This is the first of a four part interactive diagram in the FT this morning. It's stunningly important, because it shows, literally graphically, the scale of the issue we are facing in Greece. I urge you to look at the rest. If anything it is more powerful:
Look what the FT is saying (and with which I concur). It's suggesting that the path down which Greece might be forced leads to complete economic collapse, social chaos, the streets exploding and more.
And it makes clear that if others have to follow (and if Greece goes the dominoes will be falling) then the contagion spreads.
Then it will not just be streets exploding. Extremism will fill the void that neoliberal failure will have created, and that extremism will, inevitably be nationalistic. There is an inevitable consequence to that given the stresses that will exist. We have to be realistic: the choice now is whether or not we start down the road to war, or not.
We have faced such crises before, the only difference being this time it has arisen because of economic failure and not because of war. The precedents were in 1919 and 1945. In 1919 the decision was to divide Europe, and to punish those seen to be at fault. We got fascism, world war, dictatorship which was not finally eliminated until 1989 and outright disaster for Europe.
In 1945 the West, at least, made a different choice. It decided that it would work together despite crippling debts to build a vision of a shared Europe, and that's what the Marshall Plan delivered. It also delivered peace.
We face that choice now. I am not overstating my case that the choice now is the path to war or peace.
Surely there is only one option?
The FT does, I think, know this. But will our politicians see sense and realise that we're not just chooosing chaos for a few Greeks now - we're consigning European unity to history if we don't solve this crisis now.
And we can solve this crisis. It needs money printed. It needs economic stimulus and investment, now. It needs a plan for recovery, now. That will, I accept, devalue the wealth of some in Europe. But surely a little redistribution of wealth now is worth it? The alternative is modern war in Europe in my opinion - and I can, as a human being, as a father, as a compassionate person, imagine nothing worse.
And I think I have a duty to lay my concerns on the table.
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I know you’ll have a perfectly good answer, but why is a Greek default worse than the Icelandic or Argentinian ones? Just asking.
Because they weren’t in the Euro with Italy following close behind as a result
A Drachma default would have been a hiccup
This is TB
And relax…
It does appear that the transition from Great Depression to full employment in democratic European after WW2 is not widely understood: the public stimulus and the increase of inflation coming together to solve the debt overhang problem (the magneto of demand, using Keynes’s term), rather than it being a moral present for the victors.
If and when Greece falls then Minsky Moment II hits, a second panic like that of October 2008. Will the old men of Keynesian economics be listened to: will Krugman, Shiller, Akerlof, Stiglitz, Eichengreen. Michael Woodford etc get their way? Will the effective Keynesian solution spell the end for neoliberalism, for Marxism, for Fascism? Questions, questions.
Of course, if we had alternative local currencies up and running all over the place, we’d avoid most of the problems as we’d still be able to trade, wouldn’t we? This is what happens when you hand an important monopoly over to a crew of shysters in return for immediate personal gain – William of Orange, I’m looking at you here!
I have a very strong feeling that dual currencies are part of the answer to this problem – but have not worked out how yet
A good graphic as you say, Richard. As a commentor points out on the FT site there’s also a good (complimentary one) at the NYT – http://www.nytimes.com/interactive/2011/10/23/sunday-review/an-overview-of-the-euro-crisis.html?ref=global
Insofar as your proposals go, which you know I support, I’m afraid I don’t see much hope of their adoption because it’s quite clear that all of the politicians and their advisors involved in this mess are completely unable to think outside the neo liberal box they’ve painted themselves into. In short, they’d rather continue with this slow motion car crash than admit the system is fundamentally flawed.
Anyway, never mind. Last time I looked the markets were up – and even Robert Peston was admitting he couldn’t understand why. And yet governments worldwide continue to bow to their wisdom!! Pure and utter madness.
I have long taken the view that the path we are on will lead to war in the end. You cannot pretend that people are commodities and condemn increasing numbers to poverty and desperation without consequence, forever. What the powerful do not seem to understand is that money should serve people: not the other way around. At present the people in the rich countries seem to have a streak of masochism which is allowing austerity measures to be imposed: but that will not last forever either. If there is no change in direction war will come: and if anything should lead a new breed of politicians to arise and find support it is that. Even before prosperity, it is the responsiblity of the political class to maintain peace: if they do not understand that they are not fit to govern: if they understand, yet are arrogant enough to imagine that so long as the “political class” are all that matters (which was implicit in the statements of Merkel and Sarkozy) then they have lost sight of democracy. We live in a plutocracy and that was never mandated.
I fear that this apocalyptic vision is real. The intrinsic anti-democratic nature of this one-sided neoliberalism may well end with a bang rather than a whimper, and be replaced with the military option of enforced neo-feudalism.
I am an ordinary working man that loads lorries for a living. I have been saying to my wife now since the collapse of the banks in 2008, that this (Capital in crises) is the stuff wars are made of. If you read history the writing is on the wall daubed in letters 10′ high!
I too am a father with two “Kids” at uni. It is time that Governments from the richer nations realise that corporations and markets can no longer have the whip hand, Parliament can no longer be the National Executive for big business.
It IS true Capitalism is not working and a major redistribution of wealth is needed and it’s needed now.
Has as been pointed out the only other option is to send our kids to war again, and what for? To keep the rich rich is what for at the price of our children’s lives!!
It is time for people to support the Trade Unions and those taking direct action. It is time to realise that militancy is not just expectable but actually needed.
Karl Marx once famously said “Workers of the world unite; you have nothing to lose but your chains.”
Now is the time or we WILL pay the blood price.
Your logic is sound…
Pete
I agree with your logic that the path we are currently on is very destructive. I hope that it does not end in war, but after yesterday’s Guardian article about preparations for bombing Iran I feel quite pessimistic about the future. The problem is that many people in this country are so obsessed with the cult of celebrity, and our media has been so dumbed down that the real issues are being glossed over and are subjected to propaganda from the right. Politicians refrain from telling the truth and this is not just a problem for the UK hence the level of social unrest in other countries. Unfortunately I am not sure what the answer is other than the complete repudiation of neoliberalism and this is not going to happen in the short term.
In fairness, there is a positive side. I think the main reason the US under Bush didn’t attack Iran was simply that we can no longer afford it.
If (god forbid) we get the Mormon as next president he’ll have to ask China for funds to attack Iran. I hope the Chinese will tell him to calm down.
I’m suprised they didn’t include an eclipse and a hail of frogs in that assessment.
Why on earth should bank machines stop issuing money? Cash is only a tiny part of the economy, bank workers, like everyone else, will presumably want to turn up to work as normal. We have a central bank which can come up with 75 billion whenever it feels like it.
I am astonished that the same people who have the foresight to create eorogendfor to crack desperate peoples heads on behalf of ‘investors’ and put countries into administration at the drop of a hat ,have no clue what to do about a wholly predictable failure of a totally discredited financial system.
The threat of social collapse, which I genuinely believe can be arranged, is the gun finance is holding to our heads. What the FT should be asking is why not a single politician in power is doing anything to neutralise this threat.
What kind of world re they forcing us to live in?
As for war, we’ve been at that as long as I can remember, so who’ll notice the difference?
Sorry – but I think you might be trying to be amusing – but I think the FT is bang on here
And yes, the cash points will fail and with it the food supply chain
It’s that bad
The food chain is very vulnerable and so I would advise people to stock up on store cupboard items because just in time delivery systems would soon collapse.
Way ahead of you Teresa, http://www.economania.co.uk/uk-preppers.htm.
I actually see the FT as delivering the threat, one which we heard before (our 2008 crisis,the american TARP heist) and wonder what the alternative is if Greece does not default?
Just keep on punishing populations in order to pamper dysfunctional banks and their beneficiaries?
Continue the absurd pantomime of round tripping bailout money from the ECB to societe general et al?
Watch Greece diligently destroying its economy while increasing the burdens of its obligations?
I think this is irresponsible scaremongering of the worst kind.
I see no need for social collapse. As I said, I acknowledge that it could happen.
But that is a decision for our now nakedly undemocratic elite and I’m not sure they are particularly concerned.
This is a man made disaster which will require man made solutions, and these will have include putting finance back in its box. The solutions to the crises of the twenties and thirties could have been applied at any time, ie putting people to work, recapitalising populations.
What we should expect is governments and central banks to keep the show on the road while finance withers to an appropriate scale.
Putting finance back in its box is a major theme of The Courageous State
The Greek debt has to be cancelled, it’s that simple. The EU can dance around this reality until the cows come home, but the fact is, its the elephant in the room that’s not going to go away.
We have to remember that most of the bailout money for Greece is not going to the country of Greece, but mostly to foreign banks. It’s an open secret that the EU does not give a flying firkin for Greece as long as the European single currency is rescued.
Much of Germany’s debt was cancelled after World War II, yet the EU stobbornly insist on punitive austerity measures for Greece. All over the world, we are effectively cancelling the bad debts of the banks by showering them with public money while allowing countries like Ireland and Greece to twist in the wind.
Allow a complete cancellation of Greek debt and allow the Greek economy to grow. Also, if countries are allowed to tax and borrow in sufficient amounts to invest in productive industry and remove the ridiculous straitjacket of austerity measures, the effect of debt will be substantially lessened.
As some have suggested, there should be a thorough audit to find out just how much of this debt is actually legitimate.
Cancelling the debt seems to me to be the only real way forward.
Cancel one debt and you have to cancel them all as they’ll all want it. Some of this debt is owed to pension funds etc – what are people supposed to do when they’ve got no pension? My feeling is they won’t have any pensions to speak of anyway because money itself is being greatly devalued just now – but that’s another story.
I don’t agree with you Richard.
Why war between states when the war is between the 1% and the 99%, everywhere?
The only way we can fight to win that war is at the level of the national, because democracy is bounded – its not an abstraction. We are set up to effect democracy inside bounded state entities. Yes – jointly and in unison across borders. But it is in our own country that we can force change. Not trying to force it on others as has been the pattern.
Forcing change in the UK would in fact be very signficant further afield, because of the reach of UK based financial services tentacles.
Your fear of the national may be fashionable among a certain stratum, but is not constructive in this.
You are as far removed from having any comprehension of my thinking as ever Linda
Why you spend all your time seeking to alienate baffles me
Because, in with a lot of useful stuff, you are dangerously destructive.
Your ‘Guardian’ attitudes to the national level of action work against the democratic force for change we so desperately need.
You also refuse to admit to your huge blind spots e.g. the international trade agenda and how through that, this crisis is the mother of all shock doctrine developments.
That is perhaps the nature of blind spots – but even when they are revealed???
I think I’m wholly aware of those issues
And have them wholly on board
So we’ll just have to differ