June 28, 2012 - 03:16

    I don’t give a damn if you think you are a ‘scientist’ – and when I say “human action” I AM providing a law of nature and when I say and “Public Choice Doctrine” I AM providing a proven social theory – so other than getting a refund for your obvious poor education, Human Action is a Law of Nature, and when I offer a “doctrine” I am offering a theory which explains such action, cause and effect

    Now, I know this is very hard for you to grasp these things, as you are a subjective, emotional, pragmatist over principle, short-time preference person and little of what I post makes sense to you for those reasons.

    Public Choice Doctrine directly and correctly applies to this situation. You are insisting people will curl up and die quietly in a corner. You are naive, and you hide your naivety behind your degree.

    Your economics may make many baseless assumptions, but do not apply your faults to me.

    Your economics depends on formulas, but do not apply your errors to me.

    My economics is based on human action, which is always ultimately individual.

    Because this contradicts your collective mode of thinking, you have an impossible time understanding such things, and as such, twist in your mind that what I say cannot be so.

    I have more than ample support for my position … such as, I’ve been right and you’ve been wrong repeatedly – you simply cannot comprehend why this happens as it contradicts your basics you learned by rote from your superiors.

    Your “fiscal pact” DOES require the North to fund the South!

    But in your mind, to you this is NOT financing the South, no, to you, is it NOT repeating what has happened every ,time before – even if in FACT it is exactly what has happened each and every time before!.

    But you live in contradictions, so such a contradiction for you is normal behavior.

    But -like the comical definition of insanity, that is, repeating the same thing over and over again believing you will get a different result, you suggest repeating over and over again WILL, this time!!!, get a different result!

    You are the one full packed with assertions, quote, “…southern states HAVE TO ACCEPT…”. Who says? Who is going to enforce this with what army?.

    You have no answer. Your assertion is nonsense.

    You say, quote, “no is saying Germany is going to borrow…”, yet Germany MUST and IS BORROWING to fund its government (notwithstanding your naive belief that if they say they will balance a budget, means they already have! “Yeah, I’ll quit smoking tomorrow too…I promise!”)

    You are claiming it must fund Greece! Simple logic states if someone is borrowing to pay its bills, and you go to that someone to borrow $5, they need to borrow that $5 on your behalf to give to you. The fact that this simply is beyond your understanding displays the fundamental disconnect you have on this topic.

    And of course, I’m right … again ….


    Merkel: No eurobonds ‘as long as I live’

    Whether Greece joined the Euro for this or that reason is moot. What they did after they joined is germane. What will happen because of that is eventual as the day follows the night – default.

    As Hayek pointed out 30 years ago, the end game is economic suffering of a high order

    – either the dregs of high inflation of the Euro, and the widespread collapse of the standard of living for all of Europe,

    OR Greek-then-Spain-then-Italy default, and the widespread dregs of economic depression for all of Europe.

    There is no third way, there is only grave economic reckoning of one or the other by the operation of government and its Keynesian economic stupidity.

    So as sown so shall be reaped.

  15. #25 by Scott Erb on June 28, 2012 - 03:33

    You have nothing, BF. Proclaiming “human action” to be a “law of nature” is silly. Absurd. Irrational. You are vague, don’t define your terms, and simply dance around reality. You’ve got faith in a bizarre ideology that has nothing to do with reality. You are radically subjective – so subjective that you take your personal whims and pretend they are objective reality. The EU summit is making progress. Reality is proving you wrong. You are lost in a world of abstractions and faith. You also don’t understand Keynes or economics (you don’t understand Hayek either). You proclaim principle, but that’s silly. Principles are faith-based. You’ve got your religion. I have reality.

    • #26 by Black Flag® on June 28, 2012 - 03:49

      You are naive and empty.

      Of course – to you – Human Action is silly. Such a concept undermines your theory of the human insects – the collective.

      I do define my terms – you ignore them. That way, you don’t have to provide any yourself.

      I am radical – which means “to get to the root of things”. You are superfical – you have no or limited understanding of the underlying cause/effect mechanisms and would rather believe in magic.

      The summit will make no progress. Germany will not “play ball”. It owns the ball.

      “…
      The EU is pushing for a collective financing of members’ debt, a bank union and eventually a Treasury office to oversee the currency, the Die Welt newspaper said on Wednesday.

      Commission President Jose Manuel Barroso stressed that the plan was not only about European economic integration but also to generate more confidence in the euro and get nations to commit to the European project.

      Merkel is said to be looking increasingly isolated in her opposition to the idea….

      Reality is proving me wrong!! LOL!

      Reality HAS PROVEN YOU WRONG…. and goes nicely along with my prognosis as posted here.

      Pragmatism leads to evil – the scrafice of the long term for the short. Again, your Principles are based on faith – do not apply your faults to me. You pick yours from the way the wind blows on an hourly basis – do not apply your methodology to me. It matters not one wit what you think is silly – the proof is in the pudding, sir – and yours is rotten.

      You suppose, you assert ..”they HAVE to….” with no basis whatsoever.

      You have illusions that you hide behind that you call reality. You do not see what is in front of you because it scares you.

      You would rather make up fairy tales, and believe in them with all your heart, then face the eventuality and the unavoidable.

      Your dream of Europe as one big collective is ending.

      Since sorrow never comes too late, and happiness too swiftly flies.

      Such thoughts would destroy your paradise.

      No more; where ignorance is bliss, ‘Tis folly to be wise.

  16. #27 by Scott Erb on June 28, 2012 - 09:33

    LOL! “Scares” me? You’re just ranting and raving, BF. You sound a bit over the top and a bit like a kook here. You’re lost in a false ideology, you do not understand reality and your verbose rant is only an attempt to cover that up. Seriously, you need to rethink your entire world view. Human action is not silly; your attempt to fantasize that it is all some kind of ‘universal law’ is.

  17. #28 by Alan Scott on June 28, 2012 - 16:25

    Scott,

    ” The EU summit is making progress. Reality is proving you wrong. You are lost in a world of abstractions and faith. You also don’t understand Keynes or economics (you don’t understand Hayek either). ”

    Delaying armageddon every 3 or 4 weeks is not progress . Exactly what progress are you speaking of ?

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