The Breaking EU – a Sign of the Times

I see that the Greek financial problem is rearing up again. It seems that the Greek Government is likely to welch on its debt repayments, and is likely to need another bail-out to pay off the previous bail-out.

So what precisely is the situation? I do not know because the details of the bail-outs are never clearly explained. So let me imagine the situation.

The Greek Gov is, say, paying out more in pensions and other benefits, than it can afford, simply because taxation is not bringing in enough revenue. But, politically, reducing pensions is a hot potato. Because the Greek economy is a basket-case, no one wants to buy its Government bonds, despite high interest rates. It cannot devalue its currency (which would mean that anyone holding Greek currency would take a ‘haircut’) since it is in the Eurozone, so it goes to the EU Central Bank and asks it to buy its bonds. There is much tutting and the IMF and World Bank join in. Between them, the EU CB, IMF and World Bank come up with a plan. The plan requires austerity (and smoking bans).  [We must bear in mind that the big noises in the World Bank and IMF are the Americans] The new Greek Government fears, rightly, total economic collapse, and quietly agrees to reduce its pension and benefits hand-outs, and hopes for the best. But nothing changes and the economy continues to go downhill. Of course, the reduced pensions and benefits reduce demand which reduces supply, which reduce tax income. And so, a year or whatever later, nothing has changed. The Greek Gov cannot buy back its bonds. It asks the EU CB, IMF and World Bank to accept new bonds to replace the old bonds. The EU CB, IMF and World Bank demand even more austerity (and more smoking bans) and the Greek Gov MUST agree to avoid economic collapse.

What would economic collapse mean? I do not know, but I can guess. Remember that Greece cannot decide to print Euros, so it would be unable to pay salaries, pensions, etc. The recipients of the salaries, pensions, etc, would not be able to buy anything, other than by raiding the bank accounts. But banks do not have a bottomless pit of euros, so they have to close their doors and disable their cash machines. People stop paying their mortgages and personal loans, and no one buys cars, etc . In effect, THERE IS WARFARE! Government totally collapses. No one goes to work unless the get paid ‘in kind’. “I shall do a day’s work for you provided that you pay me a pound of potatoes, half a pound of lamb, etc, and I must see the provisions before I start work” And, for a country like Greece, the tourists stay away.

You cannot blame the Greek Gov for trying to avoid such a total catastrophe.

But how about this? Suppose that the Greek Gov had learnt from the last bail-out and, secretly, printed billions of drachma – as much as is needed. Suppose that it decided to ‘call-in’ the Euros and replaced them with drachma. It could then repay its bonds with the collected euros. The EU CB, IMF and World Bank (aka America and Germany) would have to put up with their losses.

I cannot think of any alternative. Greece would have to ‘start over’. That is not unusual since most Nations of Europe had to ‘start over’ after WW1 and WW2. But that does not mean that its People must live in poverty. For most of the year, countries like Greece are nice a warm. They do not need central heating or artificial ventilation, other than a small fan occasionally. Lots of activities in their bars and cafes take place outdoors. A couple of years ago, I visited Malaga, but I stayed in a university hotel which normally housed students. The facilities were very basic, but OK for a guy on his own. Meals were basic, in the Spanish style – mostly bread, butter and coffee for breakfast, plus fruit. But they also provided some egg and bacon, if you preferred. The hotel did not do lunch, but it provided an evening meal, if you wanted it. It was not exactly a banquet, but it was OK. Personally, I preferred to visit a local pub and dine there. One night, I forgot to pay, and the waiter chased after me. I must have been at least 100 yards away before he caught up with me. “Veiente”, he cried. “Oh, SORRY, REALLY SORRY, here you are”, I responded, and gave him my €20 note.

But even that small community on the outskirts of Malaga had its den of evil. One night, on my way back to the hotel, I noticed a bar with a bouncer outside. I had had a couple of beers and felt brave. So I asked the bouncer if an Englishman was allowed inside. I think that I used a bit of English and a bit of Spanish and a bit of French. Like, “Por favor, Ingles, entree?” So they let me in. It was about 11pm, but I must have been early, because there was no one in except prostitutes.  I fled immediately. Not that I have anything against prostitutes. On the contrary, prostitutes are very amusing, and not always uneducated. I fled because I know that they tempt you…….

What have such reminiscences to do with Greek insolvency? It is that the Greek People do not know how lucky they are. Or perhaps they do, but do not think that it is important. But it IS important. They are lucky enough not to freeze. Here in England, I have had the central heating on continuously since the beginning of December. If I did not, then we would all have to wear woolly jumpers and overcoats IN THE HOUSE! When I was in the RAF in Cyprus, the winter months simply meant more rain. The difference between winter and summer was that summer was hotter, and not that winter was horribly cold. Winter was pleasantly warm, for the most part.

The EU could have been wonderful. In fact, for a few years, it was wonderful. Perhaps the fact that it was wonderful, and free, allowed the influx of ‘controllers’ and ‘prohibitionists’. The same could be said of the UN and the WHO. It always seems to be the same – ‘good intentions’ seem always to be replaced by ‘coercion and lies’.

Brexit must mean more than disconnection with the present set-up of Communist Europe. It must mean an ongoing conflict of ideas.

WE ENGLISH PEOPLE WANT RECOGNITION. It is about time that, in contrast with Scots, etc, the ENGLISH people have just as much authority.

But the whole Scottish independence thing is wonderful, from an English point of view. Scotland costs England a lot of money. So let The Crankie demand Independence, and, as proof of her demand, refuse to accept the English subsidy.

I think that my last paragraph above describes precisely the ‘cognitive dissonance’.

The EU is breaking, and it is terribly sad. The problem is the use of FORCE. Given time, the Nations of Europe would have found ways to cooperate with free trade and sharing of resources. But, “NO!!” ZEALOTS OF ALL KINDS BUGGER THE THING UP. I do not understand how these Zealots, like the Medical Mafia, get inside. It can only be because politicians fail in their duty, which is to STOP one section of the populace persecuting and stealing from another section. That is what Government exists for. It does not exist to decide which side of the road we should drive on. Such things are common sense.

The EU is breaking because it is a mirror of Soviet Russia.

Read the ‘Gulag Archipelago’.

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4 Responses to “The Breaking EU – a Sign of the Times”

  1. nisakiman Says:

    Cyprus is considerably further south, and thus considerably warmer, than mainland Greece, Junican. This winter has been unseasonably cold – we even had snow here in Patras last month, and old people, unable to afford to heat their homes, have been dying of hypothermia. So it isn’t as rosy as you might think. Normally in winter we have night time lows of about 4° – 6° C and daytime highs of around 13° – 17° C, which although not nearly as cold as UK, is certainly not warm.

    The economic situation here is dire. All the bailout money Greece gets barely touches the sides of the local economy before it goes straight back to the European banks to repay the loans. At the behest of the Masters in Germany, taxes here have become punitive to the point of impossibility (for instance, last month they increased the price of petrol by 20% and slapped new taxes on phone lines – almost every week a new tax or tax rise is announced), and as a result businesses are folding at an unprecedented rate, creating a vicious circle of ever diminishing tax returns. The tax office is constantly ramping up its prosecution of people avoiding and evading taxes, further exacerbating the problem. I know quite a few guys who have their own businesses here, and they all say that if they were to pay all the taxes demanded by the government, they would simply go out of business, as there would be nothing left for them to live on. In fact one of my friends opined that he would have to run his business at a loss to comply with all the tax demands.

    You are correct in your opinion that the only possible way Greece will ever break out of the vicious downward spiral it finds itself in is to junk the Euro, default on its loans and go back to the Drachma. In fact I was saying this six years ago when the shit first hit the fan, and had they done it then, by now the economy would be on the way up. Now it will be even more painful than it would have been then, but with self-determination returned to the hands of the Greek people, at least there would be hope. As it stands, they are at the bottom of a financial hole, desperately digging deeper in the vain hope that they will come out the other side. The European bankers meanwhile are handing them new shovels as the old ones wear out, urging them to keep digging.

    The saddest thing about all this is that their desperate attempts to stay in the Euro will all come to naught, because at some point the Northern European countries will eject them from the single currency anyway, and they’ll be fucked every which way. All the pain and suffering will have been for nothing.

    • junican Says:

      I exaggerate, of course, Nisak. How can you account for ‘niceties’ of weather in a blog post? All I am saying is that Greek weather, very like Cyprus, tends to be dry and warm for most of the year. Weird, is it not, that the most draconian anti-smoker laws are aimed at the those countries which are coolest and wettest (apart from the basket case known as Oz).

      I suppose that what I am saying is that the Greek people need to decide that THEY DO NOT WANT OR NEED Germanic or British life-styles. Their bars can have the windows and doors open, and the clientele can relax, indoors, and drink, chat and smoke without a fug of alcohol fumes.

  2. smokingscot Says:

    Not your usual place for business news, however I happened to stumble upon this article that puts yours and Nisakiman’s viewpoint into perspective. It says:

    A “German euro” was nearly 17 percent undervalued against the dollar in purchasing-power-parity terms, while a “French euro” was overvalued by nearly 5 percent.

    A “Greek euro” was overvalued by 7 percent.

    http://www.dailystar.com.lb/Business/International/2017/Feb-04/392225-euro-may-be-too-weak-for-germany-but-too-strong-for-others.ashx

    Meaning there’s not a hope in Hades that Greece (or several other countries in the Euro block) can get themselves out of this mess.

    And should the American administration succeed in pushing the value of the Euro to a level that makes German exports compete fairly in the US, I dread to think what sort of mess will result in Greece.

    Alternatively, should the Yanks take action on the import duty side of things, then the Germans have two choices, flood the markets with cheap German goods (which I’d argue they’ve been doing for several years), or simply quit the Euro.

    That of course is what AfD wants – to quit the Euro.

    And Ms. Le Pen wants that as well. Plus she’s today promised a referendum on continued participation in the project, unless she can negotiate acceptable terms for France.

    (I get ahead of myself. So sorry. Patience til we see what happens in The Netherlands. Their election’s on March 15th).

    • junican Says:

      No problem, SS. There is nothing wrong with speculating, provided that you do not expect your speculations to be forecasts.
      I personally think that the UK should negotiate with Germany and France in the first instance before spreading the negotiations to other countries. The UK should not negotiate with the EU. I say ‘EU’ in the political sense. Junker is EU – he and his like are yesterday.

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