Tag Archives: germany

Where does the legal right to a 5y GREXIT exist?

The proposal by the German finance minister, and agreed to by others, that Greece take a five year break from the Eurozone is astounding. Its not so astounding that a man who has been musing on this for years has now tabled it. Schauble has as far back as 2012 been wanting this. What is astounding is that he had the gall to table it at the Eurogroup. Given that the Eurogroup is self admittedly a body with no legal basis or structures, I suppose they can do whatever they want. But when it’s a group of finance ministers musing on something ultra vires we should be concerned. And what they are doing, or proposing to do, is exactly that. Continue reading

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When words collide – Why this is not the end of the Greek crisis

So, as most reasonable people hoped and expected, a compromise has emerged. Greece extends the bailout for four months, has a few days to suggest measures that will work to meet the broad targets therein, but the overall constraints on the primary surplus can, seemingly, be relaxed. So, a less austere bailout. Germany wins on forms of words – the Troika (now unnamed but there) remains, the bailout remains, but the words that are used suggest a lower degree of austerity. Peston sees the Greeks getting the best of it as does Frances Coppola, Bloomberg the Germans, Frances Coppola noting that this gives Syriza a chance to show that it and Greece via it can be trusted to behave like a modern half decently managed country. I think she misses the point in making this point. Greece has an appalling record, but the ordolemmingism that Germany has pushed onto everyone as The One True Way to Prosperity also represents a breach of trust, that states can find their own way within bounds of sense.

Nonetheless, I dont see this as the end. Here, in a picture, is why. Its about words. Humpty Dumpty stated ‘When I use a word, it means just what I choose it to mean — neither more nor less.’. Are Greece and Germany reading the same words while being on the same page? I am not sure.

the_lewis_model_712

Germand and Greeks use words and impart meaning to language in very very different ways. The diagram is from Richard Lewis, and is a model of national cultures to complement the well known World Value Survey, GLOBE, Schwartz and Hofstede models. Crucially, it concentrates on language. Cultures are arrayed around three main poles.  These are as below  Germans are Linear-Active. They place great store on the written word, and are planners. Greeks, not so much. The spoken word, in other words, interpretations of what the written word might mean, that is what matters.

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Ordolemmingism the new European way.

As I write, on Thursday afternoon, disarray reigns in the Eurozone… again. Astonishingly, it seems that this time it is semantics, whether to call what the Greeks are willing to accept a bridging loan or an extension of the bailout, that has caused the breach. And the fault lies squarely and firmly with the Germans. Again.
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Lessons for 2015 from 1919…

In 1919 Lord Keynes penned a wonderful tome, The Economic Consequences of the Peace. It is a profound work, written by him to express his concern, as an economist, with the punitive and inflexible approach being taken to German debt. It contains nary an equation but is one of the best pieces of economic analysis you will find anywhere. It would be well worth a read by the politicians of Europe.

You cant expect Greece to immiserate itself forever

Germany should realise that a settlement that is generous to Greece will hurt in the shortterm but reap benefits longterm

Debt reduction is the best way forward, then and now…

Handily enough, now as then much of the debt is owed “internally” in a bloc of so called allies…

Just set the payments in such a way as to make it in everybodys interest that Greece trades and prospers

Irving Fisher in 1922 got it spot on…

This government in Greece is soft-medium left. The Nazis await in the wings. Deal with Syriza or reap dragons teeth…