Brexit Thread V - The Final Countdown?!?

[AdrienIer]

Why not just volunteer?

You do realize that we have a professional army ? And that I am a particularly bad fit to become a soldier ?
It would be particularly abhorrent for us to betray an economic and political ally if it was under duress.

 

[Hrothbern]

Right, exactly. If you're economically illiterate and believe austerity to be technically necessary in some sense, then you can minimize the importance of the fact that the EU very obviously forced these national governments into policies that were rejected by the populations the national governments were supposedly serving.

But I'm not economically illiterate, and I'm here to tell you that far from being a "realistic solution to the situation" austerity simply made "the situation" worse, as it was undoubtedly intended to do. Austerity failed on its own terms of making the government of Greece better able to pay back its debt. That is what it always does, because there is no way to pay back a debt by contracting GDP and destroying the ability to repay it.

The "realistic solution," if anyone was actually worried about Greece repaying its debt, would be what historically has been done in every analogous situation: write off some of the value of the debt to bring the principal down to a manageable level, and draw up interest rate terms that actually allow the government in question to keep up with payments.

But that wasn't on the table, because the real reason for austerity was not technical, it was political: namely, that in the EU the banks which were the creditors of the Greek government have political power, but the Greek people have none. The Greek 'debt crisis' was seen as an opportunity to enforce the standard neoliberal agenda on Greece, to redistribute tremendous amounts of wealth from the Greek population to the government's creditors.

I agree fully on Greece.
And countries without their own currency have far less tools available to handle big disruptions.
Greece joining the Eurozone was a terrible mistake by both the EU and Greece.

And yes all kinds of other capital interests were served with that austerity wave.

But I think we should not ignore that the US has the benefit of the most used reserve currency, protecting it from sky high interest rates if the national debt goes up, and is in a constant mode of very severe austerity compared to the welfare states in Europe.
If an European country toggles down its welfare rate from 8 to 7, it is a strong austerity action for sure, but still much less of an austerity level than a US at 5.

 

[Arakhor]

The Greek debt crisis is patently relevant to Brexit.

Most European politics is relevant to Brexit, but we don't end up discussing Euro politics frequently.

 

[Lexicus]

You do realize that we have a professional army ? And that I am a particularly bad fit to become a soldier ?
It would be particularly abhorrent for us to betray an economic and political ally if it was under duress.

You have a professional army, so what? I find it to be in extremely poor taste to engage in any kind of advocacy or activism for your government to send people to war if you're unwilling to go yourself.

But I think we should not ignore that the US has the benefit of the most used reserve currency, protecting it from sky high interest rates if the national debt goes up, and is in a constant mode of very severe austerity compared to the welfare states in Europe.
If an European country toggles down its welfare rate from 8 to 7, it is a strong austerity action for sure, but still much less of an austerity level than a US at 5

In broadest terms "austerity" means cutting public spending. It's kind of ironic because you're absolutely right that the level of social spending in the US is pathetic, but the US's persistent federal deficits since the crisis are practically the only thing keeping the global economy sputtering along.

Also if you look at the overall performance, you are seeing southern European countries on like a 2 or 1: mass unemployment in many cases that is worse than it was in the Great Depression. The US never came close to that because we responded to the crisis with counter-cyclical spending, not austerity.

 

[Hrothbern]

but the US's persistent federal deficits since the crisis are practically the only thing keeping the global economy sputtering along.

Yes
I am aware of that. But you are right in stating that !

 

[Lexicus]

One obvious connection between Brexit and austerity is that the areas of Britain hardest-hit by austerity seem to have been those that delivered the largest Leave vote. The UK has more regional inequality than any other country in the EU, because it contains the richest area in the EU (London) and some of the poorest (the areas of the post-industrial north whose GDP per capita is roughly equivalent to Bulgaria's).

 

[AdrienIer]

You have a professional army, so what? I find it to be in extremely poor taste to engage in any kind of advocacy or activism for your government to send people to war if you're unwilling to go yourself.

You seem to be one of the "why die for Dantzig" crowd.
If tomorrow Canada was invaded by Chinese troops don't you think the US would intervene ? And if it didn't would you find that perfectly acceptable ?

 

[Hrothbern]

One obvious connection between Brexit and austerity is that the areas of Britain hardest-hit by austerity seem to have been those that delivered the largest Leave vote. The UK has more regional inequality than any other country in the EU, because it contains the richest area in the EU (London) and some of the poorest (the areas of the post-industrial north whose GDP per capita is roughly equivalent to Bulgaria's).

yes, Northern Ireland should also have voted Leave because of that same economical difference. And did not because of the border.
It's a general problem of nation states with "only" one central bank, one currency and "one" inflation rate.
If the differences in the kind of economy between regions are too big, this starts to bite.

If you look at the development over time of GDP per Capita, or GDP (PPP) per Capita post the GFC, list that up as % change, you get for example in the period 2011-2017 in the US, with an average improvement of 7%, a scattering of minus 8% to plus 38% between the states.
https://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP_per_capita
In Europe something similar happens, both at country level and at region level.

 

[Lexicus]

In the US many of the states run by Republicans have developing-world per capita GDP, child/mother mortality statistics, etc, so I am familiar with the general idea.

You seem to be one of the "why die for Dantzig" crowd.
If tomorrow Canada was invaded by Chinese troops don't you think the US would intervene ? And if it didn't would you find that perfectly acceptable ?

Had Hitler's Germany been armed with thousands of nuclear warheads on ICBMs, you're damn right I'd've been in the "why die for Danzig" crowd.

I'm not exactly a pacifist, but people who won't have to fight shouldn't be allowed to start wars.

 

[metatron]

In broadest terms "austerity" means cutting public spending. It's kind of ironic because you're absolutely right that the level of social spending in the US is pathetic, but the US's persistent federal deficits since the crisis are practically the only thing keeping the global economy sputtering along.

Oh, you mean that the US are sustaining this business:

I'll go through the labor of making a list for you.
This is CIA world factbook data, largely for 2017.

First the Eurozone (we're talking rounded $ billions):
+296.0 FRG
+82.4 Netherlands
+52.8 Italy
+24.3 Spain
+10.9 Ireland
+8.6 Austria
+3.0 Luxembourg
+2.4 Slovenia
+1.1 Malta
+0.9 Finland
+0.9 Portugal
+0.5 Estonia
+0.3 Slovakia
-0.1 Latvia
-0.5 Greece
-0.7 Lithuania
-0.8 Cyprus
-1.5 Belgium
-28.9 France

Also:
+1.3 Bulgaria
-0.7 Kosovo
-0.9 Montenegro

(But yes, Italy is gonna go belly up with that 53 billion window to play with. Any day now. Sure. )
I have roughly and recklessly added this up (looks legit, fingers crossed), and we shall put that in global context.

+452 Eurozone
+189 China (162+10+17)
+175 Japan
+85 ROK
+79 ROC
+67 Switzerland
+60 Singapore
+44 Thailand
+41 Russia

-22 Australia
-22 Argentina
-23 Algeria
-29 Brazil
-34 India
-39 Turkey
-56 Canada
-91 UK
-462 US

Well, if the Anglosphere stopped consuming all the surplus cars and electronics the evul exporters put out...
... could they not just end up in other places? Could the funny Europeans and East Asians not give all the stuff to each other, or, say, India, for that matter?

Right now they are giving it to Anglospherians in return for funny numbers that dance around on computer screens propping up the economy of NYC and London. Which in turn props up the economy of California by assigning pie-in-the-sky value anticipations to "tech companies" that reinvent one old racket or another and call it "tech".

You seem to be one of the "why die for Dantzig" crowd.
If tomorrow Canada was invaded by Chinese troops don't you think the US would intervene ? And if it didn't would you find that perfectly acceptable ?

Danzig.

Spoiler :

All djerman Zs are pronounced like a "ts".
So you don't need the T in front of it.
But we often put that in anyway.
Except when we don't.
As in Danzig.

It's a dumb language, needless to say.
(No really, there are nuance level differences. Having the actual T gives cues on the surrounding vowels, stress, tempo, that sort of thing. Usually it's pretty marginal if not outright redundant, though.)

 

[Silurian]

Tusk is from Danzig.

 

[Lexicus]

Oh, you mean that the US are sustaining this business:

Yes. In effect the US government is acting as the buyer of last resort for the entire world.

Could the funny Europeans and East Asians not give all the stuff to each other, or, say, India, for that matter?

I think that is already starting to happen.

 

[Yeekim]

But that wasn't on the table, because the real reason for austerity was not technical, it was political: namely, that in the EU the banks which were the creditors of the Greek government have political power, but the Greek people have none.

Of course the reason was political. The alternative was for other Eurozone governments to bail Greece out/forgive its debt - because the banks could not have taken the hit without . However, no voters in no other country felt like just picking up Greece's tab.

 

[Takhisis]

One obvious connection between Brexit and austerity is that the areas of Britain hardest-hit by austerity seem to have been those that delivered the largest Leave vote. The UK has more regional inequality than any other country in the EU, because it contains the richest area in the EU (London) and some of the poorest (the areas of the post-industrial north whose GDP per capita is roughly equivalent to Bulgaria's).

And to double down they'll abolish these human rights and worker protection and consumer protection and environmental law things that are so in the way of a truly progressive business environment for the UK.

 

[FriendlyFire]

I agree fully on Greece.
And countries without their own currency have far less tools available to handle big disruptions.
Greece joining the Eurozone was a terrible mistake by both the EU and Greece.

Internal domestic EU politics played a large part, both allowing greece to joing the EZ and the bailouts
Any solution that didnt take into account the Greek corrupt government and culture of tax evasion was bound to fail. Greek economy and system of government needed so many reforms

 

[Traitorfish]

Most European politics is relevant to Brexit, but we don't end up discussing Euro politics frequently.

That probably goes some way to explaining Brexit.

 

[innonimatu]

Of course the reason was political. The alternative was for other Eurozone governments to bail Greece out/forgive its debt - because the banks could not have taken the hit without . However, no voters in no other country felt like just picking up Greece's tab.

No, the alternative, if they believed the banks to be so important, was for the national governments to pay the shortfall and take them over. There was no limit to the amount of new money this countries could put into the banks, as the ECB has proven bu doing exactly that. And into companies, because it also bought a lot of corporate debt. Why couldn't it instead loan at 0% interest to she states in order for those to "bail out" and (in the process take over) the banks?

Instead the ECB, obviously under the authority of the EU, obviously controlled by the major governments within, gave away financing to the very same private entities that brought about the great financial crisis, allowed the very same system to carry on, and and left the very same people in power.
Greece was a small country, had no decision power, and was served for dinned. This is why the EU does not work. Will never work. It's two wolves and about twenty lambs deciding what's for dinner. The lambs even all together within the EU do not have enough influence to block the wishes of the wolves. And because they are in the EU they cannot do external alliances and are entirely at the mercy of the wolves. There's a few aspiring wolves in the mix, but overall for small countries the EU is an extremely bad idea, strategically. Brexit only makes it more so, at least before it was necessary for three wolves to agree on who was for dinner.

 

[FriendlyFire]

Instead the ECB, obviously under the authority of the EU, obviously controlled by the major governments within, gave away financing to the very same private entities that brought about the great financial crisis, allowed the very same system to carry on, and and left the very same people in power.

Greece was a small country, had no decision power, and was served for dinned. This is why the EU does not work. Will never work. It's two wolves and about twenty lambs deciding what's for dinner. The lambs even all together within the EU do not have enough influence to block the wishes of the wolves. And because they are in the EU they cannot do external alliances and are entirely at the mercy of the wolves. There's a few aspiring wolves in the mix, but overall for small countries the EU is an extremely bad idea, strategically. Brexit only makes it more so, at least before it was necessary for three wolves to agree on who was for dinner.

Greece could have Grexit ? or defaulted ?
The EU said Greece could set its own internal financial policies provided that it was able to balance it budget ? (fix tax collection, expenses, labour reforms, pensions etc)

Greece could have gone the way of iceland which refuse to bailout its banking sector and instead choose to prosecute and gaol those involved
In hind sight the US and EU should have followed suite. At least the UK gaoled a bunch of bankers

 

[innonimatu]

The EU made it crystal clear that a greek default meant being ejected from the EU through retaliatory measures. For a time Greece was made unable to do any foreign trade at all as it was excluded from the international interbank payments systems (the EU learned from the americans, finance as a tool of semi-war).

But the greeks should still have left at that point, sure. But they had incompetents and, ultimately, traitors in the government who dragged on negotiations and burned the cards that Greece held at the start (the damage that default would cause to the private creditors). Instead of playing those cards immediately to attempt to force a negotiated default, an incompetent government spent, wasted, months on negotiations with the EU where the EU was not actually willing to give in on anything. And was utterly unprepared to do what was best when the time ran out. Then claiming that lack of preparation, it betrayed the express wishes of the greek electorate and capitulated.

History repeats itself? This brexit thing certainly has a lot of parallels. Wasted time, lack of proper preparations for no deal, etc. Only thing left to do to make it a farce is a referendum on the deal and then betrayal.

 

[Hrothbern]

To keep the history about what really happened correct:
In 2012 holders of Greek debts were forced by the EU to accept a haircut of Euro 107 Billion ($140 Billion).
A debt reduction of about 50% of Greek GDP at that moment.

In March 2012, about 97 percent of privately-held bonds—about €197 billion—were exchanged for about €90 billion in EFSF bonds, resulting in a 53.5 percent reduction in the face value of the bonds and a reduction of approximately €107 billion in the Greek debt. The bondholders who accepted the “haircut” obviously figured that 50 percent of something was better than 100 percent of nothing, which is what their bonds would have been worth if Greece were to default.

https://eustudies.macmillan.yale.ed...nsequences-high-debt-high-unemployment-remain