Greece’s Citizens Know More than Paul Krugman

One of the interesting dynamics in Greece is the continued attachment of the Greek population to the Euro. All the polls show 60-70% majorities for staying in the euro zone, notwithstanding the ravages of austerity. But there is a very simple explanation for this paradox. As much as the Greeks blame the rest of Europe, and especially the Germans, for their problems, they understand very well that nothing is worse than their home-grown politicians.


091926b1-b5eb-4886-ba1a-cf61b07e64eb-2060x1236We generally don’t make the mistake of overestimating the competence of Paul Krugman on this site (PT) …

Photo credit: David Levene


Although some Greeks and their sympathizers bemoan the loss of economic sovereignty, the continued support for the Euro proves that most Greeks still want to outsource their financial and economic policies to anyone else.  As usual, Krugman has been the slow deer on this one. He was recently quoted on CNN as saying that “I, you know, I may have overestimated the competence of the Greek government.”


Marxists Way Past Their Sell-By Date

But there were plenty of warning signs for Krugman and the world. A big one was the self-proclaimed adherence to Marxism by the leaders of Syriza, the governing party in Greece. I am not writing as a knee-jerk conservative here. I am willing to admit that it is possible to hold many political and economic views without immediately qualifying for the Flat Earth Society, but Marxism does not fall within this range of the allowable.

There is no doctrine in the social sciences that has been more thoroughly debunked, in both theory and practice, than Marxism. It is not possible to be a true believer in Marx unless you are an imbecile or willingly self-deceptive. In either case, this does not make you an ideal negotiating partner, something to bear in mind when you are deciding where to place your sympathies in the battle between Greece and the troika.


econ-calcThe most devastating debunking of Marxist economics was penned by Ludwig von Mises in 1920. As Mises showed, rational economic calculation is simply not possible in a socialist system. For a long time, economists refused to believe this, because it was such a vehement broadside against central planning and social engineering, which most of them to this day seem to regard as the chief tasks of their field. However, Mises’ contentions have never been successfully refuted, and ultimately the economic breakdown of the world’s command economies put an exclamation mark to it all.


There is also a beautiful irony in the recent negotiations, where the Greeks massively overplayed their hand, in large part because they failed to read the signals sent by the capitalists. True to their ideological leanings, the Syriza leaders would never think to consider the judgment of the markets.

When these reacted to a potential Grexit with calm, the Greek negotiating position – which was always based on blackmailing the rest of the Eurozone with the risk of contagion – disappeared. The German press caught it just right when they published a doctored photo of Greek Prime Minister Tsipras pointing a gun at his head and saying “pay up or the idiot gets it.”


20150702_handels1_0Hand over the money or I’ll shoot! How German newspapers saw Tsipras.


A Pyrrhic Victory

For their part, the Germans (and the other northern and central Europeans) were clearly trying to make the Greeks an offer they could not accept. They want the Greeks out and they were actually wrong-footed when Tsipras caved to all their demands, thus denying German Chancellor Merkel the immaculate expulsion she needed politically.

Although the negotiations on the third Greek bailout are generally reported as a victory, I think the Germans know that it will be a Pyrrhic one. They will get sucked further into the Greek quagmire and will lose even more money when the inevitable occurs. And Greece will remain a toxic distraction for the euro zone.


Expel the GreekMission not accomplished

Cartoon by Steve Bell


Finally, as an example of the type of muddled thinking that the Greek crisis has produced, consider an article entitled “Germany, Not Greece, Should Exit the Euro” by Ashoka Mody, a Princeton economist who formerly worked at the World Bank and the International Monetary Fund.

Mody makes a pretty strong case for a German exit – followed, he acknowledges, by the Netherlands, Belgium, Austria and Finland, although he misses out on the central Europeans who would also certainly head for the door – being less disruptive than a Greek one.

The argument all seems pretty reasonable and logical, until you realize that a euro zone shorn of Germany and these other countries is also totally shorn of its raison d’être: a zone created to facilitate trade and impose discipline on lagging members would be stripped of its strongest traders and its only examples of rectitude.

Like the crazed Vietnam War colonel, Mody wants to destroy the euro zone in order to save it, whereas the logical conclusion from his reasoning is that the entire thing should be dismantled. The fact that this article was even published in a medium such as Bloomberg, and then seriously discussed in a video segment, shows how far down the rabbit hole the Greek crisis has dragged us all.


NewYorkTimes_1968_Ben_TreFrom the original February 8 1968 AP news story on Ben Tre, explaining how the US military had to “destroy the town to save it”.


Image captions by PT


This article is an excerpt from “Some Short Takes”, which Roger recently published at Economic Man. Readers who are interested in the remainder (which includes brief remarks on student loans, Russia, Obama’s visit to Kenya and the London property market) please click here.




Emigrate While You Can... Learn More




Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.


Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA


One Response to “Destroying the Village to Save It – A Brief Post Mortem on Greece”

  • Crysangle:

    .. and I always thought it was the ‘Europeans’ who were Marxist , setting rates to suit the all , bailing out banks with everyone’s money to keep the asset prices level and deposits liquid for society’s benefit , levelling VAT across Europe , capital controls to stop capitalists running off with their money , confiscating the assets of oligarchies to feed the system , supporting the markets to make an exit look trivial and soothing , lowering yields for the over funded now in need , creatively supporting governments that cow to the common line , austere inflation of sovereign debt , and more , much much more .

    So I suppose that it all comes down to who is more Marxist , an EU ‘capitalist’ or a Greek Marxist .

    At least a Greek Marxist is honest , unless of course he is a capitalist in disguise , in which case all things are fair .

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • The India-China Border Issue
      Deep-Seated Racism and Happy-Smiley Hypocrites In Delhi, people of the northeastern part of India, who have mongoloid features, are derogatorily called “chinky.” It is not unusual for men in Delhi to stop their cars to proposition a random girl from the northeast for a sexual encounter, assuming her to be “loose.” Indians' ignorance about the geography of their own country, their irrationality, superstitions and bigotry have been fertile ground in these days of Covid-19. People...
  • Silver “Scarcifies” – Precious Metals Supply and Demand
      On Monday, Silver got Scarcer – and Simpler On 23 July, we said:   “Well, it’s complicated.”   The action on 27 July was not.   Silver spot price vs. September basis   Notice the big drop in the basis starting around midnight (London time). It falls from over 7% to under 2%. To refresh: Basis = Future(bid) - Spot(ask) For the first two and half hours, the spot price is not moving. So, the only way the basis can drop is if the price...
  • Best Laid Schemes
      A Really Neat Bridge   But, Mousie, thou art no thy-lane, In proving foresight may be vain; The best-laid schemes o’ mice an’ men Gang aft agley, An’ lea’e us nought but grief an’ pain, For promis’d joy! – Robert Burns, To a Mouse, on Turning Her Up in Her Nest With the Plough (in extract), 1785     Installation of the final cable support pipes on the Gerald Desmond bridge replacement. Here is a drone video of the project. [PT] Photo by...
  • Silver Explodes — But Why? Precious Metals Supply and Demand
      Explosive Days in Silver The silver market witnessed another explosive day! At midnight (in London), the price of the metal was $26.90. By 9pm, it had rocketed up to $28.95, a gain of 7.6%. This is not normal. But then, we are not in a normal world.   After several years of going nowhere and a downside fake-out in March this year, silver has come to life rather dramatically... [PT]   The Republicans are spending like drunken Modern Monetary Sailors. And...

Support Acting Man

Austrian Theory and Investment


The Review Insider


Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts


Gold in USD:

[Most Recent Quotes from]



Gold in EUR:

[Most Recent Quotes from]



Silver in USD:

[Most Recent Quotes from]



Platinum in USD:

[Most Recent Quotes from]



USD - Index:

[Most Recent USD from]


Mish Talk

    Buy Silver Now!
    Buy Gold Now!