Slash Greek debt now!

Written By: - Date published: 7:00 am, July 8th, 2015 - 222 comments
Categories: capitalism, class war, colonialism, debt / deficit, Europe, Financial markets, poverty - Tags: , , ,

To paraphrase Michael Hudson, debts which cannot be repaid will not be repaid. The only question is, figuring out how not to repay those debts.

The humane political economic activity before Europe now is in structuring new financial arrangements which will allow the ordinary people of Greece to start working, living, and producing again. But will the Eurogroup and their financial masters instead choose to push for another series of failed austerity programmes, while preaching their own false, financialised moral order (‘lazy Greeks need to repay their debts according to the rules – either with a pound of flesh or even with their mortal lives if necessary’). Such arguments have provided the financial powers in Europe with a necessary veneer of popular justification for their years of Greek fiscal waterboarding. Debt, as it has always been throughout history, remains an effective tool of social and economic control by the powerful against the weak.

From the standpoint of Economics 101, the ongoing IMF/Germany/Eurogroup/ECB insistence on forcing Greece into futile decades of austerity is illogical. Austerity has already proven highly damaging to both the Greek people and the Greek economy. Apart from dangerously humiliating the entire Greek nation (and energising the neo-Nazi “Golden Dawn” party), chronic austerity is a predictable recipe for aggregate demand destruction, the resulting economic malaise all but guaranteeing that Greek debts to the rest of the EU cannot ever be repaid.

In contrast, a common-sense restructuring of Greek debt which prioritises investment growth and productive capital expenditure would allow Greece to repay, over time, all its obligations to creditors.

It is worth remembering that the “German economic miracle” after World War 2 was founded on multiple rounds of writing off huge German war debts. In 1945 these debts were many multiples of German GDP. Germany should not now be kicking out the ladder, after having climbed to the economic top of Europe via the receipt of its own massive and generous debt restructuring.

This overall picture might lead one to the conclusion that the European push against Greece is predominantly ideological and political in nature, no matter how strenuously European officials cite rules and precedence as the decisive factors.

Greece referendum protest

On the back of the loud Greek “OXI” referendum result, it’s Europe who must get real and take heed of the recently (and quite curiously) released IMF ‘preliminary debt sustainability assessment‘ report that suggests that slashing Greek debt and instituting a 20 year repayment holiday is the way to get the Greek economy back on its own two feet.

Getting Greece back on its own two feet is surely what the EU powers and their financial masters want. Right?

Best wishes to the tight knit professional Syriza team who have fought the good fight, thus far. Unfortunately, the push back they will suffer isn’t over yet, as the daily threat of out of service ATMs, bare supermarket shelves, missed pension payments and empty pharmacies is an ever present reminder to all Greeks that they are still not in charge of their own country: the economic hitmen are. To recap – debt remains a potent means of social and economic control, even over entire sovereign nations. And those in power who have that control rarely give it up easily or willingly.

hit

 

Historical note for Matthew Hooton: who glibly remarked that “Syriza will be forced to take Greece down a totalitarian path. It’s what always happens when countries follow this type of economic “thinking”.” In fact, the last time Greece went down “a totalitarian path” was when the USA helped install a CIA backed military junta in Greece, 1967-1974. That’s partly why Greeks are fanatical about their democratic rights today.

222 comments on “Slash Greek debt now!”

  1. Tracey 1

    Thanks for the post CV.

    Debt relief has to be a part of the solution. Is Germany as worried about Greece for the Greeks or because she sees her Guarantees being called up?

    Is there a mechanism for a creditor of a country to sue for their money?

    I have recently been put on to http://www.renegadeinc.com and they have a video interview with Former Chief Economist of the World Bank Prof. Joseph Stiglitz.

    In the video he advises that “we should stop allowing economic policies to dictate how we function as a society. ”

    This is how the Green Party forms it’s vision for NZ; from People to Environment to Economy, in that order.

    For some parties it is just Economy, Economy, Economy and for reasons I refer to below that is not good enough.

    We have an obligation as human beings to create a society that allows all people to thrive. Anything less is a failure (and that failure is a spectrum).

    In this country, if you fall and cannot work you get rehab, medical treatment, 80% of your former wage and son from ACC.

    IF you get struck by an illness, or suffer a disability you are relegated to way below a living wage. You will get a pay rise when and if you reach 65 and can receive a pension.

    Forget the myths about fraudulent beneficiaries and bludgers because by far the clearest majority of this vulnerable group are made up of:

    disabled through birth, accident, illness
    had a job but lost it (had children when they had a job/s and could afford all the necessaries)
    had a partner but lost them

    Then we have low income

    Some hungry
    Some without adequate footwear and warm clothing
    Some without warm and healthy homes

    Then we have children…

    Some hungry
    Some without adequate footwear and warm clothing
    Some without warm and healthy homes
    Some being abused, physically, mentally and sexually (in numbers that should make us angered to action, rather than just angered)

    A society ought always be measured by how it treats its vulnerable. NZ is failing. Not as much as India, or Somalia but when a so-called rockstar economy, a doyen of the western world has some of the statistics we have, we should be hanging our heads in shame.

    In all the time I have lived in NZ, nearly 50 years, give or take, the mantra has been growth/GDP, when those are on an up-curve everything will improve and yet here we are. After decades of growth and higher GDP, we have

    some of the most abused children int he western world
    hungry children
    struggling ill and disabled folks
    the trying to get work but can’t

    We are NOT Greece, or India or Somalia, but rather than feeling smug we shouldnt be using them as our yardstick for success anyway.

    here’s the video

    http://renegadeinc.com/prof-josef-stiglitz-our-society/#autoplay

    • RedLogix 1.1

      Your passion and heart is openly visible in this Tracey. This is what is so often missing from our current political leadership – any sense of real connection with the people they are supposed to be leading.

      And we are seeing the same sort of thing here in Australia as the ‘lucky country ‘ continues to polarise economically.

      What I’m seeing is that if you are not fortunate enough to be well-educated, experienced in the right areas, or simply privileged enough – then you really have almost no chance.

      • Tracey 1.1.1

        “What I’m seeing is that if you are not fortunate enough to be well-educated, experienced in the right areas, or simply privileged enough – then you really have almost no chance.”

        And those who are ” fortunate enough to be well-educated, experienced in the right areas, or simply privileged enough ” think they got it all from hard work and so look down on those struggling as though they are islands, with only themselves to blame. we will read more of it below in this thread I am sure.

        The 4 main banks with their 3 month billions in profit have all just announced pay rises of 5% for all employees, right?

  2. Paul 2

    Thanks for sending the footnote to Hooton.

    • Fustercluck 2.1

      Yea. Those who believe in ‘liberal’ rights for capital and in curtailing human rights accordingly always gloss over the fact that our monetary system is a human fabrication with virtually no grounding in the material world. The ‘laws’ that rule our monetary system are presented as being on par with the laws of physics, immutable and predetermined. Nothing could be farther from the truth. Capital changes the rules to suit itself at a whim with a stroke of a well-bought politician’s or technocrat’s pen while at the same time they force the productive majority of the population to accept their new laws as iron-clad dogma.

      Hooton is a clever, canny and dangerous advocate of predatory monetary polices under a false rubric of free markets. What about free people?

  3. RedLogix 3

    Well done on your first post CV. Concisely argued and to the point. I look forward to more solid contributions from you.

    The good news is that some small signs of sense appears to have been kicked into the heads of the European Council.

    http://www.theguardian.com/world/live/2015/jul/07/greek-debt-crisis-alex-tsipras-seeks-last-chance-deal-live

  4. Facetious 4

    I doubt it will happen, because Germany will block such move. It would be great to go about life spending like crazy expecting our debtors to forget the money they lent, wouldn’t it? Irresponsible Greece must pay what it owes.

    • dv 4.1

      Factious – you need to watch Judge Judy.

      Greeks did borrow too much BUT who were the irresponsible lenders – they have to take some responsibility too.

      Surely the lenders do some due diligence to see if the debt can be repaid?

      (Judge Judy often will not awards debts to be paid especially if lending has continued after no repayments have occurred, or the recipient has no source of income)

      • RedLogix 4.1.1

        Facetious is really showing nothing more than a form of racist snobbery here.

        Lending in this scale carries huge responsibilities for the lender – and the assumption of substantial risk. A risk they seem to want to now default on.

        • Gosman 4.1.1.1

          Ummm…. you are aware that the original lenders have largely been replaced and that they did get a haircut on their debt. The current debt is largely from Nations in the Eurozone. These are the same nations Greece wants even more funds from even if they get debt relief.

        • dv 4.1.1.2

          The whole thing feels like Pay Day lenders and trucks that prowl the poorer suburbs in NZ

    • RedLogix 4.2

      So why didn’t an ‘irresponsible Germany’ have to repay it’s debt’s in the wake of WW2?

      For five years now Greece has been attempting to follow the Euro austerity regime to repay it’s debt – and as a result it’s economy has been brought to it’s knees. Exactly what is smart about this?

      Besides – you have entirely ignored the very complex story of how that debt was created in the first place, and who has benefited from it. It’s been pretty much the same story here in NZ as well.

      NZ will never repay the debt this government has piled up either. The top few percent of the economy and big corporates were given big hand-outs with tax cuts – while the resulting debt is being loaded onto the entire economy. It’s a blatant form of theft.

      • Tracey 4.2.1

        Apparently that’s different. Although why would the nay-sayers want to use that example? Germany got debt relief and became a powerhouse economy… a success story if you will… they would have left Germany to austerity and what would it be today?

      • Gosman 4.2.2

        Germany didn’t get in to debt because they were irresponsible in relation to spending. They got in to debt due to having to pay reparations in two world wars. The Greeks were entirely responsible for spending more than they earn. Noone forced them to take loans out.

        • Colonial Viper 4.2.2.1

          Germany didn’t get in to debt because they were irresponsible in relation to spending.

          A large part of that German debt was used to build a war machine that killed over 30 million people (a majority of whom were Russians; and very many Jews and other ethnic minorities).

          Do you really consider that ‘responsible spending’, Gosman.

          In contrast, much of that Greek debt was used in the purchase of goods and services from Germany. Put another way – the German real economy benefited handsomely from that Greek spending.

          • Tracey 4.2.2.1.1

            you are talking about people. gosman talks about ideology and spreadsheets.

          • Clean_power 4.2.2.1.2

            “..much of that Greek debt was used in the purchase of goods and services from Germany” Nobody could argue. It is called the market economy, where goods and services are traded. That is NOT an excuse for careless spending, for living well beyond its means, the behaviours Greece has demonstrated.

            • Colonial Viper 4.2.2.1.2.1

              Germany was more than happy to take those Greek euros, and German banks were quite happy to lend the Greeks those euros.

              Both lender and borrower, beware.

              • Foreign waka

                Are you a German hater?

                • greywarshark

                  Are you a thinker Foreign waka? The discussion has gone far ahead of
                  unrelated questions of racism or whatever? The talk is about major political maneouvres against a whole country by a whole country. Individual likes and dislikes don’t enter into it.

        • Jones 4.2.2.2

          Germany was in debt because it had to finance a war machine. The Swiss banks lent to the Nazi government who then paid private industry to build the war machine.

          I once had a conversation with a Swiss banker about this as he was bemoaning the amount of money the Swiss banks lost as result of backing Germany financially in WW2. The Swiss banks were betting on both sides, by the way, but were considerably more invested in Germany than the Allies.

          But it gets worse (and it speaks to the attitudes and values of bankers)… the Swiss banks accepted gold in payment from Germany, knowing it was either stolen from occupied countries (like Belgium and Greece) or from concentration camp victims.

        • emergency mike 4.2.2.3

          So wrecking multiple nations killing millions militarily because your fuhrer wants it all, not irresponsible, massive debt relief, Germany is a wealthy nation.

          Getting sucked in by predatory lenders and politicians who said they would sort it out, irresponsible, no debt relief, Greece doomed to poverty for decades.

          Nobody forced Germany to invade the world. But Hilter was democratically elected and wildly popular, so I guess that was the voter’s choice right Gosman?

          Maybe now that Germany is on top of Europe economically, they should go ahead and pay those historical debts. Time adjusted and with interest of course.

          Besides, it sounds like Germany never really paid Greece back what they deserved for the war. The Nazis stole a lot of money, and wrecked the country. After the war Germany paid back only a fraction the money they stole, and paid nothing for the wrecking the country part.

          “Mainland Greece was liberated in October 1944 with the German withdrawal in the face of the advancing Red Army, while German garrisons continued to hold out in the Aegean Islands until after the war’s end. The country was devastated by war and occupation, and its economy and infrastructure lay in ruins. Greece suffered more than 400,000 casualties during the occupation, and the country’s Jewish community was almost completely exterminated in the Holocaust. By 1946, however, a vicious civil war erupted between the British and American-sponsored conservative government and leftist guerrillas, which would last until 1949.”

          In 1942, the Greek Central Bank was forced by the occupying Nazi regime to loan 476 million Reichsmarks at 0% interest to Nazi Germany. In 1960, Greece accepted 115 million Marks as compensation for Nazi crimes. Nevertheless, past Greek governments have insisted that this was only a down-payment, not complete reparations.[1] In 1990, immediately prior to German reunification, West Germany and East Germany signed the Two Plus Four Agreement with the former Allied countries of the United States, Great Britain, France, and the Soviet Union. Since that time, Germany has insisted that all matters concerning World War II, including further reparations to Greece, are closed because Germany officially surrendered to the Allies and to no other parties, including Greece. On Sunday, February 8, 2015, the Greek Prime Minister, Alexis Tsipras appeared in front of the Greek parliament and officially demanded that Germany pay further reparations to Greece.[2] On April 6, 2015, Greece demanded Germany pay it the equivalent of $303 billion in reparations for the war. Germany replied that the reparations issue was resolved in 1990.[3]”

          So Germany reckons they don’t have to pay any more because they surrendered to the allies, not to Greece. Which sounds like a weak excuse for avoiding your responsibilities to me. Meanwhile Germany is now trying to shaft Greece over it’s money problems. Funny how that works out.

      • greywarshark 4.2.3

        @Red Logix at 11 am
        Really good summary RL. I am copying that – might trot it off to blinkered rw relatives when appropriate.

      • left for deadshark 4.2.4

        Let’s not forget (fire sale assets).in support of RL. 😉

        edit: earlier up this thread.

  5. Facetious 5

    I agree, dv. Greece’s lenders are guilty of giving piss to a drunk, heroin to an addict.

    • Gosman 5.1

      Yet you seem to want them to give even more. How about the Drunk/Addict shows that it is willing to stop using first.

      • Facetious 5.1.1

        No, Gosman. Both are responsible, but Greece must pay what it owes.

        • Gosman 5.1.1.1

          Who determines what amount that is and dies debt relief come with any obligation in the Greeks to run their country better?

          • Tracey 5.1.1.1.1

            by “run their country better” you mean how the lenders or you think it should

            Do you think that the debt relief given to Germany in 1953 had any impact on the ability of Germany to later become a powerhouse economy?

            • Gosman 5.1.1.1.1.1

              The Germans had a reputation for being very productive and industrious in 1953. The Greeks don’t. That is the key difference between Germany in 1953 and Greece now.

              • Morrissey

                Ha! Hard working Aryans, lazy wogs. You have written some moronic, unintelligent stuff on this forum, but that’s about as lazy and uninformed a comment as anyone has ever posted here. And, no, I haven’t forgotten Brett Dale.

                A note to the Moderators: Is the sort of casual racism that this fool is indulging in acceptable here?

                [lprent: Not acceptable to me. But also not something that I’m likely to go to town moderating over either.

                Commenters are usually quite competent at highlighting and de-constructing the sub-text of comments like that. As with most topics having these ingrained bigotries aired and dealt with is usually a whole lot more effective than censoring them.

                If I think that they get in the way of having a robust debate, then I’ll deal with them in my usual subtle style. ]

                • Paul

                  The moderators are very generous to the trolls who visit.

                  • Morrissey

                    Sadly, though, Paul, that particular troll is not merely visiting; he hangs out here all the time. I have counselled him on several occasions to go away and do some reading—serious reading, not the columns of “Sir” Robert Jones and Mike Hosking—but he has obviously ignored my advice.

                • Gosman’s comment was stupid, not the least because in 1953 Germany was producing bugger all, what with being flattened and all that. The previous twenty years were hardly a ringing endorsement either. Slave labour tends to lift the average, eh.

                  In terms of productivity, the Greeks are disliked by the dry right because they have pretty much got the balance right; they work to live, not the other way round. That’s how it should be. Their current difficulties have little to do with their productivity and all to do with the usual failures of the market. The invisible hand is arthritic.

                  However, in terms of moderation, Gosman didn’t use racist language. You did. So, nah, nothing to see here.

                  • Morrissey

                    However, in terms of moderation, Gosman didn’t use racist language. You did. So, nah, nothing to see here.

                    I used that term to highlight the obscenity (however unwitting) of Gosman’s post. Are you now going to pass a similarly snide comment about Barack Obama for using “the N-word” a couple of weeks ago?

                    [It wasn’t snide, it was factual. You wanted action on racist language, now you’ve got it. Take a day off, Moz. TRP]

                  • Wayne

                    te reo putake,

                    Actually you are wrong. By 1953 the German economy was humming. By 1955 they had exceeded their pre- war output. The period you are thinking about was 1946 to 1949, which were pretty drastic.

                    As for what should happen, well we all have our views. It seems like an actual decision will made on Sunday.

                    My pick – a shifting of positions by both the Euro-lenders and Greece.

                    This is a much bigger test for Angela Merkel than for anyone else. She can’t be seen to roll-over to Tsipras and she won’t want to be seen to kick the Greeks out of the eurozone.

                    Does she have the imagination to come up with a solution that both protects her position with her German voters, while also being able to provide a lifeline to the Greeks, and save their future in Europe?

                    We will soon know. History in the making. If she can do this she will be one Europe’s greatest leaders of the last 80 years.

                    • Colonial Viper

                      Varoufakis has long given the Eurogroup a way ahead with his so-called “Modest Proposal” of debt restructuring and using existing eurozone institutions in slightly different ways. Everyone gets paid back in full, if circumstances are created where Greece can get back on track to consistent economic growth.

                    • Fair call, Wayne, but the post war German economy was built on the back of massive aid via the Marshall Plan. If I recall correctly, they were the 3rd biggest recipient of American money. So, money plus the wiping of loans were both ingredients in Germany’s recovery. That would be a good formula for Greece, too.

                    • left for deadshark

                      By 1953 the German economy was humming. By 1955 they had exceeded their pre- war output.

                      It was half a country, and had both legs up.

                      edit: thats the problem coming late an not reading all comments first,excuse me TRP

                • Morrissey

                  Thanks for that, Lyn. I wouldn’t want him banned, unless he descended into a Sir Paul Holmes-style rant; I think Gosman is a bit more decent than that, and that his errors are unwitting rather than nasty.

                • Gosman

                  It is hardly racist. It is factual. Here is a BBC article about the subject.

                  http://www.bbc.com/news/magazine-17155304

              • cogito

                There is, and always has been, a huge cultural divide between the countries of northern and southern Europe.

                I grew up in Italy, and calling someone a German was pretty much the worst possible insult that anyone could throw at someone. Germans, with their “square mentality” as they used to call it, were absolutely hated.

                I doubt much has changed.

            • Foreign waka 5.1.1.1.1.2

              Tracey, it rally becomes obvious that you and others are hell bent to blame the Germans for Greece economic mismanagement. This is pure propaganda and smacks of prejudice. Despite the historic background that is readily available, you persist with the myth that Germany did not replay what was due. They still do and to date it amount to 809 billion Euro ( this is in numbers Euro 809,000,000,000,000) in relation to one of the agreements.
              In comparison, Greece has borrowed in peace times and deceived with their financial statements when joining the European Nation despite knowing very well what this means. So not only was there deceit, now there is a demand and the demeanor to shame the rest of Europe into submission. Just that you are aware, the European Nations do know that.
              The issues are far more complex then just pointing fingers and simplifying issues that have financial and geopolitical backgrounds and reasons.

      • RedLogix 5.1.2

        Nope – the idea of a debt jubilee is an old one – and there are plenty of very high profile non-bank economists who are openly advocating just this.

        Given the insane amount of debt accumulated globally – a global scale debt default is probably inevitable as well. One way or another it will happen in an orderly or disorderly fashion.

        • Gosman 5.1.2.1

          Under your proposal what incentive is there for Greece not to go back to spending far more than the earn?

          • Tracey 5.1.2.1.1

            The crumbling of their society (sorry to bring humans into it Gosman)?

            • Gosman 5.1.2.1.1.1

              Why would they worry about that when the last time it happened they got their debts written off because of people like you?

              • Tracey

                if your finances were stretched by your own actions would you make your next mortgage payment and not feed your children and keep the house warm for the next week? and no i am not comparing the greeks to children. i am asking you a genuine hypothetical question.

                • Gosman

                  You don’t seem to get it for some reason. If Greece wants to default on debt payments then it is free to do so. It just can’t do that A ND expect even more money from the same lenders. Using your clumsy and overly simplistic analogy, it would be like not paying the mortgage to feed the kids and then going back to the same mortgage provider to ask for a top up.

                  • Paul

                    Did you support trillion dollar payout to banks in 2008?

                    • Gosman

                      Not especially. However what you probably aren’t aware if is that the vast majority of the trillions given to the banks in assistance has been paid back.

          • Colonial Viper 5.1.2.1.2

            Under your proposal what incentive is there for Greece not to go back to spending far more than the earn?

            The Greek government is already achieving a substantial budget surplus (one of the highest in the EU). This budget surplus, as required by Eurogroup, is actually part of the reason why Greek households and businesses are going under, as the government takes far more money than it spends back into the Greek private sector.

            But let me invert your question and see if you can answer it: what incentive is there for large financial institutions to not go back to lending far too much to Greece?

            • David 5.1.2.1.2.1

              “The Greek government is already achieving a substantial budget surplus (one of the highest in the EU). This budget surplus, as required by Eurogroup, is actually part of the reason why Greek households and businesses are going under, as the government takes far more money than it spends back into the Greek private sector.”

              If this is the case and they really are running a primary surplus, they can default and stay in the Euro with very little effort. The only reason they would need a deal is if they need to borrow to carry on, if they have a surplus they don’t need to so are free to do as they choose.

              Why don’t they follow this path?

              Or, if all that surplus is a problem, they could simply cut taxes, or spend it all.

              Why don’t they do that?

              • Colonial Viper

                The primary surplus excludes Greece’s current loan repayments. Once those are factored in, alongside Greece’s ongoing deep trade deficit, the country is in the financial shit.

                The main point about the primary surplus is that it forms an excellent and disciplined basis for Greece to rebuild from – as long as they can get the debt relief the IMF preliminary sustainability assessment recommended. The Greeks don’t want to do a ‘hard default’ on their “European Partners” as they do want to pay back what they owe – but on a sustainable basis.

                One other point I will raise here – the Europeans built a currency where there is no method of recycling large trade surpluses from the strongest countries, to cover the large trade deficits of the weakest countries. Weaker economies like Greece papered over that fact by borrowing big. So the Euro was critically and structurally flawed from the start.

                • David

                  “The primary surplus excludes Greece’s current loan repayments. Once those are factored in, alongside Greece’s ongoing deep trade deficit, the country is in the financial shit.”

                  That is my point, they can default on the payments and not need any more loans. If that is really where they are, then that is the only logical road for them.

                  “One other point I will raise here – the Europeans built a currency where there is no method of recycling large trade surpluses from the strongest countries, to cover the large trade deficits of the weakest countries. Weaker economies like Greece papered over that fact by borrowing big. So the Euro was critically and structurally flawed from the start.”

                  Yes, this is why anyone with half a brain said that the Euro was a really dumb idea. Everyone from Kurgman to Friedman in fact. They when ahead anyway, the Euro has always been a political project, not an economic one.

                  • Gosman

                    Not quite. Their banks need urgent recapitalization and the projected primary budget surplus was before Syriza poked the Greek economy by imposing capital controls and spooking business confidence. In short they will need more funding just to keep the level of spending they have now without taking in to account debt repayments.

                    • David

                      Yes, that is rather the fly in the ointment, they need to keep borrowing. Austerity is inevitable regardless. Unless, that is, that the rest of Europe decide to fund Greece to the tune of 70+bn every year forever.

                  • Foreign waka

                    David, yes many people within the Euro Zone are actually putting their Government under pressure as they are stretched to the max with the % of poor people growing faster then ever to quit the Euro Zone.
                    The European continent has in total around 33 countries and more then 50 languages and cultures. So its not like the USA states and this is/was the big mistake. Its an accountant dream and a humanitarian nightmare.

            • Accy 101 5.1.2.1.2.2

              Experience! Greek bonds are no longer the equivalent of German bonds Greek Bonds are now junk status lenders now know the risk they are taking. In effect the Greeks won’t be able to borrow except at crippling rates. It will of course also possibly limit the appetite for borrowing as interest rates will be much higher.

        • Crashcart 5.1.2.2

          What Facetious also ignores is that it is literaly impossible for all debt in the world to be paid. The fact remains that with the current banking system all money is generated by either lending or investment in bonds. All of these require a return in interest. If all money created has interest owing on top of the original amount then there is literally not enough money in the system to pay back debt.

          The whole system is designed to lead to Bankrupcy. To this point it has relied upon small players going bankrupt regularly. Be that individuals or buisnesses. Unfortunately lending has exceeded an amount at which these failures can prevent large scale bankrupcy. We are hitting the point where whole economies are going to collapse under their debt.

          I am no doom sayer but I am concerned and think that it is very important that the Euro Zone come up with a viable solution.

          • Foreign waka 5.1.2.2.1

            The Euro Zone will more likely fail as its people are not much better off then the Greek.

  6. Gosman 6

    What is Greece offering as a commitment to reform so they don’t get in to this problem again? Without that there can be no debt relief.

  7. James 7

    “On the back of the loud Greek “OXI” referendum result, it’s Europe who must get real…….”

    Yeah right!

    They forget that they cannot vote OXI for another country to loan them money, or to forgive them their debt.

    The government of Greece are amateurs and should have never have been voted in. Thats why they have had to get rid of their finance minister. Not that he was a “hero”, but simply that they way he acted and his proposals were so ridiculous that they had no chance of working and other governments would not deal with him. In fact getting rid of him has been the only smart thing that government has done.

    The Greeks are authors of their own misfortune – and there are many articles written of the vast difference between the German and Greek write – offs. People are using this as a simplistic argument – http://www.bloombergview.com/articles/2015-01-27/germany-deserved-debt-relief-greece-doesn-t-i5fdca2y

    They voted OXI its the Greeks who have to get real….

    • Gosman 7.1

      Apparently in the leftist world you can vote for other nations to bail you out. Leftists seemingly only believe in democracy when it involves taking other people’s money.

      • RedLogix 7.1.1

        Who voted to bail out the banks in 2009 Gosman?

        • Gosman 7.1.1.1

          The legislatures in each nation affected. That is their job I believe.

          • Tracey 7.1.1.1.1

            what did they base their vote on Gosman? Or do they just blindly say “yes give them more money without thinking about why?”

            Bugger I wasn’t going to argue your circles with you today. I shall cease.

            • Gosman 7.1.1.1.1.1

              I believe they based their decision on the economic and political cost that they believed would occur if they did nothing.

              • Paul

                Adam posted this clip yesterday.
                It somewhat counters much of what you say Gosman.
                Why is no blame or responsibility put on the private bankers who lent to Greece?
                Neoliberal capitalism for the poor, socialism for the banks.

                • Gosman

                  They have had to take a hair cut already so it is not true that they have had no downside.

              • Colonial Viper

                I believe they based their decision on the economic and political cost that they believed would occur if they did nothing.

                That is a weaselly, though carefully worded reply, Gossie. The truth is that the heads of the banking and financial system threatened entire countries with systemic economic collapse, unless western governments gave them all the free tax payers money that they wanted.

                That is another reason that the “Too Big To Fail” banks in 2008-2009 are generally even bigger now than they were then.

                We have been perfectly set up for a re-run of the GFC.

                • Tracey

                  i wonder why be see.s to be taking tbis so much to heart. its like he believes the greeks are getting off with no consequences.

                  no matter how often people say they will suffer consequences either way he gets emotional and blames “people like” me.

                  • Colonial Viper

                    curious eh. And the fact that Greek social statistics have gone into the toilet, suicides are up by a third etc. doesn’t seem to register as being the most real and the most painful “consequences” that there are.

                  • Gosman

                    You misinterpret my interest. Greece is like Venezuela – a morality tale about the dangers of following left wing economics and the limitations of people voting for political ideas that are unrealistic. The fact that ‘people like you’ try to paint it differently is fascinating to me. The cognitive dissonance in your position is more interesting.

                    • Tracey

                      wow, you really just cannot exist in a space where you can’t be right, where there is actually no right answer and where competing, overlapping and multiple elements can be at play? You just have to repeat yourself over and over and over as though there is a magical point (or number of times) at which suddenly everything you have been repeating is agreed to by everyone.

                      cognitive dissonance? Bah. You cannot even see that this actually is really important to you at a much deeper level than your intellect. Just because you tell yourself you are this disinterested rational and logical observer doesn’t mean that is what you are Gosman. You are incredibly attached to this topic (and Venezuela) at far more than just an intellectual level.

                    • thatguynz

                      Ya what? So somehow it is the PRESENT Greek government that has got them into this predicament? Putting aside all the other machinations by external parties around Greek’s admittance to the Eurozone, did their previous governments just cease to exist in your mind?

                      Fuck me, I didn’t think it possible but your ideological babble knows no bounds.. Yet YOU have the gall to accuse others of cognitive dissonance. You are truly a special one Gosman.

              • Jones

                Not quite. It would be more accurate to end your paragraph with “… if they didn’t do what the bankers wanted”. The bankers held a proverbial gun to government heads… a mafioso-type offer that couldn’t be refused.

                • Gosman

                  How so? Please show me how the bankers held a gun to the various Greek government’s heads metaphorically in relation to their borrowing and spending pre 2007.

                • Gosman

                  Apologies you are discussing the various bailouts that happened in 2007/8 not Greece. However the banks didn’t force the various governments to provide a bailout. Lehman Brothers went to the wall fro example. It was the consequences of letting more banks go broke that convinced the politicians.

  8. It is worth remembering that the “German economic miracle” after World War 2 was founded on multiple rounds of writing off huge German war debts. In 1945 these debts were many multiples of German GDP. Germany should not now be kicking out the ladder, after having climbed to the economic top of Europe via the receipt of its own massive and generous debt restructuring.

    What’s worth remembering is that the German “war debt” that was cancelled consisted of punitive reparations demands from the Versailles Treaty. Germany paid its actual debts.

    What’s also worth remembering is that the German debts had been run up by a fascist dictatorship running a war, and with the demise of that dictatorship the problem of running up huge debts disappeared. There’s no sign that Greek governments will stop spending way more than the country earns, in fact there’s every indication that they won’t.

    It’s true that Greece will never be able to repay these debts and they should be written off, but there’s no valid comparison with Germany in 1953.

    • Tracey 8.1

      isn’t the principle similar though PM with reswpect to being out from under the yoke of debt?

      “The London Debt Agreement covered a number of different types of German debt from before and after the Second World War. Some of them arose directly out of the efforts to finance the reparations system, while others reflect extensive lending, mostly by U.S. investors to German firms and governments
      Osmańczyk, Edmund Jan; Anthony Mango (2003). Encyclopedia of the United Nations and International Agreements: G to M (2003 ed.). Taylor & Francis. ISBN 978-0-415-93922-5. p. 797

      “The total under negotiation was 16 billion marks of debt resulting from the Treaty of Versailles after World War I which had not been paid in the 1930s, but which Germany decided to repay to restore its reputation. This money was owed to government and private banks in the U.S., France and Britain. Another 16 billion marks represented postwar loans by the U.S. Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact”

      Timothy W. Guinnane, “Financial Vergangenheitsbewältigung: The 1953 London Debt Agreement” (Economic Growth Center, Yale University, 2004) pp 17. 20, 21, 27-8, 30

      Apart from anything else Greece has a new government which is NOT the same ideology of those who have been presiding more recently… The thing is the right and left of Greece both decided that votes were more important than the state of the nation.

      One reason Greece’s public service is so big (or was) is because it was a job for life, with early pension AND politicians would grant new jobs create new positions for certain constituencies to get re-elected. So, that has to change. Corruption has to stop (in all its forms) but there is some evidence of it being clamped down upon. My understanding is they are seeking a 20 year debt relief.

      None of us know the impact of the last few years on the minds of Greeks and how that might rsult in a change from past behaviours. I know many left the cities to return to their home villages because they could live in a home (parents) which was mortgage free (in the family for generations) and live from the land and so forth.

      Will that change everyone? Probably not. But how many will it have changed?

      Maybe the boil has been or is being lanced… and then it can heal?

      • Gosman 8.1.1

        The new government is very similar to the old governments in that they think government can solve the economic problems in Greece not the Greeks themselves.

        • Paul 8.1.1.1

          Debt that can’t be paid won’t be paid.
          Simple.

          • Gosman 8.1.1.1.1

            Then there is no more debt that they can raise to pay for their overspending. Simple.

            • Colonial Viper 8.1.1.1.1.1

              Gosman, have you not be following what Tsipras and Varoufakis have been saying this year? They have both consistently said that Greece is insolvent and unable to repay further loans; neither of them want German or French tax payers to lend Greece any further money.

              In that way, your position and Syriza’s position lines up well.

              • Gosman

                Then all Greece should do is state that they are unilaterally repudiating the debt (or at least a significant proportion of it) and then use the funds they save to pay for a recapitalisation of the banks and the reorganisation of their economy. However I suspect Syriza knows that even if they do they they will need further funding from other European nations hence why they are looking to get debt restructuring as part of a further bailout.

                • Colonial Viper

                  Greece gave up being a currency sovereign when they joined the euro, at which time they simply became a user of someone else’s currency, with zero power to set its value or its supply. Bad move for any sovereign state, IMO.

                  • Gosman

                    A bad move for the Greeks considering their predilection for overspending I would agree. However the Greek people generally like being part of the Eurozone. They think it makes them better off and protects them from turning in to less fortunate nations (that view has a degree of racism behind it). Hence why Syriza has NEVER claimed recently that it will ditch the Euro and return to the Drachma. Hence their only option is to beg for both Debt relief AND more money.

                    • McFlock

                      lol
                      That all depends on how the negotiations go, doesn’t it.

                      You might well find that the next referendum is about ditching the euro.

                    • Gosman

                      Their banking sector will have collapsed by then. I doubt they could afford to hold another refrendum in that circumstance.

                    • McFlock

                      Right. whatever.

        • Tracey 8.1.1.2

          you are like a mantra on a record that is stuck.

          • half crown 8.1.1.2.1

            Remember Gosman is RIGHT.

            • Tracey 8.1.1.2.1.1

              yup, and he is going to repeat himself over and over and over and over and over until everyone sees that. BUT he has no emotional investment in this, purely intellectual. :rool:

      • Morrissey 8.1.2

        Tracey, I don’t think you should engage with that bloke. You are arguing in good faith, he is not.

        It’s quite clear he has read nothing and thought even less about the reasons for Greece being set on by these predators.

      • isn’t the principle similar though PM with reswpect to being out from under the yoke of debt?

        It’s similar in that debts were written off, yes. But as your quoted piece about the London Debt Agreement shows, what was written off in Germany’s case was almost all punitive war reparations – of the DM 16 billion of actual debts, they were left owing around DM 15 billion.

        And at the risk of attracting the same inane accusations of racism that have been directed at Gosman, the big difference is that the German government needed to get debt down so that the country’s indisputable scientific, technical and industrial expertise could get back to work making high-quality stuff that people want to buy – the Greek government doesn’t have that prospect in front of it. It’s shown no indication that it intends to change the way things were run prior to the crash.

        • Tracey 8.1.3.1

          wasnt the same amount of 16b owed to us bankers? or was that for interest on reparations?

          • Psycho Milt 8.1.3.1.1

            As I understand it, there was about DM 16 billion in outstanding Treaty of Versailles reparations demands, and a further DM 16 billion in debts owed to banks. According to font-of-all-wisdom Wikipedia, the second 16 bil consisted of post-war loans made by US banks – presumably to keep Germany afloat while the economy was effectively producing nothing. After the 50% debt write-off, Germany owed around DM 15 bil – ie, the nett result was that the bullshit ToV reparations were wiped but almost all the post-war borrowing was still owed.

        • Colonial Viper 8.1.3.2

          the big difference is that the German government needed to get debt down so that the country’s indisputable scientific, technical and industrial expertise could get back to work making high-quality stuff that people want to buy

          That’s a free market revision of actual history.

          The United States finally settled on a ‘Strong West Germany’ policy a few years after World War 2 ended in order to help contain the Soviet Union and the Warsaw Pact bloc. That was the main political motivation in allowing Germany to become a great economic power again.

          Many people had argued ferociously against this, preferring to keep Germany permanently weakened as an agrarian, de-industrialised economy which would never again have the wherewithal to wage yet another major war. (Read up on the development of Morgenthau Plan 1944-1945).

          • Psycho Milt 8.1.3.2.1

            The Morgenthau Plan never got serious traction because it was a completely unrealistic revenge fantasy. It was essentially the same as Pol Pot’s vision for Cambodia and would have had a similar result. You can’t take the population of a highly-industrialised country full of scientists and engineers and just decide you’ll make them all farmers, not unless you’re willing to murder large numbers of the ones who don’t die of starvation. I don’t doubt Morgenthau was completely sanguine about that prospect, but fortunately the governments of the western allies didn’t consist entirely of murderous nutcases. Germany was coming back as an industrialised country unless armed occupation forces prevented it, same as Japan. As you say, once the US and its pals finally woke up to the fact that there were two European aggressors in WW2, there was no prospect of trying to prevent Germany recovering.

            • Colonial Viper 8.1.3.2.1.1

              You speak of German’s recovery as some kind of historical inevitability, but starved of financial capital, coal and oil, Germany would have remained a poor farming country for decades. Yes, many would have starved or had to flee the country into the rest of Europe as second class citizens. (Many German scientists and engineers ended up in the US, as you know).

              Of course, that was also not going to result in a country able to stand up against the Warsaw Pact. Which is what swung things in Germany’s favour.

              The Morgenthau Plan never got serious traction because it was a completely unrealistic revenge fantasy.

              This plan was discussed at length over 2 years at the most senior levels of British and American government. Deindustrialisation of the Ruhr and the Saar had been planned in detail and after the war, at least some steps to carry it out were instituted eg German steel production was reduced by 75%.

              The geopolitics of the newly developing Cold War killed the plan dead once and for all, though.

              • You speak of German’s recovery as some kind of historical inevitability…

                Yes, because, in the absence of military occupation it was exactly that, and even if there hadn’t been a sizable murderous totalitarian aggressor right across the border the western allies would have lacked interest in a permanent military mission to play “Holiday in Cambodia” with the BRD. That’s why the Morgenthau Plan never got beyond bullshit sessions among overpaid officials.

    • dukeofurl 8.2

      Punitive reparations demands ????
      That is only the nazi propaganda that you are repeating. The reparations while harsh were for the widespread civilian devastation of northern France and Belgium.

      Germany of course was virtually untouched by the battles, to its infrastructure industry and farming. – Since the Allies didnt invade and lay waste to the German countryside the right spread the lie that Germany wasnt defeated and was being unjustly punished- when of course it was their militarism all along.

      Because the full reparations werent paid , the reconstruction costs were borne by France and Belgium ! ( so much for Germany couldnt afford it )
      One of the reasons for run-away inflation in Weimar republic was an attempt to reduce the currency and so cheat on reparations costs, but it got out of hand

      • Yes, punitive reparations demands. As with war crimes trials, reparations are something only ever imposed on the losers of a war. If the German and Austro-Hungarian empires had won, no doubt they also would have had a list of reparations demands for the losing imperialists. It’s bullshit either way.

        • dukeofurl 8.2.1.1

          You still dont get it.
          If you start a war and lose , you have to pay for the damage done.

          Sadaam had to pay for his damage during invasion of Kuwait! Around $60 bill ?

          Germany had to pay for damage to France and Belgium, rightly so , not punitive.

          part of the problem for Germany after WW1 was that they were a Federal state, while France was very centralised.

          You are just repeating nazi propaganda from before WW2. Its not bullshit. They werent asked to pay for the vast costs of the war just the cost of rebuilding in Northern France and Belgium.

          As any damage to infrastructure has to be rebuilt . Who pays for that ?

          Your hubris is breathtaking

          • Psycho Milt 8.2.1.1.1

            If you start a war and lose…

            More accurately: if you lose a war, you will be found to have started it and will be sent all the bills. If you win a war, you’ll find the losers started it and can be sent all the bills. That’s how both politics and history work, and is usually given the technical term “bullshit.” It’s not how actual debt that you have an obligation to pay works. That’s why no-one these days is outraged that the Soviet Union didn’t pay the reparations that were imposed on it under the Treaty of Brest-Litovsk.

      • Foreign waka 8.2.2

        OMG You are so out of your debt it is painful. Untouched by battles? How about Dresden, Stuttgart, Berlin, Cologne, Hamburg etc… 150 cities in total with millions of women, children and old people killed while hiding in cellars and underground.

        http://rense.com/general81/germm.htm

        • Tracey 8.2.2.1

          which is also why the assertions by Gosman that Germany was a thriving (productive) nation by 1953 is entirely accurate.

  9. Olwyn 9

    I have been reading Owen Jones’s “The Establishment and How they get away with it,” in which he quotes ex-slave and abolitionist Frederick Douglas, “Power concedes nothing without a demand.” Things can only change if pressure is maintained on the institutions that are currently out to bleed Greece dry. The Greek government has actually tried to work out ways of paying, but their offers have been rejected because they do not religiously follow the required formula – sell your assets and screw the poor. Moreover, they would probably have gained a degree of debt forgiveness by following the formula, even though doing so would bring hopelessness as well as ruin on their people. Nothing gives these lending institutions authority as our lords and masters – it is time for irresponsible lenders to answer for themselves, but they won’t unless they are made to – they have had their own way for too long.

    • Colonial Viper 9.1

      he quotes ex-slave and abolitionist Frederick Douglas, “Power concedes nothing without a demand.”

      +1

      Even the IMF’s own analysis shows that Greece debt must be heavily written down and a long repayment holiday instituted, if the country is to have a chance of getting back on its feet.

      It appears that the right wingers aren’t actually interested in any of that, and prefer instead the sadistic financial waterboarding of Greece to continue (and which guarantees that the debts will never be repayable).

      • Gosman 9.1.1

        Greece will get restructuring of it’s debt just unlikely before it commits to serious reform of it’s economy.

        • Tracey 9.1.1.1

          It will be give and take, from both sides. That is not a revelation to you is it?

  10. Ad 10

    Good to see you back CV

  11. cogito 11

    “Germany should not now be kicking out the ladder,”

    The rich kicking out the ladder after they themselves have benefited is standard practice these days – as also practiced by Key, Bennett and others in the current NZ reich.

    Time to fight back.

  12. Chooky 12

    +100 CV…and

    Two brilliant Americans in London …Max Keiser and Stacy Herbert …plus one Australian Economics Professor, Steve Keen now of Kingston University…. put the Greek and European and International financial situation succinctly…plus a hint at American strategic politics with Russia…re IMF … now they are running scared…will Greece turn to Russia ?

    http://rt.com/shows/keiser-report/271909-episode-max-keiser-780/

    “Every week Max Keiser looks at all the scandal behind the financial news headlines.

    In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the Greek referendum results, financial terrorism and bail-in fears induced velocity of money. In the second half, Max interviews Professor Steve Keen about the Greek ‘OXI’ (No) vote and the dictatorship of the ECB.”

    http://www.kingston.ac.uk/news/article/1393/17-sep-2014-eminent-academic-steve-keen-to-help-kingston-university-become-world-class-centre-for-new-economic/

  13. Dorothy 13

    I agree , ” Slash Greek Debt now”
    The people who are being hurt most are not those responsible,
    Previous Greek governments were irresponsible not the least for ignoring widespread tax evasion.
    I also note Pikettty and others comments about Germany’s financial history since the second world war . [pot, kettle black ? ]
    Germany needs to remember too, that it made a lot of money selling to Greece
    in its drive for wealth in more recent time.

    • Colonial Viper 13.1

      the key is to create and establish a financial and monetary system which serves the needs of society and the dignity of individuals. At the moment our political classes are heavily programmed to subordinate individuals and society to a financial and monetary system deliberately weighted to serve the 1% at the expense of most other people.

  14. johnm 14

    ” Greece And The EU Situation — Paul Craig Roberts ”

    ” I conclude that the “Greek debt crisis” is now contained. The IMF has already adopted the Greek government’s position with the release of the IMF report that it was a mistake from the beginning to impose austerity on Greece. Pressured by this report and by Washington, the EU Commission and European Central Bank will now work with the Greek government to come up with a plan acceptable to Greece.

    This means that Italy, Spain, and Portugal can also expect more lenient treatment.

    The losers are the looters who intended to use austerity measures to force these countries to transfer national assets into private hands. I am not implying that they are completely deterred, only that the extent of the plunder has been reduced. ”

    ” John Perkins in his book, Confessions of an Economic Hit Man, describes the process by which Western financial interests intentionally over-lend to weaker countries and then use the pressure of the debt to force the transfer of the countries’ wealth, and often sovereignty, to the West. The IMF and its austerity programs have long played a role in the looting. ”

    ” As I have previously written, the Greek “debt crisis” was an orchestration from the beginning. The European Central Bank is printing 60 billion euros per month, and at any time during the “crisis” the ECB could have guaranteed the solvency of any remaining creditor banks by purchasing their holdings of Greek debt, just as the Federal Reserve purchased the troubled mortgage backed “securities” held by the “banks too big to fail.” This easy solution was not taken. ”

    http://www.paulcraigroberts.org/2015/07/07/greece-eu-situation-paul-craig-roberts/

    • Colonial Viper 14.1

      I like a lot of the commentary by Roberts, who was formerly an Assistant Secretary of the Treasury during the Reagan years.

      Basically, I think the US (who is by far the most powerful member of the IMF) re-did its calculations and saw that Greece was effectively being forced by the Eurogroup/ECB to go to Russia (or China) for funding. And it was having none of that.

      Still, I don’t think that Alexis Tsipras’ Cabinet should all fly on the same plane together for a while yet. They aren’t out of the turbulence by a long way.

      • AmaKiwi 14.1.1

        +1 Absolutely.

        I’m surprised the jackals haven’t pumped off Yanis. He’s eloquently dangerous.

        I’ve missed you this past week, CV.

    • johnm 14.2

      Financial Nonsense Overload

      By Dmitry Orlov

      ” As most of you probably know, Greece is saddled with more debt than it can possibly hope to ever repay. Documents recently released by the International Monetary Fund conceded this point. A lot of this bad debt was incurred in order to pay back German and French banks for previous bad debt. The debt was bad to begin with, because it was made based on very faulty projections of Greece’s potential for economic growth. The lenders behaved irresponsibly in offering the loans in the first place, and they deserve to lose their money.

      However, Greece’s creditors refuse to consider declaring all of this bad debt null and void—not because of anything having to do with Greece, which is small enough to be forgiven much of its bad debt without causing major damage, but because of Spain, Italy and others, which, if similarly forgiven, would blow up the finances of the entire European Union. Thus, it is rather obvious that Greece is being punished to keep other countries in line. Collective punishment of a country—in the form of extracting payments for onerous debt incurred under false pretenses—is bad enough; but collective punishment of one country to have it serve as a warning to others is beyond the pale. ”

      http://www.informationclearinghouse.info/article42327.htm

    • Olwyn 14.3

      @ johnm: Washington favors this centralization of political power in Europe, and Washington favors the One Percent over the people. However, above all Washington favors its own power and has acted to prevent a Greek exit, which could begin the unraveling of NATO.

      This to me is where the contradiction lies in the US/corporate bid for world mastery. The neo-lib wing wants to subjugate populations to the dominance of the financial sector, while the neo-con wing wants to universalise US-style corporate capitalism. It has to be difficult to meet these two ends at the same time – the subjugated populations can hardly make the universalisation idea an attractive one to those who are not already caught up in it. They must surely dwarf the appeal of such things as blue jeans, coke and rock music.

    • johnm 14.4

      ” The assault on Greece is just the latest episode in a long history of shutting down choice on behalf of the financial elite.

      By George Monbiot, published in the Guardian 8th Juy 2015

      Greece might be financially bankrupt; the troika is politically bankrupt. Those who persecute this nation wield illegitimate, undemocratic powers: powers of the kind now afflicting us all. ‘

      ” All this is but a recent chapter in the long tradition of subordinating human welfare to financial power. The austerity now imposed on Greece, brutal as it is, is mild by comparison to earlier versions. Take, for example, the Irish and Indian famines, both exacerbated (in the second case caused) by the doctrine then known as laissez-faire, but which we now know as market fundamentalism or neoliberalism.

      In Ireland’s case, one eighth of the population was killed – one could almost say murdered – in the late 1840s, partly by the British refusal to distribute food, to prohibit the export of grain or to provide effective poor relief. Such policies offended the holy doctrine that nothing should stay the invisible hand

      When drought struck India in 1877 and 1878, the British imperial government insisted on exporting record amounts of grain, precipitating a famine that killed millions. The Anti-Charitable Contributions Act of 1877 prohibited “at the pain of imprisonment private relief donations that potentially interfered with the market fixing of grain prices.” The only relief permitted was forced work in labour camps, in which less food was provided than to the inmates of Buchenwald. Monthly mortality in these camps in 1877 was equivalent to an annual rate of 94%. ”

      http://www.monbiot.com/2015/07/08/3796/

  15. Pascals bookie 15

    Gos, what do you think of the Friedman and Fisher quotes here:

    http://krugman.blogs.nytimes.com/2015/07/07/milton-friedman-irving-fisher-and-greece/?smid=tw-share&_r=0

    I mean, set aside the pointless task of identifying who is most to blame just for a moment.

    • greywarshark 15.1

      pPB
      The Krugman link was great and I tried to print it out, copy it etc. but the golden words of Friedman and Fisher are not available to me, though I can get the rest of the Krugman article. Perhaps gold is required to read this ancient history from the minds of the gurus? It says something about photo and Credit where the extract would be. That may have something to do with it. Is the offer of gold necessary before there is a full electronic resource there?
      (Or perhaps it belongs to that guy who has bought up lots of collected newspaper history and is photographing it for posterity and renting it out.?)

      Perhaps this is what Aaron Swartz was concerned about? He wanted to light and reveal – SMALL, dark, cluttered places (were important in the life of Aaron Swartz.)
      http://www.economist.com/news/obituary/21569674-aaron-swartz-computer-programmer-and-activist-committed-suicide-january-11th-aged-26-aaron

    • Gosman 15.2

      They seem to be stating that devaluation is much the best option for nations that get themselves in such a mess. However Greece does not have that luxury at the moment.

      • Pascals bookie 15.2.1

        Therefore?

        Come on mate, you seem to have a lot to say about what ought to be done. What do Friedman and Fisher’s quotes suggest about what you’ve been saying?

        Also, what is the role of a Central Bank in these circumstances, if devaluation is off the table?

  16. Kevin 16

    After WW2 I’m pretty sure the Allies had a lot control over Germany’s economy. If the debt is to be forgiven then the the EU would need to have that kind of control over Greece’s economy, at least until it was working again.

    • Pascals bookie 16.1

      Well, there was a lot more than just debt forgiveness there, they poured in money and resources.

      but this gets to the central well known flaw of the eurozone. It was always intended as a stepping stone to a federal Europe. And germany was not exactly a resistor on that front. Going with the single currency first always carried the risk that the currency would exacerbate crises. In the lead up, Germany benefited from a lower currency than she would have had with a D-Mark. Buying southern europe debt in euros was a safer bet than buying them in Drachmas. The south was on the other side of those factors of course. All of them thought it would work out ok.

      But as a system it was prone to exactly this sort of mess. Germany can puff itself up all it likes, but they largely built this system. they wanted the south in, and they benefited from it for quite some time. Normally, the stronger core of an economy that makes those gains carries the risk that in a crisis they will have to bail out their periphery. The fact that there isn’t a fiscal or political union to go with the currency union makes these things more fraught and obvious, but they don’t change the underlying realities of them.

  17. Pascals bookie 17

    Honestly trying to identify who is the most blameworthy is simply bollocks.

    It all depends on how wide your focus and where you draw your arbitrary lines. The design of the Eurozone played a huge role, so are the designers to balme? Who benefited from that design? Should the nations that received structural benefits bear the inevitable costs that have fallen out of the obvious design faults?

    It’s just a rubbish argument. The outsized pain has been felt by the young and poor of Greece. If you want to demonstrate that they benefited the most, during the lead up, compared to say the buyers of euro denominated Greek bonds be my guest. Be sure to show that they had the same level of comparative knowledge too, given such knowledge is a necessary condition of assigning moral blame. If that’s what you want to do.

    • AmaKiwi 17.1

      CV, I support your idealistic hopes. But I don’t think it will happen because the social mood has swung from positive to negative.

      The Euro and the European Union were designed by elected politicians in a burst of economic euphoria. How naive to think a thousand years of Europeans slaughtering each other would vanish with their utopian EU scheme.

      In today’s negative mood the Euro and the EU will be blamed for everything that goes wrong. In a few years both will be historical footnotes.

      (Don’t bother to post disagreeing with me. I know nearly everyone does.)

      • Colonial Viper 17.1.1

        Well, Europe’s political and financial elite appear to have been willing to financially crush for years a modern European country and its peoples. Reminds me of Ghandi’s quip about “western civilisation” – that it would be nice.

        Over the next few decades real resources and energy availability is also going to continue to wind down so I agree with you things are going to get much more difficult, not less.

    • Tracey 17.2

      There is no right and wrong answer, imo PB. Those trying to convince others (from both sides of the ideological/economic argument) are pissing in the wind. Blame -games suspend solutions, it doesn’t bring them about.

      Greece, rightly or wrongly, is trying to wrestle back some control of its own future. Those who want to make this an intellectual argument/equation/discussion are omitting a very important thing from their analysis and proposed solutions. People (emotions of those people).

  18. Bill 18

    A bit of an aside.

    Serious action on AGW entails crashing the market economy (to get the necessary CO2 reductions). Ever wondered how much austerity (the elite’s idea of a controlled crash landing of the economy?) can be unleashed on a population before ‘push back’ occurs? Then look at Greece.

    Meanwhile, the ~25% tank in Greece’s economy wasn’t even close to producing the 10%+ year on year CO2 cuts that are now necessary to have any chance of avoiding dangerous climate change.

    I’d suggest that if we want a livable future in terms of temperature, and we want that future to include wee details like universal access to food and medicine, then we need to stop playing ‘follow the leader’ and grab society’s reins ourselves.

    • Colonial Viper 18.1

      Serious action on AGW entails crashing the market economy (to get the necessary CO2 reductions).

      Basically. Any political party which says it is serious about tackling AGW on one hand, then smoothly goes on to talk about encouraging economic growth and increasing peoples incomes (and standard of living = consumption) on the other hand, are being less than honest.

    • Kevin 18.2

      How on earth will crashing the market economy reduce AGW? By sending us all back to the stone age?

      • Bill 18.2.1

        The scientifically credible and necessary 10% per annum cuts in CO2 from energy is, according to all orthodox economists, incompatible with economic growth.

        So. If we want to avoid dangerous levels of warming we need to wind down the market economy.

        Our only other option is to maintain the market economy until the effects of climate change collapse it out from under our feet. (eg – intense weather knocking down/out (portions of) the electricity grid = no water coming from peoples’ taps…climate related crop failure = no import/export of given commodities…intense rains washing out roads and rail networks = breakdown of local distribution…more intense storms at sea (wave height) = much less international shipping etc, etc, etc).

        By the time we have our economy taken from us by climate change, we’ll be looking at further warming coming down the line due to lag. Hmm. Tipping points and the ‘anthropological’ taken out of global warming?

        Fuck that.

  19. BM 19

    Greece can’t afford the pension plans ,the incredibly bloated public service, the corruption and the unwillingness of it’s citizens to pay tax.

    It just doesn’t make enough to pay for that sort of life style.

    It’s killing the country and until that changes, Greece is boned and it’s a waste of time giving them anymore money.

    As Kevin said above, the Greeks need a care taker government to make the necessary changes.

    • Colonial Viper 19.1

      Ahhhh, regime change is it now. Perhaps you favour a bunch of former Goldman Sachs eurocrats to take the reins? Perhaps you have read the book “Confessions of an Economic Hitman” that I linked to in the post above.

    • Tracey 19.2

      wow really BM? al those things. greece cant afford. does anyone else know about this??.

      • BM 19.2.1

        Why haven’t they made the necessary changes then?

        What’s the hold up?

        • Colonial Viper 19.2.1.1

          BM, Greece has conducted massive internal economic devaluation since 2010, as part of its participation in Troika programmes. Pensions have been cut by up to 48%, the retirement age has been put up from 58 to 67, public sector payrolls have been cut by 30%. Wages and pensions slashed. VAT hiked.

          These are also the austerity reasons why Greece GDP has been in a death spiral.

          You really need to keep up with the play.

          • AmaKiwi 19.2.1.1.1

            CV: “BM, you really need to keep up with the play.”

            BM type reply: “Nah. Everyone’s entitled to their own opinion.”

            AmaKiwi: “Correct. But everyone is not entitled to their own facts (except Gosman).”

          • Big Al 19.2.1.1.2

            CV YOU really need to keep up with the play.
            Suggest you google “Greek for a Week” which was a UK TV4 doco on what it meant to be a Greek worker. Made in 2012 (i.e. 2 years after your quoted Pension cuts, increase to retirement age, and public sector payrolls slashed by 30%). Takes about 45 mins to view, but really outlines in 3 simple examples why Greece is in the crap. This is the mentality which has put them there, and is keeping them there as the Greek Govt refuses to change anything.

            • Kiwiri 19.2.1.1.2.1

              Ok, will check out anti-Greek propaganda soon.
              That will be good for tickling my dormant sense of envy and resentment too. Thanks.

            • Colonial Viper 19.2.1.1.2.2

              nd is keeping them there as the Greek Govt refuses to change anything.

              Nonsense. Greece has achieved greater structural deficit reductions than any other country in the Eurozone. Now it is time for Europe to start investing in Greece and in the Greek people again.

              Because without that, there really is no more point to being part of Europe.

            • Pascals bookie 19.2.1.1.2.3

              Every time I google it the links all clearly indicate that some ‘reality tv show’ rather than a doco.

              Who was the documentartian of the one your talking about?

        • Tracey 19.2.1.2

          Have you been living under a rock, or as your comment above suggested to me, only just turned your attention to greece? I think you will find they have been making the changes they think are necessary and in the last few months very much so. Don’t confuse your version of what is necessary being different from theirs as them not making necessary changes.

          • The lost sheep 19.2.1.2.1

            ” I think you will find they have been making the changes they think are necessary and in the last few months very much so.”

            Apparently not Tracy.
            In a speech to European lawmakers today…
            ” Tsipras admitted that after winning power on a promise to end austerity, his government had “spent more time negotiating than governing”

            http://www.reuters.com/article/2015/07/08/eurozone-greece-idUSL8N0ZO1MI20150708

            • Tracey 19.2.1.2.1.1

              so you don’t think that spending time negotiating a better deal for his people is making changes that he thinks are necessary? i can see how your could define renegotiating a situation of debt/interest that he considers is harming his people as :necessary changes”

              I mean so far, they have not been thrown out of the EU (as many said they would/should) they still are part of the euro (which some said they couldn’t/wouldn’t) and Merkel has left the door open, the IMF has announced austerity could never have worked…

              Seems the necessary changes might have been putting their foot down and saying “we can’t keep doing the same thing” (in all respects).

              All in how you view “necessary changes” Lost.

              • The lost sheep

                Endlessly dithering and delaying and completely misunderstanding the position and intent of the parties you utterly rely on to pull you out of the hole you are in , while at the same time actively insulting them?
                Even when your procrastination has lead your economy to plummet in an unprecedented manner, your banks forced to close, and your economy bankrupt…
                So that you are now in a much weaker negotiating position than you were at the beginning?

                Personally I see that as catastrophic mismanagement of the situation .

                But as they are Marxist’s I understand that you will believe that everything they do is perfection, and that anything that doesn’t work out for them will be someone else’s fault.
                After all, that’s the attitude that has made Marxist economic theory the dominant force it is today.

      • Paul 19.3.1

        Did you justify the bailout of the banks in 2008?

        • infused 19.3.1.1

          Please quote where I have said that.

          • DoublePlusGood 19.3.1.1.1

            He asked if you did or not, aiming to see if you are being ideologically consistent or not. He did not state that you said that. Please read more carefully.

      • Tracey 19.3.2

        Do you think a new deal will be exactly what the creditors demanded, say, 5 months ago?

      • Tracey 19.3.3

        Do you think that any deal will be the same one the creditors have wanted for the last few years?

    • Anno1701 19.4

      “It just doesn’t make enough to pay for that sort of life style.”

      you forgot to mention its also had lots of kids it cant afford and it spends all its money on booze, smokes, iphones, sky tv and pokies !

  20. Ad 20

    In ten years time or so when all the biographies come out, there will be a summary of Greece’s financial-political dynamics similar to Australia’s Dismissal of Whitlam, as follows:

    “During the crisis, Whitlam had alleged that Country Party Leader Anthony had close links to the US Central Intelligence Agency (CIA).[113] Subsequently, it was alleged that Kerr acted on behalf of the United States government in procuring Whitlam’s dismissal. The most common allegation is that the CIA influenced Kerr’s decision to dismiss Whitlam.[114] In 1966 Kerr had joined the Association for Cultural Freedom, a conservative group that was later revealed to have received CIA funding. Christopher Boyce, who was convicted for spying for the Soviet Union while an employee for a CIA contractor, claimed that the CIA wanted Whitlam removed from office because he threatened to close US military bases in Australia, including Pine Gap. Boyce said that Kerr was described by the CIA as “our man Kerr”.[115] Whitlam later wrote that Kerr did not need any encouragement from the CIA.[116] However, he also said that in 1977 United States Deputy Secretary of State Warren Christopher made a special trip to Sydney to meet with him and told him, on behalf of US President Jimmy Carter, of his willingness to work with whatever government Australians elected, and that the US would never again interfere with Australia’s democratic processes.”

    (Wikipedia)

    Kerr referred to above is the Governor-General that sacked the Whitlam government.

  21. AsleepWhileWalking 21

    Yanis Varoufakis: “We’ve made hope return to Europe”
    ….yes you have. God bless them.
    (15mins)

  22. DS 22

    This is a balance of payments problem, not a fiscal problem. Our usual right-wing suspects going on about “living beyond your means” rather overlook the fact that Greece cannot compete within the Euro.

    The solution is permanent fiscal transfers from Germany to Greece (a la New York to Mississippi) or the end of the Euro.

  23. Observer (Tokoroa) 23

    @ Colonial Viper
    @ Tracey
    Congratulations on your writings. So full of common sense !

    If a person is out of money, they cannot pay. Neither can they be jailed if they have done no wrong.

    But, as human beings they can be assisted with food, water, housing, work opportunity, education and trade.

    If any nation, including Germany should savage the Greeks further with monetary weapons, then those Nations will become utterly despised. Angela Merkel from being a great Ruler, will emerge as just another self absorbed, constipated Tyrant.

    But in saying that, the English speaking world, mainly but not solely The United States of America with help from London, allowed their banks to destroy the human dignity of millions of people. All over the world. Unbelievable horror and lack of human empathy. Evil on a scale not formerly seen.

    Two things could or should be sought by the European Court. Firstly a total reparation from America for the colossal financial harm it has caused.

    Second, A request to China that it call in its $Billions/$trillions of loans to America. For, having China flush – will give the world a chance to break away from evil bankers.

    The same English speaking nations (America, Britain, Australia) have killed without turning a hair hundreds of thousands of innocent Arabic and Asian people within recent years. A ruthlessness that is beyond understanding !

    Greeks – You are mighty clean alongside the actions of the English Speaking world. Don’t let anyone else tell you otherwise.

  24. cogito 24

    “For, having China flush – will give the world a chance to break away from evil bankers.”

    China – they’ve got plenty of evil of their own, don’t imagine otherwise.

  25. Gosman 25

    This article gives a good example of why Greece is not simply being offered debt relief

    http://www.wsj.com/articles/why-everybodys-in-the-dark-on-greece-1434325260

    Syriza wants to use other people’s money to play Keynesian pump priming.

    • DS 25.1

      Greece is not being granted debt relief because Germany wants to have its cake and eat it too: it wants to run massive current account surpluses, while complaining that those running current account deficits aren’t paying it back. Someone’s current account surplus is someone else’s deficit, and is what this entire thing is about.

      But yeah, keep pushing the right-wing narrative of this being about “socialism”. Never mind that Greece has cut government spending by a fifth in the last seven years.

      • Gosman 25.1.1

        Whether or not Greece has a Current account deficit should have little bearing on Sovereign Debt UNLESS it is the Greek government that has decided to fund the deficit. Why any government would choose to take on what should really be mainly a private sector issue is beyond me. It would suggest a degree of incompetence that even previous Greek governments weren’t able to reach.

        • DS 25.1.1.1

          Current account deficit = capital account surplus.

          What happened was that Greece experienced extensive capital inflows from the rest of the Eurozone (read: cheap credit). Those inflows disappeared (read: the end of cheap credit as a result of the Global Financial Crisis). Normally this would result in Greece’s currency devaluing, thereby closing the current account deficit (it’s what would happen here if foreign investment started to dry up).

          But Greece can’t devalue, because it’s stuck in the Euro, and the Euro is designed with German needs in mind. This forces internal devaluation – cuts in wages and prices. This creates a deflationary spiral, which in turn destroys the tax base. Greece’s government debt as a proportion of GDP has increased in the past few years not through profligate government, but because GDP has collapsed. Further creditor-enforced cuts have only made the situation worse.

          In summation, this is only a sovereign debt issue because the ECB and the IMF turned it into one. Without the Euro, there wouldn’t be a crisis at all.

          • Gosman 25.1.1.1.1

            No. It has always been a Sovereign debt crisis. Your analysis would have been accurate if the Greek State had been forced in to a negative Sovereign debt issue because it had to take onboard the private sector debts. That was not the case. What kicked off the Greek crisis was the discovery that the government debt was much higher than previously reported not that the government had to bail out banks or the like.

            • DS 25.1.1.1.1.1

              I repeat: sovereign debt levels are a distraction. Greece was running debts to the tune of 100% of GDP pre-crisis. High, but not spectacular (compare the UK’s 250% debt levels after the Napoleanic Wars). That’s increased to 180% of GDP because Greece has lost a quarter of its GDP, and the tax base has been destroyed. Further cuts will only increase the debt, as Irving Fischer pointed out in the 1930s.

              No Euro means devaluation, and Greek control of its own monetary policy. This would have meant crisis completely averted.

              An even clearer example is Spain. The Spanish Government ran surpluses and had low debt on the eve of the crisis. Now? It’s been screwed by the Euro, such that it might well follow a Grexit.

          • Foreign waka 25.1.1.1.2

            Brussels is calling the shots to be precise… and the city is not in Germany (hint). But it would mean more research, its sooo easy to find someone to blame. So why not falling back to the god ol’ German bashing.

  26. Observer (Tokoroa) 26

    Hi Cogito

    What China banking evil are you referring to? What percentage of malpractice compared to American Banks?

    Thanks

  27. Philip Ferguson 27

    Crucial to troika thinking is how to destroy Syriza and the example that it is setting. Syriza may yet give in – Tsipras has wobbled several times and the largest group within Syriza is Synaspismos, whose origins are in Eurocommunism.

    There are also a number of revolutionary Marxist groups in Syriza, the largest of which is probably the KOE, which identifies as Maoist. The other Marxist groups in Syriza are from the Trotskyist tradition.

    The troika’s main fear is that the resistance the Greek people, and Syriza at their head, have put up inspires the working class of Spain, Portugal and Ireland in particular. Syriza has to be crushed. That’s why the troika are trying to impose harsher conditions on Greece than when New Democracy and the Labour Party (Pasok) were in power and doing the troika’s dirty work.

    What the referendum has revealed however is the decline of both New Democracy and the Greek Labour Party, the Labourites having collapsed electorally due to their vicious anti-working class economic policies (just as they are collapsing in Ireland for the same reason). So the troika don’t really have a political party of real weight in Greece to do their bidding right now.

    We put up on Redline a communication we received from one of the main left currents in Syriza (remember that Syriza is a coalition of left-of-Labour forces). The communique included some interesting stuff about troika strategy: https://rdln.wordpress.com/2015/07/07/a-great-no-by-the-greek-people/

    We’re awaiting a new communique from the Greek comrades about the last few days, including the resignation of Varoufakis, the finance minister and its significance.

    Phil

  28. Observer (Tokoroa) 28

    Hi DS

    Undoubtedly Germany has done well by gaining surpluses while nations trading with Germany have paid with mounting deficits.

    Equilibrium is not a chosen ideal for the Wealthy. So, I think given that more and more wealth is going to ever fewer people, the whole world should take note of Greece’s anti austerity principle and ignore the strange distortions of the wealthy.
    Using Banks to thrash and starve individuals is so shockingly sick.

    We should make it compulsory for each and every Bank to observe a non austerity charter.

    The Greeks are making sense to me. We live on a planet that belongs to us all. Not to a bunch of Midas mad men.

  29. Gosman 29

    For all the leftists here who try and paint Greece as some victim of a neo-liberal plot have a read of this article written shortly after the Greek debt crisis began.

    http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-201010

    “As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it. In just the past decade the wage bill of the Greek public sector has doubled, in real terms—and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension,” Manos put it to me. “And yet there isn’t a single private company in Greece with that kind of average pay.” The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland’s. Greeks who send their children to public schools simply assume that they will need to hire private tutors to make sure they actually learn something. There are three government-owned defense companies: together they have billions of euros in debts, and mounting losses. The retirement age for Greek jobs classified as “arduous” is as early as 55 for men and 50 for women. As this is also the moment when the state begins to shovel out generous pensions, more than 600 Greek professions somehow managed to get themselves classified as arduous: hairdressers, radio announcers, waiters, musicians, and on and on and on. The Greek public health-care system spends far more on supplies than the European average—and it is not uncommon, several Greeks tell me, to see nurses and doctors leaving the job with their arms filled with paper towels and diapers and whatever else they can plunder from the supply closets.”

    The money wasn’t squandered on the wealthy. It went to public servants.

    • Tracey 29.1

      and none of that has changed in the last 5 years, right Gosman?

      the public servant issue was exacerbated by the way politicians offered jobs for life and created new positions to secure their re-election. Mostly right representative parties btw.

      “First, demographics. About 20.5% of Greeks are over 65 – behind only Italy and Germany in the EU when it comes to an ageing population. And with the country’s youth unemployment rate still above 50%, its young people are not going to be able to pay for their grandparents pensions any time soon.

      Second, Greek society has a dependency on pensioners. One in two households rely on pensions to make ends meet and the country has an old-age dependancy ratio above 30%, which means that for every 100 people of working age in Greece there are 30 people aged 65 or over.

      Third, Greek pensions aren’t so generous. About 45% of pensioners receive pensions below what is considered the poverty limit of €665 per month.

      Looking at the actual expenditure on beneficiaries, Greece’s figures don’t stand out as exceptional and are instead on par with the EU average:..

      http://www.theguardian.com/business/2015/jun/15/unsustainable-futures-greece-pensions-dilemma-explained-financial-crisis-default-eurozone

  30. dv 30

    In breaking news

    The greeks have apologised to Germany with the present go a large wooden horse.

    Merkel was very pleased and said thank you.

  31. dv 31

    And all future Euros are to printed on Greece proof paper.

  32. Observer (Tokoroa) 32

    Hello Gosman

    Willing as you are, I don’t think you’re in a position as a Kiwi to advise Angela Merkel, nor the Prime Mister of Greece.

    You see as of today, $1 NZ Dollar gets you 0.59 Euro. $ 1 NZD gets you close to 0.66 cents USD (American cents.

    In spite of your wonderful geniuses – The PM and The Treasurer of New Zealand – your Dollar does not cut the mustard in Europe or in America.

    Your Kiwi Dollar is worse than watered down milk powder and worse even than watered down beer. Better to keep your meretricious mouth shut old boy.

    If you stay silent people may think you are perhaps a fool ; but when you open your mouth you definitely leave people without doubt.

    Ditch your lightweight currency and get a grown up currency Gosman. Then offer to assist Angela Merkel.

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