Greece, and what to do with Europe

So.... Greece looks like it voted for a beating. To be fair to the average Greek voter, they had a pretty poor choice. Vote for the guys who got you in to this mess (PASOK - centre left or ND Centre right).

On the other hand vote for a bunch of idealistic lefties. Not really knowing what you'll get or which currency you will be using next week.

Tough choice.

But the whole Greek thing is like a microcosm of the where the west sits. Basically, we have all had a good run. We got rich on colonialism, fought each other to a standstill, stayed rich on exploitation of third world resource, and now as China & other brics rise we face a challenge to our collective dominance for the first time since the renaisance. As Greece was a victim of Ottoman colonialism, you can see why they feel it isn't up to them to pick up the tab. But, like my mother was very fond of reminding me, life isn't fair.

Except real wages for ordinary people have been falling for over a decade. For those poorer than the average, their share of the pie has been in decline since around 1980.

Normal people have been chomping on austerity since long before the Lehman collapse. In fact you could easily argue that the combination of falling real wages and easier borrowing was the root cause of the whole crisis (And some people whose job it is to know agree with me.)

Not that any of that helps us see that way out. But what it does tell us is what our next steps should be.

1) Start cancelling debt. There is too much debt. People have borrowed to much. And (to state the obvious) this means people have lent too much. We have tried kicking the borrowers. For a LONG time we have tried this. Time to give the lenders a damn good kicking too. If you have lent money to a household or bank that can't afford to pay, tough. You lost that money.

2) Start restricting household access to credit. This is not so fashionable. It will impact the profits of banks (aaaahhhhhh) and the bonuses of bankers (diddums). But it will  limit the extent to which credit bubbles can build up in the future

3) Separate investment banks from retail banks. Separate them sbsolutely. I am not interested in Chinese walls or clever solutions that management consultants propose, if there is a unversal banks, one side will have to sell off the other. Simples. End of.

Doubtless the financial insdustry guys won't like it. That is the first endorsement any proposed solution should be looking for.