Tag: Greece

Just before the last round of presidential elections in Egypt that put Muslim Brotherhood candidate Mohamed Morsi in office, the Egyptian Supreme Constitutional Court, which is still packed with the Mubarak regimes appointees, ruled that the parliamentary elections were invalid. The ruling military then dissolved the lower house until new elections could he held. Sunday, in defiance of the ruling, President Morsi decreed the the old parliament to reconvene until a new parliament was elected:

The move was the first in a series of decrees planned by Morsi against the military, according to Morsi’s former campaign media coordinator Sameh El-Essawy, a member of the Muslim Brotherhood’s Freedom and Justice Party. [..]

And hints of a deal seemed unlikely after Morsi’s decree, which stipulated that parliament reconvene and continue its duties until a new assembly is elected, scheduled for 60 days after Egypt drafts a new constitution. Morsi’s decree directly contradicts Scaf’s wishes, and underlines his determination to take control of the country’s executive.

Morsi’s decree is a reversal of the Scaf decision to dissolve parliament, not the SCC ruling that deemed it invalid, said El-Essawy. “He reversed the Scaf decision, using the same executive powers they had. He has not reversed the court ruling which he respects and that’s why a new parliament will be elected after the constitution,” he said.

The Egyptian Parliament reconvened for five minutes on Tuesday for just one vote:

The parliamentary speaker, Saad el-Katatny, convened a session of the lower house on Tuesday morning but it lasted only five minutes, during which time he stressed that parliament had the utmost respect for the law, and would do nothing to subvert it. MPs then voted that parliament would refer the matter of its ability to convene to the court of cassation in Cairo, and would not assemble until a judgment had been given.

As the drama was being played out, demonstrators against the dissolution of parliament gathered in Tahrir Square. Meanwhile, anti-parliament protesters congregated on the other side of town in the eastern district of Nasr City to voice their objection to its return.

Tuesday’s assembly was boycotted by a sizable number of liberal MPs while an independent MP, Mustafa Bakri, had already announced his formal resignation from parliament due to its unconstitutionality.

Then just hours after the chamber’s brief session, the Supreme Constitutional Court stepped in

“The Supreme Court has once again reiterated that the parliament is dissolved,” our correspondent said. “It’s the third decsion by them saying that Morsi’s decison to reinstate the parliament was illegal. They cannot say it in any more certain terms than that.”

“They’re saying that the parliament sessions cannot continue, which would mean legislative powers would stay in the hands of the armed forces – in this power struggle between the military and the president.” [..]

Lawyers representing Morsi criticised the court’s latest decision and said Tuesday’s ruling was a political move that would further complicate the crisis.

“This ruling is null and void,” lawyer Abdel Moneim Abdel Maqsud told reporters while another member of the team, Mamduh Ismail, called it a “political decision”. [..]

Morsi’s decree was hailed by those who want to see the army return to barracks, but it was criticised by those who fear an Islamist monopolisation of power as a “constitutional coup”.

As noted in an editorial in the Los Angeles Times, this is just the first of many confrontations between Morsi and the military:

In reconvening the People’s Assembly, Morsi insisted that he wasn’t flouting the decision of the court but rather reversing an executive action taken by the military council in the absence of a civilian president. Indeed, the overarching issue in this dispute is whether the armed forces are prepared to yield power to the elected representatives of the Egyptian people. [..]

To some extent, the military’s power – along with economic realities – may have inclined Morsi and the Muslim Brotherhood to a more pluralist and moderate course. But if the generals overplay their hand, they will lose popular support and antagonize Egypt’s allies, including the United States, which provides the military with $1.3 billion a year in assistance. Both Congress and the Obama administration have put the generals on notice that those funds are in jeopardy if the transition to democracy is thwarted. An attempt to shut down a reconvened parliament would be interpreted inside and outside Egypt as just such an obstruction.

So far, the Mohamed Morsi 0 – Egyptian Military 1.  

Austerity is not going well for Europe or the US.

U.S. Stocks Post Longest Slump in 1 Month on Europe Woes

by Rita Nazareth and Julia Leite

U.S. stocks fell, giving benchmark indexes the longest slump in more than a month, after a jump in Spanish bond yields above 7 percent intensified concern about Europe’s crisis and as investors awaited Alcoa (AA) Inc.’s results.

The Standard & Poor’s 500 Index slid 0.2 percent to 1,352.45 at 4 p.m. New York time, according to preliminary closing data, paring an earlier loss of as much as 0.6 percent. The benchmark index dropped 1.6 percent over three days.  [..]

Stocks joined a global slump as the yield on Spain’s 10- year bond rose above the threshold that prompted bailouts in Greece, Ireland and Portugal. German Finance Minister Wolfgang Schaeuble dismissed a rapid move toward direct bank recapitalization by the European rescue fund, limiting the tools for shoring up Spanish banks as the euro-area crisis simmers.

Stocks Retreat as Spanish 10-Year Bond Yield Exceeds 7%

By Stephen Kirkland and Rita Nazareth

U.S. stocks fell for a third day as Spain’s 10-year debt yield topped 7 percent, fueling concern the debt crisis is worsening, and investors awaited the start of the earnings season. Corn and soybeans surged on forecasts for more dry U.S. weather. Treasuries rose.

The Standard & Poor’s 500 Index slipped 0.2 percent at 4 p.m. in New York and the Stoxx Europe 600 Index fell 0.4 percent. Ten-year Spanish yields jumped 11 basis points to 7.06 percent after rising as high as 7.108 percent. The euro climbed 0.2 percent to $1.2319, rebounding from a two-year low of $1.2251. Corn rose as much as 5.8 percent and soybeans jumped to a four-year high. Oil added 1.8 percent to $85.99 a barrel and natural gas rallied as a strike threatened supplies from Norway.

E.U. Seeks to Dispel Doubts About Bank Bailouts

by Paul Geitner and Stephen Casstle

BRUSSELS – With borrowing costs for Spain and Italy climbing again to critical levels, European officials sought Monday to dispel doubts about a deal struck last month to break the “vicious circle” between shaky banks and weak governments.

Spain, suffering through its second recession in three years, was also expected to win more time to rein in its budget deficit even as euro zone finance ministers haggled in Brussels over terms of a bailout for its troubled banks.

Amid the unrelenting market pressure, the European Central Bank reaffirmed that it stood ready to do more to stem the crisis – within the limits of its mandate – while urging euro zone governments to press ahead with closer integration.

Even here in the US, the Federal Reserve admits that they may be reaching there limits on their ability to fix unemployment and are at odds as to what to do next.

Fed’s Lacker Says U.S. May Be Close to Maximum Employment

By Kathleen Hays and Jeff Kearns

Federal Reserve Bank of Richmond President Jeffrey Lacker said the U.S. may already be close to maximum employment from a monetary policy standpoint and that policy makers can’t do much more to cut the jobless rate.

“Given what’s happened to this economy, I think we’re pretty close to maximum employment right now,” Lacker said today in a Bloomberg radio interview on “The Hays Advantage” with Kathleen Hays and Vonnie Quinn. “That might be shocking. That might be surprising.”

Fed policy makers believe the U.S. central bank has limited control over the jobless rate because the employment level is driven by “non-monetary factors that affect the structure and dynamics of the labor market,” according to the January statement from the Federal Open Market Committee. The jobless rate was unchanged at 8.2 percent in June.

Lacker, who has dissented from all four FOMC decisions this year, is at odds with colleagues on what the Fed should do to boost the economy. He said in a June 22 statement that he opposed the FOMC’s $267 billion extension of its Operation Twist program because it may spur inflation and won’t give the economy a significant boost.

San Francisco Fed President John Williams said today the U.S. central bank must maintain “extraordinary vigilance” to see if the slowing economy requires additional monetary stimulus. “If further action is called for, the most effective tool would be additional purchases of longer-maturity securities, including agency mortgage-backed securities,” Williams said in a speech in Coeur D’Alene, Idaho.

While all the PTB debate how to save banks and the markets, the 99% are getting poorer putting an even bigger drag on the economy. For most the recession never ended.

The heads of state of the EuroZone countries met in Brussels today for a two day summit to  try to come to an agreement on how to bail out two of its biggest members, Italy and Spain:

The 27 government chiefs will discuss buying Spanish and Italian government bonds to bring down borrowing costs that are near euro-era records, Finnish Prime Minister Jyrki Katainen said. He also proposed that bailout funds buy collateralized government debt in primary markets.

“I’ve come for very rapid solutions to support countries in difficulty on the markets,” French President Francois Hollande told reporters as he arrived in Brussels. Without specifying Spain or Italy, he said they “have made considerable efforts to deal with their public accounts.”

Leaders will consider short-term measures to stem the sovereign debt turmoil as EU President Herman Van Rompuy’s road map to strengthen the bloc’s common currency and financial oversight ran into immediate opposition from Germany. German Chancellor Angela Merkel has become increasingly isolated as Hollande, Italian Prime Minister Mario Monti and Spanish Premier Mariano Rajoy unite to push for quicker action to ease the crisis that emerged in Greece in late 2009.

Apparently all did not go German Chancellor Merkel’s way as she canceled her scheduled evening press conference. Or maybe she was watching her country’s football team get trounced by the Italians.

Euro 2012 Live Blogging: Italy 2 Germany 0

Other than the names and faces of the actors, not much is different in either Greece or Egypt after much analyzed and anticipated elections this weekend. In Greece, the center right is still faced with the dilemma of forming and holding together a coalition government to deal with the economic crisis that threatens to take down the Eurozone. While is Egypt, despite the historic election of an Islamic president, the military still maintains a tight control and all the power.

Greek elections: Antonis Samaras faces tough task to forge unity

The fault lines are so deep that even if a government is formed, many believe it will be a miracle if it survives for long

[..]The ambitious politician faces the Herculean labour of forging a government of “national salvation” at a time of unprecedented crisis. Not since the collapse of military rule has the country come so close to resembling a failed state. Following almost three months of political paralysis – before and after an inconclusive poll in May – Greece’s public finances are in tatters, its public administration is in disarray and its austerity-weary people are beaten down. It is now for Samaras to pick up the pieces. [..]

Late on Monday Samaras announced he had agreed with the head of Pasok, Evangelos Venizelos, to build a coalition, with negotiations expected to be concluded by Tuesday. Once bitter political rivals, the socialists, who came in with 12.3% of the vote, say the creation of a government of “national co-responsibility” is vital if Greece is to be steered through the crisis.

Combined, the two parties would control a comfortable majority of 162 seats in the Greek parliament. [..]

But fault lines in Greek society are so deep that even if a government is formed many believe it will be a miracle if it survives for long. To secure further rescue loans Athens has agreed to pass an extra €12bn in budget cuts, measures seen as vital if its economy is to reclaim competitiveness. And on Monday creditors led by Germany appeared in little mood to relent.The fiscal adjustment programme might be relaxed but “only marginally,” several officials said. “Greek society simply cannot endure any more measures,” insisted (New Democracy MP Kyriakos) Mitsotakis. “It’s not a question of what party is in office, it is a fact.”

German Chancellor Andrea Merkel, emboldened by the Greek center right narrow victory, has continued her hard line stand on enforcing the Greek deal

“The Greek government will and must naturally follow through on the commitments that were made,” Ms. Merkel told reporters at the Group of 20 meeting in Los Cabos, Mexico, disappointing those in Athens who hoped for a signal of new flexibility toward Greece in the wake of the vote. “There can be no loosening of the reform steps.”

At least Greece has a Parliament. Egypt on the other hand is once again on the verge of revolution as the Muslim Brotherhood threatens to take to the streets once again in protest over the military usurpation of power:

The ruling generals sought for the first time to sell the public on the decision to dissolve the Brotherhood-led Parliament on the eve of the vote. In a nearly two-hour news conference that was edited before it was televised, two members of the military council insisted that they regretted dissolving Parliament, but that they had been forced by a court ruling from judges appointed by former President Hosni Mubarak.

And although they have now issued an interim Constitution keeping legislative and much of the executive power for themselves – and even said later Monday that they would appoint a general to run the new president’s staff – the generals promised to hold a “grand celebration” when they turned over power as promised at the end of the month. [..]

In their news conference, the generals acknowledged they would have a monopoly on all lawmaking powers as well as control of the national budget. But they said that the new president – they did not name Mr. Morsi – would retain a veto over any new laws and could name the prime minister as well as other cabinet officials.

The generals have not backed away from the initial charter that removed the military and the defense minister from presidential authority and oversight and defended the imposition of martial, arresting and detaining civilians for trials in military courts. They also took it upon themselves to appoint the new president’s chief of staff and revived a special national defense council packed with loyal military officers, charged with overseeing matters of national security. This is not going over very well with the Egyptian people.

The bright spot in all of these travails, the French who gave newly elected president François Hollande a majority in Parliament on Sunday, which is likely only to embolden his drive for more growth-oriented spending and a retreat from German-style austerity. But if everything you hear about Greece and Egypt sound familiar, it is.

The Greeks have decided to stay the course with the center right and have given a victory to the New Democracy Party headed by Antonis Samaras:

New Democracy narrowly beat Syriza, an alliance of radical leftists, winning 29.53% of the vote against 27.12% for the coalition led by Alexis Tsipras. Samaras called the result a victory for Europe.

“The Greek people today voted for the European course of Greece and that we remain in the euro,” Samaras declared in a victory speech. “This is an important moment for Greece and the rest of Europe,” he insisted, saying that Athens would honour the commitments it made in exchange for rescue loans from the EU and IMF. [..]

Across Greece’s divisive political spectrum there was speculation that Samaras would be able to form a viable coalition with the socialist Pasok and the small Democratic left – parties that have also agreed to accept the onerous terms of bailout funds even if they, too, want to renegotiate the package. [..]

Pro-bailout parties now constitute 50% of the electorate. But with the other half also vehemently opposed to the austerity policies dictated by foreign lenders, Greece’s rollercoaster ride is unlikely to end soon. It is now well into its fifth year of recession, with unemployment at a record 22% and worsening levels of poverty leaving thousands of Greeks destitute and homeless. Resistance to further austerity measures is only going to grow.

In France, exit polls indicate that Socialist Party of François Hollande has won a solid majority in both houses of the Parliament, eliminating the need for a coalition government. The conservative National Front has won four seats. The party leader, Marine Le Pen lost her bid for a seat but her 22 year old niece, Marion Marechal-Le Pen is believed to have been elected in the southern region of Carpentras. Former presidential candidate and M. Hollande’s ex-partner, Ségolène Royal has lost her bid for a seat in the National Assembly.

The Socialists and other left-wing parties came out on top in last Sunday’s first round of the vote, winning 46 per cent to 34 per cent for (former president Nicholas) Sarkozy’s UMP party and its allies. [..]

The polls showed France’s Socialists winning between 287 and 330 seats in Sunday’s runoff vote – almost certainly enough to secure a majority in the 577-seat Assembly. [..]

The Greens, who are close allies of the Socialists and already in government, were expected to win up to 20 seats.

The vote was also a key test for Marine Le Pen’s anti-immigrant and anti-EU National Front (FN), which took 13.6 per cent in the first round; far above the four per cent it won in the last parliamentary election in 2007.

There are no results yet for Egypt. But there is news and it is not good for the Egyptian people no matter who wins. This is the report by Leila Fadel and Ernesto Londoño in the Washington Post:

CAIRO – Shortly after polls in Egypt’s landmark presidential vote closed Sunday night, Egypt’s military leaders issued a constitutional decree that gave the armed forces vast powers and appeared to give the presidency a subservient role.

The declaration, published in the official state gazette, establishes that the president will have no control over the military’s budget or leadership and will not be authorized to declare war without the consent of the Supreme Council of the Armed Forces.

The document said the military would soon appoint a body to draft a new constitution, which would be put to a public referendum within three months. Once a new charter is in place, an election will be held to chose a parliament that will replace the Islamist-dominated one dissolved Thursday by the country’s top court.

Currently, exit polls show Muslim Brotherhood candidate Mohamed Morsi, ahead of former prime minister Ahmed Shafiq in the presidential runoff vote.

The Big Three elections that are taking place this weekend in Egypt, France and Greece. The outcome of these elections will not only effect the people of those countries but will have global impact as well.

In Egypt, the second day of voting for president is expected to be heavier than yesterday. Many Egyptians, not trusting the safety of their ballots held overnight, decided to hold off and vote today. Their choices are between between a conservative Islamist, Mohamed Morsi, the candidate of the Muslim Brotherhood and Hosni Mubarak’s former prime minister and long time friend, Ahmed Shafiq.

The prevailing mood among voters was one of deep anxiety over the future, tinged with bitterness that their revolution had stalled. Moreover, there was a sense of voting fatigue, and fears that no matter who won, street protests would erupt again.

Egyptians have gone to the polls multiple times since Mubarak’s fall on 11 February 2011: a referendum early last year, then three months of multi-round parliamentary elections that began in November, and the first round of presidential elections last month. [..]

The election is supposed to be the last stop in a turbulent transition overseen by the military generals. But even if they nominally hand over some powers to the winner, they will still hold the upper hand over the next president.

The generals are likely to issue an interim constitution defining the president’s authority while they retain their hold on legislative powers, and they will probably appoint a panel to write the permanent constitution.

Since the Mubarak packed Egyptian Supreme Court declared the parliamentary elections unconstitutional and dissolved parliament, the military has imposed martial law. Without a parliament, military council and the new president will get to write the constitution. This is not what the Egyptian people took to the streets planned or want. As Egyptian activist Mona Eltahawy said on Twitter: the choice is between the fascists with guns or the fascist with god.

In France, parliamentary elections are today. French citizens living outside France voted yesterday at consulates around the world. These elections will determine how much clout newly elected President François Hollande’s socialist government will have to get France and Europe out of the economic doldrums with a stimulus package from the EU. Much depends on German Chancellor Angela Merkel and just how much she will budge. So far, despite her party’s losses in state elections, it looks like she has dug her heels in forcing unwanted, and admittedly counterproductive, austerity measures on everyone.

The Socialists need 289 MPs in the 577-seat house for an absolute majority, which would allow Hollande to implement his manifesto with relative ease. The broad French left dominated the first-round vote on 10 June, and polls suggest a Socialist absolute majority is possible, though not a certainty.

Even if Hollande’s party does not quite win a majority alone, it looks likely to be able to make up the numbers by forming a partnership with the Greens, with whom it has an electoral accord. This would avoid Hollande having to depend on more hardline leftists who oppose key elements of his programme.

Much will depend on voter turnout. This is the fourth election in France in two months, after the two-round presidential race. Turnout in the first-round parliamentary vote on 10 June was 57%, the lowest since 1958.

One of the key issues is whether the far-right Front National can win seats and sit in parliament for the first time since 1986. The last FN deputy was elected in 1997, but the result was later annulled over funding irregularities.

And probably the most important election is taking place in Greece where a win for the far left Syriza Party may drastically change the austerity policies that have created a humanitarian crisis.

The Guardian has documented the humanitarian catastrophe that followed. Soup kitchens for the middle class, a huge jump in homelessness and mental disease, daily suicides, lack of basic medicines, cancer patients turned away from pharmacies, and hospitals ceasing operation because of a lack of basic supplies. The question on Sunday is not between the euro and the drachma, but between the continuation of these policies or salvation from the greatest destruction a people have experienced in peacetime. If something is leading to the exit from the euro, a probable collapse of the eurozone and a possible world crisis of 1930s magnitude, is not the Syriza policies but extreme austerity and mad economic recipes.

Syriza is totally committed to the eurozone. Its manifesto promises an immediate repeal of all laws enacted by the Greek government after the bailouts. Some of the measures affecting the private sector were never demanded by the troika – the EU, IMF and the European Central Bank – and were introduced by the establishment parties. After that, negotiations will start for a substantial reduction of the debt, which may be followed by a moratorium on servicing the debt until the economy starts growing again.

In a highly symbolic move, the minimum wage and unemployment benefit will return to their pre-austerity levels. Syriza’s anti-austerity and pro-Europe policies represent the best interests of the Greek people.

Many of the results will be available later today, some later in the week since most of these elections are done with paper ballots which take time to count and confirm. We will bring the results and analysis of their impact as they are posted.

Last week the Irish voted against their own (s)elf interest, which according to Yanis Varoufakis, professor of economics at the University of Athens, when they “voted in favour of the EU’s fiscal compact which specifies that which is both impossible to attain and catastrophic if it is attained“:

So, why did the Fine Gael-led Dublin government push so powerfully in favour of this piece of crippling idiocy? And why did the smart, decent Irish voters said Yes, despite their tradition of saying No to euro-silliness? The answer is simple: They were blackmailed. Ireland’s voters were told: Vote No and the flow of money from the troika will cease. And so they voted Yes, even though I suspect that no government minister, no rank and file Fine Gael or Labour Party member, no man or woman on the street believes that the Fiscal Compact they voted for makes sense. [..]

If on 17th June Greeks voted like the Irish did last week (that is, against their reasoning and guided by fear and blackmail), the Eurozone will become history, with terrible consequences for the global economy. This is not the case of the Philosopher Kings blackmailing the plebs to do what is right. This is the case of ‘madmen in authority’, to quote Keynes, who are not only steering the vessel toward the rocks but who are, in the process, punching holes in the life vests that may carry us to safety once the shipwreck is complete. [..]

To conclude, Europe’s peoples are being marched into a catastrophe. They know that this is their predicament. They can see their march is leading them off a mighty cliff. But they are too afraid to veer off, in case there are beaten back into line, in case they get lost in the woods, for reasons that sheep know best. However, the only way this hideous march can end is if someone summons up the courage and does it. And steps out, showing the others that this march can stop and must stop – for everyone’s benefit. Who is that someone? We, Europeans, do not have many options. As I wrote above, the Irish people had a chance but did not take it. In two weeks, the Greeks have their chance. Voting for Syriza would offer us (and by ‘us’ I mean all Europeans) a chance of this circuit-breaker. A chance to say: Enough! Time to change course in order to save the Eurozone, so as to prevent the Great Postmodern Depression which lurks once the euro-system fragments formally.

Varoufakis gives his reasons for supporting Sariza: first, that Sariza is the only party that understands that Greece needs to stay in the EuroZone and that the Eurozone won’t survive if it doesn’t give up austerity; second, the economic team that will negotiate on Greece’s behalf are good and persuasive with a clear understanding of the situation; and third, Syriza will not be the sole arbiter of the Greek government. It will be a coalition, so there is no need to fear the party’s extreme leftism.

I hope the Greeks’ come to their senses unlike the Irish and Wisconsins.

The economic crisis in Europe and the austerity response to it which has spread from Greece to other countries in Europe has dominated the news now for weeks. This past weekend the leaders of the G-8 met at Camp David where it was the main topic for discussion. While President Obama’s statement that encourages stimulus and growth as solutions to the EU problem, he did not discount austerity as one of the driving policies that has extended the downturn and caused social upheaval in Greece and now Spain. The reporting in the traditional mainstream media has been particularly lacking ion balanced analysis and, in some cases, some pretty sloppy and biased reporting.

William K. Black, an associate professor of economics and law at the University of Missouri-Kansas City, former litigation director for the Federal Home Loan Bank Board and a white-collar criminologist, takes reporters at the New York Times task for their profound ignorance on covering Europe’s financial, social, and political crises. He explains why they are so wrong:

Economists have known for roughly 75 years that adopting austerity in response to recession or depression will make the economic crisis grow and last far longer.  Austerity is to economics as bleeding was to medicine. [..]

The NYT article focuses on Alexis Tsipras, the Greek political leader whose party rose to prominence by promising to reject the loan-for-austerity program that the disgraced former Greek government agreed to at Berlin’s diktat. The article’s theme is that Tsipras is endangering all of Europe by demanding an end to austerity being imposed on Greece.  The reporters write, as if it were undisputed fact, that Tsipras has started “a high-stakes game of chicken with Europe’s leaders.”  But that reverses the facts.

The game that Berlin designed required the Greek to agree (1) to drive their economy off a cliff into a deepening Great Depression through increased austerity, (2) to force an enormous reduction in working class wages, (3) to sell Greek islands to private parties, and (4) to give up other aspects of sovereignty so that hostile, foreign, and private entities such as the IMF and the ECB could monitor its governmental actions.  The Greeks are now refusing to commit economic, political, and social suicide.  The Germans are demanding that they drive off the cliff because “a deal is a deal.”

If Greece were to drive off the cliff by adopting greater austerity it would likely destroy the EU.  Austerity would force Greece into a deepening depression, eventually lead to a default on Greek sovereign debt, and tear Greece apart.  Austerity has already generated a substantial neo-Nazi party in Greece.  Few Americans recall the Greek civil war between the right and the left that began in World War II and continued for several years after the war or the post-war coup.  Greeks recall the civil war and the coup and fear their resumption.  Proponents of the Berlin Consensus already have blood on their hands because of the suicides engendered by mass unemployment, small business failures, and hopelessness.  If the Berlin Consensus sparks a civil war or coup it could be fatal to the EU.

The EU crisis was also the topic of a heady discussion on this Sunday’s Up with Chris Hayes. Prof. Black was joined on the “Uppers” panel by Betsey Stevenson, former chief economist for the Obama Labor Department, Karl Smith, assistant professor of economics and government at the University of North Carolina at Chapel Hill; and MSNBC policy analyst Ezra Klein.

Mr Hayes’ assessment of the political situation in Greece was challenged by a commenter at his blog. Carol P Christ wrote with regards to the political and social responses to the crisis:

Since you are a member of the Progressive Left, you might reconsider calling Syriza the ‘far” Left in comparison to ‘far’ right Golden Dawn. There is no comparison between the 2. Syriza is a coaliton of parties to the left of centrist PASOk and to the “right” of KKE the Communist Party. You might be voting for them if you were in Greece, but you surely would NOT be voting for Golden Dawn. There is NO “comparison” between the 2. Continuing to compare the 2 parties makes it seem that all Greeks are irrational. There is nothing irrational about voting for Syriza. [..]

The “austerity” programs of the EU and banking systems have already destroyed our economy. To blame immigrants as Golden Dawn does is illogical. To ask voters to reject the terms of the second austerity package which is leading to massive unemployment and daily failures of small businesses is by no means irrational.

The Green Party is also against the austerity packages. And we are not “irrational” either.

The dualistic thinking of the west (ironically a legacy of Plato) leads to the demonization of the “other” as irrational. Unfortunately Greece has been portrayed as the “irrational” other within Europe for some time now.

Greece does need to change, but punishing the poor and middle classes is not a “rational” policy. [..]

Let me add that the European union and the Euro should not be confused. The Euro has only been in existence for 11 years. England with one of the largest economies in Europe is not a member of the Euro, nor is Sweden. They are still part of Europe and the European Union.

In Greece the Euro led to a massive rise in prices (a cup of coffee from $1 to $3-5, etc.) without a concomitant rise in wages. For example a tour bus driver makes E700 a month and a radiologist E1400, wages that are near poverty level in the US. depending on family size. Yet the cost of living is as high or higher than in the US, thanks to the price rises that the Euro brought. Gasoline is over $10 a gallon. Sales tax is 23%.

The European Union is a good thing, but the Euro was driven more by market forces and the desire to sell goods freely in Europe, than by a concern for world peace, the environmental protection, or any of the other good things the European Union is working on.

The Euro has not been a good thing for Greece, in my opinion.

(I have taken the liberty of posting most of Ms. Christ’s comments because I think they go straight to the heart of the misrepresentation that is taking place in the traditional news media.)

In another article at the New Economic Perspective, Prof. Black reports that the former head of the European Central Bank (ECB), Jean-Claude Trichet, thinks that by giving European politicians the power to declare a sovereign state bankrupt and take over its fiscal policy it would salvage the euro. To quote Prof. Black, “austerians have decided that since democracy is the problem, imperialism is the answer.”

Nor are fixing the problems of the euro a solution for the austerians:

Trichet, however, says that answer is impossible:  “For the European Union, a fully fledged United States of Europe where nation states cede a large chunk of fiscal authority to the federal government appears politically unpalatable, Trichet said.”  Democracy remains the stumbling block, but Trichet has an answer to that problem – crush democracy.  He proposes that the EU:

   “[T]ake a country into receivership when its political leaders or its parliament cannot implement sound budgetary policies approved by the EU. The action would have democratic accountability if it were approved by the European Council of EU heads of states and the elected European Parliament, he said.”

Of course, the “sound budgetary policies” he means are the suicidal, and failed policies of trying to balance the budget during a Great Recession.  He does not understand even now that a nation in a severe recession cannot simply decide to run a budget surplus.  It can try to do so, by cutting spending or raising taxes, but those policies are likely to reduce already sharply inadequate public and private sector demand, which increases unemployment, increases demand for public services, and reduces government revenue – all factors likely to increase the budget deficit.  I am sure that the Greeks will consider the loss of their sovereignty at the hands of hostile foreign powers who openly sneer at the Greek people to represent the epitome of “democratic accountability.”

And what was the reaction of Berlin to Trichet’s policy to force suicidal austerity on the Greeks and bleed their economy while removing their sovereignty and right to democratic rule?  You know the answer.

As Prof Black so aptly noted that that austerity is “a policy where you’re handed a gun and told to shoot yourself. Eventually people say, ‘Now exactly why should I do that?’. [..]

Whether Greece is the good or the bad, the policy is stupid.”

The United States is not Greece. It has its own sovereign currency and a bond market which it controls. We do not need to follow the EU and shoot ourselves with austerity.

We live in interesting times … Those on the left following the  situation in Greece were treated to an interesting spectacle in the last election in Greece on May 6th 2012. As expected, those mainstream parties that supported the EU/IMF/ECB memorandum (http://www.reuters.com/…) imposing even more harsh austerity on the country were punished: New  Democracy’s (the conservatives, centre-right) votes from 33%-19%, PASOK’s (the Greek socialist party) share fell from 43%-13%, LAOS fell below the 3% needed for securing seats (right-wing nationalist party) all lost seats in the election (greek election results).  This represents in many senses a significant rejection of the mainstream political forces that have been ruling Greece since the end  of the rule of the colonels (1967-74, for a history of modern Greece  see, History of modern Greece) and particularly of the austerity that they have been imposing on the people of Greece over recent months.

Cheat Sheet (to keep track of the players):

SYRIZA: coalition of the radical left, led by Alexis Tsipras

New Democracy: Conservative, centre right neoliberals, led by Samaras

PASOK: Panhellenic Socialist Movement, Socialist party led by Venizelos

KKE: Communist Party of Greece

ANTARSYA: Coalition of Greek Anticapitalist Left, hard left

Golden Dawn: Chrysi Avgi, Greek Fascist Party, neonazis

DIMAR: Democratic Left, centre left to left wing, led by Fotis Kouvelis

LAOS: right wing nationalists

Independent Greeks: Right-wing split off of New Democracy, anti-austerity

Negotiations with party leaders to form a government in Greece fell apart again, as Greece inches closer to new elections in June that could usher in the left wing Socialist government opposed to the draconian austerity agreement with the European Central Bank, the International Monetary Fund and the Eurozone. Talks will resume on Tuesday but the moderate Democratic Left party in Greece says it will not join pro-bailout parties in a coalition without the more radical far-left Syriza. It doesn’t sound promising but technically President Karolos Papoulias has until Thursday when Parliament reconvenes:

Without the support of Democrat Left, a decidedly “pro-European” force which won 19 seats in parliament, the New Democracy party and centre-left Pasok party fall two seats short of being able to achieve a workable majority.

Syriza, an alliance of leftists and ecologists that emerged as the poll’s surprise runner-up – and has since seen its popularity surge on the back of anti-austerity sentiment – rejected the idea of participating in a government that it claimed was bent on “destroying Greece”. Alexis Tsipras, Syriza’s young firebrand leader, refused to even attend the negotiations. [..]

Syriza, whose popularity has risen on a platform of rejecting such measures, is projected to win the election with as much as 27%, according to polls conducted over the past week. Tsipras, an unabashed populist who counts Hugo Chávez among his heroes, has promised to renegotiate the painstakingly acquired bailout agreement Athens has signed with foreign lenders.

With the radical left fast dominating a political landscape whose traditional parties have been decimated for backing policies now blamed for record levels of poverty and unemployment, analysts believe it is only a matter of time before Greece is cut loose from Europe. The result, they say, will be a dramatic decline in living standards as the debt-stricken country, bereft of international rescue funds, slips ever deeper into poverty.

The markets reacted negatively with the prospect of a Greek withdrawal from the euro:

Financial and energy shares fell the most among 10 groups in the Standard & Poor’s 500 Index. JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) sank at least 2.6 percent as European lenders slumped. Alcoa Inc. (AA) and Schlumberger Ltd. (SLB) slid more than 1.5 percent to pace declines in commodity producers. Symantec Corp. (SYMC), the biggest seller of security software, retreated 1.4 percent after Goldman Sachs Group Inc. cut its recommendation.

The S&P 500 slid 1.1 percent to 1,338.35 at 4 p.m. New York time, the lowest since Feb. 2. The Dow fell 125.25 points, or 1 percent, to 12,695.35. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against S&P 500 losses, rose 10 percent to an almost four-month high of 21.87. About 6.6 billion shares changed hands on U.S. exchanges, in line with the three-month average.

Meanwhile, German Chancellor Andrea Merkel’s Christian Democratic Union was handed a defeat in Sunday’s election in Germany’s most populous state, North Rhine-Westphalia, receiving only 26% of the vote:

The outcome will be seen as a rejection by voters of the strict austerity policy promoted by Ms Merkel’s party at both local and national level, and a boost for the opposition. It will encourage the SPD and Greens to campaign all out for a “red-green” coalition at national level when Ms Merkel stands for re-election in autumn 2013. [..]

Opinion polls suggested that voters did not regard Ms Merkel’s national and European policies as relevant, and opted instead for the popular “red-green” coalition in the state, headed by Hannelore Kraft of the SPD, which had governed without an absolute majority for the past two years. The surprise election was caused by the defeat of Ms Kraft’s annual budget by the CDU, FDP and the far-left Linke party.

The defeat is the worst suffered by Ms Merkel’s CDU since the party lost control last year of the state of Baden-Württemberg in the wake of the Fukushima nuclear disaster.

Chancellor Merkel has chosen to ignore the defeat at home and stuck to her position on austerity agreement with Greece:

Merkel tells Greece to back cuts or face euro exit

Greece may be forced to leave the euro if the country refuses to implement spending cuts agreed with the European Union, Angela Merkel warned. [..]

Yesterday, Mrs Merkel raised the spectre of Greece leaving the euro. She is under increasing pressure in Germany to force the country out of the single currency to avert several more years of uncertainty. “I believe it’s better for the Greeks to stay in the euro area, but that also requires that we set out a path on which Greece gets back on its feet step by step,” said the chancellor.

“The solidarity for the euro will end only if Greece just says, ‘We’re not keeping to the [austerity] agreement.’ But I don’t expect that to happen. I do think they are making an effort. There are many, many people in Greece who actually want it.”

The worries over will happen to the Greek economy should they exit from the euro are really unknown. From Paul Krugman:

In particular, I keep reading that Argentina’s example is irrelevant, because Greece has hardly any exports.  [..]

What is true is that Greece doesn’t export a lot of goods. But it exports a lot of services – shipping and tourism (pdf). How might these respond to the devaluation of the new drachma? [..]

This isn’t a prediction that everything will be fine, but it is a caution that the pessimism about Greek prospects once the turmoil is past may be overdone.

If the left wing holds out and wins enough of a majority in June to form a new government, we’ll find out sooner than later who’s right about Greek prospects without the euro.