And They're Calling It "Medicane"

Climate change has brought a new severe weather event to the Mediterranean. It's being called the "medicane." Put simply it's a hurricane, akin to what is routinely experienced in the Caribbean, only it develops in the warming water conditions of the Mediterranean.


You can blame a ‘medicane’ for this week’s deadly flooding in Greece.

Nope, a “medicane” is not a new type of health insurance. It’s a Mediterranean hurricane — such as the one currently developing in the Mediterranean Sea, where warming waters have produced a weather system with the characteristics of a subtropical cyclone.

Flash floods linked to moisture from the storm hit parts of Greece on Wednesday, killing 16 people and injuring dozens more. The storm is projected to skirt Sicily and head toward Greece this weekend, potentially inflicting more damage.

Medicanes are so uncommon that scientists have yet to establish a clear set of criteria for them. Weather systems like these are more typically found in the Caribbean, where warmer water temperatures feed tropical storms.

A Mediterranean cyclone generally counts as a medicane if it forms the characteristic hurricane-like “eye,” according to Emmanouil Flaounas, a meteorologist at the National Observatory of Athens who conducts research on medicanes through a European Commission-funded project.

There are plenty of new terms being coined thanks to climate change. "Flash drought" is one, "atmospheric river" is another. Now "medicane." Eventually somebody will have to publish a directory of the next lexicon. I suppose "we're so screwed" probably doesn't fit the bill.

Turns out there are sites where you can brush up on climate change lingo.  Then again, don't. When you see how extensive the word lists are you'll be thoroughly demoralized.

Guess Who's Coming to Dinner? No One, Angela, No One.

Is it the Euro or is it Angela Merkel - or both?  Whatever the case, Merkel's brutal subjugation of Greece has given the neighbours outside the Eurozone good cause to think twice about joining the common currency, the Euro.

Once, it was an exclusive club that nearly all of Europe aspired to join. Now, in the wake of Greece's latest financial crisis and the hard-line response from many of the Continent's powers, becoming a partner in the European common currency seems less and less appealing to many of the countries lined up for their chance.

From Poland to the Czech Republic to Hungary and points farther south and east, joining the euro is increasingly seen as rife with risks and costs - including a substantial surrender of sovereignty - that outweigh the benefits. And while many of the countries that have not yet adopted the single currency had doubts before the Greek crisis flared, the heavy penalties incurred by Athens to stay in the eurozone have made the trade-offs even clearer and the political leanings against membership more pronounced.

The qualms about partnership in the currency raise further questions about the ability of the European Union to maintain momentum toward its long-held and oft-stated goal of ever-closer union. More than any other policy, the single currency was intended to bind the members economically and politically while reducing the chances of conflict, and the decline in enthusiasm for the union has tracked a more general reassessment of European integration.

The doubts are now playing out primarily in the countries that most recently joined the European Union, primarily in Central and Eastern Europe. Lithuania became the 19th and newest adopter of the euro in January.

...Zoltan Pogatsa, a political economist at the University of West Hungary, said the greatest benefits to joining the eurozone came from undertaking the financial reforms required to become a member. Once that stability is achieved, he said, it may be wiser to keep the local currency and peg it to the euro, as Denmark and Sweden have done.

"This way, you preserve your option to devalue, and you do not fall under the technocratic dictatorship of austerity," he said.

 

Merkel's Toxic Tonic

Has German Chancellor Angela Merkel's subjugation of Greece inadvertently poisoned European unity?  That's how a pro-EU lobby group sees it.

"The last few weeks have laid totally bare the European Union's brand of authoritarian dogma," UKIP leader Nigel Farage wrote in the London Telegraph.

"More and more people are waking up to the dangers of this supranational beast sweeping aside national sovereignty completely. Many who had continued to believe until very recently that the EU was compassionate and forward-looking are beginning to realise just how backwards the whole project is."

Pablo Echenique, a deputy from Spain's radical left Podemos, labelled the deal a "financial coup d'etat" that converted Greece into a protectorate.

Podemos leader Juan Carlos Monedero said it was "a terrorist crime".

Greece's former finance minister Yanis Varoufakis warned the deal would strengthen the far right Golden Dawn party.

Beppe Grillo, leader of Italy's anti-euro Five Star party said eurozone leaders had used a "strategy of terror", and Catarina Martins, leader of the Portugese anti-capitalist Left Bloc said "democracy has been completely swept aside to make way for colonial-style impositions".

On Monday, the leader of France's National Front, Marine Le Pen, said if she were Greek Prime Minister Alexis Tsipras she would have led Greece out of the Eurozone.

"Greece is no longer free," she said. "This is a carve-up to deprive the Greeks of their entire national heritage. It is clearly the enslavement of a country inside the European Union itself."

Her deputy Florian Philippot said the Greek people had been "cast into slavery".

Ms Le Pen had previously praised Greece's referendum on the bailout deal, pushing for her own referendum on the exit from the European Union.

The UK, under Conservative prime minister David Cameron, has already committed to a referendum on EU membership next year.

Until recently the 'Yes' vote was clearly in front.

Peter Wilding, director of the British Influence group which is lobbying for Britain not to leave the EU, said if Greece accepted the deal offered by Europe it would "essentially be voting itself to be a ward of the Eurozone".

"The price of ceding sovereignty and apparently bypassing democracy is a high one for Greece but also a gift for the No campaign here.

"Whether you support German rigour or Greek pluck, it is clear that the consequences for continental solidarity have been toxic. The longer the crisis has dragged on, the more it has corroded Europe's political culture and revealed the shallowness of any sense of political solidarity across the continent and the limited legitimacy of the EU's political institutions."

Oh, Angela, whatever have you done?

Krugman - Europe Also Won in Yesterday's Greek Bailout Referendum

From my years practicing insolvency law, I was left stunned at the illogic in the demands that the creditors sought to impose on Greece.  The approach made no sense.  They demanded Greece accept a debt load it could never hope to pay off. They essentially wanted the Greek government to mortgage the very future of Greek youth, even those yet unborn.

It doesn't make any difference whether it's an individual, a corporation or a country - when it falls insolvent the best deal for creditors is always a workable deal and that means debt forgiveness, taking a haircut.  If Joe owes you a million dollars but he can only repay it at a hundred dollars a month, you have no more hope of recouping your money than Joe has of paying it.  Sometimes there is no deal.  Companies go under, their assets sold for pennies on the dollar of value. Countries can go in all sorts of predictable and unpredictable ways.

Nobel laureate economist Paul Krugman writes that yesterday's No vote in Greece was a win not only for the Greek people but also for Europe itself.


...Europe’s self-styled technocrats are like medieval doctors who insisted on bleeding their patients — and when their treatment made the patients sicker, demanded even more bleeding. A “yes” vote in Greece would have condemned the country to years more of suffering under policies that haven’t worked and in fact, given the arithmetic, can’t work: austerity probably shrinks the economy faster than it reduces debt, so that all the suffering serves no purpose. The landslide victory of the “no” side offers at least a chance for an escape from this trap.

...In advance of the referendum, the European Central Bank cut off their access to additional funds, helping to precipitate panic and force the government to impose a bank holiday and capital controls. The central bank now faces an awkward choice: if it resumes normal financing it will as much as admit that the previous freeze was political, but if it doesn’t it will effectively force Greece into introducing a new currency.

...In the failed negotiations that led up to Sunday’s referendum, the central sticking point was Greece’s demand for permanent debt relief, to remove the cloud hanging over its economy. The troika — the institutions representing creditor interests — refused, even though we now know that one member of the troika, the International Monetary Fund, had concluded independently that Greece’s debt cannot be paid. But will they reconsider now that the attempt to drive the governing leftist coalition from office has failed?

...Unless Greece receives really major debt relief, and possibly even then, leaving the euro offers the only plausible escape route from its endless economic nightmare.

And let’s be clear: if Greece ends up leaving the euro, it won’t mean that the Greeks are bad Europeans. Greece’s debt problem reflected irresponsible lending as well as irresponsible borrowing, and in any case the Greeks have paid for their government’s sins many times over. If they can’t make a go of Europe’s common currency, it’s because that common currency offers no respite for countries in trouble. The important thing now is to do whatever it takes to end the bleeding.

Next Up, Spain

As events unfold over the next few weeks following today's No victory in Greece there'll be plenty of people watching in Spain.  That country's Podemos movement promotes a similar sort of anti-austerity platform to that of Greece's Syrzia.  It's hard to imagine today's defiant events in Greece not having a knock on effect in Spain and perhaps Italy also.

I've spent some time this afternoon prowling the web for online European newspapers, stopping to look at their photos of street celebrations across Greece. What struck me is how generational this seems.  Unlike the earlier protest marches where the crowds were of all ages, today seems to be a day for young Greeks to rejoice.

Greek youth, after all, had the most to lose.  Just coming into adulthood they faced the prospect of either having to emigrate or face a future of perpetual penury.  They grew up with five years of punitive austerity, saw what it did to their parents.  They understood that a Yes win would be "game over" for their future.  They fought and they won even if it victory only means the right to fight again another day.

By contrast it was the wealthiest Greeks who were the most outspoken proponents of the Yes side.  The austerity measures the Euro Bank and IMF were using to crush ordinary Greeks really didn't matter to the oligarchs who, in many cases, were the real tax dodgers contributing to the debt crisis.  The shipping magnates remain unscathed, still venerated as de facto nobility.

The Spanish go to the polls in a general election some time before 20 December. Podemos has gone up and down in the polls but today's events might give a much needed boost to anti-austerity supporters.

Greece - Damned If You Do, Damned If You Don't

Greek voters appear poised to rather narrowly reject another round of austerity measures demanded by the IMF, the European Commission and the EBC.

It's something of a "heads I win, tails you lose" proposition.  Be it Yes or No, the Greek people are pretty much screwed either way.

As observed in Der Spiegel, even if the Greeks accept the terms they'll be stuck with debts they have no reasonable prospect of repaying - as in none, ever.

The German press seems to be blaming their Chancellor, Angela Merkel, for being too soft on the Greek's Syrzia government.  The cover of the German edition speaks for itself.

The Guardian is predicting a 61% win for the No side.  Doubtless some will say that given the referendum was called on such short notice, even that win is less than decisive.

What's totally unclear is how the IMF and European Union will respond.  They might go thermonuclear and expel Greece, the Grexit option which is sort of like holding a gun to the Greek people's head and another to your own.

Having done a lot of insolvency work in my time, it's dismaying to see how irrelevant reality is to this disaster.  The Euros, especially Merkel, need to understand that there are no debtors prisons any more.  There was a time not all that long ago when we forgave Germany for debts and a lot of other things right up to and including the Holocaust.  The quality of mercy thing...

When you're dealing with an insolvent you need to find a deal that works for creditor and debtor alike.  It has to give the creditor more than they could receive otherwise while leaving the debtor motivated to pay what it can.  There has to be light at the end of the tunnel.  If you leave the debtor without hope, usually you're both screwed.

Athens' creditors need to accept reality, figure out how much Greek debt needs to be forgiven, and strike a deal.  Or not.

As for the No side, they're already celebrating their referendum win.  This is a big day, especially for young Greeks who played no role in their country's collapse but were looking at paying a punitive price indefinitely.  I think this picture captures their mood perfectly.

Why Syrzia Matters. It's About a Good Deal More than Austerity. It's About Salvaging Democracy.

Le Monde reminds all of us why Syrzia matters not just in Greece, but across Europe and even on our side of the North Atlantic.

The Greeks don’t need to have the meaning of the word “democracy” explained to them. Even so, they have been given countless lectures since voting in a leftwing government determined to end the austerity policies that have made their lives a misery for six years. The schoolmasterly reprimands have come from people who know what they are talking about: they are people who imposed treaties their electorates had voted against and reneged on campaign promises as soon as they came to power. They are now in a trial of strength with Syriza, which has been trying, against terrible odds, to stick to its promises and beliefs. That trial was all the tougher since those beliefs may spread thoughts of resistance to those hitherto resigned to powerlessness. This confrontation has been about more than just the fate of Greece: the future of European democracy is at stake.

...Though Syriza is isolated in the EU, hounded by its creditors and faced with capital flight, it is in fact trying to rehabilitate concepts that have become alien to democratic life, such as “sovereignty”, “dignity”, “pride” and “hope”. But how could it do so in a state of permanent financial crisis when it is forced to back down in each successive negotiation? And do so all the more painfully as the means designed to throttle the will of a restive populace were shown publicly, while the tormentors chuckled as they recounted the most recent confrontations.

...As its finance minister Yanis Varoufakis has made clear, Greece is “determined not to be treated like a debt colony that should suffer”. What is at stake goes beyond the right of a people to choose their destiny, even when a judge of democratic niceties as fine as German finance minister Wolfgang Schäuble reckons that they have “elected a government which is acting somewhat irresponsibly”. Because the question also concerns the possibility of a state extricating itself from destructive policies, rather than having to further toughen those policies each time they fail.

....Greece’s economic collapse, which has now lasted six years, is comparable to the damage that four years of military destruction and foreign occupation inflicted on France in the first world war.  Which explains why Tsiprias's government gets enormous pupular support — even from the right — every time it refuses to prolong such a destructive policy, and why it is unwilling to survive “like a junkie waiting for his next fix”. But Syriza has few friends outside Greece. As in Agatha Christie’s Murder on the Orient Express, to investigate the potential killers of Greece’s hopes would mean interviewing every EU government, and the chief suspect would be Germany: the failed disciplinary strictures are German, and it intends to squeeze those — especially in Mediterranean countries — who refuse to endure them indefinitely. In Spain, Portugal and Ireland, the governments’ motive for the crime is more sordid. Their citizens would benefit if the iron fist of austerity stopped pounding them. But their governments are afraid, especially when they feel threatened by a domestic challenge from the left, that Greece will demonstrate that it is possible to refuse to follow “a well-marked path, a known path, a path that the markets and the institutions and all the European authorities know,” the path that French finance minister Michel Sapin claims must be “explored right to the end”. The prospect of Greece breaking free would show that all these governments were gravely mistaken to make their people suffer needlessly.

Everyone knows that getting Greece’s debt repaid would be like “extracting blood from a stone” (Paul Krugman, The New York Times, 29 January). So why isn’t it equally clear that Syriza’s economic strategy to finance urgent social expenditure through a determined fight against tax fraud could draw on a young, determined, popular, political force, originating in social movements and free of the compromises and corruption of the past? Even if not marked out, the path is discernible. The uncertain future brings to mind what the philosopher Simone Weil wrote about workers’ strikes in France in June 1936: “No one knows how things will turn out. There is reason to fear a range of disasters. ... But no fear can erase the joy of seeing those who have always had to bow their heads, by definition, standing up for themselves. ... Whatever may happen next, we will always have had this. For the first time, and forever, there will be other memories floating around these heavy machines than silence, coercion and submissiveness”. The Greeks’ struggle is universal. Our good wishes no longer suffice. The solidarity it deserves calls for action. Time is still, as always, running out.

There Are Whistleblowers, Then There's This Guy

Kostas Vaxevanis has blown the whistle on the rich and powerful in his country and he's been arrested and hauled into court for it in what could turn into an astonishing showdown in a country that is a powderkeg of pent up resentment just looking for a spark.

Vaxevanis is the editor of a Greek weekly, Hot Doc, that just published the names of what it claims are the 2,000 biggest tax evaders in the country.   He was giving a radio interview when the cops tracked him down and hauled him away.

His defenders say the government is trying to hide the truth that it had the list for two years and did nothing because the names include prominent members of the country's business and political elites.

"If anyone is accountable before the law then it is those ministers who hid the list, lost it and said it didn't exist. I only did my job. I am a journalist and I did my job," Vaxevanis said in the video sent to Reuters news agency.

The case has triggered a parliamentary inquiry and could provide the basis for prosecutions at a time of rising radicalism on both left and right and a sense of injustice over the widespread destitution and despair created by Greece's economic crisis set against the relative impunity of the country's rich, who have a long history of tax evasion.

George Papaconstantinou, a former finance minister, said the Greek tax authorities had failed to act on the list because they were afraid of confronting the country's elite tax evaders. He also claimed that the affair brought to light only a small part of a massive tax evasion problem that was part of what he described as a "broken and corrupt system".

Greek Madness

Austerity-bludgeoned Greece has a society teetering on collapse.  It is a country headed by a government gone mad.

Even as, "doctors in Athens hospitals are handling only emergencies, bus drivers are on strike, schools are still short of textbooks and thousands of state employees are demonstrating against their dismissal,"  Greek leaders talk openly about inking more than ten billion Euros in contracts for warplanes, ships, and other weaponry if the next 80-billion Euros in bailout monies arrives.

The new austerity programme that Greece's government has announced leaves hardly a Greek unscathed. Unless, that is, he works for the military or for the armaments industry.

In 2010 Greece’s budget for the military was almost seven billion euros. That is about three percent of its economic output, a figure surpassed among NATO countries only by the United States. The Ministry of Defence did, however, cut its arms procurement in 2011 by €500 million. But all this will mean, believes an arms trade expert, is that future needs will be all the higher.

The Chilling Face of Greek Fascism

Greek police officers are warning that the brutal, fascist Golden Dawn movement has infiltrated their ranks.  The Guardian has prepared this disturbing look into Greece's spreading fascism.

                 
                   
                   
                   
               

Will the Country that Gave the World Democracy, Lose Its Own?

The prime minister of Greece warns his country is on the verge of becoming the next Wiemar Republic.   Antonis Samaras is appealing for funds to fend off the outright collapse of Greek society.

"Greek democracy stands before what is perhaps its greatest challenge," Samaras told the German business daily Handelsblatt in an interview published hours before the announcement in Berlin that Angela Merkel will fly to Athens next week for the first time since the outbreak of the crisis.

Resorting to highly unusual language for a man who weighs his words carefully, the 61-year-old politician evoked the rise of the neo-Nazi Golden Dawn party to highlight the threat that Greece faces, explaining that society "is threatened by growing unemployment, as happened to Germany at the end of the Weimar Republic".

"Citizens know that this government is Greece's last chance," said Samaras.

A Greek Tragedy -

Its flag looks eerily like Hitler's swastika.  "It" is the far-right Golden Dawn party that has risen out of the turmoil of Greece's economic collapse.

And another eerie echo from the past is that Greek police, hard hit by government austerity, are reported to be sending crime victims to Golden Dawn for protection.

...Athenians are being openly directed by police to seek help from the neo-Nazi group, analysts, activists and lawyers say.

In return, a growing number of Greek crime victims have come to see the party, whose symbol bears an uncanny resemblance to the swastika, as a "protector".

One victim of crime, an eloquent US-trained civil servant, told the Guardian of her family's shock at being referred to the party when her mother recently called the police following an incident involving Albanian immigrants in their downtown apartment block.

"They immediately said if it's an issue with immigrants go to Golden Dawn," said the 38-year-old, who fearing for her job and safety, spoke only on condition of anonymity. "We don't condone Golden Dawn but there is an acute social problem that has come with the breakdown of feeling of security among lower and middle class people in the urban centre," she said. "If the police and official mechanism can't deliver and there is no recourse to justice, then you have to turn to other maverick solutions."

Other Greeks with similar experiences said the far-rightists, catapulted into parliament on a ticket of tackling "immigrant scum" were simply doing the job of a defunct state that had left a growing number feeling overwhelmed by a "sense of powerlessness."

A spreading sense of helplessness, fear of outsiders, loss of confidence in government and its institutions, and the rise of a radical, hard-line movement - just add water and stir.

The Cost of Austerity

Austerity, while popular with rightwing pols, can wreak havoc on a society.  Greece today is austerity's punching bag.

Austerity inevitably translates into cutbacks in services, even essential services.  In Greece this has resulted in a one-year increase in HIV/AIDS infections among IV drug users of 1250%.   And the rest of the population isn't getting off easy either as malaria makes a comeback in epidemic proportions.

As the public finds private healthcare increasingly unaffordable, creating a 24% increase in demand for public healthcare, the public healthcare budget has been slashed by 40%.   The head of Doctors without Borders, Greece, Reveka Papadopoulos, says the entire health system is rapidly deteriorating.

In Greece and other debt-ridden Euro states, the austerity crackdown is stimulating the rise of extremist left and rightwing movements riding the tide of public unrest.

Greece a Goner But What Is the Lesson for Us?

In all likelihood the 21st century will be marked by a succession of dramatic upheavals.   The rise of radical conservatism and the true warfare state followed by a decade of democratic suppression and futile conflicts was the opener.  The same gang hatched the era of casino capitalism that, despite the crash of 2008, churns along today albeit in slightly different guises.  The Arab Spring and an era of revolution are just getting started.  The rise and fall of phoney economic miracles from Iceland to Ireland, Italy to Spain and, of course, Greece are rocking the bastion of Western Europe.  And we haven't even gotten to the environmental calamities yet.

But, in the spotlight at the moment is Greece.   For months Greece has been struggling to cope with its own national insolvency while its partners in the Eurozone have pondered rescue or bailout schemes.   After all we're talking about a Western European country here, the cradle of democracy.

The nature of the Greek crisis and the attempts to resolve it are much too complex for this discussion.   It appears that the Euro states have finally accepted that, bailout or no, Greece is a goner.  The Greek people are simply unwilling to endure the severe austerity measures a workable bailout will demand.   Powerful support is said to be already building for radical right and radical left-wing movements in Greece, a formula for a European brand of social upheaval that sometimes turns very deadly.

The important question is whether it was actually debt at the root of the Greek collapse or was that debt merely a symptom of a much greater and widespread malady that imperils much of the developed world?

The Greek problem didn't pop up out of nowhere.   It was the accumulated result of a succession of "kick it down the road" governments.   The Greek government actually claimed there were barely 5,000 citizens earning 100,000 euros or more annually and collected taxes as though that was true.   The trigger may have been pulled by Goldman Sachs and other Wall Street vultures but they merely took advantage of an opportunity presented by governmental malpractice.

There, I said it - governmental malpractice.   The critical failure of governments to do their job.   A run of Greek governments were woefully negligent in their duties to the rank and file, ordinary Greek citizen.  They allowed the rich and powerful to shirk their tax obligations and hide their money, making good that default only by reckless borrowings.   Then they set out to hold ordinary Greeks liable to bear the brunt of the pain of their own negligence only it hasn't worked.

These governments don't set out to destroy their countries.  Most of them have very sensible, short-term programmes and operate as if that was all that should be expected of them.   They don't look back and they don't look ahead, at least not much past the next electoral cycle.  It's this failure to treat themselves as part of a continuum that can create nation-destroying crises.  This is the result of excluding posterity as an essential element of government planning.   If a predecessor hasn't provided for you and you, in turn, don't provide for your successor, these long-wave length problems can behave much like a tsunami.   They're really nothing to worry about as they cross thousands of miles of ocean.  It's only when they reach that last half-mile approach to the beach that all hell breaks loose.

Governmental malpractice isn't limited to fiscal policy either.   Governmental malpractice is occurring on a massive scale today on the problem of global warming.   Climate change is another long-wave problem.  It builds gradually which can make it appear deceptively benign especially to those who prefer to neglect or scoff at the whole thing.  Yet, if the models are right, global warming has its own tsunami-like characteristic, one or more "tipping points" at which climate change goes from being a more or less manageable problem and switches into runaway global warming as our planet's own feedback mechanisms are triggered.   And we've been warned, repeatedly, that we'll probably go right through those tipping points before we actually realize what we've done.  (Isn't it curious how the subject of "tipping points" has been all but completely scrubbed from the climate change debate?)

Greece should serve as an invaluable object lesson to us all.  It should show us that the faith we put in western democracy should be less the measure of the institution than of the weakness or strength of our leadership.  If they fail the institution itself becomes an historical collection of lofty ideals discarded to convenience.

We need to change our political discourse, to expand it beyond next year or where we will be five years hence.   We need to demand political leadership that talks plainly and convincingly about where our country will be thirty, forty, even fifty years ahead and what they're doing to shape that reality.   Imagine if the Greeks had forced their leadership into that same conversation thirty or even fifteen years ago.

--------

Sorry this is so disjointed.  It's what often happens here when a train-of-thought moment occurs.

When Steve Says You're Fine, Call An Ambulance

The Greeks should have seen it coming when, just a couple of weeks ago, Stephen Harper pronounced himself confidant that Greece was on the road to a full economic recovery.   As a guy who supposedly earned a Masters degree in  economics from some diploma mill the University of Calgary, Harper's judgment in economics questions has been utterly pathetic.

But what of Greece?  How's that recovery going?  Well Greece has just earned the world's lowest credit rating, CCC, from Standard & Poors.

"The downgrade reflects our view that there is a significantly higher likelihood of one or more defaults, as defined by our criteria relating to full and timely payment, linked to efforts by official creditors to close an emerging financing gap in Greece," the US ratings agency said.

Say what?   Didn't they hear what Stephen Harper said?   Don't they understand that everything in Greece is just dandy?  No?

The Party's Over

''We have destroyed ourselves. We are angry

at what is happening now, this is why people are on the streets

screaming 'thieves' at the parliamentarians.

''We are also grieving the end of an era,

the end of a 30-year party. We are staring into an abyss now

and no one knows where we will land.

We have absolutely no idea where we are headed.''

That is how Kostas Argyros, presenter of the weekly television news program The Correspondents describes what has befallen his native Greece. The bachannal is over, the purse is empty and now comes the hangover. From the Syndey Morning Herald:

...with the passing on Thursday of austerity measures that raised taxes and loosened employment laws and will slash the budget deficit from 13.6 per cent of gross domestic product this year to less than 3 per cent by 2014, the social contract that has held Greece together since the fall of the military dictatorship in 1974 is finished.

In return, Greece will receive loans worth €110 billion ($158 billion) from its European Union partners and the International Monetary Fund to save it from bankruptcy.

''We are all expecting Greece to become Argentina, or worse,'' said an Athens financial consultant, Nikos Kontodimos.

Imagine, a country that has run out of easy options, that will now be forced to live within its means. The rubber meets the road.

Greece, however, is but one of several Western countries sinking in debt. They're not like their big brother mega-debtor, America, because their creditors don't need them in the same way they need the USA. That leaves them highly vulnerable to their creditors and those who would "game" their debts.

Maybe, just maybe, the 30-year binge much of the West has been on is drawing to its inevitable end. Perhaps we're witnessing the beginning of a new era of reality. What a change that would be.

Krugman Explains the Euro Crisis

In today's New York Times, Nobel economist and Princeton professor Paul Krugman succinctly sums up the economic nightmare hitting Greece and how it ripples through the Euro:

...During the years of easy money, wages and prices in the crisis countries rose much faster than in the rest of Europe. Now that the money is no longer rolling in, those countries need to get costs back in line.

But that’s a much harder thing to do now than it was when each European nation had its own currency. Back then, costs could be brought in line by adjusting exchange rates — e.g., Greece could cut its wages relative to German wages simply by reducing the value of the drachma in terms of Deutsche marks. Now that Greece and Germany share the same currency, however, the only way to reduce Greek relative costs is through some combination of German inflation and Greek deflation. And since Germany won’t accept inflation, deflation it is.
The problem is that deflation — falling wages and prices — is always and everywhere a deeply painful process. It invariably involves a prolonged slump with high unemployment. And it also aggravates debt problems, both public and private, because incomes fall while the debt burden doesn’t.

Hence the crisis. Greece’s fiscal woes would be serious but probably manageable if the Greek economy’s prospects for the next few years looked even moderately favorable. But they don’t. Earlier this week, when it downgraded Greek debt, Standard & Poor’s suggested that the euro value of Greek G.D.P. may not return to its 2008 level until 2017, meaning that Greece has no hope of growing out of its troubles.

All this is exactly what the euro-skeptics feared. Giving up the ability to adjust exchange rates, they warned, would invite future crises. And it has.

...what are the lessons for the rest of us?

The deficit hawks are already trying to appropriate the European crisis, presenting it as an object lesson in the evils of government red ink. What the crisis really demonstrates, however, is the dangers of putting yourself in a policy straitjacket. When they joined the euro, the governments of Greece, Portugal and Spain denied themselves the ability to do some bad things, like printing too much money; but they also denied themselves the ability to respond flexibly to events.

And when crisis strikes, governments need to be able to act. That’s what the architects of the euro forgot — and the rest of us need to remember.

Let this be a lesson to those who advocate monetary union between Canada and the United States. To adopt a common currency, that is to say the greenback, would be an enormous policy straightjacket for Canada. Enough. No way.