Whose debt ?
Greece, the first major casualty of Europe's democratic deficitGreece has essentially lost its right to rule.
Sovereignty has been traded for loans from the IMF and Euro group in order to pay of creditors and, in the main, private banks.
The depreivation to be enforced on the population of Greece is the price to be paid for irresponsibility on the part of the European Union and, in particular, the European Commission, for not monitoring and auditing the state of affairs of Greece as part of the Single Market and as a member of the Euro in particular.
the birth & death of democracy...
Behind the scenes Germany presses its interests by demanding proof that the Greek politicians will deliver on what they have voted to undertake while, at the same time, obtaining front end loadings and paybacks in the form of arms sales to Greece for German manufacturers. Naturally the arms sales were agreed to by politicians and not be the people of Greece.
Under Angela Merkel, Germany has continued to grow stronger at the expense of other European nations within the Euro by ensuring that ECB decisions favoured German interests while the same decisions prejudiced the efficient running of economies elsewhere in the Euro zone. The general conditions of management of the the Euro zone which have, in general, not involved a review of the preferences of the European constituency, and the result has been that the European democratic deficit has grown wider. Merkel is well suited to this type of East German machinery. Merkel demonstrated her lack of democratic credentials in her open letter to other European leaders that proposed that the way to impose a European constitution on European electorates was to change its name and not require a referendum. Rather the idea was to avoid a referendum and have parliaments usher the "treaty" through as a "formality" and politicians were given the job of smoothing
over the details and misrepresenting the importance effectively participating in stealth legislation. The extraordinary issue at the time was that European leaders did not object to this cavalier attitude on the part of Merkel but rather were impressed at her tactic of getting round the European electorate. Such are the stains on the progress of European democracy amply muddied and dehumanised by politicians folowing the interests of their political parties rather than their electorates.
Following the intrests of bank and intermediation lobbies, political parties, throughout Europe, have haplessly assisted in the establishment of a defective financial system where financialization expanded in an uncontroled fashion. When the banks became exposed as a conbined result of poor decision-making on their part and a failure of politiciaisn to come up with adequate regulation, the current crisis emerged. Lost between two schools of economics (Monetarism and Keynesianism) neither of which incorporate equity and modern forms of finance in a transparent or balanced fashion, politicians, under the guidance of the banks, opted for bailing out the banks with funds they did not have. Thus the bail out, "financed by government" was massive donation to the banks which needs to be paid back, no, not by the "governments" but by the electorate through taxation and declines in real income resulting from cut backs in government services.
No one in Europe voted for this chaos overseen by incompetent financial institutions and incompetent politicians. Politicians never had a mandate to act in this way from any European electorate and the culmination of their oblivious view of the public and the underlying steadfast pressure to protect German interests is what has lead to this sorry state of affairs.
Europe's democratic deficit requires a more effective application of constitutiuonal economics. There is also a need for economists who adhere to the Keynesian and Monetarist schools to own up to the fact that their theory and methods are highly flawed and provide no solutions. They should also desist from trying to convince politicians, who know no better and often considerably less, that there is some intellectual rigour or objectivity in theories that come up with policies which have no traction and which generate externalities in the form of losers, winners and those who remain unaffected. This crisis is as much one created by a deficient intellectual critical mass of those who contributed to the shaping of the grand economic models of the world economy as it is about people taking decisions without understanding the implications. The future of society rests upon there being a role for the human conscience guiding people's preferences so that in exercising their freedom of volition and action they do not impinge on the freedom of others to mould and seek their own prefeences. The complex of preferences is such that political parties, tiny private organizations bent on power, have no means of taking them into account, except at a most banal level, because of their own limited intellectual critical mass. A more paricipatory form of governance acting in the general interest as opposed to the interests of a few could help gather better intellects and practitioners together so as to identify better pathways meeting with a wider level of approval. This can only be achieved by marginalizing political parties and bringing raw economics into a constitutional economic context. The objective is to seek to know the general preferences through a better form of "democracy" and through an improved constitutional model, that also provides a framework for the operation of the economy by moving towards an economy that serves the social and economic constituencies in an equitable fashion.