You
only need to read the URL’s above (and not follow the links) to know for sure
that we are well into the end game of the Greek chapter of the disastrous
Euro-Project (Chapter 2 goes Portugal, 3 Spain, 4 Italy, 5 France. Ireland will
rejoin the UK). The horrible realization is dawning on all sides that Delors
and Co designed a ratchet (aka a racket) that would deliberately navigate the
collective flotilla of Euro-States up a blind creek without the proverbial
paddle. No room to turn around, no way back, no escape hatch. Whereupon Fritz
the BMW worker would discover that he is being bounced into a Federation of
which he wanted no part – since it inevitably involves shipping large
quantities of his Dm type readies to Greece and all points Club Med in
perpetuity. The citizens of which won’t even say thank you and are absolutely
convinced they are entitled to no less – in fact more, more, more. Retire at 50
after shuffling paper for two hours a day for 20 years and drinking Ouzo for
the rest and sending the bill to Berlin. Prussian guilt meets Teutonic
frugality. Anything could happen and probably will. Greece is a total basket
case, which is nothing new. Nice islands, good beaches and a mono-economy based
on tourism (with a bit of shipping run by expat Greeks living in Belgravia who
pay only modest taxes, and those to HMRC). Except when a large number of your
customers are those very same Fritzes the BMW worker, it’s not good marketing
to shout about arrogant, heel-clicking Germans not paying at least twice for
their vacation in the sun.
What
all this means is anyone’s guess. The crisis is now being spun as a test of
“austerity” versus “growff”; which of course is just the über-Keynseian
free-lunch crowd (Krugman, Rajoy, Monti, et al) talking their book (Berlin to
send more moula via Frankfurt). It is of course an utterly false trade-off and
neither is the simple answer. Indeed there is no simple answer. Keynseian
demand management by government deficit spending might be part of an answer if
everyone hadn’t spent the milk money long ago and been borrowing it for years.
The only answer is “you sure as shoot shouldn’t be trying to re-start this
wreck from here”. Boris is right. It’s a brick wall. The neo-Keynseians have no
comprehension that the sole source of “growff” is private capitalist investment
with a reasonable expectation of a satisfactory risk/reward. More private
employment, less workers at the state trough. But that means structural reforms
that are very hard to deliver in any modern democracy (see Japan). Any sovereign
state “enjoying” 50% plus youth unemployment should figure out that something
is not right in the Kingdom of Denmark and take steps. No such luck. The
syndicati and public sector unions rule. Luddites to the core.
So
the deadly game of undeclared chicken goes on. How will the Greeks vote, how
will Frau Angela handle the pressure of being isolated by the tax (which no one
pays) & spenders, will the ECB provide liquidity to Greek banks through the
election (or will the BuBank slam the window first)? We won’t know until it
happens and nor will they. It’s totally in the lap of the Gods. Those whom they
wish to destroy they first place in monetary union. My money (a few Euro’s
denominated with X and N serials – Germany and Austria respectively) is on the
Germans concluding that tho’ the Euro may be good for them in many respects,
it’s not enough to prefer the unlimited free lunch program for the whole of
Club Med in perpetuity. Having said that, they certainly fear being branded by
the free lunch crowd as obdurate wreckers of the house that Jack (Delors)
built; so for a while they may allow some papering of the cracks and end runs
around the ECB charter, treaty clauses and ECB constitution; but 2/3rd
of a vote in the Bundestag to gut the FRD constitution and federalize the
Eurozone isn’t going to happen. The rest is Rauch und Spiegel.
What
is Milton Friedman thinking to himself as he watches from monetarist economist
purgatory?
Simon
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