Greece & the EU

So I've been trying to get up to speed on what's really happening with Greece and the EU. My man Paul Krugman says:

The European project — a project I have always praised and supported — has just been dealt a terrible, perhaps fatal blow. And whatever you think of Syriza, or Greece, it wasn’t the Greeks who did it.

My favorite article so far about the situation is from Interfluidity, which lays out Krugman's case in clarifying detail. If you read nothing else, read that. Here's the heart of it:

The choice Europe’s leaders faced was to preserve the union or preserve the wealth, prestige, and status of the community of people who were their acquaintances and friends and selves but who are entirely unrepresentative of the European public. They chose themselves. The formal institutions of the EU endure, but European community is now failing fast.

It is difficult to overstate how deeply Europe’s leaders betrayed the ideals of European integration in their handing of the Greek crisis. The first and most fundamental goal of European integration was to blur the lines of national feeling and interest through commerce and interdependence, in order to prevent the fractures along ethnonational lines that made a charnel house of the continent, twice. That is the first thing, the main rule, that anyone who claims to represent the European project must abide: We solve problems as Europeans together, not as nations in conflict. Note that in the tale as told so far, there really was no meaningful national dimension. Regulatory mistakes and agency issues within banks encouraged poor credit decisions. Spanish banks lent into overpriced real estate, and German banks lent to a state they knew to be weak. Current account imbalances within the Eurozone — persistent and unlikely to reverse without policy attention — implied as a matter of arithmetic that there would be loan flows on a scale that might encourage a certain indifference to credit quality. These were European problems, not national problems. But they were European problems that festered while the continent’s leaders gloated and took credit for a phantom prosperity. When the levee broke, instead of acknowledging errors and working to address them as a community, Europe’s elites — its politicians and civil servants, its bankers and financiers — deflected the blame in the worst possible way. They turned a systemic problem of financial architecture into a dispute between European nations. They brought back the very ghosts their predecessors spent half a century trying to dispell. Shame. Shame. Shame. Shame.

Heartbreaking.

Gaius Publius writing at Hullabaloo, my favorite progressive blog, connects this to the neoliberal project of privatization of everything for the benefit of plutocrats, pointing to parallels between Greece and Ukraine.

The actual story is that the forces of privatization on the "liberal left" in Europe have found a nation in a great deal of economic trouble, thanks in large part to looting from outside, and they're offering a “helping” hand in order to further loot the country via those privatizing strings. In the minds of the looters (we'll call them “neo-liberals” below) every government-owned operation (Athens airport, say) is a missed profit opportunity for someone rich enough to buy it, and the world would be better if everything were made private.

But airports and other revenue opportunities don't privatize themselves; they have to be pried loose from government.

Greek journalist Michael Nevradakis and US investigative journalist Greg Palast make a similar case:

Here’s how it works. To join the Eurozone, nations must agree to keep their deficits to no more than 3% of GDP and total debt to no more than 60% of GDP. In a recession, that’s plain insane. By contrast, President Obama pulled the USA out of recession by increasing deficit spending to a staggering 9.8% of GDP, and he raised the nation’s debt to 101% from a pre-recession 62%. Republicans screamed, but it worked. The US has lower unemployment than any Eurozone nation.

As Obama scolded the European tormentors of Greece: “You cannot keep on squeezing countries that are in the midst of depression.” Cutting spending power only leads to less spending which leads to further cuts in spending power – a death spiral we see today in the Eurozone from Greece to Italy to Spain—but not in Germany.

“Not in Germany.” There’s the rub. Normally, a nation such as Greece can quickly recover from debt-induced recession by devaluing its currency. Greece would become a dirt cheap tourist destination once more and its lower-cost exports would zoom, instantly increasing competitiveness. And that’s what Germany can’t allow. Germany lured other European nations into the euro in order to keep them from undercutting Germany’s prices in export markets.

Restricted by the 3% deficit rule, the only recourse left for Eurozone debtors: pay the piper with “austerity” measures.

In Disinventing Democracy George Monbiot describes the anti-democratic, plutocratic nature of the process at work.

Consider the European Central Bank. Like most other central banks, it enjoys “political independence”. This does not mean that it is free from politics; only that it is free from democracy. It is ruled instead by the financial sector, whose interests it is constitutionally obliged to champion, through its inflation target of around 2%. Ever mindful of where power lies, it has exceeded this mandate, inflicting deflation and epic unemployment on poorer members of the eurozone.

The Maastricht treaty, establishing the European Union and the euro, was built on a lethal delusion: a belief that the ECB could provide the only common economic governance that monetary union required. It arose from an extreme version of market fundamentalism: if inflation was kept low, its authors imagined, the magic of the markets would resolve all other social and economic problems, making politics redundant. Those sober, suited, serious people, who now pronounce themselves the only adults in the room, turn out to be demented utopian fantasists, votaries of a fanatical economic cult.

The authors of this are not simply mustache-twirling villains. Ian Welsh outlines the cultures of the actors involved, and describes the architects of the EU this way:

In this worldview, it is only progress that national politics become increasingly devoid of content, and it is only necessary to build European-level democracy when the Europeans have finally, ironically, swallowed the medicine of their own mission civilisatrice. A case in point that is unfolding right now is the drama over refugees, specifically, how to settle them. Brussels had a perfectly reasonable and fair idea that refugees be allocated to countries in proportion to countries’ relative economic weight. This was met with absolute rejection, particularly by newer EU countries in Eastern Europe, who explicitly do not want even a small increase in the proportion of brown people who live there. Behind these countries hid some of the older, larger countries, whose national politics are already burdened by immigration-fatigue.

To EUians, this can only be confirmation that, at the national-political level, Europeans are only a hair’s breadth away from poking each other with sharp sticks in order to maintain ethnoreligious homogeneity. And they may be. But is it a sustainable solution to gradually dilute their democratic rights? To EUians, it is the only answer.

But as the Interfluidity article observes, these European elites have betrayed the good motivation of preventing European international conflict; in Welsh's words they have become functionally psychopathic.

I'll be adding more links and quotes here as I find them.