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Austerity Has Failed. An Open Letter to A. Merkel by Thomas Piketty, Jeffrey Sachs, Heiner Flassbeck, Dani Rodrik, Simon Wren-Lewis AnalyzeGreece!, July 7 <http://www.analyzegreece.gr/topics/greece-europe/item/276-th-piketty-j-sachs-h-flassbeck-d-rodrik-s-wren-lewis-austerity-has-failed-an-open-letter-to-a-merkel> *Five leading economists warn the German chancellor: “History will remember you for your actions this week* The never-ending austerity that Europe is force-feeding the Greek people is simply not working. Now Greece has loudly said no more. As most of the world knew it would, the financial demands made by Europe have crushed the Greek economy, led to mass unemployment, a collapse of the banking system, made the external debt crisis far worse, with the debt problem escalating to an unpayable 175 percent of GDP. The economy now lies broken with tax receipts nose-diving, output and employment depressed, and businesses starved of capital. The humanitarian impact has been colossal—40 percent of children now live in poverty, infant mortality is sky-rocketing and youth unemployment is close to 50 percent. Corruption, tax evasion and bad accounting by previous Greek governments helped create the debt problem. The Greeks have complied with much of German Chancellor Angela Merkel’s call for austerity—cut salaries, cut government spending, slashed pensions, privatized and deregulated, and raised taxes. But in recent years the series of so-called adjustment programs inflicted on the likes of Greece has served only to make a Great Depression the likes of which have been unseen in Europe since 1929-1933. The medicine prescribed by the German Finance Ministry and Brussels has bled the patient, not cured the disease. Together we urge Chancellor Merkel and the Troika to consider a course correction, to avoid further disaster and enable Greece to remain in the eurozone. Right now, the Greek government is being asked to put a gun to its head and pull the trigger. Sadly, the bullet will not only kill off Greece’s future in Europe. The collateral damage will kill the Eurozone as a beacon of hope, democracy and prosperity, and could lead to far-reaching economic consequences across the world. In the 1950s, Europe was founded on the forgiveness of past debts, notably Germany’s, which generated a massive contribution to post-war economic growth and peace. Today we need to restructure and reduce Greek debt, give the economy breathing room to recover, and allow Greece to pay off a reduced burden of debt over a long period of time. Now is the time for a humane rethink of the punitive and failed program of austerity of recent years and to agree to a major reduction of Greece’s debts in conjunction with much needed reforms in Greece. To Chancellor Merkel our message is clear; we urge you to take this vital action of leadership for Greece and Germany, and also for the world. History will remember you for your actions this week. We expect and count on you to provide the bold and generous steps towards Greece that will serve Europe for generations to come. Sincerely, Heiner Flassbeck, former State Secretary in the German Federal Ministry of Finance Thomas Piketty, Professor of Economics at the Paris School of Economics Jeffrey D. Sachs, Professor of Sustainable Development, Professor of Health Policy and Management, and Director of the Earth Institute at Columbia University Dani Rodrik, Ford Foundation Professor of International Political Economy, Harvard Kennedy School Simon Wren-Lewis, Professor of Economic Policy, Blavatnik School of Government, University of Oxford Greece Exposes The Flaws Of A Wrong Europe by Mehmet Ugur and Ozlem Onaran Social Europe, July 7 <http://www.socialeurope.eu/2015/07/greece-exposes-flaws-wrong-europe> The Greek people, their newly-elected government and many Europeans and non-Europeans with a sense of justice, history and solidarity, have been shouting loud: the “Greek problem” is a consequence of neo-liberal economic and financial policies that have become increasingly dysfunctional and dangerous. The problem has been made worse by the ascendance of sheer inter-governmentalism in Europe. Both neo-liberalism and inter-governmentalism are the results of collusion between economic, financial and political elites in Europe, aided by economists, political scientists, lawyers, analysts and journalists with a conservative outlook. The symbiotic relationship between these two has been feeding on the spoils of increasingly unequal wealth accumulation. Their narrative about “Greeks living beyond their means” is nothing but an unashamed distortion of facts about both the present and the past. The distortion of current facts takes the form of preaching to the Greek people on how they should show penance despite the facts on the ground. The origin of Greek debt, like subprime lending in the US and, given the general dysfunctionality of the financial system as laid bare by the Great Recession, is a result of reckless lending by private banks. Accommodating economic policies and perverse financial regulations have facilitated this – just as much as the symbiotic relations between the European arms industry and corrupt politicians in Greece, and tax evaders in Greece and tax havens in Luxembourg and elsewhere in Europe. . . . Özlem Onaran is a member of the Debt Truth Committee in Greece and Professor of Workforce and Economic Development Policy at the University of Greenwich. Mehmet Ugur is Professor of Economics and Institutions at the Department of International Business and Economics of the University of Greenwich. In Bad Faith by Ashoka Mody openDemocracy, July 7 <https://opendemocracy.net/can-europe-make-it/ashoka-mody/in-bad-faith> . . . We may not like the conclusion, but it is quite simple. Greece has not grown and prices have fallen because that was to be expected when persistent austerity is laid on top of an unsustainable debt. The debt-deflation spiral always outpaces the returns from structural reforms. As certainly as these things can be predicted, on the path set out by the creditors, the stakes will continue to be escalated: the debt-to-GDP ratio will continue to rise, the calls for more austerity will grow, and, as the pattern repeats, more debt relief will be needed. So we arrive at the present. The IMF looks back at its diagnosis in November 2012 and says, the Greeks did not follow our advice; it is no surprise that they are in a mess and they need more debt relief. The truth is that the Greeks are in a mess precisely because they followed the IMF’s austerity advice and because the promised elixir of structural reforms was illusory. And the double indignity is that the IMF now wants the Greeks to do more austerity in the midst of a debt-deflation cycle because it chooses to misread the evidence of the past years. If that advice is, in fact, followed, it is nearly certain that the Greek debt burden will be greater in two years than it is now. We may cast a moral and political spin on these facts. Indeed, it is understandable that political considerations will play a central role in the European dialogue. But the economic logic is relentless. And the IMF’s role—its only role—is to render the economic logic transparent for informed decision making. In disregard of generations of fine IMF economists and research, the IMF has engaged in its own moral posturing to retrieve its money and hide its failures. To be clear, the argument is not that more debt relief be promised in exchange for more austerity now. The argument is that debt relief is needed now—more than the IMF suggests—to prevent the need for even more debt relief later. It is as much in the creditors’ interest to change course as it is in the Greek interest. Once that premise is accepted, then within that basic framework there is much that the Greeks can do to improve their lot. But such is the momentum, the politics will almost surely subordinate the economic logic. That would be a mistake. At what is surely a pivotal moment in European and global history, at least the facts must be laid out transparently. _ _ _ _ _ _ _ _ _ Ashoka Mody is Charles and Marie Robertson Visiting Professor in International Economic Policy at the Woodrow Wilson School, Princeton University. Previously, he was Deputy Director in the International Monetary Fund’s Research and European Departments. He was responsible for the IMF’s Article IV consultations with Germany, Ireland, Switzerland, and Hungary, and also for the design of Ireland's financial rescue program. Earlier, at the World Bank, his management positions included those in Project Finance and Guarantees and in the Prospects Group, where he coordinated and was principal author of the Global Development Finance Report of 2001. He has advised governments worldwide on developmental and financial projects and policies, while writing extensively for policy and scholarly audiences. Open Letter to anti-Greek Eastern European bloc by Zoltan Pogatsa AnalyzeGreece!, July 8 <http://www.analyzegreece.gr/topics/greece-europe/item/277-zoltan-pogatsaq-open-letter-to-anti-greek-eastern-european-bloc Dr.Zoltan Pogatsa believes that the Eurozone states of the former Eastern bloc have been duped by the major powers into firmly opposing Greece. They are being led to believe that Athens is damaging to their economies. It's all a deception, the Hungarian professional of political economy argues, as Eastern Eurozone members money never actually went to Greece, but to Brussels, in order to support the euro. _________________________________________________________ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
