“The European spirit signifies being conscious of belonging to a cultural family and to have a willingness to serve that community in the spirit of total mutuality, without any hidden motives of hegemony or the selfish exploitation of others. The 19th century saw feudal ideas being opposed and, with the rise of a national spirit, nationalities asserting themselves. Our century, that has witnessed the catastrophes resulting in the unending clash of nationalities and nationalisms, must attempt and succeed in reconciling nations in a supranational association. This would safeguard the diversities and aspirations of each nation while coordinating them in the same manner as the regions are coordinated within the unity of the nation.” - Robert Schuman
Last weekend’s Greek referendum is heavy in consequences, but we will probably need some time to fully understand its historical relevance. Today’s WRU offers several articles dealing with its potential aftermath and underlying, deeper meanings.
Indeed, it goes far beyond a simple referendum on bailout terms: it is the European Union’s purpose that is being questioned. Or more accurately the European Union’s actions in light of its founding principles. Ruthless devastating austerity measures, anti-democratic processes, and intense political pressures are a far cry from the supposedly benevolent and enlightened union.
Should we take an additional theoretical step up, it is the place of money (especially finance) in our society that is at stake: should whole countries endure savage and degrading economic measures to pay back reckless lenders, even when it is clear that no matter how deep the reforms are enacted they will never be able to make up for the wasted loans?
In ancient times, debt jubilees where common to sustain social life and avoid undeserved wealth concentration. Let’s all remember how Western Europe paid back its outsized loans inherited from its barbaric early twentieth century wars: inflation, debt forgiveness, and economic growth. None of these solutions are being offered to Greece, a small country unable to break out of the Troika’s grasp.
After 4 long years of disgraceful treatment, it seems pretty clear that it is banks from large Euro countries that are being saved, not Greece. In addition to extreme imbalances created by Germany, the large flows from the financial industry have created a terrible situation in which the European Union chose to side with the reckless bankers instead of the (admittedly) reckless people.
This is a good, though extreme, illustration of what is happening in the world today: the quiet coup happened bloodlessly -and quite profitably for the top deciles. The 90% will pay to clean the mess created by corrupted politicians and yield hungry investors: Goldman’s role in manipulating Greece’s national account before its entry in the EU springs to mind, although the EU’s voluntary blindness is probably morally even worse.
The Greek elite probably took its wealth out of the country, and the unending bridging loans provided by the Troika did nothing for the economy, except allowing the repayment of principal and interests to foreign banks.
To conclude, Greece Prime Minister’s decision to put to vote an insane proposal by self justifying technocrats appears to be the right thing to do, although the consequences it brings upon will probably pose a serious challenge to the European Union’s existence. As late as May 2015, long term interest rates on other countries with debt crisis were still calm. We can only hope this lasts.
History & Geopolitics
Nicholas Winton, Rescuer of 669 Children From Holocaust, Dies at 106 – “It was only after Mr. Winton’s wife found a scrapbook in the attic of their home in 1988 — a dusty record of names, pictures and documents detailing a story of redemption from the Holocaust — that he spoke of his all-but-forgotten work in the deliverance of children who, like the parents who gave them up to save their lives, were destined for Nazi concentration camps and extermination.“
Strategy in Real Time: Dueling with an Enemy That Moves – “That, in fact, is the essence of strategy: It is not to dream up a series of unilateral actions that will inevitably lead to the accomplishment of our goals, but to recognize that each measure we take will invariably lead to countermeasures, and to anticipate the ultimate costs of reactions, both ours and theirs.“
Russia vs. China – “A country without a coherent plan for advancing its national interests is a sorry thing. Worse yet, however, as we may find out in the years to come, would be a country forever on the brink of crisis and conflict with a beleaguered, nuclear-armed rival.“
America’s Founding Principles Are in Danger of Corruption – “In addition to the rise of the national security state, and the concentration of wealth and power in America, no development in modern times sets us apart more from the nation originally bequeathed to us than the rise of the special interest state.“
Conversation: The Consequences of Greece’s Referendum – [Video] – “Stratfor Senior Managing Editor Ben Sheen and Economy Analyst Mark Fleming-Williams discuss the Greek crisis, the public referendum scheduled for July 5 and the likely consequences.”
Beyond the Greek Impasse – “If the creation of a peaceful European civilization rests on prosperity, as the founding EU document claims, Europe is in trouble.“
The Growing China-Latin American Energy Relationship – “This combination of geopolitical imperatives, profitability, diversification, and the slow evaporation of a key Latin American export market, all point to increased Chinese energy investments to the region, resulting in potential outsized gains to companies positioned there.“
Finance & Economics
The world is defenceless against the next financial crisis, warns BIS – “In some jurisdictions, monetary policy is already testing its outer limits, to the point of stretching the boundaries of the unthinkable.“
Europe’s Many Economic Disasters – (Hat tip Lao Ho) – “Or to put it a bit differently, it’s reasonable to fear the consequences of a “no” vote, because nobody knows what would come next. But you should be even more afraid of the consequences of a “yes,” because in that case we do know what comes next — more austerity, more disasters and eventually a crisis much worse than anything we’ve seen so far.“
Greece, prejudice and politics – (Hat tip Lao Ho) – “The average German voter believes his hard earned euros are being used to bail out deceptive, lazy Greek pensioners who banqueted on borrowing. In fact, they are bailing out their own well-paid bankers who lent too much the decade before.“
Picture of the day: Globe photos of the month, June 2015
About Carlito Riego
"Great perfection may appear imperfect, but its usefulness is inexhaustible. Great abundance may appear empty, but its usefulness cannot be exhausted. Great correctness may appear twisted, great skills appear crude, great eloquence appear awkward. Activity conquers cold; inactivity conquers heat. Clear serenity governs the world." - Lao Zi