Not very pretty.

German austerity economics have swept over Europe reducing the Continent to a region of misery, growing unemployment, perpetual recession, in short to economic disaster which of course brings civil and social disaster in its wake.

A small but vivid example of how German austerity, aka Nonsense Economics works can be seen from what is going on in Greece. Not the general picture of a destitute bomb site, but just a single detail.

In September, we are told, 1 billion Euro was withdrawn from bank savings deposits in order to pay the exorbitant, extortionist taxes imposed by the troika government. This is supposed to help balance the budget. Ok. However, Greece, that is the Greek taxpayer has borrowed 50 billion to recapitalise the banks. Small detail that while the Greek taxpayer is putting up the capital, ownership of the banks remains with the private bankers.

Okay again. Only recapitalisation itself does not restore the banks to health. The banks need deposits to be able to lend to businesses and households in order to provide the necessary liquidity. The government, however, taxes to extortion because the troika believes, erroneously that this is the way to balance the budget.

Now the brunt of the exorbitant taxation is on property, that is houses, many of which are still struggling to pay off their mortgages. The exorbitant taxation, however, makes it impossible for a large number of households to meet their mortgage payments. Hence the bad debts figure for the banks grows and grows.

Deposits dwindle because there is no other way to pay taxes since all income had been slashed. So the banks are faced with growing bad debts on the one hand and dwindling deposits on the other owing to the taxation brilliance imposed. Hence banks remain dangerously insolvent teetering on the edge of collapse, and the Greek taxpayer over indebted and over taxed. So what to do?

Well of course we know what to do. The fuzzy headed pig farmer heading the Eurogroup at Germany’s behest has told us as much. Quite simple really. Since by a stroke of genius depositors have been upgraded to investors the solution is easy. The bank confiscates all deposits over 100,000 Euro (and of course this may well be less, say 50,000 or even less. Why not?)

So deposits will inevitably be shorn off. But then how are any of the taxes going to be paid? Simple, we confiscate all housing! And then? Well… we’ll sell off all Greek real estate to foreigners. Really? And why do you think foreigners will be so dumb as to buy a house that carries an enormous tax burden with it?

But not to worry. All is going well in the Eurozone. The austerity is working, we are turning the corner. Look! Ireland will be back in the markets by the end of the year…

Oh and the Euro elections will return a majority of extreme right wing anti Europeans. Interesting.

A rhetorical question of course after yesterday’s Eurogroup. They dithered and procrastinated put off all decisions, that is more kicking of cans down the road.

One may well point out that this is the wont of Eurogroup and Euro anything meetings, particularly when in crisis mode. However, yesterday’s meeting was a little different. Germany, that bastion of stability, has still not formed a new government and consequently the great Fuhrer (if you’ll pardon the expression, I use it in its literal sense of leader rather than as any kind of historical analogy) Herr Schauble was absent.

So how could they possibly decide on anything at all without his firm hold on the rudder, eh? I ask you!

We read in the Guardian Business Blog:

The Wall Street Journal has today published new information which confirms what many observers and combatants in the eurozone crisis have long suspected ? that the 2010 bailout of Greece badly botched, contributing to the country’s subsequent woes.

With a third aid package for Greece looming, the WSJ has got its hands on a cache of documents marked “Secret” or “Strictly Confidential” which show how the International Monetary Fund struggled to tackle the Greek problem three years ago.

Crucially, the document shows that some IMF members were pushing for a debt write-offs in 2010 – something which finally happened in Greece’s second bailout, after Eurozone banks had the chance to offload their Greek bonds.

The 2010 documents show that several IMF directors were deeply skeptical of the staff’s economic projections from the beginning, calling them “rather optimistic,” “overly benign,” even “Panglossian.”, the WSJ reports.

And while the IMF presented a united face in public, there was pitched argument and dispute behind the scenes about the wisdom of the 2010 bailout plan — which forced tough austerity onto Greece in return for loans, but without tackling its overall debt pile.

and quote from the article:

“

The IMF documents show there were heated discussions about the need to write off part of Greece’s debt from the start. At the May 2010 meeting, directors from Middle Eastern, Asian and Latin American countries repeatedly asked why they weren’t being presented with the option.

European directors were “surprised” when Switzerland “forcefully” weighed in on the dissenting side, the minutes show. “Why has debt restructuring and the involvement of the private sector in the rescue package not been considered?” the Swiss executive director, Rene Weber, asked at the time.

The IMF says today that debt restructuring simply wasn’t feasible in 2010, because the risk of Greece’s financial turmoil spreading to other countries was so high.

Much of the debt was held by already fragile French and German banks, so European nations wouldn’t consider it. And the U.S. feared its own trillion-dollar exposure to European banks.

Ms. Lagarde was French finance minister at the time and keen to avoid losses by her country’s banks, which had lent heavily to Greece. Mr. Strauss-Kahn?widely known to be angling for the French presidency at the time?backed off a tentative effort to press the issue after encountering European opposition before the IMF meeting.

Back in June the IMF admitted that mistakes were made in 2010, when it published its own review of the bailout. These documents confirm it.”

That is the first evil. The subsequent evil is even worse. The Greek government steered by the dynamic duo of Stournaras and Samaras (with his extreme right wing acolytes), remains indifferent to this undoubted evidence. They pretend they have no idea. They carry on in complete subservience to German design. Which is, as Professor Varoufakis points out, to keep Greece in the Euro only because they fear the unravelling of this failed, disastrous project, BUT on the firm condition that Greece will be prohibited from achieving any kind of even moderate recovery.

But no, although the Greek government now has quite an arsenal of weaponry to hit back and do battle to shake this pernicious German designed policy off its back, it does absolutely nothing. Nothing at all other than press on with the malignant austerity that everybody by now knows will achieve nothing but catastrophe.

Why? Well it may be very simple, are they completely daft? No. Completely self interested. Yes. All they care about, in the spirit of Olli Rehn and others of that ilk, is to cling onto their overpaid jobs with all the perks and, no doubt, great opportunities, still, for graft.

In other times this Stournaras/Samaras behaviour would have been called by its proper name: treachery, treason rather and would be punished accordingly.

We should stop blaming Germany. She has only been acting in her own self interest as she perceives it*. But the Greek governments from Papandreou, through Papademos to the Stournaras/Samaras duo have been acting in the interests of foreign powers and destroying their own country completely and knowingly, as can no longer be refuted. This is a completely different matter.

*Even though Germany has been notorious for miscalculating what is in her own interest as she is currently doing, but that, dear readers, is another story.

The Guardian reports today:

European markets hit by politics

European stock markets fell sharply in early trading as the prospect of the US government shutting down and the Italian coalition collapsing this week sends shivers through trading floors.

Making it sound as though something terrible has happened! The Markets, with a Capital M, hit by politics??? What is the world coming to?

Yet isn’t it about time politics started hitting back at markets? For the past thirty years at least, through deregulation, graft, “the best politicians money can buy” and a demented  headlong rush into a thoroughly dogmatic worship of markets, politics have been abolished. One need go no further than the EU to see this in practice.

So instead of shaking at the thought that markets have been hit by politics, perhaps we should start rejoicing.

Can we hope that this may signify the return of some sense to the politics and economics of the 21st Century?

After being bashed over the head for years over how imperative deregulation is for the proper functioning of the Economy, how imperative it is we leave everything up to the market that knows best, after the idiocy of the supposed “trickle down effect” of supply side economics, we have at last heard the hint of some reason coming back.

Ed Milliband said he would freeze energy prices, whereupon out come the guns of the terror squad the neoliberal aficionados employ, not unlike neo nazi hit squads, and start screaming No! That is impossible! It would be a disaster! It would lead to energy black outs! The country will be plunged into darkness if any kind of regulation returns! We must be free to hike up prices whenever we chose  to keep our profits rising to keep share holders happy! There Is No Alternative! As shrill and piercing in our ears as ever.

Milliband comes back and states the obvious, what no party leader has dared even mutter over the last thirty years. Certainly not Tony Blair who turned citizens into consumers when it came to schooling and health care. Milliband just came out and said, “the King has no clothes.” He said this is the same kind of terrorisation we heard from the banks, the same scare mongering tactics to preserve high profits at the expense of citizens. It is not acceptable and we need to bring back regulation.

Hear hear! The whole financial sector is in dire need of REregulation, so are the huge energy monopolies and most other big businesses for that matter. Regulated capitalism worked very well, and the whole thing started breaking down with the hysterical, dogmatic deregulation mania of the zealots.

The gap between rich and poor has grown out of all proportion, the middle classes are being wiped out, the standard of living for the 99% of citizens has plummeted. So just what has all this deregulation achieved? Well just that. It has accumulated wealth into very few hands at the expense of civilization as a whole.

However, if the energy industry continues to threaten black outs if they are not allowed to hike up prices on citizens whose income is steadily and surely decreasing, I would say they themselves are providing the perfect argument foe Nationalisation!

There! I’ve dared say it!

The Frau’s Great Victory is due entirely to her own image and nothing else. The election campaign was squarely centred around her and her alone. A lot of silly comments in the international press about her remarkable achievement in that she is the only leader in Europe not to have been ousted during the crisis. In all other Eurozone elections so far all the incumbents have been ceremoniously ousted by a kick in the rear from their electorates.

But the Great Mutti not only held onto power but increased her share of the vote spectacularly! Well, yes… But why is this considered such a great achievement? If anything it was to be expected. All the other ousted leaders were following the policies She imposed on them. But then the citizens (or vassals) of the other Euro states do not vote in German Elections. On the other hand, The Frau not only has not imposed any debilitating stringent austerity programmess on her own electorate, but has designed a policy which benefits Germany alone. If only for the short term.

In other words the southern states are being forced into penury to keep the Euro going so that German exports remain competitive. Furthermore Germany has imposed a nice little earner in that all these bail out funds, though not bailing out any of the recipients, are generating billions in inflows to Germany from interest. While, at the same time causing the debt of the debt stricken states to balloon. So what was the object of the exercise? To benefit Germany! Alone, you dumbkopf!

Well, after the election results that is quite obvious. Merkel has very successfully imposed a policy of Heads I win Tails you lose on the rest of Europe. So for God’s sake stop expressing surprise on how well she did compared to other incumbents! There is no comparison.

Now the composition of the Bundestag. Well, since Germany does have a fair proportional representation electoral system, the seating result is interesting. In the triumph of her will The Frau is about 5 seats short of an overall majority. Since the ignoble Free Democrats were booted out (at least!) and since the Alternative for Germany party just didn’t get into the Bundestag for a few thousand votes it appears, the Bundestag is made up as follows: Merkel (and it IS Merkel and not the CDU judging by the winning campaign) is 5 seats short and the opposition parties are in the majority. The Opposition Parties are the SPD, the Greens and De Linke.

All three parties in opposition are supposedly from left leaning to left wing parties. In any other democracy, since they have a majority in votes and seats, they should be the ones to form a governing coalition. However this is not going to happen. Firstly because of all the hype over Merkel’s triumph, second, perhaps above all, because the SPD, Social Democratic party is just another of these misnomers like Tony Blair’s version of a “Labour” party, or Papandreou’s so called “socialist” or even Francois Hollande’s lukewarm version of “socialism.”

Nevertheless, the SPD does not seem too keen. NOT mind you because it objects to Merkel’s policies, since they did vote in every one of the Greek “bail out” packages with all the catastrophic conditions attached, but because last time around the Grand Coalition with Merkel cost them a large percentage of votes. This time around Merkel’s coalition partners were decimated, so simple cynical political survival politics warn against participating in such a coalition.

So what could happen? Well a coalition of the left, the only sensible and democratic solution is out, because the Germans do not want to rock the boat of The Frau’s triumph. Next, of course the Grand Coalition with the SPD, or even a small coalition with the Greens. It appears, however, that the Greens have ruled this out. And it is reported that the SPD is split over whether to go ahead with the coalition, for the above stated reasons.

So a good solution could be a minority CDU government (in any case the SPD just about always votes with Merkel on most things), or else there could be defections from the SPD or even a formal split of the SPD. The most likely outcome appears at this stage to be the Grand Coalition, because somehow the Germans, despite the way they actually voted, are polled as wanting this solution. Ingrained conservatism after all? Lack of imagination? A false sense of security?

It makes you wonder why Marx had always believed the Revolution would start in Germany!

There have been some rather shallow articles trying to explain why Greece today is not like the Weimar Republic. One even had the audacity or ignorance to say that the difference was that Greece has the democratic EZ supporting it, because otherwise it would have collapsed.

This preposterous statement fails to realise that Greece would be neither over indebted nor so uncompetitive if it had never entered the Euro. Furthermore it choses to ignore the fact that the very stringent austerity imposed by Europe together with a German ban on any funds to help growth is what have ruined Greece, not saved it from catastrophe.

A blogger in the Guardian reminded us of a very perceptive article on the BBC by Paul Mason dating 11 months ago.

He says and I quote: “Faced with a recession, [Heinrich] Bruning followed a policy of austerity, while keeping Germany’s currency pegged to the Gold Standard (much as Greece has follows a policy of austerity dictated by euro membership). This made the recession worse.”

The situation today is even worse than it was when the article was written. But I think the main aspect of it is truer than ever. He described the “hopeless inertia” we have succumbed to, how people have stopped protesting and reacting and withdrawn into themelves, into drug and drink and the purely personal, and quotes from Kurt Weill’s Opera, the Silver Lake:

“You escape from the horror,” Fennimore sings; “that may destroy all we know. Yet the germ of creation will struggle to grow.”

“All this can be a beginning

“And though time turns our day back to night

“Yet the hours of dark will lead onwards

To the dawning of glorious light.”

And this is what expresses the mood in Greece today. Not fight as Mason says, but flight. Flight either abroad, for those younger, or into the personal, substances or even, perhaps above all, flights of fancy. One day we will be reborn again. Perhaps…

At least the Marx brothers were funny. This lot just make you cry and cry and cry.

But “Marx Brothers” is the closest they will ever get to even the remotest understanding of Economics.

But perhaps I am being too harsh. They do have a sense of humour. Both of them maintain that they have done an excellent job! (And they can actually pull off these gags of theirs about a success story and having saved Europe with a straight face!)

The Economist published a ridiculous article on Frau Merkel, very much endorsing her to win the German Chancellorship for a third time. It starts off by saying how much they have criticised her for her policies and in so many ways that she had done a very poor job, with which the Economist objected. BUT!

BUT they say, what if instead of the Frau there were to be a left wing coalition, including de Linke!!! Quiver, quiver, shake shake! Such horror! No! We can’t have that so we must have this miserable, bigoted, small minded failure yet again, or else? What will the world come to?

It is a miserable article ending with the hope that The Frau will wish to be remembered as “a decider and not a ditherer”, clean forgetting that she is a proven ditherer and unlikely to change now, especially if she has won a third time on her record of dithering and fudging and kicking the can down the road.

But even more destructive austerity, inhuman Merkel is better than, oh my God! Dare I even say it! A mildly pink coalition, far removed from anything remotely resembling red!

What the Economist fails to appreciate, however, is that all these Merkel shenanigans masquerading as ‘policy’ are precisely what has pushed Europe so much nearer the edge of some kind of red revolution. Even a pink one. So if the Economist is really so terrified of a Red Revolution in Europe, it should be rooting for a mildly pink coalition in Germany that would put an end to this idiotic, catastrophic, economically disastrous policy, pushing people to the brink of revolution, that the Merkel Chancellorship has imposed on Europe.

But that, I suppose, would be too imaginative for them. Never mind. I would like to dedicate the following ditty to them and all those who think like the Economist. (I am sure Walter Bagehot is turning in his grave).