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May 18, 2013


The cynical among us, and they are legion, could argue that the Greek crisis is no big deal, that, after all, the Greek economy is less than 3% of the euro zone’s gross economy, a miniscule portion of a much bigger economy, and whether Greece survives as a viable nation state or a failed state is not that significant in the larger order of economic events. Such a shortsighted view ignores certain important realities.

For one, the Greek economy is a 100% deal for Greeks, not 3%. They have to live with the horror of developing poverty every day and adjust their very lives and the future of their progeny’s lives to the realities of the penury certain to be their legacy. There are no days off; they are poor every day and (with present Wall Street/Merkel austerity policy choices, i.e., profits over people) destined to become poorer. If ever any country needed a big dose of Keynesian economics, it is Greece and it is NOW!

The present game of loan-dictate by Merkel (and central and international investment banks – read Goldman Sachs and its ilk)  to keep bondholders happy and the German balance of trade payments surplus intact does not put people to work in Greece or anywhere else in the European Union; it rather increases their debt – and while (as in Greece) they are stuck in a common currency without any opportunity to call their own shots (such as devaluation of currency) to attempt to work themselves out of their economic bind of the moment, having been forced to abandon any choice in making such decisions to the Berlin-Brussels axis and who are thereby not even in charge of their own destinies.

Merkel, after all, is not the prime minister of Greece. She is the (as it were) CEO of Germany. When dealing with the “Greek problem,” there is a built in conflict of interest in coming up with what is best for Greece. Her allegiance is to Germany, not Greece, so when making policy for a foreign state (as here), she is duty-bound to do what is in the best interests of Germany, not Greece.

As noted in Part II of this essay, Germany has (very quietly) surpassed China recently in terms of gross balance of trade payments surplus, a distant dream for its EU and common currency partner long since eligible for bankruptcy, Greece – very distant. It must be plain to those who are awake that Germany’s poor cousin, Greece, must be taken to the economic woodshed if Germany’s interests are to be protected, and that insofar as individual Greeks are roughed up, way it goes, folks, it’s the way capitalism works. You should have worked harder and saved your money like we did instead of coming to us, hat in hand, spendthrifts begging for a handout. Better luck next time!

The unemployment rate for youth in Greece is 60% and (at recent count) 27% in general. Those unemployment numbers and their breakdown by age are similar to current conditions in Spain and Portugal, with Italy and even France as well as other members of the European Union moving in the same direction, and (historically) rival the numbers we experienced here in the 1930s during the Great Depression. With a workforce sitting on street corners, it is not only production, profits and wages that are lost to the economy and the workers and owners of shops and factories. Revenues to government are also lost, which complicates even further the government’s efforts to sell debt (bonds) under junk bond rates, improve infrastructure, meet the soaring costs of welfare for the unemployed etc.

Policies, especially when made from afar (and wrong choices at that), are straining the chords of social cohesion in Greece. Predictably, with nothing else to do, crowds are in the street protesting anything and everything. If social cohesion goes, economic restructuring will become secondary; existence as a viable nation state bound by common history and common language will be up for grabs, inviting another “strongman” to ride in on his/her white horse to save the day (as in the “colonels” era).

So much for the dictatorship of common currency – a new dictator will be certain to default on Greek bonds, return to the drachma, and leave the European Union. Merkel’s vision of a “United States of Europe” (an idea for which common currency is a planned precursor) will be delivered a fatal blow as other impoverished states in the euro zone may follow the Greek example. Beware the template. . . .

So what is the continuing Greek experience to us? Why should we care? Aren’t we insulated from the EU’s troubles? Why worry about templates promising a loss of social cohesion elsewhere? Don’t we have our own unemployment problems and (recently) austerity proposals from both parties offered as solutions, proposals that will exacerbate our economic problems rather than solve them? Yawn?

We have good reason to be concerned beyond templates for loss of social cohesion possible in the Greek experience. First is that the EU is our number one trading partner, and its implosion would deal a heavy blow (and increasing unemployment here) to our export industries (which make up a substantial segment of our economy, and one vital to our attempts to offset the negative balance of trade payments to China and others). We cannot afford to ignore the Greek or any other such negative experience within the EU for purely economic reasons, since the Greek contagion is subject to import.

There are, in my view, other good reasons for our concern. Greece is the birthplace of democracy, a system I treasure beyond any other. It is dispiriting to see such a proud inventor of fairness and justice in governing on the rocks. I want Greece to succeed out of a sense of nostalgia (an ingredient never to be found in the bare-knuckle world of the economic marketplace). I cite that sense of things here anyway.

Perhaps more importantly (and in this I am in agreement with Merkel’s plan to bring it to fruition), I want the EU Union to succeed in its attempts to morph into the “United States of Europe.” Europe with its history of wars, exploitation and colonialism would clearly be a better place for its inhabitants and the rest of the world as well if they were united far beyond a mere common currency connection. Such a “United States,” rather than becoming united piecemeal (common currency of some to date) would be truly united in a political and economic unification that, over time, would merge their respective histories into a new common history of economics, law and government; a merger that would make Greece one of the “states” of the United States of Europe following the American constitutional model, and a new Europe as a democratic nation state comprised of several local states, as here.

Merkel and her banker friends are today prescribing exactly the wrong medicine for what ails those in the common currency union who are suffering recession. It’s as though they are prescribing strychnine for patients who have been poisoned. However, she is right to pursue the idea of a democratic and united Europe – if the prospective states can survive as viable entities long enough to make such choices down the road. Meanwhile, I strongly urge Merkel and such putative states to forego their reckless and inhumane policies of austerity for a large dose of Keynesian economics – now. Right now! GERALD  E


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