Archive for March 15th, 2010

No Fear of Greeks Buying Gifts

I caught Doug Henwood’s Behind The News podcast from Saturday week ago this morning. He had an interview with Yanis Varoufakis, a Greek Economist. Varoufakis gave a very lucid account of the current pressures being brought to bear on Greece. Below is a rush transcript of an excerpt I thought was of particular interest to residents of a country whose government prides itself on its best-in-class ratings from European elites for its deflationary policies.

Varoufakis: Germany has been since the early 1950s up until 2008, let’s say, it has been enjoying the fact that it was the United States, as a hegemon, that was creating the demand for the German surplus. In 2008 that story ended. I do not think that the political elite of Germany, and this is the tragedy of Europe at the moment, the problem is not countries like Greece or Spain or Portugal, who are running a deficit. The problem of the Eurozone is Germany. Because they have not understood that in order to maintain their leading position and their capacity to accumulate capital and grow technologically and so on, they have to have demand for their goods. The United States knew this very well about Germany and supported German surplus creation for decades. As of 2008, that story has ended. Germany now thinks it can get away, it can get out of this crisis by pretending that there is no problem with regard to demand for its goods in places like Greece, and places like France and Italy and so on and so forth. And they’re hiding behind this neo-mercantilist mentality. I was talking to an officer of the ECB, the European Central Bank, who happened to be German, and of course the bank is in Frankfurt, it is nothing more than the extension of the German Bundesbank, the Central Bank of Germany. And I put exactly the point you raised to him, and I was astonished by the reaction. He said, “you know what? You’re right. What we’re doing is probably going to push countries like yours into recession. Into permanent recession”.

And I said, yes, but aren’t you worried that this is going to stop us from buying your goods, buying your exports? And in a twist of quasi-intelligence, he said, “well, we are pushing wage deflation towards you. We are forcing you effectively to reduce wages. But you know what? Wage earners in your country do not buy Mercedes Benzes. It is the elites of countries like yours who do. And we are going to look after them. We are going to ensure there are transfers of European money, effectively German money, to Greece, to build roads and metro stations and improved telecommunications, and the people who will benefit from that are the elites and perhaps the migrants: migrant labour. Greek wage labourers, we don’t care for, because in any case they buy Chinese or Korean. So they might as well reduce their demand for imports into the Eurozone”. I thought that was brilliant, but what I thought was terrifying was that it was so wrong, because if we have a negative growth for around 5-6% which is what I predict will happen next year, given the deflation that is being pushed down our throat at the moment, I think that the elites are going to find it very very hard to maintain demand for German products too. So my accusation for the Germans is not that they are being selfish, or misanthropic, but that they are being a bit idiotic.

Varoufakis also had some stark words about the prospects for successful resistance:

It’s a very mixed picture. On the one hand, it is true that the Greek public, especially the youth, are completely disenchanted with the system and are prepared to resist on the streets, very actively and very energetically as you know. At the same time, I have to say that history has taught us, not only in Greece but everywhere, that the period of recession, of savage recession, is not a good period for the organising of struggle. The midwar period proved that without a shadow of a doubt, the early 1980s in Britain proved that when unemployment is rising, you may have conflict, industrial conflict, even some good demonstrations, but that does not mean that society is resisting effectively. The other day we had a general strike here in Greece, and I marched with the unions, but I can testify that the general mood was one of resignation. It reminded me in a sad way of the demonstrations we had in 2003 just before the invasion of Iraq. You will recall that throughout Europe there were anti-war demonstrations before the war was launched in Iraq. I remember that we had 800,000 people in the centre of Athens and yet everybody believed that the invasion was going to take place and that we were not going to be able to prevent the massacre. That was the kind of feeling I got the other day: we resist, we demonstrate, but it was a bit tokenistic.

I think we’re entering a period of major recession, accelerating poverty, which is going to inflame the ultra-right and their attacks against migrants, and I very much fear for the migrant population of Greece which is about 10%, perhaps more, 10-15% of the total population here (inaudible) and during a recession the migrant community is always the one that bears the brunt of disorientated anger. I fear for the young people who are already experiencing a very high unemployment rate. It’s not looking good, but as you said before, this crisis, because I think it’s going to spread around Europe, it may, may bear smidgens of hope regarding the possibility of a pan-European reaction to the idiotic position that all you need to get out of a crisis is the stability of the currency and the elimiation of the deficits. The Herbert Hoover syndrome, as I call it.

Henwood: But when this crisis broke out, a lot of people, and I must say, I found this tempting myself, thought of it as the beginning of the end of neo-liberalism. Do you see anything like that happening in the coming years.

Varoufakis: I’m afraid not, and you can see that happening in your own country is that now we have bailout money used support candidates and lobbyists arguing against regulation. So the crisis by itself creates a window of opportunity. I do not believe it guarantees progressive change. Do you?

Henwood: No, certainly not, that’s not the way it’s turned out, but maybe we’re just in the early phases of all this.

Varoufakis: Yes. It’s a bleak time.

Bleak indeed.

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March 2010