The Scotish newspaper the Scotsman came out with an interesting article quoting Venizelos.
the country’s finance minister, Evangelos Venizelos, said European and international institutions were using Greece as a “scapegoat” to “hide their own lack of competence to manage the crisis”.
In a statement, Mr Venizelos also said that Greece had been “blackmailed and humiliated”.
Venizelos really does take the biscuit, he may not have a clue about economics but his political thinking is world class.
I have mentioned various times about Venizelos and his double think fantasies and here is another example, perhaps not the most obvious, but a good example none the less.
He says “Greece is being blackmailed and humiliated” , sorry, what? Let me give an analogy to show the absurdity of this statment, which granted, does give the papers and TV a good sound bite.
A good Samaritan sees a drunk lying in the road, he wants to help the drunk but on the condition that he puts down the bottle of whiskey, the drunk refuses and then claims to passers by he is being blackmailed by the good Samaritan. Please tell me if my analogy is not an accurate description of Venizelos’s claims.
Venizelos’s other statements with regards to the EU using Greece as a scapegoat to hide their own incompetency. This statement can have 2 hidden meanings. The first is that Venizelos is practising double think, ie because the EU is giving Greece tough conditions in exchange for financial help it must mean that the EU is the incompetent party. Obviously.
But it could also mean something deeper, and maybe Venizelos has cut to the core of the matter, is he and the PASOK government being stopped from defaulting? Is Venizelos and the PASOK government being prevented from taking their preferable course of action which is default because the EU is in some way preventing them from doing so?
Is the EU actually blackmailing Venizelos and the Greek government be threatening them with expulsion from the Euro and EU if they default?
I doubt it but I suppose only Venizelos and Papandreou know the answer to that question but it does open up an alternative train of throught regarding Greece’s relationship with the EU.
For what it is worth, if Venizelos is actually being blackmailed I would recommend Greek default, any outside organisation that asks elected leaders to act against the best interests of their population is not an organisation worth being a member of.
What most people don’t realise, maily because of the moniker “bailout”, is that the EZ partners are LOANING the money to Greece (with profit) to pay the european banks holding Greek debt. Also, the current debt is governed by Greek law which means with a simple decision Greece can default and not pay a cent. The new “bailout” loans are governed by English law (Britain is not even part of this) which is mostly aligned on the side of the lender, with rights to property in the case of a default.
When the crisis started a couple of years ago Greece asked the rest of the Eurozone (not the EU) for help on the attack to their economy that made the spreads (difference between Greece’s and Gernamy’s loan interests) to skyrocket. Greece basically asked the EZ to do something to get the rating agencies off their back. Instead, Germany almost unilateraly decided that Greece should be “bailed out” and punished for being so bad at managing their finances. Again, people hear about billions of euros in bailout and think that the EZ just gave the money to Greece. The reality is quite different. Every couple of months there is another “installment” of the bailout package, usually just enough to keep Greece from defaulting. However, for the package to be “released” Greece has to implement ever more painful measures. In reality some of these measures are quite impossible to attain and each time the EZ is shown to be “doing Greece a favour” by releasing the funds. Lately they are asking for sale of government assets which is madness in the current environment; even if anybody was interested in buying them the price paid would be much lower than their value.
Of course, the measures concentrated on reducing public sector wages and pensions (public expences) and increasing taxes. In a country with mainly small, usually family-owned businesses this has resulted in a spiral of recession where Greece has lost 20% of her GDP in 3 years, unemployment is approaching 20% and there is no end in sight.
So, your samaritan analogy would have been more accurate if the samaritan’s suggestion was to offer vodka instead of the whisky. For every sip the drunk would perform some errant for the new master and take a beating as well so that he is appropriately punished for his vice and in the meantime he would have to pay the “samaritan” both for the vodka and the whisky. And if he has to sell his clothes for pennies to do so that would be just fine…
I would call that blackmail and humiliation.
I agree to a large extent but I do not think it is blackmail.
The Greek political establishment have created this problem with huge help from the Greek central bank.
The situation is what it is, the facts are the facts.
Greek politicians have a choice. They can default, which I think they should have back in 2008 (it would not have been so bad). Or they can except terms of the people who will lend them money.
I understand how you could look at it as blackmail but look at it this way. The EZ could have declined not to give any money at all. Which would be the right thing to do in my opinion.
And now you have Papademos coming out and saying Greeks must get poorer. http://independence4wales.com/2012/greek-must-get-poorer-papademos-reveals-his-true-mission
It almost seems like a deliberate plan from the start of the Euro to ultimately get Greece and the other EZ countries to give up their sovereignty.
Thanks for the comments. I think we are getting to a concensus here except for a couple of points. First of all, the money that is lent to Greece don’t bail out the country but the previous lenders i.e. European banks and the ECB. There was the first blackmail: pay back your debts to the banks so that they don’t collapse and we have to bail THEM out or you will be kicked out of the Euro.
For many analysts a return to the Drachma is seen as catastrophic. Given that the debt is in Euros and that won’t change and since the new currency would need to be devalued by at least 50% the external debt (not only government) would double overnight. Inflation would skyrocket leading to more devaluation hence more debt.
At the begining of the crisis Greece was running a high budget deficit before load repayments. This means that even if it didn’t have to repay the loans the country didn’t have enough revenue to pay for public sector salaries, pensions and services.
Furthermore, after decates of CAP policies Greece is no longer self-sufficient when it comes to food and energy. It needs to import both food and oil. Without those imports there would be famine in urban areas and deaths in the very cold winter (-20 in the north last week). Also, electricity rationing, water shortages, and generaly a nightmare scenario for all citizens.
So, was a default and a return to the drachma a viable alternative as suggested? It would be more painful than people imagine.
But that was not the last blackmail. The “bail-out” was structured in installments and usually enough money was given each time to cover the DEBT ONLY. If the installment was not given Greece would default and all efforts up to then would be for nothing. So every 3 months the Troika (ECB,IMF,European Comission) would push for more measures to make Greece “more competitive” (and since “more competitive” is a relative term, more than whom?). And it was these measures that created a downward spiral of recession and the high unemployment with businesses closures everywhere. The government was unable to resist to many of those (it was successful on others). This is a continuous trail of blackmail. And consider this: at the end of last year’s installments there were no loan repayments so the only thing that was in danger of not getting paid were salaries and pensions. And that was when the demands were even more unrealistic and the noose was tighter.
Greece doesn’t need to get poorer. It’s mismanagement and corruption that got it where it is today. This is where Europe didn’t help at all, in fact each country (especially Germany) used that corruption to their own ends (see Siemens scandal, dodgy submarines, military equipment etc.). Even when we were in the middle of the crisis, one of Germany’s terms for the loans were to accept (and pay for) submarines that were previously rejected for technical reasons.
Finally, I would agree with you that it seems like a deliberate plan to convert the periphery countries into protectorates of the main countries within the EZ.
About your first point. I make every effort to stress that the Greek people are completely separate from the Greek government but I also use the term “bailout” a lot without specifying “Greek government bailout”. This is an oversight on my end. You are right. From now on I will define bailout correctly.
About being “kicked out” of the Euro. I agree. This is blackmail if it were true, but is it possible to “kick” Greece out of the Euro? I argue that Greece can choose whichever currency it wants, it is not something other countries can dictate.
http://independence4wales.com/2011/drachma-or-euro-greece-chooses-not-europe
The “problem” that Greece would have if it were to use the Euro as a currency against the wishes of the ECB, is that the country would have to eliminate the trade deficit because Greece would not have access to the ECB printing press. This is not really a problem.
Greece without a trade deficit would mean there would be low taxes and low regulation in order to make Greek industry competitive with other European countries.
About the debt being in Euros even if Greece were to exit the Euro. I disagree. Greece is a sovereign country and it can dictate terms. Either the debt is converted into Drachmas or the debt is not paid back. It’s that simple.
I also do not believe it is possible for the Greece to return to the Drachma AND to leave the debt in Euro. The Greek government cannot payback the money as it is, leaving the debt in Euro would be impossible in my opinion. For all the reasons you outline.
If we can go past that being a possibility
You then talk about the currency needing to be devalued overnight. From what I understand you are saying that on day 1 (when the Drachma is reintroduced) the exchange rate would be 1 Drachma to 1 Euro (for example) and the next day it would have to be devalued to immediately to 2 Drachmas to the Euro.
But why would the currency need to be devalued?
Currency/money is labour and property in an easy to exchange form. It cannot be devalued from one day to the next; the productivity of a worker does not change overnight. But now we are going into the problem of central banking….
http://independence4wales.com/2011/greek-central-bank-makes-baseless-threats-against-greeks
About CAP, I couldn’ t comment on this.
A return to the Drachma being painful. I think your point about the debt still being in Euro after change of currency is wrong because it would be totally unworkable.
So the hard part about returning to the Drachma. Greece as it currently is, is not self sufficient, not because it cannot feed itself but because it imports more than it exports, financially the country is not self sufficient. I believe this is deliberate. If Greece were to have a balance trade account it would mean there would be low taxes and low regulation and the country would have a strong currency.
http://independence4wales.com/2011/greek-debt-crisis-extremely-easy-to-fix
If Greece had a balanced trade account the country could use a gold or silver standard for its currency and would be free of the central baking model and therefore free from the manipulation of outsiders.
About the government bailouts. I believe the line in the media is complete nonsense. The government bailouts have one purpose and one purpose only and that is to buy the government time so they can extract as many Euros from the Greek population as possible before the inevitable government default.
http://independence4wales.com/2011/controlled-demolition-of-greek-economy
About Greece not needing to get poorer. I could not agree with you more. But the fact still remains, this is exactly what Papademos has said needs to happen.
Papademos is a central banker and true to form he is not addressing the real issue of why Greece is uncompetitive. Greece is not uncompetitive because of the currency, Greece is uncompetitive for the reasons you outline. It does not matter if Greece has the Euro or the Swiss franc, the problem would still remain.
http://independence4wales.com/2011/greece-pm-papademos-appointment-is-a-moral-hazard
The core problem is that there are too many taxes and too much regulation. And the legal system in Greece does not work efficiently. If these 3 things were addressed there is absolutely no reason why Greece could not be competitive with any country on the face of the planet.
The sad fact is this, Greece uses the central banking model and while it does, the value of Greek people’s labour and property will be easily manipulated by central bankers.
http://independence4wales.com/2011/the-banking-system-is-a-cartel-the-economic-crisis-proves-it
The current government problems could not highlight the issue any clearer. Bankers are blackmailing the Greek government because the Greek government is dependant on bankers. Until Greece frees itself from this dependence then Greece will continue to be manipulated in any way central bankers want.
http://independence4wales.com/2012/new-greek-drachma-euro-problems-how-to-solve-them
Short answers as I don’t have much time…
– Is it possible to “kick” Greece out of the Euro?
There is no mechanism to do that but unbearable pressure may be put on Greece to quit the Euro itself. There is nothing to stop Greece doing that.
– But why would the currency need to be devalued? Currency/money is labour and property in an easy to exchange form. Currency is either backed by resources like gold or – in the case of fiat currencies like $, £, € and what drachma will be – it’s a legal tender and it’s worth as much as it is desirable. The drachma will devalue as a matter of fact because nobody will want it initially. All economists agree on that.
The rest of you comments are based on assumptions that counter the above so not much I can comment as they are falacious.
I am curious though, do you read anything else but this site? Try reading Greek, German and French newspaper sites google can translate them for you. You will be surprised with what’s going on…
Hi. Okay Ill keep my answers short also.
I agree with you re unbearable. The question you have to ask is who is responsible for putting Greece in this position? Why are Greek politicians not asserting their authority?
Nobody will want the Drachma? What? Even if it were tied to gold or silver? Realistically, the new currency will have to be if Greeks are interested in having control of their own country. IF Greece were to go back to a fiat Drachma it will make absolutely no difference to Greece. The same people who control the Euro in Greece will be controlling the Drachma. The results will be the same.
In short I agree with you, if Greece continues with a fiat currency then the currency will be inflated, the Greek central bank have said this is what they will do. http://independence4wales.com/2012/greek-central-bank-governor-outlines-strategy-for-drachma-return
Inflation has nothing to do with the economy though. It is simply down to the central bank printing too much currency.
I am not sure why you say my comments are counter to what you have said? Basically I agree with you on both counts.
But I also say that just because Greece will be put under unbearable pressure and that nobody will want the new Drachma, does not make it moral, logical or necessary and it does not mean it has to be that way. Just because someone says I am going to shoot you does not make it right.
Just because the mainstream media is saying something is a fact it does mean it is a fact.
Just because something happens the way the mainstream media said it would, does not it is logical, natural, correct or without manipulation.
I am asking the question, why is Greece portrayed as being in such a weak position by it’s own politicians and what needs to happen to make Greece stronger?
To state my main sources, mainstream media
http://www.kathimerini.gr/
http://www.athensnews.gr/
http://www.france24.com/en/
http://www.bloomberg.com/
http://www.bbc.co.uk/news/
http://www.foxnews.com/
Most of whom say Greece can be manipulated by foreign governments and banks, and who also say that the new Drachma will be catastrophic for Greece without bothering to explain how or why.
One question for you.
Do you accept that the Greek Prime Minister has said he will make Greeks poorer and that the recession in Greece is deliberate and is part of his devaluation plan?
– Because they have no authority or power within the EZ and there are too many national issues (Turkey, FYROM, Cyprus and more) that the rest of the countries can be used to blackmail Greece.
– What gold and silver? You are assuming Greece has a Fort Nox hidden somewhere.
“Inflation has nothing to do with the economy though. It is simply down to the central bank printing too much currency.”
Actually inflation, by definition, is the rise in the general price of goods and services. What you are talking about is currency depreciation.
“Just because the mainstream media is saying something is a fact it does mean it is a fact.”
Of course. But publications influence minds, and by extention markets. Rating angencies react making the false “facts” into a reality. Example, a couple of “bad articles”, the rating agencies reduced Greece’s rating to a category that brokers were not allowed to buy. Hence, Greece was driven out of the markets and bankruptsy became more unavoidable.
On the return to the drachma and why nobody explains why it will be a catastrophy. I don’t think foreign powers care if Greece destroys itself but they do care about the Euro. If by any chance Greece returned to the drachma and succeeded (not without pain but less than what’s in store now) then other countries will see it fit to exit the EZ. There are also those that believe that, successful or not, a single exit of a country from the EZ will mean the end of the Euro (because it’s fiat and depends on market feelings etc.). And of course, a Euro collapse will mean a very long term global recession. A global recession will mean Greece will be in recession as well and the circle is complete. The truth is, it’s all speculation, nobody know what will happen. They would rather not try it though in case they were right.
If I remember correctly The current PM has said that Greeks will need to become a bit poorer.Papademos, however has only been PM for a couple of months and certainly hasn’t presided on any part of the recession.
Don’t take this the wrong way, but if you only get your information from newspapers and the TV you are going to agree with everything you hear and it will all sound reasonable.
Greece has all the power, unless another country wants to invade, Greece is free to do what it wants.
About Fort Knox, the currency should not be centrally controlled, that is the problem with the system now. Private investors would bring the silver/gold.
Actually increasing prices of goods and services is a symptom of excess printing of money/inflation, not the cause. I do not dispute the mainstream media agrees with you. I agree with Mises, Hyak etc.
For example, would you want to pay less for an apple if the amount of money in your pocket decreased? Or would you be prepared to pay more for an apple if the amount of money in your pocket increased? If the amount of money in your pocket stayed the same why would the amount you are prepared to pay change?
Whatever the press says the fundamentals are the same, that is the beauty of markets. Greece, France, UK, Spain, USA are fundamentally unsound economies (becuase of their trade deficit,pension obligations, general social security payments now and in the future, servicing of their debt). I do not dispute confidence is what is keeping them afloat. But the markets are reality, newspapers & media are either trying to manipulate people’s perception of reality or reporting on reality/events, either way, they have no effect on the facts of reality.
You underestimate Papademos, he oversaw Greece’s fraudulent entry into the Euro as president of the Greek central bank and he oversaw the massive borrowing of the Greek government as vice president of the ECB even though he knew the borrowing was based on fraudulent information. Papademos is not the only player but he is one of the key players that got Greece into the Euro, who enabled Greece to run up unsustainable debts and he is one of the key players in stopping Greek banks from lending and he is the key player in making the suicidal austerity measures look democratic.
The austerity measures along with the banks not lending are the cause of the recession in Greece. Papademos controls the Greek economic policy (granted he uses threats to coerce people) and he is a central banker.
The austerity measures are a farce and deliberately self destructive. And in no way restore Greece to pre 2008 prosperity. The recession in Greece is designed to take Greece down to the new normal.
Why have the banks stopped lending? Who knows but there are a variety of reasons.
They are creating a crisis in Greece to seize more control over the Greek economy and EU economy by centralising control with the ECB.
They are creating a crisis because they are bankrupt. Threatening collapse is their method of forcing taxpayers to bail them out.
I am sure there are more reasons