The Greek Depression, the Troika, and the New York Times (videos)

The party dedicated to ending the economic malpractice of austerity that has devastated the Greek people is the "extreme" party while the Greek parties who capitulated to the German threats and austerity demands and gratuitously forced Greece into a worse-than-the-Great Depression are what? How did understanding basic macroeconomic principles, taught to me 45 years ago as well settled fact, and supported by the next 45 years of experience become "extreme?"

The author then makes his own Orewellian statement, the unintentionally hilarious metaphor that the troika might force a Greece that regained its sovereignty to operate "outside the umbrella of the single European currency." An "umbrella" protects one from the rain and extreme sun. Adopting the euro was a major factor in bringing the deluge to Greece.

Here's the author's bottom line.

"In other words, financial markets view Greece's problems -- and Greece's future -- as important for Greece alone. Since 2012, the European Central Bank has pledged to do 'whatever it takes' to prevent a crisis of confidence in European bonds (read: buy them as the lender of last resort if private markets dry up), and European governments have moved toward jointly guaranteeing the Continent's banks."

We can divine from this paragraph that the author agrees that the reason the bond vigilantes were defeated was not austerity, but the ECB's implicit sovereign debt guarantee. Greek bonds will be fine as long as that guarantee is in place -- which is why Germany is implicitly threatening to yank that guarantee if the Greeks vote for Syriza. Germany wants to be able to threaten to unleash the bond vigilantes to in order to intimidate the Greeks from voting to restore democratic rule.

There's a more fundamental point though -- it isn't simply the "financial markets" that "view Greece's problems -- and Greece's future -- as important for Greece alone." It's the troika that has decided that forcing the Greek people into a gratuitous second, more severe Great Depression is "important for Greece alone." German odes to European solidarity have been exposed as pious platitudes. Germany didn't act to bailout Greece, it acted to force the Greeks to aid in bailing out German banks.

The NYT columnist, however, ignores the worse-than-Great Depression that the troika pointlessly inflicted on Greece. To the columnist, "the great risk" is that Germany's infliction of economic malpractice will be blocked by the election of Greeks dedicated to ending Germany's latest assault on the Greek people.

"The great risk, of course, is that markets are wrong. The same political forces that appear poised to bring an extreme leftist party to power in Greece are bubbling in other parts of Europe."

Yes, we can't have democracy and competent economic policies spread to other parts of Europe -- that is truly the "great risk" that the Germans and their journalistic apologists fear. The columnist comes back to that nightmare at the end of his piece.

"The risk is no longer that Greece's problems will infect the rest of Europe. It is that the same dynamics of political economy causing unrest in Greece will soon enough arise in its bigger neighbors."

Yes, just as the Washington Consensus' austerity led to the election of leaders in many Latin American nations opposed to austerity, a similar dynamic could arise in Europe. Greece's greatest tradition is bringing democracy to the world, so Greece is the ideal nation to lead Europe to the restoration of real democracy.