|
|
May 26, 2013
|
|
|
|
 Greece Isn’t Europe’s Only ProblemPosted on Mar 30, 2010The Greek crisis has precipitated the existing crisis of the European Union. The EU crisis began with the abortive attempt to write a European constitution that could find ratification, and with the expansion of the EU to 27 members. These two events effectively terminated postwar Europe’s attempt to establish a political federation. A monetary union, however, was successfully created, with a common currency, the euro, but the threat to its success, known from the start, was that national economic differences, dictating different policy choices, with consequent national budget discrepancies, would eventually undermine the euro. The euro, after a period of weakness shortly after the circulation of banknotes and coins in 2002, increased to a high of more than 50 percent over the dollar but is now falling back. Recent complaints in Europe about the euro’s “decline” have simply reflected its move back toward its original dollar parity, in part the result of a deliberate American policy during the Clinton and George W. Bush years to keep the dollar cheap, to the advantage of American exporters. This policy was financed by the Chinese government’s unceasing purchase of dollar Treasury bills, motivated by the uncomfortable position China is in as the major exporter to the United States and its main debtor. This requires China to prevent the dollar from further decline, diminishing the value of China’s reserves. Advertisement Today’s European crisis was precipitated by Greece acting with possibly reckless honesty, and Germany behaving badly toward Greece (the latter a case of the pot calling the kettle black; Germany itself is running a deficit of some 3 percent over the EC stability pact limit—promising, like Greece, to do better in the future). Germany’s haughty refusal to assist Greece in its difficulty ignored the fact that German banks have been large-scale lenders to Greece, and that they, in particular the state Landesbanken, were deeply involved in the U.S. mortgage crisis. Some had to be refinanced and others taken over, contrary to widely held illusions about the German supposed fiscal fortress, and the actual difficulties of the Deutsche Bank and some of the Landesbanken, controlled by the German states. Originally conservative agricultural banks, many in recent years allowed themselves to be seduced into the high-stakes international derivatives market. The endangered are in states governed by Angela Merkel’s Christian Democratic coalition. With regional elections approaching, Chancellor Merkel has preached against the sins of the Greeks while ignoring troubles at home that no one was supposed to know about (except the professional derivative traders). Note that “bailing out” Greece, as the commentators like to say, did not mean literally loaning money; it meant guaranteeing new Greek loan bids so as to attract loans at the same rate as other EU members. Greece, of course, has only itself to blame for its budget crisis since the governments preceding the return of the Socialists, and George Papandreou’s becoming prime minister, enjoyed the assistance of Goldman Sachs and complaisant accountants in rigging the books so as to seem to stay within the rules of the European Central Bank. Papandreou, newly in office, revealed what had been going on. German bankers and commentators and even Merkel have suggested that Germany might abandon the euro and let the Mediterranean EU members who belong to the euro zone and experience debt problems—Greece, Spain, Portugal—stew in their own juice. Germany could then gather the virtuous Netherlands and Finland into their very own currency zone (composed of states that profit from subcontracting to Germany, practicing the German export-at-all-costs trading model, while suppressing consumer buying power). Greece, despite all, on Monday was only able to get new loans at over 6 percent, which would imply decades of austerity to come for government, worker and consumer. Simon Johnson, formerly chief economist at the IMF, and the banker Peter Boone have proposed (in the April issue of the British Prospect magazine) that a better way exists. Some form of managed Greek default would be less painful and more constructive. Since a large part of the Greek debt is held by German banks, such a managed default might have a certain poetry in it. Goldman Sachs might take a haircut, too. Visit William Pfaff’s website at www.williampfaff.com. © 2010 Tribune Media Services Inc.  TAGS:
|
Truthdigger of the Week: Medea Benjamin
Email 
Print
Share
Email to a friend
Newsletter 
Like Us
Follow Us
Get Our Feed
Tags|Bazaar|Podcast|About Us|Contact Us|User Agreement|Privacy Policy|FAQ: Comments and Moderation | Google+
© 2013 Truthdig, LLC. All rights reserved.
By EKIM, May 7, 2010 at 7:57 am Link to this comment
(Unregistered commenter)
This is only the beginning of a “Global Crash”, and
Report thisAmerica is going to bail them all out. Well the USA
contributes 17.09 % to the IMF just for things like
this. Why are we here in the United State expected to
bail out other nations with our Taxpayers money? The
USA is the single largest contributor to the IMF. Who
is running our country? the second largest
contributor is Japan at a whooping 6.12 % then
Germany at 5.98 %, I have to ask why the USA taxpayer
pays nearly triple here compared to any other
country, also we foot the bill for most every war
that takes place out there sending more troops and
spending more money than any other nation? Why do we
bail out Wall Street, our banks (and other nations
banks, (IE; RBS) and Savings and loans make hand
picked companies the benefactors of billions of
dollars (IE; Haliburton and the most recent Wat in
Iraq, or Goldman Sachs) and now we are footing the
bill for Greece and soon Italy, Spain and I am sure
many other to follow. The United States current
deficit is 12,950,479,938,409.28 WOW and The
estimated population of the United States is
308,330,763
so each citizen’s share of this debt is $42,001.91.
The National Debt has continued to increase an
average of $4.14 billion per day since September 28,
2007! Concerned? We keep spending like we know that
the Mayans 2012 prediction must be correct and
nothing else really matters. I have to point out one
over looked fact in regards to a term you probably
have never heard of and that is “Force Majeure” is a
common clause in contracts which essentially frees
both parties from liability or obligation when an
extraordinary event or circumstance beyond the
control of the parties, what does this have to do
with anything? I will tell you, it is where the
Federal reserve or the US Treasury declares “Force
Majuere towards the United States national Debt, what
does that mean, Well your money is now Toilet paper
is what that means and everything you think you own
is theirs and pretty much worthless. You see they can
declare this at the tipping point, where it appears
that we can not ever pay our debt back. When would
this happen? We passed it just recently and they have
been passing paper around like it hasn’t happened,
well I believe it has! What would happen next? It’s
called the 6900 series of protocols. It would start
with declaring a force majeure, which would
immediately be interpreted by the marketplaces as a
de facto repudiation of debt. Then the SEC and the
various regulatory exchanges would anticipate the
market’s decline, hour by hour—when Japan’s
markets opened the next day, what would happen when
the European markets, and all the inter- linkages of
the global markets. On the second day, US Special
Forces would be dropped in by parachute in the cities
where the twelve Federal Reserve district banks are
located.
The origin of these protocols comes from the
Department of Defense. This is contingency planning
for a variety of post-collapse scenarios. Those
scenarios would include, obviously, military
collapse, World War III, in other words, and its
aftermath. Cheery future? a lot to look forward too.
It is really crazy that all the nut jobs and
cardboard toting crazies might have had it right all
along. Why don’t we see Glen Beck talking this up, he
seem willing to push the envelope don’t he? Well I
believe they count on you having your head down like
a good sheep, but I am telling you to WAKE UP, check
things out, for we are heading straight into a crash
Globally that no one can stop, and you had better be
ready. EKIM
By Gordy, March 31, 2010 at 6:46 am Link to this comment
Where’s the money gone? Who has it? If this is a
Report thisconsistent system then the conservation of energy
principle must apply to it; therefore money can only be
redistributed, not destroyed. Where did it go during
the 1930s depression, and where has it gone during this
one?
By P. T., March 30, 2010 at 10:32 pm Link to this comment
” . . . a deliberate American policy during the Clinton and George W. Bush years to keep the dollar cheap, to the advantage of American exporters.”
If that was American policy, it was a big failure. Just observe the U.S. trade deficits. A strong dollar was actually U.S. policy, in order to hold down inflation and protect bankers and bond holders.
As for China, as much as it would like to sustain the strong dollar to stimulate exports, it will eventually have to take a hit on its U.S. assets, as the large U.S. trade deficits cannot be sustained indefinitely and the dollar must fall.
Report this