[onlooker]

No doubt a bold step by Greece but it is bought about by the already untenable state of the overall European economy in which it seems Germany is the only one with real power left. Also, unlike some third world countries voters and citizens are more sophisticated in Europe and now are becoming well aware that the whole system of usury loaning and debt accumulation is not viable. Expect more smaller countries to realize this and act accordingly.

[onlooker]

Echoing what Dave has been explaining the facets of the current system that are particularly pernicious are fractional banking, compound interest and fiat money. Thanks Dave for posting the new economic models that can replace this untenable system.

[davep]

Fiat money isn't necessarily a problem itself if its creation is regulated correctly. A gold (or any other physical precious metal)-based system could be manipulated by those who control the gold.

[onlooker]

Dave can I ask you a question, can these new economic models ie. 100% reserves, function within the larger context of capitalism as we have practiced?

[davep]

Dave can I ask you a question, can these new economic models ie. 100% reserves, function within the larger context of capitalism as we have practiced?

Totally. A simpler overview of the same sort of monetary reform than the IMF plan can be found here http://www.themoneymasters.com/monetary-reform-act/

[Cid_Yama]

This referendum has nothing to do with change of Government. The only question on the ballot is whether to accept the austerity measures demanded by the Troika or not.

The Greek people will NEVER go back to the austerity measures. They have made that clear time and again.

They voted this government in on the platform of no more Austerity, and this government has fulfilled it's promise.

Tsipras called for the referendum knowing full well what the outcome would be. The Eurozone also knows what the outcome will be and, if truth be told, have been preparing the last 5 months for a Grexit.

Expecting anything else is a conservative pipedream.

The Eurozone finance ministers wouldn't be so angry if they thought they had a ghost of a chance in the referendum. The only way they were going to win was to convince Tsipras to stab his people in the back, behind closed doors. Tsipras wasn't having any of it.

The most dangerous man to the system is a man with principles. One who cannot be bought. Viva la revolución!

[Cid_Yama]

Austrian Finance Minister says Greece cannot leave the EU without their permission.

What are they going to do? Invade?

[onlooker]

that is the standard response of the leaders and other elites of this system to bully and threaten. They are as reprehensible as any rulers and henchman who have ever existed.

[SeaGypsy]

I think MBS post is satire, the suggestion is absurd as the outcome is a forgone conclusion. Like telling an employee, "Hey you can't quit, we have to fire you!"

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[dissident]

Why no calls for austerity for the banksters and speculators? Why are pensioners and ordinary workers supposed shoulder the burden?

Greece should follow Iceland's approach and have all the big money gamblers take a haircut.

To think this all comes from a $400 billion debt. While Ireland gets away with having a $2.7 TRILLION debt, Greece is being sodomized when it is rather trivial just to restructure its debt and reduce the annual servicing burden. For example it is possible to defer interest.

I think there is more happening here than meets the eye.

[Lore]

The difference I believe here is that you have the Icelandic Krona vs the Euro in which any manipulation of the latter can be a contagion for the rest in the EU.

[onlooker]

which itself begs the question of whether the EU is making an example of Greece to dissuade others from making any such bold moves. The EU is already on shaky ground so maybe they see this as a high risk/ high reward scenario. If they can make Greece back down or if the incipient independence of Greece turns out really bad that could have the intended effect. On the other hand if neither works in favor of the EU, this contagion could be the beginning of the end of the European Union and the Euro.

[dissident]

which itself begs the question of whether the EU is making an example of Greece to dissuade others from making any such bold moves. The EU is already on shaky ground so maybe they see this as a high risk/ high reward scenario. If they can make Greece back down or if the incipient independence of Greece turns out really bad that could have the intended effect. On the other hand if neither works in favor of the EU, this contagion could be the beginning of the end of the European Union and the Euro.

This sort of behaviour tells all we need to know about the nature of the EU. It was sold as the EEC but has morphed into some oppressive "union". I am quite sure that the vast majority of EU citizens were not all that keen on the union aspect and it was foisted on them.

[SeaGypsy]

The Grexit looks like being the guinea pig the Euro never wanted to have but with massive disconnect in real life economic culture north & south was always inevitable. The idea you can collect like Greece & spend like Sweden was never going to wash really.

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[C8]

The EU is definitely being greedy here- but the Greeks put themselves in this situation entirely on their own. Nobody forced them to take giant loans- they deluded themselves into thinking they could have the good life without sweat.

The problems of low tax collection, falling productivity, a rapidly aging population, and economic disaster were all over the Greek newspapers and media for the last 10 years. A people who wanted to be informed voters had few excuses for not becoming just that.

Hard decisions had to be made: taxing the wealthy more, collecting everyone's taxes better and cutting down on free loading, raising retirement ages, improving education and competing seriously in world trade instead of relying on tourism, creating incentives for larger families to at least stop the decline of wage earners. Greek voters ignored all these issues and eagerly drank the political Kool Aid of the day the last 15 years.

Democracy has no magic in and of itself. It depends on a citizenry who take the responsibility to educate themselves, debate, ask tough personal questions. Most of all it requires people who have that (now) dirty word "character"- the willingness to look at both sides of a debate in good faith, the willingness to admit flaws and past mistakes and grow from these.

Without citizens who have education and character democracies turn into a mob of "consumers" who overspend their political bank account and lurch from crisis to worse crisis. Democracy is only as strong as its citizenry.

The Greeks need to study their own classics.

[Lore]

I agree with most of the reasons as pointed out with the exception of incentives for larger families which only perpetuates the problem. Declining populations need to adjust to a new order of doing business.

[Outcast_Searcher]

To think this all comes from a $400 billion debt. While Ireland gets away with having a $2.7 TRILLION debt, Greece is being sodomized when it is rather trivial just to restructure its debt and reduce the annual servicing burden. For example it is possible to defer interest.

I think there is more happening here than meets the eye.

As of 9/30/14 Ireland's external debt was about $240 billion, or 103% of GDP, and $52,000+ per capita.

As of 3/31/14, Greece's external debt was about $575 billion, or 179% of GDP and nearly $48,000 per capita.

https://en.wikipedia.org/wiki/List_of_c ... ernal_debt

So the overall external debt load (private and public outside owed outside the country) looks much better for Ireland, given the size of their economies.

The Irish have made a go at keeping their external debt fairly stable in recent years. (Note the amount shown here is in euros, which roughly agrees with the $240 billion figure for Ireland above).

http://www.tradingeconomics.com/ireland ... debt?embed

Same thing for the Greeks, but the total debt figure (again, in Euros) is much higher, but also agrees well with the $575 billion figure above.

http://www.tradingeconomics.com/greece/external-debt

So, it's not like Ireland is getting a far better deal despite having much more debt. It's that Ireland is taking responsibility and trying to deal with its debt in exchange for ongoing credit. Meanwhile Greece is threatening to abandon its debts, and claims that their debt is the fault of their creditors, and that ANY credible behavior on their part like meaningful tax enforcement, raising some taxes, cutting some unrealistic programs a bit, etc. is impossible, grossly unfair, etc.

Are you willing to lend your life savings to known deadbeats and expect NOTHING to secure such loans? If not, why do you expect that of the "mean old" creditors is Europe?

[Cid_Yama]

The EU as a mechanism to transfer surplus from its “South” to its “North”

In other words, competitiveness at the core Euro countries, which are characterized by higher levels of labor productivity than in the South, mainly depends on keeping wages and prices under control, so that German commodities continue to be competitive (because of their higher quality and so on) compared to similar commodities produced in East Asia and beyond. On the other hand, compettiveness in the European periphery, which consist of countries with lower levels of labor productivity, like Greece, mainly depends on improving productivity through new investment on R&D. Therefore, the competitiveness problem in the South is mainly a development problem and refers to the need of creating a strong productive base, which will not be formed within the process of uneven capitalist development (as today), but within a process of social control of the economy to create a self-reliant economy.

Yet, despite the fundamental difference concerning the causes of low competitiveness between the “North” and the “South” of the EU, in the framework of the post-Maastricht Europe, a common policy was adopted for all member countries––a policy that was determined by the needs and the interests of the North. Thus, the Single Market, did not mean the unification of peoples, as the EU propaganda presented it, not even the unification of states, but simply the unification of free markets. ‘Free markets’, however mean not only open markets (i.e. the unhibited movement of commodities, capital and labour), but also flexible markets (i.e. the elimination of any obstacle in the free formation of prices and wages, as well the restriction of state role in the control of economic activity, which implies the drastic restriction of the element of ‘national economy’.

This was the essence of the neoliberal globalization characterizing the new institutional framework of the EU, i.e. that the state control of the domestic market of each member state (which was drastically restricted within the Single Market of 1992) was not replaced by a corresponding EU control of it, apart from some (mostly nuissance) regulations on uniformity, etc. In other words, the new institutions aimed at the maximization of the freedom of organized capital,, whose concentration was facilitated in any way possible, and the minimization of the freedom of organized labor, whose co-ordination was restricted in any way possible and mainly through the unemployment threat.

If Germany is indeed the country which was on the receiving end of the greatest benefits from joining EU and the Eurozone, whereas the countries of the European South received the least benefits out of it, this was far from accidental or due to the bad designing of the Eurozone as, post-Keynesians and other reformists (including the Euro-Left!) argue. When the Eurozone was institutionalized at the beginning of the new millennium Germany already enjoyed relatively high levels of labor productivity and competitiveness and the new currency essentially has ‘frozen’ the relative deviations between the advanced North of the Eurozone and the much less advanced South (parts of which were in fact underdeveloped).

Then, the Single Market itself, under conditions of a common currency, brought about a relative equalization of commodity prices and a certain increase in wages in the South, as workers were struggling to maintain the real value of wages and at the same time to narrow the gap in wages with Northern workers. On the other hand, German employers were in a much better position to suppress wage rises because of the difference in labor productivity they enjoyed due to advanced technology and investment in R&D, but also due to better relative prices. As Wolfgang Münchauput it, “Germany entered the Eurozone at an uncompetitive exchange rate and embarked on a long period of wage moderation.

Macroeconomists would say Germany benefited from a real devaluation against other members”. If we add to this, that the countries in the South no longer had the power to devalue their currencies, whereas Germany did not have any need to devalue its currency as long as it could keep wage rises in pace with labor productivity increases, then we can understand why (and how) the Eurozone essentially functions as an economic mechanism to transfer economic surplus from the countries of the European South to those in the North and particularly Germany.

link

To make this simpler, independent nations can use the tools of wages, prices, currency valuation and tariffs to control their own trade balance.

If an economically weaker country enters into 'free trade'(gives up it's right to use those tools to protect it's own trade balance) with economically stronger countries, then a trade imbalance in favor of the economically stronger nation naturally develops. Without restrictions within the Eurozone to prevent those trade imbalances from occuring, the stronger nations feed on the weak.

Not only do the weaker nations not benefit from the economic union, they are destroyed by it.

That is what has happened to all the weaker nations in the EU; Greece, Spain, Italy, Portugal and Ireland.

So stop with the Conservative, "The Greeks are lazy bums" meme.

They were victims of a financial scheme rigged to strip them of their wealth and redirect it towards Germany. To find the bad actor, you just had to find who benefited the most, and prevented any reforms to fix the internal trade balance problem. Germany knew about the internal trade balance problem, but benefited from it, and blocked any attempts to reform it. And it wasn't an accident. It was written into the EU constitution just that way by, guess who, Germany.

Just because a Con job is of epic proportions, and carried out by state actors, doesn't make it anything more than a Con job. Charles Ponzi would be proud.

But then, Conservatives have always been best at blaming the victim. It takes your eyes off the perp.

[onlooker]

It is obvious that Greek banks are storing money to withstand the coming credit crunch that in turn explains closing banks so as people do not panic and make a run on banks. Next few weeks will be very interesting.