Tuesday, February 10, 2015

Yves Smith — Outlook Darkens for Syriza and Greece

Greece's finances look to be more precarious than previously thought, which puts Syriza in an even weaker bargaining position.
The real threat to the EU and EZ is not Greece but France.

That optimistic possibility now looks hopeless. Syriza is finding its options narrowing dramatically. And as we will discuss shortly, a Grexit is not something the government wants or is seeking, and for good reason. But the short-sighted pounding of Greece will if nothing else play into the hands of Marine Le Pen, the rabidly anti-Eurozone leader of Front National. A Le Pen victory in the French presidential elections of 2017 would mean a rapid departure by France, an almost certain fatal blow to the Eurozone project. So even if a victory over Syriza winds up looking decisive, it is likely to prove to be Pyrrhic.

Why Syriza won't actually push the exit button.
Evans-Pritchard’s assessment is that Syriza is willing to play an extreme form of a game of chicken because the costs to the Eurozone will be high if Greece is forced out. He like many observers believe that once the Rubicon of defining exit mechanisms is crossed, other exits are inevitable. The idea that a Grexit will be contained, even if it is “contained” in the immediate sense of limited immediate financial contagion, will prove to be illusory as the spring 2007 delusion that the subprime criss would be contained.
And let me again stress that Varoufakis sincerely believes that a Grexit would be a disaster for Greece. The idea that Syriza is executing a nefarious plan to produce a Grexit while looking blameless to Greek voters is implausible. The damage to the Greek economy, not just short term but longer-term, would almost assure Syriza’s ouster and pave the way for big gains by the Nazi party Golden Dawn. This is what Varoufakis wrote in 2012 on why a Grexit was a terrible idea (emphasis original)
It's looking more and more likely that eurocrat intransigence may end darkly, with rightist ascendency in Europe — the very thing that the euro was established to preclude from ever happening again.

Yves brings in a lot of other relevant information. I've just emphasized one particular point.

Naked Capitalism
Outlook Darkens for Syriza and Greece
Yves Smith

15 comments:

Malmo's Ghost said...

Sorry, Yves, but the Eurozone project as now conceived is utter bunk.

Calgacus said...

It's looking more and more likely that eurocrat intransigence may end darkly, with rightist ascendency in Europe — the very thing that the euro was established to preclude from ever happening again. The reverse is true. The aim of the Euro was to permanently establish exxxxtreme rightist ascendancy. The old EEC, one could argue was a nice groovy touchy-feely peace-loving hippy commune, and that is how most Europeans were suckered into it. But the Euro poison, the extreme "rightist" Aztec economics that thought gold standards were too worker-friendly was in there from the beginning, and has taken over. See Parguez.

Varoufakis is undoubtedly too pessimistic about Grexit, predicting zero probability events as inevitable. Though I think she has listened a bit to me, Yves is more irrationally pessimistic still than YV, selectively quoting him.

Malmo's Ghost said...

Given the viciousness of the oligarchs running the Eurozone, what's wrong with being "rabidly anti-Eurozone"?

The fear of a quasi-fascist uprising is fanciful too. None of these groups Smith fears are remotely a majority in said countries, and Le Pen isn't a danger to the civilized world if it came to power. That's simply rank hyperbole and thus nonsense on Smith's part.

A Eurozone breakup would be a good thing in the long pull. Fewer countries could coalesce into smaller EZ units (two or three of these smaller units) and thrive as United States of Europe each.

Tom Hickey said...

MG, if you believe that stick your nose deeper into what's happening in the Ukraine, for instance. There are also neo-Nazis in other Russophobic groups in other Eastern European countries formerly in the orbit of the USSR that are actively supporting that element in the Ukraine. This is happening now, and there is a very good chance that Maidan 3, if it occurs as some foresee, will be a neo-Nazi government in Europe.

While this is somewhat understandable in Eastern Europe owing to the history, it is less understandable in Europe and the US. In these countries it is generally nationalistic, xenophobic, anti-immigrant and racist, specifically anti-Semitic and white supremacist.

Yes, this is still a small minority, but so were the Nazis when they first started out. This is not a path to toy with by creating conditions similar to those that lead to the rise of Hitler, especially in countries experiencing a significantly level of non-white immigration, which includes both Continental Europe, the UK, and the US, where far right extremism is ascendant and being noticed publicly.

Malmo's Ghost said...

Tom,

The so called neo-Nazi threat in Ukraine isn't exactly compelling. Many reputable observers, local Rabbis included, claim it is simply Russian propaganda.

Kristjan said...

"The so called neo-Nazi threat in Ukraine isn't exactly compelling. Many reputable observers, local Rabbis included, claim it is simply Russian propaganda."


not all of it,

European Parliament resolution of 13 December 2012 on the situation in Ukraine

"[The European Parliament] is concerned about the rising nationalistic sentiment in Ukraine, expressed in support for the Svoboda Party, which, as a result, is one of the two new parties to enter the Verkhovna Rada; recalls that racist, anti-Semitic and xenophobic views go against the EU’s fundamental values and principles and therefore appeals to pro-democratic parties in the Verkhovna Rada not to associate with, endorse or form coalitions with this party."

So after they overthrew democratically elected government in Ukraine, they became the freedom fighters, the fighters for democracy and our media forgot to tell us that it was not Russia who labeled them bad guys, it was EU.

http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2012-0507+0+DOC+XML+V0//EN


Tom Hickey said...

My conclusion is quite different. I don't claim that all those to whom I am referring are self-identified Nazis, although some are. These people are extreme nationalists, and many are anti-Semitic or white supremacist. What unites them is extreme nationalism, violence as a means, and "cleansing" of the territory they control and for some this means ethnic cleansing. Some of these people have been documented as committing war crimes in Eastern Ukraine, or evidence points in their direction.

The troops fighting the separatists are the Ukrainian armed forces and the volunteer battalions. The UAF is composed of existing contract troops and conscripts. The volunteer battalions attract many one the extreme right. Some of the them wear Nazi symbols, including a modified Waffen SS Wolfsangle, the symbol of the Azov Battalion, and I have put up pictures of helmets with swastikas on them in the past.

There is tension between the UAF and the volunteer battalions reflecting the rivalries of the Ukrainian oligarchs that control politics in the Ukraine. There is a struggle going on not only against the separatists but also among oligarchs and the Right Sector. Here is an example from today's reporting, asking why the response to the kettling of the junta forces by the separatists hasn't been met with more resistance. This is from fort Russ, sympathetic with the separatists, added by J. Hawk the translator:

The second explanation is that the UAF General Staff, which is loyal personally to Poroshenko, has orders not to risk the destruction of the UAF because it is needed as a check on the Right Sector and the volunteer battalions which are rather loyal to Turchinov, not Poroshenko.

But it has to be said that the volunteer units like Azov and Donbass are not fighting especially hard either, except maybe on Facebook. On the one hand, they are keen to establish their reputation as the “true” defenders of Ukraine (presumably in preparation for the inevitable settling of scores with their political opponents after the fighting is over), but at the same time they have not shown any qualities of elite fighting units so far. Rather the opposite—as soon as the going gets tough, the volunteer battalions withdraw to a safe location and blame their setbacks on the UAF. They, too, are mainly concerned about preserving themselves.

As a side note, it’s not clear whether the operations of the Azov and Donbass units were coordinated in any way, possibly by Yarosh’s “parallel General Staff.” Turchinov was reported as “coordinating” the operations around Mariupol, but the fact that no formations other than Azov participated in the operation suggests his authority is more limited than his official position implies.


Why doesn’t the Ukrainian military participate in Ukrainian attacks?

Kristjan said...

"The fear of a quasi-fascist uprising is fanciful too. None of these groups Smith fears are remotely a majority in said countries, and Le Pen isn't a danger to the civilized world if it came to power. That's simply rank hyperbole and thus nonsense on Smith's part.

A Eurozone breakup would be a good thing in the long pull. Fewer countries could coalesce into smaller EZ units (two or three of these smaller units) and thrive as United States of Europe each"



Yes, and at the moment It seems that these leftists are doing nothing but empty talk mostly. I am tired already of their rhetoric that EU needs to be reformed etc, yet they do nothing, they love fixed exchange rates and euro to the death.


It is interesting that ECB analysis says that leaving the euro and staying in EU is legally problematic. So if you leave euro you have to leave EU too. You can leave EU but still use euro though.





http://en.wikipedia.org/wiki/Greek_withdrawal_from_the_eurozone#Legality
… that negotiated withdrawal from the EU would not be legally impossible even prior to the ratification of the Lisbon Treaty, and that unilateral withdrawal would undoubtedly be legally controversial; that, while permissible, a recently enacted exit clause is, prima facie, not in harmony with the rationale of the European unification project and is otherwise problematic, mainly from a legal perspective; that a Member State's exit from EMU, without a parallel withdrawal from the EU, would be legally inconceivable; and that, while perhaps feasible through indirect means, a Member State's expulsion from the EU or EMU, would be legally next to impossible. … with a reminder that while, institutionally, a Member State's membership of the euro area would not survive the discontinuation of its membership of the EU, the same need not be true of the former Member State's use of the euro.






So this utopic dream will be broken up. I know how the left hates the idea. At the same time this left in Europe is saying nothing about ultra high unemployment and rising poverty in periphery. Even if you read some leftist Post Keynesians like Coppola, It is the same empty talk: nationalism is not the answer, Europe needs to change, It needs to be reformed etc.


I am not a fan of Le Pen either but leftists are dreamers who underwright neoliberalism any time, they have shown It over and over again. Talking about Greece then Pasok comes to mind. Syriza will leave euro only by accident I think, they certainly don´t want to do It. Social Democrats have vanished in Europe really, only labels are left.

NeilW said...

"Europe needs to change, It needs to be reformed etc. "

There is no more a Europe than there is an America.

Unfortunately the one world idealists struggle with the basic concept that humans are tribal in nature.

Malmo's Ghost said...

Apparently to Smith, an extreme nationalist is someone or some group that opposes the EU itself. Ironically if Smith is really concerned about the rise of extreme nationalism then the solution to it isn't complicated. Get rid of the EU as presently constituted. Problem solved.

Malmo's Ghost said...

The more I read Smith the more I realize she's blinded herself because she's an extremist and "rabid EU supporter". Even though she's witnessed these sadistic EU overlords in action exert incalculable harm on the inhabitants there , she still pines for the EU and lambasts its detractors. She keeps claiming a fracture EU is worse than the status quo, but provides little compelling evidence to back said claims up. If I was one of the poor sots living under this EU rule I should run from a Yves Smith faster than you can say dupe.

Ignacio said...

I hope LePen wins and blows up the EU. Nuff said :)

"Left vs. Right" is nonsensical framing how it's usually being done. The right is the people trying to maintain the status quo, left is usually people trying to move forward or progress. That's how I personally frame it, not because some dumb politician names his party however.

What we consider today 'right' were centuries ago 'left' because they were progressive compared to the conservatives. Now the conservative forces are people who are trying to keep the whole EU as it is and believe in neo-liberal globalist dreams that are crumbling (you can dump in there most of the USA establishment while we are at it).

Peter Pan said...

So the choices, according to Yves Smith, are for Greece to capitulate or be booted?

Malmo's Ghost said...

Yves Smith wants capitulation,. According to her it's the only choice. She's a crackpot.

Roger Erickson said...

There seems to be a continent-wide inability to openly discuss big pictures, and not enough courage & audacity to explore adventurous options.

Risk is taken, no matter what people try. So why not get together and work on some desired outcomes? Simply working together is the safest thing to do, that's the best chance for handling all unexpected difficulties in stride.

So far, the EEU & euro project seem like mechanisms for pretending to collaborate, without actually doing so. Predictably, that's just increased, not decreased, the underlying fundamental tensions.