By Pavlina Tcherneva
Cross posted from aljazeera.com
Most analysis of the Greek debt crisis ignores an important reality: While Greece may be the villain du jour, every eurozone nation is profoundly short of cash. That’s because of a well-acknowledged, but not fully appreciated, flaw at the heart of eurozone financial architecture that converted a historically unprecedented number of nations from issuers of their own currency to users of a common currency.
Greece is simply the first country to experience the extreme consequences of that loss of monetary sovereignty. With no independent source of funding, no currency of its own, no central bank to guarantee its government liabilities, it has had to ask others for help. And as a condition for securing that help, Greece has until now been forced to consent to radical austerity policies.
As an analogy, consider a United States with a common currency but no Treasury to conduct macroeconomic policy, stabilization or stimulus spending. Imagine also that the Federal Reserve was banned by law from guaranteeing U.S. government debt. And imagine that one state, say, Illinois (think Germany) was the major net exporter, accumulating dollars (euros) while most other states (as is the case in the eurozone) were net importers, thereby bleeding dollars (or euros). Finally, imagine Illinois providing a loan to cash-strapped Georgia (think Greece), dictating that it implement slash-and-burn privatization of public assets and drastic cuts to state payrolls, pensions and other essential programs. This, in essence, is the situation in the eurozone today.
But Greek voters last month rejected continuation of an austerity program that has plunged their economy into depression, voting in a government determined to break out of the current terms on which Greece gets help from the Troika.
Read the rest of the article here.
“”In keeping with popular sentiment at home, Varoufakis has taken the Grexit option off the table, arguably losing his main bargaining chip.””
This may be true in a technical sense but I’m not sure he’s against pushing things to the point of Europe kicking Greece out. Not that he wants this, I don’t think he does, but I don’t see him backing down from his position if Europe wants to force this option.
He knows very well that he has the correct position of democracy trumping bureaucracy.
The sentiment in Greece seems to be very strongly anti-austerity and the message seems to be getting support in other areas of Europe. Varoufakis and Tsipras seem determined to follow through on this proposal.
“”Indeed, Varoufakis could be forgiven for imagining he’s treading a path blazed by another Greek legend — Sisyphus.””
I would suggest Spartacus.
http://tvnewsroom.consilium.europa.eu/event/eurogroup-meeting-february-2015/national-briefing-greece-part-166
http://tvnewsroom.consilium.europa.eu/event/eurogroup-meeting-february-2015/national-briefing-greece-part-2-qa7
http://tvnewsroom.consilium.europa.eu/event/eurogroup-meeting-february-2015/national-briefing-greece-part-3-qa7
This may be true in a technical sense but I’m not sure he’s against pushing things to the point of Europe kicking Greece out. Not that he wants this, I don’t think he does, but I don’t see him backing down from his position if Europe wants to force this option.
No time to link, but that is YV’s stated and reiterated position. Just hope he doesn’t back down. He said “We are ready to lead an austere existence, which is something different from austerity” last month.
The architect of the Euro Ismar Issing,a Hayekian, deliberately attempted to “de-nationalize” money in accordance with Hayek’s prescription. As such this resulted in the neutering of a public good or rather a means of cooperation by which members of society could contract obligations with each to create the goods and services they all need.
Excellent article, but while Greece is attempt a Euroland rescue, possibly the overall operation benefits the central banksters.
It was the French branch of the Rothschild family, after all, which began promoting the adoption of the Euro back in the 1970s.
The best strategy Greece can follow in the long run, would be to exit the EU.
The best thing for the Euro Central Bank, would continue to have captive nations, all with differing tax systems and captive currencies.