True situation within Greece

[financeguy]

Originally Posted by Aygo

Merkel knows that Germany cannot walk alone by itself. Although Germany sells a lot to China and South America, Europe still is Germany's biggest market by far.
Merkel knows as well two other things:
1) The european construction was leaded by France with the support of Germany, and after the reunification, by Germany with the support of France. So, Germany depends on France's support.
2) Germany's superavits and healthy public accounts are the reflex of Europe's deficits. The more german's accounts get balanced and clear, the more the other countries' accounts have troubles. Many economists have already explained that well.

Europe's debts are unsustainable because Merkel insists that the ECB cannot work as a "normal" central bank, it cannot print money and create inflation because Germany has panic of Weimar's inflation, it cannot lend money directly to the States, it cannot regulate the markets independently.

I agree, certainly, that Hollande's proposal to reduce the retirement age are not going to happen in any world that approximates reality.

These are all valid points that you've made, but I think it's worth bearing in mind that the French and German bond prices have differentiated in recent months - in my opinion, it is not inconceivable to see Germany isolated, and justifiably, from their point of view, to see them removing themselves from the current exchange rate mechanism.

[Aygo]

Originally Posted by deep

Ok, with the citizens in Greece and France both unhappy with the austerity measures, will these new 'left' leaders change to policies that add to more red ink?

And if yes, will that lead to a European financial collapse?

or, are these elections already enough, to destabilize financial markets and we are headed to another financial melt down, a la 2008?

I'm afraid that the situation in Greece will end with the intervention of the military, of the greek army.

The provisional results say that the winner, New Democracy (right wing) won with only 18-20%(!) and the other party of Government, the pseudo-socialist went from 44% in 2009 to a mere 13-14%. That may not be enough for a majority. But even if it does, everyone is saying that this hypothetical coalition between ND and PASOK will result in such weak government that it won't last until the end of this year.
The surprise of the night was SYRIZA (the Left Front, a coalition of real socialists and several left movements) which became the second political force with 16-17%.
The biggest negative surprise is the Chrysi Avgi, a neonazi party which had 6-8% and elected 15-22 deputees. It's a shame that predictably, this crisis brought back to Europe the ghost of the neonazi and extreme right movements with so much strenght.

Greece is a pressure cooker ready to explode. The politically, the chaos is so big that many start to say that the situation may only be resolved with military intervention later.

I don't even want to imagine what it all means to Europe and to the future of the european construction.

[Aygo]

Originally Posted by financeguy

I agree, certainly, that Hollande's proposal to reduce the retirement age are not going to happen in any world that approximates reality.

These are all valid points that you've made, but I think it's worth bearing in mind that the French and German bond prices have differentiated in recent months - in my opinion, it is not inconceivable to see Germany isolated, and justifiably, from their point of view, to see them removing themselves from the current exchange rate mechanism.

I don't think that Germany will take that risk. Mostly because Germany has been the biggest winner of having the Euro as it exists, as it works and with the weight it has: even stronger that the Mark was.
The Euro and its conditions couldn't be better for Germany, specially as a massive exporter.
Germany isolated also looses political weight. Although weaker, Germany needs France as both are the political engine of Europe.

[Aygo]

Here's the beggining of the political chaos...

New Democracy (right wing/conservatives): 18,9%/108 deputees* (33,5%/125 deputees in 2009 elections)
*In Greece, there's a rule that can be activated, that the winner of the elections can have extra 50 deputees. This rule was activated, that's why ND had 108 deputees and not 58.

SYRIZA (left front/socialists/old communist dissidents): 16,8%/52 dep. (4,6%/13 dep.)

PASOK (self-called socialist party, in fact, social-democratic/Third Way): 13,2%/41 dep. (43,9%/160 dep.)

Independente Greeks (new party, dissidents of the New Democracy, recently expelled): 10,6%/33 dep.

KKE (communists): 8,5%/26 dep. (7,5%/21 dep.)

Chrysi Avgi (neonazi extreme-right): 7,0%/21 dep. (0,3%/0 dep.)

"Democratic Left" (new party - dissidents of SYRIZA + recently expelled dissidents of PASOK): 6,1%/19 dep.

All the other parties didn't elect any deputee or didn't reach the 3% necessary to enter the greek parliment. Of of these parties was the LAOS (Orthodox-conservatives/extreme-right, but non-neonazi) which had 15 deputees (lost 'em all) and included the provisional coalition government that lasted from late 2011 until early 2012 when it left that coalition.

With these results... The first "natural" alliance is ND and PASOK (the parties that alternate in the government). But they only have 149 deputees and a majority is reached at 151. If the "Democratic Left" accepts a coalition, maybe a government can be formed.
The winning party, ND, has 3 days to form government. If it fails, the president goes to the second best voted, the SYRIZA. SYRIZA wanted a coalition of left parties (the communists and the "Democratic Left"), but they rejected it.
If it fails, the president goes to PASOK, the third best voted. If it fails, there'll be new elections.

It's going to be a huge headache to form a government. The analysts say that even if the ND reach an agreement with PASOK (and maybe the "Democratic Left"), this government will be so weak that it'll "fall" after a few months or even weeks.

I only lament the ascent of the Chrysi Avgi. Skinheads that accompaign old ladies, that spank immigrants, that said they're gonna make the nazi salute in the parliment. Greeks elected 21 of these. In the news I was listening to people that usually voted in PASOK and now they voted in these "androids".

I start to believe in the group of analysts that claim that this situation will end up in a military intervention.

[mama cass]

Originally Posted by Aygo

In France, the nationalist Marine Le Pen had 18% of votes two weeks ago. 18% is even more that what her father had (16%) a few years ago. The "Front Nationale" party is so strong now, that the second turn of the presidential presented a dispute of her electorate between Sarkozy and the pseudo-socialist Hollande.

the 18% this year was actually pretty much the same as what the combined far right achieved a few years back, only this time round it was concentrated into a single party... what was more alarming was Sarkozy, who is centre-right, trying to pander to the far right with anti-immigration and anti-foreigner rhetoric in an attempt to win over Le Pen voters...

they're not that strong at the moment - just an annoyance and very loud... although if things do go pear-shaped in the next few years, the situation could get very worrying indeed... here, where i live (in a traditionally Socialist region), some of the young people have been blatantly saying that they voted Le Pen which is very frightening indeed...

ps- why do you call Hollande a "pseudo-socialist"? - i would say he is very much in keeping with the spirit of French Socialism actually... [eta: ahh i get it - i've just read the rest of the thread]

[mama cass]

Originally Posted by Aygo

Here's the beggining of the political chaos...

New Democracy (right wing/conservatives): 18,9%/108 deputees* (33,5%/125 deputees in 2009 elections)
*In Greece, there's a rule that can be activated, that the winner of the elections can have extra 50 deputees. This rule was activated, that's why ND had 108 deputees and not 58.

SYRIZA (left front/socialists/old communist dissidents): 16,8%/52 dep. (4,6%/13 dep.)

PASOK (self-called socialist party, in fact, social-democratic/Third Way): 13,2%/41 dep. (43,9%/160 dep.)

Independente Greeks (new party, dissidents of the New Democracy, recently expelled): 10,6%/33 dep.

KKE (communists): 8,5%/26 dep. (7,5%/21 dep.)

Chrysi Avgi (neonazi extreme-right): 7,0%/21 dep. (0,3%/0 dep.)

"Democratic Left" (new party - dissidents of SYRIZA + recently expelled dissidents of PASOK): 6,1%/19 dep.

All the other parties didn't elect any deputee or didn't reach the 3% necessary to enter the greek parliment. Of of these parties was the LAOS (Orthodox-conservatives/extreme-right, but non-neonazi) which had 15 deputees (lost 'em all) and included the provisional coalition government that lasted from late 2011 until early 2012 when it left that coalition.

With these results... The first "natural" alliance is ND and PASOK (the parties that alternate in the government). But they only have 149 deputees and a majority is reached at 151. If the "Democratic Left" accepts a coalition, maybe a government can be formed.
The winning party, ND, has 3 days to form government. If it fails, the president goes to the second best voted, the SYRIZA. SYRIZA wanted a coalition of left parties (the communists and the "Democratic Left"), but they rejected it.
If it fails, the president goes to PASOK, the third best voted. If it fails, there'll be new elections.

It's going to be a huge headache to form a government. The analysts say that even if the ND reach an agreement with PASOK (and maybe the "Democratic Left"), this government will be so weak that it'll "fall" after a few months or even weeks.

I only lament the ascent of the Chrysi Avgi. Skinheads that accompaign old ladies, that spank immigrants, that said they're gonna make the nazi salute in the parliment. Greeks elected 21 of these. In the news I was listening to people that usually voted in PASOK and now they voted in these "androids".

I start to believe in the group of analysts that claim that this situation will end up in a military intervention.

yeah... very scary...

[Aygo]

Originally Posted by mama cass

the 18% this year was actually pretty much the same as what the combined far right achieved a few years back, only this time round it was concentrated into a single party... what was more alarming was Sarkozy, who is centre-right, trying to pander to the far right with anti-immigration and anti-foreigner rhetoric in an attempt to win over Le Pen voters...

they're not that strong at the moment - just an annoyance and very loud... although if things do go pear-shaped in the next few years, the situation could get very worrying indeed... here, where i live (in a traditionally Socialist region), some of the young people have been blatantly saying that they voted Le Pen which is very frightening indeed...

ps- why do you call Hollande a "pseudo-socialist"? - i would say he is very much in keeping with the spirit of French Socialism actually... [eta: ahh i get it - i've just read the rest of the thread]

As far as I remember, 17,9% was the best result ever in the history of Front National. Not even Marine's father, Jean-Marie Le Pen, had such good result, even when he went to dispute the presidential second turn in 2002 (with 17%in the first turn and 18% in the second). Plus, the Parti Socialiste and Sarkozy's UMP have been seen its electoral expression diminished as the years go by, this time both scored below 30%. For example, I thought Bayrou, but mostly, Mélénchon were going to have better results, but they were expressive anyway.
I heard from political analysts that many people that used to vote in the communists and in the Parti Socialiste voted this time in... Le Pen's Front National. It's a protest vote but it's also a sign of how much volatile voting is today in France, but also in Europe.
This morning I heard greek people saying they used to vote in PASOK and yesterday they voted for Chrysi Avgi(!).
This is the exact same way, a too much similar context, that Hitler and the fascist regimes (in Portugal, Spain, Italy, France, Greece, etc) were ascended and were born in Europe.

Now, why do I say that Hollande is a pseudo-socialiste?
Because no "Socialist Party" in Europe is socialist. And Hollande is no exception. Remember that Mitterrand has that wave of nationalizations in the early 80's but soon he stepped back and he turned into third way measurements in the middle of the decade?
European "Socialist Party"'s buried socialism right after the II World War and became social-democratic. Remember that real socialists do not accept market economy and want socialism by the revolutionary way through the classes. Social-democratics dont': not only they want to build socialism slowly and peacefully, but they accept market economy. In fact, real social-democratics do not accept it, they tolerate it. That's why Socialist Parties are not even social-democratic anymore, because they accept very naturally the market economy. In fact, they helped a lot in the desregulation of the economies and financial markets, hand in hand with the conservatives and christian-democrats (the other big european political family that stays in power for decades). And that started in the 1980's and increased in the 1990's with the Third Way, specially Blair's Third Way that influenced the european center-left back then.

[mama cass]

Originally Posted by Aygo

As far as I remember, 17,9% was the best result ever in the history of Front National. Not even Marine's father, Jean-Marie Le Pen, had such good result, even when he went to dispute the presidential second turn in 2002 (with 17%in the first turn and 18% in the second).

that was because the extreme right vote in 2002 was split between 2 extreme right parties... the combined vote was actually higher in 2002 than in 2012 - here is the article i read which breaks it down:

Marine Le Pen's 17.9% is not a breakthrough for the far right | World news | guardian.co.uk

although her score is the highest for a Front National candidate in a national election, it isn't the greatest support the far right has ever won. In 2002, Jean-Marie Le Pen collected 16.86% in the first round of the presidential vote, while a little-remembered figure called Bruno Mégret, formerly Le Pen's right-hand man but by then running for a breakaway extreme-right party, scored 2.34%. As several French commentators have pointed out, their combined score was 19.22% – which is 1.3 points more than Marine Le Pen's. Her record in the départements (27.3% in the Vaucluse) was also exceeded by Le Pen and Mégret, who together polled 29.5% there. (She did collect more individual votes than her father. But the abstention rate this year was 20.5%, against 28.4% in 2002.)

but yeah i do agree that the potential for the resurgence of fascism in Europe in a time of crisis is a real worry indeed... although the French elections yesterday have given me hope that extreme values are indeed in the minority... Sarkozy truly shot himself in the foot by embracing FN rhetoric, and even though many voters did not agree with Hollande's politics they still voted for him just to eliminate Sarkozy...

Originally Posted by Aygo

Now, why do I say that Hollande is a pseudo-socialiste?
Because no "Socialist Party" in Europe is socialist. And Hollande is no exception. Remember that Mitterrand has that wave of nationalizations in the early 80's but soon he stepped back and he turned into third way measurements in the middle of the decade?

yeah, that's why i said Hollande is in the traditional vein of "French Socialism" lol

[Aygo]

Originally Posted by mama cass

that was because the extreme right vote in 2002 was split between 2 extreme right parties... the combined vote was actually higher in 2002 than in 2012 - here is the article i read which breaks it down:

Marine Le Pen's 17.9% is not a breakthrough for the far right | World news | guardian.co.uk




but yeah i do agree that the potential for the resurgence of fascism in Europe in a time of crisis is a real worry indeed... although the French elections yesterday have given me hope that extreme values are indeed in the minority... Sarkozy truly shot himself in the foot by embracing FN rhetoric, and even though many voters did not agree with Hollande's politics they still voted for him just to eliminate Sarkozy...



yeah, that's why i said Hollande is in the traditional vein of "French Socialism" lol

I didn't know there were 2 extreme-right parties in France. What was the name of the other, by the way?

"French Socialism"... That reminds me the cliché that portuguese pseudo-socialists say which is something like «socialism, or democratic socialism or social-democracy, which are all basically the same». Wrong. It's not the same. That's fooling people with a lie.
As I explained, social-democracy was born by opposition to socialism that wanted a socialist society by revolution, denying the capitalist market economy... Which social-democracy rejects. As far as I know, no leader of the "Socialist Party"'s in Europe, including Hollande, Ségolène Royale, Strauss-Kahn, Miterrand or Jospin are against the market-type economy. Yes, they want to see it regulated (Hollande told that in the campaign), but they're not against it, because that'd be against the construction of Europe as we know it. So, they're not socialists. They're social-democratic.

That's the same thing as in Portugal.
The present government party called PSD (Social-Democratic Party) is a center-right party who became further right/neo-liberalist with the new leadership/Prime-Minister.
Where's the nonsense here?
There's no such thing as social-democracy of the right-wing! That's political marketing.
"Socialist Party"'s decided to maintain "socialist" in the name even though they entered in a drift by the social-democracy and, lately, by the Third Way. That's political marketing. Doesn't mean they're socialists.

Yes, there are socialist parties in Europe. But they don't have "socialist" in the name. In these parties, you can find Bloco de Esquerda (Left Bloc - Portugal), SYRIZA (Left Front - Greece, second best last night), Front de Gauche (France), Die Grünen and Die Linke (Germany), etc.
These, yes, are socialist parties.

[deep]

on a serious note,

any opinions on the new first lady?

[mama cass]

Originally Posted by Aygo

I didn't know there were 2 extreme-right parties in France. What was the name of the other, by the way?

from wikipedia as i don't know much about this guy at all:

In 1985 Bruno Mégret joined Jean-Marie Le Pen's National Front (FN, a far-right political party). In 1986 he was elected to the French National Assembly, representing Isère. A rival of Jean-Pierre Stirbois, then general secretary of the FN (who died in 1988), he organised in 1987 Le Pen's election campaign and became the number two (délégué général) in the movement.
He became member of the European Parliament for the FN between 1989 and 1999. In 1989, Bruno Mégret created the Institut de formation nationale, thr Centre d'études et d'argumentaires, the magazine Identité, the conseil scientifique and the publishing house Editions Nationales to elaborate the doctrine and diffuse the ideas of the Front National. His friends of the Club de l'Horloge Jean-Yves Le Gallou, Jean-Claude Bardet, Yvan Blot and Jean-Jacques Mourreau of the CAR also secured key positions in the hierarchy of the Front National.
However, the relationship between Le Pen and Mégret turned sour during the following decade. Mégret and others inside the Front started criticizing Le Pen's "extremist" positions, which, they argued, prevented the Front from obtaining political executive positions. Moreover, Bruno Mégret started to become very popular with the militants of the party, winning a large support against his rival Bruno Gollnisch that had been made vice-president and general secretary of the Front National by Le Pen in 1995. On 9 February 1997 Bruno Mégret's wife, Catherine Mégret was elected mayor of Vitrolles.[2] Following the social unrest of November–December 1995, Bruno Mégret developed a strategy of creating new unions (FN-RATP, FN-TCL, FN-Poste, Mouvement pour un Education Nationale, FN-Police) and professional organisations tied to the Front National to increase the audience of the party.[3] This strategy contrasted sharply with the previous traditional anti-union stance of the Front National.
In 1998, Bruno Mégret split from the Front National and founded the Mouvement National Républicain.[4]
He received 2.33% of the vote in the first round of the 2002 French presidential election. Bruno Mégret endorsed Jean-Marie Le Pen in the runoff against Jacques Chirac.
In 2007, he supported Jean-Marie Le Pen in the French presidential election.
After he was sentenced to 8 months of probation, 8000 Euro fine and one year ban from candidating in any election for defalcation of public funds, he resigned in 2008 from the political field. He used money from the town Vitrolles to support his 2002 presidential run.

the Front de gauche grouped together the French left wing parties, including the Communist party - Melenchon caused quite a stir during the election campaign, but some of his policies (i.e. 100% tax on salaries over 300,000 euros) were pretty unrealistic although he did gain quite a following over here... the French "Socialist" party is more centre-left in the general political spectrum really, not true socialists, like you said, and Melenchon claims to be properly "left-wing" rather than "extreme left" as dubbed by the British press in particular...

[mama cass]

Originally Posted by deep

on a serious note,

any opinions on the new first lady?

she's pretty well-known in her own right here in France as a political journalist...

[Aygo]

Thanks for the enlightnment, mama_cass. Some things are clearer now. I had no idea about the MNR, had never heard about it.
And I didn't know that Mélénchon proposed 100% tax on salaries over €300000. But I guess that was just to attract attention to him. For what I've read about Mélénchon and the Front de Gauche, this party is in the same family of those I reffered (including the portuguese Bloco de Esquerda), which are "real" socialist parties. In Portugal we have the Communist Party, but this one seems conservative and less radical compared, for example, with the greek KKE of Aleka Papariga.

I was surprised to see Ségolène Royale giving a big support to Hollande. It seems they have a good relationship. What amazed me is that the french Socialist Parti seems like a family business: Hollande was married with the ex-leader and almost-President Ségolène Royale, and the previous leader, Martine Aubry, is daughter of Jacques Delors, ex-"socialist" minister (and ex-president of the European Comission).

[Aygo]

Well, it seems that Greece is really leaving the Euro. The question is when? Right now, even before the elections, or after the elections?

Europe has rejected eurobonds, it has stopped Greece to leave the Euro with less chaos and slowly. Now it's too late.
I don't want to even imagine what's gonna happen to them...
...And to the rest of the Europe, specially to the weakest economies (and under intervention) like my country.

The consequences of something like this, for Greece and for the rest of the Euro are unimaginable.

[digitize]

I think The Economist handles it well this week: http://www.economist.com/node/21555572

They're spot-on about the best thing for Europe in the wake of a Greek exit being much stronger fiscal integration (and probably a stronger ECB, too), but that seems to be unquestionably politically impossible in the short term. Those who rejected Eurobonds and whatnot may start to feel consequences soon.

[mama cass]

why does the euro need to survive at such cost to the people? it's just a fucking ideology!

i'll tell you what, life has got so much more expensive in Europe WITH the euro - prices are insane... it's getting hard to make ends meet day to day...

i don't think tighter fiscal integration will work - Europe has always been divided, and historical attempts to unite Europe, i.e. Napoléon and Hitler, were futile and deemed a BAD thing back then!

it's not like the US where the working population can move freely to where the money/jobs are - otherwise you would have Greeks being able to move easily to Germany to work, which is not the case... what with the massive language and cultural barriers for a start...

this whole thing is incredibly distressing - forget WWII - this is WWIII, an economic war in which bankers and faceless corporations can bring a country down at the touch of a button - the whole thing is out of control and maddening - how did we get here? insanity!

ps- that Economist article is too late re. Spain - the run on the banks there has already started...

[Aygo]

The problem is that life will get much more expensive for most countries if the euro ends. Yes, for a country like Portugal, a weak and small economy, it's unbearable to have a currency that is as strong as the german Mark was. But if we leave the euro or if the euro ends, it'll be even worse to get back to the Escudo. Yeah, we'll be able to devalue our debt and exports will be favored. But the inflation and the loss of purchasing power, as well as the price of import products, it'll be dramatic.
So, I don't know what's worse.

Fiscal harmonization, eurobonds, letting the ECB works as a "normal" central bank, etc... Even if all that would happen now, I'm afraid it's too late. It's not gonna solve the problem, neither it's core. The Euro was heavily badly structured, with more benefits for some economies and now it's too late 'cause we can't get back. And getting back would be even worse.

I predict 4 months for Greece to leave the Euro. 6 months for the military to take control of the political power over there.
6 months (max.) for Spain to ask for financial assistance by the IMF (which will require all the money available in the EU, so it means that there's no money for Italy, who's next).
12 months for Portugal to ask for a second bailout program, because we'll follow Greece's story, but a year late.

[mama cass]

what if everybody just ditches the euro and goes back to their own currency, leaving countries to adjust their exchange rates as before? maybe that would make things more competitive again and more flexible all round?

here in France, we still have prices in "French francs" shown on most labels, cash register receipts, and bank statements... maybe it's been in the back of people's mind all along!

it's going to be a very worrying few months anyway...

[Aygo]

Here it is:
Spain expected to ask for a bailout tomorrow.

Mariano Rajoy, the UE and the press, say it's a bailout for the failling banks.
Well, Portugal received €78 000 milions (or €78 billions, in american language)... And most of that money was, part to the banks (€12 billions), and the most part to pay to thr creditors. No real money came to the economy... In fact, our debt increased from 86% of GDP to 120% next year.

That's what's gonna happen to Spain... As it was easily predictable, because the steps have been the exact same of Portugal, with the difference we're a year ahead, and Greece two years ahead.

The other difference is that Spain is a big economy and Rajoy has already warned Merkel he won't reduce the budget deficit as fast as hard as she forces the others. Why? Because Spain can do so... And because spanish are not as subservient as we portuguese are.

Next stop for the vultures: Italy. I give them other 6 months.

[financeguy]

We're in uncharted waters now. I think Ireland/Greece/Portugal cannot survive in the eurozone and will default. Don't know about Italy and Spain, but surely there is not enough left to bail them out, not properly? The Spanish bailout is a joke, doesn't remotely address the situation. It is starting to look like a northern zone of selected eurozone countries may emerge, Merkel was strongly hinting at this the other day.

Ireland will presumably ultimately return to a peg with sterling, which in my view is not the worst option.