Troika Punches Panic Button on Greece and Spain

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By Don Quijones, Spain & Mexico, editor at WOLF STREET. His blog: Raging Bull-Shit

After four years of inflicting economic pain and misery on Europe’s semi-bankrupt periphery, the Troika (IMF, ECB and European Commission) is suddenly in a lather over the potential political consequences of its disastrous economic policies: “I wouldn’t like extreme forces to come to power. I would prefer if known faces show up,” said European Commission president Jean-Claude Juncker regarding the upcoming Greek elections.

Speaking at a press conference in Pekin, the IMF’s Chief Economist Oliver Blanchard warned that unemployment in Spain remains too high, fueling a surge of support in “populist movements” and “political parties that do not want to form part of the euro.”

Blanchard’s words were a barely veiled reference to the phoenix-like rise of Podemos, a stridently anti-establishment but far from Eurosceptic political party. In recent polls of voter intentions for the upcoming municipal elections (March) and general elections (September), the new party, now in its second year of existence, has consistently commanded between 25% and 30% of the votes – more than either of the two main parties.

The fear among the political elite, both in Madrid and Brussels, is palpable. In the last few days, Prime Minister Rajoy dispatched his Vice-President, Soraya Sáenz de Santamaria, and Minister of Industry, José Manuel Soria, on a vital mission to persuade Spain’s biggest media conglomerate, Grupo Planeta, to adopt a more critical tone in its reporting on Podemos. In return the government will offer the broadcaster more licenses for more channels. Bienvenido a España!

The Troika Effect

It no longer matters what dastardly ploys the Rajoy government tries to pull off in its desperate bid to hold onto power; with the exception of hardcore PP voters, the Spanish electorate has had enough. Like Samaras’ party in Greece, all the Rajoy government can serve up is a continued diet of fear, lies, and distortion. Podemos, by contrast, offers the prospect of change, for better or worse.

Senior business executives, small business owners, teachers, lawyers, doctors, nurses, civil servants, hijos de ricos en el paro (the unemployed children of rich parents), even their rich parents… all have told me that they intend to vote for Podemos in the upcoming elections. Their main reason? The current government’s naked corruption, criminality and its shameless resurrection of the ghosts of Spain’s Francoist past.

The Troika’s austerity regime comes a close second. As in Greece, the people of Spain are tired and weary of paying for the excesses and failings of a corrupt, self-serving political and economic elite. The austerity measures the Troika has imposed on countries like Greece, Portugal and Spain – in return for bailout funds that in the main have gone toward buttressing Europe’s too-big-to-fail banks – have done nothing but exacerbate the underlying economic conditions on Europe’s periphery.

In late 2011, Rajoy’s government took to austerity with barely concealed glee. Since then, unemployment has failed to budge under 24%; essential public services, drained of vital resources, are being amputated limb by limb; and wages in both the public and private sectors continue to slump. Meanwhile, the country’s public debt has increased by more than half, from 60% of GDP in 2011 to 92% today. So much for austerity!

Naturally, the compound interest on that debt has also swollen: in 2007, the interest payments represented 4.4% of total public spending; by 2013 they had reached a whopping 9.3% – more than the government spends each year on education. What’s more, the amended version of Article 135.3 of the Spanish constitution – a prerequisite of the Troika’s 2012 bailout of Spain’s bankrupt saving banks – gives “absolute priority” to the payment of interest above all other areas of public spending.

As for Greece, its total public debt has grown from an already staggering 126 percent of GDP in 2010 to 175 percent today – and that despite two de facto defaults and ruthless bond haircuts! More than three-quarters of that debt now consists of bailout loans from the Troika.

In other words, both Greece and Spain remain on wholly unsustainable economic paths, despite all the economic misery and pain inflicted by the Troika’s economic shock therapy.

A New Age or Another False Dawn?

Whatever your opinion of Syriza or Podemos or their respective leaders, Alexis Tspiras and Pablo Iglesias, it is clear that an electoral victory for either party would represent a significant blow against the raggedy status quo. According to Yanis Varoufakis, a university professor of economics hotly tipped to be Syriza’s first ever finance minister, a Syriza government’s first task would be to “destroy the Greek oligarchy system.”

If Syriza wins enough votes to control parliament and its leadership honors its electoral pledges – granted, a massive if! – then perhaps, just perhaps, the country might have a slim chance of getting off rock-bottom as well as setting a more socially inclusive standard of economic governance.

As for those shrieking about Greece’s sacred duty to pay off all its debts, I present Michael Hudson’s mantra of perfect logic:

“Debts that can’t be repaid, won’t be repaid.”

It is the overriding dilemma of our times. As Australian economist Steve Keen says, the only sane and effective response to this dilemma is to ask ourselves “not whether we should or should not repay this debt, but how we are going to go about not repay­ing it.”

If the Syriza bloc does win a landslide victory it will be placed under almost unbearable pressure to toe the Brussels line. The ECB’s choice of timing for its virgin round of Quantitative Easing, just four days before the Greek elections, was surely no coincidence. Nor was the central bank’s decision not to extend its QE program to Greece unless, that is, it concludes the pending Troika review.

As if that were not enough, the ever-dependable U.S. rating agency Standard & Poor’s just issued a statement that it may downgrade the rating of European countries where Eurosceptic parties may assume power. According to the rating agency, the most “credit negative” parties are SYRIZA and Podemos, since they both favor increasing public spending and restructuring their debts.

Pro-Euro, Anti-Austerity: A Perfect Paradox

The irony is that neither SYRIZA nor Podemos are Eurosceptic – at least not openly! Instead, what they represent is a manifestation of popular rejection of Troika-imposed austerity. As Tspiras said in a public address yesterday, “The bailout is over. Blackmail is over. Subservience is over.”

Unfortunately, Tspiras is either badly mistaken or he’s knowingly misleading voters. For as long as Greece is in the euro, subservience will forever be its fate. As I wrote many moons ago, the introduction of the single currency had one primary purpose:

To slowly, almost imperceptibly, weaken nation-state institutions to the point of total dependence on Brussels and Frankfurt; and ultimately have them supplanted with EU institutions. It is the financial equivalent of death by a thousand cuts.

It was ever thus and all by design. As Robert Mundell, the Nobel prize-winning father of the euro, admitted to Greg Palast, the euro is what allows congresses and parliaments to be stripped of all power over monetary and fiscal policy. Bothersome democracy is removed from the economic system as the wholly undemocratic and Goldman-compromised European Central Bank is gifted the reins of economic power. “Without fiscal policy, the only way nations can keep jobs is the competitive reduction of rules on business.”

As such, if SYRIZA genuinely sought to save the Greek people from the Troika’s kiss of economic death, their only option would be a dignified exit from the single currency. Either that or accept the occasional ECB-provided crumb of sustenance (a little shot of QE here and there) and the slight – and no doubt temporary – loosening of the monetary strait jacket. Meanwhile, Brussels’ ever opportunistic elite would no doubt exploit this new crisis to claw its way that little bit closer to its ultimate goal: fiscal and political union. By Don Quijones.

And a watertight means for multinational corporations to trump national legislatures? It’s close to becoming reality, but people are starting to open their eyes. Read… Europe Gets Cold Feet on “TTIP,” Americans Should Too, But Obama Needs it for his Legacy

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  33 comments for “Troika Punches Panic Button on Greece and Spain

  1. AC
    Jan 24, 2015 at 6:04 pm

    My favorite corrupt-Spanish government action was the criminialization of home photovoltaic power systems – forcing people to pay extortionate electricity rates to the newly ‘privitized’ power companies.

    Merely getting voted out of office is better than they deserve.

  2. Limacon
    Jan 24, 2015 at 9:22 pm

    Grasping all , thy lose all.

  3. jan frank
    Jan 24, 2015 at 11:03 pm

    “the euro is what allows congresses and parliaments to be stripped of all power over monetary and fiscal policy. ”

    Perhaps that’s the only way we can introduce a modicum of real democracy into countries like Spain and Greece. Until now, voters could only choose between the one corrupt party or the other corrupt party. No country in Europe is without corruption, but you have to live in one of those countries to realise the sheer scale and effrontery. Stripping parliament of power is like taking away the car keys of the Porsche 911 from an irresponsible teenager and letting him get around on his moped.

    • retired
      Jan 25, 2015 at 11:34 am

      Get rid of the corrupt politicians in Greece & Spain.
      Hand power to the corrupt Eurotrash in Brussels instead,doesn’t sound like a great deal to me! The problems in Europe run much deeper.They are cultural,social & economic & they were formed hundreds of years ago.
      European nations,even back to Roman times,have been rigid & class structured societies.Who out there believes that after the French Revolution,the liberated peasants
      instantly morphed into enlightened citizens?It may be hard to take,but I am firmly of the belief that they were then & still are now liberated Peasants & not enlightened citizens!This is the case all over Europe.When Bismarck instituted his social reforms in Germany in the 1880’s he created a fraud.The European Social Democrats movement grew out of this lie,there was never any real democracy in Europe.There was just a manipulated,contrived,& guided from behind the curtains,facsimile of Democracy!A basic welfare system was put in place to give the underclasses a modicum of security in order to placate them. They maintained control by tossing the peasants/workers a bone here & there & having them believe that they,the workers,were masters of their own fate.In reality the old class divisions are still part of the European cultural scene.What I am simply saying is that Europe has no real mature & sophisticated voting public to turn to,only a mass of liberated peasants/workers.They will not give any new government the mandate to impose the painful reforms needed to turn things around!
      The citizenry will jump from one party to the next looking for magic to save them.When the next party can’t come up with something for nothing they will jump to the next party.This will go on till some dictator puts an end to the game!
      This is Europe’s fate,no political party can institute reforms that will lead to prosperity without the willing consent of sophisticated & enlightened voters & in Europe these sort are a semi-mythical creature,not seen very often!

    • MC
      Jan 25, 2015 at 2:28 pm

      “Stripping parliament of power is like taking away the car keys of the Porsche 911 from an irresponsible teenager and letting him get around on his moped.”

      What a fantastic metaphor… too bad the irresponsible teenager can still wreak havoc and get away with barely a bruise. I strongly suspect he’d still cause damages if forced to go on foot.
      Only a solution: lock him up in his room until he changes his ways.

  4. mick
    Jan 24, 2015 at 11:34 pm

    A decade into the EU strategy and the incompetent oligarchs still don’t even have full control of the weakest nations. So much for their reputation as “elites,” they’re bumbling buffoons who are so corrupt and incompetent, they’ll never see their precious New World Order.

  5. Brujo Makaveli Adam Smith Jr.
    Jan 25, 2015 at 2:37 am

    “Naturally, the compound interest on that debt has also swollen: in 2007, the interest payments represented 4.4% of total public spending; by 2013 they had reached a whopping 9.3% – more than the government spends each year on education.”

    Can you give me a link to the site, where you found this stuff?

    “Perhaps that’s the only way we can introduce a modicum of real democracy into countries like Spain and Greece.”

    Yeah, cold shower woke them up and now they are doing something about it.

    You don’t need to be a great wizard to understand, that cutting public spending will increase debt level to gdp. Wage cuts were dumb, because it created debt deflation. I would have raised wages in Germany and few other countries by ~10 percent, because of this fiscal consolidation imposer, called common currency union. Wage growth is better than inner devaluation – dont you think?

    I would also create a law, that companies have to increase wages by ~2 percent per year. This debt system needs growth, that it can keep on running. Of course export sector would bitch about this, but you can devaluate euro, if things get messy. That’s no difference from minium wage. If you wouldnt have minium wage, people would race to the bottom in wages, if theres no full employment.

    Theres no social security system in Spain my uncle said, whos flying airplanes and living in there. Is that right? In Finland government gives you enough money to pay rent for a one-room flat and buy some food. You receive about 600 euros per a month, you can also get more if you go whining into social security office. That works as a automatic stabilizer, but periphery aint have this kind of luxury installed into their system, if Im right? Is it time to do something about it?

    • Don Quijones
      Jan 25, 2015 at 8:00 am

      Here’s a link of an article I got some of the information from; the rest I came across while translating an as-yet unpublished academic paper for a well respected Spanish economics professor (hence, for the moment no link):

      http://www.zoomnews.es/analisis-y-blogs/analisis-y-opinion/rajoy-prima-riesgo-sostenible-pais-deuda-educacion-mierda

      If you don’t speak Spanish, the basic thrust of the article is that Spain is (or at least was in 2013) spending more on interest payments than on education. As one expert quoted by the article says, any government that allows such a state of affairs to happen is “una mierda” ( shit!).

      If you study the effects of economic crisis and international bailouts, one of the first things you’ll realise is that interest payments always goes up — and often enormously. It’s one of the wonders of compound interest and one of the reasons why so many developing nations still owe billions on world bank or IMF loans from the 60s or 70s, despite the fact they’ve already paid two or three times the original principle.

      For an idea of how this works, a good place to start is the following documentary, War By Other Means:

      (https://www.youtube.com/watch?v=79bZ71fUZRU).

      Lastly, regarding your question on whether Spain has social security, it does. Indeed, it’s one of the most expensive systems in Europe, both for employers and the self-employed. I myself pay well in excess of 250 euros a month for the right to work legally as a freelance translator and writer. And that’s the bare minimum! If you want a semi-decent pension and unemployment insurance (ha!) you have to pay somewhere in the region of 600 or 700 euros per month (and that’s before paying 20% income tax).

      If you want to learn more, here’s an article I wrote on the issue over a year ago:

      http://ragingbullshit.com/2013/05/21/black-market-or-bust-the-choice-facing-many-of-spains-self-employed/

      • Brujo Makaveli Adam Smith Jr.
        Jan 26, 2015 at 5:52 am

        Thanks, I believe, that I have watched that documentary from Pilgrim few years ago, but got to check it again.

        In Finland they take all of those insurance payments from the paycheck also. Its not a problem here. People aint really thinking that the government or somebody is robbing them, but thats just us. We have used to it.

        Its easier to think that government is us, than that you would live in some dark ages and king X is just using you. Its not like that anymore, at least not here.

        Well its nice to see some active people trying to change politics over there, like we saw in Greece yesterday. Theres few obstacles on the way, but we will see what happens.

        …and no I dont understand Spanish. I lived in Spain for a few months some years ago, but can only order few cerveras in Spanish.

  6. Julian the Apostate
    Jan 25, 2015 at 5:35 am

    It seems to me that Adam Smith, Jr learned nothing from the old man. “I would also create a law that companies would have to increase wages at ~2% per year…” At whose expense? Set up pensions? At whose expense? Where is the money to come from in nations that are flat broke? Seems you’re anxious like the Oligarchs to spend OPM. Go back to sleep, looter.

    • Brujo Makaveli Adam Smith Jr.
      Jan 25, 2015 at 6:45 am

      “It seems to me that Adam Smith, Jr learned nothing from the old man. “I would also create a law that companies would have to increase wages at ~2% per year…” At whose expense?”

      Blaah, It just increases cost inflation and companies will add it to the price of a final product. Its so simple.

      In Finland you have to pay for a cashier at least 8 e\hour. Do you think that people will go to buy their groceries from some other country, because in Estonia example the cashier gets paid 3 euros\hour. Dont think so?

      It would be the same effect, if every eurozone nation would have the same increase every year. It would stop beggar thy neighbors policies. Of course those countries, which are closer full employment would have much higher increases, but it would come naturally.

      Pensions would have cpi increases, like they have now. You dont have to take it off from anywhere.

      Im solving debt money problems here now, because when you cut wages. That will lead to debt deflation. Then citizens will pay much higher proportion of their wage to the bank and they dont have money to spend for anything else. This will lead into increased number of unemployment. You can see this in Greece and Spain pretty well.

      Central bank can print money as much as they want. If they print too much, inflation will get out of hand, but thats not a problem in the eurozone at the moment or what do you think? ECB just started buying own debt, so countries doesnt have to loan money from the market, if they dont want to. Its just that if inflation gets too high, they will raise interest rates and sell bonds to the market. Then theres less money on the market and prices should come down. At this point governments have already cut spending back, because economy runs on its own and countries doesnt need to run high deficits. Japan is doing just fine with debt\gdp over 200 %. The main question is, how much do you have to pay for creditors and whom they are?

      What is OPM? Are you a troll, because you seem like one? You are just making a argument fallacy called ad hominem.

      So why are you my darling thinking, that I would loot someone? We dont even have to take from the rich, if we dont want to, so I cant even compare myself to Robin Hood. =(

      • Jan 25, 2015 at 10:07 am

        “Japan is doing just fine with debt\gdp over 200 %.” Brujo, I hope you were kidding and wrote this with a strong mix of irony and sarcasm. Because in reality, Japan is everything but “doing just fine.” If you would like to find out more, read some of my articles on Japan. http://wolfstreet.com/category/all/japan/

        To clarify, Julian the Apostate is NOT a troll. He has been commenting here for a long time.

        And “OPM” means “Other People’s Money.” It is NOT an ad hominem attack. It’s an expression we commonly use in US English. Wall Street does it, governments do it, companies do it…. Our entire modern civilization is based on it, it sometimes seems to me.

        So relax a little.

        • Brujo Makaveli Adam Smith Jr.
          Jan 26, 2015 at 5:41 am

          “Go back to sleep, looter.”

          This is ad hominem fallacy.

          Yea, well I have to admit, that Im not an expert at this case. have to investigate a bit more about Japan. =P

          Its not a problem for the Japan to buy their own debt, use this money to buy stocks in US and home, like they are doing, which is just leading to devaluation of yen.

          Of course they are not doing any good for their own people, but those who own export companies must love it.

          Japan have lowest interest\GDP payments of these zones, if you watch these tables. Its few years old, but still…

          http://www.economicshelp.org/blog/5866/economics/debt-interest-payments-as-a-of-gdp-and-tax/

          No problem for Japan as a country and oligarchs. Most of the people will not benefit from these policies, but thats not a purpose of it, I believe.

        • Sean Atkinson
          Jan 26, 2015 at 7:44 am

          Wolf- What Julian wrote at the end of his message is indefensible, and it is how a troll writes: “Go back to sleep, looter.” Brujo is rightfully describing Julian’s tone and content. Your comment (to “relax”, also condescending)- should be aimed at Julian. It seems to me you are defending someones post based on previous history, not on his current statement.
          As far as the crux of Brujos economic contention, Japan is doing fine compared to Spain and Greece. so his point does have merit.
          As far as:”Where is the money to come from in nations that are flat broke?” By leaving the Euro and printing your own money, of course, like all independent countries have done for decades. It makes as much sense for Spain to use the Euro as for Argentina to use the US Dollar. Eventually, we will all learn: you are not free without your own currency.

      • Jan 25, 2015 at 11:04 am

        Central banks cannot ‘print money’ or make unsecured loans (same difference). They are collateral constrained. For a central bank to lend without security would render it instantly insolvent (like pushing a apple off the table = it falls onto the floor).

        ‘Central banks printing money’ is an Internet meme beloved of David Stockman and ZeroHedge. Where it exists in the real world there is chaos. In Argentina for instance, there are runs out of both banks and the currency as there is no lender of last resort (that is what central bank insolvency actually boils down to). When a central bank prints money there is no difference between that bank and the rest of the private sector lenders whose insolvency has necessitated central bank action in the first place.

        In fact a good way to determine if a country’s central bank is even ‘HINTING’ at making unsecured loans (monetization, for instance) there is currency depreciation, which is a run out of the currency in forex markets. An example is Japan … EU … Russia … Turkey … there will be runs out of all the currencies (that is dollar preference which is different and has to do with the relationship of dollar and petroleum).

        Another thing to keep in money is not purchasing power but a claim against it. Expansions of the volume- or quantity of money cannot increase purchasing power which is equal to the capital that is purchased: ‘capital’ being non-renewable natural resources, the basis of all ‘production’. As capital is depleted so is purchasing power. Eventually your capital is gone, you have no purchasing power but mountains of useless ‘money’. (Alternatively, money is unavailable because it is hoarded.)

        • mick
          Jan 25, 2015 at 5:20 pm

          Steve,

          Are you saying that CB’s actually are constrained in their money creation? I know that’s exactly what you’re saying and I understand there will be limits, but with a currency like the USD, it would take trillions before any negative consequences would appear.

          Even a currency like the Canadian dollar would be able to “hide” 10-30 billion I would think. That said, I would very much like to believe that CB’s don’t have the license to print that it appears they do.

          I just don’t quite see how there would be any serious ramifications from printing off a couple billion here and there, especially if it’s kept secret. Sure, you’d get a little inflation, but you’re suggesting far worse problems.

          If you’re willing, I’d love an answer. How it would warm my heart to know they aren’t as free to print as it sure seems.

        • Brujo Makaveli Adam Smith Jr.
          Jan 26, 2015 at 5:21 am

          Argentina pegged their currency to USD, when this peg went wrong they lost all their foreign reserves and had to loan foreign currencies. Im talking here about government using its own money. Eurozone is enough big to be reserve currency, like USD and YEN.

          Your currency will go down, if you print money and you dont have exports, but eurozone doesnt have this problem. Theres always a need for euros, because we export, a lot.

          I dont like Zero Hedge, they love gold too much. I favor FIAT-money.

      • jarana
        Jan 25, 2015 at 1:47 pm

        As always, this is the kind of “print MOAR” thinking that floods the supposedly “revolutionary” minds here in Spain. It´s sad to find it even here.

        You pseudo-Robin-Hood-s are part of the problem, not of the solution. What part of the sentence: “redistribution is a zero sum game, so every hypothetic improvement must be at the expense of others” are you having problems with?

        Here you come, renewed socialists to fight our crony capitalists. What could go wrong?

        • Brujo Makaveli Adam Smith Jr.
          Jan 26, 2015 at 5:12 am

          Central Bank buying government bonds and government using that money to fiscal is stimulus redistribution and zero sum game in what universe?

  7. Jan 25, 2015 at 10:40 am

    The euro = gasoline. There is no way any European country (lacking its own source of petroleum) will reintroduce their ancient (or post-modern replacement) currency.

    @ $30/barrel no exporter will accept drachma (or lira or pesetas) in trade for valuable capital (petroleum). Even @ $50/barrel, in international trade any mini-currency is worthless. The euro is a pure energy price hedge that is its only ‘selling point’ (and what a point it is!) For southern Europe to exit the euro would mean dollar black markets for fuel and hyperinflation as locals trade the (worthless) currencies they have for the dollars they need so they can drive their precious (useless) automobiles. It goes without saying that Greek, Spanish, Irish, Portuguese, Italian, etc. central banks would be ‘printing money’ (for real, making unsecured loans) = runs out of these currencies as in Venezuela, Belarus, Argentina, etc where central banks are making unsecured loans. The outcome = a euro black market paralleling the dollar variety = chaos.

    Just watch, the new parties will promise then realized no euro = no gasoline and they will rush to embrace the ongoing status quo. In Europe it is drivers and auto industry vs. everyone and everything else. Europeans will mimic ISIS and behead people in town squares if this is what it takes for them to keep their cars.

    The problem in Europe is an energy crisis, the continent burns through 10mbpd imported crude … with negligible organic returns or gains (less than 5- 10% of fuel use is remunerative). EU must tap finance industry to pay for its fuel supply.

    – This is why finance is so important: no finance/no loans = no industry, cars.

    – Debts cannot be forgiven: if the borrowers cannot repay then the lenders themselves or the citizens in their entirety. If the debts are forgiven on Monday, by Wednesday new debts greater than the amounts forgiven must be taken on … to keep those wheels turning. (There are ways to deal with the debt I won’t go into here.)

    – The problem is an industrial economic model that burns through its capital (non-renewable natural resources) and annihilates its purchasing power by doing so. We need a new economic model that husbands capital rather than squanders it. Otherwise this new economy will be imposed upon us by force of events: “Conservation by Other Means™”

    • Don Quijones
      Jan 25, 2015 at 11:08 am

      Some very good points Steve! If you’re right (and I think you probably are), what it means is countries like Greece and Spain (and if we’re being honest, just about every other advanced “Western” nation) can neither pay their debts or stop paying them. It’s truly the fat mother of all Catch 22s!

      • NotSoSure
        Jan 25, 2015 at 7:51 pm

        I think Steve got it right i.e. the status quo will hold eventually unless a revolution happens and I think this is unlikely in Greece. As DQ mentioned though, the Catch 22 will eventually need to be resolved, and I really fear the outcome of this.

    • sangell51
      Jan 25, 2015 at 12:11 pm

      Interesting problem but Putin has been wooing Greece and Greece is small enough that even a financially strapped Russia could offer oil on concessionary terms to Greece if it defaults and triggers a Euro crisis. I’d be on the lookout for just this sort of mischief…soon.

  8. Allan
    Jan 25, 2015 at 11:29 am

    “When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.”

    Frédéric Bastiat

  9. sangell51
    Jan 25, 2015 at 12:04 pm

    To go along with “Debts that can’t be repaid, won’t be repaid.” you also have to recognize that sometimes ‘ there are no good solutions’ and while Spain maybe able to claw its way back out of its economic mess ( provided the global economy doesn’t tank) Greece has no real future in the EU. That 240 billion Euro troika millstone around its neck is too large for the EU to forgive it ( the need to make good on those EFSF bonds and ECB loan would push Spain and Italy over the edge) so other than some term easing Greece is stuck with it unless it defaults and exits the EU.

  10. Julian the Apostate
    Jan 25, 2015 at 1:42 pm

    Thanks for the defense, Wolf. That arrogant burst of verbiage from “Adam Smith Jr.” (an anti-concept like ‘robber baron’) and the accusation of ad hominem attack came from a different place. He was furious not because I called him names, but because I IDENTIFIED him. Notice he never answered my question, at whose expense?
    I Remain, Dear Sir, your Humble Servant JULIAN

  11. Yancey Ward
    Jan 25, 2015 at 3:07 pm

    There is little doubt in my mind that Syriza and Podemos will lead their countries to even worse economic fates, however, such a change is necessary in order to make fertile the ground for reforms. The status quo must be broken, even if that leads deeper into despair.

    • Sean Atkinson
      Jan 26, 2015 at 7:45 am

      Iceland is doing just fine, and so will Spain and Greece.

  12. john tucker
    Jan 25, 2015 at 5:18 pm

    oil just hit a new 15-year low.
    Evidently someone must have greased the down-chute …..

  13. Julian the Apostate
    Jan 25, 2015 at 8:03 pm

    Let the games begin! A nod across the Forum to Fabius Maximus. We Romans have to stick together B-)

  14. Ray
    Jan 26, 2015 at 5:58 pm

    “In late 2011, Rajoy’s government took to austerity with barely concealed glee.”

    “Meanwhile, the country’s public debt has increased by more than half, from 60% of GDP in 2011 to 92% today.”

    … and the author doesn’t notice the contradiction?

    • Don Quijones
      Jan 27, 2015 at 5:32 am

      Yes, Ray, I do notice the contradiction. Hence the reason why I finished the paragraph with “So much for austerity!”

      The fact of the matter is that almost all European countries that have supposedly engaged in “austerity” now have far larger debt to GDP ratios. That includes Ireland, the UK, Spain, Portugal and obviously Greece.

      This is largely due to extra expenses like bank bailouts, increased spending on unemployment benefits, higher interest payments on the debt (as already mentioned in the article)… This does not mean, however, that governments have not been cutting spending where it hurts the most. For example, in Spain we no longer have universal health care: more than a million people (basically immigrants and the long-term unemployed) can no longer access public clinics or hospitals.

      Taxes, meanwhile, have increased for the majority (for the self-employed, for example, income taxes went up almost 50 percent in one fair swoop). These are all painful measures that can make people’s lives much more difficult… while at the same time doing little to improve the state of the government’s books, especially when hundreds of billions of future texpayer funds are being ploughed into the financial sector.

  15. Julian the Apostate
    Jan 26, 2015 at 6:30 pm

    I stand by my identification of “Adam Smith, Jr” as a looter. He did not say “I would support a law” which might simply be confusion over the proper role of government but “I would make a law.
    Let me define my terms. The proper role of goverment arises from the concept of self-defense. The police to protect you from criminals, the military to protect you from invaders, and the courts to protect your contracts from breach. To these ends government has a monopoly on force. (Ayn Rand) Any man who would “make a law” to force another man (in this case an employer) to pay a given amount of the employer’s as a minimum wage thinks that the employer’s money is his to re-distrbute as he pleases–with a gun as his only argument. That, ladies and gentleman, is a thief, a looter in a store who may not defend himself.
    No sir, you can’t claim to be Robin Hood because he stole from the government and returned it to the Crown’s victims.
    I am, etc. JULIAN

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