Beware of the Ides of March
© by Rainer Kalwitz
Greece has taken a step forward. Albeit not with risk that the people have stood up to counted. So far Greece stands alone in the morass of foolish German determination to dominate Europe regardless of the pain inflicted on the populace. This is being repeated again after the last two disastrous blundering attempts in the twentieth century, World Wars I and II. The weaker nations have weakened further since the senseless austerity measures were imposed. Greece steps out as the first man standing.
Spain, Portugal, Italy, and France will follow Greece’s lead in various ways. Since the imposition of austerity Greek unemployment has gone from 7.8% to 27.5% (under 25 years old 25.7% to 58.3%); Spain 11.3% to 26.1% (under 25 years old from 24.5% to 55.5%); Portugal 8.7% to 16.4% (under 25 years old 21.5% to 38.1%); Italy 6.7% to 12.2% (under 25 years old 21.3% to 40%; France 7.4% to 10.3% (under 25 years old 19% to 24.8%). Each of these nations have flirted with both socialist (as was communist) and fascist governments in the past, especially during and after immobilizing economic events. Each of them have now experience seven years of pain in the ranks of its populace, especially among the youth. Do not imagine that political change is not in the works for all of them. Previously, war was the inevitable consequence. Now, we must hope it will stop at political and economic muscle flexing.
In any event should the Germans persist in their quest they may achieve the long sought after economic domination of Europe. Germany will be the last man standing – the Euro becoming its own private currency, strong as can be, the local economy will experience severe deflation and a large portion of their export market will have disappeared, the Euro zone now accounts for 50% of German exports. Once again in its quest for “Uber Alles” Germany will weaken and fail.
The press today believes that Tsipras is banking on Germany and the other creditor nations will not let the monetary union break up. We do not think this kind of analysis does Mr. Tsipras justice. He is aware that for Greece to regenerate its economy a default or massive debt forgiveness is needed, now rather than later. Moreover, the new finance minister Yanis Varoufakis believes a default follow by and exit from the Euro will enable Greece to recover gradually from the imposed economic and social morass. He knows that the “rescue” provided by the Troika was little more than a bailout for the private holders of Greek debt, centering mainly around the German banks. No, we must not assume that Greece is bluffing, nor that the other Eurozone countries to follow will be bluffing.
For background on the crisis, please click on our April, 19th 2010 article “Myths of Today,” May 30th, 2012 article “Voluntary or Involuntary, Default is a Given,” May 25th, 2010 article “Who Will Save the Countries, Who Will Save the Currencies?” and our December 7th, 2011 article “Deutschland Uber Alles."
Should one believe that Quantitative Easing will solve the Euro problems, it won’t. Though QE was the propellant of markets and bank profits in the United States during the times of QE in America, total employment as a percentage of the population declined from 67.24% to 65.13%. Quantitative Easing is an easy go-to vehicle to enhance markets and grow the income of the rich, while adding nothing to wages and having absolutely no positive bearing on increasing employment.
"Beware of the Ideas of March."