![\"Greek](\"https:\/\/i0.wp.com\/www.dougsbriefcase.com\/blog\/wp-content\/uploads\/2015\/01\/credit-guardian.jpg\")
<\/a>Greek Prime Min\u00adis\u00adter paid trib\u00adute to Greek patri\u00adots exe\u00adcut\u00aded by Nazis dur\u00ading WWII<\/span>. His mes\u00adsage to the Ger\u00admans was clear: we bailed you out, now it\u2019s our turn. [Cred\u00adit: The Guardian]<\/p><\/div>Short\u00adly after his elec\u00adtion last Sun\u00adday as Greece\u2019s Prime Min\u00adis\u00adter, Alex\u00adis Tsipras chose not lay a wreath on the Tomb of the Unknown Sol\u00addier in Athens\u2019 Syn\u00adtag\u00adma Square. Instead, he went to a war memo\u00adr\u00adi\u00adal in the Athens sub\u00adurb of Kessar\u00adi\u00adani<\/a> where Nazi sol\u00addiers exe\u00adcut\u00aded hun\u00addreds of Greek Resis\u00adtance fight\u00aders dur\u00ading the bru\u00adtal Ger\u00adman occupation.\n Tsipras\u2019s mes\u00adsage was not lost on Angela Merkel and oth\u00ader Euro\u00adpean lead\u00aders: the world for\u00adgave most of Ger\u00admany\u2019s debt; now it\u2019s Greece\u2019s turn.<\/p>\n In 1953, Ger\u00admany need\u00aded a bailout<\/a>. The Ver\u00adsailles Treaty that end\u00aded the First World War required the Ger\u00adman gov\u00adern\u00adment to pay repa\u00adra\u00adtions to the war\u2019s vic\u00adtors. Dur\u00ading the 1920s, these pay\u00adments, which the Eng\u00adlish and French insist\u00aded be made in gold, con\u00adtributed to the hyper\u00adin\u00adfla\u00adtion and social dis\u00adplace\u00adment that brought the Nazis to pow\u00ader. Hitler repu\u00addi\u00adat\u00aded this debt and default\u00aded on oth\u00ader mon\u00adey bor\u00adrowed dur\u00ading the inter-war period.<\/p>\n After the Sec\u00adond World War, the cash-strapped West Ger\u00adman gov\u00adern\u00adment agreed to nego\u00adti\u00adate repay\u00adment. The Allies under\u00adstood that forc\u00ading Ger\u00admany to repay all of its debt would have crushed its crip\u00adpled econ\u00ado\u00admy. The Lon\u00addon Debt Agree\u00adment<\/a> for\u00adgave half the debt, spread repay\u00adment of much of the rest over 30 years, and deferred pay\u00adment of back inter\u00adest until East and West Ger\u00admany reunited.<\/p>\n Tsipras argues that if Greece could for\u00adgive Nazi atroc\u00adi\u00adties, the Ger\u00admans should be will\u00ading to for\u00adgive Greece\u2019s fis\u00adcal improv\u00adi\u00addence. He would like a deal along the lines of the Lon\u00addon Debt Agreement.<\/p>\n Greece and Ger\u00admany took very dif\u00adfer\u00adent roads to penury. Ger\u00admany went bank\u00adrupt the old-fash\u00adioned way: by los\u00ading wars. War once deplet\u00aded pub\u00adlic cof\u00adfers; today it is peace that brings gov\u00adern\u00adments to their knees.<\/p>\n Pub\u00adlic social wel\u00adfare spend\u00ading in devel\u00adoped coun\u00adtries aver\u00adaged 22 per\u00adcent<\/a> of eco\u00adnom\u00adic out\u00adput in 2012, accord\u00ading to the OECD<\/span>. Sus\u00adtain\u00ading these lev\u00adels of pub\u00adlic spend\u00ading requires oner\u00adous tax regimes and sub\u00adstan\u00adtial gov\u00adern\u00adment bor\u00adrow\u00ading, both of which weigh on nation\u00adal economies.<\/p>\n For Greece, that weight has become unbear\u00adable. Its debt reached 176 per\u00adcent<\/a> of GDP<\/span> last year. Unem\u00adploy\u00adment is near\u00adly 26 per\u00adcent<\/a>. A series of bailouts that began in 2010 pro\u00advid\u00aded near-term relief but appear to have done more harm than good. The gov\u00adern\u00adment has no means of repay\u00ading the 7 bil\u00adlion euro ($7.8 bil\u00adlion) in bonds that mature this sum\u00admer. Pen\u00adsion cuts and lay\u00adoffs of pub\u00adlic work\u00aders, on which past bailouts were con\u00addi\u00adtioned, spread resent\u00adment, result\u00ading the elec\u00adtion of Tsipras and his Syriza party.<\/p>\n That par\u00adty \u2013 whose full name trans\u00adlates to \u201cCoali\u00adtion of the Rad\u00adi\u00adcal Left\u201d \u2013 ran on an anti-aus\u00adter\u00adi\u00adty plat\u00adform. The par\u00adty con\u00adsists large\u00adly of neo-Marx\u00adists who see the recent bailouts as a cap\u00adi\u00adtal\u00adist plot to sub\u00adju\u00adgate Greek work\u00aders to bankers. The new government\u2019s finance min\u00adis\u00adter has described the aus\u00adter\u00adi\u00adty on which Greece\u2019s cred\u00adi\u00adtors insist\u00aded as \u201cfis\u00adcal water\u00adboard\u00ading<\/a>.\u201d Syriza wants a big\u00adger bailout and an end to aus\u00adter\u00adi\u00adty. They have pledged to defy their Euro\u00adpean pay\u00admas\u00adters by undo\u00ading cuts in social spend\u00ading and rehir\u00ading gov\u00adern\u00adment work\u00aders. Which is why they won the elections.<\/p>\n The the\u00ado\u00adret\u00adi\u00adcal frame\u00adwork behind his party\u2019s plat\u00adform was set forth in a recent piece by three Greek econ\u00ado\u00admists, includ\u00ading John Mil\u00adios, who before the elec\u00adtions served as Syriza\u2019s chief econ\u00ado\u00admist<\/a>. The Mil\u00adios paper<\/a> (as I\u2019ll call it here, since his is the only name I can spell), pub\u00adlished by the Levy Eco\u00adnom\u00adics Insti\u00adtute of Bard Col\u00adlege, sets forth \u201ca plan for solv\u00ading the sov\u00ader\u00adeign debt cri\u00adsis in the euro area in line with the inter\u00adests of the work\u00ading class\u00ades and the social majority.\u201d<\/p>\n Past Greek bailouts did not serve those inter\u00adests, accord\u00ading to Mil\u00adios and his co-authors. \u201cTheir aim,\u201d Mil\u00adios and his col\u00adleagues argue, \u201cwas nev\u00ader to tack\u00adle sov\u00ader\u00adeign indebt\u00aded\u00adness.\u201d Instead, Greece\u2019s Euro\u00adpean cred\u00adi\u00adtors had a hid\u00adden agen\u00adda. They used the Greek debt cri\u00adsis to \u201cpro\u00admote and embed neolib\u00ader\u00adal reforms at all lev\u00adels of the econ\u00ado\u00admy and soci\u00adety\u201d to the detri\u00adment of work\u00aders. They lent Greece just enough mon\u00adey to sur\u00advive the imme\u00addi\u00adate cri\u00adsis and in return demand\u00aded aus\u00adter\u00adi\u00adty that cut wages, ben\u00ade\u00adfits, pen\u00adsions and pub\u00adlic sec\u00adtor jobs, advanc\u00ading the inter\u00adests of cap\u00adi\u00adtal over those of labor.<\/p>\n What is need\u00aded is \u201cdis\u00aden\u00adgage\u00adment from the aus\u00adter\u00adi\u00adty trap.\u201d That can only be accom\u00adplished by a \u201cmajor shift in the role of the Euro\u00adpean Cen\u00adtral Bank (ECB<\/span>).\u201d The shift Mil\u00adios and his co-authors want would be major indeed: they pro\u00adpose that the ECB<\/span> gen\u00ader\u00adate 4.3 tril\u00adlion euro ($4.8 tril\u00adlion) to buy down the debt of all 18 euro\u00adzone coun\u00adtries, reduc\u00ading each country\u2019s out\u00adstand\u00ading debt to 50 per\u00adcent of its GDP<\/span>. The ECB<\/span> would then issue inter\u00adest-free loans to each country\u2019s cen\u00adtral bank (Greece would bor\u00adrow 228 bil\u00adlion euro ($253 bil\u00adlion) under the plan; France, 895 bil\u00adlion ($996 bil\u00adlion). No inter\u00adest would be due on these loans, but coun\u00adtries would have to repay prin\u00adci\u00adpal. Even\u00adtu\u00adal\u00adly. Such pay\u00adments would not com\u00admence until the loan bal\u00adance rep\u00adre\u00adsent\u00aded no more than 20 per\u00adcent of GDP<\/span>. Mil\u00adios and his co-authors esti\u00admate that it would take Greece 58 years to repay the loan, assum\u00ading that its annu\u00adal eco\u00adnom\u00adic growth would aver\u00adage 4.2 percent.<\/p>\n The Mil\u00adios paper also offers an alter\u00adna\u00adtive plan. Rough\u00adly half the debt of sev\u00ader\u00adal Euro\u00adzone nations matures over the next five years (2016\u20132020). The authors pro\u00adpose that the ECB<\/span> declare a five-year mora\u00adto\u00adri\u00adum on both new debt and inter\u00adest pay\u00adments on exist\u00ading debt. As bonds mature, the ECB<\/span> would extend to each gov\u00adern\u00adment an inter\u00adest-free loan to cov\u00ader the redemp\u00adtion cost. It would issue sim\u00adi\u00adlar loans to cov\u00ader inter\u00adest pay\u00adments dur\u00ading that five-year peri\u00adod. No coun\u00adtry would have to begin pay\u00ading down the loans until their bal\u00adance fell to 20 per\u00adcent of GDP<\/span>.<\/p>\n Either pro\u00adpos\u00adal, Mil\u00adios writes, would \u201cover\u00adthrow aus\u00adter\u00adi\u00adty for\u00adev\u00ader\u201d and give the Euro\u00adpean Left a new slo\u00adgan: \u201cWe will not sac\u00adri\u00adfice the wel\u00adfare state to debt. The Euro\u00adpean social mod\u00adel must be refounded!\u201d<\/p>\n Catchy. But improb\u00ada\u00adble. While the Tsipras gov\u00adern\u00adment may win bet\u00adter terms on the next bailout than its pre\u00adde\u00adces\u00adsors did, they won\u2019t get a deal quite this gen\u00ader\u00adous, even by invit\u00ading all Euro\u00adpean coun\u00adtries to par\u00adtake of the largesse. If the Greeks were to take this posi\u00adtion in their nego\u00adti\u00ada\u00adtions and refuse to budge, their expul\u00adsion from the euro would become a near certainty.<\/p>\n Still, one has to admire the insights of the Euro\u00adpean Left, espe\u00adcial\u00adly when com\u00adpared with the rather na\u00efve views of Amer\u00adi\u00adcan pro\u00adgres\u00adsives. Our home\u00adgrown experts typ\u00adi\u00adcal\u00adly shrug off the debt prob\u00adlem and sug\u00adgest that future pro\u00adduc\u00adtiv\u00adi\u00adty and tax hikes on the wealthy are suf\u00adfi\u00adcient to sus\u00adtain enti\u00adtle\u00adment spend\u00ading over the long term.<\/p>\n The Mil\u00adios paper, by con\u00adtrast, acknowl\u00adedges that there is lit\u00adtle \u201cfis\u00adcal space\u201d for social wel\u00adfare spend\u00ading. High\u00ader tax\u00ades can\u2019t keep pace with growth in promised ben\u00ade\u00adfits; nor can they sur\u00admount the debt incurred to pay those ben\u00ade\u00adfits. Since Mil\u00adios and his col\u00adleagues find ben\u00ade\u00adfit cuts unac\u00adcept\u00adable, their only way to cre\u00adate fis\u00adcal space is through mas\u00adsive debt mon\u00ade\u00adti\u00adza\u00adtion. The \u201crefound\u00aded\u201d wel\u00adfare state would depend for its sur\u00advival not on high\u00ader tax\u00ades, eco\u00adnom\u00adic pro\u00adduc\u00adtiv\u00adi\u00adty or fis\u00adcal reform, but on the abil\u00adi\u00adty of cen\u00adtral banks to cre\u00adate cred\u00adit out of thin air.<\/p>\n Mil\u00adios and his col\u00adleagues may prove prophet\u00adic. Cen\u00adtral banks have become hyper\u00adac\u00adtive since the onset of the last finan\u00adcial cri\u00adsis. Quan\u00adti\u00adta\u00adtive eas\u00ading and oth\u00ader uncon\u00adven\u00adtion\u00adal mon\u00ade\u00adtary inter\u00adven\u00adtions, as Mil\u00adios cor\u00adrect\u00adly observes, have so far prin\u00adci\u00adpal\u00adly ben\u00ade\u00adfit\u00aded the investor class by inflat\u00ading equi\u00adty prices amid stag\u00adnant wages. If finan\u00adcial cri\u00adsis were to recur, the pres\u00adsure on cen\u00adtral banks to take even more uncon\u00adven\u00adtion\u00adal actions will mount. The con\u00adse\u00adquences of such approach\u00ades, though poten\u00adtial\u00adly dis\u00adas\u00adtrous, may at some point become polit\u00adi\u00adcal\u00adly irresistible.<\/p>\n Alex\u00adis Tsipras is report\u00aded\u00adly fond of the Cuban rev\u00ado\u00adlu\u00adtion. He named his son Ernesto<\/a>,<\/span> in hon\u00ador of Che Gue\u00advara. Tsipras sees him\u00adself a white-col\u00adlar Che, pre\u00adfer\u00adring starched shirts to mil\u00adi\u00adtary fatigues and berets.<\/p>\n An old-school Marx\u00adist, Che want\u00aded work\u00aders to seize the means of pro\u00adduc\u00adtion. Tsipras wants them to seize con\u00adtrol of the pro\u00adduc\u00adtion of money.<\/p>\n","protected":false},"excerpt":{"rendered":" Short\u00adly after his elec\u00adtion last Sun\u00adday as Greece\u2019s Prime Min\u00adis\u00adter, Alex\u00adis Tsipras chose not lay a wreath on the Tomb of the Unknown Sol\u00addier in Athens\u2019 Syn\u00adtag\u00adma Square. Instead, he went to a war memo\u00adr\u00adi\u00adal in the Athens sub\u00adurb of \u2026 Con\u00adtin\u00adue read\u00ading