Friday, April 30, 2010

The 'Endarkenment' and the Euro Debt Fiasco in the Cradle of Western Civilization (Greece)

By Gary Tedman

I found this, I think, brilliant term (to 'endarken', implying the opposite to enlighten, to confuse and obfuscate) mentioned by the blogger 'suav' on a BBC blog. The writer says it was from Polish youth.

The principles of 'endarkenment' are working well in the Press these days while they try hard to disassociate the current sovereign debt crisis (Greece and so on) from the earlier banking crisis (Lehman collapse), whilst constantly trying to highlight the 'recovery', but the fact that the latter crisis developed from out of the former will not go away, it is history and it shapes events anyway.

From an article in the Independent online edition "Sean O'Grady: Greece is a problem – but Spain could destroy the euro" Friday, 30 April 2010, a useful timeline of the current shenanigans is given:


"2 May IMF talks in Athens with Greek officials end
3-6 May French parliament expected to approve rescue package
3-10 May IMF board, EU Commission have to formally approve the deal
6-7 May Greek parliament votes on new three-year austerity programme
6-10 May German Bundestag expected to endorse the deal, the last of those required to, the Netherlands and Luxembourg already having given tacit approval
9 May Key elections in North Rhine-Westphalia, Germany's most populous state
10 May European summit formally endorses the deal
19 May Next repayment of Greek debt; €8.5bn must be in place if Greece wants to avoid default
31 May €355m debt repayment due
Summer/autumn 2010 Threat of widespread strikes and unrest in Greece at harshness of deal; risk of political instability or that the government might fall
29 September Further €180m debt repayment due
2011 Greece needs to refinance the equivalent of 18 per cent of its GDP, or €23bn, with almost €9bn due on 20 March 2011. Annual deficit down to 9 per cent of GDP. Return to world growth should help
2012 Annual deficit down to 3 per cent of GDP by year end"


To illuminate this from NYTimes "As Greek Drama Plays Out, Where Is Europe?", Published: April 29, 2010, Steven Erlanger writes:


“The fact that a German regional election can play such a disproportionate role in messing up efforts to contain what was a much smaller crisis several months ago is astonishing,”

Mr. Kirkegaard said. And the fact that there will be no European Union summit meeting until May 10, after the German elections, “is so blatantly political,” he said.

“This is no way for an E.U. that has to contain an accelerating crisis and market panic to behave,” Mr. Kirkegaard said.

"...the Lisbon Treaty that created Mr. Van Rompuy’s position, and which was intended to make the enlarged European Union more agile and coherent, deliberately left out powers for coordinating fiscal policies, which are the fiercely guarded prerogative of the separate nations. Even so, countries like Germany can only blame themselves for not insisting on realistic European oversight of Greek statistics, which were widely believed to be false for two decades."


“Questions are asked to nations, not to the E.U. — but nations cannot deal with this problem alone,” said Dominique Reynié, director of the Foundation for Political Innovation and a political scientist at the Institut d’Études Politiques de Paris.

“The silence of the E.U. and its institutions has become deafening. It is incapable of demonstrating that an entity called Europe exists. This is a situation that cannot go on.”

"...The European Union “seems to be in a state of permanent self-promotion,” he said. “But it cannot ask its voters to relinquish part of their nations’ sovereignty and then not answer the call when there’s a problem.”…."


Well… it has… so far; Merkel is, or was, trying still to put off any vote to ratify a loan in Germany until May 10 after the elections there, when it 'is expected' to be agreed by the whole Bundestag, all of whom are (weirdly, given they are still 'expected' to agree it) voicing strong anti-bail-out sentiments, and thus making her job rather more difficult. This would, if achieved, exculpate her party from sole responsibility for dumping the crisis onto the backs of German workers again.

Meanwhile neither the Greek nor the German working people want a bail out. They didn't cause the crisis.

Yes, the Greek and German people agree, they don't want a bail out which will just make them suffer more and help make the bankers and bourgeoisie even more wealthy (yet again). But the politicians, they want a bail out and don't want it all at the same time. The one's who stand to lose from a default want the bail out, but the others who want the euro low for exports want the falling euro, they also fear more for their personal political position. If both lots look at the future though, they see whole rounds of bail outs being necessary, including very probably for themselves, but will there be any money left in the kitty after a few have gone to the wall? Unlikely. But they won't worry about the future much.

Thus the current 'solution' is letting things slide, the anarchy of the market. And the longer the politicians dither about the loan the higher its price becomes and the more serious the social consequences of 'contagion', but it doesn't matter to these politicians because they know they won't be paying the price anyway, this will be taken on by the working classes of Europe, who they seek to be elected by (!), thus what matters to them is their own political futures. After all, the founding members of the EU wanted Greece on board for the benefits, to collude and trade with, not for its social problems, not to share responsibility for looking after the people who they are meant to represent, just for swapping them as a cheap labour force.

At the moment the world is being led by credit rating agencies, big investment banks, and big speculators (this is almost always the case in capitalism, but it is now very visible in the crisis). The main credit rating agencies are anointed by the SEC, based in New York they are private financial corporations that wield a lot of power and influence and are a part of the problem, they are not independent and 'objective' as is often made out, but have vested interests. Their judgements are as political as they are economic. The SEC was once run by Bernie Madoff, now in prison, and that just about sums up their approach to regulating finance. Of course they got the ratings wrong in the crisis (giving top ratings to bankers toxic CDSs), but that isn't the point - it just proves the politics of it. Most 'economists' are paid to get it wrong in the 'right way' for the ruling class, they are perhaps one of the last academic professions to still be in this backward condition of anti-science.