The passing scene – August 17, 2015

Seven Myths about the Greek Debt Crisis by Stergios Skaperdas, a University of California economics professor.  (Hat tip to naked capitalism).

An economist argues that (1) default would not be the worst outcome for Greece, (2) the troika (European Central Bank, International Monetary Fund, European Commission) is not trying to rescue Greece, (3) Greece’s problems are not caused by corruption and bad policy, (4) no Greek government could have carried out the troika’s policies, (5) the troika’s policies would not have benefited Greece, (6) exiting the Eurozone would not be catastrophic for Greece and (7) the Greek government in fact does have bargaining power.

Hillary Clinton Doesn’t Care That Much About Abortion Rights by Ted Rall for Counterpunch.

Instead of trying to persuade judges that abortion is a constitutional right, why don’t Hillary Clinton and other liberal Democrats support legislation to guarantee abortion rights?  Ted Rall thinks Democrats hold back because they cynically want to keep abortion alive as a issue.  But maybe they’re just timid.

Clown Genius by Scott Adams.   (Hat tip to Rod Dreher)

The creator of the Dilbert cartoons thinks most people probably would buy a used car from Donald Trump because his campaign demonstrates mastery of the classic techniques of salesmanship.

Germany got a debt writedown: Why not Greece?

After World War One, the Allies were saddled with war debts to the United States that were beyond their ability to pay.

Herman Josef Abs, center, representing Federal Republic of Germany, signs a 1953 agreement cutting Germany’s debts to foreign creditors in half.

They hoped to get the money out of Germany, which was obligated to make reparations payments beyond that nation’s ability to pay.

Eventually Germany defaulted on its obligations to the Allies, and the Allies defaulted on their obligations to the USA and its bankers—but not in time to prevent the onset of the Great Depression and the rise of Adolf Hitler.

After World War Two, the Allies learned their lesson.  They allowed the German government [1] to write off half its debts.

If this hadn’t been done, the postwar German economic miracle might not have taken place, and the recovery of Europe as a whole would have been delayed.

Today Greece has more debt than it can repay.  Eventually there is going to have to be a write-down of this debt.

The question is whether the Greek population will have to be reduced to poverty and Greek national assets sold off at bargain prices before this happens.

Squeezing Greece won’t help German people

The Greek debt crisis is not a conflict between Germany and Greece.   It is the European Union acting as a debt collection agency for central bankers.

German working people get no benefit from the demand that the government of Greece impoverish the people of Greece so as to pay interest to the European Central Bank and the International Monetary Fund.

They in fact will suffer in the long run, because the more wages and living conditions are driven down in other countries, the harder it will be to maintain them in Germany.

Some five years ago, I wrote a post about how Germany was a good role model for the USA, because its leaders were committed to industrial productivity and a high-wage economy.   Unfortunately, the German leaders instead have taken the USA as a role model, and followed our downward path of financialization.

I believe that people who borrow money have a moral obligation to pay it back—if they can.  I believe that there are other moral obligations that take precedence, such as the welfare of those who depend on you.  That’s why the United States and other nations substituted bankruptcy laws for debtors’ prisons.

The Greek debt problem would have solved itself if Greece had its own currency instead of the Euro.  As Greece’s balance of trade worsened, its currency would be devalued and its products and services (including the tourist industry) would become cheaper in terms of dollars and euros.

The great fear of the “troika”–the ECB, IMP and the leaders of the European Union–is that Greece will stop using the euro, and that some of the other 17 countries that use the euro will follow suit.  That might be a problem for bond-holders.  I don’t see it as a problem for ordinary people in Germany, the USA or any other country.

LINKS 

It’s the class conflict, stupid! by David Ruccio on occasional links and commentary.

Europe: Shaking the Temple by Conn Hallinan for Dispatches from the Edge.  (Hat tip to Bill Harvey)

From Minsk to Brussels, it’s all about Germany by Pepe Escobar for RT Op-Edge.