I’m just going to highlight a few extraordinary passages in this Der Spiegel report on the machinations in European political economy as usury, dependency and imposition threaten to combine and apply the ruin of the Continent.
One of the items on the agenda was the possibility of Greece withdrawing from the monetary union.
Banks in many euro-zone countries could eventually find themselves dependent on the billions from Luxembourg, because they would have to write down their holdings of Greek government bonds. Greek banks would suffer the most from the consequences of a national bankruptcy. For this reason, German officials argue, it is quite conceivable that Greek banks could still receive aid even after the Greek government itself had been cut off from EFSF assistance.
Contrary to earlier assumptions, restrictions on the movement of capital, which could be used to prevent Greek citizens from moving their money abroad (something that would endanger the country’s banks), are now seen as being compatible with EU law. Article 143 of the Treaty on the Functioning of the European Union offers a loophole, in that it permits certain countries to “take protective measures.”
But there are also companies on the list that will struggle to attract buyers at the moment, like the Greek national railroad, which has been losing billions for years, and the Hellenic Postbank. In addition, the powerful labor representatives in many state-owned businesses will deter potential investors. Union organizers at the electricity monopolist DEI are seen as especially radical. They have already threatened to cut off electricity if the company is privatized. The unions are fighting for their perks. Greece's state-owned companies are a benefits paradise. In some cases, bonuses are even paid to employees for washing their hands. The roughly 20,000 employees of DEI earn twice as much as a high-school teacher on average.
Greek citizens and companies owe the state a total of almost €40 billion in taxes. The sum would more than cover the government's budget deficit for 2011. But many government agencies are seen as inefficient and corrupt. Now that their salaries have been cut by 20 percent or more in the course of several rounds of austerity measures, the Greek tax authorities often perform the bare minimum of their duties, and sometimes even less. Some 17 tax offices did not perform a single audit in the first seven months of the year. In Corinth, a city near Athens, the local tax authority collected only €18,000 in value-added tax within six months, even though the region is home to one of Europe's largest casinos and a number of companies are headquartered there.
The Spaniards have already put up two of their airports for sale and enshrined a balanced-budget provision, also known as a “debt brake,” in their constitution. The new law limits new government borrowing to 0.4 percent of GDP, but not until 2020.
Really, that is one stiff drink indeed. Straight Makers or something. In assaying its more general meaning, I am again struck by the instinct to mistrust those would, as Burke put it, consult their invention and reject their experience.
Find me the man who, three or four years ago, predicted that normal European papers would be complacently reporting on the break-up of the Eurozone, conceding that banks matter more than countries, that public sector unions tend to be pernicious to the public prosperity, that Spain is so stricken as to be open to austerity programs of startling directness, etc.
You will not find such a man, I submit. He cannot exist. Events are in the saddle and ride even the wisest of prognosticators. (Keep in mind that being wrong is the very farthest thing from a detriment to a career in prognostication.) We’re still in uncharted waters and the old certainties are crumbling in the teeth of brute reality.