You probably heard that the pro-EU party won in the Greek elections yesterday. Matt Yglesias (I have to admit, he’s doing a good job in his new role at Slate) and Krugman have a run-down of what this means and how Greece got there. Krugman on how Greece got there:
On the other hand, many things you hear about Greece just aren’t true. The Greeks aren’t lazy — on the contrary, they work longer hours than almost anyone else in Europe, and much longer hours than the Germans in particular. Nor does Greece have a runaway welfare state, as conservatives like to claim; social expenditure as a percentage of G.D.P., the standard measure of the size of the welfare state, is substantially lower in Greece than in, say, Sweden or Germany, countries that have so far weathered the European crisis pretty well.
[….]Greece joined the euro, and a terrible thing happened: people started believing that it was a safe place to invest. Foreign money poured into Greece, some but not all of it financing government deficits; the economy boomed; inflation rose; and Greece became increasingly uncompetitive. To be sure, the Greeks squandered much if not most of the money that came flooding in, but then so did everyone else who got caught up in the euro bubble.
[….]So Greece, although not without sin, is mainly in trouble thanks to the arrogance of European officials, mostly from richer countries, who convinced themselves that they could make a single currency work without a single government. And these same officials have made the situation even worse by insisting, in the teeth of the evidence, that all the currency’s troubles were caused by irresponsible behavior on the part of those Southern Europeans, and that everything would work out if only people were willing to suffer some more.
Yglesias on the meaninglessness of Greece in the European big picture:
Last but by no means least, Greece is basically irrelevant. This is a small, poorish country that has no broader significance in the economic world. If everything else was fine, you could solve—or not solve—the problems of Greece in a dozen different ways. The real issues are Spain and Italy, two much larger countries whose participation in the eurozone speaks to the core purpose of the European project. And while Greek-related worries don’t help Spain or Italy, the problems of Spain and Italy are also quite real and freestanding apart from anything happening in Greece. In Spain, the banking system is a total shambles and since the government can’t print money it can’t bankstop the banking system without bankrupting itself. In Italy, a large outstanding debt stock means that slow nominal gross domestic product growth risks bankrupting the government. In both cases the problems can’t really be solved domestically because the key levers are in the European Central Bank headquarters in Frankfurt, which has turned the whole thing into a complicated international negotiation.
I don’t know much about European politics, and probably I probably shouldn’t speculate here…but I wonder if the southern countries of Europe are the strapping young bucks of Europe — dark and lazy, of course — buying ouzo and tapas with their welfare checks.
Console
It’s a bit shocking at just how easily people are willing to build narratives out of ethnic stereotypes. I take that back… the building of the narrative is easy, it’s the widespread acceptance that really gets me.
cathyx
David Dayen doesn’t think the new government will last very long.
arguingwithsignposts
“greece is largely irrelevant.” yes, i want to hear economic@ analysis from yglesias because of that kind of trenchant statement right there. /snark
Metrosexual Black AbeJ
@arguingwithsignposts:
He’s right, Greece is irrelevant to the larger European picture, except insofar as it is a harbinger. The economy just isn’t that large.
Mino
I think it’s all part of that …hire one half the prols to kill the other half. Complexion is incidental. As we are re-discovering out here, too.
Mino
France, however continued her slide toward Socialism.
Villago Delenda Est
Once again, it’s moral posturing, not fact, that drives the narrative.
Those damn lazy sun drenched swarthy southern Europeans lack the proper Protestant work ethic! Yeah, that’s the ticket!
schrodinger's cat
@Metrosexual Black AbeJ: If Greece exits the Eurozone what would happen to the Euro, and more importantly the currency derivatives market which is much larger than the mortgage derivative market was.
Jennifer
I don’t know if they’re the exact equivalent of strapping young bucks, but they’ve been the poorest area of Europe for going on 500 years and there’s no doubt the northern Europeans have an attitude of superiority in re southern Europeans. There’s long been a belief among northerners that the southerners are lazy. The tradition of siesta proves it.
Linda Featheringill
@cathyx:
Link didn’t work for me. Try:
http://news.firedoglake.com/2012/06/18/greek-elections-fail-to-forestall-market-carnage-in-europe/
Tlazolteotl
Oh, I think that has quite a bit to do with it.
Amir Khalid
I have waited many a moon to see this post headline, and now I am content.
On topic, I think it’s not just that the prejudice is there; it’s also that the prejudice fits a narrative fashioned (consciously or not) to deflect blame away from where it should lie, with the centers of financial power in Northern Europe.
MattF
There’s a lot of bad blood between Greeks and Germans and the feelings are mutual. The Germans tend to repress it more since there’s a pretty broad recognition in Germany that they made some boo-boos during WWII. You won’t see the mutual dislike much when things are going swimmingly– however, things are not currently going swimmingly.
Culture of Truth
Close, but I don’t the Germans fear the southern / eastern Europeans the way whites fear black Americans, (broadly speaking of course) If anything, given recent history, it’s the other way around.
Hendrik
You don’t buy tapas, they’re free! And delicious.
Villago Delenda Est
@MattF:
Well, if gathering up dozens of civilians to be executed in retaliation for the death of a single German soldier is a “boo-boo”, then, yes, they made several. Thousand.
Culture of Truth
Anyway, as Tom Lehrer said, we taught the Germans a lesson in 1918, and they’ve hardly bothered us since then.
elmo
While I think you’re right about attitudes toward lazy swarthy Southrons, the real irony here is that in reality, Greece is a country of Galtian overlords: nobody pays taxes.
Betty Cracker
Now I’ve got that damn song stuck in my head.
Villago Delenda Est
BTW, Doug, I love the thread title. Frankie Valli for the win!
cathyx
@Linda Featheringill: Thanks Linda, that’ll do, but this was the article I was linking to:
http://news.firedoglake.com/2012/06/17/center-right-new-democracy-wins-in-greece-but-may-have-trouble-forming-government/
Mino
@elmo: Plus, from what I have read, the clergy is totally subsidized by the state, as well as being major property owners..
Yutsano
@Mino: The Orthodox church pays no taxes on their property as well as no income tax. And they are one of the largest property owners in Greece. Combine that with an economic model where families often employ relatives and pay wages under the table and it’s a tax base nightmare.
Mark S.
Greece is basically irrelevant. That’s why we’ve been talking about it for like 3 fucking years. Has there ever been a more perfect marriage than Matt Y and Slate?
Rob in CT
I remember when I was in Italy (1997), the Northern Italians looked down on the (relatively poor) Southern Italians as lazy and corrupt.
This would certainly help explain why the conservative narrative was so easy to sell: it appeals to existing prejudice. Everybody just knows the Greeks, Italians (well, the Southern ones anyway)and the Spainards are corrupt layabouts. Why, they’re probably taking a siesta right now!
Valdivia
Greece is the word it’s got groove it’s got meaning
Rocking title DougJ
The Other Chuck
Does the ECB try to create a representative system such as a rotating chair, or is it pretty much controlled by German politicians?
Though I’m not sure staffing it with bankster would-be overlords from any other country would work, since their first instinct is to defer to and serve the already rich and powerful, and that’s the status quo anyway.
Culture of Truth
And if Romney was a horse he’d be in the Olympics. So no, not irrelevant
artem1s
in the 80s when i studied in Europe this was pretty much the attitude, yes. most of the animosity was directed at that time to gast arbiters from Turkey and other swarthier regions but Greece was a huge target for their disdain even then. Greece and Italy was where Northern Europeans, especially Germans went for vacation. There hadn’t been much infrastructure building since WWII and it was pretty primitive in parts of the country outside of major cities and tourist sites.
in the late 90s and 00s the west German’s were singing the same tune about the newly absorbed eastern block countries. granted they footed the bill to get eastern germany back up to speed but they also made out like bandits investing in building up the infrastructure there and in large parts of the eastern block countries.
I’ve been waiting a while too for someone to get to this point about the dirty Southrons and Haradim. Italy is in much worse shape. I wonder if this hasn’t been discussed as much because most of their debt has been financed by France. Also if Italy paid to stay in the EU by getting rid of Berlusconi rather than going through austerity.
Culture of Truth
June 18 — German Chancellor Angela Merkel said today Greece must embrace austerity. Period.
Merkel told reporters in the Mexican resort of Los Cabos “there can be no loosening on the reform steps.”
Nein!!
Punchy
OT: cant link, but TPM has an article up on how Scalia likes precedent when it suits him, and disavows it when he needs to vote the other way. Has any Justice ever been any more brazen about how political his judgements are? This honesty about his dishonesty seems surreal.
Culture of Truth
Every Slate article: “Hey stupid, everything you think is wrong. Here’s why.”
Violet
Excellent title!
catclub
There is a wikipedia table of US state GDP in order, with a comparable nation as well. Greece gets Maryland – about $300B
the population of greece is about twice that of maryland, so gdp per capita is half.
If maryland had 21% unemployment and unsustainable debts, something would be done by the federal government to alleviate that. It would not be allowed to take down the rest of the US.
Ireland and Libya (pop 6.5M) are no great shakes either, yet we have talked a lot about them and their economies/ global impact.
liberal
@Yutsano:
AFAICT churches here often pay no property tax; IIRC it varies with locality and/or state.
That’s just crazy. I can see exempting religious institutions from taxes in general, but not property tax, at least not the component falling on land.
catclub
@Culture of Truth: Of course, if you still read them, then the time for ragging on Slate has passed.
I can honestly say I have very rarely read Sullivan, and McCardle only once. I probably have some different failing….
Enhanced Voting Techniques
@Jennifer:
I have also heard Northern Europeans accuse Southern Europeans of despising hard work and being gamblers or glory seekers. So no surprise Bonn is sniffing about they should just quit whining and get to work. In American terms Southern Europe is more like Mexicans than African Americans.
jonas
Krugman’s absolutely right that Greeks, as individuals, are certainly not lazy and the social welfare net there was never terribly robust. But their government and political system were f-ed up six ways from Sunday for a very long time.
What cheeses the Germans and the Dutch and the Danes, et al. off about the Greeks is not the siesta-loving, manyana attitude of southern European workers (they know that’s a silly stereotype), but that they’ve tolerated such dysfunctional politics for so long — the tax evasion, the graft, the corrupt patronage systems, etc. Now, to wit, the Greeks just put the New Democracy party back into power — a party that was largely responsible for digging the hole the Greeks are now trying to climb out of. It’s not quite the same as the image of the Cadillac-driving welfare queen, or steak-buying young bucks, but perhaps more like people’s impression of D.C.-ers reelecting Marion Barry.
liberal
@elmo:
Exactly. That’s the moral failing.
Mino
Hum, seems a lot of folks think the winners (the Goldman party) will be unable to form a government cause no one wants to touch them with a barge pole.
fuzz
On the topic of the title: when the Greeks won in soccer over the weekend the first thing the announcer says was “Greece is the word!”
Valdivia
I just think countries that give up total control of their monetary policy have very limited tools to solve these kind of crisis (Argentina’s peg to the Dollar preceded their crisis, see El Salvador after dollarizing their economy, etc). The Germans are totally blind to how their prescriptions are going to end up having the precisely inverse effects than what they are aiming for.
Metrosexual Black AbeJ
@Culture of Truth:
It’s amazing how often it’s that. Their fucking food column is called “You’re doing it wrong.”
But after seeing Yglesias at Netroots, I realized I should read his column there. I’m able to understand it quickly and he makes good points on monetary/fiscal policy type issues.
Mino
@liberal: That’s was a big boondoggle here in Texas. The Baptist Church leased the land to all the HEB grocery stores. Don’t know if that is still happening, but probably, yes.
Valdivia
This little segment of TAL about the EuroCrisis is pretty illuminating about the kind of Government disfunction that went hand in hand with the institutional problems at the European level to make things ever worse.
Console
@jonas:
Greece could fix it’s entire political system and it would still be in the same boat economically. Which is why the conversation doesn’t stop at Greece, and includes Italy, Spain, Ireland, and Portugal. France won’t be immune either if those big dominoes start falling.
At some point, the structural factors of the eurozone have to matter, regardless of how much disdain germans have for the greek political system.
Culture of Truth
@jonas: I think that’s right, but if I were Greek I would say to those frugal Germans, “We’re all a part of the same hypocrisy. My offer is this: nothing.”
Violet
@Culture of Truth:
(Bolding mine.) This pretty much illustrates what’s wrong with the whole system. Leaders of countries and other galtian overlord types fly off to resort towns from whence they tell proles that belt-tightening is gonna happen, no arguments. I assume after that they resume sipping their umbrella drinks by the pool.
Mino
It’s the swaps, I think. Greek’s debt is manageable. It’s the bets that make it weaponized.
jwb
@Mino: I never heard that HEB and the Baptist church had this sort of deal and a quick google was unhelpful. Do you have any links?
Hill Dweller
OT: Ann Romney says she and Willard probably won’t take as many vacations as the Obama family has during their time in office. Classy.
Setting aside the fact Obama has taken very few vacations relative to other presidents, can you imagine the reaction if Michelle Obama ad something similar about Laura Bush?
jwb
@Mino: Also look at who is holding the swaps.
Valdivia
@Hill Dweller:
I loathe loathe these people. They may have money but they totally lack class.
Culture of Truth
Yikes!
Italy has only a 50-50 chance to remain in the euro, said Edward Altman, a finance professor at NYU.
Culture of Truth
Mitt is on a permanent vacation from reality.
catclub
@jonas: “but that they’ve tolerated such dysfunctional politics for so long—the tax evasion, the graft, the corrupt patronage systems, etc”
Except the Germans overlooked all that when they were deciding to let Greece into the Eurozone. Again, the banker who is an expert on risk is not responsible when _THEY_ approve a bad loan. It is the wily dusky folks fooling the banks. Yeah, right.
Mino
@jwb: That was the set up back in the late 60’s-70’s. I’ll have to check with my SIL to see if that’s still going on.
And on another note, France is trying the alternative (per Reuters):
A resounding Socialist victory in weekend parliamentary elections will allow President Francois Holland to press ahead with reforms to tame France’s deficit and promote economic growth in Europe, a senior minister said on Monday.
The Socialists, who won a comfortable majority in Sunday’s parliamentary elections, will use a special session of parliament next month to axe tax breaks and increase taxes for large corporations, particularly banks and energy companies.
Hollande is also pushing for a big pan-European stimulus.
deep
Why can’t any of these pundits point out what seems obvious to me? The reason so many countries are in trouble is because the world’s richest don’t pay taxes! Anywhere!
Anoniminous
The importance of Greece to the Euro-zone economy is they are being used as a pass-through entity so the German and French governments can TARP their banks. (Against “the law,” btw.) If Greece defaults Deutsche Bank & etc. goes and THAT will in all likelihood trigger a cascade failure of the global FIRE sector.
The elections recapitulated the election of 40 days ago and, unless PASOK wants to commit suicide, will have the same result: no government and drift.
German and French banks will continue to divest themselves of Greek debt, the European Central Bank will continue to block Greece from purchasing their own debt on the open market, and the Greek economy will continue to contract under Austerian Economics.
SRW1
“So Greece, although not without sin, is mainly in trouble thanks to the arrogance of European officials, mostly from richer countries, who convinced themselves that they could make a single currency work without a single government.”
True, and a god damn f*cking indictment especially for German politicians. Because Germany itself is a federal state and has been a transfer union (“Länderfinanzausgleich”) already way before German unification, not to speak introduction of the Euro.
So, this can not have been a totally unknown issue to German politicians.
What I’d like to know is whether European leaders really were just simply naive or whether they thought this was going to cause a crisis that could be used to force more fiscal uniformity and things simply got out of hand.
Rafer Janders
@Hill Dweller:
Umm, do they have a job to take vacations from? It’s pretty easy to not take vacations if you don’t have a job you have to show up at every day in the first place.
I mean, at this point isn’t their entire life one long vacation….?
handsmile
Inconclusive as the Greek parliamentary elections were and may likely continue to be (the majority vote-winning New Democracy party must still cobble together a coalition government), there were also important elections in France and Egypt over the weekend.
Rather than court annoyance with a re-post here, i wrote a longish comment (#23) on the results (with an obligatory link to the Guardian) on mistermix’s earlier “Open Thread this morning.
Also, an update: with 99% of the votes tabulated in Egypt’s presidential election run-off, the candidate Mohammed Morsi of the Muslim Brotherhood has received a majority of 51.8%. Morsi has declared himself the victor, but official results have not been announced. Whether Egypt’s military, which last night essentially declared a coup though it’s being reported as a “power-grab,” will allow Morsi to assume office is very much uncertain. What is certain is that Egypt remains a tinderbox.
NancyDarling
I listened to a conversation between Bob Wright and Yanis Varoufakis, an economist at the University of Athens taped before the election, and it is clear to me that their bailout is not really a bailout, it is just taking money from one part of the EU, the Bailout Fund and transferring it to another part, the European Central Bank. Nothing is left to turn the economy around and fund things like health care and education. It kicks the can down the road and digs the hole deeper. Yanis says they should just refuse the next installment during the next negotiations. To quote him exactly, “We defaulted in March, and yet we still have an unsustainable debt….Our creditors in March lost 70-80%”.
Whatever the sins of the Greeks and their government, they are essentially being forced to rob Peter to pay Paul with nothing left over for rent and groceries, etc. And their debt just keeps growing with every installment.
I have no doubt that the Masters of the Universe in their plum corner offices at the Central Bank and the Bailout Fund offices take a hefty slice off the top of every transaction to compensate themselves for moving money around electronically.
Anoniminous
@SRW1:
Political power in Europe lies with the various national governments. The UK, in particular, has worked hard to keep EU institutions powerless. This is why Merkel, the Troika, and the effectively run-by-Germany European Central Bank is setting economic policy and responses to the crisis.
jonas
@catclub: I’m not sure that “well, you should have known better than to lend us money,” is really a helpful response. The whole point of the EU and the euro was that it was supposed to put everyone on an _equal_ footing in terms of trade, diplomacy and economic relations. From Greece’s perspective, the whole point was that they could be part of this entity and get the same respect in financial markets as the Germans or the Dutch. In retrospect, that was not wise, but that’s the EU for you. The EU parliament has 23 official languages and every memo or regulation it produces is published in all those languages.
handsmile
@Mino: (#57)
The French Socialist Party (PS) now has an absolute majority in both houses of parliament, the National Assembly and the Senate. As you noted, such legislative control will enable Hollande to achieve the financial and economic reforms he campaigned on in winning the French presidency.
It also bolsters his Eurozone authority as an anti-austerity counterweight to Angela Merkel. How effective that weight will be is far from clear, however.
Heliopause
I’ve been thinking for a while now that the Euro crisis is Germany’s big chance at payback for losing those wars. Seems to me that bonding the peripheral countries in debt peonage suits the Germans just fine. We’d like to think that Europe is one big Rick Steves wine-and-cheese party, but people have longer memories than that. This is a fiscal anschluss and it ain’t pretty.
I know Krugman has to be more temperate with his language than a mere blog commenter but sometimes I wish he’d be a little more bold about putting it in these terms, much as Martin Wolf did in this exchange with a German finance minister.
So there, my first comment of the day and it’s just dripping with godwin.
Commenting at Balloon Juice since 1937
The Greeks elected the Neo-Nazis hand chosen by the European elite. Its a double win for Germany.
Mino
@Anoniminous: Haven’t Geitner and Bernanke done their bit, under the radar, to rescue Deutsche Bank? Are they still propping it up?
Oort Cloud
@Culture of Truth: I guess Angela Merkel doesn’t do irony.
catclub
@jonas: “I’m not sure that “well, you should have known better than to lend us money,” is really a helpful response”
I agree. This is usually NOT a helpful response. But when the lender is saying “how could we have possibly known that you were unreliable” – given a history full of tax evasion, feeble governments, the whole tax free church thing, it is pretty relevant.
plus, they are bankers. It is their job to have known.
When I am a borrower, I am not actually the expert on risk and loan qualifications. The banker is.
ornery_curmudgeon
So Krugman is shilling for more centralized control by the financial sector … with no explanation of derivatives or what is really happening.
“Meanwhile, the same happens in Spain, where the government is forced to borrow money … to shore up banks that are borrowing from the ECB (at 1%) to lend to the Spanish government (at 7%) so that the latter can … bail them out. Not even the sickest of minds could make this up!” – Ambrose Evans-Pritchard, “Greek agony drags on as Asphyxiation Bloc wins”
IrishGirl
If we listen to MSM, then yes, the Greek people are being portrayed as lazy, greedy, welfare hogs. I wonder how much of this narrative by Fox, CNN, BBC, etc is part of their preparation for the use of this “excuse” in the U.S.? We’ve been hearing the cons preaching austerity but they have yet to convince the American people because we know that we’re not lazy, that we’re not sitting around living off of welfare (except for those mythical brown welfare queens, of course). With Greece, they are characterizing the whole nation as such and, from what I can see, getting away with it. Is Greece the prelude to the austerity marketing approach that cons will take here if Romney wins election or if Pres. Obama wins but Dems lose what little control they have in Congress?
Anoniminous
@Mino:
They have and is the big reason Obama keeps telling Merkel & Co. GMBH to get their shit together.
Amir Khalid
@Anoniminous:
I think of die Firma Merkel as more of an AG than a GmbH, myself.
mclaren
Yglesias is ignorant and incompetent. Greece matters because if they exit the EU, it puts huge pressure of Italian and Portugese voters to exit the EU as well.
fuckwit
Racism and prejudice in Europe is very long-standing– at least as old as American racism–, and it is all about the rich, industrialized, whiter, Protestant, Northern peoples looking down upon the savage, unwashed, uncouth, swarthy, Catholic/Orthodox/Muslim, poor, uneducated, rural/agricultural, peoples of southern Europe.
Ask a Milanese how he feels about Sicilians. Ask a Frenchman how he feels about Greeks (hell, ask a LePen follower there how he feels about Jews!). Ask a Romanian how he feels about Hungarians. Ask a German or Swiss or Austrian how he feels about– well, anyone who isn’t them. And, ask a Brit how he feels about… the people anywhere “on the Continent”. And we haven’t even discussed the Balkans.
Frank Zappa said “there is more hate per square mile in the European part of the world than there is anywhere in the USA”, and I think he may have gotten it right. The grudges and prejudices and stereotypes and resentments go back thousands of years.
It’s gotten better in recent years, as people have been so much better educated there (especially compared to here). And the Euro has helped establish more unity in Europe than it has ever seen, so I guess that’s a win for the Euro and the people of Europe. But still, it’s not just football rivalry there; there’s more to it.