Mr Stournaras, the Greek Minister of Finances gave an interview to the BBC yesterday. He was extremely upbeat, declaring that there was almost no chance of a Grexit occurring any more and that recovery would begin in Greece in the last quarter of this year. He spoke of optimism in the market and claimed that they had managed to turn the economy around. All very bright and beautiful. 

However, Martin Koehring of The Economist Intelligence Unit isn’t convinced by the Greek finance minister’s claim that the risk of leaving the eurozone has almost vanished. Nor is he  convinced by Yannis Stournaras’s argument that the Athens government has turned the economy around, as the Guardian informs us. Nor are we.

And in this debilitating disastrous mess they have made of what used to an economy in Greece there is one feature no one bothers to concern themselves with at all, neither Mr Samaras in his pipe dreams of enormous investments rolling in from abroad at his behest, nor Mr Stournaras in his cocky presumptiveness. And that is, the severe brain drain from Greece.

Educated, able, intellectual, bright young people are leaving in droves because they cannot find jobs in this austerity driven recession, or even if they do, the pay they are offered simply is not worth their while. So when recovery does start, according to Mr Stournaras’ triumphalist claim that we shall start seeing recovery towards the end of the year, who will be there to provide the necessary driving force for the economy, for the country?

After five years of continual recession that has shrunk the economy by some 20% of GDP and counting, achieving an unemployment rate forecast by some to reach the dizzy heights of 30% this year, the Stournaras prediction of a recovery really does not amount to much. Some kind of anaemic recovery is bound to appear no matter how badly the economy is being handled. And it is. Being handled badly.

However, it will be a lopsided, handicapped recovery when we have lost our most valuable resource. Our educated and qualified young people who should be in the vanguard if recovery is to lead to real growth and a stable dynamic economy. They will not be there.

Some optimists say, Oh, they will come back! But will they? Mr Samaras and Mr Stournaras are very cocky in preening themselves that they have regained lost confidence in Greece. But whose confidence are they talking about? That of fickle, unstable markets perhaps? That of self serving politicians like Angela Merkel who is only interested in getting reelected and will do whatever it takes to achieve that admirable goal? Even pretending that the Samaras Stournaras duo have turned the Greek economy around?

But what of the confidence of the Greek people that the (mis)handling of this crisis has completely demolished? By the time recovery may start showing up timidly, our best and brightest will have established themselves abroad, with good salaries and better prospects. Some will have set up permanent homes, have had children and all the trappings that make a return even more difficult.

But beyond that, what incentives will they have to return to their home country, when confidence in Greek governments has been annihilated? Who will ever think seriously again for a very long time of buying their country’s government bonds to assure their savings? Hmmmm. Who will dare for a very long time to buy a house, or build one using savings acquired from their work abroad, when they know that whatever the situation might be at the time, the first thing any Greek government will do will be to slap enormous property taxes and other taxes on them?

Who will dare to bring their saving back at all? There simply is no confidence at all. And this loss cannot be regained easily or quickly. It is the kind of doubt and cautiousness passed down from father to son, mother to daughter. It will take a generation or two to overcome, and that only if the likes of Papandreou, Samaras, Stournaras, Venizelos and the like never appear on the Greek political scene again.

With all this empty talk about regaining competitiveness, why is this aspect not even hinted at?

Like a bad case of flue in winter the Davos shindig comes back every year. A lower key event than usual, they say, because… well damn! The pauperisation of such a large swathe of Europe has not lead to the ballooning of profits it was supposed to. In fact, sotto voce, it has led to the opposite. Not only that but car plants, for one, are closing down one after the other.

Mme Christine Lagarde (aka Marie Antoinette) gives an interview on a Greek TV channel. Of course she retains her exquisite poise, but what does she say? That well, er, um, even though the IMF itself maintains that the austerity prescription did not work we…. just have to keep at it. Under the simpleton’s belief that we might just get different results this time.

Will there be more cuts in pensions and salaries and more taxation? Well, there shouldn’t be if the rest of the programme is carried out properly. Omitting to say that the rest of the plan is impossible to carry out, properly or otherwise. Hey ho. But what about recovery? When will that come? Well, we have already achieved a tremendous amount in that direction by slashing income… I mean reducing labour costs of course. And that is what will bring about investments and growth!

Hmmm. Why has the opposite of that happened then? No investments and galloping unemployment? Well, you know you have to get the structural reforms going and… Same old, same old beat of the drum with platitudes, and reiterations of a theory that does not apply and… well yes I did say I care less about Greek children going hungry than those of the Niger!  But in the Niger they are going hungrier…

And then Portugal. The star performer of the bailouts. It actually sold long term bonds on the market at a reasonable interest rate. Hurray! Ok. But then why has it been decided that it needs a new bailout because this, well, does not really mean anything? Same old same old. No matter what you do, you’re f…ked.

And what about Britain and the dynamic duo Cameron and Osborne? Their policy has proved disastrous. The economy is shrinking. They’re in for a triple dip and all that. Do they realise that perhaps they need a drastic change of direction? Not a bit of it. We shall carry on with more of the same for several more years and then it will be all right. They say.

And damn you, if it isn’t we shall call for a referendum on whether to stay in the EU! You’d like that wouldn’t you?

In Greece a promising strike fizzles out. Not to worry, no one will get paid anything any more. They will only continue to be taxed. Because, the government says, regardless of whether it is true or not, that is what the troika wants. And what the troika wants the troika gets.

And the beat goes on. And on. And on. The same tedious beat leading no one anywhere. Or rather leading us all down into the black hole of their making.

The trouble with living in historically exciting times is that… well it doesn’t really feel like it. Just a heavy droning. A dead beat. Incessant inanities being spewed out by narcissistic nonentities who fancy themselves and think they know because they stick to the manual even though it is completely obsolete. Besides they remain totally out of touch with what their inanities have provoked. A bit like Marie Antoinette. Though she poor dear, was not responsible for the destructive policy, as our current little lot obviously are.

Of course I am referring to the luminaries gathered at Davos. Larry Elliot has a brilliant piece on the state of play there in the Guardian. A few interesting points come up. First of all, that what we could call the representatives of the notorious 1% sucking up all the wealth out of the rest of the world, do not share the European officials and politicians buoyancy of the worse of the crisis being over.

I suppose that lot can be excused for wild statements like that. As they have grandly demonstrated throughout the Euro crisis, they haven’t a clue how the economy works. Yet do the Davos bunch know any better? Perhaps not. As Larry Elliot points out:

“But the dilemma for the CEOs gathered in Davos is that the policies they have championed in the past ? fiscal austerity, weaker trade unions, aggressive cost cutting ? have hammered consumer spending.”

Which they obviously did not expect to happen! Yet if they had a modicum of common sense, would it be hard for them to realise that that is precisely what happens. The more you squeeze income and cut benefits to increase your profits, the less your customer has to spend. The less he has to spend, the less he buys and your profits simply do not materialise.

Anyway, Karl Marx did point this out over a hundred years ago, as one of the contradictions of capitalism, did he not? And okay, you can’t expect gung ho business CEOs to read terribly subversive books like that, now can you? And the neo liberal dogma thinks Keynes is just as bad.

How about homely proverbs and fairy stories then? When you slaughter the chicken that lays the golden eggs you lose everything. Don’t you? But perhaps all these macho CEOs are not allowed to read fairy tales to their kids either.

Still if they started screaming that this debilitating austerity must be stopped before we all die, then perhaps the best and greatest of Europe, that is Frau Merkel, might listen. Well, it was listening to the bankers alone that got us into this state in the first place. Perhaps a few industrial producers might help turn her head this time.

After all, it does seem from Davos, that the penny has finally dropped. Their workers are also their customers. So if you squeeze them dry, still worse snigger with pleasure as more and more of them are thrown onto the dole because that will enable you to cut wages even further (hurray!), you’re not going to be selling much despite having achieved greater profit margins in theory. Are you?

Meanwhile although this great big devastating crisis was created in the first place to save the banks, it is finally dawning on all our luminaries that, oh dear, by squeezing the people to save the banks, through cuts in wages, pensions, welfare and over taxation… whoops! Deposits have dwindled! People will not borrow, and… Yes. That hasn’t worked the way they wanted either.

So as Larry Elliot concludes:

“Three things would help: fixing the banks, a reining back of austerity and a new social compact to ensure that productivity gains are once again shared by capital and labour.”  (My bold print)

Amen to that!

Well what do you know? Except that it is pretty useless. Greece has been told that she will not be obliged to take even further measures for six months, to give her time to effect all the necessary reforms that remain outstanding. That is just about all of them, barring labour relations, where labour rights have already been abolished. But that is the only “reform” that has been put into affect).

Of course, the really horrendous taxation measures, which will reduce every last honest Greek to pauperdom, combined with additional slashes in pensions and public sector salaries, have already been voted in, so why the big fuss? What is so great about this hollow would be moratorium since a large spate of horrendous measures have been taken already?

Well, just another admission that all these crazy plans are expected to fail. That they all know perfectly well that all targets set will be missed. Because the only reason why any further measures would be automatically taken would be in the case when targets were missed. And our PM and his side kick of a Minister of Finances have kept reassuring that this won’t happen if….

If everything we have agreed to is carried out (like collecting over 2.5 billion more in taxation from a moribund economy in deep recession, aka depression).

And precisely because they all know very well that the targets will not be met, but nobody wants to upset little Angie in her bid to cling on to power, the six month moratorium has been expressly designed to paper over the cracks they all know will appear, till the German election is safely over.

After that? What then? Who knows? All that matters now is how to keep kicking that damned can down the bloody road! And let those going cold and hungry in Greece eat cake if they must.

Speaking about the prospects for Greece on Greek TV, Christine Lagarde, IMF Chief, (aka Marie Antoinette) sounded rather too upbeat when she said the following:

Our analysis is that if the structural reforms are conducted and therefore if there is a proper transmission of the salary cost reduction into prices, no additional cost reduction or pension reduction will be needed.

If, however, the structural reforms were not to take place, if the closed professions were to maintain their privilege, if the multiple licenses, bureaucratic hurdles and impediments to growth were to stay, then we would face another situation where the fiscal deficit needs to be tackled and therefore more cuts would be needed.

Now of all these why has nothing at all happened three years in to the crisis and three years of direct troika involvement? And how far is any of it likely to be seriously undertaken by the present Samaras regime which has proved just as incompetent, just as self serving and just as corrupt as the previous ones? Corruption, in fact, we are told has even increased.

As to the lethal corruption engendering, growth prohibitive bureaucracy, it is common knowledge that the parties supporting the government, share the spoils on a 5,3,2 basis. That is positions are filled NOT by the best and brightest as you would expect under the siege conditions Greece is living in, but 5 for Samaras’ party, 3 for Venizelos PASOK party and 2 for Kouvellis so called Democratic Left party (which has proved neither democratic nor left.)

The current government is bending over backwards so that its clients of the public sector will not be touched. Neither are firings contemplated, nor, which is worse, is any real modernization or stream lining of public sector services even mentioned, lest its should upset all those party appointees who get rich on the kick backs this regime engenders.

And as to “salary cost reduction being properly transmitted to prices”… Well now, does she STILL not know that the factors reducing productivity and maintaining prices exorbitantly high have very little to do with the already slashed cost of labour? Does she not know that under the troika’s guidance the financial costs for businesses have gone up exponentially? The exorbitant levels of taxation on everything from fuel to milk have caused production and transportation costs to soar on the one hand, and shelf prices to rise on the other.

If she doesn’t, then she isn’t much good for the job now is she? If she does (as one would expect) then who is she trying to kid? Herself? The other members of the IMF? The Greeks? (But they are beyond kidding and totally insignificant anyway) Or is it just that she too is in on the scam. Nothing must budge, nothing must flutter till Angela Merkel gets re elected Chancellor!

Which is why not only she but also our own Minister of Finances are trying to make positive noises about how things will start going well AFTER The Frau has been safely elected.

When they do not, then we know the mantra, and the actual cause of course. It is all the fault of the Greek government for not having put serious reforms into effect. Which they can be relied upon not to do. But then doesn’t Christine know that too? It would come as quite a surprise if she didn’t.

“Europe’s plans for banking union are coming unstuck before they’re even agreed, according to the Wall Street Journal  this afternoon.”

Why does that not come as a surprise? Possibly because the current German Chancellor gives the impression that all she wants is to cling onto power at any cost and has therefore browbeaten the whole of the European Union to put everything on hold till she clinches the election.

She has also made us feel that she really does not want a banking union at all. And only agreed to discus it to gain time for her own personal benefit. She wants nothing that might compromise Germany’s narrow interests as she and Rossler perceive them. This, however, hardly goes any way to reassuring that Germany’s broader interests will be met, but unfortunately this is the trap Europe is currently caught in. Narrow national self interests that can no longer see the big picture.

There is, however, one voice today that does provide some reassurance. The Finnish PM’s comment over the need for Britain to stay in Europe. The EU without England, he says would be like Fish without the Chips! And he is right. To stay together and constitute a force and a presence on the global scene, the European Union should not be allowed to fall apart. And it’s not just a question of the fish staying with the chips!

However, what we are seeing at the moment are narrow minded centrifugal tendencies. Cameron is playing to the Europhobes, out of fear of the Ukip rise and possible loss of the hard line right of his party. Therefore he plays the populist card of the referendum for Brexit. A game that could possibly get out of hand and cause a big blow to European Unity.

The Frau is so immersed in her tactical maneuvers to ensure her reelection that she cannot see the wood from the trees (if ever she could). She wants to keep taking without ever giving. Her populism will no doubt ensure her reelection, but it will also ensure even worse conditions in the EU with recession spreading to Germany too, and the whole endeavor risks being put in danger through narrow minded self interest.

As to the peripheral states, the inhuman stringent austerity that has been imposed has achieved one major result. The unprecedented and dangerous rise in unemployment. The suffering imposed on the people without any tangible result, that is without any tangible positive results but plenty of negative ones, makes them ripe for populist rhetoric.

The EU is no longer perceived as one entity. It is already at risk of disintegrating into its original parts. Hate and distrust between the peoples’ is rife, as it is being fanned by the above mentioned populists and others. Governments are deaf and blind to what is really going on. Yet the EU is so much greater than the sum of its parts, with the potential to make the difference globally.

It is more than a pity that it is now in the hands of miserable nonentities of low stature who cannot see further than their individual noses.

It appears that after the 2014 European Parliamentary Elections, the next President of the Commission will be elected by the European Parliament, and not appointed by the powers that be, who prefer nonentities for obvious self serving reasons.

This is indeed a step in the right direction. However, will it be enough and will it be in time to keep the European project going?

Larry Elliot has an extremely interesting article in the Guardian today on the German economy. He describes how the economy has slowed down and that its growth is slumping. The the recession in the Eurozone has also hit German exports hard.

Greece has been chastised and vilified and sent through hell for the sin of consuming too much, not producing nearly enough and living beyond its means. On the other hand Germany’s woes derive from just the opposite. Its economy has relied on exports and investment, to the detriment of domestic consumption. In other words it produces far more than it can possibly consume.

And that’s not good either? Well, says Larry Elliot “Take away exports and investment and there is not a lot to sustain German growth.”  So what do we do? Greece is all wrong and Germany is all wrong too? Well no. What is wrong is rigid unimaginative thinking over the economy. The German obsession with viewing the economy as a morality play.

A morality play, mind you, where everybody else is sinful and only Germany is virtuous. Which is the usual approach of bigots. So in this vein of superior morality having to punish delinquents, it managed to impose through its clout on the one hand and through the utter insipidness and ineffectiveness of the European leadership on the other, a policy of debilitating austerity with absolutely no provision for growth whatsoever.

As a result it shot itself in the foot and lost its best customers. That is Europe. So the problem is not that there is one and only economic policy that must be followed by everybody, as the pea brained German government has decided. The problem is one of balance. And having said that I hasten to qualify it. The economy is a problem of common sense.

If you squeeze an economy to death (such as the Greek economy) you have not helped it recover. You have ruined it. And by ruining the economy of your customers you end up hanging yourself with the same rope. What is needed is imagination, an open mind, a refocusing of what is really important, that is realising that the purpose of an economy is to provide a good life, for the peoples, not just the 1% milking the system now.

Of course Greece should improve its production and rely less on imports. But then so should Germany concentrate on improving domestic consumption and cutting down her reliance on exports. There is need for austerity in economies, but not the German version which throws everything out of kilter.

As Larry Elliot says: “…it would be preferable ? for German citizens, for the eurozone and for the rest of the world ? if consumer spending and domestic investment constituted a bigger slug of  [the expected future] growth [of Germany]. For that to happen, though, there would need to be a change in the way Germany thinks about economics and its role in the world, and that looks some way off.”

Which is the main, if not the major problem for Europe and the global economy.

Well, the signs are not very promising. A bill from the Ministry of Finances supposed to contain extra taxation of luxury items (like middle sized cars) and strong punishment for tax evaders and a motley muddle of all sorts of other things, is being pulled back and forth. It has been submitted to Parliament where it MUST be voted, as has become tiresome by now, under urgency rules (meaning hardly any debate) to meet the prerequisites for the next tranche. Same old same old.

And in the same old same old way it is obvious that no one in government from the Minister to Ministry personnel, has done much thinking about what they want to pass. Clauses are being pulled out at the last minute to be changed or omitted. Other clauses are rushed in. In short a shambles of shoddy work. Not to mention some kind of tax on yachts entering Greek waters.

This to catch the nasty Greek tax dodgers! Hah! Gotcha! Hmmm… I don’t suppose it will do the high class marine tourism we are so desperate for though. Will it? Like the other problem. Liquidity. For banks to be able to loan again, the recapitalisation is not enough. Deposits in banks will have to grow. Moneys sent abroad must be enticed back, since in the deep and continuing recession we are in, newly generated income being deposited is very unlikely.

Government solution? Raise tax on interest earned and threaten to confiscate moneys from bank accounts if you owe the tax authorities over 500 Euro. Given that people who simply cannot pay the exorbitant taxation being so carelessly (not to so inhumanly) imposed, is it likely that anyone with small savings will leave their money in the bank?

And there are so many things like that. Slip shod work. On the cuff. Laws not thought out at all. Laws that will create further problems rather than solve anything.

It looks as though the whole government is in a blind panic. This conclusion is further corroborated by the government’s reaction to the terrorist attacks on journalists and government targets. (Thankfully bloodless so far.) Shrill shrieks with the sole intention of trying to blame the opposition SYRIZA party for all of these. Directly. Giving rise to suspicions that they may even be the ones behind all this merely to divert attention from their horrible, dangerous mishandling of government and to discredit a party they fear might win the next elections.

In any case, whatever is behind all this, what is obvious is that the government has lost its cool and is caught up in a raging panic.

None of this augers at all well for the future of this country.

In his meeting with Alexis Tsipras, Wolfgang Schauble is reported to have said that nothing can change in the Greek policy and that if Greece does not fulfill all the demands of the Memorandum, Greece cannot stay in the Eurozone. Well, he would say that wouldn’t he? Especially to that young upstart Tsipras.

Nevertheless, perhaps Mr Samaras should stop to listen and stop the vacuous boast that a Grexit is no longer on the cards. He should also perhaps stop to think that all this amateur shilly shallying and about turns are not, after all, conducive to solving the Greek problems but, instead are exacerbating them.

Perhaps he should also stop to wonder why it was big bad Schauble accepted Tsipras’ request to meet with him. If his government (Samaras’) is in no immediate danger of falling apart, perhaps Schauble would not have bothered with such a meeting. Why should he, when he has Stournaras almost literally licking his boots?

Then again perhaps Samaras has stopped to think about it. Not how to fix the economy. No. He leaves all that to anything the troika might get into their heads. But he may be thinking about the threat to his maintaining power from Syriza, a threat enhanced perhaps by Schauble’s willingness to meet with him, a threat he is trying to deal with by demonizing SYRIZA as a terrorist organisation.

But his government’s protests are so shrill and so obvious, that it may well be he feels power slipping out of his hands like water through a sieve, and can see no other way of clinging on to it.

Drawing up a serious, workable plan to start pulling Greece out of the crisis has proved far too much for him. He imagined sucking up to Merkel would have been quite enough. Well, it isn’t.

Are we at a crossroads? Is the crisis over? As many officials from Barroso to Draghi are saying and hinting respectively? Today’s picture tends to show optimism. An optimism reiterated in Greece. In a somewhat hollow and, I would say dangerous way. Hollow, because how can the government be so up beat when it knows that the country is not only not coming out of the crisis, but set to enter the worse possible phase of it yet with rising unemployment, deeper recession and a populace pushed just about beyond all endurance. With no remedy in sight.

Dangerous, because all these up beat statements of, recovery will start in the second half, there will be no more measures, we have ensured Greece will not be kicked out of the Euro, are not only very far from the certainty with which the government expresses them, but more than likely not to be born out. (Even the avoidance of Grexit, should everything else go badly wrong, as well it might.)

The hope is that despite the government’s poor performance and even worse propaganda, things might just not go so terribly wrong, after all. But even so, the high optimism and triumphant statements of having saved us yet again will lead to far greater resentment and possible social upheaval, when things do not go as fantasized by the government, than if the statements had remained low key and cautious.

Nevertheless, today Europe looks so much better, in terms of lower borrowing costs for the danger states, in terms of the Euro parity rate rising and… well, not much more. Take unemployment figures for instance. Thing is the whole Euro project never takes unemployment figures into account. They don’t seem to matter. So in the Brussels/Berlin axis view, things are going really well. You see, inflation remains low. Which is the ONLY thing that matters to Germany, hence the only thing that matters to the puppets in the Commission and elsewhere.

However, Alice Ross has tweeted a warning: “Every new wave of the euro-zone debt crisis began after sustained rallies for the euro.”

It remains to be seen whether this will be born out.

There are very many reasons why Europe should stick together and not unravel. But there are many reasons why this is now in danger. And the main danger seems to be that not one of the members has any notion, concern, still less real commitment to “Europe”.

At the moment we have regressed into individual nation states, looking after their own narrow interests to the detriment of the broader European interest. Where national hatreds have flared up, where all that matters is the figures, where the people can just go to hell as far as European leadership is concerned (and that includes, perhaps more than others, the current Greek government).

Will the peoples of Europe rise to the challenge and maintain and improves what they have started, despite current leadership, or will they be too weak and too dispensable to make any difference?

ECB unveils new ?5 note

Mario Draghi has officially unveiled the new ?5 note. It boasts a photo of the ancient Greek goddess Europa, and will come into circulation on May 2*

Aha! Is this a coded sign that Greece is to remain in the Euro after all?

If not, they better be careful. Greek Goddesses are known for a vindictive streak if they are crossed.

So watch it guys. All of you. Greek incompetents included.