http://krugman.blogs.nytimes.com/2012/03/12/losing-the-belt/
"March 12, 2012, 9:52 am
Losing the Belt
A number of people have asked me for a quick, easy explanation of the difference between a government and a family — basically, what’s wrong with the argument that when times are tough the government should tighten its belt.
I’m working on it. But maybe we can use Greece as a quick illustration of the point.
After all, you could view Greece as being like a family that overspent, got itself into debt, and whose members now have to do all the things families do when they get in that position: slash spending on inessentials, postpone medical care and other big expenses, quit their jobs and reduce their incomes — oh, wait.
That’s the key point, of course. When a family tightens its belt it doesn’t put itself out of a job. When a government tightens its belt in a depressed economy, it puts lots of people out of jobs; and this is a negative even from the government’s own, narrowly fiscal point of view, since a shrinking economy means less revenue.
Now, you might argue that slashing government spending doesn’t actually cost jobs — that is, you might argue that if you spent the past few years in a cave or a conservative think tank, cut off from any information about how austerity is working in practice. For the results of austerity policies in Europe have been as good a test as you ever get in macroeconomics, and without exception big cuts in government spending have been followed by big declines in GDP.
So lose the belt; it’s a really bad metaphor."
I’m working on it. But maybe we can use Greece as a quick illustration of the point.
After all, you could view Greece as being like a family that overspent, got itself into debt, and whose members now have to do all the things families do when they get in that position: slash spending on inessentials, postpone medical care and other big expenses, quit their jobs and reduce their incomes — oh, wait.
That’s the key point, of course. When a family tightens its belt it doesn’t put itself out of a job. When a government tightens its belt in a depressed economy, it puts lots of people out of jobs; and this is a negative even from the government’s own, narrowly fiscal point of view, since a shrinking economy means less revenue.
Now, you might argue that slashing government spending doesn’t actually cost jobs — that is, you might argue that if you spent the past few years in a cave or a conservative think tank, cut off from any information about how austerity is working in practice. For the results of austerity policies in Europe have been as good a test as you ever get in macroeconomics, and without exception big cuts in government spending have been followed by big declines in GDP.
So lose the belt; it’s a really bad metaphor."
http://www.nytimes.com/2012/03/12/opinion/krugman-what-greece-means.html?partner=rssnyt&emc=rss
What Greece Means by Paul Krugman
"So Greece has officially defaulted on its debt to private lenders. It was an “orderly” default, negotiated rather than simply announced, which I guess is a good thing. Still, the story is far from over. Even with this debt relief, Greece — like other European nations forced to impose austerity in a depressed economy — seems doomed to many more years of suffering.
And that’s a tale that needs telling. For the past two years, the Greek story has, as one recent paper on economic policy put it, been “interpreted as a parable of the risks of fiscal profligacy.” Not a day goes by without some politician or pundit intoning, with the air of a man conveying great wisdom, that we must slash government spending right away or find ourselves turning into Greece, Greece I tell you.
Just to take one recent example, when Mitch Daniels, the governor of Indiana, delivered the Republican reply to the State of the Union address, he insisted that “we’re only a short distance behind Greece, Spain and other European countries now facing economic catastrophe.” By the way, apparently nobody told him that Spain had low government debt and a budget surplus on the eve of the crisis; it’s in trouble thanks to private-sector, not public-sector, excess.
But what Greek experience actually shows is that while running deficits in good times can get you in trouble — which is indeed the story for Greece, although not for Spain — trying to eliminate deficits once you’re already in trouble is a recipe for depression.
These days, austerity-induced depressions are visible all around Europe’s periphery. Greece is the worst case, with unemployment soaring to 20 percent even as public services, including health care, collapse. But Ireland, which has done everything the austerity crowd wanted, is in terrible shape too, with unemployment near 15 percent and real G.D.P. down by double digits. Portugal and Spain are in similarly dire straits.
And austerity in a slump doesn’t just inflict vast suffering. There is growing evidence that it is self-defeating even in purely fiscal terms, as the combination of falling revenues due to a depressed economy and worsened long-term prospects actually reduces market confidence and makes the future debt burden harder to handle. You have to wonder how countries that are systematically denying a future to their young people — youth unemployment in Ireland, which used to be lower than in the United States, is now almost 30 percent, while it’s near 50 percent in Greece — are supposed to achieve enough growth to service their debt.
This was not what was supposed to happen. Two years ago, as many policy makers and pundits began calling for a pivot from stimulus to austerity, they promised big gains in return for the pain. “The idea that austerity measures could trigger stagnation is incorrect,” Jean-Claude Trichet, then the president of the European Central Bank, declared in June 2010. Instead, he insisted, fiscal discipline would inspire confidence, and this would lead to economic growth.
And every slight uptick in an austerity economy has been hailed as proof that the policy works. Irish austerity has been proclaimed a success story not once but twice, first in the summer of 2010, then again last fall; each time the supposed good news quickly evaporated.
You may ask what alternative countries like Greece and Ireland had, and the answer is that they had and have no good alternatives short of leaving the euro, an extreme step that, realistically, their leaders cannot take until all other options have failed — a state of affairs that, if you ask me, Greece is rapidly approaching.
Germany and the European Central Bank could take action to make that extreme step less necessary, both by demanding less austerity and doing more to boost the European economy as a whole. But the main point is that America does have an alternative: we have our own currency, and we can borrow long-term at historically low interest rates, so we don’t need to enter a downward spiral of austerity and economic contraction.
So it is time to stop invoking Greece as a cautionary tale about the dangers of deficits; from an American point of view, Greece should instead be seen as a cautionary tale about the dangers of trying to reduce deficits too quickly, while the economy is still deeply depressed. (And yes, despite some better news lately, our economy is still deeply depressed.)
The truth is that if you want to know who is really trying to turn America into Greece, it’s not those urging more stimulus for our still-depressed economy; it’s the people demanding that we emulate Greek-style austerity even though we don’t face Greek-style borrowing constraints, and thereby plunge ourselves into a Greek-style depression."
http://hat4uk.wordpress.com/2012/03/12/revealed-how-paying-double-for-german-subs-helped-to-sink-greece/
REVEALED: HOW PAYING DOUBLE FOR GERMAN SUBS HELPED TO SINK GREECE
The German type 214 submarine….expensive if you’re GreekSeveral names crop up with menacing regularity….especially those of Yannis Beltsios, Michel Filipidis, Michael Matantos, Tony Georgiades, and his now retired father in law on the Board of Bank of Greece (a major participator in the recent
Using the quaint terms ‘related offset transactions and obligations’, MIE’s books for instance (supported by an independent legal investigation pointed out to The Slog) show that Michael Matantos of MIE alone handed on a grand total of 55.1 million euros during the period 2000-2004. Most of this was to oil the wheels (aka grease the palms) in relation to the supply of four submarines from Kiel dockyard.
The individual payments noted in that exhaustive report are horrifying, but relatively small-fry:
Between 2002-04, Ferrostaal paid 7.5m euros to PDM and Zelan. No activity of any substance can be traced to this Cypriot-based duo, and all the record of directors have vapourised. But their job was to ‘facilitate contract awards’ by Greek ministries. ‘The complete lack of any documentation supporting performance by these companies raises serious concerns’, says a confidential German report. In 2004, Dusseldorf prosecutors fingered Sotiris Emmanouil, the head of Hellenic Shipyards, as the recipient of illegal bribes running into millions of euros by yet another intermediary – HDW – and a later report showed he had indeed received 2.2 million euros via an affiliate in October of that year. Again, no evidence of services supplied exists. In July 2007, 11 million euros were handed to shady ‘facilitators’ Dolmarton. No back-up of tasks performed.
But when it comes to the Greek government’s purchase of four 214 Class submarines from Germany after 2000, you have to see the amounts syphoned off to believe them. Says the legal investigation referred to earlier:
‘The Project Archimedes [submarine supply] contract was signed in 2000. It was in the volume of 1.14bn euros…..the [German supplier] consortium incurred additional offset obligations of 1.53 billion euros.’
So the price to the Greek taxpayer doubled….entirely due to corrupt payments made to the Greek governing elite.
A fourth submarine supply contract was signed May 2002. The audit investigation quoted above states that it ‘had a volume of approximately 464.9m euros….and offset obligations of 563 million…’
Again, backhanders doubled the price. And, say several Greek sources, even the ‘real’ price had been stuffed with additional items that represented profiteering by Ferrostaal and its associates.
This is hardly surprising when you consider Ferrostaal’s onerous expenses: between 2000 and 2003, the German supplier paid MIE a staggering 84 million euros, of which over 50 million went on bribing the necessary signees in the never-ending line of outstretched hands called the Greek Elite.
But it is the now even more heavily burdened taxpayers of Greece who are paying the price for this crude rip-off. Most of the perpetrators are doing very nicely thank you. For example, Ferrostaal worked with Yannis Beltsios and paid him €1 million because Greek Defence Minister Akis Tsohatzopolous instructed them to. In April 2011, Parliament voted to prosecute Tsohatzopoulos for corruption….but in August, Greece’s Supreme Court ruled against pursuing the bribery charge because the charge of accepting bribes has been barred by the 2005 immunity law.
That law was authored and pushed through by….Evangelo Venizelos. And naturally, Akis and Evangelo have been colleagues together in PASOK for nearly two decades.
Ever more outward go the tentacles of Greek elite squids, these gigantic deep-bribed calamares. George Lanaras’s ex-wife, following years of corrupt sales to South Africa, married F W de Klerk. Lanaras’s son in law Tony Georgiades is a billionaire shipping magnate, and alleged key sanctions-buster under apartheid. He reportedly had the ear of South African President Thabo Mbeki while acting as a lobbyist for Ferrostaal, which led the German submarine global marketing consortium. No matter who’s in power – black or white – these eminences grises are always there in the shadows.
Michel Filipidis is a lawyer who moved to France, where he owns and runs Syspertec, a software information specialist ‘serving large companies, banks, and financial institutions’ as the website puts it. Syspertec is being modest. It’s clients include the French Central Bank, the French Tresor Publique, BNP Paribas, Credit Agricole….and many other institutions hugely exposed to Greek debt and fearful of a Hellenic default. Well well well.
And Michael Matantos is a director of three companies, Unimog Investments, Kassos Steam Navigation, and Sunbeam Maritime. It is remarkable how many of the intermediaries in this tale have names including ‘maritime’ or similar. Like Marine and Industrial Enterprises (MIE) of which we learned so much in yesterday’s Slogpost. Matantos’s partner in Sunbeam is Constantine Kyrkilis…who used to be an Executive Vice-President at MIE.
Nothing changes, and nothing ever will as long as these leeches are on Greece’s back. And they are, in essence and influence, the reason why the Greek elite didn’t tell the Troika to go jump in the lake months ago. For these people are part of a vast network of sales, graft, survival and prosperity which would largely cease to exist were Greece to be ejected from the EU.
The Greek nation is facing default for all kinds of reasons that range from insane lending policies by French and German banks to clever schemes worked out by Goldman Sachs to help the Greek Establishment lie to Brussels. But is is also in the mire because of many such cases of official greed and German profiteers. Perhaps, the next time German tabloids start shrieking about ‘lazy Greeks’, they should bear this in mind.
I am grateful to many brave Athenians for their help in compiling this series, but special thanks must go to the folks at www.olympia.gr
Related: Arms bribery and the overflowing bank account of Evangelo Venizelos
No comments:
Post a Comment