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German election's message to Greece: looks like Grexit is coming

Election result calls into question prospect of future Greek bailouts paving way for Grexit.

Alexander Mercouris

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One little debated consequence of Sunday’s German election is that it significantly increases the prospect of Grexit, i.e. of Greece leaving the eurozone.
The last bailout of Greece in 2015 was not uncontroversial.  The IMF bureaucracy has never made any secret of its doubts about it.  Some of the other creditor states of the EU – for example Slovakia and Finland – are known to have been unhappy, whilst economists in the US and Britain were outspoken in their opposition.
However the bailout agreement was in the end railroaded through because it had the backing of Germany, by far the strongest state in the EU.
The bailout agreement was however also controversial in Germany itself.  The Finance Ministry and the Bundesbank are known to have had their doubts, as did many members of Chancellor Merkel’s CDU party.
The best known skeptic was however Germany’s Finance Minister Wolfgang Schäuble, who proposed at the height of the bailout crisis that Greece leave the eurozone “temporarily” in return for a haircut of its debt.  Unofficially it is reported that he also proposed that Greece be given a 50 billion euro parting gift to tide it over the inevitable turbulence that would follow in the aftermath of its leaving the eurozone.
Chancellor Merkel is known to have given serious thought to Schäuble’s proposal, and he at least seems to have thought for a short time that it had her backing.
However in the end the proposal was ditched in favour of another bailout of Greece following strong objections to Schäuble’s proposal from France and Italy (who were worried for the future of the eurozone if one of its member states left) and above all from the US, which saw Greece’s continued membership of the eurozone and of the EU as vitally necessary for NATO’s continued presence in the eastern Mediterranean  It was in fact apparently a telephone call from US President Obama that finally persuaded Chancellor Merkel to drop Schäuble’s proposal and give instead the proposed bailout of Greece her backing.
Though there was some unhappiness in Germany that the country had again been pushed into bailing out Greece, in the absence of any parties in the Bundestag opposed to the bailout Merkel had no difficulty getting it through.
That position has however now changed.
The AfD was originally set up to oppose bailouts by Germany of the eurozone’s weakest states, and it is a certainty that if any further bailouts are ever proposed whether of Greece or of any other of the eurozone’s weaker states it will vehemently oppose them.  That means that unlike in 2015 if any further bailout of Greece is proposed in future, unlike in 2015 there will be a party in the Bundestag which is guaranteed to oppose it.
However of even greater importance than the opposition of the AfD is that the FDP – Merkel’s all but certain future coalition partner – has also clearly signalled its strong opposition to any future bailouts, whether of Greece or of anyone else.  In the words of the FDP’s leader Christian Lindner during the election campaign

If there was a debt cut for Greece, as the International Monetary Fund suggests, then we should be open-minded to finally solving the problem.  Greece gets a debt cut, the money is gone, but for that Greece has to leave the euro zone, gets a new currency of its own which it can devalue and increase its competitiveness in tourism

In other comments Lindner is also reported to have said that Greece should be given a payoff to help it through the expected turbulence it will suffer once it leaves the eurozone.
What Lindner is proposing is of course the same as what Wolfgang Schäuble proposed in 2015.  Moreover it appears that Lindner is angling to replace Schäuble as Finance Minister.
Here it is necessary to make a number of points.
Firstly, it is a certainty that sooner or later Greece will need a further bailout if it is to remain in the eurozone.
At the present time the official view in Greece is that the worst of the crisis has passed, and that the country is recovering.
I do not know anyone in Greece who shares that view.
What is for the moment sustaining Greece’s economy is a temporary revival of the eurozone economy caused by the European Central Bank’s bond buying and quantitative easing programme.
However it is debatable whether the European Central Bank will be able to continue with this programme for much longer.  Not only is opposition to the programme in Germany since the election certain to grow, but the general global tightening of monetary conditions as a result of the US Federal Reserve Board’s unwinding of its quantitative easing programme appears to make the European Central Bank’s own bond buying and quantitative easing programme unsustainable.
All it will take is a dip in the economy of the eurozone for Greece to fall back into crisis, and with the European Central Bank’s bond buying and quantitative easing programme certain to end before long I know scarcely anyone in Greece who is properly informed about the situation who doubts that sooner or later this is what will happen.
When it does Greece will need another bailout if it is to stay in the eurozone.
Secondly, though Lindner’s statements and those of the FDP could not be more emphatic, it is likely that if a further Greek bailout situation arises he and the FDP will come under strong pressure to reverse their stance.  The same economic and geopolitical factors that lay behind the 2015 Greek bailout will still be there, making it a certainty that Lindner and the FDP will face demands from the EU bureaucracy, from the European Central Bank, from the Atlanticist wing of the German establishment and from the US to soften their stance.
However it is doubtful they will do so.  The FDP lost its position in the Bundestag following the previous parliamentary elections of 2013 in part because as Chancellor Merkel’s junior coalition partner it went along with all her orthodoxies.  The FDP will not want to be put in the same position again.
Given the strong position against further a bailout that Lindner and the FDP have taken, and the likely popularity within Germany of that stance, there will be strong opposition within the FDP if Lindner shows any inclination to reverse it, and it must be unlikely he will do so.
The odds must therefore be that when the next demand from Greece for another bailout comes the FDP will oppose it, in which case Merkel will risk the future of her coalition if she insists on it.  Moreover she will do so in support of a policy which is unpopular, and which will be opposed in the Bundestag and in the country by the AfD, leading to a high probability that opposition to a further bailout within the CDU will also crystallise.
Indeed it is likely that as the crisis within Greece resumes – as sooner or later it will – the knowledge of the opposition to a further bailout in Germany will have a chilling effect, and will harden opposition to the bailout in other countries in the eurozone which would have to agree to it, like Slovakia and Finland.
In that case it becomes extremely difficult to see how a further bailout could take place, in which case despite the opposition of France, Italy, the EU bureaucracy, the US and the Greek elite, a Grexit (ie. Greece’s exit from the eurozone) will finally have to take place.
Whilst it is too soon at the moment to say that the German election has definitely paved the way for a Grexit, realistically that looks like the most likely outcome.
There is a commonly expressed view that if a Grexit takes place and Greece finally leaves the eurozone, the eurozone itself will unravel as it is exposed as nothing more than a currency union rather than a true single currency
I have never shared this view.  On the contrary I believe that the eurozone will continue better without Greece, which will remain in all other respects a member state of the EU.
Following the German election it now looks as if before long this opinion will be put to the test.

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EXPLOSIVE: Michael Cohen sentencing memo exposes serial liar with nothing to offer Mueller (Video)

The Duran Quick Take: Episode 38.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris take a quick look at the Michael Cohen sentencing memo which paints the picture of a man who was not as close to Trump as he made it out to be…a serial liar and cheat who leveraged his thin connections to the Trump organization for money and fame.

It was Cohen himself who proudly labelled himself as Trump’s “fixer”. The sentencing memo hints at the fact that even Mueller finds no value to Cohen in relation to the ongoing Trump-Russia witch hunt investigation.

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Via Axios

Special counsel Robert Mueller and federal prosecutors in New York have each submitted sentencing memos for President Trump’s former personal attorney Michael Cohen, after Cohen pleaded guilty in two different cases related to his work for Trump and the Trump Organization.

The big picture: The Southern District of New York recommended Cohen serve a range of 51 to 63 months for four crimes — “willful tax evasion, making false statements to a financial institution, illegal campaign contributions, and making false statements to Congress.” Mueller, meanwhile, did not take a position on the length of Cohen’s statement, but said he has made substantial efforts to assist the investigation.

Southern District of New York

Mueller investigation

Michael J. Stern, a federal prosecutor with the Justice Department for 25 years in Detroit and Los Angeles noted via USA Today

In support of their request that he serve no time in prison, Cohen’s attorneys offered a series of testimonials from friends who described the private Michael Cohen as a “truly caring” man with a “huge heart” who is not only “an upstanding, honorable, salt of the earth man” but also a “selfless caretaker.”

The choirboy portrayed by Cohen’s lawyers stands in sharp opposition to Cohen’s public persona as Trump’s legal bulldog, who once threatened a reporter with: “What I’m going to do to you is going to be f—ing disgusting. Do you understand me?”

Prosecutors focused their sentencing memo on Cohen as Mr. Hyde. Not only did they detail Cohen’s illegal activities, which include millions of dollars of fraud, they also recognized the public damage that stemmed from his political crimes — describing Cohen as “a man who knowingly sought to undermine core institutions of our democracy.”

Rebuffing efforts by Cohen’s attorneys to recast him as a good guy who made a few small mistakes, prosecutors cited texts, statements of witnesses, recordings, documents and other evidence that proved Cohen got ahead by employing a “pattern of deception that permeated his professional life.” The prosecutors attributed Cohen’s crimes to “personal greed,” an effort to “increase his power and influence,” and a desire to maintain his “opulent lifestyle.”

Perhaps the most damning reveal in the U.S. Attorney’s sentencing memo is that Cohen refused to fully cooperate. That’s despite his public relations campaign to convince us that he is a new man who will cooperate with any law enforcement authority, at any time, at any place.

As a former federal prosecutor who handled hundreds of plea deals like Cohen’s, I can say it is extremely rare for any credit to be recommended when a defendant decides not to sign a full cooperation deal. The only reason for a refusal would be to hide information. The prosecutors said as much in their sentencing memo: Cohen refused “to be debriefed on other uncharged criminal conduct, if any, in his past,” and “further declined” to discuss “other areas of investigative interest.”

 

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Canada to Pay Heavy Price for Trudeau’s Groupie Role in US Banditry Against China

Trudeau would had to have known about the impending plot to snatch Huawei CFO Wanzhou and moreover that he personally signed off on it.

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Authored by Finian Cunningham via The Strategic Culture Foundation:


You do have to wonder about the political savvy of Canadian Prime Minister Justin Trudeau and his government. The furious fallout from China over the arrest of a senior telecoms executive is going to do severe damage to Canadian national interests.

Trudeau’s fawning over American demands is already rebounding very badly for Canada’s economy and its international image.

The Canadian arrest – on behalf of Washington – of Meng Wanzhou, chief financial officer of Chinese telecom giant Huawei, seems a blatant case of the Americans acting politically and vindictively. If the Americans are seen to be acting like bandits, then the Canadians are their flunkies.

Wanzhou was detained on December 1 by Canadian federal police as she was boarding a commercial airliner in Vancouver. She was reportedly handcuffed and led away in a humiliating manner which has shocked the Chinese government, media and public.

The business executive has since been released on a $7.4 million bail bond, pending further legal proceedings. She is effectively being kept under house arrest in Canada with electronic ankle tagging.

To add insult to injury, it is not even clear what Wanzhou is being prosecuted for. The US authorities have claimed that she is guilty of breaching American sanctions against Iran by conducting telecoms business with Tehran. It is presumed that the Canadians arrested Wanzhou at the request of the Americans. But so far a US extradition warrant has not been filed. That could take months. In the meantime, the Chinese businesswoman will be living under curfew, her freedom denied.

Canadian legal expert Christopher Black says there is no juridical case for Wanzhou’s detention. The issue of US sanctions on Iran is irrelevant and has no grounds in international law. It is simply the Americans applying their questionable national laws on a third party. Black contends that Canada has therefore no obligation whatsoever to impose those US laws regarding Iran in its territory, especially given that Ottawa and Beijing have their own separate bilateral diplomatic relations.

In any case, what the real issue is about is the Americans using legal mechanisms to intimidate and beat up commercial rivals. For months now, Washington has made it clear that it is targeting Chinese telecoms rivals as commercial competitors in a strategic sector. US claims about China using telecoms for “spying” and “infiltrating” American national security are bogus propaganda ruses to undermine these commercial rivals through foul means.

It also seems clear from US President Donald Trump’s unsubtle comments this week to Reuters, saying he would “personally intervene” in the Meng case “if it helped trade talks with China”, that the Huawei executive is being dangled like a bargaining chip. It was a tacit admission by Trump that the Americans really don’t have a legal case against her.

Canada’s foreign minister Chrystia Freeland bounced into damage limitation mode following Trump’s thuggish comments. She said that the case should not be “politicized” and that the legal proceedings should not be tampered with. How ironic is that?

The whole affair has been politicized from the very beginning. Meng’s arrest, or as Christopher Black calls it “hostage-taking”, is driven by Washington’s agenda of harassment against China for commercial reasons, under a legal pretext purportedly about Iranian sanctions.

When Trump revealed the cynical expediency of him “helping to free Wanzhou”, then the Canadians realized they were also being exposed for the flunkies that they are for American banditry. That’s why Freeland was obliged to quickly adopt the fastidious pretense of legal probity.

Canadian premier Justin Trudeau has claimed that he wasn’t aware of the American request for Wanzhou’s detention. Trudeau is being pseudo. For such a high-profile infringement against a senior Chinese business leader, Ottawa must have been fully briefed by the Americans. Christopher Black, the legal expert, believes that Trudeau would had to have known about the impending plot to snatch Wanzhou and moreover that he personally signed off on it.

What Trudeau and his government intended to get out of performing this sordid role for American thuggery is far from clear. Maybe after being verbally mauled by Trump as “weak and dishonest” at the G7 summit earlier this year, in June, Trudeau decided it was best to roll over and be a good little puppy for the Americans in their dirty deed against China.

But already it has since emerged that Canada is going to pay a very heavy price indeed for such dubious service to Washington. Beijing has warned that it will take retaliation against both Washington and Ottawa. And it is Ottawa that is more vulnerable to severe repercussions.

This week saw two Canadian citizens, one a former diplomat, detained in China on spying charges.

Canadian business analysts are also warning that Beijing can inflict harsh economic penalties on Ottawa. An incensed Chinese public have begun boycotting Canadian exports and sensitive Canadian investments in China are now at risk from being blocked by Beijing. A proposed free trade deal that was being negotiated between Ottawa and Beijing now looks dead in the water.

And if Trudeau’s government caves in to the excruciating economic pressure brought to bear by Beijing and then abides by China’s demand to immediately release Meng Wanzhou, Ottawa will look like a pathetic, gutless lackey to Washington. Canada’s reputation of being a liberal, independent state will be shredded. Even then the Chinese are unlikely to forget Trudeau’s treachery.

With comic irony, there’s a cringemaking personal dimension to this unseemly saga.

During the 197os when Trudeau’s mother Margaret was a thirty-something socialite heading for divorce from his father, then Prime Minister Pierre Trudeau, she was often in the gossip media for indiscretions at nightclubs. Rolling Stones guitarist Keith Richards claims in his autobiography that Margaret Trudeau was a groupie for the band, having flings with Mick Jagger and Ronnie Wood. Her racy escapades and louche lifestyle brought shame to many Canadians.

Poor Margaret Trudeau later wound up divorced, disgraced, financially broke and scraping a living from scribbling tell-all books.

Justin, her eldest son, is finding out that being a groupie for Washington’s banditry is also bringing disrepute for him and his country.

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US Commits To “Indefinite” Occupation Of Syria; Controls Region The Size Of Croatia

Raqqa is beginning to look more and more like Baghdad circa 2005.

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Via Zerohedge


“We don’t want the Americans. It’s occupation” — a Syrian resident in US-controlled Raqqa told Stars and Stripes military newspaper. This as the Washington Post noted this week that “U.S. troops will now stay in Syria indefinitely, controlling a third of the country and facing peril on many fronts.”

Like the “forever war” in Afghanistan, will we be having the same discussion over the indefinite occupation of Syria stretching two decades from now? A new unusually frank assessment in Stars and Stripes bluntly lays out the basic facts concerning the White House decision to “stay the course” until the war’s close:

That decision puts U.S. troops in overall control, perhaps indefinitely, of an area comprising nearly a third of Syria, a vast expanse of mostly desert terrain roughly the size of Louisiana.

The Pentagon does not say how many troops are there. Officially, they number 503, but earlier this year an official let slip that the true number may be closer to 4,000

A prior New Yorker piece described the US-occupied area east of the Euphrates as “an area about the size of Croatia.” With no Congressional vote, no public debate, and not even so much as an official presidential address to the nation, the United States is settling in for another endless occupation of sovereign foreign soil while relying on the now very familiar post-911 AUMF fig leaf of “legality”.

Like the American public and even some Pentagon officials of late have been pointing out for years regarding Afghanistan, do US forces on the ground even know what the mission is? The mission may be undefined and remain ambiguously to “counter Iran”, yet the dangers and potential for major loss in blood and treasure loom larger than ever.

According to Stars and Stripes the dangerous cross-section of powder keg conflicts and geopolitical players means “a new war” is on the horizon:

The new mission raises new questions, about the role they will play and whether their presence will risk becoming a magnet for regional conflict and insurgency.

The area is surrounded by powers hostile both to the U.S. presence and the aspirations of the Kurds, who are governing the majority-Arab area in pursuit of a leftist ideology formulated by an imprisoned Turkish Kurdish leader. Signs that the Islamic State is starting to regroup and rumblings of discontent within the Arab community point to the threat of an insurgency.

Without the presence of U.S. troops, these dangers would almost certainly ignite a new war right away, said Ilham Ahmed, a senior official with the Self-Administration of North and East Syria, as the self-styled government of the area is called.

“They have to stay. If they leave and there isn’t a solution for Syria, it will be catastrophic,” she said.

But staying also heralds risk, and already the challenges are starting to mount.
So a US-backed local politician says the US can’t leave or there will be war, while American defense officials simultaneously recognize they are occupying the very center of an impending insurgency from hell — all of which fits the textbook definition of quagmire perfectly.

The New Yorker: “The United States has built a dozen or more bases from Manbij to Al-Hasakah, including four airfields, and American-backed forces now control all of Syria east of the Euphrates, an area about the size of Croatia.”

But in September the White House announced a realignment of its official priorities in Syria, namely to act “as a bulwark against Iran’s expanding influence.” This means the continued potential and likelihood of war with Syria, Iran, and Russia in the region is ever present, per Stripes:

Syrian government troops and Iranian proxy fighters are to the south and west. They have threatened to take the area back by force, in pursuit of President Bashar Assad’s pledge to bring all of Syria under government control.

Already signs of an Iraq-style insurgency targeting US forces in eastern Syria are beginning to emerge.

In Raqqa, the largest Syrian city at the heart of US occupation and reconstruction efforts, the Stripes report finds the following:

The anger on the streets is palpable. Some residents are openly hostile to foreign visitors, which is rare in other towns and cities freed from Islamic State control in Syria and Iraq. Even those who support the presence of the U.S. military and the SDF say they are resentful that the United States and its partners in the anti-ISIS coalition that bombed the city aren’t helping to rebuild.

And many appear not to support their new rulers.

We don’t want the Americans. It’s occupation,” said one man, a tailor, who didn’t want to give his name because he feared the consequences of speaking his mind. “I don’t know why they had to use such a huge number of weapons and destroy the city. Yes, ISIS was here, but we paid the price. They have a responsibility.”

Recent reports out of the Pentagon suggests defense officials simply want to throw more money into US efforts in Syria, which are further focused on training and supplying the so-called Syrian Democratic Forces (or Kurdish/YPG-dominated SDF), which threatens confrontation with Turkey as its forces continue making preparations for a planned attack on Kurdish enclaves in Syria this week.

Meanwhile, Raqqa is beginning to look more and more like Baghdad circa 2005:

Everyone says the streets are not safe now. Recent months have seen an uptick in assassinations and kidnappings, mostly targeting members of the security forces or people who work with the local council. But some critics of the authorities have been gunned down, too, and at night there are abductions and robberies.

As America settles in for yet another endless and “indefinite” occupation of a Middle East country, perhaps all that remains is for the president to land on an aircraft carrier with “Mission Accomplished” banners flying overhead?

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