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[lijacote]

I also wouldn't call the Syriza affair a "loss of sovereignty". Syriza is free to do whatever it wants. But the rest of Europe is also free to not give them money anymore if they do something else. I think the austerity policy were a stupid idea, but it's not an issue of loss of sovereignty.

Heh. Recently, in Finland, the government entered into negotiations with the representatives of the trade unions. Unless the trade unions agreed to enter a social contract with the government (whose contents are wholly repugnant), the government would slash ten billion from what is essentially social security and welfare. If they did agree, they would not slash quite as much (was it four billion?). Such "free" contracts. As Mainiac says, it's blackmail, and that's not a very good contract at all.

But of course, the federalist would think that blackmail is acceptable.

What's 'international custom' in this case?

Either treat Greece like the US treated Mexico in the 90s or treat Greece like the US treated California seven years ago.

If the US had treated Mexico like Greece is being treated Mexico would have said "Fuck you too, buddy" and just unilaterally defaulted and gone to the IMF and World Bank for an adjustment program.  If the US had treated California like Greece is being treated California would have sued and received damages through the Federal courts.  The California case is such an outlandish scenario though that it's almost absurd to contemplate and I certainly can't provide an examples.  And that's the thing, people thought that Greece being mistreated like this would be an outlandish scenario.  Germany overturned the founding principles of the Euro to protect a few banks. It's amazingly inefficient, a few bank nationalizations and tens of billions of dollars would have solved the banking side of things.

Nationalisation doesn't serve privatisation, which is an essential part of the neoliberal offensive.

[Sheb]

So you're saying that Europe should just bankroll Greece, no matter what choice they make, otherwise we're "restricting their sovereignty"? That's like saying the supermarket is "restricting my freedom" by not giving me free stuff. Technically true (I'm left with the unappealing choice of going without bacon-flavored chips or finding a job to get money, so my freedom of eating chips while lounging on the couch is gone), but any reasonable person would agree it's normal.

mainiac: Do you have a good primer on the US-Mexican default stuff?

[mainiac]

That's like saying the supermarket is "restricting my freedom" by not giving me free stuff.

No it's not.

The reason why the EU is obligated to bankroll Greece is because the EU controls the currency that Greece is a member state of the European monetary union.  You are not a memberstate of your supermarket's monetary union.  Such contracts were made illegal in the 19th century between corporations and individuals.  They are still legal between governments and other governments however.  That is why the US was obligated to act as a lender to California 7 years ago and the EU was obligated to act as a lender to Greece 5 years ago.  The difference being that the US knew the difference between it's ass and a hole in the ground so California is fine and the US made good on it's loans to California.  If the EU had done it's job 5 years ago, the cost of solving the Greece problem wouldn't be this high.

[Sheb]

Ok, in that sense it's understandable then.

So by the US-Mexico thing you just meant that the US doesn't control Mexico's currencies?

[scriver]

That's like saying the supermarket is "restricting my freedom" by not giving me free stuff.

Yeah, your fat arse is definitely a proper and sufficient comparison to Greece's economical situation.

[lijacote]

So you're saying that Europe should just bankroll Greece, no matter what choice they make

Nope. I wonder how you arrive at this.

[Sheb]

Mainiac made more sense: the way you presented it, they were blackmailed, but they were after all free to refuse dealing at all time (which is what is happening too). Without insisting on the duty that come with monetary policy the case doesn't stand.

It's like arguing that Europe is infringing on Swiss sovereignty because they were shut out of some programs after voting to restrict entry by Croats.

[mainiac]

So by the US-Mexico thing you just meant that the US doesn't control Mexico's currencies?

At the core, yes.  The key thing is the ability it gives them:Mexico always has the option to go "fuck you too, buddy" and ramp up inflation.  This is generally not going to be an optimal outcome for the US*.  The implicit threat of Mexico resorting to this means that there is always a guarantee of Mexican ability to pay, you will always get Peso's back even if those Peso's aren't worth as much.

Suppose Mexico were to agree to start using dollars instead.  Mexico would be giving up it's "fuck you too, buddy" power.  That is a very, very big deal.  The US would no longer need to worry about Mexico exercising this power so it would encourage American investment in Mexico.  However assurances would need to be made that the US would make sure to replace the assurances of Mexican ability to pay because Mexico just gave up it's guarantee in that regard.  If the US didn't do this it would be reckless and that recklessness would undermine all investment in Mexico.

Greece gave up the Drachma and the assurances that came with it.  This lead to German investment in Greece which was profitable for Germany and beneficial for Greece.  However this took place under the agreement that the EU as a whole would protect Greek ability to reply.  It was understood that Greece was like California, where the US government will make sure things dont get too bad.  If California ever got really bad it would just end up like Alabama, backstopped entirely by the US government.

Then the crisis hits and it turns out that Greece isn't like California or even like Alabama.  They gave up their currency but they aren't considered a stakeholder in the Euro.  Instead the Euro exists to protect German bankers.  And that is the actual realizing of all the paranoid shit about neoliberalism that people say.  We sold out a country to protect a trifling small amount of wealth in a handful of banks.

It's a good world where we agree never to go "fuck you too buddy".  Cooperation allows for larger economies of scale and lets the collective standard of living rise.  But if one side cooperates and the other side betrays them it leaves the naive side deep in the shit.  The EU has not only ruined the benefits of cooperation, it has tainted the whole process and made everyone much more suspicious in the future.

*although if needs to happen the US has an incentive to try to cooperate with Mexico and make the adjustment through inflation process less painful for both sides.

[lijacote]

Mainiac made more sense: the way you presented it, they were blackmailed, but they were after all free to refuse dealing at all time (which is what is happening too). Without insisting on the duty that come with monetary policy the case doesn't stand.

It's like arguing that Europe is infringing on Swiss sovereignty because they were shut out of some programs after voting to restrict entry by Croats.

In no way does any of that justify your interpretation of anything I've said as "Greece must be bankrolled by Europe". No, I don't think it should. I think the Euro should be dismantled, or at the very least it should become a co-currency, not the currency. That would be a compromise. With the way things are in the eurozone, nations are not free to control their own currency. Not only is national currency no longer under their control, but public institutions and public security are eroded by the central authority in Europe, in the interest of paying back the loan - as if destroying the public sector did anything to help with the deficit. This "austerity" is not only threatening and destroying Greece, it has also been leveraged against my country of residence, Finland, which is one of the better-off countries in Europe, and only because we're nearing some arbitrary limit of debt (60% of GDP, IIRC) - this limit is used to justify cuts to public spending, which does fuck-all to help the economy as a whole and a lot to help the private sector.

It serves only the interest of a few investors to "keep Greece bankrolled" and in the euro, those who have invested in Greek debt. I don't give a damn if they lose out, if the end-result is that Greece doesn't have to tear down every public institution and sever all the limbs of the public economy.

Who can't refuse blackmail? Who is not free to refuse offers made at "gunpoint"? It is a dubious freedom, but it is there. This dubious freedom is what is used to defend this odious debt and these violent "contracts".

[Helgoland]

lij, you're one hell of a weird nationalist.

Greece gave up the Drachma and the assurances that came with it.  This lead to German investment in Greece which was profitable for Germany and beneficial for Greece.  However this took place under the agreement that the EU as a whole would protect Greek ability to reply.  It was understood that Greece was like California, where the US government will make sure things dont get too bad.  If California ever got really bad it would just end up like Alabama, backstopped entirely by the US government.

[...]

It's a good world where we agree never to go "fuck you too buddy".  Cooperation allows for larger economies of scale and lets the collective standard of living rise.  But if one side cooperates and the other side betrays them it leaves the naive side deep in the shit.  The EU has not only ruined the benefits of cooperation, it has tainted the whole process and made everyone much more suspicious in the future.

- Wasn't there an explicit 'no bailout' clause? You say 'it was understood' as if that was the written law.
- Couldn't the shit Greece pulled pre-2008/2010 be considered going "fuck you too buddy" as well? I'd wholeheartedly agree with you if the EU was a proper state, but as things currently are, the comparison to California fails. It's a mistake in the construction of the Euro, I guess, one which will have to be rectified either by growing integration or by dismanteling the currency.

[smjjames]

I know it rose out of the TPP discussion, but maybe take the Europe stuff to the Europol thread?

[Helgoland]

It's not like a fucked-up Eurozone won't have an impact on the US

[mainiac]

The commitment isn't to assume the debts, the commitment is to create an economic balance that allows the debts to be repayed.  Now it is often cheaper to assume a fraction of the debt then create that balance through other means.  For instance Germany recognized in the 20s that they could make themselves more useful to the Great Powers alive then dead and got the other powers to agree to the Young Plan and the Dawes Plan, both of which took debts from Germany.

- Couldn't the shit Greece pulled pre-2008/2010 be considered going "fuck you too buddy" as well?

Well let me take a step back, "fuck you too, buddy" is a shortening of "I have the ability to go it alone.  You want to push me around?  Fuck you too, buddy.  I'm giving you nothing."

Greece in 2008/2010 did not have the ability to go it alone.  They had given up this ability.

It's not like a fucked-up Eurozone won't have an impact on the US

Yes.  The US economy would have recovered quite a bit sooner otherwise.

[lijacote]

lij, you're one hell of a weird nationalist.

I am only a nationalist to the degree that I think nations should be free of imperialism. National liberation is the extent to which I'll agree and ally with nationalism, no more than that, and no less than that. The right of all nations to self-determination and all that.

[smjjames]

It's not like a fucked-up Eurozone won't have an impact on the US

True, global economy and all that.