A sovereign state ought to be able to decide what its currency is, and provide enough to employ its citizenry. California does, not so Europe.
In 2008, bankers told the government of the USA that ATMs and all banks would shut down immediately, if the government did not provide banks with the hundreds of billions of dollars to keep money in the banks. The government obeyed, and now the total aid to the American economy is said to be of the order of 13 trillion dollars, not far from the entire GDP of the USA. The European “welfare” states instead plunged into austerity, making sure that the value of the money of the rich would only augment, even if it meant European youth would have to immigrate to the USA to find work.
The USA talks one way, through its plutocrats, and the Main Stream Media they own. The reality is often the opposite of what they depict. Although the USA criticizes Europe for being too socialist, the truth is the opposite.
The fact is Europe is not socialist enough to provide its banks with money for We The People. At least, We The Greek People: from lack of liquidity, Greek banks have been closed for two weeks and counting.
What kind of a sovereign is Europe?
Knowing what sovereign means help. It comes from the Old French soverain “highest, supreme, chief,” from the quite Vulgar Latin *super-anus ” (literally, superior inferior opening of the alimentary canal; as contemporary American urban linguo would have it, on face value, “sovereign” means super bad ass). An economist from India who has long contributed to this site, Partha, has made the following cogent observation:
pshakkottai Says, July 7, 2015:
Extinguishing Greek debt is equivalent to Europe being monetary sovereign which is what regarding all Europe as one country means. Greece would not be subject to austerity, wouldn’t have large debt payments and can grow. The created money will save banks and the investors in those banks. There will be no panic. At this point many banks can be nationalized. Which nation owns what is a question to be decided.
As it is Greece which needs energy will go with Russia and its own currency and will do well in a few tears. Energy was the only thing Greece was short of. This is a plus for Putin and a minus to EU.”
Well, I will not focus on Partha’s second point, where my perspective is different: Grexit, like Brexit, would mean a diminution of European sovereignty (thus a greater influence of other superpowers).
Although Britain can take care of itself, not so for Greece, thus Grexit is, de facto, an impossibility: kick Greece out, it will still be at the door (same problem with deluded England).
It’s easier to help Greece inside the EU, than outside. Moreover, Western Europe did not fight for Greece independence against the Ottomans to replace them by worse. Finally Russian methane is putting in danger Russia itself, the latest Russian numbers reveal. Solar PhotoVoltaics will make Greece energy independent: as soon as massive investments are done, existing technology allows this.
More saillant is Partha’s first point. European and World (IMF) authorities decided to led bankers escape punishment. Thus hundreds of billions of bad loans from banksters to plutocrats were reimbursed by the Greek state, itself borrowing from the so-called “institutions” (EC, ECB, IMF, etc.) AS IF this were a public utility.
In practice it meant reimbursing gangsters for their expenses. Thus, the behavior of authorities is tantamount to demonstrating that they have been captured by outlaw bankers.
Instead, a sovereign ought to have enough authority to decide what We The People are going to use as currency. Californians did not bat an eyelash, when they were told the State of California
Some say financial rectitude is everything. False:
Look at the USA. California is, by far the largest economy in the USA. The GDP of California in 2014, pulled by technology, was $2.3 trillion. The only states in the world with a higher GDP are Britain, France, Germany and Japan (in ascending order).
However, a few years back, California, which was bankrupt, was paying its employees with pieces of paper called IOUs. There was some grumbling, yet, so great is the awe of California in the minds of its 40 million denizens, that the Californian economy ploughed, right along. One of the reasons of California’s superiority is that it takes six hours, by jet plane to cross the continent, where some decisions centers are. Far away.
By a very long shot, the American state with the best finances is Alaska, giant in territory, tiny in population. What is its economy doing? It’s shrinking:
So much for deficit spending being the end all, be all.
True Speak Means Deeper Considerations:
Everybody speaks of the Greek debt, but not how it originated. Everybody speaks of the Euro and Greece, but not how the German government agreed to make Greece twice richer than it really was, by deliberately converting Drachmas into Euros at twice the real rate. Surely that does not have to do with some places in Greece having the highest concentration of German luxury cars, in the world.
One is never better served, than by oneself. Papandreou, a SOCIALIST Prime Minister of Greece, was asked to help clean up after Goldman-Sachs had cooked the books of Greece to underplay the amount of deficit Greece had. As if European “authorities” did not know that Goldman-Sachs had cooked the books (I could have told them; cooking and plotting, this is what Gold Men do).
But the truth is dire: Goldman-Sachs (largest private contributor to Obama 2008 presidential campaign), had “captured”: European decision making. Many European decision makers were connected to Goldman-Sachs and its ilk. All of them probably hope to be in the good graces of Goldman-Sachs, and its ilk.
Papandreou is from one of Greece’s top three plutocratic families. So most of the aid to “Greece” was actually an aid to private bankers, many of them, not Greek. That was accompanied by such propaganda that most Europeans think that common Greeks are “splurging” (yes Greek plutocrats, ship owners, Greek church and military are splurging… with the help of northern European banks; hopefully the Trotskyist PM Tsipras will fix that next week).
Iceland did not go that route, the route of welfare for bankers: Iceland jailed its banksters. France, instead, judged and jailed a trader. Wall Street was delighted to find its own French trader to accuse, judge and condemn. So two traders, both French were accused of everything, and the City of London also found some foreign born trader to accuse.
So what happened to the Peoples’ Sovereignty? It’s over: High Finance has captured not just democracy, but the mind of We The People, and is the real sovereign. At least, more so in Europe, than in California. Even though California is the America, of America.
Something got to give. (That may be why Tsipras caused a crisis, knowing full well only a crisis would provide the needed energy.)
Next we will study a bit “Germans and Their Lies” (to steal Luther’s title about Jews). I am happy to report that dear Krugman is finally catching up on that subject.
You want to change the world? Change the mood.