[p2p-research] Fwd: Open letter to European policymakers: The Greek crisis is a European crisis and needs European solutions

[Michel Bauwens]

HI Peter,

ready for announcing your project?

the below is also good material for an article on our blog,

Michel

On Fri, Apr 30, 2010 at 9:54 PM, Peter Mazsa <
peter.mazsa at theunitedpersons.org> wrote:

> On 30 April 2010 13:12, Michel Bauwens <michelsub2004 at gmail.com> wrote:
> > ---------- Forwarded message ----------
> > From: Dante-Gabryell Monson <dante.monson at gmail.com>
> > Date: Thu, Apr 29, 2010 at 9:28 PM
> > Subject: Open letter to European policymakers: The Greek crisis is a
> > European crisis and needs European solutions
> > To: fyeg_green_economy_wg at listen.jpberlin.de
> > Cc: Joel Wardenga <joelwardenga at gmx.de>, Laura Appeltshauser
> > <laura.appeltshauser at gruene-jugend.de>, Lívia Magdošková
> > <magdoskova at yahoo.com>, Rowaa ElHabashy <rowaa.elhabashy at yahoo.co.uk>
> >
> >
> > Although views and proposed solutions in this letter may not
> > fundamentally re-question current mainstream economic systems,
> > the following open letter may be worth reading...
> > Perhaps someone on this list can provide a better decryption of the
> > situation, and of the issues and suggestions ETUI points at through this
> > letter ?
>
> Better description:
>
> "The underlying problem is the rule for printing money:  in the
> eurozone, any government can finance itself by issuing bonds directly
> (or indirectly) to commercial banks, and then having those banks
> “repo” them (i.e., borrow using these bonds as collateral) at the ECB
> in return for fresh euros.  The commercial banks make a profit because
> the ECB charges them very little for those loans, while the
> governments get the money – and can thus finance larger budget
> deficits.  The problem is that eventually that government has to pay
> back its debt or, more modestly, at least stabilize its public debt
> levels.
>
> This same structure directly distorts the incentives of commercial
> banks:  they have a backstop at the ECB, which is the “lender of last
> resort”; and the ECB and European Union (EU) put a great deal of
> pressure on each nation to bail out commercial banks in trouble.  When
> a country joins the eurozone, its banks win access to a large amount
> of cheap financing, along with the expectation they will be bailed out
> when they make mistakes.  This, in turn, enables the banks to greatly
> expand their balance sheets, ploughing into domestic real estate,
> overseas expansion, or crazy junk products issued by Goldman Sachs.
> Just think of Ireland and Spain, where the banks took on massive loans
> that are now sinking the country."
>
> http://baselinescenario.com/2010/04/29/to-save-the-eurozone-1-trillion-european-central-bank-reform-and-a-new-head-for-the-imf
>
> +
>
> Better (symptomatic) treatment:
>
> "I think what is needed is for every deficit-plagued government to
> lower public sector salaries by ten percent until the crisis blows
> over.
>
> The worst thing that could happen is that cutting wages could reduce
> aggregate demand through Keynesian channels. But gosh, look at some of
> the alternatives: sovereign defaults, bank runs, cuts in public sector
> jobs? A cut in public sector pay is probably the least unpalatable
> option."
> http://econlog.econlib.org/archives/2010/04/the_best_policy_1.html
>
> P.
>
>
> > According to this open letter from ETUI ( European Trade Union Institute
> ),
> > as far as I understand, they bring attention to
> > "wage and price divergences which are not sustainable within a
> > monetary union where exchange-rate adjustments are no longer possible",
> > saying that "The problem is symmetrical and the solution
> > must be as well."
> > Cordially, Dante
> > pdf:
> >
> http://www.etui.org/en/Media/Files/Open-letter-to-European-policymakers-The-Greek-crisis-is-a-European-crisis-and-needs-European-solutions/Read-the-open-letter
> >
> http://www.etui.org/en/Media/Files/Open-letter-to-European-policymakers-The-Greek-crisis-is-a-European-crisis-and-needs-European-solutions
> > excerpts:
> > "The problem is symmetrical and the solution
> > must be as well."
> > "Such wage and price divergences are not sustainable within a
> > monetary union where exchange-rate adjustments are no longer possible.
> But
> > this
> > requires an adjustment from both ends. Wages and prices in Greece and
> other
> > countries
> > need to fall in relative terms, but they must increase faster in Germany,
> > whose aggressive
> > wage moderation policies are deflationary, export unemployment and
> threaten
> > to explode
> > the monetary union. This is the only way to rebalance the euro area while
> > avoiding the
> > huge risk of a deflationary spiral."
> > "it is in Europe’s vital interests to resolve the Greek crisis on the
> basis
> > of
> > rising incomes across the continent and to put in place the needed
> machinery
> > to cope with
> > competitive and fiscal imbalances in the future. The future of the euro
> area
> > as a whole is
> > at stake. There is a serious risk of a falling Greek domino knocking over
> a
> > series of other
> > countries. Portugal and other countries now stand where Greece was a few
> > months ago.
> > The economic, political and social costs would be enormous. Has Europe
> > learnt nothing
> > from the 1920s when Germany was, in many ways, in a similar situation to
> > Greece
> > today? Prevented from raising exports to service its foreign debt
> > (reparations) by
> > mercantilist policies, Germany embarked on a disastrous course of
> deflation
> > and
> > depression which paved the way for the horrors that followed."
> > "The Greek crisis is a chance to drive European integration forward to
> the
> > benefit of all
> > Europe’s citizens. But current policies, based on misperceptions of
> economic
> > interlinkages and short-sighted and erroneous views on ‘national’
> interests,
> > threaten to
> > destroy the monetary union, set back European integration and imperil its
> > economic and
> > political future. EMU simply cannot go on like this. We call on European
> > policymakers
> > to find European solutions that serve the interest of all Europe’s
> > citizens."
> >
> >
> > ---------- Forwarded message ----------
> > From:
> > Date: 2010/4/29
> > Subject: [gtm] Crise grecque avec réflexions sur le rôle de la BCE et
> taux
> > d'intérêts
> > To: "gtmonnaie at gtmonnaie.be" <gtmonnaie at gtmonnaie.be>
> >
> >
> > Bonjour,
> >
> > Open letter to European policymakers: The Greek crisis is a European
> crisis
> > and needs European solutions
> >
> >
> http://www.etui.org/fr/Media/Files/Open-letter-to-European-policymakers-The-Greek-crisis-is-a-European-crisis-and-needs-European-solutions
> >
> > Cette lettre de 3 pages de l’ETUI (European Trade Unions Institute) donne
> la
> > lecture de cet organisme sur la crise grecque, ses origines et les
> remèdes,
> > avec des réflexions sur la BCE et les taux d’intérêts.
> >
> > Franco
> >
> >
> >
> > --
> > Work: http://en.wikipedia.org/wiki/Dhurakij_Pundit_University - Think
> thank:
> > http://www.asianforesightinstitute.org/index.php/eng/The-AFI
> >
> > P2P Foundation: http://p2pfoundation.net  -
> http://blog.p2pfoundation.net
> >
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> >
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> >
> >
> >
> >
> >
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> >
> >
>
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-- 
Work: http://en.wikipedia.org/wiki/Dhurakij_Pundit_University - Think thank:
http://www.asianforesightinstitute.org/index.php/eng/The-AFI

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