European Union pressure is growing for Greece to "do the right thing" -- which means, to the EU's leaders, a massive and sudden cut in the Greek budget deficit. Greece, without doubt, has gotten itself into a fine mess; still, it is now time for the Greek government to push back more effectively.
Fuming at EU arrogance will accomplish nothing. And, while global investment banks may have helped hide the evidence, it seems unlikely they actually designed the great blunder of eurozone admission (and broken Greek promises). It's time to stop blaming others and get crafty.
Greece should open a semi-official channel to the IMF and talk discretely about taking out a loan.
This is not an anti-Greek suggestion. The IMF has changed a great deal over the past 10 years -- learning lessons and developing new ways of thinking. (For more detail, see my current Project Syndicate column.) Today's IMF would give Greece a much more reasonable deal than would the EU acting alone.
But the main reason to approach the IMF is that this, if done properly, would drive the EU nuts in a most productive manner.
The Germans really do not want more IMF pressure to ease up on European Central Bank monetary policy or -- heaven forbid -- to engage in some fiscal expansion (or other increase in domestic demand). The Germans want to export their way out of recession, and the devil take the hindmost.
And President Sarkozy absolutely does not want the current IMF Managing Director -- Dominique Strauss-Kahn -- to do anything that can be presented as a statesman-like contribution to the world. Strauss-Kahn is a contender for the French presidential election in 2012, so you can see how that works. (Aside: strictly speaking, according to IMF rules, Strauss-Kahn should step down from the Fund; but he is too wily a politician to let anyone push him out at this moment.)
By approaching the IMF, Greece will get a better deal from the European Union. Our baseline view is still that the IMF's role will be only "technical", but behind the scenes the prospect of greater IMF engagement (and even a standby loan) is a powerful card that Greece should threaten to play.
Crossposted with the Baseline Scenario.
The Tried and Tested "Divide and Conquer" ruse that Americans have always used to such effect in the past, Mr. Johnson? The American Elite never wanted the European nations to get together -- they are so much more easy to manipulate when divided. Fortunately, the people have recognized this and know that any "friendly advice" offered by Americans always has their own benefit in mind. The Greeks will work with their European colleagues and they'll sort out this mess themselves. BTW -- maybe the USA should approach the IMF for a bridge loan, too? Oh, I forgot -- they just need to have the Fed print more funny money. I guess that works... until it stops working. Enjoy your "recovery" until then, my friend.
We need the bankers in Euro zone and every country to disclose if other countries did that same thing with off balance sheet, so called assets and debts since the EU seems to so quickly smear and abandon Greece for behavior that other countries in the EU have likely mimicked.
It is amazing that the EU is so thin skinned and frankley criminal in what they are suggesting.
Still, there has been little traction on preventing the sort of risky behavior on the part of the banking industry that has caused this mess and that is disappointing to say the least. The whole notion of corporate personhood needs to be abolished and the people who caused this mess need to be held accountable.
At some point, the whole E.U. notion may become challenged by the stronger European economies (what few of them there are).
The absolutely LAST THING Greece should do is approach the IMF. It should cut its ties with the World Bank too.
Look at the nations that DID go to the IMF and what happened:
- Russia: Went from 2 Million und communism to 74 million in poverty in ten years.
- Chile: The IMF made the people that got rid of the torturers pay the debts the torturerers and massmurderers had accumulated. - The people had to pay - WITH MASSIVE INTEREST - for the tools they were tortured with
- South Africe: They were made to give all monetary control and the national banks over to the very people they wanted to get rid of AND give them all the land they had stolen under Apartheid
- South East Asia: When London and Wall street destroyed their economies the IMF told those ruined nations that they had to sell all national assets and resources to those who destroyed them for a pittance if they wanted help
- ...............
The list is endles. But what happens is the same thing all over: if the IMF is asked for help a firesale follows that makes Wall Street and London soar and throws the nation right back into the stone age.
There's nothing here about the Euro being a German fiefdom to sell their goods, a place where Germans increase their competitiveness and care not a whit that other countries can't devalue their currency to create new jobs and bump up exports. Instead, Germany fronts the money so they can buy German goods.
There's also nothing here on the fact that even if Greece did everything perfectly, they would still be in this mess, because Spain, Portugal, Italy and Ireland are, to a slightly smaller degree.
There's a lot here on the genetic incapabilitiy of Greeks to work hard and make something of their country, but nothing here on the genetics that caused German bankers to mess with credit default swaps that has left the German gov't badly exposed to a Greek default. But I guess maybe the genetically defective Greeks are running German banks these days.
There's no irony here from Germans whose country was a shambles after WW2, and who received a ton of money mainly from the USA to rebuild. But I guess Greece committed a bigger sin, screwing up their budget, than murdering millions. So, Germans giving moral lessons about rectitude to Greece--really ironic given the way Germany flattened the country and killed 15% of the population.
It is simply the cold hard realities of the laws of economics.
Here's the thing. A small group of people have stolen most of the money in the world, and through a series of fraudulent schemes they have bankrupt the rest of us. They're sitting offshore with their bundles of money waiting to come back in to "rescue" us -- in exchange for complete power. Pretty soon there will be a small group of secret hedge and private equity fund billionaires who own and run everything in the world, and the entire concept of a "democracy" will be meaningless, since no government anywhere will have any power. That's why we need to indict, prosecute, seize assets, and throw into prison every person who has played a role in the fraudulent financial schemes over the last 10 years. It's the only hope.
If all this happened under democracy, why would anyone want to rescue it form extinction?
Surely what is needed is a system that would prevent a recurrence?