[Marxism] Piketty et al to Merkel: austerity has failed; E'zone corruption; IMF bad faith; E. Europe duped

Dayne Goodwin daynegoodwin at gmail.com
Wed Jul 8 16:04:59 MDT 2015

Austerity Has Failed. An Open Letter to A. Merkel
by Thomas Piketty, Jeffrey Sachs, Heiner Flassbeck, Dani Rodrik, Simon
AnalyzeGreece!, July 7

*Five leading economists warn the German chancellor: “History will
remember you for your actions this week*

The never-ending austerity that Europe is force-feeding the Greek
people is simply not working. Now Greece has loudly said no more.

As most of the world knew it would, the financial demands made by
Europe have crushed the Greek economy, led to mass unemployment, a
collapse of the banking system, made the external debt crisis far
worse, with the debt problem escalating to an unpayable 175 percent of
GDP. The economy now lies broken with tax receipts nose-diving, output
and employment depressed, and businesses starved of capital.

The humanitarian impact has been colossal—40 percent of children now
live in poverty, infant mortality is sky-rocketing and youth
unemployment is close to 50 percent. Corruption, tax evasion and bad
accounting by previous Greek governments helped create the debt
problem. The Greeks have complied with much of German Chancellor
Angela Merkel’s call for austerity—cut salaries, cut government
spending, slashed pensions, privatized and deregulated, and raised
taxes. But in recent years the series of so-called adjustment programs
inflicted on the likes of Greece has served only to make a Great
Depression the likes of which have been unseen in Europe since
1929-1933. The medicine prescribed by the German Finance Ministry and
Brussels has bled the patient, not cured the disease.

Together we urge Chancellor Merkel and the Troika to consider a course
correction, to avoid further disaster and enable Greece to remain in
the eurozone. Right now, the Greek government is being asked to put a
gun to its head and pull the trigger. Sadly, the bullet will not only
kill off Greece’s future in Europe. The collateral damage will kill
the Eurozone as a beacon of hope, democracy and prosperity, and could
lead to far-reaching economic consequences across the world.

In the 1950s, Europe was founded on the forgiveness of past debts,
notably Germany’s, which generated a massive contribution to post-war
economic growth and peace. Today we need to restructure and reduce
Greek debt, give the economy breathing room to recover, and allow
Greece to pay off a reduced burden of debt over a long period of time.
Now is the time for a humane rethink of the punitive and failed
program of austerity of recent years and to agree to a major reduction
of Greece’s debts in conjunction with much needed reforms in Greece.
To Chancellor Merkel our message is clear; we urge you to take this
vital action of leadership for Greece and Germany, and also for the
world. History will remember you for your actions this week. We expect
and count on you to provide the bold and generous steps towards Greece
that will serve Europe for generations to come.
Heiner Flassbeck, former State Secretary in the German Federal
Ministry of Finance
Thomas Piketty, Professor of Economics at the Paris School of Economics
Jeffrey D. Sachs, Professor of Sustainable Development, Professor of
Health Policy and Management, and Director of the Earth Institute at
Columbia University
Dani Rodrik, Ford Foundation Professor of International Political
Economy, Harvard Kennedy School
Simon Wren-Lewis, Professor of Economic Policy, Blavatnik School of
Government, University of Oxford

Greece Exposes The Flaws Of A Wrong Europe
by Mehmet Ugur and Ozlem Onaran
Social Europe, July 7

The Greek people, their newly-elected government and many Europeans
and non-Europeans with a sense of justice, history and solidarity,
have been shouting loud: the “Greek problem” is a consequence of
neo-liberal economic and financial policies that have become
increasingly dysfunctional and dangerous. The problem has been made
worse by the ascendance of sheer inter-governmentalism in Europe.

Both neo-liberalism and inter-governmentalism are the results of
collusion between economic, financial and political elites in Europe,
aided by economists, political scientists, lawyers, analysts and
journalists with a conservative outlook. The symbiotic relationship
between these two has been feeding on the spoils of increasingly
unequal wealth accumulation. Their narrative about “Greeks living
beyond their means” is nothing but an unashamed distortion of facts
about both the present and the past.

The distortion of current facts takes the form of preaching to the
Greek people on how they should show penance despite the facts on the
ground. The origin of Greek debt, like subprime lending in the US and,
given the general dysfunctionality of the financial system as laid
bare by the Great Recession, is a result of reckless lending by
private banks. Accommodating economic policies and perverse financial
regulations have facilitated this – just as much as the symbiotic
relations between the European arms industry and corrupt politicians
in Greece, and tax evaders in Greece and tax havens in Luxembourg and
elsewhere in Europe.
 . . .
Özlem Onaran is a member of the Debt Truth Committee in Greece and
Professor of Workforce and Economic Development Policy at the
University of Greenwich. Mehmet Ugur is Professor of Economics and
Institutions at the Department of International Business and Economics
of the University of Greenwich.

In Bad Faith
by Ashoka Mody
openDemocracy, July 7
 . . .
We may not like the conclusion, but it is quite simple. Greece has not
grown and prices have fallen because that was to be expected when
persistent austerity is laid on top of an unsustainable debt. The
debt-deflation spiral always outpaces the returns from structural
reforms. As certainly as these things can be predicted, on the path
set out by the creditors, the stakes will continue to be escalated:
the debt-to-GDP ratio will continue to rise, the calls for more
austerity will grow, and, as the pattern repeats, more debt relief
will be needed.

So we arrive at the present. The IMF looks back at its diagnosis in
November 2012 and says, the Greeks did not follow our advice; it is no
surprise that they are in a mess and they need more debt relief. The
truth is that the Greeks are in a mess precisely because they followed
the IMF’s austerity advice and because the promised elixir of
structural reforms was illusory.

And the double indignity is that the IMF now wants the Greeks to do
more austerity in the midst of a debt-deflation cycle because it
chooses to misread the evidence of the past years. If that advice is,
in fact, followed, it is nearly certain that the Greek debt burden
will be greater in two years than it is now.

We may cast a moral and political spin on these facts. Indeed, it is
understandable that political considerations will play a central role
in the European dialogue. But the economic logic is relentless. And
the IMF’s role—its only role—is to render the economic logic
transparent for informed decision making. In disregard of generations
of fine IMF economists and research, the IMF has engaged in its own
moral posturing to retrieve its money and hide its failures.

To be clear, the argument is not that more debt relief be promised in
exchange for more austerity now. The argument is that debt relief is
needed now—more than the IMF suggests—to prevent the need for even
more debt relief later. It is as much in the creditors’ interest to
change course as it is in the Greek interest.

Once that premise is accepted, then within that basic framework there
is much that the Greeks can do to improve their lot. But such is the
momentum, the politics will almost surely subordinate the economic
logic. That would be a mistake. At what is surely a pivotal moment in
European and global history, at least the facts must be laid out
   _   _   _   _   _   _   _   _   _
Ashoka Mody is Charles and Marie Robertson Visiting Professor in
International Economic Policy at the Woodrow Wilson School, Princeton
University. Previously, he was Deputy Director in the International
Monetary Fund’s Research and European Departments. He was responsible
for the IMF’s Article IV consultations with Germany, Ireland,
Switzerland, and Hungary, and also for the design of Ireland's
financial rescue program. Earlier, at the World Bank, his management
positions included those in Project Finance and Guarantees and in the
Prospects Group, where he coordinated and was principal author of the
Global Development Finance Report of 2001. He has advised governments
worldwide on developmental and financial projects and policies, while
writing extensively for policy and scholarly audiences.

Open Letter to anti-Greek Eastern European bloc
by Zoltan Pogatsa
AnalyzeGreece!, July 8

Dr.Zoltan Pogatsa believes that the Eurozone states of the former
Eastern bloc have been duped by the major powers into firmly opposing
Greece. They are being led to believe that Athens is damaging to their
economies. It's all a deception, the Hungarian professional of
political economy argues, as Eastern Eurozone members money never
actually went to Greece, but to Brussels, in order to support the

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