Showing posts with label Troika. Show all posts
Showing posts with label Troika. Show all posts

11 March 2019

The wars of European Unification - What lies ahead?

When we look into history, we see periods when it seems obvious what the outcome was going to be, and wonder how they could not or did not see it coming during those times. Take the expansion of Rome from about 210 BC through about 150 AD, or the rise of the British Empire from 1700 to 1900. There is also the rise of the United States in its first three-quarters of a century. Then we can look at Europe from about 1870 to 2030. In the middle of any of those periods, it would not have been obvious that there was a peak coming, followed by stability and decline, or civil war.

One thing that distinguished each of these historical eras was the growth of empire, apparent unending upside, followed by limits, competitors on the periphery, conflict and civil war (across the greater empires, if not in the core). Is this what we should expect of the German Europe Empire Union?

In each of the first two examples, history shows us the rise and rise of the empires and civilisations, the peaks and the beginnings of their declines. Rome in 210 BC was fighting an existential war with Carthage, or so it seemed at the time. Yet through the eyes of history, Roman domination seems inevitable; Carthage simply was not a match, and Hannibal was never going to get Latins to fully abandon alliances with Rome, a prerequisite for Carthaginian victory. Later, Britain expanded into India and North America, Australia, New Zealand and various parts of Africa, but reached its peak and the strains on empire eventually pulled it apart. By the middle of the nineteenth century, pressures were building, and the second great spasm to hit the empire occurred with the Indian Mutiny (the first being the rebellion in the North American colonies). The British Empire survived, but by 1900 it becomes clear that the next century would be one of disengagement from Empire.

Will historians look back at the Franco-Prussian War (1870) as the first of the three great wars of European Unification under the hegemony of the German Empire? And as war is the continuation of politics by other means (Clausewitz, 1827), was the failure of the wars to accomplish the political objective then replaced by the politics of acquiescence by countries exhausted by war, fearful of a re-industrialised and again potentially imperial Germany? After all, the very embryos of what became the EEC and then the EU were attempts to contain post-WWII Germany; containment that ultimately failed with Germany once again becoming the economic and industrial powerhouse of Europe.

Our other example from history could be the United States of America from 1776 through 1850. American independence from the United Kingdom was hard won, and through a series of almost Roman campaigns over the following 75 years, a Union was formed. While American (European) technology and organisational skills were sufficiently advanced to make the subjugation of the natives almost a foregone conclusion, it probably did not appear to be that pre-ordained at the time. 

I have selected 1850 for the United States, and 1900 for the British Empire, and 100 AD for the Roman Empire, because these are the rough dates at which we can see the stresses appearing, that ultimately lead either to the long retreat, or to civil war before renewed expansion. Each of these empires reached levels of expansion that tested their organisational and political systems, alliances and ultimately stretch them to their limits, while also putting them into too-close proximity with emerging blocks or nations/groups that do not wish to be assimilated (and whose "power" is adequate to counter the residual level of power available to the Empire at its outer fringe..

So is Europe and the EU at its 100 AD, 1900, or 1850 point yet? Certainly, the wars of European Unification failed to accomplish the goal that has been achieved through peaceful politics. Europe is now a unified imperial power centred on Brussels, but under the effective economic control of a few "member states" of that union. Like the Romans before them, Germanic Europe has created a politically unified hegemony over much of the continent, and happily exercises that power in the suppression of local politics, or actively sides with the regional satrapies in the suppression of dissent in their regions. 

If we look far enough back, we see Rome arbitrating over the succession of Masinissa as the king of the Numidians, and we see the Romans continuing to support Masinissa as the King of all Numidia, and in his disputes with Carthage. Of course, their support for Masinissa came at the expense of Carthage, and eventually precipitated the Third Punic War and the destruction of Carthage. Today we see "Brussels" supporting Madrid in their dispute with the Catalonians, ensuring continued suppression of Catalonian independence and the continued imposition of the Spanish culture and language on the Catalonians. 

And Catalonia in Europe is not alone. Almost every European country has its ethnic and national minorities, some seeking independence and others comfortable that their cultures are protected, even if that means subjugation within a larger nation-state. The Breton in France and the Welsh in the United Kingdom are good examples of nationalities that are attempting to protect and even promote their national cultures and languages within existing countries. And for these two, close relatives that they are, the years of suppression of language and culture are mercifully in the past. In neither are there "national movements" seeking independence, though there is in each a greater awareness of their culture and language.

But other groups within Europe do seek independence to a greater or lesser extent. Northern Italy is a different country from Southern Italy, and while the south is comfortable with that single national identity, many in the north would happily forge a different national path.

The Balkans remain a mixture of independent nations and cultures, and languages. Their civil war of the 1990s should have been a wake-up call and warning of the dangers of an overbearing central government, but instead is viewed as the poster-child for the dangers of nationalism. Without the overly powerful central government, demonstrably supportive of the desire and needs of one community within the Yugoslav nation, nationalism would not have been a problem. So which came first, excessive control perceived to be in the hands of one national group, or the rise of nationalism on the part of the many national groups within Yugoslavia?

The current European government is not in danger of repeating that error; it is actively repeating that error, to the very visible detriment of European national groups. 

The "European Project" today is pushing up against a combination of barriers, each of which can be managed, but like all empires, it is the combination of barriers and pressures that result in stagnation, civil war and ultimately slow (and sometimes fast) decline and fall. While the countries will remain - there were follow-on nation-states after the fall of Rome and the retreat of the British Empires. The European Empire's barriers are both external and internal.

Externally the European Empire is boxed in; to the east by the still existent and now re-expanding Russian Empire, while to the west, the United States has evolved from mentor to competitor to adversary. To the south, the entire African continent views Europe as either a former colonial master to be soaked, or the future of on their poor populations. 

Internally the threats are just as strong, and mainly come as a result of imperial over-reach by Brussels and their German masters (and French lapdogs), aided by Benelux intolerant and culturally domineering liberalism. The nations of Eastern Europe do not accept the idea that the dominant liberalism represents the only "core value" of European nations. These are conservative countries with populations that remember totalitarian rule, and in many cases remember personally starvation and impoverishment after the fall of those regimes with the collapse of the Soviet Union. Their current economic conditions, while far superior to their condition under the Soviet system, comes at the cost of what they believe are their core, conservative and predominantly "Christian" values. In many cases, the younger and more "liberal" members of their societies have migrated westward, and those who remain see no reason to cast aside their historic prejudices and values.

Further, the incompetent handling of the migrant crisis, with edicts from Brussels that countries must accept certain numbers of illegal migrants, harkens back to the rule of the Soviets who likewise demanded that countries accept Russian migrants (and troops).

As mentioned earlier, there is also the perception that the centre will be more than willing to punish any country or nation that does not follow the edicts and instructions of the centre, all in the name of "helping them". Recently, Former Finance Minister and now President of the German Parliament, Wolfgang Schaeuble said “as minister of finance, I had asked for a lot from the Greeks, but these reforms had been in the interest of the Greeks if they wanted to stay in the eurozone,”

This is the same man who told Yanis Varofakis that "elections cannot be allowed to change economic policy" or to put it more simply, the EU, German, the ECB and the IMF did not care who the Greek people voted for, and that they would punish Greece for even asking for debt relief. Another way of looking at this; no German or French banks will be harmed by the lending that they provided, even knowing that the loans could never be repaid.

Yanis Varofakis wrote, "Of course he had a point: democracy had indeed died the moment the Eurogroup acquired the authority to dictate economic policy to member states without anything resembling federal democratic sovereignty."

Such situations will only continue to increase the dissatisfaction within the empire (oops, Union), with the result that Brexit will not be the last event in the disintegration of the European Empire  Union but will be seen in history as the first event.

So returning to the question of looking back on Europe from 2040 or 2050, or further in the future. Will the Wars of European Unification give way to the First European Civil War?

Here we look again at the American experience, in which the period of expansion between 1776 (independence from the United Kingdom) and 1850 pushed the boundaries of centralised power versus the power at the individual state level. Eventually, the issue of slavery, dressed up as a "States Rights" issue was to tear the country in half. Slavery was not the only issue, but underlying any of the other issues was the principal issue of a State's right to allow slavery.

The rich and industrial North was pushing for the elimination of slavery, while the poorer and less industrialised South required slavery to provide the labour for the large landholders, and through them provide the economic foundation to support the rest of the South. While the percentage of actual slave owners in the South was fairly low, and the number of slaves individually owned was low, there were enough major (and minor) slave owners whose personal and community economic structures would be upended by emancipation. 

In modern European terms, the South simply needed to modify their economies and introduce labour and capital policies similar to the North, and all would be good. (Being very clear, Slavery was a blight on the South and the United States as a whole, and remains, unfortunately, a blight on the world. The very practice of defence of slavery is evil).

The problem faced by the South was that there was no way that they could restructure their economies without major upheaval and economic dislocation. The South could not, and never did become an industrial society that continued to power the Northern states long after the Civil War.

With this history in mind, and a quick review of the current European economic situation, we find a similar situation (thankfully without slavery) of an industrial and "rich" North and a poorer South, bound by a common currency and a central power authority that favours and indeed is directed by the North.

Greece has provided an example to all of how far the centre is willing to go to ensure that the rest of the South stays in line. And the Brexit fiasco provides additional evidence of the centre's willingness, and intention, to punish any who think they have the right to make their own decisions.

This will work for some time. But for how long. And will the final pulling apart of the European Empire Union be peaceful, or like the United States, will a Civil War be fought in Europe, the Centre against the East and South?

If the Wars of European Unification are anything to go by, we already know how the sides will be drawn, with the big difference this time being that the "Central Powers" of Germany and Austria may well include a new "Central" of France and the Benelux countries.

How soon might this happen? It is hard to say, but the rhetoric out of Brussels and outright hostility to (and from) the Eastern members suggests that it may be years and not decades away. While the Treaty of Lisbon contains the now famous Article 50, the defection of multiple countries and the very visible shrinking of the European Empire Union may be more than the centre will allow. 

09 July 2015

Why Everyone Wants a Grexit

All the wrangling and grandstanding in Europe today has one purpose; to force Greece out of the Euro while convincing all other countries to stay in the Euro. The Germans and the Troika want Greece out, even though they cannot say it out loud. The Greeks want out, even though they cannot say it out loud. And they all want the Grexit for their own reasons, little of which have anything to do with the good of Europe of the Euro per se.

So Wow, OXI (No) won, and by a landslide. Surprised? Then again, anyone listening to anything coming out of Greece should have expected it. With the deal off the table, a Yes vote would have been the equivalent of signing up for German Language lessons. A Yes vote was simple capitulation to Berlin and Brussels, even if dressed up as a vote for stability. OXI was an affirmation of the independence of Greece and the Greek people.

I wrote on April 15th, 2015 that the Grexit was inevitable, and it still is. Sure, there is another conference, and there will be another after that. Nothing will be achieved in these conferences; if the Greek government does not agree to capitulate to serial defaulter Berlin and Brussels, aka The European Branch of Goldman.

And nothing will be agreed because it is already accepted that the loans cannot be repaid, that the debt is unsustainable. Therefore, asking Greece to demonstrate how they can pay back loans that they cannot repay is asking them to lie, again. If the Troika, Germany and the rest of Europe are willing to pretend, then maybe. But nobody is pretending any longer.

And while Prime Minister Tsipras insists that he does not want to leave the Euro, those statements are for the "centre-left" of his party and the wider population, as they face insult after insult from their European brothers. In reality, Tsipras has no intention of staying in the Euro, and is actively creating the situation that enables an exit that can be "blamed" on the Troika, Germany and France.


Greece’s prospects of staying in the eurozone have dwindled further after the Prime Minister Alexis Tsipras arrived at an emergency summit of his fellow eurozone leaders in Brussels without a concrete plan to resolve his country’s debt crisis.

Eurozone leaders and ministers struggled to contain their incredulity as Mr Tsipras and his new Finance Minister, Euclid Tsakalotos, could only offer oral outlines of their request for another bailout, despite the EU’s demand for fresh proposals after last Sunday’s referendum rejected the previous bailout terms. The Independent

All Tsipras need to do now is wait for the news to gets out that Europe will demand that all Greek bank accounts be raided in a "Depositor Bail-in" - the numbers vary from as little as 30% of all account values greater than €8,000 up to "What have you got, hand it over". This would see what little is left in any Greek bank account confiscated. Think Cyprus without any mercy.

Once that is presented as part of the in-or-out proposal from the Troika, Tsipras, with no money left in the banks, will have the support he needs to introduce a New Drachma.

Two Options, One outcome

Because we need to be clear, there are, from the Loan Sharks perspective, only two options. I'm sure they've gamed this out already, but I see only one longer-term outcome.

  1. Write a deal that will save Greece, and watch the other countries demand the same.
  2. Punish Greece, leading to the introduction of IOUs (also known as New Drachmas) and force Greece out of the Euro.

Both of these lead to the same longer-term outcome: death of the Euro, but option 2 pushes it out to someone else's watch. With option 1, the demanded bailouts and write-off of the other countries will bankrupt Europe. With option 2, Greece does an "Iceland" and after more pain, begins recovering, though from a lower base, resulting in evidence that there is successful and meaningful life after the Euro.

There is no 3rd option, the "do nothing" option, because "do nothing" resulting in the actualisation of option 2.

It is important to remember that the decisions that are being made by all sides are NOT about saving Greece or the Euro, or France, Spain, or any of the rest. It is all very personal. It is about saving the stashes of dosh that these people have made, saving their status, and saving their jobs. And this goes for everyone involved in this.

Greek Political Unity

Tsipras is doing what he's doing because this is the only way that he saves Syriza from political oblivion. The other Greek parties are supporting him because (unsubstantiated, but my own guess) they know that if they do not, there are "perp walks" in their futures. If there wasn't the implied threat from the Greek Parliamentary Committee on the debt, then they would each be doing everything they can to undermine Tsipras and Syriza.

Beyond the threat of the Parliamentary Committee findings, there is the "Lost List" (the ""Legarde List") of individuals with significant bank account at the Geneva branch of HSBC in Switzerland, a list of 1991 names that then Finance Minister Giorgos Papaconstantinou, um, lost. There is a much longer list of 80,000 names that Syriza is looking at. There will be plenty of politicians and various ministry officials on that list.

So the deal is pretty simple, support Syriza in getting Greece out of the Euro and implementing a recovery programme, or go to jail. I think we have the basis for a Greek Government of National Unity, headed by Syriza and Mr Tsipras. We might even see the return of "V for Varoufakis".

The Loan Sharks

The Loan Shark enforcers are in a difficult position and must decide which will be worse, general rebellion across the Zone from a "saved" Greece option, or a punished Greece facing more pain as a warning to France, Spain and the rest. It must be difficult to know that whichever choice you make, in order to save your own stash of dosh gained through screwing Greece in the first place (the lenders AND the Greeks who did the deals), more suicides, closed businesses, lost futures, are on your head. But hey, you were (and are) just "doing God's work".

So there is no way out for any of them. Save Greece, lose the Eurozone. Kill Greece, save your stash and kick the dead-Eurozone can into the next guy's term in office. Then, like the Dark Lord Cheney, you can blame your unmitigated disaster on the next poor schmuck.


10 May 2015

This One Chart Proves the Grexit is desirable, and inevitable

Saturday 9th May, or as I've been calling it, G-Day (Grexit Day) has come and gone, without Churchill's desired invasion of Greece, with the idea of flanking Germany while also limiting the spread of Soviet control across eastern Europe.

No. Wait. I'm getting things mixed up here. Let me start over...

Now, I wouldn't want you to think that I'm actually comparing the Eurozone to the German occupation of Europe during the Second World War. There is no comparison. One brought pain and suffering across a continent, destroyed peoples, economies, culture, cities, indeed entire countries. And no, don't wait for the punch line - and then there was WWII. The fact is that the European Union with open borders and flow of people and capital has helped to lift millions out of poverty while also ensuring peace across (most of) the continent for over 50 years.

It is just a little humorous however to notice that the pre-D-Day map of Occupied Europe does bear a striking resemblance to a present day map of Euro Europe.

One of these is the EuroZone, the other is Axis occupied Europe in 1943 - Which is which?

So, starting over...

Saturday 9th May, or as I've been calling it, G-Day, has come and gone without the invasion of Europe by the New Drachma. Having predicted May 9 as the day, I now say "I was wrong ... about the date." Yet the conditions for a Greek Exit from the Euro are as strong today as they ever were, and getting stronger by the day. In my previous post predicting May 9 as G-Day, I listed six reasons why Grexit is inevitable. The passing of the 9th without a Grexit does not in any way invalidate any of those reasons.

Now I'll add another reason; it is the only way that Greece will rebuild the Greek economy and get the country back to work. And until the country gets back to work, there will be no future for Greece.

This chart, from the National Party (the ruling party) of New Zealand shows why Greece must leave the Euro, and why it will be a good thing. Look closely at this chart:


Now what does this tell us? Here are some quick observations:

  1. New Zealand almost when broke in 1984, and in the space of 3 - 4 years, after restructuring its economy, went from being the 24th least open economy in the OECD to being the 1st, most open economy. And the economy grew nicely, after weathering the terrible pain of the restructuring.
  2. Ireland has stuck with the Troika's demands and programme, and remains in trouble.
  3. Iceland, after defaulting and being locked out of the international capital markets and the initial pain, has now enjoyed multiple years of solid economic growth, and is now #1 on this chart of levels of employment.
  4. Meanwhile Greece is right there at the bottom. It knows that it can follow Ireland and spend another decade handing over assets to the loan sharks, sorry, the Troika and the loan sharks they represent, or it can take the Iceland approach and see renewed economic growth, quickly.
The road to growth is through a managed bankruptcy and fresh start. People can do this, and so can companies. As for lending to people, in the United Kingdom the FCA (Financial Conduct Authority) requires lenders to ensure that their clients are actually able to repay, and to ensure that the loan will not result in undue hardship. So why didn't those lending to Greece, or to be more accurate, buying Greek bonds and therefore making an affirmative investment, confirm that their investment would be able to be repaid without undue hardship.

A quick reminder of my original 6 reasons:

  1. This is what the Greek people voted for.
  2. The Greek people know that Europe is not going to bail them out, again (and again).
  3. Greece (and the Troika) know the debt will never be repaid.
  4. Syriza had six months or face political oblivion next election.
  5. The Greeks needed to show "good faith" and negotiate, and they've done that.
  6. The demand for reparations from Germany is designed to ensure negotiations fail.
Number 6 is almost the "General Belgrano" option. If it looks like negotiations will actually happen, thereby stranding your fleet in the middle of a South Atlantic winter, then do something to ensure the other side will not negotiate.

New prediction:

So, having missed the date, instead of fixing another date, I will only predict the following for anyone visiting Greece this summer:

  • Buy your Euros before you leave, because if the Grexit happens while you are there, you'll not be using any ATMs, they'll be shut.
  • You might even get the chance to buy your New Drachmas before you leave.
  • The weather will be sunny.
  • The Retsina will be tasty (and will go perfectly with the sunshine, olives and salads).
  • The Greek people will be as wonderful and hospitable as ever.

Because let's be real about this, in or out of the Euro, Greece is a fantastic place, and the tourists will flow in, and the wine and olives and other produce will flow out. And with any luck, and Grexit will also begin the process of (re-)creating a vibrant economy that brings the Greek diaspora home.

Oh, and for a final treat - the official Talking P.I.G.S. music video!

 Talking P.I.G.S. official music video