It is impossible to overstate the significance of Greece’s “Oxi,” or No vote. It puts into stark relief a simple proposition: governments propose, the citizens whose labors fund them dispose. In this case the government in question was not the Greek government, but supranational institutions: the European Commission, the European Central Bank, and the International Monetary Fund, known collectively as the Troika. It is symbolically fitting that in a simple exercise of direct democracy, voters in its cradle rejected the Troika’s proposal of rescue loans without debt relief, coupled with a package of reforms. Leaving aside questions of fair dealing—neither side has clean hands—the vote shows that the financial foundation of government does indeed rest on the consent of the governed. Beyond the immediate chaos and longer-term ramifications, it was this realization that prompted the hysterical panic, prior to the vote, of the powers that be, in Europe and beyond. After the vote, panic gives way to terror.
Not that they should be surprised. History is littered with regimes in which the productive people who were to support the rulers’ grand schemes, burdened with too much debt and taxes, said “Oxi”. The joke in the old USSR: they pretend to pay us and we pretend to work. Usually there is no vote to register the sentiment—there certainly wasn’t in the USSR—but when work is punished rather than rewarded, people stop working and governments collapse. The Greeks watched their economy shrink and unemployment climb under Troika-mandated austerity, and were facing decades of debt servitude. A default and exit from the EU will be no picnic. Alexis Tsirpas’s Syriza socialists will get acquainted with the realities of no credit (unless Russia or China comes through), reinstatement of a drachma that nobody inside or outside Greece will trust, and only what it can generate in economic activity going forward to fund their redistributive proclivities and the rest of the government, assuming Greek aversion to paying taxes can be overcome. In other words, Greeks will be starting from zero, but in their collective judgement, zero is better than negative—clawing out from a deep debt and austerity hole.
The key word here is repudiation, and the way is now clear for the government of Greece to repudiate hundreds of billions of euros of debt with the clear support of its citizens. For a breakdown of potential creditor losses, see “How a Greek Default Could Hammer Bonds, by Carl Weinberg” SLL, 7/5/15, and “Good On You, Greece—But Don’t Waver Now (Part 2),” by David Stockman,” SLL, 7/4/15. For a description of the financial ripple effects, see “Crisis Progress Report (8): Acceleration,” SLL, 7/2/15. There is indeed a limit to how much debt and taxes can be piled on the serfs, in Greece and elsewhere. Governments propose; the serfs dispose, and the Greeks may have just disposed of not just a mountain of debt, but the whole creaky apparatus of the EU. They will serve as an example for other political parties across Europe—now termed extremist but perhaps soon to be mainstream. Will youth in developed countries around the world, faced with shrinking economies and bleak job markets, but also charged with paying their elders’ “entitlements” and servicing their elders’s debt, get ideas? Don’t bet against it.
SLL is going to venture out on a limb and predict that the Greek vote represents two apexes: peak debt and peak government. The people have spoken. Congratulations, Greece.
Reblogged this on The Lynler Report.
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All the big word talk about Greece is a smoke screen. Greece is just an example of how socialism STILL doesn’t work. Maggie Thatcher said it perfectly.
” Socialism fails when you run out of other peoples money”.
All this talk about ‘austerity, money supply, bond markets, Euro-zone, IMF’ is all bullshit. Its as simple as what Maggie said. Socialism still doesn’t work and no one will give Greece any more money to piss away.
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Right now the Eurocrats have to be shaking in their boots. Their greatest fear? — Spain, Portugal and Italy decide to have a vote too.
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I give the full credit to mathematics. However, I did not realize that it would take this long for math to have recognition, once again. All of the manufactured propaganda, from the powers that be, can be neutralized by the comprehension of simple math. Humans can be swayed,bamboozled,swindled and robbed utilizing fraudulent mathematics. Why can’t mathematics be used for positive means? Perhaps we have become such morons that we cannot comprehend or utilize mathematics as a positive. Take away most peoples calculators and they are lost. Mathematics as a process is when the real learning takes place. The results are the frosting on the cake. The lack of the “process’ is a major loss in the learning experience. Empty pockets and empty bank accounts get peoples attention. Understanding how it came about,is a mystery to most people.
Help me understand this. Greece has lived large above their means for decades, borrowing money to fund entitlements and pensions, to fund the public sector, to fund their way of life, all on borrowed money. Now when the piper comes and says Greece must pay back what it owes, they say NO. How can this be celebrated? In my part of the country, these types of people are called deadbeats, not hero’s.
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I’m assuming you are a hard working, productive, taxpaying citizen. If so, the US government has stolen a good part of what you’ve made through the years, and incurred trillions of dollars worth of debt for which the ultimate obligation to repay is upon you and all the other taxpayers. Much of the money government has spent has gone, like in Greece, towards vote buying, transfer payments, useless wars, crony capitalism, and other expenditures that presumably have not benefitted you at all. According to usdebtclock.org, your share of the national debt is $154,375 if you are a taxpayer, and your share of unfunded pension and medical liabilities is $818,593. Do you consider yourself duty bound to pay any of that? If so, nothing is stopping you from writing a check to the government. However, if you don’t consider yourself duty bound to pay, if you reject most of what the government does as illegitimate, how would you vote in a referendum that gave you choice to repudiate the debt? The world’s corrupt governments (all of them, including the EU, Greece, and the US) rest on a foundation of debt and taxes. Undermine the foundation and you undermine government. That is why SLL cheers the Greek vote. It may well be the beginning of the end of the corrupt, liberty-destroying blobs that today rule the world.
Yes, well when you put it that way, it makes sense, I was thinking more on an individual level. Thank you. And no, I would not sacrifice any more than I already do for this corrupt government of ours that tramples individual liberty at every turn.
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Nice bluff by Tsipras and Varoufakis…..good game theory, but you’re betting with people’s lives. As H.L. Mencken said…. when the people learn to vote themselves largess from the government coffers, it is the end of democracy….in this case someone else’s coffers of digital zeros leveraged on the backs of the people and corrupt Greek politicians since 1974 have become wealthy. So the EU has pooped their pants because “the natives are restless” Tsipras armed with a mandate now says…..give us 50+ billion euros overs three years and we might raise taxes and lower pensions……..or else…..Spain, Portugal, Ireland and Italy may follow suite? When you thought it couldn’t get much worse…..it has…..nice game theory Yianni……but in reality the people of Greece are reaping what was sown. Meanwhile Vladimir is waiting for this round to play out and he will up the ante with no call.
I am Greek, heart and soul. I asked friends in Greece to let me know what time the revolution starts so I can be there in time when the party starts. This latest gambit has only diffused the pressure for a short while.The tail has indeed waged the dog.
I cry for my friends and family in Greece. But I’m also laughing at this kibuki comedy.
They are making a deal as we watch. (See the Telegraph article linked on Drudge, for details)
There is not going to be a debt repudiation as you and those you link dream of. Tsipras has folded under pressure, or perhaps bribery played a role. Regardless he’s going to knuckle under, accept some more money from the banksters, use that money to service his debt, and accept some more terms for running his country from the trioka. All and all truly pathetic play. He just folded with pocket aces and a pair showing on the first raise.
But than anyone who would expect a man of the left to solve the problem created by decades of leftist rule is not thinking clearly. It’s been fun to watch so many otherwise sober people expect the left to slit their own throats. Tsipras is not that fellow.
Scroll down about two pages and you can see the terms offered by both sides. They are not far apart now, a deal is imminent.
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