The blimp... Cpt. Beefheart: genius

Don Van Vliet January 15, 1941 – December 17, 2010


The blimp

Master master
This is recorded thru uh flies ear
'n you have t' have uh flies eye t' see it
It's the thing that's gonna make Captain Beefheart
And his magic band fat
Frank it's the big hit
It's the blimp
It's the blimp Frank
It's the blimp

When I see you floatin' down the gutter
I'll give you uh bottle uh wine
Put me on the white hook
Back in the fat rack
Shad rack ee shack
The sumptin' hoop the sumptin' hoop
The blimp the blimp
The drazy hoops the drazy hoops
They're camp they're camp
Tits tits the blimp the blimp
The mother ship the mother ship
The brothers hid under their hood
From the blimp the blimp
Children stop yer nursin' unless yer renderin' fun
The mother ship the mother ship
The mother ship's the one
The blimp the blimp
The tapes uh trip it's uh trailin' tail
It's traipse'n along behind the blimp the blimp
The nose has uh crimp
The nose is the blimp the blimp
It blows the air the snoot isn't fair
Look up in the sky there's uh dirigible there
The drazy hoops whir
You can see them just as they were
All the people stir
'n the girls knees trembles
'n run 'n wave their hands
'n run their hands over the blimp the blimp
Daughter don't yuh dare
Oh momma who cares
It's the blimp it's the blimp.

Plus something more "conventional":

Electricity:

The Greek Economy on a Crucifix: IMF lies and misrepresents yet again

This much I have learned from watching the output of various IMF mouthpieces on Greece these past months: Even high level spokespersons lie, are ignorant of and misrepresent the facts, even easily available facts, ideoleptically making the case for the disaster they are imposing not on actual shortcomings or economic problems but, rather, on what the IMF would expect these measures to be in order to implement its (highly ideological and scantily backed by any sort of empirical evidence anyway) shock therapy on the country. This is a "therapy" that was imposed at the behest of the ECB and the Central Wankers in the process (and I'm not sure yet if it was a conscious decision or just massive ineptitude) of creating a Peripheral "Latin" Europe: the EU as a relatively wealthy (but more unequal) core, surrounded by pauperized banana cheap-service republics destroyed by policies that can only be described as "a Versailles treaty without the war".
The other thing that I've learned from our IMF experience, is that the docility of Greek Media Magnates / Public Contractors and their petty little shops towards our new Overlords and our post-quisling government that is assisting them in the most slavish manner, knows no bounds. Only the dissident media actually take the trouble of pointing out these sorts of inconsistencies. But this is a different issue, for a different post... Let us return to the IMF's latest communique...

I will eschew commenting on all of the BS that Thomsen spouts in his latest interview on IMF Survey magazine. I will specifically focus on one of his statements that is so obviously and transparently bogus (and repeated in every IMF communication), that in an ideal world it would automatically disqualify him and the organization he represents from managing having anything to do with the Greek economy:

IMF Survey online: Why is legislation to allow firm-level wage agreements so important? Will this lead to massive wage cuts?
Thomsen: The way the Greek labor market was operating contributed to a disproportionate increase in wages over the last decade and a loss of competitiveness. So wages need to be brought more in line with productivity. Over the medium term, wage developments in Greece will be governed by productivity improvements. A more open and dynamic labor market will offer more and better employment opportunities as the business environment improves, investment increases, and the economy expands.

False premises

The IMF, an organization that has been promoting such sociopathic policies around the world for a third of a century now at least, have indeed forced pretty much a complete dismantling of the collective bargaining system in Greece, in order to make it much more like those of the third world countries that were, until recently, their main victims. This is a deregulation so drastic that, in the real world, it is expected to diminish wages in the private sector by 20% - nominal wages that is, in a country which has been running up a 6% inflation rate this year on top of chronic high prices, and thus combines Swiss prices with Portugese (going on Bulgarian) wages. On top of this, in a previous obscenity the IMF/ECB demanded that lay-off compensation be drastically reduced. On top of all of this, Greek unemployment is at 12,4% this month – the highest in decades, but in reality what people actually call un- or under- employed are close to 20 to 25%.
Already we have seen unilateral action by employers who have no or few profitability problems, reducing their workers salaries by arbitrary amounts. And these “firm-level” wage agreements that the IMF and the WB has had two decades worth of experience imposing on Latin American countries, have been a failure everywhere, as has been this idea that labor flexibility will bring more and better employment. In 2001 the Multinational Monitor noted that:

The theory behind labor flexibility is that, if labor is treated as a commodity like any other, with companies able to hire and fire workers just as they might a piece of machinery, then markets will function efficiently. Efficient functioning markets will then facilitate economic growth.
Critics say the theory does not hold up. Former World Bank chief economist Joseph Stiglitz described the problem to Multinational Monitor: “As part of the doctrine of liberalization, the Washington Consensus said, ‘make labor markets more flexible.’ That greater flexibility was supposed to lead to lower unemployment. A side effect that people didn’t want to talk about was that it would lead to lower wages. But the lower wages would generate more investment, more demand for labor. So there would be two beneficial effects: the unemployment rate would go down and job creation would go up because wages were lower.”
“The evidence in Latin America is not supportive of those conclusions,” Stiglitz told Multinational Monitor. “Wage flexibility has not been associated with lower unemployment. Nor has there been more job creation in general.” Where “labor market flexibility was designed to move people from low productivity jobs to high productivity jobs,” according to Stiglitz, “too often it moved people from low productivity jobs to unemployment, which is even lower productivity.”

Meanwhile in 2004 Eckhard Hein & Thorsten Schulten noted in “Unemployment, wages and collective bargaining in the European Union”:

Analysing the developments in the EU during the last four decades, no strictly inverse relationship between real wage growth and unemployment can be found. On the contrary, persistently high unemployment has had strong adverse effects on nominal wage growth and on the labour income share. Weakened labour union bargaining power and changing collective bargaining strategies have contributed to this result. It is therefore concluded that the current EU economic and employment policies aiming at further wage restraint, wage differentiation and decentralisation of collective bargaining are deeply misguided and have to be replaced by an alternative wage policy in Europe as part of a growth and employment oriented coordination of macro-economic policies

I should add that Greece already had a very flexible job market: between unreported and semi-reported labor, pseudo-apprenticeships and "illegal" immigrant labor, as well as the high proportion of the self-employed in Greece, well over 80% of the workforce had no employee payroll taxes, no job security, no benefits - nothing. Greece's was probably the most flexible job market in the EU, unofficially "liberalized" up till now. And this did not have much of a beneficial effect on anything...

A disproportionate increase in wages?

The first lie is included in the first line of text: the "disproportionate increase in wages over the last decade" is patent nonsense, Greek wages were very much in line with productivity and in purchasing power terms were pretty much stagnant for most of the past decade. I have discussed this in previous posts so I'll just copy & paste here the relevant parts:

@Eurotrib:...Debunking IMF propaganda

It is far from obvious how the IMF measures competitiveness, the FAQ section is not referenced at all, and it's not clear how this quantification arises or what does it mean. Erik Jones, writing in Euro Intelligence, was already debunking part of the competitiveness mythology, as pertains to labor costs, in March:

...What matters in terms of a head-to-head competition is how Greece and Germany compare in the cost of labor per unit of output and not the real compensation of employees.  Moreover, we should look at their performance across the European marketplace as a whole.  By that measure, if we set the year 2000 equal to 100, then by 2009 Greece was at 98 while Germany was at 95.  Germany is still doing better than Greece, but only by a little and both have improved against the rest of Europe.

...Using national accounts data for relative real unit labor costs in manufacturing, Greece goes from 100 in the year 2000 to 87 in 2008.  Over the same period, Germany goes from 100 to 90.  It is hard to see how Germany comes off better in the comparison.

...Even if Greece is not suffering in terms of manufacturing, the high real incomes that Greek employers are doling out must surely be hitting the bottom line in the service sector, shouldn't they?  Again, that's hard to see in the data. Total compensation per employee was 53.8 percent in Greece and 57 per cent in Germany...

Furthermore the "since Euro adoption" part is misleading. Greek productivity was surging until 2007, after that year, influenced of course by the global crisis, and affected by real fiscal imbalances (about which more later) productivity (and competitiveness, however defined) fell faster than the Dow Jones average after a computer glitch, but that was surely not a uniquely Greek phenomenon.
In fact Greece was receiving praise by the IMF itself for its improved competitiveness, singled out as the most successful economy in Southern Europe.



Source: IMF

While in a recent post here a few days ago I mentioned:

Let's kill the meme that somehow in Greece workers were benefiting from unreasonable pay-hikes this past decade:
Here we are: real wages have been growing faster than productivity perhaps between 2007-2009 in Greece. Before they were not:

Based on real wage increases during 2007 (3.9%), pay increases in Greece were the highest of the countries of the EU15. Prior to the 2007 increase, there had been four years during which the average annual increase in Greece was around 3%. These big increases, by international standards, in the average real wage in Greece were fully offset by increases in labour productivity, leaving unit labour costs stable in real terms at 2000 levels.

In the private sector during the 2000-2007 period, there was a cumulative decrease of 1.2% in real unit labour costs. Average real wages increased more slowly than average labour productivity, which left companies with leeway to benefit from higher labour productivity. The effect of this development was that at the end of 2007 real wages in the private sector had increased by 27% over the 2000-2007 period, while productivity increased by 36.5%. Thus, there was a benefit to companies of around 7% in unit labour costs in real terms.

For the year 2007, Greece was in second to last place as regards the level of gross wages in € (net wages plus employee contributions). In Greece, average monthly earnings in 2006 amounted to €1,668 for full-time employees, compared to an average of €2,366 in the other countries of the EU15...

... Whereas monthly labour costs in Greece were 83% of the comparable mean costs in the EU15 (in purchasing power parities), labour productivity in Greece stood at 91% of the European average.

In recent years unit labour cost in Greece has become the lowest in the EU15. This development relates to the fact that in Greece labour productivity increased substantially in 1996-2004 and increased in the range of 1.7%-2.7% a year during the four years from 2005 to 2008.

To make things even clearer, here's a chart that shows the profit per employee in the EU market economy in 2005
[source EU KLEMS, shown here]:

The 2006 numbers for Greece are even higher (~44k, >51k in the banking sector) and these sorts of numbers were typical for the past decade up to the crisis.

Greek wages in the private sector were underperforming compared to profits during the same period. The loss of competitiveness has an insignificant labor cost component, a huge inflation component and a large profit component. Yet wage earners are asked to accept massive cuts de facto, and a general return to the 1950s in terms of worker rights and protections...

Over the medium term

...Over the medium term wages will not follow productivity. Or perhaps they will, if more and more young and skilled younger workers leave the country for abroad, leaving manual and semi-skilled labor to man the sweatshops of a new euromaquilladora economy that seems to be the only visible goal of this exercise in thirdworldization. Over the medium term, farmers' markets garbage heaps will be turned increasingly more into senior-citizen mosh pits, as pauperized pensioners fight over pieces of half-rotten tomatoes. Others, less spritely grampas and granmas, will be heading for their neighbourhood garbage cans - and it ain't just the elderly. One in five children under 17 were in poverty last year, there is no telling what the numbers will be this year...

Reforms

Finally, about those reforms that the IMF will be imposing and are supposed to take us out of the slump and into the promised land of growth, sometime, somehow... Where exactly have they been succesful in doing so Mr. Thomsen? What about the Greek government selling off pretty much everything under public control today - including public parks and water companies it seems? Where was that a success? And in doing what?

I wonder if there is somewhere *one* instance of an IMF bureaucrat daring to give an interview against a team of journalists / economists playing hardball and not acting as de facto cheerleaders for the neoliberal voodoo remedies they are peddling?

Greek general strike today: anger and violence

Riots erupt as anger colors the 7th general strike this year in Greece:

The strike comes at the heels of a new law that dismantles the system of collective bargaining in the Greek private sector, and sets up a large number of Greek public companies for privatization. Working people are expected to lose around 20-30% of their (already contracting) nominal wage, with an inflation rate that is expected to reach close to 6% this year. Last night the "socialists", losing (and expelling from the party) one more MP, voted by themselves the new measures (mandated by the ECB and the IMF as part of the deal that will allow Greece to receive the 3d installment of the "stabilization" package).

There were close to 100.000 protesters I reckon that took part in the Athens demo from early morning to late afternoon, and tens of thousands more in other major Greek cities... The mood of the crowd and society at large is murderous. A Conservative MP and former development minister Costis Hadjidakis was near-lynched by a group of demonstrators as he left the Parliament building amidst the demo:



While clashes with the police were extensive (and we still don't know how many were hospitalized)



You can follow some of the on the spot coverage and the discussion it generates at twitter at the hashtag gstrike...

The 11th thesis on wikileaks

The highly sage, practical bureaucrats who secretly and unjustifiably think of themselves in the way that Pericles openly and rightly boasted of himself: "I am a man who is the equal of anyone both in knowing the needs of the state and in the art of expounding them" — these hereditary leaseholders of political intelligence will shrug their shoulders and remark with oracular good breeding that the defenders of freedom of the press are wasting their efforts, for a mild censorship is better than a harsh freedom of the press. We reply to them with the words of the Spartans Sperthias and Bulis to the Persian satrap Hydarnes:

"Hydames, you have not equally weighed each side in your advice to us. For you have tried the one which you advise, the other has remained untried by you. You know what it means to be a slave, but you have never yet tried freedom, to know whether it is sweet or not. For if you had tried it, you would have advised us to fight for it, not merely with spears, but also with axes."

Karl Marx: On freedom of the Press

1. What is in the long run more important than the content of the leaked cables, and the revelations of atrocities uncovered and admitted in Iraq and Afghanistan, is the reflexive response of what is practically a system of internet control. From Amazon to Pay Pal, from DDOS attacks to credit cards and data visualization companies, and then outside the web to banks, the Swedish and British court systems, Interpol, the whole world it seems - everybody fell on wikileaks with a vengeance that was meant I figure, less to silence this particular story (something that I imagine even the most deluded of state and corporate technocrats knew was pointless) but rather to inflict damage against the organization at a time when it was growing stronger and, more importantly I imagine, to discourage any further groups or networks from joining the game. This is not I feel mainly an attempt to shut down, but rather to intimidate and contain...

2. This comes at a time when the basic liberties of the Internet as we have hitherto known it, are under attack, and attempts are made to tame the worldwide web wilderness it into a commercialized and controlled greenhouse: See the developments on ACTA, Google's apparent decision to censor torrent searches, apparently illegal domain seizures in the US among other developments. These have to be seen in the context of the unprecedented attack in much of the first world against democracy, social welfare and worker incomes, a final push for the Neoliberalization of Everything. It is an integral part of this ongoing attempt at a neofeudal counter-reformation.
3. The resilience of wikileaks and the broad and widespread support it has garnered is a cause for jubilation. Not only has the whole operation proved that it can survive under the most profound threats and attacks, it has created a world-wide movement of support. The speed at which the whole web was mobilized to preserve and keep track of the wikileaks site , as well as the campaigns and solidarity moves in support is impressive.
In recent developments the nebulous collective of web commando/trolls working under the name Anonymous, a swarm of magnificent/annoying vigilantes, has been active today wreaking revenge on Wikileaks' adversaries and frightened twitter to reinstate their briefly banned account, showed that a loosely organized bunch of LOIC-wielding guerilla nerds can survive on the friendly cyber-terrains of the Internets and cause as much trouble to (what I cannot help but call) The Man, as a bunch of AK-47-toting Iraqi goat-herders caused the US occupation forces. Make no mistake this is an unfolding war... (Facebook is as I'm writing this, in trouble)
4. In an age of generalized state and corporate surveillance it offers some consolation that there exist ways to reverse the tables and give citizens an opportunity to spy on their governments for a change.
5. Wikileaks is bound to grow stronger from these events. It has extra street cred now, a hero's status for many, and it is bound to attract more, not fewer, leakers of all sorts in the future. Assange has stated that a big bank is next in line. This too will not hurt wikileaks status. But it will gain them some really powerful enemies. This doesn't mean that Julian Assange personally is safe yet. However I do think that if he survives this first round of charges and legal clashes he will live to become a legend in his own time. But Wikileaks is not Assange anyway. I have no doubt that the organization will continue regardless of what happens to Assange himself.
6. The wikileaks affair is bound to change the way classified information is circulated and increase the vigilance of state and corporate actors regarding the safety of their communications.
7. In the process wikileaks is inventing a new form and process of muckraking journalism for the 21st century. The synergy between wikileaks and major world newspapers, is something that will be repeated, tinkered with and copied, I'd wager, around the world. Especially in a world with a growing deficit of incisive and reporting it might lead to a quantum jump to an emerging world-wide citizen supported network of really free journalism.
8. The wikileaks saga will also serve as a model for alternative web survival strategies. In fact, it raises the issue of inventing even more fall-back routes and methods for projects that run afoul of state and corporate rules. This is something that should be developing from the ground up I reckon over the next few years. I believe that at the end what is needed is an emergent shadow infrastructure that will be able to "hide" and support alternative ventures, as much as possible, outside of the control of government or supranational bodies.
9. In order to do this, some sort of alliance needs to be built to protect Internet freedom and independence, around the world and across ideological lines. From universities and research centers to labor unions, from hacker teams to NGOs and from political parties to newspapers and content commons, at least some sort of unspoken understanding needs to emerge that will allow implicit collaboration in such a project.
10. Thus wikileaks can and should serve as an example that needs imitators on all fronts. It isn't just a fixed organization, it's an idea, an open proposal, a template. It offers more than a particular batch of information that reveals government crimes and hypocrisy: it offers proof that such an organization can exist and have an effect.

Thus one arrives finally at the 11th thesis:

11. Philosophers and pundits have only interpreted wikileaks in various ways - the point however is to emulate it...

[Based on some thoughts and reactions after reading Geert Lovink's ten theses on wikileaks, where he raises some very valid and important points...]

[An edited an improved version is now up on Eurotrib]

Wikileaks appreciation image repost

Via the brilliant collective that is Monochrom. In honour of all those that help make governments cry, governments harboring a profound hatred for Democracy enforced by the oligarchical tyrannies of corporate America...

- Boycott the censors at Amazon
- Free Bradley Manning, this generation's Daniel Ellsberg

Greece: Devoured slowly by lying, bloodsucking, neoliberal vampires

Statement by the EC, ECB, and IMF on the Second Review Mission to Greece

Abstract: IMF / ECB / EC to Greek workers: You're screwed and there's nothing you can do about it. We own your asses.

Selected highlights (blockquotes in italics) with commentary:

The objectives underpinning the program are to restore fiscal sustainability, safeguard financial sector stability, and boost competitiveness—to create the conditions for sustained growth and employment. Maintaining fairness in the program also remains of paramount concern and this will continue to guide the direction of policies in the period ahead.

Translation: The objectives underpinning the program are to promote the German Stupidity Pact at the expense of the taxpayers and working people in particular, promote widespread social instability, poverty and gaping income differentials, and boost competitiveness by squashing already meager wages and salaries in the country to third-world levels. Maintaining fairness in the program is absolutely of no real concern to anyone, although a show of concern is put on for PR purposes just in case anyone in Greece is dense enough to fall for this bullshit or any bleeding hearts in Germany start wondering.

Comment: This is a Grand Canyon's worth of bullshit

Regarding the outlook, the economy is expected to begin turning around in 2011. Wage and price inflation is beginning to moderate, setting the stage for improvements in competitiveness.

Comment: These are the same people who expected inflation to be around 1,9% this year (as opposed to ~5% at least in reality), despite having prescribed the blitzkrieg of indirect tax increases that have played the major role in pulling the inflation rate to numbers not seen in Greece the last 10 years. Inflation from where I am does not seem to moderate. In fact the new batch of VAT increases (in basic foodstuff as well) and other tax hikes (such as toll road fees, bus tickets etc) that they have imposed on our sorry asses, are almost certain to have a positive effect on price inflation.

Wage inflation is certainly beginning to "moderate": in fact wages are in free fall - its like saying of a sinking ship that "its upwards momentum has began to moderate". Public sector wages having been cut by 20-40% this year and private sector wages plummeting as employers take advantage of widespread insecurity and galloping unemployment (suffered even before the "troika" basically destroyed the small and ineffective fig-leaf that was Greek labor laws and collective bargaining system - see below), in a country where "half of Greece’s paid employees [had] net incomes of between €501 and €1000" in 2006. Of course "wage moderation" in the private sector was created by forbidding by law any wage increases in any company regardless of any agreements.

See also previous post, on Greek labor compensation and productivity...

As for competitiveness, coming from their lips this has the sole meaning of more impoverished and desperate workers. The troika is hard at work indeed (along with their henchmen in the Greek government) to increase that sort of competitiveness - yet why would the average Greek worker set to join the working destitute and live in a desert of vanishing social welfare safety nets, give a damn about such "competition" towards penury?

Finally, the laughable prediction of "turning around the economy within 2011" has few outside observers agreeing, as they seem to see the depression in Greece extending to well beyond 2011:

"The Greek Government's 2011 budget should be enough to ensure that it can continue to tap its euro 110bn bailout facility, but it does nothing to improve the medium-term outlook for the economy and public finances," said Ben May, European economist at Capital Economics.

The budget also forecasts a sharper recession next year than originally predicted, with the economy expected to contract by 3 percent compared to the originally forecast 2.6 percent. This follows from a 4.2 percent contraction this year.

"With the economy likely to remain in recession well beyond 2012, we think that the debt to GDP ratio could eventually exceed 170 percent of GDP, implying that a restructuring of government debt is eventually all but inevitable," May said.

In the fiscal area, the deficit reduction by 6 percent of GDP in 2010 is larger than the initially targeted change. At the same time, data revisions for 2009 and weaker-than-projected revenue collection mean that an extra effort will be needed to meet the deficit target of 7.5 percent of GDP in 2011, which the government has reaffirmed.

Translation: Because an acknowledgment of higher than expected deficit reduction would create problems in the legitimization of the implicit goal of thirdwoldization, we had to run the numbers yet again so as to show that the original deficit was in fact higher than originally determined. This allows us to put in effect measures regarding (what will, we hope, become) a path to a sweatshop economy, that will make the "satanic mills" of the 19th century look like the Swedish welfare state. Since it is inconceivable that our, wholly arbitrary but nevertheless sacred, numerical targets might be revised in light of this re-estimation of the 2009 deficit, all else follows inescapably.

Comment: It is indicative as to what passes for logic in the IMF's communiques, that they use as an excuse for the latest series of attacks against working people in Greece the fact that their (totally unrealistic and consciously unrealistic) revenue "projections" have not been met. However even an Athens cabdriver could certainly have guessed that by asphyxiating the economy and creating a depression from this recession, these projections (which were based on assuming little decline in real taxable incomes and an inspection mechanism that was both crooked and inefficient already, before being further defunded by the measures imposed by the troika itself) were ludicrously unrealistic to begin with. Thus as Greece "fails" unavoidably to meet other unrealistic projections one should expect further measures to correct this "underperformance"...

New measures have been agreed to broaden tax bases and eliminate wasteful spending, particularly in the areas of:

• Health spending—which is inefficient relative to other euro zone countries;

• State enterprises—which are a heavy burden on the economy with perennial losses for Greek taxpayers; and

• Tax administration—which has instruments now coming into place to strengthen compliance.

Translation: New measures have been agreed, to rob the working classes of any meager savings they might have retained and to destroy the last vestiges of a (sub-standard even before the IMF plague) social state.

Noteably:
- Truly inefficient health spending is being cut *without* being made more efficient, thus making it *even less efficient* and creating in the medium run a greater economic burden: I.e. as the number of nurses in public hospitals declines (due to the "no new hiring" clause in the troika's mandates) doctors report a marked acceleration in the spread of contagious microbes in hospitals, due to a huge increase in the number of patients each nurse treats (note that due to the overprescription of antibiotics Greece is already a world leader in superbugs), something that will lead to an even greater burden on the public health system and society as it will have to face the consequences of spreading epidemics.

- Greece will be left with practically no train system outside of Athens and Thessaloniki, mass transportation will be priced out of range of the poorest and will be made scarcer. Bus and metro tickets prices (in a country where already before the crisis average wages were half those in Germany and northern Europe, and gas prices are already the highest in Europe due to the indirect taxes on gasoline imposed by the troika) will be increased by 50%. Water services might also be privatized with the well known effects that has on prices...

- Tax administration will be understaffed (as there is a ban, practically, on hiring people in the public sector) and more susceptible to corruption, since the inspectors salaries have been cut severely as well. The ban on public sector hiring
will also result in a less efficient tax collection system.

The government’s fiscal policy remains anchored in reducing the deficit to below 3 percent of GDP by 2014. The government’s medium-term budget strategy paper, to be discussed in the next review, will specify time-bound action plans for crucial structural reforms needed to achieve the remaining fiscal adjustment, and to do so in a socially balanced way.

Translation: The government’s fiscal policy remains anchored in reducing the deficit to a completely outlandish and arbitrary number by a completely outlandish and arbitrary date, which, if achieved will have had the result of reducing the country to third world levels in all sorts of measures of living standards. That this goal is unachievable will allow the ECB and the IMF bastards to claim that Greece failed in its programme, and force an onerous default on the country at some point, on colonial terms.

Structural reforms are needed to secure Greece’s competitiveness, reinvigorate output, and increase employment. While significant progress has been made, with some landmark reforms—including pension reform—the program has now reached a critical juncture.

Translation: We are neolib wingnuts and actually enjoy inflicting pain on the plebs Structural reforms, and by such we mean the many ways we have devised to redistribute wealth to the richest, inside the country, and to the core EU from the periphery, at the EU level, are needed to secure that workers will be so disempowered as to accept working for crumbs... Old people will die before they receive pensions: even if they don't keel over through overwork and disease, they will starve or freeze to death given the minuscule amounts they will receive as what will be laughably called "wages".

Many of the reforms that are necessary to transform Greece into a dynamic and export-driven economy require skillful design and political resolve to overcome entrenched interests.

Translation: First of all some terms: Entrenched interests = The great majority of the population. Then "export driven economy", as trained and skilled labor flees to other countries in order to feed themselves and their families, = a labor intensive export economy... Thus Greek wages will certainly float down to those of their Balkan neighbors and, who knows, if labor flexibility is aggressively pursued, perhaps below that. Of course one could argue that it is impossible to turn a country which has been seriously deindustrialized, as is par for EU policy regarding periphery countries from 10% of GDP exports to a net exporter - exporting what? What would it mean for Greece to become an "export driven economy"? How wise is it to prescribe as a cure something which is by design impossible to implement on a global level and which will be antagonized continuously by the hard Euro policy?

The challenge now is to implement an ambitious schedule for these next-stage reforms:
• Aligning wages more closely with firm-level productivity, including through reform of arbitration and collective bargaining systems.
• Opening up access to services, trades, and professions.
• Unlocking the potential of Greek industries by cutting red tape and barriers to entry, and privatizing state assets.

Let me point out that "aligning wages more closely with firm level productivity" is bullshit. On two counts: One, currently they have forbidden any wage increases at all in Greek companies, even if there is agreement between workers and management, thus the alignment they're referring to is only downward. Second, what they have done by prioritizing "firm level wage agreements" over collective general or even sectoral agreements, isn't aligning "wages to productivity" but aligning them to despair, given that real unemployment in Greece is scheduled to reach at least 20% by next year. Thus firms will be able to coerce workers into working for a pittance regardless of firm profits or "productivity".

All the measures they have imposed have this common denominator: wage depression. To an unprecedented extent. However even Eurobank Research, hardly a paragon of worker advocacy, seems to think that they are overdoing it:

The Greek economy has experienced productivity increases of 2.4% per annum on average over the past decade, compared with 0.8% per annum in the EU-16. If productivity continues to increase at comparable rates in the future, ULCs of Greek exporters will likely decline to their level of 2000 within the next two years without the need for radical wage cuts.

Note also that they are creating with all of this a society of even higher criminality and graft, something that isn't likely to help with "competitiveness in tourism", a cornerstone of the greek economy, obviously...

In summary: the reforms needed to return Greece to robust economic growth are underway, but developments to date also reveal that structural issues must be dealt with to make the adjustment sustainable.

Translation: In summary: the reforms needed to return Greece to third-world status are underway, but developments to date also reveal that structural issues must be dealt with to make the adjustment sustainable, so that the country remains a basketcase for the foreseeable future.

I'll let Jarvis Cocker sum it up, and you all can sing along with him:



A revised and augmented version of this post can be found at the European Tribune

A comment on the alleged lack of productivity of Greek workers

[This was originally a comment at Eurotrib, which I repost here, augmented and edited:]

Let's kill the meme that somehow in Greece workers were benefiting from unreasonable pay-hikes this past decade:
Here we are: real wages have been growing faster than productivity perhaps between 2007-2009 in Greece. Before they were not:

Based on real wage increases during 2007 (3.9%), pay increases in Greece were the highest of the countries of the EU15. Prior to the 2007 increase, there had been four years during which the average annual increase in Greece was around 3%. These big increases, by international standards, in the average real wage in Greece were fully offset by increases in labour productivity, leaving unit labour costs stable in real terms at 2000 levels.

In the private sector during the 2000-2007 period, there was a cumulative decrease of 1.2% in real unit labour costs. Average real wages increased more slowly than average labour productivity, which left companies with leeway to benefit from higher labour productivity. The effect of this development was that at the end of 2007 real wages in the private sector had increased by 27% over the 2000-2007 period, while productivity increased by 36.5%. Thus, there was a benefit to companies of around 7% in unit labour costs in real terms.

For the year 2007, Greece was in second to last place as regards the level of gross wages in € (net wages plus employee contributions). In Greece, average monthly earnings in 2006 amounted to €1,668 for full-time employees, compared to an average of €2,366 in the other countries of the EU15...

... Whereas monthly labour costs in Greece were 83% of the comparable mean costs in the EU15 (in purchasing power parities), labour productivity in Greece stood at 91% of the European average.

In recent years unit labour cost in Greece has become the lowest in the EU15. This development relates to the fact that in Greece labour productivity increased substantially in 1996-2004 and increased in the range of 1.7%-2.7% a year during the four years from 2005 to 2008.

AFAICS the problem with this analysis is that it does not take into account the very high (comparatively speaking) inflation during this period, which means that "real" wages in PP were not what counted. What is relevant in terms of "competitiveness", is absolute wage levels in Euros, and (outside the Eurozone the relative price of the Euro). However high inflation in Greece was due to vast monopolies in many sectors of the economy, that went practically unchecked, hardly the workers' fault. It is unfeasible to have real wages shrink during an expansion. Having said that, since 70% of the GDP was due internal consumption, and speaking of orders of magnitude another 10% was due to tourism and another 10% to shipping, the absolute wages are quite irrelevant. Corporate profits were hugely up during this period, any way you measure them. The OECD data show a huge (>15%) jump in ulc in 2002. The only thing that can possibly explain this (as nothing else spectacular happened at the time during the collective bargaining agreements) is euro adoption. Why this would result in reocketing labour costs is unclear to me... Some sort of data glitch perhaps?

Note also that even during the period 2000-2009 (that is, including the crash in productivity of 2007-2009) unit labor costs in Greece had indeed grown compared to Germany, but in fact fell compared to the EU average, and in manufacturing they were below German ULC as well. I've linked to Erik Jones's article before, but I'll quote him again:

...What matters in terms of a head-to-head competition is how Greece and Germany compare in the cost of labor per unit of output and not the real compensation of employees.  Moreover, we should look at their performance across the European marketplace as a whole... By that measure, if we set the year 2000 equal to 100, then by 2009 Greece was at 98 while Germany was at 95.  Germany is still doing better than Greece, but only by a little and both have improved against the rest of Europe.


...Using national accounts data for relative real unit labor costs in manufacturing, Greece goes from 100 in the year 2000 to 87 in 2008.  Over the same period, Germany goes from 100 to 90. It is hard to see how Germany comes off better in the comparison.

...Even if Greece is not suffering in terms of manufacturing, the high real incomes that Greek employers are doling out must surely be hitting the bottom line in the service sector, shouldn't they? Again, that's hard to see in the data. Total compensation per employee was 53.8 percent in Greece and 57 per cent in Germany...

NB: these alleged pay increases came with increasing hours worked and do not apply to the black or gray economy... And of course the *private* sector was below this average - never mind the precarious workers not included because they were victims of a generalized private and public sector trainee scam to avoid paying social security contributions and allow employers to pay below minimum wage...

However the result of the imposed austerity that is being inflicted with special severity on the lower strata of the working population is to drop wages even further to average purchasing power that Greeks had in 1980 or something (which doesn't describe the depth of the crisis enough: moving from middle to low income, or from low income to poverty is a totally different animal than the steady state, much less improvement. And to push all that through the ECB is demanding inter alia circumvention of collective bargaining and lowering the minimum wage from 700 to 590 Euros (possibly below that in "exceptional cases").

The question on the original thread was about the viability of the Euro. Can Greece leave the Euro: my first reaction was that it would be a disaster. However if this madness is kept up (we're heading for a -4,5% recession at least this year and - -3% next year - and these are a slight negative correction on the IMF's forecast numbers, so they're probably idiotically optimistic - with inflation running at close to 6% this year) such a disaster might turn out to be the lesser evil compared with the ECB / IMF intensive thirdworldization programme.

Back somewhat

The Return
So I'm back sort of, and we'll see how that goes... I imported here stuff I was writing (basically reposting) at Arachne which I'll re-purpose somehow, I'll see...

Things are getting out of hand here and I think I should lend a hand in reporting Greece's "socialist"-led plunge into ECB/IMF mandated poverty and despair.

I've been posting some sparse reports over at Eurotrib, an oasis of sane people angrily protesting the attempted return of what once was Social Europe to neofeudalism.

So let's see how long I'll keep posting this time...

Greece: Driven into Crisis

ZCommunications | Greece: Driven into Crisis | Ingo Schmidt:

This is ironic inasmuch as the IMF, currently headed by Dominique Strauss-Kahn who served as finance minister in Lionel Jospin's socialist government from 1997 to 1999, recently relaxed its long-time opposition against capital controls. An IMF policy paper published in February 2010 declared that countries that have capital controls in place fared much better during the financial crisis than countries that did not have them. Moreover, IMF chief-economist Olivier Blanchard openly plays with the idea of raising the inflation target for central banks to give them more leeway for monetary policies and also to ease debt burdens at least to some extent. Not surprisingly, the European Central Bank (ECB), which has neoliberal monetarist principles enshrined in its statute, rejects this Keynesian brew served by French economists

Mark Weisbrot, Greece: Who Needs"Success Estonian Style"

Mark Weisbrot, "Greece: Who Needs 'Success Estonian Style'"

The European Union and the IMF have the money and the ability to engineer a recovery based on counter-cyclical policies in Greece as well as the Baltic states. If it involves a debt restructuring -- or even a haircut for the bondholders -- so be it. No government should accept policies that tell them they must bleed their economy for an indeterminate time before it can recover.

The Ugly Math That Shows Why Saving Greece Is Mission Impossible

Here's The Ugly Math That Shows Why Saving Greece Is Mission Impossible

Rick Wolff: "Greece, Again: Demystifying 'National Debt'"

Rick Wolff, @ MRZine "Greece, Again: Demystifying 'National Debt'":

"...Yet again, business leaders, politicians, academics, and media are blowing smoke around Greece's efforts to cope with "national debt" problems. Something far more important for the world than this small country's financial travails is at stake. Indeed, what is at stake affects us all. What is happening in Greece parallels developments everywhere; only details and timing vary...
...Today, the employer class is anxious that its long-successful use of national debts to avoid taxes is in difficulty. The risks of that indirect way to manipulate states into serving its class needs while charging the working classes have risen sharply. Employers now reckon that states must restore their credit worthiness first, before new lending can resume. And the way for states to do so -- in the employers' view -- is to levy more taxes on the working classes and/or cut state programs serving those classes. The alternative, taxing employers and the rich while cutting state supports for them, is largely omitted from public discussion.

That is the meaning and content of today's Greek debt crisis and tomorrow's parallel crises in Ireland, Spain, and Portugal and future crises in most other capitalist economies. In each case, particular conditions and past histories will shape the specifics. Most important, the political organization and mobilization of the working classes will shape how far (and perhaps whether) those crises get resolved at the workers' expense."

Rainer Kattel, "Should Greece Follow Estonia's Example?"

Rainer Kattel, "Should Greece Follow Estonia's Example?":

...Simply put, the eurozone assumed and still tacitly assumes either growing German wages or growing productivity in the rest of Europe. Neither has been the case.

The Baltic economies with pegs, and with its insistence on keeping the pegs, have simply tied the noose around their own necks, trading monetary stability for, first, high financial fragility, and second, very probably long-term high unemployment and debt deflation in the private sector. This will probably result in waves of emigration, growing social problems, and the like. In other words, the costs have been shifted to the future, and they are more than likely to equal Greek troubles in fiscal terms. Estonia is Greece in disguise. It remains to be hoped that the EU and the IMF recognize that and refrain from simplistic fiscal retrenchment that makes problems only worse as the Greek domestic demand and, accordingly, government fiscal position will only weaken further. This results, as we have seen in Estonia, in real economic depression, which is GDP contraction in double digits.

Pixel Armageddon

"Pixels" by Patrick Jean:

Karl Marx on public debt

Karl Marx: Economic Manuscripts: Capital Vol. I - Chapter Thirty-One:

...The only part of the so-called national wealth that actually enters into the collective possessions of modern peoples is their national debt. Hence, as a necessary consequence, the modern doctrine that a nation becomes the richer the more deeply it is in debt. Public credit becomes the credo of capital. And with the rise of national debt-making, want of faith in the national debt takes the place of the blasphemy against the Holy Ghost, which may not be forgiven.

The public debt becomes one of the most powerful levers of primitive accumulation. As with the stroke of an enchanter’s wand, it endows barren money with the power of breeding and thus turns it into capital, without the necessity of its exposing itself to the troubles and risks inseparable from its employment in industry or even in usury. The state-creditors actually give nothing away, for the sum lent is transformed into public bonds, easily negotiable, which go on functioning in their hands just as so much hard cash would. But further, apart from the class of lazy annuitants thus created, and from the improvised wealth of the financiers, middlemen between the government and the nation-as also apart from the tax-farmers, merchants, private manufacturers, to whom a good part of every national loan renders the service of a capital fallen from heaven-the national debt has given rise to joint-stock companies, to dealings in negotiable effects of all kinds, and to agiotage, in a word to stock-exchange gambling and the modern bankocracy.

Zizek's Joke

Includes greek subs:

Mark Weisbrot, "Central Bank Independence: From Whom?"

Mark Weisbrot: Central Bank Independence: From Whom?:

There is no obvious reason why monetary policy -- the central bank's decisions with regard to interest rates and money supply -- is so different from other major policy decisions that it should be specially insulated from the electorate. There is no valid analogy, for example, to the independence of the judiciary -- which is based on a theory of separation of powers, or checks and balances, ostensibly to limit abuses of power or infringements on civil rights and liberties.

The argument for an independent central bank is more purely an elitist argument. It really boils down to the idea that monetary policy is too important for the "uneducated" masses to have an influence over it.

Ironically, the reality is quite the opposite: monetary policy is an area where pressure from the majority is sorely needed. There is a grand conflict of interest between the financial sector and the rest of society.