The euro – a hostage of the continent

The euro – a hostage of the continent

EU Finance Ministers repress the unresolved euro crisis

by Beat Kappeler

The euro is in an economic crisis, and it remains unresolved because of the character of the involved. Let us start with psychoanalysis of Dutch Finance Minister Jeroen Dijsselbloem, the chief negotiator of the euro-ministers in the Greece-issue. For years, he had repeatedly announced final agreements of the creditors with Greece, endorsing support packages with many billions. But just after he had been voted out seven weeks ago in the Netherlands, he suggested that the Euro-South had squandered the money for “booze and women.” The words were even more subtle. He said: “I can’t spend all my money on booze and women and then ask for help.” But a few days ago, he again proposed a European Monetary Fund, which should give the South a hand. The voter can only punish such fickle politicians. Dijsselbloems political party vegetates now at 5.7% of all votes. The character of the German saviours of Greece and the euro is hardly more stable. Finance Minister Schäuble has repeatedly criticised Greek efforts as insufficient, he also suggested “a time out for Greece”, i.e. a temporary exit. But he always and immediately deferred to Merkel’s super-ego and promoted her support packages. In August 2015, in the German Bundestag, he advocated the now-running package of 86 billion euros, because it requires privatisation income of EUR 50 billion created in Greece. Still this spring, he wants to persuade the International Monetary Fund to inject new money, although virtually nothing has been privatised and even French Commissioner Pierre Moscovici admits that Greece has only implemented 2 out of 15 reforms promised. The sale of a large part of the Greek Railways to the Italians yielded just 42 million euros. Already in 2015, it was possible to realise that 50 billion EUR of privatisation income were pure illusion. But: “The Levantine negotiating tricks have arrived in Berlin”, one would have said earlier when political correctness was even less strict. Or did the members of the parliament thankfully accept to rationalise the illusion?
Last autumn, the other finance ministers repressed reality – in turn, they suspended the sanctions of the Maastricht Treaty against the far too high deficits of Portugal, Spain and France. No wonder, the quorums of votes for such sanctions are so high that the united debtor countries can block them at any time. Finally, the new EU ambassador in Switzerland, Michael Matt Matthiessen, has just stated: “The euro is a success.” Sigmund Freud would thus have to diagnose fierce repressions, delusions and rationalisations, as well as a Freudian slip by Mr Dijsselbloem. But these attitudes are economically devastating, because honest dealing with the euro problem remains impossible this way. And politically they are destroying the European landscape of the political parties as in the Netherlands and France.
This week a new reality came into play. Greece, after saving money in a self-strangling way, has achieved a budget surplus of 4.2% of the country’s domestic product – but before interest payments. Although some are a little disbelieving, the EU considers a surplus of 1.7% for the whole year 2017 possible. But this means, however, that Greece could leave the euro, stop the debt service and still could live as good – as bad – as today. There is no need for new money, the state is again self-sustaining when not paying interest charges. The time out conditions are reached and conceivable. But nobody aims for it, not even the communists in Greece’s government. Rather a relief package than new loans, which in the form of interest payments flow immediately back to the North.
Also repressed is the real situation in other debtor countries. In France, Spain, Portugal and Italy, interest rates are mainly due to the government deficit, hampering the whole, pitiful annual growth of the economy. Everything goes to the creditors, not to new jobs. And one wonders that the debts increase due to compound interest, that in the domestic product the capital incomes increase more and more compared to the wage bill of those who work.
The politicians of the North and the South are Freudian repressors, they are unable to assess compound interest dynamics, they are ruining Europe. After the elections of this year, for sure after the elections in four years, they will surely not land on the chairs of ministers, but in the waste bucket of the political party history. Posterity will equate their veneering to that of the ancien régime, that of the tsar who suffered it exactly one hundred years ago.     •

Source: NZZ am Sonntag from 30.4.2017; courtesy of the author

(Translation Current Concerns)

Greece’s debt

rt. Anybody, who would like to draw his pension today after 30 years of work as a salesperson in Greece or to have to finance a longer hospital stay? The living conditions have become unbearable for great many a people through the rigid austerity measures of the “troika”, consisting of envoys from EU institutions and the IMF. Due to the indebtedness of some corrupt politicians and bankers, the population has to pay billions of euros in interest and compound for years. As so often after a short time, the new political “bearers of hope” had also proven to be corrupt.
It is in the meantime known that the exorbitant indebtedness of the country has been arranged in connection with the accession to the EU and the then consultation by the Goldman Sachs House. At that time, the name of a Goldman Sachs employee, the current President of the European Central Bank Mario Draghi, was always mentioned. Appalling, how fast the debts that the Greek government received before 2010 from private banks (including Goldman Sachs, Deutsche Bank) were passed on to taxpayers in Europe, especially in Germany. Of the 326 billion (!) euro debt, for which Greece is to stand today – that is 180% of the Greek Gross Domestic Product –, since 2012, almost three-quarters of the private debt has been redistributed to the European Central Bank and the European Stability Mechanism ESM (226 billion euros) and the International Monetary Fund (13 billion euros).
Independent financial analysts had already proposed a debt cut to the Greek government before 2010. A debt relief is also being discussed today (cf. “Neue Zürcher Zeitung” from 8.5.2017). In the country itself, it is hoped that increased tourism because of the war conditions in the Levant will put a little more money into the coffers.

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