Western hypocrisy

“European leaders and the West in general are criticising Greece for their failure to collect taxes. One of the points of our commission [Independent Commission for the Reform of International Corporate Taxation] is that the West has created a framework for global tax avoidance, but the US is opposing the creation of a UN framework and [even] discussions among all the countries to do something about it. Here you have advanced countries trying to undermine a global effort to stop tax avoidance. Can you have a better image of hypocrisy?”

Joseph Stiglitz, 13 July, 2015, Addis Ababa

Greece – a victim of finance curse?

Those who have studied development economics will be familiar with the term ‘resource curse’ – a paradox of plenty, when countries or regions with abundance of natural resources tend to have less economic growth and worse development outcomes.

The recent developments in Greece reminded me of another phenomenon – finance curse – which is a story about ‘country capture’ where an oversized financial sector comes to control the politics of a finance-dependent country and to dominate and hollow out its economy.

One particular quote seems to be so timely to mention here: “Beyond a certain point, financial development is bad for an economy. Instead of supplying the oxygen that the real economy needs for healthy growth, it sucks the air out of the system and starts to slowly suffocate it.”

You can read more about finance curse here.

Greece isnt Greece’s biggest problem

Syriza. To some it is a group of extremists which can pose a threat to the establishment. To others it is an anti-austerity social movement which fights for justice, human dignity and democracy. To Brussels and Europroject masters it is a nightmare and as an unexpected storm in the middle of the night. To investors it is a big seed of uncertainty making the euro to free-fall. But to all those, who have jumped on the ‘mass panic wave’ seeing Greece as a source of Europe-wide destabilization, I have picked 3 quotes by 3 internationally recognized economists who have perfectly described the new situation in Greece: Greece isnt Greece’s biggest problem and Syriza is anything bur radical.

Joseph Stiglitz in his interview with the CNBC told: “Greece made a few mistakes … but Europe made even bigger mistakes.” The medicine they gave was poisonous. It led the debt to grow up and the economy to go down.” He said “the real problem is Germany, which has benefited greatly under the euro. “Most economists are saying the best solution for Europe, if it’s going to break up, is for Germany to leave. The mark would raise, the German economy would be dampened.” He also thinks that if Greece decides to leave euro, it will be better and yes, Spain and Portuglar may follow, because they will see that there IS an alternative.

Jeffrey Sachs in the Guardian has written that: “Anybody who does the Greek debt arithmetic (and it sometimes seems that in Berlin nobody actually does) knows that it cannot repay its external debts, now around 170% of GDP, without a level of pain that is simply beyond the tolerance of democratic societies. The leftwing party Syriza is no anomaly; it is telling the financial and political truth in the runup to Sunday’s elections, however unpleasant that may be to politicians in Berlin and Brussels. Some Germans today insist that a debt is a debt, and that Greece must repay in full. They should recall the relief that Germany was granted through the Marshall plan, and the 1953 London agreement on German debts. Did Germany “deserve” the relief in 1953? That was not the right question. Germany’s new democracy needed the relief, and Germany needed a fresh start. It played a major role in the economic recovery and construction of Germany’s democratic institutions.”

Paul Krugman in his post in the New York Times said: “The troika [IMF, ECB, EC], while pretending to be hardheaded and realistic, was peddling an economic fantasy. And the Greek people have been paying the price for those elite delusions. [..]

So now that Mr. Tsipras has won, and won big, European officials would be well advised to skip the lectures calling on him to act responsibly and to go along with their program. The fact is they have no credibility; the program they imposed on Greece never made sense. It had no chance of working.

If anything, the problem with Syriza’s plans may be that they’re not radical enough. Debt relief and an easing of austerity would reduce the economic pain, but it’s doubtful whether they are sufficient to produce a strong recovery. On the other hand, it’s not clear what more any Greek government can do unless it’s prepared to abandon the euro, and the Greek public isn’t ready for that.

Still, in calling for a major change, Mr. Tsipras is being far more realistic than officials who want the beatings to continue until morale improves. The rest of Europe should give him a chance to end his country’s nightmare.”

Debt crisis: if Greece could help Germany 60 years ago, why Germany cant help Greece today?

Did you know, that 60 years ago Germany was in big trouble because of its huge post-war debt due to reparation payments after the 1st world war and then reconstruction loans after the 2nd world war and several countries including Greece and Spain decided to cancel half of Germany’s debt? It was well understood that it is in all Europe’s interest to help Germany to revitalize its economy despite all the nasty things it did in 1930s and 1940s.

Now, when Spain and Greece is in trouble, Germany would need to make a similar gesture. But, will it?

I highly recommend to read this article.

about those who choose to fight

In these difficult times in countries, which are hit particularly hard by economic crisis, people choose different protest actions: some leave, some distance themselves from everything, some try to profit from this misery, but some choose to fight. This is a new documentary about those who have chosen to struggle and fight for better future in Greece. Inspiring actually. and thought-provoking..