The New Dark Age

14 July 2015 — The Wolf Report: Nonconfidential analysis for the anti-investor

2010— The government of Greece is bankrupt and cannot service it’s sovereign debt.  The economy is near collapse.  First bailout memorandum, familiarly known as the Kick-The-Can-Down-the-Road Memorandum is agreed to.  Economy continues to contract.

2012— The government of Greece is bankrupt and cannot service it’s sovereign debt, most of which is owned by commercial and private financial institutions.  The economy is near collapse.  Second bailout memorandum, familiarly known as Eat-Shit-And-Die Memorandum is agreed to.  Commercial and private financial institutions balance sheets are rescued.  Economy is that much nearer to collapse.

2015— The government of Greece is bankrupt and cannot service its sovereign debt, most of which is now owned by the official institutions of European and international capitalism, the ECB, the governments of Germany, France, Italy, Spain either directly or through the EFSF, whose last active program was the assistance program for Greece, which expired on June 30, 2015.  EFSF continues to exist but only to service the bonds it issued to bankroll its operations and its assistance programs, receive payments, and maintain continuity as the ESM takes over all responsibility.

The Greek economy has effectively collapsed.  Tsipras, the Prime Minister and leader of the Syriza party establishes a referendum for the Greek people to reject the “last offer” of the EU lenders, vowing that “the day after the referendum, negotiations will resume,” and “the bigger the ‘NO’ vote [on those previous terms] the better the terms [of the new agreement that results from the new negotiations].”

Tsipras is, and has been, in so far over his head he has to look up to see the bottoms of his own shoes. Tsipras appeals for a third bailout.  Instead he receives and supports an “agreement”, familiarly known as the Hung-By-the-Neck-for-Our-General-Amusement-Agreement, that may, if certain conditions are met, possibly lead to a third memorandum.  Oh boy, can’t wait for that. 

2015– Tsipras, who’s penchant for self-aggrandizement is matched and supported by an astounding inability to accurately evaluate social forces and “economic outcomes,”  states that while he does not “believe in” the new memorandum, he will implement it; that he signed the agreement in order to “avoid disaster for the country,” which of course has suffered catastrophically from the previous memorandums; that he has no plans to resign, and that the the terms of this agreement “were milder” than those of previous agreements.  

Well, taking his “personal plans” first in dealing with this topsy-turvium  pathology of Tsipras’, it doesn’t matter what he plans, as has been so made so painfully clear to the most casual observer.  He doesn’t plan to resign?  That’s nice.  And irrelevant.

Reports are that ANEL, whose seats gave Syriza the majority necessary to form a government will vote against the agreement when it reaches the floor of the Hellenic Parliament.  Now the vote on this agreement will be one of the two most important votes the parliament has taken since January 26, 2015, the other being the vote of July 10, so I expect a good half-dozen or so of Syriza MPs, including Varoufakis will have personal matters of a higher priority demanding their time, and won’t attend the session.  And another good half-dozen or so will actually find the nerve to vote “no.”  

The KKE and the Fascists are sure “no” votes, so Tsipras’s faction in Syriza will be dependent upon “yes” votes from PASOK, and New Democracy. This vote, no matter which way it goes is a vote of confidence in the Syriza government with all votes meaning “no confidence.”  Tsipras is done. Gone.  Cooked. Maybe he gets a severely reduced pension, but we can hope not. 

Now as to this current agreement being “milder” than the last pre-referendum offer.  This agreement commits the Eurozone, the IMF, the ECB, the ESM to absolutely nothing.  This “agreement” is a set of pre-conditions that Greece must satisfy before negotiations towards a new MOU can even be initiated.  So we cannot compare the terms of this agreement to the terms of the last proposal made by the Troika prior to the referendum.

This is more than a technical detail, but more than technical details have never been exactly the strong point of Syriza’s administration. 

What the agreement does require is that the Greek government modify the VAT to suit the demands of the Troika. 

What the agreement does require is long term, comprehensive reform of pensions to the satisfaction of the Troika. 

What the agreement does require is that the Greek government comply with the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, which stipulates that government deficits cannot exceed 3% of the GDP and that government debt does not exceed, or is sufficiently declining towards [emphasis added], 60% of the GDP.

What the agreement does require is full implementation of that same treaty such that automatic spending cuts are triggered in case of deviations from targeted primary budget surpluses.

What the agreement does require is changes to pension laws to offset the cost of the decision by Greece’s Constitutional Court in 2012 declaring illegal the cutting of benefits to those who received both main and supplemental pensions, an estimated “clawback” by the EU from Greece of €1.022 billion.

The agreement does require implementation of OECD “Toolkit 1” to “enhance” competitiveness in various retailing and merchandising sectors with the application of OECD “Toolkit 2” anticipated for the manufacturing sector.

The agreement does require privatization of the country’s electricity transmission network.

The agreement does require “reform” of labor markets to comply with “European best practices” when it comes to mass dismissals and layoffs.

The agreement does not require the transfer the transfer of €50 billion in national assets to a privatization fund, in that pre-valuation of assets prior to market sale does not satisfy the demand to fund this special facility to the €50 billion mark from the sale of assets.  The €50 billion realized from the sale of assets having as yet unknown total costs, pre-crisis notional value, or any other measure, will be used to “pre-refund” the debt occurring from any new memorandum and recapitalizing the banks (€25 billion), decreasing the debt/GDP ratio (€12.5 billion) and “investments” (€12.5 billion). 

The agreement does require the review of legislation, with the exception of the emergency humanitarian package, enacted by the Hellenic parliament since February 20, in order to amend any laws that “backtracked” on previous commitments.

These are the “minimum requirements” that Greece alone must fulfill before any negotiations for debt relief, extended terms, additional funds provided by the ESM can take place. 

So there are no new terms that are milder than in previous agreements, because there are no terms of any agreement.  There are minimum requirements placed exclusively upon Greece before any negotiations regarding any possible agreement will even be entertained.

Now all the PhDs in the world– the Leos, and Sams, and Hans, and Yannis– can try to spin this as an “undefeat.”

All the idiot movie-reviewers, semi-socialists, and friends can plead that Syriza, poor little Syriza was overwhelmed because life and systems and computer networks and writing code are just too complicated for anybody other than–well, themselves, when up until now everybody else was arguing that those same computer networks made it so much easier to “manage” socialism, to really match production to need (see Cockshott’s works).

All those who yesterday proclaimed that the job of revolutionists, Marxists, etc. was to join Syriza “in order to keep it honest” can pretend that joining Syriza was anything ever than the dishonest effort to pre-empt the prospects for social revolution.

The institutions of European capitalism know better.  They know blood when they smell it.  They know victory when they taste it.  And the blood of the people of Greece is the taste of victory in the mouth of the Troika.

July 14, 2015