Thursday, 9 July 2015

Left? Right? Centre?

In the interests of clarity, I'd just like to check. The 'Troika' is under fire from both the 'left' and the 'right' and both claim to be doing it in defence of Greek democracy. The Left claiming that the demands to reform the Greek economy before any 'relief' package can be handed over, is 'damaging the economy and denying vital services', while the right claim it is undemocratic to demand any controls at all. Both, presumably, would like the Greeks to be allowed to continue on their merry way, funding their corruption with everyone else's money.

Once you add in the UK Media which seems to simply put a negative spin on anything to do with the €uro or the EU and one rapidly comes to the conclusion that the 'Troika' (which I understand to be the German Federal government, the European Central Bank and the EU Commission) may actually be right. That they aren't popular with the Left or the Right is a given. The Right love to hate them as being about 'stealing sovereignty' and trying to create a 'Fourth Reich' to use the populist UKIP label, and the Left love to hate them because they won't allow freewheeling spending. The Greeks currently hate them because they want to keep on with their freewheeling spending - using the rest of Europe's money as the former Latvian PM said on our television recently. Funny how the media love to show us all the hard Right and hard Left banging on about the 'evil' EU restricting Democracy on the one hand, and the 'evil' Troika on the other for imposing controls on free spending handouts.

The irony is that both sides earnestly believe they are defending the 'democratic' rights of everyone to determine their own affairs. Both seem to forget that the currency is currently the world's second largest 'Reserve' currency and has actually proved reasonably stable in the sixteen years since it was created. The Greek government actually cooked their books to get in in 2000, joining at a Rate of 340.75 Drachma to the €uro. What we now know is that they did so because the Drachma was on the point of collapse, and perhaps Brussels and the Commission should have looked at the glossy figures a little more thoroughly when they were presented by a rather large UK based international accountancy firm that handles major corporate tax affairs for several companies who pay little or no tax to the countries they operate in.

The argument advanced by Mr Farage in an interview aired last night is that the Greeks have 'lost their sovereignty' because they are unable to 'adjust their economy' be devaluing their currency. I got the impression he felt that, to help Greece, everyone else in the Eurozone should allow the Greek government to run the printing presses, flood the market with devalued €uros and allow runaway inflation everywhere else. Ironically, this is what Die Linke and their fellow 'socialist' supporters in the Greens and other 'left' parties want.

Just so the Greeks can carry on doing the spending they are doing. Not unnaturally that suggestion has the more prudent Finance Ministers - and Hr Schauble is just one (though he happens to control the largest €uro based economy, and does it rather well) - rather cross. Especially the Baltic States, Poland, Czech Republic, Slovakia, Finland and Sweden.

Having lived in a country where printing money was used to address economic downturns, and devaluation employed to improve export trade, my own feeling is that those who feel this is the right way are either mad, or they are deliberately and dangerously trying to ruin the whole European economy. I'm starting to believe the latter in fact. Which makes me think that none of them have any concept of the misery it will inflict. As I said, I have lived through it. I have lived with an 'official' inflation rate of 12.5% year on year and the consequences were that though my salary was automatically 'adjusted for inflation' and I usually got at least 5% annual increments - my actual spending power decreased annually by a minimum of 7 - 10%.

Why? Because the 'official' inflation rate was roughly half the actual. That is what allowing Greece to 'devalue' the €uro would produce in the longer term. Thank you all the Left wing commentators in the UK and US media trying to talk the €uro out of existence, or talk it into devaluation. I can't use the expression here that I would say to their faces, but I will use the Shakespearean curse - A pox on all your houses.

Perhaps it is time for a reality check for the ideologues of the 'left' and the 'right' - and maybe the 'centre' as well. Economies are built on trade, productivity, goods, services, savings and prudent management of the resources of any nation or group. The EU isn't perfect, but it is doing a remarkable job of holding together a very disparate group of people and cultures. As Josephus has reminded me from time to time, one of the biggest problems is the divide between the frugal and industrious 'northern' nations and the more laid back and less industrialised southern ones. That is perhaps most evident when one looks at the divide between Southern Italy and Northern Italy, or those South Eastern States once part of the Austrian Empire and those that were run by the Ottomans.  A similar divide almost tore the US apart in the 1860s, less than a hundred years after its Founding.

The Germans are very, very touchy about inflation and falling productivity. They remember all to clearly how runaway inflation in the 1920s and early 30s brought a certain Party to power that plunged them into almost total destruction, and they won't allow anyone to take them there again. In the last weeks the Greek government has repeatedly come to the table with the same proposal - no cuts, no immediate reform, just give us the money and we'll see what we can do. Understandably, Hr Schauble is angry, after all Germans are going without some of the benefits they are paying for the Greeks to enjoy. It might pay the UK Media to be a little less 'anti-German' and get their heads out of the 1940s mindset. The German economy is remarkably stable, partly because they don't have the same lurching from 'socialist' to 'neo-socialist' and 'capitalist' economic dispensations and flights of fancy as we do. They aren't the threat, and neither is Brussels - the real threat is the idiocy that says fragmenting Europe into a myriad small states with parochial politics is the right way to go in the world as it is developing today.

As for the current crisis, Mr Tsipras is going to have to come up with a bit more than rhetoric and lots of glad-handing people like Mr Farage to get any change from the Troika and no amount of Farage Fulmination and Leftist whinging is going to change it.

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