Πέμπτη, Μαρτίου 08, 2012

Military conquest

Όπως ακριβώς δημοσιεύθηκε στη λίστα HELLENIC-PROFESSORS-PHDS@HEC.GREECE.ORG (οι επισημάνσεις δικές μου).

Dear colleagues,

I felt compelled to provide some answers to certain replies to my original and follow-up postings.  Although I deeply respect several of the correspondents that raised objections to my arguments, I believe that there are echoes of denial, a misplaced optimism and a rose-color glasses view of the world in their rebuttals.  The situation that Greece finds itself is painful for all of us.  However, denial and misplaced optimism is not an answer at any level.

Some claim that Greece has not lost any more sovereignty than other members of the union because of the EU stability pact.  This is a wrong assessment at many levels.  Under the stability pact, no country really loses sovereignty until it has to invoke the provisions of the pact.  Then, woe to this country.  The provisions of this pact are onerous.  But as onerous as they are, they are not nearly as painful and as extensive as the revocation of sovereignty that has been imposed on Greece.  The stability pact does not include provisions to have an entire country's revenue sequestered to a special escrow account to which the lenders have prime and unfettered access.  In the affairs of modern states, this level of loss of revenue has only resulted upon military conquestTo deny this and to claim that the situation that Greece finds itself resembles that of other states in the EU is not only pure denial, it is also dangerous.  It is dangerous because it lulls many to inactivity and a false comprehension of reality.

The statement is also made that this crisis is forcing the faster integration of Europe into a federal state.  This claim again requires suspension of disbelief.  It is a great misreading of the situation.  In fact, exactly the opposite is happening.  Europe is clearly breaking up along various fault lines.  In fact, the stability pact itself will create even more fault lines as states that invoke its provisions and request assistance would have to fall under the tutelage of the strong.  Conditions would be dictated on them, determined mostly by the whim of the powerful. 

Let's look closely on the Greek reality.  Despite the pronouncements of the Greek government, the troika has essentially given up on Greece.  It is now well accepted that the "2nd bailout" will fail.  The "haircut" of the private investors (commonly referred to as the PSI) is likely to fail to attract a decent number of them as the CDSs would be far more attractive to certain of them.  Even if it succeeds as advertized, it would make a small contribution.  The cost of servicing the debt would decline from 17% of GDP to 13% of GDP.  And this would be before the new loans totaling 130 billion euros come into play.  At the end of the process, Greece would have the unsupportable burden of a debt at 160% GDP.  The loans themselves are quite inadequate to cover the fast declining income of the government caused by the downward spiral of the Greek economy.  The "2nd bailout" was designed to cover very modest deficits in the next couple of years.  The budget deficit for 2012 was projected at 1.5% but now it appears likely that it would be much larger than the original modest estimate.  The January 2012 numbers show that income declined by 5% for the month while spending increased by 8%.  Thus, for the Greek rescue to work, the troika has to provide far more money than has already been pledged.  Unfortunately for the Euro-believers, the German finance ministry made it very clear that no additional funds would become available.  Greece is really expected to default  this year and exit the Euro.  In fact, it would be shoved in this direction by our "friends" in the EU.  Again, German officials made it clear that they need the stability funds to protect the rest of the endangered states (primarily Italy and Spain) and they are not willing to spend another dime on Greece.  My calculations indicate that by October of this year, the Greek state would run out of funds and it would be unable to meet its obligations internally (the creditors would have been paid, of course)

It is really important here for the Euro-believers to look at the facts of the last two years with open eyes.  When the Greek default became a possibility in early 2010, our "European friends" panicked and tried to save their banks.  The "bailout" for Greece was hastily prepared; a crushing austerity was imposed on the country with the contribution of local Greek quislingsThe austerity program crippled the Greek economyThe decline of the Greek economy was the deepest recorded by a modern country in the last 150 years, even surpassing the Great Depression in its decline in GDP.  But while Greece was fast sinking into poverty and desperation, our "European friends" put together a stability fund as an effective firewall for the spread of the "contagion".  Now, having destroyed the Greek economy with their idiotic neoliberalist ministrations, enabled by weak-kneed, collaborationist Greek governments, they are ready to abandon their victim to manage as well as it can.  With such friends, who really needs enemies?  Our "European friends" are far more dangerous and far more destructive than any "eastern danger" one can devise.  If one adds their open and unrestrained racism to their extensive harm of Greece, one cannot find a more virulent, repressive and reprehensible enemy in the whole modern history of the Greek state.

The statement has also been made that the competitiveness of the Greek economy has been in decline for the past 30 years, not just since 2001.  This is only partly correct.  Greece has suffered extensive de-industrialization since 1981, but, despite the effects of this process, the competitiveness of surviving sectors was not undermined until the incorporation of the country in the EMU in 1998.  The de-industralization of the country itself was a process that was initiated by the inclusion of Greece in the EU and had a determined effect on Greek living standards.  Although these increased, they increased at a much slower pace than the EU-15.  Thus, by 2001, the income gap between Greece and the EU-15 had increased by 20% to the detriment of Greece.  Greece became a study in "divergence".  It does not really take a Euro-skeptic to see that participation in the EU has been deleterious for Greece and that its participation in the Euro has been a terminal disease.

It is correct to state that devaluation itself does not provide a permanent solution.  However, the return to the drachma is not about devaluation.  It is about regaining one's capability of conducting one's monetary policy instead of this policy being decided by some indifferent bankers in Frankfurt.  The respite that would be offered would allow the Greek people to decide on real reforms, not the ridiculous neo-liberalist policies pushed by the troika that reek of Ayn Rand reprehensibly idiotic philosophy; the  extreme conservative moralism that permeates them has nothing to offer.  These policies have failed miserably wherever and whenever they have been introduced.  I really cannot understand that members of this board believe that the away ahead for Greece passes through poverty, wages of penury and a health system more appropriate for third world countries. 

Those who are afraid of the return to our own currency keep stating that such return would also mean the return of the "old bad ways".  I find these statements difficult to stomach on many levels.  Primarily, I find them unacceptable because of their defeatism and resignation.  They are also unacceptable because they totally ignore almost 200 years of modern Greek history.  The Greek state arose in 1830 in a land devastated after 10 years of vicious war with substantive armies in a very small corner of the world.  This state, with the drachma and its "old bad ways" managed to built a relatively modern economy and society and it managed to quintuple its area in the short period of its existence.  And it did so without despoiling and exploiting others in this world. 

Thus, in summary, one does not have to be a Euro-skeptic to see that the Greek involvement in the EU and the Euro has been an utter disaster; that the sooner this situation is redressed the better it would be for the country and the average Greek.  Our neighbor Turkey (that some perceive with dread), seems to be doing excellently without the EU and the Euro, probably precisely because it is outside these structures.  And one does not have to be a skeptic to see that our "old bad ways" have been highly successful in building a modern state despite the fact that from 1920 to 1974 Greece was caught in a maelstrom of wars (civil and external), as well as revolution and counter-revolution.  Now it is the time to remember what we have accomplished, to overthrow the European racist tyrants that rule the country and to rely on our resources in building a modern, fair and affluent society. Greece is alone. This is a fact.   And the sooner we grasp this reality, the better we would be.

Best regards,

Anastassios D. Retzios, Ph.D
President, Bay Clinical R&D Services
San Ramon, California, USA

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