This post is a bit tongue-in-cheek but meant to provoke discussion. Recently, especially Naked Capitalism.com has spent attention to the practical, IT issues of a Grexit. See e.g. here and here.
Here’s a thought: with the collapse of Nokia and the withdrawal of Microsoft from some of its remains in Finland and the resulting unemployment among highly skilled IT people in Finland, why not set up a Finnish-German IT task-force to engineer a controlled exit for Greece from the Eurozone ? We could include Estonia as well, so we have two countries with very advanced netbanking society and structure. This could also include reforms of tax collection (I am very happy with the Finnish tax system, as opposed to e.g. the Dutch tax system, from a user perspective that is.)
Furthermore, Estonia has experience with cybersecurity and Finland has F-Secure, which I think is a very solid company regarding virus protection and malware detection.
Just think of it: Greece could regain freedom in a hopefully non-destructive way and Finnish IT professionals get a very complicated multiyear project. Rather than Finland exiting the Eurozone, WE CAN FIXIT!
I am glad that Naked Capitalism has a take-down of the “New Deal”. During this week, also Eurointelligence already took down much of it, but that is a subscriber service so I can’t quote from that. But anyway, I am just amazed at those politicians, they truly seem to believe that something that would be leveraged by a factor 15 could actually be seen as safe.
At the moment I am just so frustrated about all of this. Why are these incompetent people in office (at the Commission but also in national governments)? Who benefits? Certainly not the ordinary citizen. I have always seen Europe as a very civilized and ‘ancient’ continent, which appreciates art, democracy and the better things in life – be it more leisure time or nature. But for quite a while now there have been too many politicians that willingly destroy all of this. I am not in favour of a return to a ‘nationalist’ Europe but neither does the perspective of growing fringe parties appeal to me (although many of the extreme left and right do have more sensible ideas than the big middle parties). But somehow we have to get rid of the current amorphous neoliberal centre parties. There should for starters be more debate on television, and on market squares, and in the lobbies of supermarkets….
I find this article by Yves Smith of Naked Capitalism very insightful, although as she writes, the core of this analysis goes back to at least Michael Kalecki. The final paragraph sums up the article quite well and refers to the problems ahead for e.g. Germany and China. The post also deals with the obsession of countries to want to have a trade surplus (Germany and Finland come to mind.)
[But] The mercantilist ideal of exporting one’s way to economic power isn’t as simple or risk free as it seems. And as we’ve discussed separately, no country in modern times has made a crisis-free transition from being export-driven to having a large domestic consumer base. Development economists, late to recognize this issue, now recommend a more balanced growth model that places less emphasis on exports and more on building internal markets. But the current export champions seem unwilling or unable to abandon their past successful formula, even when it’s not working as well for them as it once did.
…but probably they don’t. Just like the majority of Finnish politicians, they have a fantasy view of causes of the eurocrisis and don’t comprehend/allow any other interpretation. Many of the things Rose writes apply to Finland as well – although Finland doesn’t have a trade surplus anymore (we do know why). But the moralizing? Check. Export-obsession? Check. Weak domestic demand? Check. Infrastructure falling apart? Check. Local governments in financial trouble? Check. Similar view of the superiority of Finnish over foreign products? Check (true – in many fields Finland does have world-class products).
Read the whole thing. A summary could be: Germany is so obsessed with its surplus that it changes from a technology leader to a leader in cheap labour (aka working poor.) This will collapse at some point. But the section below shows the utter conservatism considering debts and debt responsibility. Ireland is Germany’s debtor’s prison! (sarcasm)
Following the crisis in 2008 of Ireland’s six domestic banks – these were private banks – German and French banks were dangerously exposed due to imprudent lending to these institutions. The Irish government was dragooned into accepting these private bank debts, probably saving the Germans and French financial institutes from a financial meltdown. It will be seen if the Irish will ever be able to repay these debts, an excessive burden, having increased the public debt by over threefold to 110 percent of GDP. Schäuble’s response to a query if making taxpayers stump up for the irresponsibility of the finance sector was simply: “If everyone sweeps in front of their own house then the whole neighbourhood will be clean”.
‘Death By A Thousand Cuts: The Silent Assassination Of European Democracy’
It is very good that this debate is now fully in the political arena, however revolting the ideas of Geert Wilders et al are. The EU indeed has a giant democratic deficit. This was long an academic debate, as long as the economy hummed along smoothly. Not anymore. So even if revolting, Wilders, Front National etc are providing an important service to democracy.
Data point one. One of my colleagues studied in Germany, has extensive, high level political and economic contacts there, and reads the press daily. He also describes his sang froid as “somewhere between that of a Chinese sage and a dead animal.”
Needless to say, he not prone to overstatement or overreaction and also has a propensity to makes Delphic remarks.
He said the Eurozone is over. In pretty much those words, a simple sentence, no caveats or conditionals. I nearly fell out of my chair. This apparently reflects the German recognition as a result of the Italian elections that they will not be able to surmount domestic opposition in Italy and potentially other periphery countries and would rather pull the plug than continue funding their trade partners. He said there was a fair bit of discussion of Germany leaving the Eurozone after the election. I quizzed him on how they thought they could do that, since the new DM would presumably trade at a big premium to the Euro. We discussed that the likely outcome would be further labor “reforms”. Maybe I am naive, but I don’t see how this would not undercut an critical German strength, that of the good, if also sometimes combative, relationship between German workers and management. My source finally said widespread recognition of the existential impasse at most a few months away.