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NLP article and some further notes

by talos Mon Nov 14th, 2011 at 06:13:14 AM EST

I was asked by the good folks over at the New Left Project for a write-up on the situation in Greece, after the "national unity" government quieted things down. You can read the article, titled "'National Unity' in Greece" here.
In brief I hold that a. This is far from settled, b. new struggles and renewed dissatisfaction are imminent and unavoidable (barring some sort of massive change of EU course, naturally) and c. that the whole situation has made a hard-left government a not totally fanciful idea:

It has become obvious over the past couple of years of the harshest austerity imposed in Europe since the Second World War that the true opposition to IMF/ECB policies comes from the streets and popular protest. As the fabric of society crumbles in Greece it seems improbable that a population in such distress can be pacified by a change of government guard. The coming months until the elections (supposedly due in February, though the date isn't set yet) will be crucial. Should the left manage to unite in an anti-austerity front as effectively as the elites have united behind the new Greek PM, Greece, so the polls seem to indicate, could be the first country in Europe to elect a hard left government. But there is a long way to go and the Communist Party, the largest party of the left, insists that it isn't interested in such a front. It remains to be seen whether it will keep to this line in the face of intensifying austerity.  

A set of new polls came out hours after this was posted at NLP. This is the result from Public Issue, a polling company that seems to be the most constantly trustworthy among those that have published a poll this week (results normalized to 100%, interestingly intent of abstention has fallen precipitously this month to "only" 27%):

front-paged by afew


  • New Democracy (conservatives, EPP) 28,5% from 31,5 in September and 33% (a historical low) at the 2009 elections
  • PASOK (socialists PES) 19,5 from 22,5 in Sept, and 44% in the 2009 elections
  • Communist Party of Greece (GUE/NGL but not really), 11% from 10,5% in Sept, and 7,5% in 2009
  • LAOS (far right) 8,5% frm 9% in Sept and 5,6% in 2009
  • SYRIZA (radical left, coalition of maoists to eurocommunists and ecologists GUE/NGL): 12% from 9,5% in Sept and 4,6% in 2009
  • Democratic Left: (moderate left, recent SYRIZA splinter group GUE/NGL observers(?)) 7,5% from 5% in Sept
  • Ecological Party (Greens) 3,5% from 3% in Sept. and 2,5% in 2009
  • Democratic Coalition (Neolib, ND splinter group) 2,5% from 2% in Sept
  • Others steady at 7%

It is obvious that mathematically this proves what I was saying. The left + Greens (including roughly 4% of the others, if I understand correctly), is for the first time since 1944 ahead and at historical heights of electoral influence. Should most of it run under an anti-memorandum banner, these polls say that they could be the winning party... That isn't easy, however because the block is hardly homogeneous and the differences that exist make such a scenario more difficult to materialize. Still even the potential should cause some sweating in various EU capitals and beyond...

Note that the same poll estimates that a majority approve of Papademos personally (55%), this after a week of the media hailing him as a new Messiah and the fact that he is a new kid on the blocks of political power. I have the feeling that his is not going to have much opportunity to further improve this score.

Finally to give you an idea of the sort of scare tactics used at the highest levels to extort a ECB friendly puppet government: Compare and contrast how J.C Juncker rules out expulsion of euro members on Nov 10th:

Eurogroup head Jean-Claude Juncker ruled out on Thursday the possibility of expelling any country from the euro zone, saying such a move is not possible under European treaties.

"I exclude the hypothesis of expelling a country from the euro zone, in fact the treaty has no instrument which allows us to do that," Juncker told Portuguese television station TVI in an interview aired late Thursday.

When, three days before, as the Eurozone was "Already prepared for Greek exit" the same Mr. Juncker:

... has tried to assuage fears that other eurozone members will be hurt if Greece were to leave it.

"We are working on the subject of how to ensure there is not a disaster for the people in Germany, Luxembourg, the euro zone. We are absolutely prepared for the situation which I describe and which I want to be avoided,"  Juncker told ZDF Morgenmagazin:

"Everything must be done to try to make sure one member of the 17-member group does not fade away but if this were the wish of the Greeks -- and I think that would be wrong -- then we cannot force the Greeks toward their fortune," Juncker said.

"This is not my favored scenario. I would like Greece to stay on board but Greece must fulfill its obligations," he said.

He said euro zone leaders had a responsibility to the whole currency bloc and it was their job to try to stop contagion.

That's how you attempt to get people freightened enough to assent to their own devastation...

Display:
Thank you for this update. I think you are reading to much into what J.-C. Junkers said. There isn't in fact any mechanism for a state to leave the Eurozone or be ejected by the others. The only option is for a voluntary exclusion of the EU altogether. I think in the second quote Junkers was simply contemplating this hypothesis, likely answering a question from a journalist.

Anyway, I think no one is really contemplating the scenario of a state simply defaulting without leaving the Eurozone, which IMHO is the most likely thing. For Italy especially this option is becoming very attractive, because if they do so they'll still be able to pay salaries the next day, unlike Portugal or Greece.  

luis_de_sousa@mastodon.social

by Luis de Sousa (luis[dot]de[dot]sousa[at]protonmail[dot]ch) on Mon Nov 14th, 2011 at 05:52:52 AM EST
Unless I misremember, the scenario of being forced out of the euro goes something like this:

1 Country X defaults on some of its bonds
2 ECB makes good on its threath to stop accepting country X bonds as collateral
3 Banks in Country X goes belly-up
4 Country X can not recapitalise banks
5 Country X re-establishes national currency

So while there is no constitutional option for being forced out of or leaving the eurozone, ECB has de facto taken that power along with the power to dictate policies that according to subsidiarity belongs to the states.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Mon Nov 14th, 2011 at 09:37:06 AM EST
[ Parent ]
But even if a country reestablishes its own national currency but decrees that debts can be paid in either currency is there any actual mechanism for ejecting them from the EMU or the EU?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Nov 14th, 2011 at 10:10:11 AM EST
[ Parent ]
Establishing a dual system is a Euro exit.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Nov 14th, 2011 at 11:38:25 AM EST
[ Parent ]
But what is the mechanism to accomplish this? And, even if that country were forced out of the EMU, how would they be ejected from the EU?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Nov 14th, 2011 at 12:01:32 PM EST
[ Parent ]
  1. Print money.

  2. Accept newly printed money in payment of taxes.

  3. Gresham has left the building.

There is no practical way to force a country out of the EU altogether, and nobody would really particularly want to do so (leaving aside some of the nuttier German gold bugs), so there is no real connection.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Nov 14th, 2011 at 12:30:46 PM EST
[ Parent ]
I was inquiring as to the treaty method for ejecting a country from the EMU. What if a country just decides to do what it must and then brazen out the resulting opprobrium instead of going quietly. What if they establish or countenance a de facto separate currency?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Nov 14th, 2011 at 02:37:48 PM EST
[ Parent ]
I was inquiring as to the treaty method for ejecting a country from the EMU.

There isn't one.

What if a country just decides to do what it must and then brazen out the resulting opprobrium instead of going quietly.

Then you have a constitutional crisis.

What if they establish or countenance a de facto separate currency?

Their voting rights at the ECB board would probably be suspended, as would their central bank's license to print Euros. Those moves are not precisely legal, but then neither is establishing your own legal tender in the Eurozone, so they would not have much ground for complaint.

Overall, I think people would take it quite well. It's the accompanying default that will cause hissy fits.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Nov 14th, 2011 at 02:43:05 PM EST
[ Parent ]
My point is that when others have control of institutions, are using them to their advantage and doing so quite stupidly there are a variety of options available other than just doing as they say. Fortunately, or perhaps unfortunately, for the EMU this does not appear to have occurred to any EMU members yet, no matter how grievously they have been abused.

If the ECB will not act as a normal central bank, why should distressed countries act as normal distressed countries?

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Nov 14th, 2011 at 04:41:28 PM EST
[ Parent ]
From a strikt legal perspective they have not left the EMU, but they are in violation of the treaty. I don't know if their voting rights in the relevant ECB council can be suspended or else what consequences can be had if they are found in violation by the court. Any fine can hardly be so large that it matters.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Mon Nov 14th, 2011 at 03:05:07 PM EST
[ Parent ]
The fine can be exclusively payable in Euro, which could trigger a choice between defaulting on an EU fine or facing Versailles-style hyperinflation.

Defaulting on EU fines (and other payments) could probably be made grounds for suspension of voting rights.

But in any event such a country would lose a lot of informal clout, so unless it's a big block doing it, formal voting rights are unlikely to matter. Expect them to be subject to a cordon sanitaire (and quite rightfully so - you leave the Euro, you don't need a vote on its policies).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Nov 14th, 2011 at 03:15:38 PM EST
[ Parent ]
Do you mean that it is de facto a Euro exit, or is there something in the treaty which forbids it without leaving the Euro?
by gk (gk (gk quattro due due sette @gmail.com)) on Mon Nov 14th, 2011 at 02:41:01 PM EST
[ Parent ]
The treaty forbids it. It also does not say that you can leave the Euro, which probably technically speaking means that you can't leave the Euro without leaving the EU.

But nobody is going to stand on that when push comes to shove. Too much strategically important real estate would start looking for alternative power blocs to align with if all the deficit countries were forced to choose between austerity colonial viceroys or full EU exit. Also, each of the ten current EU members who is not a member of the Eurozone would get a very powerful incentive to sabotage their convergence process if it becomes widely perceived that Eurozone membership puts your EU membership at risk.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Nov 14th, 2011 at 02:49:49 PM EST
[ Parent ]
That would be the scenario for Portugal or Greece, but would it be the same for Italy? It all depends on how that default occurs and who may get grilled in the process, I believe.

luis_de_sousa@mastodon.social
by Luis de Sousa (luis[dot]de[dot]sousa[at]protonmail[dot]ch) on Mon Nov 14th, 2011 at 11:12:39 AM EST
[ Parent ]
Luis, the second comment, as well as analogous threats by Ollie Rehn, Merkel and Sarkozy, were used as an argument inside Greece that if we don't agree to appoint a "technocrat" as a Prime Minister, we will be forced out if the Euro, civilization will collapse and death will be upon us all. This was not IMHO a confused reply by Junckers. It was part of a concerted attempt to "terrify" the locals, given that a recent opinion poll showed that ~75% of the population was for remaining in the Euro.

The ex-ECB Vice President spoke in parliament today. Promised pretty much the same as the previous PM, only this time with an air of technocratic confidence. He admitted that the programme so far has created a recession and increased unemployment, but insisted that the way out of this is to keep implementing the same policies that are failing now. To claim that with such an air of confidence you need to be a respected technocrat, indeed.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Mon Nov 14th, 2011 at 03:57:01 PM EST
[ Parent ]
talos:
air of technocratic confidence.

ye oddes, have we come to this?

how long are they going to try and polish a turd?

Beppe Grillo's Blog

Like so many Argentineans I watch "Rai International". We are the biggest population of Italian origin in a foreign country, even though Italy has often ignored us. I have been astonished to observe many of the happenings in Italy in the last few years like the adventures of "Your Cavaliere". In Argentina, the ones that you call "poteri forti" {strong powers}, not having managed to get back up off the ground in spite of the "coup" and the dictatorship, slotted themselves in to the Menem government , corrupting it and upsetting it right from the start. They almost succeeded. However, it has to be said that after Menem we managed to react and when, with De La Rua's "Alianza" government, they wanted to give us the final blow, the population out in the streets forced them to give up and leave. It was not the "poteri forti" that got rid of those who wanted reforms that people are now telling you are necessary and that the government you elected cannot get through because they are "unpopular". It was us, the citizens out in the streets that got rid of them, even though we were confused because like you they kept us with our backs to the wall pinned there with massive headlines in the newspapers with "Riesgo País" (your "Spread") that would have taken us all to hell unless we took the poison. The dilemma was the same as has been presented to you and to the Greeks: "If you don't want to be killed, commit suicide slowly". The law of "Flexibilisation of work", approved by the De La Rua government paying the senators, was partially repealed.
The social security contributions (even those) that had been privatised and handed over to the "Pension Funds", were taken back by the State. Argentina's GDP, that plummeted in the year of the default (-11% in 2002), straight away started to grow at an average of 8-9% a year as of 2003 and at the end of 2011 it'll be at 7% in spite of the international crisis. Hundreds of researchers are coming back to Argentina thanks to the government's "Radici" {roots} programme; the budget for public education (declared a "public good" by law) has gone from 2% of GDP (2001) to 6.5%.
Our countries have said "no" to the "free trade" that the United States wanted. This was the wish of those presidents who enjoy the biggest support of their citizens and who are often sneered at by the "First World".


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Mon Nov 14th, 2011 at 08:46:50 PM EST
[ Parent ]
Juncker's quoted missive is incoherent; he first speaks about the Greek exit as a decision only "the Greeks" can make on their own, in a part aimed at North European audiences; then ends by making the standard "Greece must fulfill its obligations" line the condition for staying in, this time addressing Greek citizens. I'm not sure how much of that was indended rather than confused; but the part about blaming Greece's failure to fully implement austerity demands for the failure of even a stabilisation of the situation, and never consider that the prescribed medicine kills the patient, is bad enough.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Nov 15th, 2011 at 09:51:12 AM EST
[ Parent ]
Do I remember correctly if I say that greek election law gives proportional results except for handing a bunch of extra seats to the largest party? So for a hard-left victory they have to form some kind of common front that lives up to the election laws definition of party?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Mon Nov 14th, 2011 at 09:41:39 AM EST
Yes, unless one of the left parties (or realistically a coalition) finishes first, it cannot gain a majority, because the first party wins +50 seats (in a 300 seat parliament).

PASOK was saying something about moving to a German-style system (or something less) but given the fact that it's heading so far towards electoral anihilation, I'm not sure they're still interested...

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Mon Nov 14th, 2011 at 11:05:59 AM EST
[ Parent ]
A bit off-topic: in a news clip this morning, there was a few seconds clip with protesters in candlelight in front of Parliament (or some central government building, I don1t remember) in Athens, with the reporter commenting "...a protest by a left-wing splinter party...". Was it actually one of the actually larger parties on the left, the splitter-but-not-splinter Democratic Left, or an actual dwarf splinter party?

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Nov 15th, 2011 at 09:55:19 AM EST
What is this all about?

Eurointelligence: France and Germany are now in open disagreement on crisis resolution (17.11.2011)

This letter of commitment..

EU officials are also still expecting a letter from Papademos bearing also the signature of the leaders from the two main parties that would commit them to the terms of the second bailout agreed on October 26.  But Antonis Samaras insisted last week that Greek politicians should not be forced to sign written commitments. Samaras received public backing on the issue yesterday from Giorgos Karatzaferis, the head of Popular Orthodox Rally (LAOS), third party in the government coalition.

And, one day earlier A run on the eurozone bond markets
The next loan tranche remains in doubt, as New Democracy leader Antonis Samaras continues to refuse to sign a letter that he supports the Greek adjustment programme. The European Commission yesterday reconfirmed its commitment not to release the next tranche of the loan until he gives a written assurance.
So, apart from a narrative of sin and moral rectitude regarding debt, are the Serious™ people in Europe insisting on making the Greek rescue a matter of personal honour of someone who isn't even in the government but in the opposition?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Thu Nov 17th, 2011 at 09:26:51 AM EST
Samaras is trying to save face. He has committed to supporting this agreement, but is also pretending that he can agree on the loan deal, but bargain about the terms, afterwards. He wants to have the room to win the elections and come back with some sort of morsel of reward. Or pretend to his party base (which is becoming restless after hearing that he will renegotiate the terms of the memorandum for 18 months now) that he will win something.
But anyway, he has agreed to pass the damn thing. The EU wants it in writing, and Samaras considers this demand demeaning (and I don't blame him). However there seems to be discussions on how to overcome this obstacle.

And yes, I might not have made that clear, the EU has demanded ever since Cannes (even before but with less force) that the opposition gives their written consent in order to sign off the sixth tranche. Not just the government. Probably because they realize that any successor government has ample legal room to challenge these agreements. It is bizarre and it might backfire. Should they embarass Samaras that much, he will not be in contention for PM, and the left will (and one of the two left party leaders stated that in any government they will participate in will not recognize any signatures by a transition government that were given illegally, unconstitutionally and against national sovereignty and interests)

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Thu Nov 17th, 2011 at 06:20:48 PM EST
[ Parent ]
he has agreed to pass the damn thing. The EU wants it in writing, and Samaras considers this demand demeaning (and I don't blame him).

You know, if the EU want to force a Greek default that way...

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Thu Nov 17th, 2011 at 06:24:22 PM EST
[ Parent ]
If they really wanted that, they'd demand that the Communist Party sign the treaty. That would have clinched it...

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Thu Nov 17th, 2011 at 07:09:26 PM EST
[ Parent ]
It is horrific how they bully every single government all over the world that stands in their way. It really became evident that they are simply bullies.
It was the same always I suppose but nowadays they do not even care to play democracy. Just makes me sick.
But pretty soon it will be revealed that "tsar is naked" and that they actually do not have money to blackmail everyone with it. It is obvious now that their promises are hollow and where ever they forced THEIR "democracy" people are much more poor then they were before and in addition they are dying like in Iraq, Libya , Afghanistan...you name it. They are bullying Serbian government right now to accept Kosovo independence, too.
But this show will pretty soon be over...


Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Thu Nov 17th, 2011 at 10:12:58 PM EST
Yanis Varoufakis: The Serpent's Egg hatchlings in Greece's postmodern Great Depression
It will prove George Papandreou's ugliest legacy: that his last-minute childish maneuvering to maximise his waning hold on power (while negotiating his eviction from the PM's job), has brought into the new `national unity' government four self-declared racists (some of whom are neo-Fascists and one a neo-Nazi of some renown). It is also wildly ironic: for Mr Papandreou's best quality has traditionally been his ardent cosmopolitanism, his demonstrated anti-nationalism, a genuine commitment to minorities and a deep seated intolerance of racism. Alas, such is the lure of power, it seems, that the entry into the new government of one minister and three junior ministers representing LAOS (a small ultra-right wing party) was cynically judged as a smaller price to pay than handing more control of the new regime to Mr Papandreou's political opponents in the two major parties - his own PASOK and New Democracy, the conservative opposition.

...

The gist

1929 ought to have taught us that two things happen after a banking-cum-debt-cum-real economy collapse: First, the common currency shrivels and dies (the Gold Standard then, the euro now). Secondly, racism raises its ugly head, gains entry into government and, before we know it, makes it impossible to find civilised means by which to tackle the Crisis. For all the talk of a technocratic pro-European government in Greece, the truth has a nasty underbelly in which the serpent's egg has already hatched. The world better beware.



To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 02:43:17 AM EST
Mark Ames (he of Exile fame) has a good article in Naked Capitalism about the rise of the LAOS party. He is wrong about Papandreou IMO as I've mentioned here, but otherwise it's pretty decent.

The irony: one day before the anniversary of the bloody Polytechnic student uprising against the military junta, the Greek parliament voted in a government which includes the sort of people that are the junta's political heirs. It is sad.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Fri Nov 18th, 2011 at 05:06:54 AM EST
[ Parent ]
If the leftists make a play for control, how long before the army backs LAOS, and we have a neo-Nazi government in the cradle of democracy and Western Civilization?
by rifek on Mon Nov 28th, 2011 at 12:59:36 PM EST
[ Parent ]
Took me a while to see this :-) The army won't back LAOS. The army is as pissed off with the pay cuts and the retirement changes. As LAOS is now part of the government (and thus the problem) and was in favor of the IMF bailout, it has lost and is losing ground among the harder core of rightist populism. The army, despite having very hard-core elements in its midst, is not at all at this point especially far right. There was a retired officers memo to the government in fact that stated that the army would not participate in any attempt to undermine democracy and that it would protect the constitution...

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Mon Dec 5th, 2011 at 09:59:19 AM EST
[ Parent ]


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