Europe needs a hegemonic Germany

For six decades Germany was being pampered by a hegemonic America that oversaw the write-off of its wartime debts, the reversal of Allied designs to de-industrialise it and, above all else, the constant generation of the global demand which allowed German manufacturers to concentrate on efficiently producing quality, desirable wares.

Having taken all this for granted for too long, Germany’s elites are now finding it conceptually difficult to come to terms with the new ‘normal’:

  • A world in which sufficient aggregate demand is no longer maintainable by the United States, or any other single bloc, and in which Germany can no longer take for granted the demand for its goods.
  • A world in which there is no room for a Eurozone that operates like an augmented Germany.

Germany’s disciplinarian imposition of the greatest austerity upon the weakest of Europeans, lacking any plan for countering the resulting asymmetrical recession, is a sorry and dangerous leftover of a long-gone world order built by America. It is the result of a mental atrophy caused by a United States acting for too long as the over-protective parent. It will backfire with mathematical precision, causing higher debt-to-income ratios and lower economic dynamism throughout Europe. The time is, therefore, ripe for a Gestalt Shift from an authoritarian to a hegemonic Germany. Europe needs a Germany ready and willing to make this shift and, indeed, so does Germany.

But what would a hegemonic Germany do? It will be worried about something beyond fiscal rectitude and market reforms. It will know that a supply of high quality products does not automatically create its own demand. It will enthusiastically strive to engineer, as America did in the 1950s, a Pan-European Recovery Program that restores demand for the goods that Europe needs.

Should Germany then try to emulate America? Germany does not have the capacity to do what the United States accomplished from 1980 to 2008; that is, to operate as a gigantic vacuum cleaner sucking into its territory other nations’ net exports, at the cost of ever expanding deficits. Nor should German taxpayers be expected to reflate the bubbles that burst in 2008 (in their own banks, in and around the Greek state, in Irish and Spanish real estate markets etc.). Burst bubbles should be allowed to remain… burst. But meanwhile a hegemonic Germany would find ways to channel the huge pools of stagnant savings into productive investments in the Periphery where they shall produce the incomes that must pay down debts and maintain the level of intra-European demand German companies need to remain competitive both within and without Europe.

In a sense, a hegemonic Germany will be playing the role that Washington did in the 1950s, adopting an activist policy to re-balance Europe’s economy through efficient surplus recycling. But how can this be achieved, when Germany cannot afford to unleash a Marshall Plan? What institutions will this recycling require?

Two things are clear: Germany should not rely on the failed nexus between national governments and Brussels, which has been responsible for inefficient and corrupt uses of the EU’s structural funds. Also, it is futile to attempt moving in a federal direction, a move that Europe’s peoples are not ready for and whose glacial pace is certain to be outpaced by the galloping crisis. Is there a third way? Yes, there is.

Germany should take another leaf out of the New Dealers who put it on the road to recovery all those years ago: Europe needs its own New Deal, funded by a new class of public finance instruments. Germany can realise such a Recovery Program centred around the European Investment Bank. The EIB already has a proven track record of creating a liquid market for debt instruments that fund successful projects. In collaboration with, and supported by, the European Central Bank, an EIB-ECB partnership has the capacity to energise mountains of hitherto idle savings on pure banking principles, with minimal involvement of member-states and no need for Treaty changes.

All it will take is a German resolve to shift from panicky authoritarianism to a hegemonic, to an enlightened self-interestedness.

127 thoughts on “Europe needs a hegemonic Germany

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  4. Just a little play… Might Germany be capable of “enlightened self-interest” if not of “self-interested enlightenment”?

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  6. You wrote “All it will take is a German resolve to shift from panicky authoritarianism to a hegemonic, to an enlightened self-interestedness”. This will never happen. Right now Germany ist heading in the opposite direction. The Government will inflict more austerity measures on its own population after the General Elections in September: A general pension age of 69 or 70, more privatisations, less benefits from public health services a.s.o. German Elites are convinced of austerity measures – it’s a moral-psychological issue. As convinced as were their predecessors in the 30s: Heinrich Brüning and others. This time it won’t end in overt Facism, however. At least not in Germany.

  7. I’d consider the wording of “Hegemonic Germany” a little toxic.
    The vast majority in Germany does not want that kind of role – and I am sure most EU citizens outside Germany don’t really want it either.

    When it comes to Germany potentially being for the EU what the US was for the western world after WW II…
    …size matters after all!
    After WW II, the US had about 30% of the GDP of the world.

    That – together with the confrontation with the USSR – made it possible and in the US’ interest to support the European recovery after the war.

    Germany’s share in the world’s GDP is obviously nowhere near 30% – not even its share in the EU’s economy is near there.

    80 million Germans can’t save an EU of almost 500 million. Simply impossible. It could help a bit – and so it should. But it’s simply not powerful enough to save everybody.

    One thought when it comes to who has to feed governments running out of money (e.g. Italy, Spain, Greece) – the taxpayers of those countries or German taxpayers:

    Apart from it being way above Germany’s means, why should the German taxpayer pay when the net private wealth in e.g. Italy is HIGHER than in Germany?–debt-with-domestic-private-wealth-by-peter-jungen

    • Could you please at least try to read and comprehend the article before commenting?
      Unless you can show me one line where Proff. Varoufakis says that the German taxpayers should pay….Jesus…

    • You are right in asking “Why should the German taxpayer pay..etc..etc..”.but the German taxpayer and the German political order should make up their minds as to what they really want or at least aknowledge the fact that no matter what they decide there will be consequences. Do they want to help preserve the EU and the EZ or do they want to revert to a national currency and economy? Both choices involve significant consequences.

      So far, it seems that Germany is playing a strategy of maximizing its benefits of the EZ for as long as it can while minimizing the domestic backlash of its possible breakup all the while bringing said breakup a little bit closer bit by bit. Nothing wrong with that in the world of realpolitik that we have allways lived in, such is the cynical and misanthropic world of politics, but since it comes at the expense of it’s so called “partners” in the South you can understand the natural reaction to this strategy.

    • Dear Crossover
      You are right in that, as you mentioned, Prof. Varoufakis does not say that the German taxpayer should pay for it.

      Instead of that direct transfer from German taxpayers, the EIB should finance it. He mentions “a new class of public funding instruments”.

      To me, since they are explicitly labeled “public funding instruments” and as the EIB probably won’t get the necessary funds from e.g. Greece, who do you think will ultimately have to pay? Especially if the financed projects turn out to not have been so great investments after all and the money invested is lost? I’d assume that ultimately the German taxpayer will have to guarantee the capital – and will ultimately bear the loss if not as many people as projected end up using an e.g. newly built TGV train line from Athens to Munich.

      I am not saying that it is ultimately a bad idea. But we are all witnessing at the moment that German taxpayers’ money is put at risk (and will eventually almost certainly to a large extent be lost) due to bailing out Greece, something that had been completely ruled out in the Maastricht treaty when the Euro was decided upon.

      So don’t tell me now that with switching the money pipeline from the north to the south on again, the risk is not ultimately with the German taxpayer, please.

      I just dared to post the link to an article that states that in e.g. Italy, private net wealth is HIGHER than in Germany.
      Instead of having that money sit around while the government is running out of revenue, wouldn’t it be the most obvious thing to channel that private wealth into the development of the south?!

      If the south is not willing or able to mobilize the significant resources that it actually has, I don’t see why the German taxpayer should.

    • @Martin
      I would like to address some points in your response.
      1) The EIB could finance projects using its own access to the money markets. The EIB bonds could be guaranteed collectively by all EZ states (a sort of euro-bond) or by collateralized revenue from projects. Risk is manageable; it is the political will that is lacking.
      2) Your evaluation of the private savings index compared to GDP is misleading. You should also compare private debt levels and take into account the state of the banking sector in each country. For example in Greece, private savings are close to a par with GDP, but private debt is slightly higher and the banks are bankrupt and insolvent, so zero chances of private stimulated investments. The same story is true for Italy and Spain. Private investment is inadequate there as well.

    • Dear Tasos
      Regarding the financial liabilities when assessing the net wealth of e.g. Italian private households, here’s some more data from Eurostat (see No. 5):

      It may be surprising – but net wealth in Italy (after liabilities) seems to actually be high.

      Page 33 of this document goes in the same direction:

      You write that the EIB bonds could be guaranteed collectively by the Eurozone countries. I agree – but if we assume that e.g. Greece, Spain and Italy are practically bankrupt then the guarantee effectively comes from Germany, the Netherlands, Finland and Austria – because they are the countries seen as truly solvent (so far).
      Again: I don’t say that this kind of investment is necessarily wrong (may be the only way in order to have some counter balance against the depression in the south) but I just would like to be clear that effectively, Germany (and the Netherlands, Austria and Finland) would effectively be the guarantors (while e.g. Italy and Greece would guarantee it too – but that’s not worth too much when they are the ones meant to be kept afloat with this manoevre).

      Oh boy – the Euro was meant to bring the Europeans closer together – hasn’t exactly worked out so well yet…

    • @Martin

      Who do i think the EIB will draw the funds from?
      It will draw it from investors willing to hold EIB paper at good rates and untaxable as all EIB bonds are.
      Its ridiculous to imply that this is taxpayer money (of any nationality) since those people will willingly invest on these bonds.

      As per Italy having the largest private wealth.
      First of all how do you count wealth?This article is all bla-bla and no graphs or tables to explain what it means.
      Nevertheless if private wealth is counted as private net worth then it would be interesting to see the prv. net worth to debt ratio of the said economies.
      Furthermore a simple prvt net worth number doesnt mean anything.Income inequality and distribution combined with net worth would shed a lot more light.
      If i’m the only person on my block that earns 1mil a year and the others live with 5000 a year that doesnt make my neighborhood rich….

    • Crossover – “Its ridiculous to imply that this is taxpayer money (of any nationality) since those people will willingly invest on these bonds.” – Yeah these people are real troopers, they take profits from investments where the taxpayer takes on all the risks. (Ignoring the fact that the purpose of the EIB is not to make money but to further political agendas)

      Again, text book fascism.

      From the EIBs website “We are owned
      by the 27 Member States and the projects we support contribute to furthering EU policy objectives…..The EIB is financially autonomous and raises the
      bulk of its lending resources on the international
      capital markets through bond issues. It has capital
      of EUR 232 billion, subscribed by the 27 EU
      Member States.
      The Bank is one of the largest borrowers on the
      public international market. Its excellent credit
      rating allows it to borrow at the best possible rates.
      The benefits are transferred to project promoters,
      which pay only a small mark-up to cover the EIB’s
      costs and, if applicable, a risk margin.”

    • Dear Crossover
      The article may be “bla bla”, as you put it, but the two links I posted on 4 March at 12:55 are not only “bla bla” as they are from Eurostat and the Banca d’Italia. Here they are again:

      Here’s some more data from Eurostat (see No. 5):

      It may be surprising – but net wealth in Italy (after liabilities) seems to actually be high.

      Page 33 of this document goes in the same direction:

      Regarding that, as you claim, the money for the investments initiated by the EIB would come from private investors:

      I doubt that private investors would be too willing at the moment to lend money to e.g. Greece or Italy. That is why the idea with the EIB as a facilitator came up in the first place.

      Now – and this is only just an innocent question and I may be wrong – wouldn’t the investors from, e.g. Germany want some sort of guarantee that the money then lend will be paid back? Or at least they may want that 50% or whatever will be guaranteed. If no such guarantee is given and necessary, then I would be surprised. If it is given, then I wonder who gives it. The Eurozone countries altogether? If yes, then ask yourself: Who is ultimately bearing the risk considering that e.g. Greece and Italy won’t really be able (or willing) to pay if things go belly-up?

      Again: In principle the EIB-financed projects may be a good thing. After all, if the projects are of the right nature, they would boost the economy and promote long-term, sustainable growth in e.g. Greece and Italy. Which is exactly what is necessary, next to internal reform in those countries. If there’s some sort of guarantee from e.g. Germany necessary then so be it. But I would like that to be transparent.

    • @Martin

      Although like i said the EIB would not force money out of taxpayers thus i dont consider a comparison of prv. sector net worth as a meaningful debate, nevertheless lets see the eurostat link you provided.
      The graph labeled “Household financial assets by instrument” shows that for the largest part, Italian Household financial assets are comprised by stocks and other equity unlike German Households (since you want to compare the 2) that have their largest part of financial assets allocated in currency in deposits.
      This effectively means that stock market fluctuations have a bigger effect on the Italian Household Balance Sheet valuation than that of German Households.

      Combined with the fact that the Italian economy is gradually going under stress which will definitely have a negative impact on firms it is safe to say that the “nominal” net worth that your sources imply is not telling the whole story.Add do that, that the attempt of the Italian gvt to slash the deficit combined with a trade deficit (assuming it will persist) will drain the prv sector’s financial assets unlike Germany’s prv sector which gets a net injection of financial assets both from the foreign sector (via the trade surplus) and the government (via the budget deficit).

      Furthermore you need only look at what happened in the US to realise that net worth isn’t giving much valuable information.
      During the last 2 bubbles that their economy experienced, the prv sector’s net worth increased.Once the bubbles burst you can guess what happened to the net worth.

    • @Martin
      I see that you ignored two points in my answer that i consider important. Namely:
      1) That the banking sector in Europe and especially in the South is in trouble and not working (in some countries basically insolvent and bankrupt). This fact renders the deposits in the banks irrelevant. If the banking sector is not working, then new private investment is impossible. Also the fact that nowadays most countries are heading towards recession and taxation is bound to increase, makes companies and individuals very reluctant about laying their savings on the line, especially in countries with high unemployment.
      2) EIB bonds could also be backed up by future revenue from productive investment in troubled regions. These investments could also be directly controlled by some independent vehicle close to the EIB for greater security. No countries are involved in this.
      To say that the euro has not worked as you described is an understatement. Maybe though that was not the case all along. Maybe it was designed for these purposes in mind and what we are now experiencing was perfectly predictable and acceptable by the euro-designers. Maybe. I guess we’ll soon find out, we must by now surely aproaching the endgame.

    • Tasos – The problems with the banks in Greece is a drop in the ocean compared to the problems the government is creating with tax increases.

    • Dear Tasos

      You wrote:
      “1) That the banking sector in Europe and especially in the South is in trouble and not working (in some countries basically insolvent and bankrupt). This fact renders the deposits in the banks irrelevant.”

      No doubt the banking system is not in great shape – probably more or less globally and especially in Greece and Spain. The Italian banking system is not in quite so bad shape from what I understand (and the German banking system is not in fantastic shape either).

      Anyway: As long as the banking system is kept alive (which will continue to be the case by the ECB) and deposit holders have access to their deposits, I think the deposits are not “irrelevant”. If e.g. an Italian citizen who has e.g. EUR 200’000 deposits in his account decided that he wanted to invest EUR 100’000 of that into some sort of growth-enhancing Italian infrastructure project (EIB backed or otherwise), he or she could do it.
      The potential is there – but it does not happen. Probably for a number of reasons, including:
      1. There are not many investment opportunities open to the public that look like a good investment to private investors. Why that is, I don’t know. May have to do something with the inability or lack of interest of e.g. the Italian government to come up with such projects and make them seem good investment opportunities.
      2. Private investors from e.g. Italy may have doubts if they see the principal back once the have invested in some local project. Corruption, inefficiency and the fear from an Italian default (or being paid back in Lira one day) may make them reluctant.

      I’m sure there are more reasons. Anyway, I find it interesting that e.g. Italy has significant private wealth but not enough revenue to keep the State functioning. I would assume the two are linked: Not enough taxes (partly due to undetermined collection based on some sort of acceptance of tax evasion within the authorities) collected over a longer period means growing private wealth on the one hand and growing sovereign debt on the other hand.
      I guess the mess is quite big as by now, inefficiency and general decline have created an environment where it is truly difficult to present investment opportunities to the potential private Italian investor that seem attractive. May have been different a few years ago – but BungaBunga Berlusconi was not too interested in what would save Italy.
      More unemployed young females means more fun for him so in a way it’s all fine for him.

    • Dear Crossover
      I’m sure that most of what you write is true. Anyway, my point was and is that private wealth in Italy is on a comparable level to that in Germany (and by some measures higher) and that therefore, it would be difficult politically to sell to the German electorate if there were major risks that the German taxpayer took over while private wealth in Italy (partly reflecting under-taxation) still is high. The problem is that what lead us to the current situation happened over a long period of time and in the last few years, Italy has really tried and in a way it is a huge success that Italy has survived so far, being able to carry its debt.

    • @Martin
      Since you seem to focus on Italy you should know that it is running a primary surplas and the Italian state can function perfectly within its current funds. The problem is the high level of Italian sovereign debt and the sorry state of its banking sector, add to that the imported recession due to the collective recession in the EZ and suddenly the Italian economy is on the edge. Do not worry though, the German taxpayer will not be asked to carry any risks. Italy cannot be “saved” using the same toxic recipe that was used in Greece-Portugal-Ireland, its economy and debt are too large. The Italians know this and besides they are not spineless and will not be blackmailed into submission as recent elections showed. In fact I think it is game over, recent polls showed that Grillo’s party is up and close to 29%, Berlusconi as well is up, Monti is out of the picture. So now close to 60% of the Italian vote is euro-skeptic. That means that either the toxic policies that are dragging the entire continent down will be abandoned or it is bye bye euro. Either way, fine by me.

    • Dear Tasos
      I agree with you.
      Let’s see what happens – there are many ugly options open now, I think.
      In German there is the saying: “besser ein Ende mit Schrecken als Schrecken ohne Ende” meaning more or less something like “better a terrible end than terror without an end”.

      I still hope that somehow, there can be a more or less “happy ending” by the deficit countries having the strength to carry out their painful structural reforms and Germany and some others – alongside with the ECB – keeping them afloat in the process.

      If – and that is a big if – the reforms showed some effect (like they’ve done in Ireland and the baltics) in Greece, Spain and Italy (in Portugal, there is some positive effect from what I understand) by the end of this year, it may all go relatively smoothly.

      If the Euro is doomed to fail then better to let it die in a way as coordinated and causing the smallest amount of damage in economic and social and “good will between countries” terms as possible.

      History is full of examples of ideas that were nice and seemed plausible in principle – but did not work in the end (communism, unregulated capital markets, etc).

      If the Euro does not promote friendship and economic prosperity between participating countries – and so far it has not – then better fix it quickly or give it up.

      From what I understand it may really be one of those “great, in principle” ideas that just don’t work quite so well in reality.

      At the beginning it caused a massive misallocation of resources away from Germany to the periphery – and now the opposite.

      Both would probably be better off if we had kept our national currencies – or had only introduced some kind of core Euro with e.g. Germany, Austria, Netherlands, Denmark – and the others keeping their Lira, Drachma, etc.

      It may be worth trying for another year or so – but then we should just give up before the damage becomes unfixable for everybody.

    • @Martin
      I agree with you obviously. Although I fear it will not be that simple. There are too many interests in all eurozone countries at stake and these interests have been calling the shots for a long time. It would take something of a revolution to bring a significant change in the direction that the EU is taking via the establishment of the eurozone and the consequences that this step brought. The fact that your saying describes the situation perfectly is revealing. Maybe change is close though. Recently a euroskeptic party has been formed in Germany. The German people should have the oportunity to clearly express their opinion in elections concerning the euro and its consequences for Germany. Finaly I should note that you should be more skeptical concerning possible effects of the fiscal adjustment programs. I could report isolated financial statistics from Greece that would give the impression of recovery (mr Scheuble had done something similar recently) when in reality the unemployment levels are all you need to know to understand that the situation remains critical.

  8. Crossover – “Even if there was a way to make sure that everybody can have access to full information, there would still have to be some form of regulation to make sure that firms would not try to withhold bits of it.”

    I think you are getting confused between laws and regulations. Laws are descriptive regulations are prescriptive.

    Sharing of information is law for businesses, they must do it completely. The problem is governments have been co-opted by big business so big business (major banks if you want) are now immune from prosecution. This is the problem. Existing laws are not being enforced. Laws are independent from government.

    Regulations say how information is to be reported. For example this form needs to be filled out in this way. In law it would say this information must be reported in a way that can by understood by the intended recipients. Regulations create excess paperwork for no material benefit. Regulations come from government.

    It has hard for people to conceal information and to not break the law. Its called insider trading, front running etc etc. Things are fine as they are the laws just need enforcing.

    Does this give everyone perfect information? Perfect? I dont know. Equal information? It should.

    I realise I make some pretty big strokes here

    • “I think you are getting confused between laws and regulations. Laws are descriptive regulations are prescriptive.”

      It could very well be so, on the other hand i believe people tend to use the term law or regulation based on how they see fit.

      For example, according to some, the minimum wage is a market regulation and thus should be abolished.
      You said: “Regulations say how information is to be reported. For example this form needs to be filled out in this way.”
      So according to you the minimum wage is a law.Regulation would be if the gvt said how the minimum wage should be paid.

      I see nothing wrong with that but i highly doubt that most free market advocates give the same meaning as you do.

      And lets not forget that the cdo crisis that errupted, was due to the derivatives market being totally unregulated.

      Btw i only mentioned the perfect information assumption because it seems to me the most obvious mistake of the free market theory.Its not the ONLY burden this theory needs to overcome.

      It also assumes that all participants are rational (game theory makes similar assumptions thats why you dont always see a game theory solution agree with reality), all industries include a big amount of firms that sell a homogenous product and so on.

    • Crossover – “on the other hand i believe people tend to use the term law or regulation based on how they see fit.” – this is exactly the point I am making. people who have the power to pass and enforce regulations will be an irresistible target for the 1%.

      “So according to you the minimum wage is a law.Regulation would be if the gvt said how the minimum wage should be paid.” Personally I would say the regulation is that you can work but you must work for this amount.

      “And lets not forget that the cdo crisis that errupted, was due to the derivatives market being totally unregulated.” – I beg to differ. It had the ultimate regulation. The free market wanted to destroy these businesses for their reckless behaviour. It is government that stopped these people from facing the consequences.

      “It also assumes that all participants are rational” – with all due respect it assumes almost the exact opposite. Austrian economics assumes total chaos, something that is infinitely complex and so only direct market participants are able to judge what is best

    • Crossover

      About perfect information

      There never will be perfect information and i definetely do not see it as a problem for the free markets.

      If someone can gain an advantage one should. The unfair and most unjust advantage is what we care about and the only way to minimize that is for more people to be able to use opportunities and have their minds work as much as possible without stupid blockages.

      That is why i am talking about control only on the broader frame of the system and on specific points that are too important for someone to play with. For instance the flow of capital from one country to another for inverstment purposes. We must know exactly the amount of money and were it is going. Deals of the government for financial purposes with investment firms that affect the country and a whole lot more.

      The more we zoom in the narrow frames of the system ,controls are becoming less. The lifeblood of an economy is the people. And they should and will ,given the chance ,find ways to advance ,without blockages that have the opposite affect.

      The state has to be big as a counter balancing mechanism ,not as an authoritative figure.

      Do not try to close reality and a theory in a box and try to find the perfection. The same mistake will happen. That of trying to close the equation ,were it can not and never will close.


      In order to explain better my thinking ,i will try to use a comparison of operating systems.

      Windows ,Linux ,BSD

      Windows has an unsatble core system. It does not use the hardware properly ,the categorizations it makes are illogical and it uses a “registry” were there is no need for one. It acts as a mechanism of gathering psychological data of the user.
      For doing this it does not make one of the most important distinctions.
      It does not separate the core system from the third partys’ software.

      Linux on the other hand ,is more stable ,more secure and is the epitome of human colaboration and free productivity.
      The core system is superior and it definetely does not register the software one uses. The different (hundreds of) distributions might seem as a disadvantage to some and this is were the -(not perfect information)- human mind of everybody goes to work to find out what suits one better and better it even more. For oneself and at the same time for the community (enlightened self-interestedness).
      Linux separates the core system so that one can update it in one go without burdening the system and without the danger of colliding software.

      BSD is far superior than all.
      It has an old code that to some might seem obsolete but in reality this code gets better and better all the time. It is not obsolete ,it is mature.
      It has all the advantages of Linux and more. It may not be updated as much as any Linux based system but the stability of the system is simply mind-blowing.
      Knowledge is needed to operate such a system ,knowledge that if you get ,will simply show you the way for greener grasses on any system.


      Todays’ economy is a Windows system.

      We need a core system like BSD ,a separation of the core system from the rest of human activity ,which will ofcourse be compatible and work seemlessly together with any third party software (with problems but with more advantages). Third party software being appropriate freedom for people to built their own “software” – businesses.

      And we need the rest of society to be a Linux community.


      Find out more about the differences of the systems and you will understand better what i mean.

    • ” Personally I would say the regulation is that you can work but you must work for this amount.”
      Your wording is misleading.You talk as if anyone would rather work for a salary below the minimum wage and the bad government forces him to work for more.The minimum wage is supposed to protect the employee by allowing him to earn a minimum amount,enough to allow him to fullfill his basic needs.Nevermind that even the minimum wage has been lowered so much that its actually not helping anyone,see if you can live in Greece with 480 a month.
      Obviously, in a free market economy we would impose no such law (or regulation if thats what you want to call it) and the minimum wage would freely float way below this amount (unless there is a shortage of workers).Thus the less skilled ones would get exactly what they desrve to earn (according to the market forces) but if thats not the law of the jungle then what is it?And in what way are you different from the big corporations that you blamed in your previous post? Do you believe they would disagree with your take on the minimum wage, framing it as a regulation?

      “It had the ultimate regulation. The free market wanted to destroy these businesses for their reckless behaviour. It is government that stopped these people from facing the consequences.”
      Lets get more specific? Show me exactly the regulations that according to you created the subprime crisis?
      You say the government stopped them from facing the consequences.But this has to do with the actions of the government AFTER the crisis erupted.Not prior !

      Its funny how me not being a free market advocate would give more freedom to those people than you would.It would only take one law (or regulation? ) simply seperating commercial banks from investment banks (pretty much like the Glass-Steagal act) and letting the latter do whatever they want and engage in any kind of derivative transaction which in case it would turn bad it would only hurt the INVESTORS who willingly chose to entrust their money to these institutions.
      In other words they would be free to do whatever they want with their money as long as they wouldn’t harm simple depositors who would only be transacting with commercial banks.
      You instead would rather tell them what they can and cant do with their money.

      By the way in case you didnt bother reading the primer i showed you, maybe you want to have a look on that: A fine critique on the invisible hand the way Austrians mean it: MMT for Austrians

    • @Demetri

      Not sure if you realised it but you just gave an example as to why free market* cant work the way its advocates imagine it.

      First let me tell you that although im no computer geek, i’ve spent a lot of time with them ever since i was little (my father gave me his amstrad 128 when i was 4 or 5).The reason i say that is because although you can call me an experienced and a little above average computer user, its the first time i hear about this BSD os.Its also the first time i hear that the registry is not really needed nor did i know that Linux are not using a registry.
      Due to my lack of knowledge i cant say whether you are right in your conclusion or not but i will take your word.So we conclude that BSD is the best choice between the 3.

      So what we have:
      1)I did know that Windows is a waste of resources but had no clue as to why specificly neither did i know to what extent computer resources are being wasted by windows..
      2)I didnt know about Linux not using a registry.
      3)I’ve never heard about BSD.
      4)Given 1,2,3 i couldn’t possibly know that BSD is the best choice out of the 3.

      My most immediate observation is that if we create a descending list with the 3 OS’s based on their brandname awareness and then another descending list based on preferred choice then the 2 lists are inverted.

      Second, i do know that Linux is for free (i dont know about BSD) yet that doesnt stop microsoft from selling like crazy.

      Now what would happen if microsoft was forced by the authorities to let every single buyer know and understand all those differences and flaws that you explained?
      Would this or would it not be framed as big government intervention/regulation by the very same people that advocate free markets* ?

      “There never will be perfect information and i definetely do not see it as a problem for the free markets.

      If someone can gain an advantage one should.”

      So we shouldnt prosecute IKEA (or whoever was involved) for selling horse meat for beef (which is lack of perfect information)?At first it may sound weird why would anyone sell horse meat (which should be more expensive) for beef but since that meat came from sick horses that were used for transportation and were receiving pain killers and/or other medicines until they were completely unable to move and were sold by their owners for their meat, then it all makes sense.

      So i guess someone gained advantage over the rest of the market and according to you he had every right to do it and should do it.In a purely economic turns you can say that the guys behind the story even implemented a corporate strategy: The so called Cost Leadership.
      But is this the type of market we want ?

      *PS I hate to use the term free market and speak against it.As i like to say free market is like a basketball game with referess that call every rule violation the see for both teams.Its not a streetball game with no referees which is exactly what they advocate.

    • Crossover – “.The minimum wage is supposed to protect the employee by allowing him to earn a minimum amount,enough to allow him to fullfill his basic needs.” – It outlaws jobs, that is all it does. It is foolish to say someone is better off not to work at all than to work for X. The problem in Greece (apart from the massive taxes) is the regulation that goes with employing someone. Honestly. If all employment regulations were binned and all state run social security was eliminated (payments and contributions). Do you think that it is possible the country would be worse off? I would say the possibility is an impossibility. The country would boom on a massive scale.

      “Show me exactly the regulations that according to you created the subprime crisis?” – Regulation? I dont know. the sub-prime crisis was and is being caused by the US government putting the taxpayer on the hook for bad mortgage loans hence the reckless lending. This is a fact.

      “But this has to do with the actions of the government AFTER the crisis erupted.” – I agree. And it is typical. Government screws up and does even more damage trying to fix the problem it created. Look at Greece for another example!

      “simply seperating commercial banks from investment banks (pretty much like the Glass-Steagal act)” – agreed

      The link, I cant stand the socialist nonsense. For example “But while non monetary plus monetary production by the non government sector(s) can accomplish a lot, they cannot provide everything we want.” – on what evidence!?

    • Richard i will only comment on one line regarding the whole topic of government regulation because i really dont see the point in discussing the obvious.
      You say:
      “It is foolish to say someone is better off not to work at all than to work for X.”
      First of all, not working at all is not the only possibility.There’s the proposal of the Job Guarantee which ensures both full employment and price stability.You can look it up though i’m not expecting you to agree with it since it involves deficit spending (most often, unless there’s a large trade surplus).But im just saying thats not the only possibility.

      Second,you would rather be employed in China instead of unemployed in Greece or anywhere in the EZ ?Before you get started, the answer doesnt necessarily have to be yes or no.It can be “it doesnt really make a difference”.
      Or to put it differently, even now that Greece is in a recession and income is shrinking do you believe that China that is booming has a better standard of living than Greece?
      Point is, when you focus simply on numbers then you miss the actual point.We can set the minimum wage at 1 euro effectively making it non-existant.Now imagine that this 27% of unemployed workforce in Greece starts working for 1 euro.According to you, problem is solved…..

      “But while non monetary plus monetary production by the non government sector(s) can accomplish a lot, they cannot provide everything we want.” – on what evidence!?
      On the evidence that in a monetized economy, money drives income, income drives spending,spending drives production ->.The private sector can grow for quite some time with credit but it will eventually have to deleverage (can you say bubbles?).

      Thats how things are, regarding monetary production based solely on the prv sector.As for non monetary production, its pretty much non-existant in today’s monetised world thus any argument including barter economy examples or robinson crusoe islands are nonsensical when it comes to describing modern economies.

    • Crossover – Let me make the point as simply as I can. Do you acknowledge that a minimum wage destroys jobs? Or to put it another way, there are less jobs available when there is a minimum wage?

      And to illustrate the point another way. Your happily retired, your doing some gardening for your local retirement home as a part time job, you don’t want a lot of money just something to keep you busy. But then someone says, sorry, you cant work for so little money, either you work for nothing or you don’t work. How would you feel?

      Anyway, that’s all I have to say about the minimum wage, its ridiculous it destroys those with the least education and the least money.

      Watch and learn. The principle is the same wherever you live.

      Read the comments on the video if you want to hear first hand experience from people that live there.

    • Crossover – With regards to “On the evidence that in a monetized economy, money drives income, income drives spending,spending drives production ->.” – Feel free to give a real world example to illustrate “monetary production by the non government sector(s) can accomplish a lot, they cannot provide everything we want”

    • Well Richard, then explain this:

      Thats a eurostat survey.See the market sentiment and maybe you will change your mind.Let me know if you believe that the minimum wage is the cause for unemployment in Greece. According to the market its neither the wage level nor government regulation their major concern.

      If you want to keep focusing only on one part of the story thats fine.Keep pretending that it destroys jobs without accounting for the fact that these jobs wouldn’t allow anyone to live at a respectable level.Whats the point?Would you work for 200 and 300 euros a month, 5-6 days a week, 8hrs a day and maybe even overtime with no compensation?
      The argument about retired people is the most ridiculous i ever heard.Mind you, you’re saying that to someone from a country with 50+% youth unemployment.

      Nevertheless, in the situation you are describing the person is SELFEMPLOYED.Please dont tell me you dont know that any selfemployed person can work for any low or high amount of money.

      ” Feel free to give a real world example to illustrate “monetary production by the non government sector(s) can accomplish a lot, they cannot provide everything we want””

      Do you even realise what modern monetary mechanics? If not then why the hell are you engaging in an argument about monetary production?Especially when i give you several sources and you just stick to your nonesense.

      Fact 1: Like i said: In a monetised economy, money drives income, income drives spending,spending drives production
      Fact 2: Money is always a liability/debt of the issuer.
      Fact 3: Most governments apart from the EZ issue their own currency.
      Fact 4: Due to fact 3 they cannot default on debt denominated in their currency, unless they voluntarily choose to do so.
      Fact 5: Everyone is free to issue money/liabilities but the problem is to have them generally accepted.
      Fact 6: With fact 5 being said, i know of no private sector in the world that issues its own currency.
      Fact 7: With fact 6 being said, the only way for the private sector to obtain THAT money that is actually accepted in its economy,either the issuer must SPEND TO the prv sector, or the prv sector must BORROW CREDIT.
      Fact 8: Credit financed growth can go on for some time but NOT forever .As proven by all sorts of credit bubbles in EU and US.

      The problem currently is EZ and US is that being MONETISED ECONOMIES they LACK the needed amount of means of exchange to function properly (fact 1).We have the resources and we also have capable unemployed people.But in order to mobilize them we NEED money.Now read all the facts again and let me know if monetary production by the non-government alone is sustainable.

      PS.If you start talking about crusoe islands,or a hypothetical situation where the prv sector somehow issues its own currency, im not going to reply.For we’re not living in such a hypothetical situation.

      Sorry but i cant break it down any further.I already tried enough.

    • Crossover
      “Not sure if you realised it but you just gave an example as to why free market* cant work the way its advocates imagine it.”

      That is exactly a part of what i said. Obviously you did not understand what i said.

      “But is this the type of market we want ?”

      No. It is not the free markets we want. You went to far now.
      And as you said even the phrase “free markets” is misleading.

      Still you do not see how i try to explain the extremes and balance them to the extend they can be.

      The laws that are to be used as a base for regulation of the broader frame are to be used at the narrow frames as well. The difference is that as we get closer to the narrow frames of human activity ,more parameters play ,more fluctuations occur. So we have to make clear distinctions of what it is we need to block and what not.

      Same universal laws ,different regulations based on the different context in which a situation occurs and ALWAYS based on proper everyday living.

      I have said over and over again in the past that i am basing everything to the proven higher laws. Natural and moral.

      We do not block the flow ,or in other words ,cut liquidity.
      We do not steal energy from the people ,or in other words tax them to the extend no-one can perform anything.

      I didn’t say ,let the corporations get too big with any means and gain ANY advantage. I didn’t say ,regulate everything and everyone to death.

      How many times need i say ,the regulations are at the wrong places?
      What does it take for people to understand the freaking law of the opposites?

      People talk about regulation ,saying that we have too much already. That we do not need more for the markets to function. Others say the exact opposite.
      The regulation we have is in the narrow frames of the system ,meaning it is for the absolute control of the everyday activities of the people. We need less.

      The regulation we need more is for the broader frames of the system ,meaning we have to control the bastards that have hijacked the system and manipulate the energy flow of it. First by obtaining common knowledge of the absolute higher laws NOT of all the activities of everyone. This is impossible.

      By knowing the higher laws broader laws of the universe we do not let any IKEA serve horse meat. But we let IKEA use any legal and moral advantage IKEA can get without burdening the system.

      We have regulation at the wrong points of the system and we have regulation opposite and reverse of what it must be ,creating situations of slavery for the people and situations of any advantage for the few.

      Define and divide people.



      He who can properly define and divide ,is to be considered a god.
      — Plato

      One of the laws of the universe is the law of the opposites. Everything has an opposite and the extremes connect. Another is that for every action there is an equal and opposite reaction. When we ,the human beings create a system ,in order for that system to function properly ,we must imitate the laws ,otherwise the laws will destroy the system.

      Recession is one thing ,depression is another. Depression is an extreme. And since the bankers created an extreme bubble growth ,the opposite of it being absolute depression ,in order not to let the bubble burst at its extreme and connect with its opposite we had to bail out the banks a little.

      Just a little though so as to cut the negative momentum. As weird as it may seem. The banks are not the bankers. Yes the bankers are corrupt and try to screw everybody ,because they have hijacked the system and manipulate the use of the banking mechanisms (and not only). We must try to correct and balance the system ,not bailout the corrupted individuals. But as long as people do not understand how a system functions ,the limitations ,the needs ,the HISTORY ,as long as people do not know how to define and divide for better understanding , as long as people fall victims to notion manipulation ,people will be meat. One notion manipulation is the notion of neo-liberalism. In action it is neo-conservatism with corporations and bankers being the kings and queens.

      I really am sorry for those that do not understand that we can not have:
      1. Absolute free markets
      2. Absolute controlled markets

      I am not referring to stupid ideologies.

      The laws are absolute. Period.


      Germany now is trying to sustain her own positive growth bubble that occured for her in the EU by trying to:
      1. bail out the bankers even MORE than needed ,not the banks at the extend needed to escape depression and to balance the system ,
      and at the same time
      2. Cut the flow at the narrow frames of the system ,thus blocking needed energy from the people.

      The effect being: Sustaining both the negative and positive bubbles at the extremes as much as Germany can ,with the excuse that we all need to get stronger and not for Germany to cut production.

      Everything is a bubble anyway. Everything fluctuates. The extremes must be avoided. As for a susrplus country , a deficit one exists ,so for a positive bubble ,a negative one exists.
      Germany does not correct anything. She sustains the extremes ,accusing the negative side of her own positive bubbles ,without explaining to the people ,how we all connect.

      Now that they brought everything to the extremes ,they fucked up and need the people ,the southerns as scapegoat.

      Tell me now Crossover. If people were educated about certain universal laws ,would this have happened?
      Is it too complex?


      Good people ,do not need regulations to do the right thing and crap people will find ways to circumvent any regulation.

      Paraphrasing from Mark Twain if i remember correctly.

      Meaning that education of the higher laws and how they work even when we tie our shoe laces is more important.

      And only based on these higher laws can we have the proper regulation at the proper points of any system.


      If the above would occur as in the good old ancient days ,then there wouldn’t have been any huge Microsoft selling like crazy because of people’s ignorance. And there wouldn’t have been any extreme government intervention and i really do not care if ignorant people that advocate extreme free markets would shout. Your example is one of the extremes and never ever ever ever ever ever following the middle path.

    • Richard: A minimum wage does not destroy employment. There are no conclusive proofs for that. Lot’s of studies prove the opposite. So that statement is mere ideology. That bears on the presumption that there is an equilibrium price for the commodity labour. There isn’t. People have to survive, so they will try to work more, when the price for labour goes down, driving the price further down. The equilibrium price for labour is merely above the price for 1500kcal a day.

    • Hans – I gave primary evidence in my comment, there are also testimonials from people who live in the area concerned. Did you miss all that or did you simply choose to ignore it?

      With regards “A minimum wage does not destroy employment. There are no conclusive proofs for that.” – Are you saying a minimum wage creates jobs? A simple yes or no will suffice.

    • “Are you saying a minimum wage creates jobs? A simple yes or no will suffice.”

      Yes a minimum wage is creating jobs because it stimulates domestic demand through higher consumption!

      101 economics

    • Aristoteles – Just to repeat what you said in case anyone missed it

      “Yes a minimum wage is creating jobs because it stimulates domestic demand through higher consumption!”

    • “Aristoteles – Just to repeat what you said in case anyone missed it

      “Yes a minimum wage is creating jobs because it stimulates domestic demand through higher consumption!””

      Since you don’t seem to see the link between higher wages and higer domestic consumption which leads to higher employment let me ask you a simple question:

      What will happen if all wages in an economy fall lets say by 10 percent or more?
      Will that affect internal demand and hence will this lead to lower production?
      Yes or no?

    • “The equilibrium price for labour is merely above the price for 1500kcal a day.”

      Since we have free global markets a.k.a. “Globalisation” the equilibrium price for labour in Europe equals to two bowls of rice each day (for a Chinese worker) plus transportation costs from China to Europe!

    • Aristoteles – “Since we have free global markets a.k.a. “Globalisation” the equilibrium price for labour in Europe equals to two bowls of rice each day (for a Chinese worker) plus transportation costs from China to Europe!” – I dont think you need to worry about that. Over half of your labour goes the government. There is a lot of room for the government to cut taxes in order to maintain your standard of living. The question you should be asking is why governments in Europe are increasing taxes given the reality you highlight. You would think they would be doing everything in their power to maintain our standard of living and to maintain our competitiveness.

    • “You would think they would be doing everything in their power to maintain our standard of living and to maintain our competitiveness”

      You seem to be convinced with the German fairytale of “competitiveness” but unfortunately the German “Wunderpille” just works inside the Eurozone. Germany has f*ck all achieved competitiveness against China, India and the rest of developing countries. It has just achieved higher competitiveness than the other Eurozone countries and has taken a merkantilistic approach inside the Eurozone (Beggar thy neighbour).

      If the Eurozone breaks up than Germanys competitiveness will become ashes again.

      Let me put it very clear Europe cant compete against two bowls of rice, just in niche areas where China has no production we can maintain “competitiveness” against the Chinese, Indians and so on.

    • Aristoteles – If you want to have an intelligent conversation, start stating some sources so people now what you are referring to specifically.

    • Aristoteles – “What will happen if all wages in an economy fall lets say by 10 percent or more?
      Will that affect internal demand and hence will this lead to lower production?
      Yes or no?”

      Your living in a government created reality as opposed to the real world.

      Your question is the same as saying what will happen to the wind if the waves get bigger? You have got it backwards. Wages are a reflection of the economic conditions, not the other way round. But I do accept that governments believe they can alter reality with a minimum wage which is obviously nonsense.

  9. “Το ευρώ και το δολάριο μοιάζουν με δύο επιβάτες στο ίδιο καράβι – όπου κάποια στιγμή ευρίσκεται ο ένας επιβάτης στο υψηλότερο κατάστρωμα και κάποια άλλη στιγμή στο χαμηλότερο. Μπορούν να αλλάζουν τις θέσεις μεταξύ τους, καθώς επίσης να κινούνται υψηλότερα ή χαμηλότερα, αλλά, σε κάθε περίπτωση, κάθονται στο ίδιο καράβι – κινούμενοι με την ίδια ταχύτητα, προς τον ίδιο προορισμό.

    Οι καθημερινές διακυμάνσεις της ισοτιμίας τους καθρεφτίζουν «τεχνικές επιρροές» – τη βραχυπρόθεσμη σχέση μεταξύ ζήτησης και προσφοράς. Επίσης, φόβους για το τέλος ή για την κατάρρευση του ευρώ και στη συνέχεια ανακούφιση – μέσω νέων μέτρων.

    Σε κάθε περίπτωση, το ζευγάρι ευρώ-δολαρίου ταξιδεύει συνεχώς μαζί, πάντοτε σε μία ορισμένη απόσταση, η οποία δεν ξεπερνά τα όρια – το μήκος και το πλάτος δηλαδή του πλοίου.

    Οι Η.Π.Α., έχοντας δημιουργήσει έξυπνα μόνες τους το (δήθεν) «αντίπαλο δέος», έτσι ώστε να «κατατροπώνεται» εύκολα ο κάθε εχθρός τους, ο οποίος ευρίσκεται αντιμέτωπος με διασταυρωμένα πυρά, δεν προσπαθούν να ενισχύσουν υπερβολικά την ισοτιμία του ευρώ.

    Αντίθετα, είναι σχεδόν ολοκληρωτικά απασχολημένες με τη διατήρηση, με τη μη διάλυση δηλαδή της Ευρωζώνης, «απομυζώντας» την κατά καιρούς – έχοντας τοποθετήσει τη Γερμανία διευθύνοντα σύμβουλο της/τους” (V.Rids).

  10. A “hegemonic Germany” in the sense described in the article simply won’t be Germany any more…It will be something else. It is crucial to differentiate between asking from someone to do something else from asking him to be something else…

  11. I think we got a clear indication of the zero chances of Germany playing a hegemonic role in the EU yesterday, when mr. Peer Steinbruck, the head of the SPD party in Germany referred to Grillo and Berlusconi that got over 40% of the Italian vote as “clowns”. That kind of arrogance cannot promote co-operation. Kudos to mr Napolitano, the Italian president for his immediate response.

    • I guess its their way to attempt to influence things once again.The “vote for the right government or you’re out of the euro” threat cannot work for Italy for obvious reasons.

      And this should also be a lesson for some Greek commentators here who during the election period in Greece were favoring the coalition government because “otherwise we would get kicked out..

    • What the Greeks didn’t ,the Italians did and Congrats to them.


      Although they have shown that in other circumstances they wouldn’t have chosen Berlusconi ,i feel they exhibited good judgment for the choices they had.

      The “political” Silvio may act as needed. Maybe he will succeed ,maybe not. But the Italians chose the “evil” they know and love and not the “evil” they know and loathe. The risk is more than acceptable.

      As for Grillo ,i do not have an opinion. I use teppanyaki.

  12. Yanis, no offense but I’ve just read this article again in more detail and realized it makes absolutely no sense whatsoever.

    You refer to German businesses selling their products to the periphery and building up savings. And your solution to this is for the German government/EIB to send money to Greece.

    How exactly do you propose the the European/German public sector get their hands on the private savings of Germans (individuals or businesses) in order to get this money flowing back to the periphery?

    And why exactly do you believe Greece needs German funds?

    Do you believe there is something fundamentally defective with the Greek people and/or the country itself?

    And again, if not, why do you believe Germany giving assistance to Greece in the form of an EU/ECB imposed long term, ongoing, structural recycling mechanism is a key ingredient for the future of the Eurozone?

    And if you insist on using the USA, do you believe there is something defective with the people and or geography of Alabama in contrast with New York for example?

    • Richard, the concept proposed in this article – as I understand it – is correct. That concept being: economic value generation in the South, i. e. in Greece, MUST be increased if there is any chance for Greece to ever make it on its own. Such value generation in Greece may come somewhat at the expense of value generation in the North but it doesn’t have to. After all, the world consists of more than only the Eurozone. But even if it did, so be it.

      Where I disagree is the ideology which I read into this article (I hasten to add: I read it into it but my reading could be wrong). That ideology being: everything must be steered by public sectors.

      What the public sector and governments can and should do is to implement the right incentives so that the desired results are achieved voluntarily by the private sector. The EU could, for example, implement incentives which make it more interesting for the private sector of the North to invest in the South than to invest in the East and Far East. That would really not be difficult at all. Most Northern States have export agencies which also promote foreign investment (Coface, Hermes, OeKB, etc.). If they flexibly assumed guarantees to cover the entire political risk of such investments (including the convertibility risk), Greece would immediately become more attractive. Those agencies also cover the economic risk but for that the premiums are justifiably higher and there are deductibles. Personally, I think the economic risk should always be entirely with the private sector.

      That part, i. e. implementing the right incentives, is the part which the EU should play. At the same time, Greece would have to play an important part on its own.

      Greece (at least the public opinion) simply has got to stop bedeviling investments, particularly foreign investments. On the contrary, Greece would have to understand that foreign investments are the only long term solution to an economy which for almost 200 years has depended on foreign funding to achieve economic well-being for its population. Even Cuba has understood that it cannot rely forever on a Soviet Empire (which is gone) or Venezuala (which may disappear as a funder) for funding its economy and they have made significant efforts to attract foreign investment.

      So, bottom line: yes, there MUST be a shift in investments from North to South. How that is best achieved can be a matter of discussion based on the economic merits but it should definitely
      not be a matter of ideology.

    • Klaus – Greece-Germany a balance will be found. The nature of this balance is entirely down to how economically free the people in the countries are. More freedom, more prosperity. The greater the imbalance in freedom the greater the imbalance in wealth.

      You can be sure if Greece is less wealthy than Germany it is because there is too much government involvement in the Greek economy. In short governments, national and international, need to reduce their involvement in the Greek economy not increase it if they want to make it better.

      The evidence post 2008 should be enough to convince anyone of this.

      With regards to a recycling mechanism. I am not clear on where Yanis is proposing to get the money from. How exactly does he propose the get the money from the German private sector exporters in order to funnel it back to Greece?

      About the ideology. Of “evil” private sector & “good” government.

      The private sector. People attack executives because they have to be ruthless and ambitious to get to the top of an organisation. An organisation which has to provide a service people will pay for voluntarily.

      And at the same time these critics advocate government as the solution.

      And government is made up of bureaucrats & politicians who also have to be ruthless and ambitious to get to the top of their organisation. An organisation which will put you in a cage if you do not give it 50% of your income.

      I am at a complete loss as to why people think the elite in the public sector think more about the interests of the people than those in the private sector. I mean, on what basis do they base their assumption on?

    • Klaus Kastner

      “That ideology being: everything must be steered by public sectors.”

      I do not think this is the ideology. The public sector has very specific functions that can not be abolished. It must act as a controlling mechanism at very specific points in the system. All else is private sector. As it should be.

      “Greece would have to understand that foreign investments are the only long term solution to an economy which for almost 200 years has depended on foreign funding to achieve economic well-being for its population.”

      Ofcourse it is. And since people were voting for so long neoliberal policies that at the end were proved to be neo-conservative policies with corporations and bankers as the kings and queens ,i do not see how you think we do not want investments. We do not want thieves.


      What i want

      A state that does its job and a private sector that does its job. Not a state that is a slave to others and a pseudo-free market that is controlled by those that control the state as well.

      There is no and will never be a functioning society with
      1. Absolute free markets from top to bottom
      2. Absolute control from the state from top to bottom


      True Democracy IS true economy.

    • Demetri – ” It must act as a controlling mechanism at very specific points in the system.” – And here you create the prime target for “corporations and bankers” and lay the fundamental foundations of fascism.

      “There is no and will never be a functioning society with
      1. Absolute free markets from top to bottom – Where is your evidence? What can be said is that the closer economies have tended towards total freedom the more prosperous they have been.
      2. Absolute control from the state from top to bottom – Agreed – This is well documented”

    • Richard

      I was expecting this from you.

      I am not against free markets.
      You still do not see the need for control in specific points of the system.

      All elites ,public or private are going to exercise control at the broader frames of the system. So we will always have “fascism”.

      Absolute free markets can not exist because there will always be an elite appearing in a society and gaining control.

      The control of the state i am mentioning has nothing to do with the control you are refering to and that has failed.

      The control that exist today is the same ,it just doesn’t come from the state and people believe that we have free markets or that true free markets have failed.

      They haven’t failed because we never had true free markets to the extent that we should, since everybody (state or private elite) was exersicing control at the broader frames of the system through corruption and at the wrong points of it. They play with words ,they manipulate “numbers” ,they exercise no control so ever on the flow of the capital etc. etc.

      So in essence there is only the control they like.

      And the true state hasn’t failed exactly because of the same reason. Because we never had a true state to exercise control the proper way.

      Find out what real Democracy is and how the powers get separated ,people for the job chosen etc.

      Af for the “About the ideology. Of “evil” private sector & “good” government.”

      I hardly see anyone here making such extreme distinctions except you that try to convince people about the need for your own ideology.

      Please no more ideologies. There will always be someone that exercises control. Do not be naive.

      This control must be known to all people and must be only on the broader frames on the system and on the points of the system that are too much susceptible to manipulation.

    • Richard

      I said “All elites ,public or private are going to exercise control at the broader frames of the system”.


      They exercise control at all levels of the system. They exercise true and hard control on the everyday lives of the people and fake control that suits them on the broader frames of the system.

      This is ofcourse unacceptable.

    • How some people believe in a system that in order to function the way it is supposed to,there MUST exist perfect information for all participants,is beyond me.

      Even if there was a way to make sure that everybody can have access to full information, there would still have to be some form of regulation to make sure that firms would not try to withhold bits of it.Because in such an environment every firm that would be able to control the flow of info would gain advantage over the others.
      Thus the whole theory is self-defeating.And the absence of perfect information is just one of the flaws of this theory.

    • Demetri – I think if we can agree the system has been taken over because it was given too much control over the population (and hence became an irresistible target for the “1%”) that would be a amazing.

      About there must be some control. Sure its possible but we are so far away from getting to a point where there is not enough government control I do no think it is worth worrying about at the moment. If we can agree the way forward is to start stripping power from government and inextricably big business that again would be amazing.

      Unfortunately people are nowhere near in agreement on these two things. ie people do not see that the political system has been taken over and people believe government needs more power. The exact opposite of what needs to be done.

      About ideology. I am sorry, I comment on reality. Unfortunately reality is so far removed from anything you see in the mainstream media or anything you hear coming out of the mouth of government talking heads, the truth is becoming a more and more unbelievable for the masses. To link again to this video in order to illustrate the point. Skip to 3.59

  13. “a supply of high quality products does not automatically create its own demand”

    Actually it does. But outside a socialsit drem zone called the EU!

  14. Dear Yanni,

    “Hegemonic Germany” indeed.
    Just so that we can all save the EURO, or else doom awaits us, right?

    Remember how the Americans liked all that “global recycling” in the ’50s? They liked it so well that their government had to keep the country constantly at war for decades, in order to sell it to its voters. How are the German voters (not to mention Dutch, British, etc…) going to like this “hegemony” thingy and what will it take to make them swallow it? Any bright ideas?

    As I said in the past, in my opinion, your political insight is very inferior to you economic analytical ability. As “proof” of this, how many “hey, great idea!” comments did you get on this article?

    Best regards

  15. Belgian MP Laurent Louis Exposes the International Neo-Colonial Plot

    On January the 17th, 32 years old Belgian MP Laurent Louis, the most controversial and demonized national political figure ever, exposes the neo-colonial plot of the western powers.

    On January the 17th, 32 years old Belgian MP Laurent Louis, the most controversial and demonized national political figure ever, explained why he voted against the Belgian support to war in Mali. Meanwhile, he expressed his disgust and wrath against the criminal foreign policies of the Belgian elite and its submission to foreign financial and interests groups and exposes the neo-colonial plot of the western powers.

    • Richard, Demetri,

      This massive islamist campaign which has been labeled as “Arabic Spring” is just the one part of the game, the second part is the so called Euro crisis with the subsequent formation of the economic NATO! Nothing happens accidentally or without a plan at the moment and Merkel is just another puppet in this game. She just obeys to her masters plans for a new world order. In GB Prince Charles seems also heavily involved in this new plan to merge Christendom with Islam, just follow the news and you will understand what I mean.

    • Demetri – Well found and thank you for sharing. Are we commenters (on Yanis’s blog) generally in agreement with this gentleman or not?

  16. Yes Germany is showing some hegemonic attitude lately.

    For example today Merkel criticised Russia and China about the Syrian issue.

    Thsee statements were made from Turkey during her visit to the German Patriot systems that were sent there, the true mission being the enforcement of a non fly zone on Syria.

    The calvinist period of the virtuous is being continued, along with some hegemonic teeth being shown…

    It is all politics. If the others are following Germany it is because they are terrified by the consequences of not doing so, the political ones being the worst

  17. Unfortunately, the German perception of the world in general and also of the European neighbours is rather parochial. After WWII the German elite as well as Joe Sixpack (Otto Normalverbraucher) agreed to focus on hard working (but only on your own buisness) and to go strictly by-the-book, without caring too much about ‘the big picture’. The result is a public discussion which is trapped to very naive pictures. For example, the common currency is regarded as a good thing which was unfortunately ruined by the lazy and reckless GIPSI countries. Only very, very few will acknowledge that the EURO crisis is in fact a ‘feature’ resulting from how the EURO was desgined in the first place (with Germany being one of the main actors). And even those might not accept that the German veto to every solution which is not ‘by-the-book’ is a main driver to deepen the crisis. In the end everything comes done the unwillingness of the German public to accept that the biggest and most powerful country has the responsibility to develop a strategic plan for the future of the European Union. There is no plan at all. There is even not the idea that such a plan is necessary. Germany just wants to go on like it did since 1949. And the German public does not even notice that this ignorant behavior leads to a German ‘leadership’ in Europe which does a lot of damage to the relationships with several of its fellow European countries and in the end will have no success at all. At this point one should also keep in mind that in the moment the German economy seems to be decoupled to a large extend from the Eurozone recession. This fact also leads to the German attitude that everyone else should just work harder and stick to the rules – instead of asking for German money and/or political concessions.

    • “For example, the common currency is regarded as a good thing”

      Not by the large majority of Germans, it never was, isn’t and never will be.

      “In the end everything comes done the unwillingness of the German public to accept”

      to transfer even more money, limitless in amount and duration, to the finance industry everywhere and to other nations in order to pay for their standards of living. Can’t see what’s wrong with this attitude.

      “This fact also leads to the German attitude that everyone else should just work harder and stick to the rules – instead of asking for German money and/or political concessions”

      Yes indeed. There is no free lunch.

    • Excelent analysis, this is indeed the most serious problem with current German public perception.

    • The public perception inside Germany is that EU was mounted for harnessing Germany’s “invincible and unparalleled” growth by putting a burden on her shoulders, the burden being the EU.

      Is that so VSS?

    • @VSS

      Do you really think that for Germany the biggest concern should be the minor amount of money that might find its way from Berlin to Lisbon/Athens/etc within the framework of a future ‘transfer union’?

      At least in my opinion we are far beyond the point where everything that is at stake are a few billions that might be lost or won at the bargaining games being held periodicly within the EU.

      We have national ecomies which face severe contraction since half a decade – without any light at the end of the tunnel. This is an economic mass destruction which will ruin local businesses no matter if they are run in an ‘efficient German way’ or the ‘lazy Greek way’. In several countries we see >50% unemployment of young people. That is not a diet in order to increase the health and efficiency of deprecated social and economic structures – this is mass starvation. It will erode the foundations of societies (those made of stone and steel as well as those in the minds if people).

      Do you think such an economic situation can sustain over years without major social and political crisis? Will Germany remain ‘the island of the bliss’ while large parts of Europe are going belly-up?

      I think that German politics and public at least have the responsibility to admit the enormity of the crisis. And Germany has to explain to its partners how it is going to react. It may well be that Germany in the end decides not to revise its economic policy. But at least all options should be put on the table and they should be discussed in a rational manner. But such a discussion is a conditio-sine-qua-non to take over leadership.

      What happens at the moment is a flat denial of the facts (as a consequence also flat denial of taking any actions beside doing minor fixes in order to muddle through for anoher few weeks/months). And as from the perspective a regular German the crisis is far, far away this situation might continue until the ‘european chain’ will break at its weekest link someday. Most probably at that moment the German public will still have no idea what is really going on in the rest Europe.

    • exactly. Naive as we sometimes should be, as your description fits so well you could send it with a link to Yanis blog to the german government. Yes, I know, it’s naive. But in our times where politicians fear nothing more than people – a lot of, yes, not single ones or hundreds only – act against them, a few hundred descriptions can’t do any harm, and after those years with false decisions (“go on, it always worked” like) there *might* sit some undersecretary of the under-secretary of the ministry of finances who’d actually would say, very silently – “yes.” In fact it would be a step like writing here in the blog. Can’t do anything bad. My mails over a year ago with links to Yanis were not answered – but then your description sounds far better than my one did…. Some day after years of doing nothing but going the old wrong road, it simply can’t go on like this, as there are men and women behind the figures and blogs and the math. In fact thousands of intelligent people should write and do more – as often said, the Germans who understand things better are a tiny, small minority still…after 5 years… oh my…

    • @G. Weber:

      It is not ‘a minor amount’ of additional transfers we are talking about here. As I wrote, it is literally limitless in amount and duration. Anyway:

      a few years ago, the proud people of Italy, Spain, France and so on called Germany ‘the sick man of Europe’. Why? Because the German economy didn’t grow as fast as their own.

      To cure this sickness, unlike those countries, Germany didn’t start to blow up -on borrowed money- bubbles in construction, finance, public sector and so on.

      It instead underwent a protracted squeeze, a huge internal devaluation, to adjust the then excessive unit labor costs. To become competitive again, to create a sustainable economy.

      During all these years, and afterwards, the GIPSIFs continued with their partys. And now it is -of course- their turn to adjust, to devalue internally, to squeeze, to correct past extravaganzas in order to make their economies competitive again.

      As you say, >50% youth unemployment, for instance. Not Germany’s doing, right? These countries themselves did it, and only they themselves can and must provide the ways out.

      In Germany, the size of the crisis is better realised than you think. Also no denial of facts: the problems the desaster into which the GIPSIFs threw Europe will cause (on top of what it did already) for the German public are rather good understood.

      We just want to start to limit -a bit- the costs for us and our children. That doesn’t mean we won’t show solidarity anymore!

      BTW; it would be nice if the receiving ones of this solidarity say from time to time thank you instead of permanently insulting Germany and her people and thus are biting the hand that feeds them.

    • @VSS
      You seem to miss the point completely. Which is a very good example of what previous poster Weber wrote about. You have serious misconceptions about the way linked economies operate in today’s globalized market . I’ll give you an example.

      If say the eurozone collapsed, a trade surplus country like Germany that relies heavily for its growth on exports would suffer. Why? Even though German exports have found the way towards new markets like China, India, Turkey, Indonesia and so on and do not rely so much on the rest of its eurozone partners, Germany’s new currency would be revaluated at greater prices than the old euro currency. Suddenly German industries that rely a lot on exports instead of domestic demand would be at a disadvantage and the country could slip into recession. The current euro levels are benefiting only very few countries in the eurozone at the moment and so does the cost of money. The main argument that the rest of your eurozone partners are making (at least the sane voices and not the puppet governments) is this: This cannot possibly go on we cannot have a union that comprises of winners and losers.

      It is perfectly acceptable that the German, Dutch, Finish whatever public will prefer to remain oblivious to the disaster that the other EZ countries are experiencing but you cannot possible believe that this will go on forever.

    • Tasos – You miss a very fundamental point. “Germany’s new currency would be revaluated at greater prices than the old euro currency. Suddenly German industries that rely a lot on exports instead of domestic demand would be at a disadvantage and the country could slip into recession.” – Your jumping to a very big conclusion here. Let me give a few examples of positives for Germany if their currency were to appreciate.

      1. Raw materials become cheaper for German businesses/manufacturers. Leading to reduced costs of products and to a lesser extent services.

      2. Prices drop. Imported goods & services become cheaper, in effect making Germans richer.

      3. Wages drop. To reflect the lower cost of living wages could drop with no effect on purchasing power.

      4. Savers & pensioners become richer. They see their money going further.

      In conclusion the perceived strength or weakness of a currency is just that, perception. What is more important is the fundamental efficiency of the underlying economic system.

      Inevitably perception always adjusts to reflect reality, it’s just the sudden “appreciation” or “depreciation” makes a much better news headline that the gradual adjustment of prices over a period of months or years.

    • @VSS

      Its really amazing how you demolish your own argument with your very own words and facts.
      You say:
      “To cure this sickness, unlike those countries, Germany didn’t start to blow up -on borrowed money- bubbles in construction, finance, public sector and so on.

      It instead underwent a protracted squeeze, a huge internal devaluation, to adjust the then excessive unit labor costs. To become competitive again, to create a sustainable economy.”

      As your wise clients in China used to say, one picture equals a thousand words.There goes a picture for you:

      Do you understand how Germany “cured the sickness” ?
      Do you understand for once that had the periphery applied the same so called cure then your own internal devaluation would have gone to waste?
      The formation of all sorts of bubbles in the periphery was in the very interests of Germany.ECB’s interest rate policy was also helpfull for Germany while it encouraged bubble formation in the periphery.

      Its so easy to advocate internal devaluation when the whole place is booming.Thats the best time to apply internal devaluation anyway!

    • Crossover – You’ll have to explain how Germany is benefiting from the imploding Greek economy. If you can also specify who you are referring to that would also be helpful. For example, German government, German people, German businesses, German banks, who exactly?

    • @ Tasos:

      The point is simple: we Hans Sixpacks, the average Germans who did never reap any profit from the bubbles the GIPSIFs created with borrowed money, just don’t want us and our children to continue to pay limitless amounts, forever, which just serves the finance industry in every country plus helps the GIPSIFs to kick the can of necessary adjustments to their standards of living and the structures of their economies further down the road. They, not we, had the big partys, now they should pay the bill themselves.

    • @VSS

      I am a German and when the crisis started in Greece some years ago my first reaction was exactly the same as your statements are now:

      1) There are so many archaic and disfunctional economic and social structures. They should fix that ASAP in order to get competitive with the rest of the world. Also the wages have to be reduced significantly in order to gain competitiveness.

      2) Greece is far away and quit small. As long as they keep their nice beaches and islands running so I can spend my holidays there, I dont care too much what happends with the country. If they finally make it or if they go belly-up – it will have no significant influence on my life.

      However, five years later I have seen one country after the other to be unmasked as ‘lazy and disfunctional’ by the markets. Nowadays, I think that the situation is much more complicated and – even more important – the ongoing crisis is a severe threat to everyone in Europe. In fact if we dont fix it in the end, the global economy will take a huge hit leading to a major meltdown.

      I want to ask you to step back from your (and my) anger with the lazy and disfunctional people/strcutures in the GIPSI countries (any idea for a nice acronym to inlcude France and Belgium?) just for a minute. How do you expect Europe will look like after five more years of economic contraction in the wake of internal devaluation? Really think about that.

      I fear that nobody of the German policy makers feels obliged to answer this question.

    • @G. Weber:

      What you say is absolutely right and it shows once more that Germany still remains a problem/threat for the other European nations. Its a pitty that the Germans don’t seem to have learned much from their horrible past. Just 65 years after the end of WW2 the Germans don’t feel any gratitude and obligations for the other European nations (like for example Greece) which have suffered so much under Germanys occupation.

      Its a pitty that moral and ethics will never blossom in your country!

    • @Richard

      If you read what i actually said you wouldnt ask such questions.My whole comment was referring to the period before the crisis when Germany was destroying domestic demand and the periphery was booming.Nowhere i mentioned the benefits of Germany since the recession started.

      With that said, i wouldn’t blame the German PEOPLE for the German policies anyway.I dont have double standards, unlike the likes of VSS…

    • @Richard
      I do not think that it is a great leap of thought to estimate that a newly introduced DM would be appreciated against the old euro. Germany’s trade imbalance would guarantee that. You seem to acknowledge it in your point #3 that clearly spells trouble for German domestic industries. Bu the way, the same industries seem to agree with this since they have publicly supported the euro currency.

      I think the whole conversation is pointless though. People in the winner EZ countries do not want to acknowledge the simple fact that in the end monetary policy in a union should address the needs of all members not a select few. Let’s see what happens and whether the ECB will lower interest rates in the next scheduled meeting. We will get our answer there. By the way the only country that does not want inflation to rise due to lower interest rates or any other monetary actions is Germany. Why is that? Because then the millions of underpaid, flexiwork Germans will find themselves underwater due to higher prices, much like the overtaxed workers of the European south.

    • There you go VSS:

      See what the corporations themselves have to say about how important is the graph you showed.It seems like they are more concerned with other things instead of ULCs.

      And i hope in your next answer you come back with a straight reply to my argument regarding whether your own internal devaluation would have been successfull if everybody else followed the same path.

    • @VSS
      Perfectly acceptable point of view. Wrong, because it was the financial sector and the elite that benefited from the euro party not the majority of the people, but still perfectly acceptable. Why don’t you push through your opinions then through your elected officials to present the options so that our economies can go their seperated ways and the euro the way of the dodo? Because that is not the message coming from Berlin, the mesage is to keep the euro alive at all costs, our costs..

    • VSS

      You always talk about bubbles. Do you know what a bubble is?

      Even life itself is a bubble. Everything flows on new levels of statistical equilibrium. Small imbalances that give you the ability to make changes and find a new level by finding new equilibrium. As long as these small imbalances do not go to extremes.

      Bubbles that break with noise keep extreme imbalances , I dare say, artificially, because it suits some to the economy.

      So with everything. So with people.

      And I’m bubble. Especially when I eat soup.

      “Bubble” politicians have been preserved because they are not so much bubbles. They preserve the mockery with perfect balance against the true bubble that we citizens are. We quickly and abruptly go up with pampered ears, we react quickly and abruptly at the end of the bubble, quickly and abruptly they f__k us and feed us all over again and we gladly eat so that the bubble re-grows. Psychological manipulation is high. They know ourselves better than us.

      When you pull ,something is pulled ,when you push ,something is pushed. Opposite forces must work together. The opposite of the puller is the pusher.

      If Germany pulls ,we must push ,if Germany pushes ,we must pull.
      No problem. It is as it should be.
      But Germany has the idea that everybody on opposite sides can push at the same direction. There you have it. Perfect equilibrium and no movement at all.

      In one word ,death. Therefore no bubbles.

      Economy is not an object between the moon and the earth with no movement. It has a trajectory and it is being pulled. When it is pulled too much near Earth it needs pushing.

      And now at the end of this post i wonder why i bother writing to you.

      Oh ,my extreme imbalances.

    • Tasos – I agree with the direction of the currency as you laid out. Im saying there are no effects in the long term. Markets adjust.

      “By the way the only country that does not want inflation to rise due to lower interest rates or any other monetary actions is Germany. ” – Germany as a country has more assets than it has debts. It does not want inflation as this will eroded the value of its Euro denominated assets. I can only speak about the UK but interest rate increases will destroy that country for sure. Greece? I know it will destroy the government finances. In 2008 I think the Greek private sector would have been basically okay. Now Im not so sure. Germany? I dont know the state of the housing market there, Ill have to take your word for it.

  18. Dear Yani,

    For more than 3 years, in this and other websites, I have been following your arguments and positions about the democratic and financial crises facing Europe and the whole world. Here are some of my thoughts.

    I think that adequate and decent solutions to people’s needs can be explored by paying attention to the fundamental principles of modern humanism, self-reliance and initiative, socio-cultural fidelity, local and national democracy, respectful interdependence, courage and generosity, and bioecological balance on our planet. How are we faring so far in the European Union (EU), if we were to use these principles to make an assessment of the state of the union? Can the EU change direction from its current path of self-destruction?

    MODERN HUMANISM’s central concept is that all human being are worthy of respect and decent conditions to grow, thrive, and contribute. The prevailing spirit of the age in the EU is MISANTHROPY, as Yani so eloquently has described: some classes and individuals are destined for “greatness” while others for servitude; some nations are worthy but others are not.

    COURAGE & GENEROSITY: These two qualities are central to decent and good living. We need courage to stand up for what we believe in. We need a generous spirit to mentor the younger generations, or forgive those who have done us wrong. In the EU, the driving principles are GREED & FEAR: money and power by and for the powerful embedded in cleptocracy & authoritarianism; fear by the powerful to and for the less powerful, what Naomi Klein has called the “shock doctrine.”

    SELF-RELIANCE & INITIATIVE: Individuals, families, groups, societies, countries are at their best when nurtured to rely on and marshall their own strengths to accomplish things. In the EU, regulations have been harnessed not to create initiative but DEPENDENCE: high unemployment rates and living in poverty for many who nonetheless work full-time; unnecessary red-tape snuffing out small businesses; young people implicitly being told that their generation not bother improve themselves as their future looks bleak (some of them are even told by official government agencies, such as the German worker receiving an official letter recently, that there are jobs available: in brothels).

    SOCIO-CULTURAL FIDELITY: Fidelity is described by psychologist Erik Erikson as being true to ourselves. This trueness to ourselves applies on an individual level, on a family level, on a societal level and national level, on an international level, and on a species and planetary level. The EU is about CONFORMITY: one currency, one set of regulations; demoicracy (do not confuse with democracy, demoicracy is a smoke screen for the dissolution of national democracy); disregard for the very real differences in social cognition among the various people residing in the geographical location called Europe; bulldozying over the richness of all of the different European cultures in the name of uni(on)-formity.

    LOCAL & NATIONAL DEMOCRACY: Both of these types of democracy are necessary processes for the representation of a wide range of interests, so that people feel they have ownership of and accountability for political decisions and their implementation. In the EU, several national governments and whole nations have seen the principles of national sovereignty and self-determination evaporate and codified in the banking sector bailout agreements. None of this was accomplished legitimately and legally. People were not asked to give up local and national sovereignty. It happened by FIAT & COLLUSION among corporate cleptocrats, corrupt politicians, and fraudelent financiers.

    RESPECTFUL INTERDEPENDENCE: We are all in this together. If we present our positions assertively and listen to the others’ positions respectfully, we stand a much better chance at finding an imperfect, yet mutually acceptable solution. In the EU, SCAPEGOATING is now the strategy of choice: if the failures of corrupt politicians, fraudelent financiers, and corporate cleptocrats are to be concealed from all the peoples in Europe, then some of these peoples and countries in Europe are to be fingerpointed as deserving blame and punishment; the rest of the peoples in Europe will get their share of blame and punishment in good time, for they too want too much respect, liberty and comforts. All citizens in Europe are now viewed as Lobster food. The Greek citizens are smaller lobsters to be cooked quickly and without delay. German citizens are giant lobsters, and if they are convinced that only the small lobsters are to be eaten, then they too will stay in the pot until they are boiled. Greeks for starters, Germans for main course.

    BIOECOLOGICAL BALANCE ON OUR PLANET: We share earth with other species and their ecosystems. Our well being as humans is directly tied to the well being of other species. What we do to other species we do to ourselves. In the EU, the concept of UNLIMITED ECONOMIC GROWTH is at the heart of its operations. Unlimited economic growth is now meeting the natural limits of our planet. In a sense, the banking crisis may be seen as a way to circumvent the people’s well-founded objections to unlimited economic growth.

    The EU had my support as recently as 6 years ago. I do not support it anymore, and I have serious doubts that it can be transformed into a vehicle that may serve the needs and aspirations of all the peoples in Europe. In my book, the EU is getting a failing grade on all counts. I do not believe that German, or French, or British, or Martian hegemony has much constructive to offer within or without the EU. It may be that it is upon us as humans to show the good things in us: courage and generosity in spirit, self-reliance and initiative in work, trueness to our cultural and historical heritages, citizenship worthy of local and national democracy, recognition of the necessity of working respectfully together, and restrain in stewarding our planet.

  19. Germany cannot lead Europe. Germany does not want to lead Europe and it most certainly should not, nor any other nation. For one thing, leadership is not in the German social DNA. This nation has produced amazing cultural, scientific and technological achievements but politically it has not produced what we may call “leaders of men” or a clear political vision for Europe that transcends small time political and economical gains. Germany has produced great rulers throughout history. Friedrich the Great, Bismark, even Merkel in modern times (whatever opinion one has about her politics, her political ruling ability is unquestionable). That was possible because that is what this nation sociologically favors. A more elaborate analysis could be found in many relevant books, but I would suggest Canetti’s work “Crowds and Power”, he was very much familiar with German society and his analysis I believe stands to this day.

    Who should “lead” Europe then? The English and the French are the usual suspects and rightly so, their societies have produced truly great leaders and the ideal of leadership is firmly established in their culture and their collective unconscious, but as we know they are in a very weak position having enormous domestic financial and social problems. Then there is the whole idea of Europe having to be “rescued” even by force and against the peoples will. To have one nation in a position of power so that it can form a hegemony over the rest and forcefully push a de facto unification that can maybe sometime transform into a United States of Europe is quite frankly an abomination of the European unification ideal that many internationalists believed in. If that is the one remaining hope for that “dream” to come true then probably the game is lost already. The nations involved in this process could only be led by a powerful and positive vision towards a path that could one day see them become equal significant partners in this union, not blackmailed and threatened into it by a ruling majority. This is what we see happening now and quite frankly it is a recipe for disaster. Sometimes it is not all about the economy, politics, society, culture matter as well and taking all these into account the verdict is against Germany or any other nation ruling over the rest and forcing them into a German or any other version of the unified Europe.

  20. Reblogged this on Verso un Mondo Nuovo and commented:
    Questa è la soluzione giusta: una Germania egemone in Europa (come lo è, inevitabilmente, la Lombardia in Italia), ma al servizio dell’interesse generale, e quindi pienamente coordinata con Francia, Italia e resto d’Europa, per avviare un piano Marshall con l’aiuto del partenariato BCE-Banca Europea per gli Investimenti.
    Non serve davvero altro.

  21. How likely do you think it is for Germany to agree to such a program?

    If it is unlikely for them to agree, or if it would take too long (such that austerity goes on as-is for another 5-10 years), do you think it would be better (in comparison to another decade of austerity), for periphery countries to just reintroduce local currencies now, and look at redenomination/defaulting of debts?

    I know your policies here and the Modest Proposal in general, would be the best of all worlds for the EU, and I would hope it would happen rather than other (much more painful) routes being taken, and that it’s important these policies be promoted; but I’m awfully uncertain, about the possibility of the EU political deadlock being resolved, so really wonder whether it’s better for countries to just get back monetary control, to try and end the humanitarian cost of this crisis and austerity.

  22. Yes to realization that Germany must do more than just spank its Euro neighbors with more austerity. Another 2-3 yrs of squeezing/squashing economic policy will only add to the boiling undercurrent of violent angry between European neighbors.

    Possibly there will be a war in the middle east with huge causalities to wake us all up from this present economic nightmare.

    It is so sad that punishment seems to be present day cure for stagnent economies rather than all the major powers in Europe, USA, Russia and China coming together and arriving at a better solution. And not some Alice in Wonderland solution but some solution that each powerful area can benefit from.

  23. La France est-elle l’«enfant à problèmes» de la zone euro ? Oui, à en croire un responsable du parti d’Angela Merkel.

    Le Figaro

    There we go again folks. The German terror:

    “Malheureusement, la France est un enfant à problèmes dans l’euro, car d’autres pays ont rempli leurs obligations de façon beaucoup plus intensive, comme l’Espagne et aussi l’Italie sous Monti”, a lancé M. Fuchs. “Les Français ont cru qu’ils pouvaient y échapper. Cela ne fonctionnera pas”. “Il est nécessaire que les Français empruntent à nouveau la voie de la vertu. Tout ce que nous avons accompli avec l’agenda 2010 –les réformes du système social et du marché du travail mises en oeuvre entre 2003 et 2005 par le chancelier Gerhard Schröder, ndlr– , les Français doivent le mettre en oeuvre. J’espère que Hollande a compris cela”, a-t-il ajouté.

  24. “…to an enlightened self-interestedness.”

    I do not think we will be filling with Buddhas all over Europe anytime soon. Unfortunately.
    Europe also needs a spiritual Greece. And that isn’t coming anytime soon either.

    • @ Yanis: who exactly is supposed to use this bullet train? You need all year round a huge number of passengers, paying high faers, to make such a thing profitable. And proftable it must be, otherwise it is not an investment but another huge waste of taxpayer’s money.

    • adamabyss – so to confirm, you’re happy to pay for the TGV out of your own pocket and you’re also happy for your Greek neighbour not to if he thinks he can do something better with his money? Start a business exporting Greek agricultural products for example. I understand correctly?

    • Re TGV: is there a project on the table (i. e. feasibility studies, project details, etc. etc.) which can be reviewed/approved by the EIB? If not, we are talking, as good as the idea sounds particularly against the background of what Cosco is doing in Piraeus, about years of leadtime before the first job comes into existence.

      There must be other projects which have a shorter leadtime as regards implementation (I hasten to add, though, that a Formula-1 race track should not be one of them!). I recall that, almost 2 years ago, McKinsey presented over 100 projects with the promise of creating 500.000 new jobs over the next ten years. Has anyone every looked at them?

      I caution about viewing the EIB as an investor. They are a lender. Having been involved with several (larger) EIB-deals in Eastern Europe, I know that they require completely structured projects where all the i’s are dotted and all the t’s crossed. They check and approve; they don’t originate.

      Is someone in Greece working on the origination of potential projects to be presented to the EIB for financing and/or to foreign investors for investing?

  25. Keep on telling them Yanis what the ought to do to save Europe.
    Eventually they will listen to you, but I hope not in the long-run …

  26. The views expressed in this article about Germany’s history and achievements and contributions and so on are describing a very personal interpretation of reality.

    Anyway: with regard to a REAL hegemonic Germany, there are powers (France, Italy…) which will do their very best to prevent this from ever happening.

    As I see it, the core of your proposal is not at all about making Germany the regional hegemon – after all this would mean Germany has a lot to say about what happens in the countries.

    No, it is apparently all about tapping even more German taxpayer’s money.

    • You think the dollars loaned to post WW2 Europe came from american tax payers. LOL. All european citizens would stand to benefit from the abolition of austerity, surplus recycling, and productive investments. Though, everyone would prefer a common debt in order to actually solidify the union, a german political willingness to recycle surpluses (to keep aggregate demand alive in order to keep production alive), is less bureaucratic and more efficient for the time being. As long as there is unutilized resources and labor, financing is not an issue. There’s so much work to do in Europe; but we can’t do it, if we apply austerity and bs supply side economics to make us walk backwards. We’re losing precious time and creating suffering and violence for no good reason. The only sustainable development is constant development.

  27. This needs a sea change in German attitudes and a lot of imagination. It needs a complete change of the old guard, from the ruling politicians to the Bundesbank, and much much more. It will also need a will to lead and create rather than just bully and blame everyone else, as it is doing now.
    Unfortunately polls tell us that Mrs Merkel is set to win her biggest victory ever, precisely because she has played the populist card and pandered to the small mindset.
    I am afraid that just as for any kind of Federalisation, such a change in Germany would take far too long to occur and the crisis is galloping.
    Perhaps if Britain takes its head out of the sand (and stops playing its own populist games) and France plucks up the courage to see things as they are and act on them with greater force, a combination of the three of them could go the right way. And would, in fact, vindicate the original European idea.

    • And another comment^^. Unfortunately, Parina, not only Merkel acts like this. A socialdemocrat (ha ha) green government would not change a thing. They talk a little then sign everything they are needed for. We even have, in the small “leftist” party, a little discussion now if they should not follow the anit-social “Social” Democrats more. It is a mess…Not that that last fact would change much – the left party will get around 5-6%, and is all alone in Germany, the only not-Merkel-follower. I don’t think Yanis Varoufakis thinks it would be a good possibility that Germany would act like he says – he just tells us what would be needed. Just say the words “New deal” here and a rather harsh laughter, not entirely based on knowledge, spreads around here, in our cultural scenes not other than in political areas (95% of cases, in fact)…Hollande in France was no hope, even if the german media shouted out loud against him, and I can’t see how Britain would be of help? The “original European idea” as the founders of the EU had it – with chancellor Kohl, for example – was not that different from what Merkel thinks, sad to say…but you mean another, the original idea of a Europe which is not only a market-radical part of the world, but a place to live for all. Well, we’ll have to wait and fight with our very modest means, it seems. In southern Europe there are more and more now…who understand.

  28. With all due respect Yani but what you write her is complete bollocks!

    The worst thing which can happen and most likely will happen is a hegemonic Germany!

    You seem to forget the heavy history of this specific country over the past 2000 years!

    If Germany takes over the EU than I can surely predict that the EU will become another attempt of the Germans to rule over the other European nations and will create turmoil, misery and massive desaster!

    May God save us from an hegemonic Germany.

  29. Yanis – I think you are having difficulty identifying an obvious contradiction in your analysis of Germany.

    Let me give an example from this article

    You say

    “Germany’s disciplinarian imposition of the greatest austerity upon the weakest of Europeans, lacking any plan for countering the resulting asymmetrical recession”

    and then you say

    “It will enthusiastically strive to engineer, as America did in the 1950s, a Pan-European Recovery Program that restores demand for the goods that Europe needs.”

    So on the one hand you are saying the Germany is deliberately creating a recession in Greece and on the other hand you are saying Germany will try to create demands for its goods.

    These two sentences are diametrically opposed and yet you treat them as the same side of the same coin.

    They cannot both be true. Either Germany is deliberately creating a recession in Greece or it’s goal is to create demand for its goods.

    There is one way you could square this circle.

    The Greek government is lashing out at an entity that is telling it to relinquish some of its power. And the Greek government is using the Greek citizens as martyrs for its cause.

    In response to the order the Greek government is saying “what you are asking will damage the Greek economy” and to prove their assertion they carry out the most self destructive measures possible and say to everyone that will listen “look! this is what happens when you force a government to get smaller, it’s Germany’s fault!”.

    So to sum up.

    To bring together the two statements you make you have to assume the reason Germany is pushing for deficit cuts is to create demand for its products in Greece in the long term.

    To imply that the goal of Germany’s austerity is to make Greek less able to buy its products (ie make Greeks poorer) does not, to be blunt, make sense.

    There is only one logical explanation to the dynamic you are talking about and it is obvious to everyone who is living and working in Greece. The Greek government is deliberately destroying the Greek economy in order to turn the people into martyrs against the forces that believe in sound money and fiscal and monetary responsibility.

    Greece and the people that live here are simply pawns in the bigger “currency war”.

  30. Sounds good, but this is not realistic. Germany has adopted a monetarist, neoliberal doctrine on fiscal policy, and we still have the Bundesbank, which is one oft the mightiest institutions. Both will prevent the U-turn you are calling for. Germany will not change, unless its power is threatened. But this is not (yet) the case, quite on the contrary: Germany is mightier (and selfisher) then ever.

  31. I disagreed with this argument when you first broached the use of the EIB as an investment engine of recovery, because I thought it was a facile side stepping of more the more fundamental issues: supply side failures due to over regulation, bureaucracy, corruption, incompetence, labor market rigidities, impediments to private sector investments, distrust of capital in general. The EIB it seemed, was being used as a magic bullet to allow your state driven, top down bias to express itself. Now I have to admit to agreeing with you….a German/EIB investment program now seems to me a legitimate way of addressing investment issues that have been allowed, indeed forced to languish. But this agreement is only because I have lost faith in the EU’s intellectual as well as political capabiltiy of addressing the free market, incentive driven reforms that are still fundamental to success. Without those, however, even your German-EIB proposals would almost surely fail because of the politicalization and corruption of the investment processes.

    • I would seriously be interested much where from – after 2008 – you take your belief in the so-called “free” market system? That is not meant as something dandy-like or coming from a snob. I simply don’t understand how this belief goes on and on, unbroken, in spite of all things that happened around us? The free market would not exist any longer, if the bad-bad bad states wouldn’t have saved them, to name just the one fact? Do you disagree?

  32. If past European actions since the outbreak of the crisis through to last year represent a guide to go by, it is indeed futile to attempt moving in a federal direction, a move as you point out whose pace is “glacial”. However, could you possibly comment on the restructuring plan of the Promissory Notes just established by Ireland? May therein lie a ray of hope? This seems to be the closest thing to fiscal financing ever carried out by a central bank in the eurozone, or even in a developed country, and Mario Draghi has given an apparent nod to this operation.

  33. Pingback: Europe needs a hegemonic Germany | Fifth Estate

    • It is almost impossible for a market (Greece and GERMANY included) without a strong demographic potential to get a significant, health and mainly sustainable growth. For instance, the U.S.A. and Australia will continue to see an important economic growth in the next 2-3 decades due to the combination of fiscal-consolidation, relatively high quality of life for the overwhelming majority of their population and IMPORTANT demographic growth. Germany will loose in the long-term its competitive advantage from its economic robustness by its ageing population (even if a high positive annual migration rate maintains).

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