This Anti Populist Agreement

July 14, 2015

Given Germany’s earlier negotiating position that Greece should be expelled from the euro zone for a period of 5 years, has Germany decided to opt instead for a set of proposals so unconscionable to Greece hoping Greece will find the terms so unpalatable, they would secede without the euro zone’s finger prints on the trigger.

Its a huge credit to Syriza instead of walking away, they have achieved terms they can put before the Greek people instead of the disenfranchisement meted out to Irish people including their parliament.

In a week when we listened to ex Taoiseach, Brian Cowen express remorse that we were bundled into a bailout without our consent; that our bailout was no so much negotiated as unwrapped and admired like an Xmas present from the ECB, it must have been embarrassing for our incumbent Taoiseach to witness  bruising efforts of Greece making a stand for its people.

On the other hand,  he did not have to appear before the Banking Inquiry to explain during the Celtic Tiger years why Fine Gael policies favoured even more deregulation of the banks and an even bigger mess with Fine Gael support for removal of stamp duty and other fuel-the-boom policies. Instead Enda Kenny decided to undermine and counter Greece’s negotiating position.

Suicidal Smiley

You might think that a bailout country would be an ally of Greece and express solidarity with its demands for a better deal. Not so.

Instead, we have been treated to an attack on democracy of unprecedented proportions by Enda Kelly and Michael Noonan and FG henchmen such as Michael Kelly MEP lobbying against Greek proposals for debt write down and a better deal.

Towards its conclusion, in spite of Enda Kenny’s visit to Italy to lobby against Greece, the only allies of Greece turned out to be Francois Hollande of  France with Italy, Portugal, Spain, in the wings. Matteo Renzi, the Italian Prime Minister, hosting a visit by Enda Kenny, must have thought Kenny’s views ‘quirky’ if not outright crazy.

Consider the following chilling interview in which Kelly rejects the ‘populist’ view, currently being amortized into a denigratory term  alarmingly subverting democratic political and institutional instruments and by implication attacking and subverting  the political affairs of a sovereign country and fellow member of the eurozone:

Measure also the involvement of the Greek parliament in debt restructuring and debt negotiation and compare with Ireland’s current Economic Management Council, where certain matters are not even allowed air before members of the Fine Gael party, outside this technical group; never mind, as in our bailout decision, put before parliament for debate.

Its clear from this interview Kelly would like a more compliant Vichy type technical group in Greece to replace a ‘populist’ Greek government. This group would be forced to pay reparations and extract odious debt from Greece including the selling off of private assets to the tune of €50bn, islands, ports, other valuables in return for another unworkable bailout.

Good deal, if you are a director of Germany’s Deutsche Bank, a global banking and financial services bank, who must have cracked open the champagne with thoughts of the private purchase of one of those Greek islands to celebrate  on news of the deal.

Kelly states the Greek government and not austerity should take the blame for the failure of austerity;  if in Ireland Fine Gael played the populist card, according to Kelly,  we would have ended up in the same position.

We must therefore logically assume FG who put policies before the previous election that included restructuring Ireland’s debt, namely, burning bondholders and demanding debt write-down, falsely claiming there was agreement for debt write down in June 2012, were at best hypocritical,  they were at worst lying to the ‘populist’ electorate.

We must assume FG/LB are not ‘populist’ parties claiming according to the Webster dictionary, to represent the views of the ‘common people’.

Debt write down is not supported by Kenny and Kelly.

In fact, supported by their satellites in the media, FG tout Ireland’s negotiation of its promissory note as successful ‘debt profiling’. ‘Debt profiling’ means ‘extend and pretend’, endless and laborious negotiations, clipping coupons, extending maturities. Both debtors and creditors factor in growth forecasts, inflation, and other economic permeable assets to pretend debt will be repaid.



Its clear Greek debt will not be repaid.

There is another lesson some economists including Dan O Brien, whom I admire in many respects, cannot seem to get the head around.

When  a country goes into default, both creditors and debtors, must take the loss.

Otherwise, there is no incentive on lenders to end profligate and foolish lending.

Its a simple axiom that is foolishly being ignored also by the IMF involved in debt restructuring in the euro zone. For this legacy, Christine Lagarde and  IMF failure to insist on write down, the IMF will have to pay the piper eventually. It will fail to lure away with its magic pipe deflation and the worsening effects of decline of the euro fallen from 1:40 to 1:10 against the rickety dollar of a little more than a year ago.

If lending is owed to itself as in the case of a Japan or EMU, if debt hasn’t the means to restructure debt by way of debt write down in EMU, with powers of enactment similar to those in the Federal Reserve,  extortion and bullying of member states, comes into play.

In recent negotiations the EU has veered to a totalitarian version of the  latter.

France, Italy and Germany have all  avoided  both structural reforms and paying the bill for Greece. One rule for the rich another rule for the poor.

The euro zone is particularly vulnerable to deflation because of Germany’s insistence on too much fiscal austerity. Increasing the debt burden on Greece and adding austerity has as much chance of saving Greece as it has of saving the euro.

Debt write-down appears to make common sense and would appear recently in the case of Greece to have the support of France and the US. However, the truth is the financial services industry have so wired the global economy since 1970, that any canary in the mine such as Greece, can bring the global economy down. How is this so?

CDS defaults in the unregulated financial services industry have so trip-wired the European and global economy that a default in Greece dollar on dollar could cost banks in Europe in particular Deutsche bank, multiples in the 10’s of the actual discount or write-down these countries could negotiate.

Say 40% or €100bn were written off, actual cost to Deutsche Bank and other French banks could be in multiples of 10 of that figure in terms of the cost of underwriting the CDS default paper these banks are on tap for.

Unfortunately, the fiat money system that is entirely paper based since the dollar was taken off the gold peg in 1971, has been allowed to develop entirely without regulation since then to its present state and is currently a financial bomb primed to explode if set off by even a small canary.

The financial services industry has become the global casino spawning the global tapping of taxpayers money that should instead be earmarked for real economic development and social services instead of serf protectorates such as Greece funneling serf tithes back to anonymous bankers and bondholders.

Since 1970 power in the financial services industry has loaded on risk, got bailed out , blocking regulations, broken the law without accountability. TBTF banks and financial institutions have over ruled the real economy and replaced it with a virtual economy manipulating values eg in the commodity markets.

Its Achilles heel however, is that the real economy will always win out in the end. Gravity in the face of such manipulation is currently being experienced in deflation in the euro zone with slowing growth worldwide in currencies exposed to these same risks.

If the deal with Greece goes ahead, kicking the can down the road, the euro itself has backed itself into a corner, austerity with its political and social negatives, will weaken the euro further.

1953 london debt conference

Creditors are currently threatening to bring the house down if they are not repaid. Its time not to pour good money after bad, bring the house down and rebuild on a solid foundation fit for human progress and end the fraudulent deceit of the current shambolic and unregulated mayhem looting and pillaging debtor nations such as Greece.

Greece should go it alone and rally its people behind its own currency. Volunteer groups within its own society should support communities in education and health. It should follow the path of Iceland.

On the back jacket of “Confessions of an Economic Hit Man” 2004 is written, “John Perkins should know he was an economic hit man for an international consulting firm that worked to convince poorer countries to accept enormous development loans – and to make sure that such projects were contracted to U.S. companies. Once these countries were saddled with huge debts, the American government would request their “pound of flesh” in favours, including access to natural resources, military cooperation and political support.”

We need an audit of the debts of Ireland and especially Greece to examine where the money went, how much German companies were made rich eg Siemens, on money lent to Greece by Germany, how much was diverted to eg military spending in a country known for corruption and obedient compliance with profligate, looting lenders.

In 1953, the Treaty of Versailles was revisited in the London Debt conference and Germany had its debt written down by over 50%. Importantly these obligations would only trigger on a trade surplus. This gave Germany the opportunity to rebuild itself in the post war years.

“The total under negotiation was 16 billion marks of debt resulting from the Treaty of Versailles after World War I which had not been paid in the 1930s, but which Germany decided to repay to restore its reputation. This money was owed to government and private banks in the U.S., France and Britain. Another 16 billion marks represented postwar loans by the U.S. Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.[2]

An important term of the agreement was that repayments were only due while West Germany ran a trade surplus, and that repayments were limited to 3% of export earnings. This gave Germany’s creditors a powerful incentive to import German goods, assisting reconstruction.[3]

Its sad to see Germany impose its version of the Treaty of Versailles on a victim of the euro such as Greece with the obedient compliance of  euro zone leaders such as our own, Enda Kenny.




Following his trashing of elected representatives of the Greek people, I never thought I would agree with anything Wolfgang Schauble,  German Federal Minister of Finance,  had to say about Greece.

But today on German radio Shauble has repeated an earlier position, that Greece would be better off with Grexit for a period of 5 years. This would enable Greece to negotiate debt write-down and do the necessary reforms to get its economy in shape. Within the EMU, debt write-down is not on the cards.

Returning to the drachma and having a parallel currency of the euro is not without its hardship difficulties.

It would require a mobilisation of a vast volunteer effort within Greece to offset the worst implications of this for its people.

Judging by their huge success in standing up for Greece at the political level, if the Greek people can mirror only a fraction of this effort, debt write-down with a quick return to order and return of Greece to markets is within their scope.

Austerity in Greece has already made their country competitive and has generated a surplus.

Their banking issues require debt write-down of the order of 60%. Devaluation and return to the drachma can turn around the fortunes of Greece in the shortest time possible.


till again














Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: