Chinese Currency in Record Fall: Oh Dear!

Yesterday, this was the headline on the BBC News site.

I included other news items below the headline for you to be able to verify the date.

You know what the record fall was?

1.9 percent.

That's right, the record fall was less than 2 percent.

It is not uncommon to see such falls in daily dollar to euro fluctuations but this, for some reason, was different. 

I checked other news outlets. There were incredible claims about the sputtering of the Chinese economy or how this move was going to increase their exports and how they would flood the Western markets with cheaper goods.

Then I looked at a piece posted by BBC's Asia Business Correspondent Karishma Vaswani. This is what it said:

DBS Bank in its daily breakfast note said "A proper devaluation is 10 - 30%, and it has to stay the course for a year before exports start to show any change".

In other words, 2 percent is hardly a devaluation and it most certainly cannot be qualified as a record fall.

And for Chinese exports to be positively affected by a devaluation, the actual currency depreciation should have been exponentially higher and the effects would not be apparent for another 12 months.

Did we get that from the lead news item? No. It repeated the export claims like every other news outlet.

Moreover, if every 1 percent depreciation leads to a $40 billion capital outflow why would China go this route to boost its exports?

Why loose $80 billion in capital exodus for dubious gains in 12 months?

Clearly, there are other considerations than export boosting behind this decision. But almost all news outlets reported it with highly exaggerated statements and they all made the export boost claim.

There is more.

This is how USA Today reported the news.

As you can see, there is now a hint of a causal link between falling oil prices and Chinese devaluation.

The article does not even offer a correlation between these two occurrences let alone a causation but a clear suggestion is made in the headline.

Tell me how ordinary news consumers are supposed to make sense of the world in which we live.

Greek Bailout Money: Another Case for Oh Dearism

Since very few of my readers checked out the Oh Dear theory you might not be familiar with the notion. 

It refers to the corporate media's concerted effort to make any issue unintelligible and scary so that your reaction as a consumer of news is to whisper "Oh Dear" instead of "OK I see why" like this case.

I am not even the person who coined the phrase. This guy is.

In any event, the Greek economic crisis and the so called Grexit makes another compelling case.

During the tense negotiations, we read about how Greeks were lazy and greedy, how they squandered the bailout money again and again. There are too many links, just check out my previous posts if you are curious.

There were ominous hints about their future outside the Eurozone. BBC reported that if the crisis continued their tourism revenues would collapse even though the obvious attraction of cheaper holidays in an ISIS dominated Mediterranean would be a no-brainer for anyone.

Moreover, news outlet claimed that things looked bleak because of the Syriza government: they singlehandedly crushed Greek recovery and put Greece back into recession, they said.

Curiously, ever since Alexis Tsipiras agreed to a very onerous deal that is guaranteed to destroy the Greek economy, the corporate media changed its tune.

It now looks like that their previous reporting on "them profligate swarthy folks" was not exactly correct.

There was a recent story in the New York Times that acknowledged that Greek bailout funds came in only to leave again instantly. Apparently, none of it remained in the country.

Wow, who knew?

Bloomberg immediately and breathlessly agreed.

It was not the profligacy of them swarthy, greedy and lazy Greek folks, they said, the whole thing was set up to bail out German and French banks.

Really? You don't say.

Yeah, it was never intended to benefit the Greek economy.

Listen to this, Bloomberg sounding like a contrarian progressive.

I always find it amusing whenever someone expresses surprise that the financial bailouts for Greece haven't benefited Greek citizens. "Bailout Money Goes to Greece, Only to Flow Out Again" in the New York Times is just the latest example. "The cash exodus is a small piece of a bigger puzzle over why — despite two major international bailouts — the Greek economy is in worse shape and more deeply in debt." 

Unfortunately, this is a feature of bailout, not a bug.

The author maintains that this has been the case in all recent bailouts, including the 2008 US crisis and of course the Irish and Icelandic bailouts, as some folks noted many years earlier.

As for Greece, well, here is the reality, after the fact.

In the case of Greece, the money flows in large part from European governments and the International Monetary Fund through Greece, and then to various private-sector lenders. We all call it a Greek bailout, because if it were called the "Rescue of German bankers from the results of their Athenian lending folly," who would support it?

No kidding.

Except where were you four months ago?

There is more.

Now the BBC reports that every time Germany pushed Greece towards bankruptcy, every time Schauble feigned disgust with his Greek counterpart and clutched his pearls and went for the smelling salts, Germany made money.

However, the study by Halle Institute for Economic Research said Germany had made interest savings of more than 3% of GDP between 2010 and 2015, and much of that was down to the Greek debt crisis. 

The IWH study says every time this year there was a spike in the Greek debt crisis, which made Greece's exit from the euro appear more likely, German government bond yields fell. Whenever the news looked better, Germany's bond yields increased.

So far Germany made 100 billion euros out of the Greek crisis.

Yes 100 billion.

They contributed 90 billion euros to save the Deutsche Bank and have already recovered more than that while squeezing Greece for another 90 billions.

And the beauty of it is that it is a gift that keeps on giving.

 Even if the situation were to calm down suddenly, Germany would still be expected to profit from the situation, the IWH argues, because medium- and long-term bonds issued in recent years are still far away from maturing.

Once again my question is, where were you when the narrative about the lazy Greek people living off the savings of honest Aryan people was solidifying?

When the whole Europe was whispering "Oh Dear!"

In case you read this as a vain stupid "I told you so" on my part, this is not the case.

The reason I refer to my previous posts is to highlight the fact that, if I, the lowliest and the most marginal commentators of the Intertubes could suggest where this was going, months or even years earlier, surely Bloomberg, BBC and New York Times could have done a little more than repeating the mainstream "profligate Greeks" narrative.

They didn't. Which clearly indicates that they didn't want to. And not they didn't know.

That is why we live in a world where your co-workers and neighbors tell you the most inane things with conviction followed by an Oh Dear expression.

Oh Dear, indeed.

Can Somebody Explain to Me "Erdogan's Gamble"?

After losing the June 7 elections, Turkey's bombastic President Tayyip Erdogan has first declared the Kurdish peace initiative DOA and then began shelling PKK positions in Northern Iraq, killing scores of militants.

He has also been relentlessly attacking Selahattin Demirtas, the co-leader of the pro-Kurdish party HDP. His latest move was to try to get HDP outlawed and Demirtas indicted.

And PKK, relishing the limelight, have responded in kind and have first shot dead a couple of cops to retaliate for Suruc, then a number of troops in separate attacks.

For once, all the pundits are unanimous. They maintain that "Erdogan's gamble" is to push up political violence in a prelude to early elections as a snap poll would certainly increase his vote. People, they say, would rush to him seeking stability.

They also point to the assistance he gets from the ultra-nationalistic MHP and its wily leader Devlet Bahceli. After the June elections, he maneuvered to have the AKP candidate elected Speaker of the House even though the other three parties outnumbered Erdogan's party.

Since then Bahceli has been attacking HDP and Demirtas on a daily basis (an odd approach for a party in opposition). He recently called HDP voters "dishonorable' creating a national outcry.

All of this, say the pundits, indicate that Erdogan's got MHP's backing to avoid any coalition government. He will call early elections and thanks to the current tense political climate, AKP and MHP will increase their electoral support enabling the former to form a government by itself.

I don't get it.

This is not because I am stubbornly contrarian, I just don't understand the logic.

Let's first take a look at the argument that political tension and renewed violence would decrease HDP's support.

HDP in Early Elections

HDP's supporters are primarily Kurds who previously voted for AKP, Erdogan's party. After Erdogan refused to help Kobani, they turned against him and pulled HDP from a lowly 5-6 percent to a lofty 13 percent.

Sure, some liberal and social democratic Turks voted for HDP, but the best estimates for their contribution are around 2 percent.

And crucially, these votes came from big cities in Western Turkey like Istanbul. The rest of the votes, meaning 11 percent, came from ethnic Kurds in Southeast Turkey.

In fact, this regional concentration is the reason why AKP lost big and HDP got 80 MPs with just 13 percent of the vote.

To give you an idea, MHP received 16.3 percent of the vote from the rest of the country and got the same number of seats in Parliament as HDP.

Given this background, if we know that Erdogan primarily lost the elections because he antagonized Kurdish voters and they switched sides and voted for HDP, how would vilifying the same party and its leader every day help Erdogan now?

Can anyone explain that to me?

MHP in Early Elections

There is more.

If you were a nationalistic Turkish person and you were afraid that Kurds were gaining too much power and might try to establish their own country in the near future by claiming a big chunk of what is currently Turkey, who would you vote for?

Would you vote for a party like MHP which has no chance of being a coalition partner and affect any policy change or for a slightly religious version of the same party which is very likely to form the next government and decide the issue?

Early opinion polls suggested that the voters were happy with their initial choices:

[A]ccording to a recent survey conducted after the election, the Justice and Development Party (AKP) would receive 41.6 percent, the Republican People’s Party (CHP) 25.1 percent, the Nationalist Movement Party (MHP) 16.2 percent and the Peoples’ Democratic Party (HDP) 12.9 percent if snap polls were to be held.

However, things changed after Bahceli began to carry Erdogan's water.

A survey taken in late July showed that in early elections AKP and CHP would get slightly higher results (41.9 and 26.3 percent respectively, but AKP would still be unable to form a government by itself) and MHP would score 15.3 percent, a full point below its June results.

So clearly MHP is hemorrhaging support with its pro-AKP policy.

And this is only early August. I don't see how MHP electorate would vote for their party in a few months' time when Erdogan has been and will continue to be matching their political platform and ideological rhetoric.

Given this situation can anyone explain the political calculus that convinced the MHP leadership to back Erdogan's early elections?

CHP in Early Elections

CHP is an interesting beast.

The majority of its electoral support is drawn from aging folks who adhere to the old Kemalist precepts. They call themselves secularist but that stance hides a vague disdain for believers, a sense of superiority and a healthy dose of elitism in the form of "this is my Republic and not yours."

AKP essentially rose to prominence by denouncing these unsavory propositions.

The rest of CHP -a minority- is composed of liberal and social democratic idealists who are there because the party used to be a social democratic entity and also because these people are concerned about the growing Islamisation of Turkey.

In a way, they support CHP not for what it stands but for it might do to stop the creeping shift towards a Wahhabi-lite system.

The Kemalist crowd in CHP identify more with the secular nationalists of MHP than with these wild-eyed liberals. They hate the AKP Islamists but they are equally leery of HDP Kurds.

Early elections would be a test for these people. If Kurdish insurgency became a daily reality would the Kemalists hold their nose and vote for Erdogan?

No one knows for sure.

It is also possible that they might hate Erdogan so much that they might agree to a Kurdish homeland just to get rid of him, especially if the face of that Kurdish homeland is Demirtas and what he asks for is less than outright separation.

It is a true gamble as no one can predict which way they would go, including themselves.

Given this calculus, if you were Erdogan would you roll the dice?

I wouldn't.

There is one more thing.

PKK and ISIS

By attacking ISIS and PKK at the same time, Erdogan is challenging two formidable enemies for what I consider very dubious political gains.

I think it is a safe bet that, if the insurgency returns, PKK would no longer fight traditional guerrilla warfare. Why stick to the mountains to be hunted 24/7 by drones when you can bring the war to them?

A few well placed IED or a couple of suicide bombers in a crowded area or a shopping center and you will get everyone's attention. And my guess is that this is what the PKK's leadership is itching to do.

Then there is ISIS.

Erdogan has just committed Turkey to a full fledged attack on ISIS, in order to get the US approval for his PKK adventure.

Now if you think PKK folks are itching, ISIS militants have a gigantic eczema waiting to be scratched.

An ISIS spokesperson suggested that there might be over two thousands militants who now live in Turkey but it is estimated that there are substantially more ISIS idiots in the country. Some were returning idiots, others were hardened ISIS fighters who moved to Turkey when their border towns were taken over by the Syrian Kurds.

To say that these guys are looking forward to blowing themselves up is a huge understatement.

And once you pulled those genies out of the bottle there is no easy way to put them back in.

How To Close the Circle?

The only way "Erdogan's gamble" would work is if he could find a way to get rid of Demirtas himself.

Either legally, by charging him with some bogus crimes or extra-legally, by terminating him with extreme prejudice.

The legal one is tricky especially since Demirtas dared him by asking for his parliamentary immunity to be removed. Clearly, he thinks he has no skeletons in the closet. At least none that can be found.

Which leaves the termination with extreme prejudice option. Sadly, it is also the most effective of the two options.

It is idle speculation on my part but think about it for a minute.

Such an event would instantly ignite Kurdish masses in Turkey and lead to huge and violent protests. Turkey being a nation state, these would be suppressed harshly and even more violently.

Under this scenario, the bulk of the Kemalists in CHP and a large portion of the MHP voters would vote for AKP as this is the only party that could form a stable government and Erdogan is the only leader who could find a way out of this catastrophe.

And most importantly, within a few weeks, the Kurdish political movement would be in disarray as they would be unable to replace Demirtas and PKK, once again, would be their only representative. The liberal Turks would have no party to support.

Erdogan would make conciliatory noises about a renewed peace process and national unity and after a somber electoral campaign he would emerge victorious.

All I can say is that I hope Demirtas is well protected.

And that Davutogu and Kilicdaroglu are as ambitious as they appear.

Because if they could form a lasting coalition government, Erdogan's gamble would become a moot point.
--------------------------
UPDATE

Bekir Agirdir, the CEO of, Konda, one of the leading polling companies told Al Jazeera Turkish (link in Turkish) that there is no way AKP could get back Kurdish support. He said that previously out of 10 Kurdish votes 5 went to AKP and 4 to HDP. In the June elections this ratio was 7 to 3 in HDP's favor.

Agirdir believes that those 7 out of 10 Kurds are not going anywhere and they are certainly not going back to AKP. He is convinced that early elections would not change the current distribution significantly.

If this is correct, a dramatic change would indeed be needed to make Erdogan's gamble work.

Will Erdogan Push Turkey Into Syrian Quagmire?

This is not a hypothetical question.

And after the recent massacre in Suruc, a small town in Southern Turkey, where 32 people were killed by an ISIS suicide bomber, it is actually a tangible possibility.

You see, the last election results put Turkey's combative President Recep Tayyip Erdogan in a serious bind.

His electoral defeat was primarily due to the rise of a pro-Kurdish party (HDP).

Ironically, HDP won a bigger percentage than expected thanks to Erdogan's increasingly hostile attitude towards Kurds and his borderline genocidal rhetoric during the Kobani siege.

However, this open animosity towards Kurds was not just a stupid or visceral reaction on his part. Basically, events forced his hands and from where he stood, he must have felt he had no other choice.

It is a complicated setup worthy of John Nash and his equilibrium. Or if you prefer the Prisoner's Dilemma.

Allow me to explain the many twists and turns behind this story.

Most pundits claim that Erdogan abruptly changed his position on Kurds and went from major reformer to implacable enemy because he was worried that an independent Kurdistan in Syria might set a persuasive example for Turkey's Kurds to seek the same.

To me that makes no sense. If Erdogan was really concerned about the pull factor of an independent Kurdistan, why did he help Kurdistan Regional Government (KRG) in Northern Iraq claim a de facto independence. And why did it have KRG's back against the Iraqi goverment in Baghdad?

Isn't KRG is a much more potent model for Kurdish independence?

Moreover, why would Erdogan promote economic development of KRG which would make the model even more enticing? And most importantly, if he was so afraid of Kurdish independence why would Erdogan pass an extensive rights package for Turkey's Kurds and negotiate a settlement with Abdullah Ocalan, the imprisoned head of PKK?

The stark reality is that, three years ago, to the nationalists' chagrin, Erdogan was ready to make peace with Turkey's Kurds.

So what happened?

To understand what happened, I always go back to the point in time where Erdogan moved from being Assad's BFF to his most determined enemy, which is July 2011 when the so-called Shiite pipeline was signed.

The pipeline was to connect Iran's South Pars natural gas fields to the Mediterranean (and eventually to Europe) though Iraq and Syria (hence the nickname). Crucially, the proposed pipeline bypassed Turkey. The agreement also blocked the competing Qatari pipeline that was supposed to go through Syria and Turkey to reach Europe.

Erdogan's rhetoric sharpened in the few months before the signing of the agreement and by September he sent his then Minister of Foreign Affairs, Ahmet Davutoglu to Damascus to deliver an ultimatum to Bashar.

Although we are talking hundreds (maybe thousands) of billions of dollars and Euros, there is more to this than money.

Since Qatar and Iran both exploit the South Pars fields from opposite ends (North Dome in Qatar), the side with a pipeline would have a huge advantage over its rival. Earlier this year, despite crippling sanctions, Iran announced that it finally managed to produce more natural gas than Qatar from that shared field.

Imagine what would have happened if sanctions were lifted and Iran could revamp its production facilities and pumped its natural gas directly to its customers.

In other words, one pipeline would favor the Shia powers of the region and the other would help the Sunni countries. This is a perfect example of economic interests overlapping with ideological predispositions.

The Sunni-Shia war that is being waged in multiple theaters in the region is also contemporaneous with that fateful decision.

Each side believes that it should become the dominant strand of Islam. This not idle talk. As the Saudis and their $200 billions showed, if you spend enough money you can change a religion in less than forty years regardless of what its edicts are.

Besides the Sunni-Shia rivalry, the Qatar pipeline was problematic for Russia. Gazprom has a virtual natural gas monopoly in Europe and the proposed pipeline would have allowed a major competitor to enter the same market, effectively reducing Russia's leverage and dominant position. Which explains why Russia leaned on Syria at the time and has been supporting al Assad since then.

In any event, this is why Qatar gave ISIS billions of dollars in seed money and unleashed them upon hapless Iraqis and Syria.

And of course, this is why Turkish government stood behind them, providing them with truckloads of arms and ammunition, intelligence and logistical support, free and swift healthcare and most importantly, safe passage to Syria to gun fodder idiots from all over the world.

This is also (and especially) why ISIS has been the first terrorist organization in history interested in creating and governing a country. I called their Caliphate unifying large swaths of Iraq and Syria, Pipelineistan.

Incidentally, this is why Raqqa has become the capital of Pipelineistan, as you will see in the next map below.

All of which brings us to the Kurds.

To put it simply and perhaps a tad simplistically, they are in the way.

This is why Syrian Kurds (and not Iraqi Kurds) are a problem for Erdogan. This is why he refused to lift a finger for Kobani and rejoiced its seemingly imminent fall.

And this is why when he says Turkey needs a buffer zone in Syria he means an area ethnically cleansed of Kurds.

But therein lies another dark tale.

Border Blues

On 19 September 2012, Turkey, rather curiously, decided that Tell Abyad, a key frontier crossing on the Syrian side, should be looked after by a coalition of Islamist forces which consisted of Jabhat al-Nusra, Ahrar al-Sham, Burkan al-Firat and Liwa al-Tawhid Brigades.

That decision had two objectives:

- To distance Syrian regime forces from the border and to create a buffer zone for the opposition forces to operate freely. 

- To hinder the Kurds' autonomy movement in the Syrian areas Kurds control and to sever the link between the Kurdish cantons of Kobani and Jazeera in what the Kurds call Rojava (Western Kurdistan).

This is the map of the area. You will notice that Tell Abyad is right in the middle of Kurdish region (Kobani to the West and Qamishli to the East).

And it is directly linked to Raqqa, the formal capital of ISIS.

Of the twin stated Turkish objectives of creating a buffer zone and hindering Kurdish movements, the latter was (correctly) understood by the forerunners of ISIS as a license to conduct a large scale ethnic cleansing:

[T]he operation to cleanse the area of Kurds began on July 19, 2013, with warning calls from mosque minarets for the Kurds to leave Tell Abyad or be punished. Of 25,000 people in Tell Abyad, which was Arabized by the Baath regime in 1963, about 12,000 were Kurds. 

Kurds who lived in the Tell Abyad town center and in 18 villages in its vicinity had to emigrate to the Kobani and Jazeera areas as well as to Turkey and Iraq. Those who didn’t paid a high price. Every single Kurdish house was raided until Aug. 5, 2013. Seventy adult males were killed, and about 400 women and children were abducted. It is not known what happened to them.

In January 2015, ISIS, having eliminated rival Islamist groups, took over Tell Abyad.

After the crossing was entrusted to Islamist groups it became a very busy hub. In fact, last month Obama noted that "thousands of foreign fighters [are] flowing into, first, Syria, and then, oftentimes, ultimately into Iraq" and criticized the Turkish authorities for not doing enough to stop the flow.

As we know, it is a feature not a bug.

But recently, the reversal of that ethnic cleansing became an actual possibility, throwing up another crisis.

In Search of a Casus Belli

After the Syrian Kurdish forces defeated ISIS in Kobani, they decided to retake Tell Abyad. This would allow them to open up a corridor along the Turkish border to Northern Iraq and get all their supplies from KRG bypassing the often prickly Turkish border officials. It would also cut off a critical supply route for ISIS.

And, as a bonus, it would make Raqqa fairly vulnerable.

The Kurdish offensive began in early June and it was assisted by American air power.

During the fortnight operation, Erdogan grew increasingly angry and began hinting that Turkey might have to intervene to stop the Kurdish advances. He appeared like a man who was quite publicly looking for an excuse to do so. At first, he stated that

“The West, which is hitting Arabs and Turkmens of Tell Abyad from the air, is sadly settling the PYD [Democratic Union Party] and PKK [Kurdistan Workers Party] terror organizations in their places.”

When this was not well received, he closed the border crossing so that he could use the human misery of the civilians running away from the armed conflict to accuse PYD of ethnic cleansing. The problem was,

when he triggered a cacophony by saying, “There is a feeling that Arabs and Turkmens are targeted at Tell Abyad,” the Kurdish YPG and its Free Syrian Army ally Burkan al-Firat had not yet entered Tell Abyad.

Incidentally, according to Kurdish sources, the border was opened briefly to allow some ISIS militants to escape.

There is a picture of one of the handful of ISIS fighters who were arrested (when journalists were there) and his smirk conveys perfectly the Faustian deal Erdogan made with them.

When Tell Abyad was taken over by PYD on 15 June, civilians slowly returned to their homes. Which prompted Erdogan to put forward another justification for intervention, namely the security threat posed by PYD and its armed forces YPG.

Since the threat was totally fictitious and YPG never had any border issues with Turkey, this didn't get any traction either.

That forced him to advance a third justification for intervention.

He ominously declared that Turkey would never allow the formation of a Kurdish state in its Southern border.

Erdogan upped the ante June 27 and said Turkey would not allow any attempts to establish a Kurdish entity in northern Syria. “We will never allow a state to be established in northern Syria and in the south of our country. No matter what the cost, we will continue our struggle in this regard,” Erdogan said.

And third time being the charm, he directed his Prime Minister Ahmet Davutoglu to ask the Turkish army prepare plans to intervene and create a buffer zone, code for removing Kurds from the area.

Domestic Obstacles

Besides long-term Pipelineistan ideas, Erdogan has a short term domestic agenda as well.

Since he lost his Parliamentary majority during the last elections, he has been itching to call early elections. I am sure he believes that a successful incursion into Syria and a confrontation with Syrian Kurds might bring the nationalists back to the fold.

And give him at least the 18 MPs he is missing for a simple majority.

In fact, to ensure the nationalists' support, he has been attacking HDP and its charismatic leader Selahattin Demirtas by accusing him of having strong ties to PKK which is reviled by a large majority of Turks.

He was also hoping that, feeling overshadowed by HDP, the PKK, or at least some factions within it, might be tempted to break the ceasefire and give him the ammunition he needs to go after them. The day after he Suruc massacre PKK did just that and killed two police officers in the same city.

That, in turn, gave Erdogan the pretext he needed to bomb both ISIS and PKK positions in Syria and Iraq respectively.

So in principle, all Erdogan has to do right now is to invade a small pocket in Syria, ostensibly to create a Kurdish-free buffer zone and call general elections once the coalition talks end up in failure.

However, there are two problems with this plan. And this is why I invoked John Nash and the Prisoner's  Dilemma at the outset.

The first was the unexpected resistance of the Turkish army to the idea of a Syrian incursion:

According to reports in Ankara, TSK’s response to the government instructions was total surprise when the Chief of General Staff Necdet Ozel asked for a written order from the government. When Prime Minister Ahmet Davutoglu reminded the TSK that there is already parliamentary authority for such a cross-border operation, the military command asked for “a written order specifically about this case.” Davutoglu is reported to have penned a specific order even while discussions were going on. It is, however, understood that to activate a plan that would require intervention in a hot combat zone, a simple signature won’t be enough.

Among other things, the army objected to the fact that this was a caretaker government and with a new parliamentary majority in place such momentous decisions should be left to the new government.

While the army is staunchly nationalistic and perceives everything related to Kurds as a major security threat, understandably, the generals did not feel very comfortable to move around in the local Pottery Barn franchise. They knew breakage would be extensive and the final bill prohibitive.

They also knew that, such a move would mean a return to Turkey's decades long civil war with PKK, a war the army did not win. This time around, with ISIS one of the likely players, the body count could be incomparably higher.

The second problem is the Prime Minister Ahmet Davutoglu.

You see, even though I once described him as a dorky academic with the charisma of lawn furniture, he is a supremely ambitious man.

He is well aware that if early elections were called, Erdogan would replace him with a more pliable Prime Minister so that he could exercise presidential powers in a cabinet-centric system.

On the other hand, a coalition government dominated by AKP would ensure his tenure as both AKP leader and PM and keep Erdogan locked in his gilded presidential palace as a figurehead.

Crucially, Davutoglu has the support of the majority of Members of Parliaments.

You see, because of self-imposed term limits, most of the AKP MPs are newcomers. If they remain MP for at least two years, they will get full pension benefits. If they are gone in six months, they will get nothing. So, the incentive to form a coalition government is very high.

In fact, I suspect it was Davutoglu who ordered those strikes against ISIS.

Adding PKK targets might be a way to mollify Erdogan but bombing ISIS persistently is an effective method of destroying Erdogan's Pipelinistan pipe dreams and his alliance with the Sunni thugs.

There is one thing I did not mention.

There are probably several thousands ISIS militants who returned to Turkey after a brief killing fields stint.

You bomb them and they will strike back.

And there are something like 22 million Kurds.

Do the math.

Or the arithmetic, as the case might be.

Thomas Picketty: "Germany Has Never Paid Its Debts"

You probably have heard of Thomas Picketty, the author of "Capital in the 21st Century."

He gave a recent interview to Die Zeit, a German magazine in which he bluntly stated that Germany is the only country in the world that has never paid its external debts.

Here is the link to an unofficial English translation.

Read the whole thing, it is great fun, if for nothing else to see how the reporter went from incredulity to squirming and how little he knew about the actual topic and German history.

When Picketty starts by saying that Germany is about to destroy the idea of Europe because of a shocking ignorance of history, the reporter defensively retorts with "we Germans have already reckoned with our own history."

Picketty disagrees:

But not when it comes to repaying debts! Germany’s past, in this respect, should be of great significance to today’s Germans. 

And he immediately goes for the jugular:

Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.

Clearly, this is the first the reporter is hearing any of this. He meekly protests "but surely we can’t draw the conclusion that we can do no better today?"

Picketty has no intention of letting it go:

When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.

So, the reporter tries another tack and asks Picketty whether he is "trying to depict states that don’t pay back their debts as winners."

Indeed, says, Picketty, "Germany is just such a state" and explains why the countries that pay their debt are losers and countries like Germany are the winners:

But wait: history shows us two ways for an indebted state to leave delinquency. One was demonstrated by the British Empire in the 19th century after its expensive wars with Napoleon. It is the slow method that is now being recommended to Greece. The Empire repaid its debts through strict budgetary discipline. This worked, but it took an extremely long time. For over 100 years, the British gave up two to three percent of their economy to repay its debts, which was more than they spent on schools and education. That didn’t have to happen, and it shouldn’t happen today. The second method is much faster. Germany proved it in the 20th century. Essentially, it consists of three components: inflation, a special tax on private wealth, and debt relief.

The reporter is aghast at this point because it sounds like those lazy Germans lived off other nations' taxpayers. What about our much vaunted economic miracle, he wonders:

 So you’re telling us that the German Wirtschaftswunder [“economic miracle”] was based on the same kind of debt relief that we deny Greece today?

You can almost see Picketty sarcastically grinning:

Exactly. After the war ended in 1945, Germany’s debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece. Instead, both of our states employed the second method with the three components that I mentioned, including debt relief. Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.

In case you've never heard of London Debt Agreement, it actually included more than a 60 percent haircut for creditors.

An important term of the agreement was that repayments were only due while West Germany ran a trade surplus, and that repayments were limited to 3% of export earnings. This gave Germany’s creditors a powerful incentive to import German goods, assisting reconstruction.

Not too shabby, don't you think?

You get to pay your debts only when you are doing really well and even then your payments are tied to your exports so your creditors are motivated to buy your stuff to get their money back.

Tsipras asked for a much diluted version of this and he was laughed out of the room. And his latest proposal no longer covers debt relief or the 30 percent haircut, without which IMF said that Greece could never repay its debt. (The IMF report was never shared with Greece during previous talks)

By now, the Die Zeit reporter is grasping at straws. He has no questions, just statements.

The end of the Second World War was a breakdown of civilization. Europe was a killing field. Today is different.

Picketty refuses to play ball.

To deny the historical parallels to the postwar period would be wrong. Let’s think about the financial crisis of 2008/2009. This wasn’t just any crisis. It was the biggest financial crisis since 1929. So the comparison is quite valid. This is equally true for the Greek economy: between 2009 and 2015, its GDP has fallen by 25%. This is comparable to the recessions in Germany and France between 1929 and 1935.

The only thing left to the reporter is the moral argument about penance and punishment.

Many Germans believe that the Greeks still have not recognized their mistakes and want to continue their free-spending ways.

Picketty delivers the coup de grace:

If we had told you Germans in the 1950s that you have not properly recognized your failures, you would still be repaying your debts. Luckily, we were more intelligent than that.

Read the whole thing.

It is a perfect illustration of how people believe the nonsense the reproduce as objective news.

Testing Radicalization of Muslims Hypothesis: the Aaurhus Model

Recently I came across a case that seemed to corroborate my hypothesis on why people join ISIS.

For those of you who found my original presentation too long, here is what I suggested.

There are three interrelated reasons why Muslims were radicalized in the last 35 years, Year Zero being 1979.

The first one is the weak national identities that emerged in the early part of 20th century, especially after the demise of the Ottoman Empire at the end of WWI.

Balkan and Middle Eastern "nations", including Turkey had to come up with new and artificial narratives to forge previously non-existent national identities (Greece and Egypt being the two exceptions). The same holds true for Asian nations like Pakistan and Indonesia which were literally "put together" around a collective idea sometimes using an acronym.

These identities could not withstand a challenge from a much more cohesive, unifying and practical identity like Islam. As long as Islam was kept in check by authoritarian governments, there was no problem. But once the challenge was launched both in their own countries and in the countries where they emigrated, their respective national identities simply crumbled.

For the Muslims abroad, the second and third generations were the most vulnerable as their parents could not provide them with a coherent national narrative.

The second element was the Saudi push for a radical Islam which provided the challenge to those national identities.

In the aftermath of the Mecca Mosque siege in 1979, Saudi Arabia decided to spend $200 billion to squash all existing expressions of Islam and to reduce the whole religion to three precepts, covering up women, banning alcohol and hyper-sensitivity to blasphemy.

Remarkably, none of these precepts had any foundation in the Koran yet after 35 years of repetition, they are now considered the founding principles of Islam.

The Saudi money went to military regimes in the Muslim world and was used to establish Koranic courses and madrassas. It also funded the dispatching of radical imams both to these madrassas and to every Western country where there was a sizable Muslim population.

The third element was the hostile reaction to pious Muslims both in their own countries and in the West, especially after 9/11.

In countries like Turkey, Egypt, Algeria, Morocco and Tunisia, pious Muslims were convinced that the secular majorities (or autocratic governments speaking for them) had been oppressing them.

In the West, the second generation Muslims were persuaded by radical imams that the Western world hated Muslims and would never allow them to join their society as full-fledged members.

The Islamophobia that emerged in the aftermath of 911 seemed to confirm the accusations of radical imams and convinced these lost second generation young people that their only salvation and redemption was through Jihad.

In addition to these premises, in my two posts on Charlie Hebdo, I also explained how the first generation of immigrants insist on giving their kids a Muslim name and then fail to teach them their mother tongues, their cultural heritage and their national identity, turning them into strangers in the only country they have known. When these immigrants realize that their kids are lost, they simply fall back on a vague idea of making them "good Muslims" a job that is then taken over by the local mosque and its radical imam.

Finally, I noted that the beauty of reducing Islam to three precepts is the isolation and social control that goes with it. Moreover, it is so effective in creating a hostile reaction in the host society that even secular Muslims become defensive and eventually feel obligated to stand with the Salafist against what they see as Muslimophobes.

How do you test such an hypothesis?

My admittedly anecdotal but representative test case comes from what is known as the Aarhus Model. Aarhus is one of the poorest neighborhoods in Denmark with a large immigrant population.

This is the case of a young Somali boy the reporter called Ahmed. And his journey fits exactly the parameters of my explanatory framework.

Ahmed and his family emigrated to Denmark when he was only 6. He started school in Aarhus, quickly learned Danish, began to play football and by his own account, he became a well-adjusted normal kid.

His father was not happy about his jeans and t-shirts and his Danish friends. He felt his son was losing his Somali identity. What exactly is the Somali identity, you might ask. Well, you know, he is, well, you know, a Muslim.

Hence, in Ahmed's teen years, his father decided to take him to Haj to Mecca.

"I didn't know much about my religion. It was like I had left it in Somalia. But my father said, you are a Muslim, you have a Muslim name. You have to know your history, your background and your religion."

A Somali boy travelling to Saudi Arabia to recover his background, his roots.

Ahmed returned from Haj with a sense of relief and a new identity. Previously, he had this nebulous idea of being from Somalia but now he knew he was a Muslim. Things were much clearer now.

He says:

"When we came back I was happy and I was a new person with a religious identity. I saw the world differently. I saw that it was important for a person to have a connection with his god, I saw that there was an afterlife."

Just like those lost inner city kids in the US who grabbed an African identity and the attitude and clothing that went with it, Ahmed began wearing what he calls Muslim clothes to celebrate his brand new persona.

That, in turn, earned him an immediate reaction. This is the post 9/11 period after all. His friends either stopped socializing with him or began to tell him what a terrible religion Islam was.

"They would say things like, 'You stone your women, you lash people who speak freely,' and I felt I had to defend my religion, but I didn't know how to debate properly and it went out not correctly."

He grew angry and extremely defensive. His solution was to go to the local mosque to talk to like-minded people.

One day, some cops came to his door to search his computers and check his email accounts because his school principal went to the police and told them that the other kids were afraid of Ahmed. He said that they thought that Ahmed was radicalized in Saudi Arabia and he might do them some harm.

Not surprising considering how many lone wolf stories circulated regularly and the truth-bending media narratives.

Ahmed complied with their requests but he felt very humiliated. He was furious. In his mind, he was just trying to be a good Muslim and the Danish society had just singled him out and humiliated him before the entire world. He missed his final exams and as the coup de grace the school refused to let him take make up exams.

Ahmed decided that if they considered him a terrorist then he would become one. He shared his anguish and anger with his new friends at the mosque.

They were sympathetic, he says, and invited him home. There were long discussions about the hypocrisy of the West in its dealings with Muslims and Muslim countries. They watched a lot of jihadi videos online. Ahmed remembers in particular those that featured Anwar al-Awlaki, the radical American cleric of Yemeni descent, who was killed in a drone strike in 2011.

"He would say things like, 'We are at war with the West, the West will kill all the Muslims around the world if we don't stand up to them,' and I was like, OK, and my friends were saying, 'Yeah, he's totally right.'"

Then someone at the mosque told him that if he wants to be a good Muslim, he should go to Pakistan to study at one of their madrassas. In his frame of mind, Ahmed readily agreed.

At that point, the police came back to see him. This time though it was not to harass him. They simply wanted him to talk to someone named Mahmoud before he left the country. Mahmoud is not his real name.

Ahmed was very suspicious of this traitor who worked for the police. Before each meeting, he patted him for wires, he argued with him defensively for months and he tried to destroy Mahmoud's religious claims. He asked for help from his friends at the mosque to defeat Mahmoud' assertions.

They couldn't do it.

In the end, he realized that the religion he was sold at the mosque was not what it was.  Mahmoud also showed him that he could keep his Muslim identity and continue to live and prosper in Denmark.

Since then, Ahmed finished high school and is about to graduate from university. And he got married recently.

"I'm happy right now. I see my future in Denmark. I couldn't see that before because it was all dark," he says.

"And now that I'm actually finished with the programme. I hope that personally I'm going to be a mentor some day and help other people who have been in my situation."

Let's take a look at the case through my hypothesis.

Weak national identity, check.

First generation father unable to provide a national narrative and falls back on Islam, check.

Second generation kid whose identity could not withstand an Islamic challenge, check.

Mosque and radical imam selling him a different religion, check.

Hostile reaction from society, check.

Radical imam nudging him to join Jihad for salvation, check.

Under normal circumstances, Ahmed would have ended first in Pakistan and then he would have moved either to Afghanistan or Syria to become one of the thousands of expandable young people.

Gun fodder for Jihadis.

This one has a happy end thanks to what is known as the Aarhus model where a knowledgeable mentor replaces both the father and the imam to remove the effects of the first two premises of my framework.

Basically, the mentor knows that the national identity is too weak and the Muslim identity will take over regardless. So he does not fight off the Muslim identity. Instead, he disputes the Wahhabi foundations of that identity and offers irrefutable religious arguments that substantiate a moderate identity. This new Muslim identity does not isolate the Muslim person from the larger society and allows for their integration into it.

Once the first two premises are gone and the isolation and the ensuing social control disappears, the third element, i.e., the hostility from society dissipates gradually.

One more thing.

The framework I put forward is the only one that explains the difference between the first and subsequent generations.

With all its slick propaganda and supposedly solid religious arguments ISIS is unable to move the first generation of immigrants.

So they exclusively focus on the second generation.

The poster you see on the right is designed and calibrated for these kids along with all the clips and social media messages.

Accordingly, ISIS produces thousands of video clips in tens of languages. You name a language, chances are they have a clip in it. Hindi, yes, Russian, yes, Japanese, yes.

Do you know what two languages are missing?

Spanish and Italian.

According to researcher Javier Lesaca, who took on the thankless task of watching every video clip produced by ISIS, they have never produced a single clip in Spanish or Italian.

Don't you think this is odd?

And, if so, can you guess why?

This is because, as I mentioned before, Muslim immigration to Spain and Italy began in the 1990s and they still have no significant second generation to speak of. Which means all current efforts of radicalization would be wasted.

If you wait another ten years, you can test my hypothesis in Andalusia.

But I certainly hope it does not come to that.

Greece and Germany Debate Signalling Profound Changes in EU

The main feedback I got on my previous post on Grexit was along the lines of, "well it was a nice and tidy argument but you were too hard on Germany and besides, if any of your points contained even a germ of truth surely someone would have mentioned them."

I am not ashamed to admit that I was fairly hard on blond and blue-eyed Northern gods.

However, this is not because I believe in their innate propensity to push their swarthy neighbors into bankruptcy or worse; it is because, in this case, nothing else explains their behavior.

As for no one else mentioning my points, there are a few lone voices expressing similar concerns, but on the whole, it is true that the corporate media's verbose reporting is so devoid of meaningful content that it looks like a textbook case of Oh Dearism.

The early stuff about Varoufakis-the-bike-riding-bad-boy has now been replaced with Tsipras the- tieless-intransigent-ideologue-pinko. There are breathless tidbits about the President of the Commission's disappointment with that young man. And of course the perennial zombie lie about Greek people being lazy southerners who want to live off German tax payers underlines all discussion on the subject.

In short, when you read up on Greece you get the impression that austerity is the only thing that will cure the Greek economy, the IMF and members of the troika are doing their best to help the lazy, lying and stubborn Greeks and Germany is bending over backwards to accommodate the unreasonable demands of the lefty Greek government.

Let's review together the main issues to determine if, heaven forbid, I wronged the Aryan nations.

Austerity: Best Cure for the Greek Economy?

Roughly five years ago, the IMF, ECB and the EU Commission told the Greeks that they should accept austerity measures if they wanted to survive, fix their economy and stay in the Eurozone.

And so they did.

Take a look at the chart below. The line above is the IMF projection of Greek growth five years ago.

Now take a look at the line below. This is where Greek economy landed after five years of austerity measures. in fact, in the intervening years, the country's debt to GDP ratio worsened.

This is from the conservative and pro-market CNBC:

Urging a "Yes" vote, European leaders and their supporters in private institutions claim more austerity would reinvigorate the Greek economy and permit Greeks to keep the euro as their currency, but such claims simply contradict the facts.

Already, the Troika, led by German Chancellor Angela Merkel and IMF Managing Director Christine Lagarde, has imposed five years of budget cuts, higher taxes and labor market adjustments. The Greeks have endured a 25- percent contraction in GDP, 25-percent cut in private-sector wages and 25 percent unemployment.

Greece's debt-to-GDP ratio has soared to 180 percent from 130 percent of GDP, and that is an impossible burden to repay.

This is from a Nobel Laureate:

If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus. 

So why didn’t this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it.

Actually, you don't even need a Nobel prize to make the point. There is a basic logic here. In the early days of the crisis, I quoted a commentator who said that asking Greece to pay its debt while shrinking its economy is like trying to milk a cow without feeding it.

This is from another Nobel Laureate:

Of course, the economics behind the programme that the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) foisted on Greece five years ago has been abysmal, resulting in a 25% decline in the country’s GDP. I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece’s rate of youth unemployment, for example, now exceeds 60%.

But what about the billions upon billions of bailout funds that the troika gave to Greece?

Glad you asked:

We should be clear: almost none of the huge amount of money loaned to Greece has actually gone there. It has gone to pay out private-sector creditors – including German and French banks. Greece has gotten but a pittance, but it has paid a high price to preserve these countries’ banking systems.

And, from day one, saving German and French banks have always been the cornerstone of these bailout efforts.

Given these facts, why do you think the troika and Germany insist on austerity measures?

The Troika Negotiating Earnestly for a Fair Outcome?

The so-called troika is composed of the European Commission (EC), European Central Bank (ECB) and the International Monetary Fund (IMF).

This is how Paul Krugman sees them:

Don’t be taken in by claims that troika officials are just technocrats explaining to the ignorant Greeks what must be done. These supposed technocrats are in fact fantasists who have disregarded everything we know about macroeconomics, and have been wrong every step of the way. 

Let's see how they did in all this.

European Commission

If you know a little bit about the EU institutions you know that the European Commission (EC) is a fairly powerless organization. Its predecessor in the European Coal and Steel Community (ECSC) had real power but once the Treaty of Rome was signed in 1957 and the EC institutions were subsequently "harmonized" the Commission became a toothless body.

While it is hailed as the executive branch of the EU system, it is more like the Secretariat of the Council of Ministers. Consequently, no Commissioner would dare to take on any minister and especially a Prime Minister of any member state, including Luxembourg's, their tiniest member.

Which makes the hostile, aggressive and downright insulting tone of the EC President Jean-Claude Juncker throughout these negoations unprecedented.

Look at the patronizing and cringe-inducing picture on the right. Have you ever seen a politician do this to another politician?

It is like Tony Soprano affectionately slapping one of his foot soldiers.

These are some of the recent headlines (if you Google "Juncker Tsipras")

Jean-Claude Juncker accuses Alexis Tsipras of lying
EU's Juncker snubs Greek PM after "absurd debt deal" rebuff
EU's Juncker rebukes Greece's Tsipras
Juncker spurns Tsipras meeting
EU Chief feels "betrayed" by Tsipras

I am pretty certain that no President of EC has ever called the Prime Minister of a member country a liar. But it is now an almost daily occurrence. And no one seems to object.

As the BBC put it:

It's hard to remember the last time a president of the European Commission used such blunt, undiplomatic and sometimes angry language about the government of a member state.

Moreover, the Commission intervened into the Greek debate to urge Greek voters to say yes to the austerity question. In fact, Juncker crossed another line when he claimed that a "no" vote would mean Greece would have to stop using the Euro and would have to leave the EU.

Neither of these propositions is true. No one can stop any country from using any currency. Liberia and Zimbabwe are doing it and Scotland and Quebec might have done it if they had voted for independence. And there is simply no mechanism to expel a country out of EU. It is blatant manipulation and fear-mongering.

European Central Bank 

Throughout the talks, ECB was providing a lifeline to Greek banks to keep them afloat. In fact, the support was seen by some as enabling the Greek government's stubborn stance. But ECB did not want to be the one to cause a major economic crisis in Greece.

"The ECB cannot be seen to be an agent of economic collapse in Greece," one source close to the ECB told me.

"It will bend over backwards to see if they can find a way to support the banks through the uncertain days before the poll."

Yet, as soon as Tsipras announced a referendum the ECB, which is supposed to be an independent institution, suddenly stopped its support to Greek banks.

This is what triggered the closing of banks and the imposition of capital controls.

And the latest opinion polls suggest that the 60€ daily withdrawal policy (triggered by the ECB move) is favoring the Yes vote.

International Monetary Fund

Under Christine Lagarde, IMF turned into an interesting organization that can promote contradictory positions at once. While it defends very strict austerity measures in Greece, IMF questions the soundness of austerity programs and argues for large stimulus policies everywhere else. Monetarist in Greece, Keynesian everywhere else.

How do you explain that contradiction?

Wouldn't you say that it is as if IMF is pushing Greece under the bus to do the bidding of some powerful countries and institutions? Actually, its rude and intransigent and terribly micromanaging conduct during the negotiations are unusual enough to lend support to such an hypothesis.

For instance, in early June the IMF team abruptly left the negotiating table and immediately flew home citing irreconcilable differences between the two sides. Do you know what that huge divide was?

Greek side agreed to IMF's surplus targets but the method they wanted to employ to achieve them was higher taxes instead of more spending cuts. And IMF walked because it preferred spending cuts to higher taxes.

This ought to be a negotiation about targets for the primary surplus, and then about debt relief that heads off endless future crises. And the Greek government has agreed to what are actually fairly high surplus targets, especially given the fact that the budget would be in huge primary surplus if the economy weren’t so depressed. But the creditors keep rejecting Greek proposals on the grounds that they rely too much on taxes and not enough on spending cuts. So we’re still in the business of dictating domestic policy.

Both the Commission and the IMF insisted that instead of higher taxes the Greek government should reduce pensions and salaries. In fact, the offer by Juncker which was presented as a last ditch effort to find a way out of the impasse was not about a new alternative but a minor tweak on poor people's pension:

The new offer is believed to have centred on a change in terms to Ekas - a top-up given to poorer Greek pensioners that Athens prefers to scrap by 2020, but Europe wants phasing out earlier.

 Here is Krugman's take on IMF behavior:

Talk to IMF people and they will go on about the impossibility of dealing with Syriza, their annoyance at the grandstanding, and so on. But we’re not in high school here. And right now it’s the creditors, much more than the Greeks, who keep moving the goalposts. So what is happening? Is the goal to break Syriza? Is it to force Greece into a presumably disastrous default, to encourage the others?

Notice that he also thinks that IMF's stated goal could not explain its attitude and there must be a hidden agenda like breaking Syriza.

There is one more thing. Just two days before the proposed referendum, IMF hastily released a report stating that Greece might need an additional $50 billion because of the policy blunders of Syriza since January 2015.

It is as if they want Syriza out.

Germany Want Greece to Recover

As I mentioned in my previous post, Germany, first through its combative Finance Minister Woflgang Scahuble and later through Angela Merkel did everything humanly possible to block any loosening of the austerity terms, to humiliate Syriza and to undermine the Greek government.

In fact, Schauble is the first politician to openly call both the Greek Finance Minister and Prime Minister liars. This is the latest:

“Greece is in a difficult situation, but purely because of the behaviour of the Greek government … Seeking the blame outside Greece might be helpful in Greece, but it has nothing to do with reality.

“The Greek government is not doing its people any favours at all if it keeps making completely false statements. Nobody else is to blame for their situation.”

The German bad faith is such that when Alexis Tsipras came back with a counter proposal accepting most of the German imposed austerity measures in exchange for loosening some repayment conditions, first Schauble, then Merkel told him to take a hike.

They would not even look at the proposals or dignify it with an answer. They said that they would not negotiate since the bailout period has already expired.

When pressed Merkel reiterated her position that Germany would not negotiate with Greece and will reconsider new talks after the referendum.

To recap, let's stipulate that this is the current situation,

Yet, neither Germany's finance ministry, nor any other European government or competent private institution, has tabled a credible analysis demonstrating how more austerity and labor-market reforms (read more layoffs and wage cuts) will instigate growth and not result in even bigger losses for bondholders down the road.

Another round of austerity would only further pummel the Greek economy, and impose economic deprivation that European leaders should be ashamed to engineer.

Once again, why do you think Germany insist on more austerity?

Is it just to break Syriza in order to prevent a Podemos win in Spain?

Or is it to restructure EU to become a two-tier space with German and other northern economies at the center and debt-hobbled and dominated southern economies at the periphery?

If you agree that PIGS countries can never pay back their debt with the current austerity policies, you already have your answer.

When the Yes side wins and Syriza resigns, Aryan eyes will be smiling.