Bulletins and News Discussion from March 3rd to March 9th, 2025 - Austerity And Its Consequences - COTW: Greece

Image is of a crowd protesting in Athens.

Last week, on Friday, hundreds of thousands of Greeks poured into the streets to strike and protest on the second anniversary of the deadliest train crash in Greek history, in which 57 people died when a passenger train collided with a freight train. On this February 28th, public transportation was virtually halted, with train drivers, air traffic controllers, and seafarers taking part in a 24 hour strike - alongside other professions like lawyers, teachers, and doctors.

The train crash is emblematic of the decay of state institutions brought about from austerity being forced on Greece in the aftermath of the 2008 Great Recession, in which the IMF and the EU (particularly Germany) plundered the country and forced privatization. While Greece has somewhat recovered from the dire straits it was in during the early 2010s, the consequences of neoliberalism are very clearly ongoing. Mitsotakis' right-wing government has still not even successfully implemented the necessary safety procedures two years on, and so far, nobody has been convicted nor punished for their role in the accident. The austerity measures were deeply unpopular inside Greece and yet the government did not respond to, or ignored, democratic outcry.

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Investors dare to imagine a world beyond the dollar
Investors are starting to imagine a financial system without the US at its centre, handing Europe an opportunity that it simply must not miss.
This exercise in thinking the unthinkable comes despite a cacophony of noise in markets. Mansoor Mohi-uddin, chief economist at Bank of Singapore, recently travelled to clients in Dubai and London. To his surprise, not one of them asked him about short-term issues like tech stocks or tweaks to interest rates. Instead, he says, “people were saying, ‘What’s going on?’ The free trade, free markets, globalisation era is over, and nobody knows what’s going to replace it.”
They refer, of course, to the new US administration. Within a month of retaking his seat at the White House, Donald Trump & co had all but trashed the transatlantic alliance, and ridden roughshod over the key checks, balances and institutions on which true US exceptionalism is built.
“It’s such a momentous change going on. If it continues like this, capital allocators will wonder: ‘Do I want to stay allocated to the US?’” Mohi-uddin says.
This cuts across asset classes. In stocks, the preference for Europe is clear — markets are streaking ahead of the US in a highly unusual pattern. But flighty stock markets are just the surface. The bit that really matters is the international use of the dollar, and dollar bond markets, as the supposedly risk-free bedrock of global finance.
This is already starting to show. On Tuesday, for instance, despite the shock of new US trade tariffs on Canada and Mexico, the dollar is not climbing in its usual fashion. Deutsche Bank says this in part reflects “the potential loss of the dollar’s safe-haven status”.
“We do not write this lightly,” wrote currencies analyst George Saravelos. “But the speed and scale of global shifts is so rapid that this needs to be acknowledged as a possibility.” What was once outlandish is now becoming plausible.
Economists close to Trump have been clear that they view the dollar’s status as the world’s pre-eminent reserve currency as a blessing and a curse — “burdensome” as adviser Stephen Miran put it. It remains a possibility — again unthinkable just a few weeks ago — that the US could seek to pull the dollar lower in an effort to support domestic manufacturing. But the US could also dismantle its own exorbitant privilege through accident rather than design by pushing the big beasts of bond markets — foreign central banks and other official reserve managers — into the arms of other nations.
The dollar makes up more than 57 per cent of global official reserves, according to benchmark data from the IMF, far in excess of the US’s slice of the global economy. The euro accounts for 20 per cent, and everyone else is picking up scraps.
Starry-eyed optimists have argued for years that the euro’s slice of the pie should be bigger, but they have been fighting reality. Europe’s bond markets are fragmented into constituent states, with Germany at the centre. The monetary cohesion is there but not the fiscal or strategic cohesion. No national market is simultaneously large, safe and liquid enough to suit a reserve manager’s needs. Super-sized trades leave a mark and in an emergency, these big hitters find only the slick US government bond market will do.
The EU has struggled to offer an alternative. That is where this moment in history comes in. Its urgent need for defence spending simply overwhelms the capacity of its individual national bond markets. Joint borrowing — easily said but devilishly tricky to do — is the obvious answer. The result could well be that Europe is thrust further to the centre of the global financial system.
The Covid-19 pandemic offered a taste of how pooling resources might work at scale. Then, bonds issued by the EU itself, rather than individual states, were met with enormous demand. The urgency of the present situation offers little choice but to move fast. “Collective action could be an answer, even if consensus has not built yet,” said analysts at rating agency S&P Global in a note last month.
If the EU could seize this moment, it would tap in to a deep well of willing buyers keen to trim US exposure. “Plenty of reserve managers could shift very quickly,” says Mohi-uddin. “There would be huge take-up.” US dominance of global debt markets does not have to end with a bang. Large, slow-moving investors would simply have to accumulate other assets rather than necessarily dumping their Treasuries. But over time, the result would be the same. Regime shifts of this kind do not happen often. But they do happen. Sterling was the global reserve currency once too.
Leave it to Comrade Trump to achieve the impossible, folks.
The question is what are they moving their assets into? Bitcoin and gold? lmao.
- Yeah I think the problem with this is there's no alternative to the dollar as a reserve currency at the moment. China is unwilling to let RMB be that, the euro is hopeless, bitcoin is not nearly large enough or practical at all for something like that. So we're stuck with the dollar, everything just becomes bumpier.
  
  Why won't China step in here? The opportunity is clearly there.
  
  The original poster here (https://hexbear.net/u/xiaohongshu) has more info that they've posted before, but basically China is unwilling to give up on their export oriented economic industrial model and transition to a consumption based model. The renminbi becoming a reserve currency would result in Chinese goods becoming less competitive, and their economy would be more about soaking up excess demand elsewhere and going from a creditor nation to a debtor nation rather than an industrial powerhouse that exports. For a number of reasons, chief amongst them worries about disruption and how the local job market would react, plus worries over how the United States would react (potentially even triggering a war) I don't think the CPC is currently considering that path.
  
  The gist of it is that printing the world currency means your economy becomes uniquely capable of buying foreign assets as well as foreign consumer goods. Meaning that if the RMB became the new dollar China would deindustrialize the same way the US did. China also has capital controls which serve to cushion the impact of global financial crises. They'd have to dismantle all that.
  
  Hmm maybe they’re thinking by establishing RMB as the dominant new reserve currency, that would put them on a direct course for conflict with the US (even though that’s inevitable anyway, but they don’t seem to be acting very much like that’s the case…). Like, all the bullshit causus belli would be there to sell to the US public, “China has usurped us on the global stage, we must reestablish ourselves through war.” Idk. Or maybe they don’t want to be turned into the powerful but lumbering giant beast with all the internal contradictions that would eventually lead to its collapse, like the US, or something
- The question is what are they moving their assets into? Bitcoin and gold? lmao.
  Why do you think that the US government is trying to exert more control over those two exact things?
- Love the EU optimism here. Good to have those high expectations to set up the hilariously large fall to reality
- If the EU could seize this moment, it would tap in to a deep well of willing buyers keen to trim US exposure.
  This would make sense except for the fact if the US economy tanks so too will the EU.

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