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Re: <nettime> Europe: from bad to worse
Armin Medosch on Tue, 30 Jun 2015 00:10:43 +0200 (CEST)


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Re: <nettime> Europe: from bad to worse


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dear Felix

your analysis seems unusually dark, since I know you usually as a mildly
optimistic person. Well, in fact I share most of it, and said so
recently on my website http://www.thenextlayer.org/node/1331 in an
article comparing the current situation to Polanyi's analysis of the
1920s and 1930s.

The amount of confusion in European papers is both, amazing and scary.
Many seem to equate a no in the referendum with Greeks exit from the
Eurozone and maybe even the EU. While this may be the outcome in the
long run, and there is no doubt that the actions of Merkel, Hollande,
Disselblom are immensely dangerous to the European project, I would like
to warn against automatically linking those events.

Syriza have always said they want to stay in the EU and in the Euro.
Maybe they can do that by applying capital controls. An example has been
provided by the irrepressible Dr. Mahathir during the Asian financial
crisis. When Malaysia was hit by that crisis originating in Thailand,
he, as prime minister of Malaysia, refused to swallow the IMF pill and
introduced capital controls. I am definitely not a fan of Mahathir with
regard to all his other policies, but this one seems to have worked.

Quoting from this studay

"Compared to IMF programs, we find that the Malaysian policies produced
faster economic recovery, smaller declines in employment and real wages,
and more rapid turnaround in the stock market. "

https://www.sss.ias.edu/files/pdfs/Rodrik/Research/did-Malaysian-capital-controls-work.PDF

I cant vow for the quality of this study above, but I just wanted to
remind of the irrepressible Doctor who keeps being a real pain in the
ass for his successors. Ah lot of what he says and thinks is absurd, but
lets not forget how he was ostracized for breaking through the
neoliberal orthodoxy by applying capital controls.

But given that example, maybe Greece can toughen it out financially. The
IMF loan? Negligible, thats something to work itself through the courts,
like Argentine's default, it can take years. A country is not broke
because of such a small debt. And now holiday season starts. If the
situation in Greece remains quiet, tourist cash will be flowing in.

Greece can stay in the Euro, strengthen its hand politically through a
referendum which is a vote on the current 'package' but not on leaving
the Euro, and thus keep negotiating. Above all, what they should
accomplish, is politicising the whole conflict. Thus, Greece could
become a real pain in the ass of the neoliberal crony capitalists of
Europe and the world

best
Armin


<...>


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