austerity will set you free

A Pinata Party. Picking over the carcass. Reena Virk. A girl, fourteen, caught in a deep plunge of self-esteem. She just wanted to be part of the gang. The cool club. But she became a victim of adolescent ritual. Virk is like Greece. A people slightly foreign to mainstream northern Europe, its people a little darker and swarthier, more Mediterranean. Ostensibly, Virk lived in an idyllic sector just outside Victoria, British Columbia, an ideal middle-class neighborhood. It began when she was lured to the park. Greece was lured to the park. Offered cheap credit, a kind of subsidy to consume European goods, running a deficit funded by the North.The alpha female states.  For Virk, it began when someone stubbed out a cigarette on her forehead, which began a sequence of beating and torture than finished the following dawn with her death. When she was found a week later submerged under water, all that was left was a few scraps of underwear. Greece is also being beaten and tortured. Not part of the gang. Used. Its expendable.

Mark Blyth:It is more than ironic that those two foundational Western civilizations — the Greeks and the Romans — who were among the very first to experiment with democracy, now have to let unelected Eurocrats run their economic affairs. There is even a whiff of the 1930s here, too, as weak democrats are pushed aside in favor of strong leaders at the behest of international creditors. As Hobsbawm noted, this did not end well last time. Read More:http://www.foreignaffairs.com/articles/136685/matthias-matthijs-and-mark-blyth/why-only-germany-can-fix-the-euro

Its about insurance premiums and credit default risk. The same scenario that triggered the crisis of 2008, the same modus-operandi exercised on hapless Greece in face of the Wall Street bullies with the banks burning the Greek body, beating up on their thinly traded Greek bonds. Like the Manson Family, its a ritual killing with the margin money going to the hedge funds- commissions, premiums, paper profits- with the result of pushing out spreads and calling in margin, as in the case of AIG. Of course, once the bailout is finalized, the money flow will be reversed and in the meantime Greeks are roasting on a lamb spit. Does this have anything to do with Greece? No. Its like Germany got them hooked on dope with free drugs and now want cold turkey. Its just another Wall Street game of a kosher style/Masonic draining of the blood and tossing the cadaver to the wolves.

Its extremely perverse. This financial sodomization. The buyers of the security have no interest in the underlying risk being covered. Pyromania, anarchy, scorched earth, even holocaust is all profitable. The Wasteland even though the crisis itself is manageable and not discounting Greek incompetence and absence of innocence and even  complicity in some quarters for their own demise.

Blyth:This complex of causes does however have a common root: Germany’s failure to act as a responsible hegemon in Europe. It is not that Germany should be unseating democracies and enforcing deflation, as it has attempted to do by installing Papademos in Greece and Monti in Italy. Rather, it should be stabilizing the eurozone by providing a set of public goods that the institutions and policies of the region have singularly failed to supply. To solve the European crisis and avoid repeating the mistakes of the late 1920s and the 1930s, those sitting in Berlin and Brussels should put down their Andrew Mellon and read Charles Kindleberger….

But who gave the cigarette that started the murder of Reena Virk? Did the perpetrators punishment fit the crime? Who is the next victim, the next Reena Virk/Greece that just doesn’t quite fit in, because they are not quite white enough and cool enough? Greece and Italy have been humiliated by having a non-democratic technocratic leadership imposed on them, the realization of Veblen economics and its science of invidious comparison. Metaphorically, why this desire to turn Greeks into lampshades and soap? Hopefully, the heroic Greek resistance to the Nazis in WWII will be recalled. Where do we go from here? ….

…In The World in Depression: 1929-1939, Kindleberger argued that “the 1929 depression was so wide, so deep, and so long because the international economic system was rendered unstable by British inability and U.S. unwillingness to assume responsibility for stabilizing it.” Indeed, Kindleberger’s critique of the United States’ role in that era’s crisis summitry might

l have been written about Germany today: “The World Economic conference of 1933 did not lack ideas … [but] the one country capable of leadership was bemused by domestic concerns and stood aside.” Read More:http://www.foreignaffairs.com/articles/136685/matthias-matthijs-and-mark-blyth/why-only-germany-can-fix-the-euro

ADDENDUM:

Blyth:First, rather than providing peripheral countries with a market for their distress goods, the Germans have been enthusiastically selling their manufactured goods to the periphery. According to Eurostat, Germany’s trade surplus with the rest of the EU grew from 46.4 billion euro in 2000 to 126.5 billion in 2007. The evolution of Germany’s bilateral trade surpluses with the Mediterranean countries is especially revealing. Between 2000 and 2007, Greece’s annual trade deficit with Germany grew from 3 billion euro to 5.5 billion, Italy’s doubled, from 9.6 billion to 19.6 billion, Spain’s almost tripled, from 11 billion to 27.2 billion, and Portugal’s quadrupled, from 1 billion to 4.2 billion. Between 2001 and 2009, moreover, Germany saw its final total consumption fall from 78.5 percent of GDP to 74.5 percent. Its gross savings rate increased from less than 19 percent of GDP to almost 26 percent over the same period. Read More:http://www.foreignaffairs.com/articles/136685/matthias-matthijs-and-mark-blyth/why-only-germany-can-fix-the-euro

…By ignoring long-established ideas such as the Keynesian “paradox of thrift” or the “fallacy of composition,” Germany is advocating a serious dose of austerity in the European periphery without even a hint of offsetting those negative economic effects with stimulus or inflationary policies at home. German growth, after all, was partially fueled by demand in Southern Europe (made possible by excess German savings). By the iron logic of the balance of payments, one country’s exports are another country’s imports and one country’s capital inflows are another’s capital outflows. So, the eurozone as a whole cannot become more like Germany. … ( ibid.)

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Rickards:Your neighbour cannot buy insurance on your house because they have no insurable interest in it. Such insurance is considered unhealthy because it would cause the neighbour to want your house to burn down – and maybe even light the match.

When the CDS market started in the 1990s the whiz-kid inventors neglected the concept of insurable interest. Anyone could bet on anything, creating a perverse wish for the failure of companies and countries by those holding side bets but having no interest in the underlying bonds or enterprises. We have given Wall Street huge incentives to burn down your house. Read More:http://www.ft.com/cms/s/0/e7168fc6-1740-11df-94f6-00144feab49a.html#axzz1mS6Rv65O

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Feminists have long argued that violence is about power and dominance. Understood in this way, male violence against women is now viewed as a direct outcome of the unequal power and dominance that males exercise in contemporary society. In the Reena Virk case, these same notions of power and dominance were rendered invisible. Instead, any reference to unequal power relations was subsumed within a frame of “the girl who tried desperately to fit in” but could not.

Reena Virk could not “fit in” because she had nothing to fit in to. She was brown in a predominantly white society. She was supposedly overweight in a society which values slimness to the point of anorexia, and she was different in a society which values “sameness” and uniformity. And she was killed by those who considered her difference an affront to their sense of uniformity. Their power and dominance, legitimized by and rooted in the sexism and racism of the dominant white culture and its attendant sense of superiority, was used to force her into submission – a submission that amounted to her death and erasure from society.

In the public presentation of the murder, Reena suffered yet another erasure. While the daily papers plastered her picture on the front and back pages, no mention save one noted that Reena Virk died because of racism. Instead, the stories repeatedly stressed her lack of fit, and her overweight appearance. The implicit message was that had she been white and had she been thin, she would have fit in, and there would have been no reason for her to be killed. Read More:http://www.harbour.sfu.ca/freda/articles/virk.htm