Nadia Idle, War on Want


So the Eurozone crisis ay??? I said I’d blog about this set of readings because I was interested in the topic REALLY, or rather I was annoyed by the fact that I didn’t understand much, thought it was important to understand what was really going on and what the forces involved were, and took it as a challenge. And here you find me again reader, several weeks after the task was meant to be completed, late in this task due to cowardice, but also to my defence, a week of illness.


Right so without further ado, the Costas Lapavistas Q&A was what I read first. I’ve heard many a non-mainstream economist and researcher rate Lapavistas so I maybe that’s why I expected to learn much from his answers in this piece. But perhaps because the Guardian didn’t publish a varied enough array of questions, but I remained quite confused by the end of it. The main point I got from it the EU/Euro works for German interests most, and does little for Greece, and that a Grexit i.e Greek exit from the Euro and defaulting on their debts is both inevitable and desirable for Greek society, but the later it’s left the worse it will be for Greece. He hardly discussed the banks at all though. Which made me think of this 2010 Aljazeera YouTube clip of Max Keiser, financial analyst on Goldman Sachs corruption in Greece which prompted some activists to call for him to be elected president of Greece (apologies, couldn’t find the version without effects added by Greek editors!).


I then read the BBC infographic: the Eurozone crisis explained I took away one important point prom this and that is that countries who played by the rules, lose out. Spain was top of the class when it came to adhering to the 1997 3% borrowing limit set up by the “stability and growth pact” put in place by the German finance minister at the time. Yet the markets didn’t reward Spain, on the contrary Germany and France the reckless borrowers of the period were those favoured by markets. So basically, the rules don’t do what they say they will do in terms of carrot and stick.


My favourite and most informative reading was the RMF sixty page report: Beggar Thyself and Thy Neighbour. Unlike the class swots in my London Econowhat reading group, I only read the abstract. And what a fine abstract it was! These were the main points I took away from those three pages:


1. The Eurozone damaged Greece for its own benefit

2. The Euro removed the freedom of states to set fiscal or monetary policy which shifts the burden of economic adjustment onto a sector the government is allowed to play with = the labour market i.e people’s wages

3. After the 2007 crisis the European Central Bank intervened to allow the banks to have liquidity, but left each state to fend for itself. European finance was rescued, “only to turn and bite its rescuer”.  

4. In effect by 2010 “peripheral countries” , i.e like Greece had been forced to accept IMF conditionality, but without IMF loans

5. All policy alternatives that the peripheral countries could pick over austerity will involve civil unrest, so they may as well pick the most equitable one for society.


I came out of these set of readings with two overarching thoughts: firstly, I wish everyone would clarify when they spoke or wrote about something being good or bad for country X, they would clarift whether they meant that country’s financial sector, its state or its people. Secondly, the injustice of it all. I pondered last month’s readings on Argentina and Ecuador, and those countries successes on social welfare indicators and thought, you’re damned or you're damned, Greece! With rising fascism and poverty on an unprecedented scale, save your soul and do a Grexit, Greece. Now better than later! Before everything is destroyed!

Part 5: The eurozone crisis

Each week someone from the econowhat? team will be reading the books and articles and watching the film. That person will post up their comments here to get the discussion started, then please add your own comments. The bloggers are not expert economists, but other people we know are, so don't be shy to ask questions.

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Nadia Idle, War on Want

Maddy Evans, Jubilee Debt Campaign

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