A certain Mediterranean nation has
taken up top-of-mind awareness of the planet these days with this brouhaha over
323 billion euros worth of indebtedness. Dissecting the “what now?” is being quite well
looked after with social, political and economic experts and analysts all weighing
in with thoughts on outcome scenarios of what most now believe is one of the
most poisonous deals ever made at one of the most crackbrained and insane economic
summits of all time.
It is quite obvious by now that Greece
is really not the problem but merely a symptom.
It is obvious that the perceived toxicity of Greece is hiding an
underlying political-economic caustic that the Eurozone is either trying its
best to dilute with rhetoric on rogue states or react with other equally corrosive
elements such as um… bailouts cobbled together in a nuthouse to reach some sort
of fission-neutral fiscal equilibrium.
To figure out why, one must start
with fundamental issues related to the difficulties that arise when the attempt
at a common fiscal policy for Europe clashes with diverse fiscal traditions
within its member states. Some are cavalier in their understanding of individual
responsibility to pay taxes while others are straight laced orthodoxy in that
department. Some like to purchase
expensive cars on lease without really caring too much about how they are going
to pay their monthly installments. Some might want to borrow for infrastructure
development whose ROIs are iffy and not well thought through. Whatever the
differences, one thing is clear: Bad money management habits that are relatively
small but spread across an entire nation’s psyche can do more harm to a country’s
economic stability than a few big ticket errors. When Eurozone was created, everyone
was looking at the big picture and no one really cared about these teeny tiny
things but when a bunch of kids with wildly different ideas of fun and
disparate types of sporting equipment try to play together in the same
schoolyard, things can get pretty confusing, pretty ugly, pretty nasty - pretty
fast.
One must wonder what sort of
lunacy prompted fairly rational human beings to rest the Eurozone on 17 struts
that are unequal in size, strength, physical composition, angle of alignment and
bearing capacity. Even a person with the intelligence of a nit would tell you that
this is engineering insanity. Is it that surprising then that torques, tats and
spats will abound? Is it that shocking that people will necessarily have to go
15 rounds on who is shouldering what burden, who is piggy-backing on whose
efforts, what is going to kick a prop out
of kilter, who is going to repair the damage and, most importantly, if all of
this is worth the few Euro more?
Well at the start, back in 1992,
it seemed a jolly good idea to many Europeans. Europe united, if not under one
flag, then under one currency. Money becoming less expensive, intra-union trade
opportunities increasing, production increasing… the positives was both
infinite and stratospheric. For a while, sure, euphoria generated the type of
growth surge in member countries that would have been unimaginable before. This
was before negativities related to cultural diversity, fiscal regularity,
levels of productivity and national priority started to make themselves felt in
the world of European economics and money markets. Suddenly, the playing field
became uneven with production costs rising well beyond income from production
increases for some European nations. Gradually, borrowings started to increase,
productivity started to decrease, unemployment started to increase and some of
the nations were staring down the barrel of a fiscal machine pistol.
One might think that the
Eurozone, being under many flags would have anticipated this sort of thing and
put in checks and balances to prevent it from becoming a reality and ensure
that debt doesn’t spiral out of control.
They did.
That particular control
instrument was called the Stability and Growth Pact (SGP) and it mandated that national
debt should be no greater than 60% of GDP and a government deficit should be no
greater than 3% annually. However, the
two biggest economies of the Eurozone, France and Germany broke this pact in
2004 and instead of being punished for it, they rewrote the rules. Therefore,
for six years starting from 2005, countries such as Greece no longer needed to
follow the SGP. This, I call the first great crime of the Eurozone and it was
not a sprat sized economy like Greece that was the culprit but its two largest.
That politically unpunished, economically suicidal crime single handedly
resulted in the misery that was later visited upon the Eurozone culminating in
the 2015 summit debacle.
Greece didn’t cause this problem.
It was collateral damage of what France and Germany did. The sharks blew it
first and the minnows reaped the suffering. By 2010, Greece was gasping for oxygen and
Spain and Portugal were not that far behind. The Eurozone went into panic
stations. They had to save their hides whatever the cost. Fearing a domino
effect of the Grecian tragedy on other vulnerable members, they pumped the
country full of Euros in 2010. That was one of the most selfish of all fiscal
moves ever perpetrated by anyone ever. By doing what they did, they were not
attempting to save Greece but the Euro and they fed the Greeks to the fiscal
sharks to achieve it. The bailout was impossible to sustain and here is the
clinch: Eurozone knew! They knew and they sacrificed one of their own family. To
save what? Merely the idea of a family which was, even at its tightest, simply
a loose network of distant relatives and their friends.
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| The insanity that is Greece in a nutshell. Schauble is right - Nobody knows. And that is a truly brilliant point to start getting a country back on track to physcal recovery a'la Eurozone. What a joke! |
No surprise that 2015 happened.
No surprise that the new bailout package is the brainchild of viciously deranged
human beings. This time around, the country that Eurozone was instrumental in
mortally wounding back in 2010 is going to be murdered. The way? Cannibalize
whatever is left that is of any worth in the country and deal with the human
fall out in the same way that the world deals with a country like Chad or
Somalia. Germany first and some of the others next mercilessly wish to treat
one of their own in the same way they treat everyone else that they perceive as
lesser than themselves despite of the fact that they were the direct cause of their
downfall. They will treat them with supercilious, two-tongued, sanctimonious,
self-righteous brutality. YUCK!
Italy knew this back in 2013. Mediobanca,
Italy's second biggest bank in a humungous tome came close to calling for a
withdrawal from the EMU and a return to the Lira. In that report, they
indicated that Italy would be far better off outside EMU, and the implicit
threat was that Italy will have to do so if the Northern creditor powers
persist with their destructive regime.
The fact that their heads didn’t screw that easy was why they led a
passionate defense of Greece at the meeting of lunes disguised as the Eurozone
summit of July 2015.
Speaking about Italy in 2013, Ambrose
Evans-Pritchard of the Telegraph says “Everything comes down to the national
mood in the end. There was a time when the cause of Europe was unquestioned in
Italy, but the long slump has taken its toll. An Ipsos poll this week found
that a record 74pc of Italians are dissatisfied with the euro. It is a loveless
marriage now. One more spat with Berlin and it will turn acrid”.
Well, that spat has already
happened with Italian Prime Minister Matteo Renzi wading into Wolfgang German
finance minister Schäuble during the Eurozone
summit. If I were Eurozone, I would be thinking of what to do when, not if,
Italy leaves. Such has been the conduct of its larger economies.
That conduct has been blasted by
Nobel Economist Paul Krugman who said recently that the EMU demands are
“madness” on every level. “What we’ve
learned these past couple of weeks is that being a member of the Eurozone means
that the creditors can destroy your economy if you step out of line. This has
no bearing at all on the underlying economics of austerity. This goes beyond
harsh into pure vindictiveness, complete destruction of national sovereignty,
and no hope of relief. It is, presumably, meant to be an offer Greece can’t
accept; but even so, it’s a grotesque betrayal of everything the European
project was supposed to stand for”.
Indeed. At present, the Eurozone and its currency are
its greatest poison. It’s greatest waste. Its most dangerous adversary. If it is to remain at least reasonably
credible in the eyes of the world, Europe must rid itself of them both and go
on with life as it did before this disastrously failed experiment in common
collectives.
If a relatively small economy
such as Greece can cause this much trauma to a fiscal structure, then one must
recognize that the structure is resting on a tiny cushion of very thin air. If
it is to come to terms with its vulnerability, it should take a time out, take
a reality check and get back on terra firma. At present, it still believes in
its bullheaded madness that it can somehow weather this storm, bulldoze
democracy with political thuggery and force a nation to renege on the outcome
of its own referendum and accept the financial knife with which to commit national
hara-kiri.
A reality check won’t happen any
time soon because Germany won’t want that. The Germans should be sweating pigs
and peeing frogs but they are not. They can’t. As recent events show, they seem
to have cauterized their toxin flushing organs in high handed blindness to
facts. In their madness it seems as if they really don’t mind Europe going into
collective renal failure or in this case, fiscal failure.
So, if things move in accordance
with what stupidity can set in motion, this would be the third time in a
hundred years that they have allowed their superiority complex to destroy
Europe. This time would not be much different from the others. In their
insanity, they will not only crash the rest of Europe but also pull their own
house down upon their heads in the process. Tragic.
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| A nation on its knees. Sovereignty lost. Riots on the streets. Democracy at its best at its birth place. Take a bow Eurozone. |
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