Louis Proyect: The Unrepentant Marxist

August 24, 2015

A brief response to Joe Firestone on IT/Grexit

Filed under: computers,Greece — louisproyect @ 5:44 pm

On August 18 I wrote an article in response to Joe Firestone, the author of an EBook titled “Austerity, Greece’s Debt Crisis and the Theft of Democracy” that had a chapter on the IT problems of a Grexit, which addressed earlier articles I had written.

Yesterday someone brought my attention to a follow-up on his blog (http://neweconomicperspectives.org/2015/08/on-the-it-problem-of-grexit-a-reply.html) that once again tries to strike a balance between Australian economist Billy Mitchell’s blithe assurance that the IT problems are minimal and my own insistence that it will be at least a three year effort to modify the systems. This will be a brief response to Firestone’s latest.

Firestone maintains that he is only for studying and evaluating some approaches. He also favors a phased implementation, something that is put forward concisely in a comment he made under his article:

  1. The mainframe application is undoubtedly very complex so there is a good possibility that Louis is right and the mainframe conversion to Drachma processing cannot be accomplished in the short time necessary for Grexit
  2. So, if we want to support a Grexit that may be necessary in the short term, then we must find a way to get around the need to convert the mainframe application in the short-term
  3. The two possibilities I suggest in my book deserve discussion as possible ways to avoid immediate conversion of the mainframe application and to have to deal with the complexities of the interaction between humans and the mainframe inherent in the operation of the application in the real world

This assumes that you can hold off converting “the mainframe application” for the future but that’s not the way that banking systems are put together as if they were Lego toys made up of discrete modules that can be assembled in phases.

Think of it this way. When you open a checking account, you sit at the desk of some bank officer who begins entering your information into a computer, starting with name, address, social security number, etc. He or she then issues you a temporary ATM card that can be used immediately for deposits and withdrawals.

In the ensuing months, customers might take out a credit card from the bank and afterwards a mortgage and/or an auto loan. And each month they expect a statement that will have an accurate record of their transactions, both debits and credits. I am sure everybody is accustomed to this unless they are used to keeping cash under a mattress.

The implicit assumption (bordering on explicit) in both Mitchell and Firestone’s presentation of the problem is that such a “phase” is essential to moving to a drachma. I can certainly understand why someone might think in those terms because that is generally how we relate to a bank—as a customer. I should add that the applications that handle such relationships are generally referred to as belonging to the “front office”.

Unfortunately, most “back office” operations must be converted on the very day that you implement a new front office based on a drachma since they are designed to support the managers and clerks who are invisible to the customer but critical to bank operations.

For example, the accounting department of a bank is fed data aggregated on a daily basis from various sources in order to populate a General Ledger, which is the source of profit and loss statements and other essential reports for treasurers, auditors and the like. Your deposits and withdrawals are lumped together with those of other customers and end up in buckets identified by a unique General Ledger Account Number, one of which might reflect Mortgages. Needless to say, knowing how much is owed to the bank in this category is essential to a bank based on the 2008 financial crisis.

So if the accounting software is still denominated in euros, what are you supposed to do? Use these for a couple of years until the next phase kicks in?

This does not begin to address the problem of being able to rely on accounting systems once they are converted to handle the drachma. Banks have historical data that is used to generate reports that reflect financial trends. Since 2003, data has been captured as euro-denominated. If you want to study how the mortgage business has been faring over a ten-year period, you need to write conversion software to update computer files going back to the day Greece switched from the drachma to the euro. You also need to make sure that all back-office applications are checked for hard-coded tests for a euro amount, as I have pointed out a number of times.

I know that most of my readers and those who have seen my posts on Naked Capitalism care little about the financial analysis conducted by bank officers in order to make business decisions but as long as Greece remains capitalist, that is the name of the game. This is not a problem limited to banks. It applies as well to insurance companies, brokerage houses, manufacturers, and any other large-scale capitalist enterprise.

Now it is entirely possible that at some point Greece might elect the candidates of the new Popular Unity party that is a leftwing split from Syriza and that is committed to a Grexit, at least if you take them at their word. They may consider the conversion to a drachma to be cost-justified even if it entails the wrenching IT modifications needed to make it work. While I am obviously sympathetic to resisting austerity, I cannot help but wonder if the answer lies solely in the type of currency used. I plan to write a series of articles about Greece that deals with the economic problems in general and hope that by that time the IT questions will no longer need to be discussed since in the final analysis they are secondary to the political ones.

August 18, 2015

Once more on IT and a return to the drachma

Filed under: computers,Greece — louisproyect @ 5:25 pm

Recently I learned that an EBook on Amazon.com titled “Austerity, Greece’s Debt Crisis and the Theft of Democracy” included a chapter titled “The Information Technology Problem” that discussed my articles on Naked Capitalism and those of Australian economist Billy Mitchell who has an unrealistic take on the amount of work required to modify Greek computer systems to handle a return to the drachma.

Joseph Firestone, the author of the EBook, has a PhD in Political Science from Michigan State, over 150 articles to his name, and an extensive background in IT but mostly at the management level. Right now he is the Chief Knowledge Officer of a company called Executive Information Systems, a title that most likely has something to do with Knowledge Management, his area of expertise. This is apparently a field that has emerged since 1991 but one that somehow managed to elude Columbia University where I worked from that year until my retirement in 2012. There will be something about it later in this article by another expert in the field.

Firestone tries to reconcile Mitchell’s views and my own, probably something that irritated the economist emeritus much more than it does me given his irascible reaction to my first article on Naked Capitalism. His tone reminded me of the one I take on issues such as when the Russian Revolution went off the rails but let’s leave that aside and move on to the substantive IT issues.

From Firestone I learned that Mitchell had a short follow-up article that somehow escaped my attention. Using the authority of a friend who appears to be as high-powered as Firestone, a man who “owns a significant private firm in Europe which is at the forefront of delivering innovative card payment services to banks and corporations throughout the Eurozone”, Mitchell sought once again to buttress his “its not rocket science” understanding of the IT issues.

The friend confided to him that since “the Euro was integrated ‘on-top’ of the existing legacy IT payment systems”, ‘switching’ the Drachma back on would not be such a major task.” He added:

the Grexit should be accomplished by stealth. He would leave everything in place as it is for now. Then establish, in secret, a public bank (like the German KfW), procure the banking software out-of-the-box, sign a contract with a major card-scheme to use its network for transactions and hook the bank up with the official Bank of Greece, the nation’s central bank.

I wonder if this plagiarized or at least conveyed the madcap spirit of Varoufakis’s “Plan B”. If they ever made a movie about such a scheme, I’d cast Steve Carell in the leading role (only because Peter Sellers is dead.)

In terms of the Euro being integrated on top of the legacy systems, I have no way of assessing this. As someone who has taken part in at least a dozen feasibility studies over the years, I have learned that it is best to be cautious. Apparently the higher up you are in the IT food chain, the easier it is to throw caution to the wind.

In the late 90s I advised IT management at Columbia to avoid purchasing a Facilities Management System from American Management Systems (AMS). This was an outfit that Robert McNamara’s aides in the Pentagon founded in 1970. That should have been a warning from the outset to steer clear. Within six months after the system was implemented at the cost of millions of dollars, the users decided it did not meet their needs and dumped it. Just a few years later AMS went under, no doubt partly a result of Mississippi terminating an $11.2 million contract to modernize the state’s tax system. It would go on to sue the company for $985 million. Wikipedia states: “a jury awarded the state $474.5 million in actual and punitive damages in August 2000, causing a drop in stock price from 44 3/8 to 14. The company subsequently settled the suit for $185 million.” You can bet that if Greece ever needed consulting help to get them back into the drachma, there would be latter-day versions of AMS knocking at its doors.

Furthermore, with all due respect to Mitchell and his friend who “delivers innovative card payment services to banks and corporations throughout the Eurozone”, there is more to IT in Greece than banking and credit card processing. Greece has hospitals, universities, wholesale and retail companies selling furniture, yogurt, olive oil, tourist accommodations, and Zeus knows what else. Many of these companies do not have in-house staffs. Getting them up and running on a drachma will not be a piece of cake—trust me on that.

For Firestone to bridge the gap between Mitchell and myself, he invokes his own particular areas of expertise that supposedly get us closer to “it’s not rocket science”. Naturally this require some critical commentary.

In a section titled “Web-oriented Architecture Approach to a Drachma-based Transaction System”, he advises “web-enabling a legacy system”, something that might take a “few days, if that long”. Well, gosh, why hadn’t he brought that to Varoufakis’s attention? That would have saved him from the trouble of lining up his pal at Columbia University to program a stealth-based “Plan B”. Firestone even offers up the names of some products that could be off-the-shelf solutions such as the one marketed by the slyly named Kapow Software. While this software no doubt works as advertised in terms of integrating different systems under a web-based front end, it has little to do with the complexities of batch processing—the meat and potatoes of all banking applications for which there is no user interface. Kapow might be of some use to a bank officer evaluating a loan application from a nervous customer sitting opposite him or her, but it is totally irrelevant to a stream of programs run at 3am in the morning that pump out customer statements. A customer statement like the kind that you receive from your friendly banker at the end of the month with a listing of your debits and credits followed by an account total. It is exactly programs such as these that will require onerous and time-consuming attention—nothing that Kapow can address.

Finally, returning to Firestone’s Knowledge Management, he starts off by wisely acknowledging that “people avoided mainframe applications wherever they could, because the chances of failure were so high”. He includes himself in that group. That being said, he regards the Kapow approach as an interim solution and concludes that a “better solution” would be to develop a new system written for the mainframe from scratch “using modern programming tools and techniques”—no doubt drawn from the Knowledge Management toolbox.

All I can say is that ever since the mid 1970s, I have heard about one new technique or another that would finally make developing large-scale systems more averse to failure. They were put forward either as management, systems analysis, database or programming technologies in trade journals such as Datamation or Computerworld:

programmerless programming: Languages such as MarkIV would allow an end user to build a system by using to specify parameters that satisfied business requirements. In fact I automated Salomon Brothers in London (SBIL) when I reported to Michael Bloomberg in 1977. Trust me, Michael couldn’t have done anything in MarkIV if his life depended on it.

goto less programming: The less said the better. I stopped using the “go to” in 1978 or so but deadlines were still missed because the user kept changing his or her mind—the real explanation for most software delays.

structured design methodologies: I worked for a consulting company that employed SDM for a phone company project that would evaluate whether a customer would be charged for a phone call that they claimed that they didn’t make. When the consulting company demanded new funding because the project was delayed, negotiations broke down and we were escorted out of the building by security guards. SDM did not address user indecision, the cause of cost overruns.

relational databases: This was a huge breakthrough supposedly because it organized data into rows and columns just like a spreadsheet that could be accessed through SQL and best when it was based on normalized data structures, which meant avoiding redundancies through a data analysis of the firm. I can only say that I have worked with VSAM flat files, IBM’s IMS hierarchical database, Cullinet’s IDMS network database before finally becoming a Sybase support person on my project team at Columbia University. All of them work just fine even though Sybase (and Oracle) are best suited for client-server or web-based applications. But in the final analysis, it is the problem of nailing down user requirements that will always bite you in the ass. Given the economic chaos in Greece, this will be a thousand times worse than the normal chaotic situation.

–Object orientation: I spent about five years developing Java programs in the STRUTS framework for Columbia University’s financial system. Anybody who sells OO as some kind of silver bullet should get one in the head.

Since I have never gone near Knowledge Management, I won’t say a word about it although I would be remiss if I did not refer you to this:

Wall Street Journal, Jun 24, 2015
Whatever Happened to Knowledge Management?
By Thomas H. Davenport

I would never claim to have invented knowledge management, but I confess to an intimate involvement with it. I co-authored (with my friend Larry Prusak) one of the best selling books on the topic (in case you are into the classics, it was Working Knowledge: How Organizations Manage What They Know) and am supposedly the second-most cited researcher in the field (after the Japanese scholar Ikujiro Nonaka).

So I should know whereof I speak when I say that knowledge management isn’t dead, but it’s gasping for breath. First, the ongoing evidence of a pulse: academics still write about it, and some organizations (most notably APQC—a nonprofit research organization of which I am a board member and respect a lot) sells out its knowledge management conference every year. Professional services firms are still quite active and successful with the idea.

But there is plenty of evidence that it’s gasping as well. Google Trends suggests that “knowledge management” is a term rarely searched for anymore. Bain’s Management Tools and Trends survey doesn’t list it in the top 25 tools for the 2015 or 2013 surveys; it was included before that. More subjectively, although I am supposedly an expert on the topic, hardly anybody ever asks me to speak or consult about it.

What happened to this idea for improving organizations? I’m pretty sure that knowledge itself hasn’t become less important to companies and societies, so why did many organizations give up on managing it? Is there any chance it will return? And what does its near-demise tell us about the attributes of successful business ideas?

Although it’s impossible to know for sure why something rises or declines in popularity, here are some of my ideas for why knowledge management (KM) has faded:

  • It was too hard to change behavior. Some employees weren’t that interested in acquiring knowledge, others weren’t interested in sharing what they knew. Knowledge is tied up in politics and ego and culture. There were methods to improve its flow within organizations, but most didn’t bother to adopt them. Perhaps for this reason, the Bain survey (for example, the one from 2005) suggests that corporate satisfaction with KM was relatively low compared to some other management concepts.
  • Everything devolved to technology. KM is a complex idea, but most organizations just wanted to put in a system to manage knowledge, and that wasn’t enough to make knowledge flow and be applied.
  • The technology that organizations wanted to employ was Microsoft’s SharePoint. There were several generations of KM technology—remember Lotus Notes, for example?—but over time the dominant system became SharePoint. It’s not a bad technology by any means, but Microsoft didn’t market it very effectively and didn’t market KM at all.
  • It was too time-consuming to search for and digest stored knowledge. Even in organizations where a lot of knowledge was contributed to KM systems—consulting firms like Deloitte and Accenture come to mind—there was often too much knowledge to sort through. Many people didn’t have the patience or time to find everything they needed. Ironically, the greater the amount of knowledge, the more difficult it was to find and use.
  • Google also helped kill KM. When people saw how easy it was to search external knowledge, they were no longer interested in the more difficult process for searching out internal knowledge.
  • KM never incorporated knowledge derived from data and analytics. I tried to get my knowledge management friends to incorporate analytical insights into their worlds, but most had an antipathy to that topic. It seems that in this world you either like text or you like numbers, and few people like both. I shifted into focusing on analytics and Big Data, but few of the KM crowd joined me.

Any chance that this idea will come back? I don’t think so. The focus of knowledge-oriented projects has shifted to incorporating it into automated decision systems. The hot technology for managing knowledge is now IBM Corp.IBM -0.28%’s Watson—very different from the traditional KM model. Big Data and analytics are also much more a focus than KM within organizations. These concepts may be declining a bit in popularity too, but companies are still very focused on making them work.

If you believe in knowledge management—and you should—perhaps in your organization you can avoid the pitfalls I have listed and allow the idea to thrive. And if you favor a different idea and want it to survive over the long term, don’t hitch a complicated set of behaviors to technology alone. Don’t embrace a vendor for your concept that doesn’t care much about your idea. And if another notion that’s related to yours comes along and gains popularity, don’t shun it, embrace it.

Thomas H. Davenport is a Distinguished Professor at Babson College, a Research Fellow at the Center for Digital Business, Director of Research at the International Institute for Analytics, and a Senior Advisor to Deloitte Analytics.

July 28, 2015

Continuing the conversation about IT and the Grexit

Filed under: computers,Greece — louisproyect @ 3:32 pm

Apparently my brief reference to Australian economics professor emeritus Bill Mitchell’s failure to mention the IT aspects of Grexit in a Naked Capitalism article touched a nerve. In a 3500 word article that appeared on his blog on Friday, July 24th he minimized the challenges and appealed to his own authority as an IT professional to drive his case home. He also took up some points in my article that weren’t really directed at him, particularly my brief remarks around the question of a Grexit not being sufficient to bring an end to austerity.

I did not have Dr. Mitchell in mind when I made that point. Furthermore, I don’t think that there is that much difference between us on the economic questions but as I will now point out we are still far apart on the IT implications of a Grexit that I will now explain.

To start with, he groups me with the sensationalistic media reports on Y2K that warned about Armageddon as if I or any other seasoned professional really worried about such an outcome. He also alludes to the opportunistic sales pitches from consulting companies anxious to get their foot in the door to help firms large and small avoid a Y2K catastrophe but at a steep price. If you were part of the permanent staff in any large organization like Columbia University, you had a very clear idea about how to do a Y2K conversion without tears.

Furthermore, I am quite sure that given sufficient time, funding and personnel, the conversion to the drachma is feasible. But the purpose of my article was not to argue that it was impossible. It was only to alert a lay audience what kind of challenge it represented. For those who have not managed large-scale project implementations, it was easy to imagine that such a conversion could take place in something like a few months. But I am convinced that it would probably take no less than three years based on my 44 year experience managing, designing, programming and testing mission-critical applications in a variety of banks, brokerage houses, and insurance companies. That was about what it took to go from national currencies to the euro and I would expect that it would take about the same amount of time to reverse engineer the process.

Perhaps nothing captures Dr. Mitchell’s unfamiliarity with the IT challenges facing a euro-to-drachma conversion than what he has to say about Y2K:

As the Naked Capitalism author notes it was really about software that had used two numbers to designate the year (MMDDYY) instead of four (MMDDYYYY). Several straightforward computer changes were made to resolve the possible problems depending on the situation (date expansion, date re-partitioning in overfull databases, windowing patches etc). Very trivial.

I did a double-take when I read this. Very trivial? Well, it is very trivial to expand the year from two digits to four digits but that was never the challenge. In fact Dr. Mitchell completely ignored what I wrote, namely that the task of finding the code was like looking for a needle in haystack. At Columbia University we divided up thousands of programs and assigned programmers to search through thousands of lines within each program to track down a six-digit date and convert it to eight digits. It took 10 seconds to modify each date when it was found but it took the better part of a year to find them all. To repeat, a search for any field of data that had “date” in its name was straightforward but what if a programmer labeled it “dt” or even “d”? Furthermore, what if a piece of data identified as “admission_date” is moved into a temporary field called “admission_temp”? You have to track the movement of data within the entire program to be sure that you had all bases covered. This was a laborious task that took us the better part of a year. It also took another year for IT to test all of the modified programs to make sure that the integrity of the data was preserved.

Greece would run into the same challenges in a euro to drachma conversion but likely would not have the kind of infrastructure that a well-endowed Ivy university was able to rely on. Given the economic desperation and chaotic conditions that Greek firms large and small operate within, it is a serious mistake to use one’s influence to persuade policy-makers to leap without looking first.

Continuing in his best case scenario vein, Dr. Mitchell dismisses the possibility that hard-coded values in a program constitute a major hurdle:

The issue is simple. Rules for determining eligibility for a service (mortgage etc) might have thresholds hard-coded into the computer system. So if your bank balance is above 1000 you qualify for a loan. Good programming clearly creates variable definitions (say, $threshold = 1000) in easy to find and edit part of the system and then uses symbolic references ($threshold) throughout the rest of the system so that when the threshold might require alteration there is one data entry required which feed the old system.

Yes, we are all for “good programming” but my experience over the years is that there is enough space between “good programming” and the actual code in legacy systems to steer an ocean liner through. In the ideal world, a hard-coded value is never used. For example, as Dr. Mitchell points out, it is good practice to define an external variable such as $threshold but in practice Cobol programmers (the language of choice in most financial applications) tend to take shortcuts because they are always under the gun to meet a deadline. So instead of defining an external variable that can be modified in a single location, they will test for ’10000’ or whatever. Since the software in Greek banks is likely to be decades old, I doubt that the “good programming” practices hailed in computer science classes find much reflection within them. In fact, Mitchell expresses a surprising degree of naiveté when he writes:

So if there is a lot of ‘hard-coding’ in the Greek financial and business systems it would require some work. The reference the Naked Capitalism article uses was written in 1999 and relevant to rather dated practices and the big challenge of converting all the currencies into the euro and all the different national business systems into an integrated set of systems that could cope with the common currency.

I would suspect the assessment that there is a lot of ‘hard-coding’ now would be amiss. Business systems have become much more sophisticated and homogenised in the 16 years since that article was written.

But the point is that when Greece went from the drachma to the euro in 2002, it was practically preordained that the modifications would be made to existing software that might have been written in the 1980s or earlier. Why would Greek banks have written an entirely new Direct Demand Accounting system in that period? Yes, business systems have become more sophisticated since the year 2000 but you can be assured that those that serve the mission-critical needs of Greek banks are decades old.

I should add that although I worked on mainframes for 23 years, the last 21 were spent at Columbia in leading edge technologies of the sort that he describes as “sophisticated” and “homogenized”. When I was hired by Columbia University in 1991, it was to make recommendations about exactly such technologies in my capacity as Development Technology Coordinator. Later on, once such technologies were adopted, I had over 15 years experience designing and programming financial applications in Java using the Struts framework. Additionally, I supported that application’s Sybase backend using Perl and other Unix-based tools. Finally, part of my retirement contract involved being available on a contingency basis for technical support as the need arose. Even now I stay in touch with my colleagues to give them my take on future IT directions.

Dr. Mitchell also seems to have missed the point I was making about historical data:

These include the historical presentation of records, for example, bank statements. These problems were already encountered and solved in the transition to the euro. There is no reason to suspect that any new issues have arisen. The Bank of Greece knows how to do this and could easily issue a procedural manual to the commercial banks and other financial institutions.

But my point was that ad hoc software would have to be developed to modify historical data. For example, just to repeat myself, if the United States elected a Marxist president and adopted a new currency called the Rosa that was pegged 10 Rosas to the dollar, you would have to develop software that went through the databases to multiply all occurrences of each cash-based data store by 10. (Let’s hope we’ll see that someday.)

Finally, if I understand Mitchell correctly, he seems to be saying that you could dust off the pre-euro conversion software from 1999 or so and use it to replace current-day systems. That would be fine if there had been no modifications made in the past 16 years to incorporate new business rules. But as we know financial applications are highly dynamic since the industry is always sensitive to opportunities that can always boost corporate profits to the disadvantage of the poor customer. Who knows? Maybe when the entire world converts to the Rosa, or even when money is no longer necessary, we will not have to face such problems but in the meantime reality must govern all major policy decisions, including ones that revolve around information technology—the nervous system of any modern economy.

July 22, 2015

Once again on the IT challenges in converting to the drachma

Filed under: computers,Greece — louisproyect @ 6:48 pm

On July 14th I wrote an article titled “Convert to the drachma–piece of cake. Right…” that was a first take on the difficulties in implementing a Grexit from an IT standpoint. Since then I have tracked down a number of high-level strategic planning documents written in the late 90s that give me a much better handle on what those difficulties amount to. Except for the folks at Naked Capitalism who reposted my original article, there are very few people on the left who have any inkling of the problem. One of them is Robert Urie who alluded to it in a recent CounterPunch article:

A central difference between Argentina and Greece is that ‘all’ that Argentina had to do was to break the peg (fixed currency exchange ratio) with the USD while implementation of the Euro was a massive technological undertaking that replaced the Greek technology and institutions that supported the drachma. In the event of a forced Greek exit recovery of these technologies and institutions would take time that the Greeks don’t have. Breakdown of the supply-chain— the integrated economic relations that together facilitate economic production, causes a cascade effect where once lost, has to be rebuilt from the ground up.

Instead what I have mainly heard is that it is much more of a piece of cake than my article would suggest. For example, Canadian leftist Ken Hanley, who wrote an article titled “The German Grexit plan may have been the lesser of two evils”, commented: “The creditors were able to develop a Grexit plan. Schaeuble even presented a Grexit plan as an alternative to deal and many think that his whole plan was to force a Grexit.” He also referred me to an article by an Australian economist that assured his readers “A Greek exit is not rocket science”. Well, it might not be rocket science but computer science is certainly relevant notwithstanding the economist’s failure to refer to IT once in his article.

The same shortcoming exists in an article that has been embraced by many on the left as a recipe for overcoming austerity. Titled “Greece: Alternatives and Exiting the Eurozone” and written by Eric Toussaint, who works with the Committee to Abolish Third World Debt, it makes very useful recommendations but once again neglects to mention anything about IT.

Now my point in referring to these difficulties was never to support staying in the Eurozone. It was primarily intended to alert the left about the dangers of thinking in terms of short-term solutions. Furthermore, my own position is that Greece’s difficulties have more to do with the underlying economy rather than what currency it uses. Some Marxists, who have been sharply critical of Tsipras, appear to understand what this means. For example, In Defense of Marxism, warned:

Some people have argued that if Greece is pushed out of the Euro this could eventually provide a solution to its economic problems. That is naïve in the extreme, not to say irresponsible. The question would still remain: what kind of an economy, run by whom and on the interests of whom?

Let us assume that the new currency is called the drachma. What will happen to it? It will fall like a stone because nobody will want to hold it. That will cause prices to rise steeply, even hyper-inflation, as in Germany in 1923. People’s savings will be wiped out. There will be a deep slump and even more unemployment.

Moreover, if Greece is forced out of the Euro, it will also find itself out of the European Union. The European bourgeois will not want to see its markets invaded by Greek goods made cheaper by the inevitable fall of the drachma (or whatever other currency is chosen). It will be necessary to take very drastic measures in order to avoid an economic catastrophe. Half measures will be useless. One cannot cure cancer with an aspirin.

I also thought that the Belgian Trotskyists of the LCR-SAP had good advice:

  1. Leaving the Euro is not a sufficient condition to break with austerity (as the case of Britain proves) but, in the Greek case, for the countries of the periphery and those which are not in the heart of the euro zone, it is clearly a requirement.
  2. The need to break with the euro does not imply making leaving the euro the central axis of an alternative programme. Even in Greece, where the question arises in a burning and immediate way, the axis of the alternative programme must be the rejection of any austerity and the implementation of social, ecological, anticapitalist and democratic policies, which directly improve the fate of workers, young people, women, the victims of racism, and the peasants.
  3. To make leaving the euro the axis of the alternative would be to run up unnecessarily against the very generally-held idea that the currency is only “neutral” technical means of allowing trade, whereas it is in fact also the crystallization of a social relationship. To make leaving the euro (or the EU) the axis of the battle would be also to play the game of the hard-line and far right, by spreading the illusion that a harmonious socio-economic-ecological development would be possible within the national framework. This illusion harms internationalist solidarity. However, this is crucial not only for the fight in Greece, but also because the integration of the economies on the continent requires a European anticapitalist perspective to satisfy social needs and to answer the urgent ecological needs.

Before moving on to the technical aspects of a Grexit, I should say a few words about my background. Even though my regular readers know that I worked in IT for 44 years, it might be useful to mention something about my experience.

To start with, before I began working at Columbia University in 1991, most of my work experience was in financial applications. I worked for five different banks: FNB of Boston, Texas Commerce Bank, Irving Trust, United Missouri Bank (where I programmed ATM’s) and Chase Manhattan. I also worked for investment banks: Salomon Brothers and Goldman-Sachs. Finally, in the 21 years I was at Columbia University, most of the time was spent working on the financial system used for purchases, general ledger and the like. Back in 1998, part of my workload over a two year period was to evaluate legacy software to identify changes needed to accommodate the arrival of 2000, a technical challenge that was dwarfed by Eurozone conversion that I will now explain.

The following documents were key to the observations I will be making:

  1. Daniel O’Leary, “The Impact of the Euro on Information Systems”, Journal of Information Systems Vol. 13, No. 2, Fall 1999. (https://msbfile03.usc.edu/digitalmeasures/doleary/intellcont/Impact%20of%20Euro-1.pdf). I referred to this in my original article.
  2. Pieter Dekker, “Preparing Information Systems for the Euro”, a sixty page white paper prepared for the European Commission on the Eurozone in September 1997. (http://ec.europa.eu/internal_market/accounting/docs/markt-1997-7038/7038_en.pdf)
  3. Patrick O’Beirne, “Managing Risk in Euro Currency Conversion”, Cutter IT Journal, 1998 (http://www.sysmod.com/eurorisk.pdf). This is basically a shorter version of the Dekker article above with a useful bibliography referring to other material in this vein.
  4. Rainer Gimnich, “Analysis and Conversion Tools for Euro Currency Migration”, Workshop on Software Reengineering, May 1999. (http://www.uni-koblenz.de/~ist/RWS99/beitraege/Gimnich.pdf)

To start with, it would be useful to understand what took place in a Y2K migration. In many programs written in the 60s and 70s, when the year 2000 seemed like a long way off, dates were formatted as MMDDYY. This meant if you were trying to establish whether a bond would mature in five years, you’d subtract something like 07/22/67 from 07/22/72 but when 2000 arrived, how could you determine whether 07/22/04 meant 1904 or 2004? The answer was to wade through millions of lines of code and expand MMDDYY to MMDDYYYY.

In a computer program, every field of data is uniquely named. This means searching in a COBOL program for something like “date_today” is pretty simple. But what if a programmer called it dt_today instead? Of course, you might figure out that “dt” means date but some lazy programmer might have written it as “tdy”.

You will have the same problem, of course, with a euro to drachma conversion. Searching for the Greek equivalent of “amount” or “amt” becomes a drain on any IT staff.

A conversion from a local currency to the euro was a whole order of magnitude more difficult when it comes to converting currency amounts, even when they are identified. For nations such as Spain that did not have a decimal based currency like the euro, the rounding became a challenge. Since this did not apply to the drachma, a simple replacement might be in order and that would be the end of it.

However, the big problem was testing for a hard-coded amount parameter as I tried to explain on Naked Capitalism underneath the crossposting of my original article:

For example, there might be tests to see if a customer has sufficient funds to be qualified for a mortgage. A program might conceivably mark it as eligible if there were 10,000 euros in the account. Switching to a drachma might make everybody eligible–not that there’s anything wrong with that obviously–but you can see that this is not a simple matter. Just being able to handle a drachma instead of a euro does not mean that software is meeting expectations. You have to do a BUSINESS analysis, which is the first stage in any systems implementation.

As it turned out, the Gimnich article listed above makes an identical point:

In many cases, amounts are hard-coded in the application programs. For instance, statements of the kind IF amt_1 < 1000 THEN … appear quite often. Here, the threshold value is simply used as a constant in the program: no symbolic constant, no variable declaration, no external amount table read.

Assuming that Greece’s programmers could convert programs to handle the drachma rather than a euro, this would mean that you could start withdrawing a new currency from an ATM on day one. And at the end of the month, you’ll get a bank statement with amounts designated in the new currency with the proper currency symbol, etc. But that’s just the tip of the iceberg. Any bank maintains a history of transactions for all customers that are used for determining loan eligibility, etc. Your account might have the proper data from the day when the drachma conversion took place going forward but what about the ten years or so of prior transaction history which were denominated in euros? A suite of programs would have to be written to manage the conversion of historical data. This is not a minor task since identifying which files contain such data requires plowing through an enormous IT inventory. Since documentation is always given short shrift in the corporate world, expect major technological hiccups or even heart attacks.

The tasks described above are properly administered in an IT department, which is centrally controlled but that’s not the end of it. Ever since the advent of personal computers, there are huge amounts of mission-critical data that are not maintained by the IT staff. The finance department of any modern corporation is overflowing with PC-based spreadsheets that are used for budgeting, etc. All of these spreadsheets will have to be evaluated for their criticality and converted to the drachma if need be. Once again, a major task.

In August 2001, Computerworld, a trade magazine I read for many years before retiring, described the risks facing small and medium sized businesses that had not gotten up to speed on the euro conversion:

Pollard said the unpreparedness of vendors and suppliers won’t create a catastrophe in the European marketplace, but it will cause supply chain slowdowns and force some small and medium-size businesses to revert to using paper invoices, bound ledgers and filing cabinets.

But Noel Hepworth, head of the euro conversion project at the European Federation of Accountants (FEE), an industry trade group in London, said companies that aren’t ready will quickly be forced out of business by large manufacturers that will refuse to deal with them.

Think about what this would mean for Greece as its businesses tried to do the same thing in reverse. This nation has a huge proportion of smaller firms. It will be exactly those that will be forced out of business if they can’t make the cut. If adopting the drachma will lead to a sharp devaluation as all experts predict, those businesses will be rotten ripe for buying up by foreign investors looking to make a killing.

Now in the long run, it might not matter that all these problems lie in store. It is probably the case that leaving the Eurozone is a necessary first step to escaping the clutches of the German bankers, the IMF and all other predatory institutions. But the left does not look good by minimizing the technical challenges. Most of all, it is worth remembering what Lenin wrote in “State and Revolution”, which is just applicable to a state embarking on an anti-austerity program based on neo-Keynesian principles as it was to the infant USSR:

We are not utopians, we do not “dream” of dispensing at once with all administration, with all subordination. These anarchist dreams, based upon incomprehension of the tasks of the proletarian dictatorship, are totally alien to Marxism, and, as a matter of fact, serve only to postpone the socialist revolution until people are different. No, we want the socialist revolution with people as they are now, with people who cannot dispense with subordination, control, and “foremen and accountants”.

I would only add programmers to the people Lenin identified above.

July 15, 2015

Greece: the scissors trap

Filed under: Greece — louisproyect @ 6:11 pm

(This was posted on FB by Jeff Richards. It overlaps with my article on the drachma conversion issues.)

Greece: The scissors trap.

The story of why Greek Prime Minister Alexis Tsipras changed his mind in the July 2015 negotiations with the European Union will, I am sure, be revealed by memoirs and investigative reporting in the future. At present any political assessment must be provisional. I am not one of those on the radical left (and the radical right in the case of Nigel Farage) who are now letting off a lot of steam with cries of ‘treachery’ or ‘betrayal’ etc. etc. etc.

Former Finance minister in the Syriza government Yanis Varoufakis, in a wide ranging interview with Phillip Adams on the radio programme Late Night Live alluded to one of the reasons why Tsipras recommitted himself to negotiations with the EU. Grexit would have required a new currency, a new Drachma. The task of creating a new currency is a very big organisational undertaking. Adams reminded the listener the vast logistical operation that was required to implement a new currency in Iraq following the invasion of that country by the Bush and Blair administrations.

Varoufakis said in the interview that the new Syriza government did have plans to opt for a new currency and they had assigned a special committee to look into the matter. That committee consisted of five members, whereas Varoufakis said that they would need to have a minimum of 500 personnel to take the process of a new currency to the next level. The reason why the finance ministry (which Varoufakis was leading at the time) did not take it to this next stage was the fear that setting up such a government department would harm the negotiations with the EU ministers. So the Greek government was caught in a trap, on the one hand trying to negotiate with intransigent ministers and hoping to exploit internal divisions within the EU -between Germany and France- and on the other hand not trying to do anything that might harm the negotiations with the EU (like being seen to be creating a new currency).

Greece exiting the European Currency Union (which is not the same as the European Union) is not an impossibly difficult task. It is however, a major logistical operation that would require the full mobilisation of the resources of the state, and the backing of the citizenry to implement. Syriza have alway indicated that it was their intention to try to negotiate and remain in the Euro with improved conditions. Plan B would have been to create a new currency. Syriza were simply unprepared for plan B, and were left with no option but to swallow the poison and hope they will survive without the country descending into a nazi revival. In many ways, it is an understandable why Syriza were caught unprepared. The relative newness in government, the enormity of the problems they were faced with, the urgent need to focus on meeting the needs of those left destitute by the policies of previous right wing governments. Most speculatively, I wondered if the lack of party cadres with limited experience in managing governments and state bureaucracies also played a role in the ‘turnaround’ by Tsipras.

July 14, 2015

Greece and the Underdevelopment of Europe

Filed under: Greece — louisproyect @ 9:32 pm

Greece has been relegated to the ranks of Somalia, Honduras, Democratic Republic of Congo and Zimbabwe by becoming the first European country to default on an IMF loan. The €1.6bn missed payment is also the largest ever by an IMF member. Popular rhetoric has blamed the situation on inherent Greek profligacy, displayed by their early pension schemes and special interests. This narrative carries the echo of the lazy conflations between the nature of places and its peoples that underpinned the earliest European imperial adventures.Columbus’ travel diaries reveal how he drew on a theory of place offered by Albertus Magnus and Pierre d’Ailly to equate the differing temperature and climates of the ‘new’ and ‘old’ worlds with differing levels of humanity to be granted to the European and non-European. For Columbus, the natives of the new world were inherently childlike due to their plentiful surroundings; hence they could not be treated as equals. Likewise, we now hear talk of the lazy, petulant and irresponsible nature of the Greek people, whose sunny climate explains their inability to adopt the protestant work ethic of the industrious Prussians.The reality is, according to the OECD, that the average Greek worker has worked 48% more hours than the average German worker; the source of the crisis is a failing of the international financial system. Ever since the IMF “assisted” Greece in 2010, the Greek economy has been in depression. 25% of its GDP has been lost under structural adjustment programs labelled “austerity packages.” 90% of Greece’s IMF debt went directly to repay other European institutions.

via Greece and the Underdevelopment of Europe.

Convert to the drachma–piece of cake. Right…

Filed under: Greece — louisproyect @ 5:40 pm

One of the things that’s been nagging away at the back of my mind in this ongoing discussion about leaving the Eurozone is what that means in terms of following through. I think that the average person on the left who considers this to be a sine qua non for Greece moving forward has no idea of what’s involved. It is not just printing new currency and delivering it to the banks. It is also a mammoth undertaking from the IT standpoint. Think in terms of what it would take to reverse engineer something like this:

NY Times, March 9 1998
A Year Before the Millennium Bug, There’s the Euro Problem
By ANDREW ROSS SORKIN

LONDON, March 8— Amid the rush to reprogram the world’s computers so that they will function after Jan. 1, 2000, a little-known computer problem looms as large with a deadline that is even earlier.

On Jan. 1, 1999, the European Monetary Union will introduce the euro, a new currency that could have serious consequences for the computer systems of financial institutions and just about any company that deals in foreign currencies and exchange rates.

Compared with the much-publicized year 2000 problem, which can set computer clocks back to 1900 instead of recognizing 2000, the euro poses a greater number of technological problems.

Exchange-rate and tax software will need to be upgraded, financial statements redesigned, automated teller machines revamped and historical data converted — and that is just scratching the surface.

”The magnitude of the problem the euro poses is unbelievable,” said Nick Jones, research director of the Gartner Group Europe, part of the Gartner Group Inc., a technology advisory and research firm. ”In terms of cost to fix, it is comparable with the year 2000.”

The Gartner Group estimates that it will cost European corporations, many of which have operations worldwide, $150 billion to $400 billion to upgrade their systems. Add to that the expenses in fixing the millennium bug, and that cost almost doubles. Mr. Jones said the cost of fixing each line of code is estimated at $1.10, with billions of lines of code having to be changed.

As someone who worked in IT for 44 years and on some very large scale projects such as developing a completely new system from top to bottom for Goldman-Sachs, this is a huge project that would require banks and any other large-scale corporations in Greece to manage. And that does not get into the problems that the civil service would have to deal with. Pension systems, the tax system, et al would have to be reprogrammed.

I now realize that when people were demanding that Syriza conduct a two-tier operation, one that sought an end to austerity within the Eurozone, and another on a parallel track that would switch over to the drachma, they had no idea what this would entail. Frankly, I don’t think that Greece is capable of converting to the drachma today even if the government voted for it. Billions of dollars would be required to do such a conversion and the cash-starved government agencies would even have less money for such a project than private corporations.

I have heard what seems like dozens of leftists complaining about Alexis Tsipras’s failure to deliver a contingency plan. These are people who almost certainly have never sat in cubicle and programmed a financial system in COBOL as I did for twenty years before I moved over to UNIX based systems at Columbia University.

My good friend Liza Featherstone complained on Facebook this morning: “Seriously every dude is a Greece expert now. How’d you all get so smart so fast?” Boy, was she ever right.

* * * *

Journal of Information Systems, Vol. 13, No. 2, Fall 1999
pp. 105–116

The Impact of the Euro on Information Systems
Daniel E. O’Leary, University of Southern California

Accounting Information System Requirements Brought About by the Euro The introduction of the euro will have a wide range of changes in requirements for accounting information systems (e.g., Dekker [1997] and others).

1. Legacy systems will require multiple updates. Unlike present day relational database systems, many legacy systems redundantly store data items (e.g., currency figures). In these systems, all instances of each redundantly stored currency data item will need to be updated to the same euro figure.

2. Systems must do triangulation. All those systems using processes related to currency exchanges, will have to be updated to reflect changes in the way conversion is done, using triangulation, rather than traditional inversion conversion.

3. Multiple currencies. Since both euro and local currencies can be used during the transition period, systems will need to allow recording and display of both home currency and the euro for each transaction. Inventories of both currencies will need to be kept as long as both are used. The existence of multiple currencies potentially exposes a company to the risk that payments are made in the wrong amounts of a currency. For example, as in Table 3, a bill for 302,706 euros incorrectly might be paid as 4,211,213 euros if clerks use the wrong currency amount.

4. Minor payment differences. Systems will need to be changed to accommodate minor differences in payments. Since customers can pay their bills in either euros or the home country currency, triangulation rounding can create a situation where there are differences in the equivalent between what is billed and what is paid when different currencies are involved. Few systems have been built to accommodate differences in payments and what is billed. Further, few systems currently accommodate billing in one currency and payment in another (Software Echo 1997). In addition, such differences will carry forward to the general ledger, which will also have to accommodate minor differences.

5. Restatement of financial reports. Firms must restate previous financial statements in euros, which raises other questions including the following: Who determines whether historical numbers will need to be restated? How much of the historical data will be restated? Will firms have the restated historical numbers attested to?

6. Inconsistent use of decimals. In some monetary systems, e.g., Belgium and Italy, decimal places are not used. As a result, systems designed for these currencies will need to be updated to accommodate the euro’s decimal places.

7. Number of decimal places. Not only is the existence of decimal places an issue, but also the number of decimal places is an issue. In order to assure that rounding is done at the appropriate level, six decimal places are required to accommodate the euro.

8. Input validation will need to accommodate multiple currencies. Input validation will need to change to accommodate the existence of a new currency and multiple currencies. Reconciliation tests will need to allow for and accommodate differences due to rounding.

9. Internal documents. Typically, most of a firm’s documents, input, and output will need to be changed to accommodate the multiple currencies.

10. Reporting capabilities. Reporting capabilities will need to be examined closely. For example, reports are often based on currency values exceeding some “threshold” amount. In some cases firms will need to change the bases of those thresholds to accommodate the euro. In addition, reports will often need to have the ability to display two or three currencies simultaneously.

11. Currency fonts will need updating. Finally, currency fonts will need to be updated to include the new symbol for the euro. Apparently, Microsoft has announced that it will accommodate the euro symbol in its 32 bit applications, but not in legacy applications, such as Windows 3.1 (http://www.microsoft.com/windows/euro.asp).

full: https://msbfile03.usc.edu/digitalmeasures/doleary/intellcont/Impact%20of%20Euro-1.pdf

 

July 5, 2015

Greece by the numbers

Filed under: Greece — louisproyect @ 6:19 pm

I am sure my readers have been following the referendum but just to make sure, “Oxi” means “no” to the German pig bankers and their regime thugs:

11698586_1140345702658796_1347555017035474432_n

Turning to another matter involving Greece and the numbers, there’s a book review in today’s NY Times of “The Full Catastrophe” by WSJ reporter James Evangelos about the Greek crisis. It was reviewed by Joshua Hammer, a one-time Newsweek bureau chief. You can probably figure out that the book and the reviewer were on the same page ideologically.

While Hammer refrains from the open hostility toward the Greek government that you’d expect from a Times contributor, there was one passage that struck my eye:

To understand what led Greece to such a predicament, Angelos visits Zakynthos, off the western coast of the Peloponnese, mockingly anointed the “Island of the Blind” after nearly 2 percent of the population — nine times the estimated rate for most European countries — was found to be receiving benefit payments for sightlessness. Angelos discovers a scheme to defraud the ministry of health that extends from the single public hospital’s sole ophthalmologist to the former prefect who signed off on the payments, one of many such social-welfare scams that cost the Greek government billions of euros.

On the island of Hydra, Angelos tells of an undercover raid on a portside taverna that drew national attention to a common Greek pastime, tax evasion, and the halfhearted and inequitable attempts of the government in the post-bailout era to crack down on cheats. “The pervasiveness of the habit, and the government’s enduring unwillingness to do anything about it, was more than any other factor the cause of Greece’s financial troubles,” Angelos observes, citing one European Commission study in which uncollected consumption taxes were estimated at 10 billion euros a year. Another study, by two American academics, estimated that self-employed workers failed to report about 28 billion euros in taxable income in 2009.

Well, of course there was and is tax evasion in Greece but why single out a study that claimed “self-employed workers” failed to report about 28 billion euros? Who are these waiters and waitresses that are largely responsible for the nation’s plight? When you read the relevant passage in Evangelos’s book, you can spot his bias immediately: “People in Germany, the Netherlands, Finland—eurozone countries that had, with great reservation, participated in Greece’s bailouts—read the stories about the swimming pools, or others about an apparently high per capita number of Porsche Cayennes in Greece…were perturbed.”

Evangelos did not really clarify what kind of  “self-employed workers” he was talking about and Hammer was all to happy to take him at his word that “workers” were bleeding the country dry. However, I invite you to read an article about the study that appeared on the website Keep Talking Greece that will put things into perspective. It states:

The chief offenders are professionals in medicine, engineering, education, accounting, financial services and law. Among the self-employed documented in the report are accountants, dentists, lawyers, doctors, personal tutors and independent financial advisers.

Odd that the professional classes can be described as “workers” unless you want to prejudice WSJ or NY Times readers against them. In fact, it is completely understandable why lawyers, doctors and accountants would want to avoid paying taxes. They are not part of the labor force but small proprietors who have the same class outlook as the rulers of society.

In terms of the authors of the paper, who clearly were anxious to represent all Greeks as tax cheats even if their words don’t exactly support Hammer’s description of them as “self-employed workers”, it is worth mentioning their affiliation. Adair Morse and Margarita Tsoutsoura are from the University of Chicago. The minute I saw U. of Chicago, alarm bells went off. It seems that Morse is a fellow at the Friedman-Becker Institute. I am sure you know that Friedman is none other than Milton Friedman, while Becker is Gary Becker, an economist who once described Friedman as “the greatest living teacher I have ever had”. Right. There’s not much information on Margarita Tsoutsoura that would shed light on her ideological leanings but I suspect that she found Morse’s views congenial.

The third author is Nikolaos Artavanis from Virginia Polytechnic Institute. a contributor to http://greekeconomistsforreform.com/, a group blog that urged a “yes” vote on today’s referendum. Enough said?

Now I am sure that the numbers the authors dredged up were fairly accurate but we can be sure that they would understand the political impact. The report was used mainly as a cudgel against the Greek nation to make the poor pay for the thievery of the bourgeoisie and the petty bourgeoisie. Here is just another example of how it served a political agenda:


How Greek tax evasion helped sink the global economy
By Brad Plumer July 9, 2012

The euro crisis first started roaring in late 2009, when auditors inside the newly elected Greek government discovered that the country had a much—much—bigger deficit than anyone realized. That, in turn, inflamed fears that Greece couldn’t wiggle its way out of its debt trap so long as it was tethered to the euro. It also exposed structural problems within Europe’s currency union. Worries soon spread to Ireland, Portugal, and eventually Italy and Spain. Now the entire global economy is on edge.

Nice place. Wonder what sort of property taxes they pay? (Petros Giannakouris / AP)

But why did Greece have such a massive budget deficit in the first place? One factor (among many) was rampant tax evasion, which had starved the Greek government of funds. As it turns out, this was a very big deal indeed. The Wall Street Journal’s Justin Lahart points to a new paper (pdf) by three economists who estimate that the size of Greek tax evasion accounted for roughly half the country’s budget shortfall in 2008 and one-third in 2009.

How is it even possible to estimate taxes that aren’t ever paid? The economists, Nikolaos Artavanis, Adair Morse and Margarita Tsoutsoura, cleverly exploit a discrepancy. Few people in Greece want to report their real income to the government, since that would mean paying more taxes. But Greek banks have very solid estimates for how much income people are actually raking in — the banks need this info to make loans or to issue mortgages.

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The phrase “”Lies, damned lies, and statistics” was first used by Mark Twain who attributed it to Benjamin Disraeli even though it is likely he never said it. Probably history will record that if Twain had lived as our contemporary thanks to some youth elixir, he would have used it as an epithet for mainstream reporting on the Greek economy.

July 3, 2015

Axis of Resistance or Axis of Compliance?

Filed under: Greece,mechanical anti-imperialism,Russia — louisproyect @ 8:16 pm

“Moscow’s long-standing policy of trying to be friends with everyone.”

Back in 2011, just around the time that the Arab Spring began, a section of the left became convinced that the revolts in Libya and Syria were not genuine. Instead they were attempts by the West and its allies in the region, especially Saudi Arabia, to topple legitimate nationalist and even radical governments as part of a strategy to isolate and then destroy the Islamic Republic of Iran, which despite its flaws, was a key member of the “Axis of Resistance” (AOR). Of course, once Iran fell into the hands of the brie-eating and white wine-sipping Green Movement, that would increase the pressure on Russia that was in the final analysis the major obstacle to American imperialist designs.

Somewhere along the line reality got in the way even though the AOR left has not allowed that to get in its way. To some extent it is impossible to ignore evidence that this schema did not and could not match up to the byzantine geopolitics of the region. For example, in today’s CounterPunch, there’s an article by Jason Hirthler titled “Going Off-Script in St. Petersburg” that reprises AOR talking points such as a reference to Putin being pressured to abandon Assad to step down, something that reflects “the chief imperial aim of the West” even though there are copious reports on America demanding that the rebels they train take no action against the Baathists.

The article tries to square the circle. Even though its intention is to portray Putin as the number one enemy of imperialism, it has to acknowledge the purpose of the meeting in St. Petersburg—to bring together the American corporate elite with the Russian government officials in order to discuss business deals, even if WSWS.org warns about nuclear Armageddon in the next few months. Hirthler writes:

Filled with thousands of businessmen cutting deals with the Russian state, it provided a platform for Russia to reshape the dominant western narrative that Russia is an international pariah.

For those of us still old-fashioned enough to take Marx’s writings seriously, it is a mystery why Hirthler can’t make the connection between the interests of the bourgeoisie and the state that acts in its interests. As Marx put it in “The Communist Manifesto”: “The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.” So as long as people such as this get the red carpet treatment in St. Petersburg, I doubt that there will be much need to find a nearby air raid shelter. The NY Times reported on June 19th that 12 CEOs were in St. Petersburg to discuss deals, including Jim Rogers, chairman of the Miami financial company Beeland Interests; John Wories, president of Amsted Rail; and Jacob Frenkel, chairman of J. P. Morgan Chase International.

The European corporate executives were even more anxious to do business.The heads of BP the French bank Société Générale showed up. Meanwhile, nothing would appear to stand in the way of Royal Dutch Shell Gazprom’s plans to  build a third liquefied natural gas plant on Sakhalin Island in Siberia. Someone remind me. Is this the sort of irreconcilable conflicts Lenin described in “Imperialism: the latest stage of capitalism”? I must have missed something.

Even Saudi Arabia is getting into the act as Hirthler refers to it signing a raft of agreements with Russia during the powwow. For a more detailed account of the growing affinity between the Kremlin and the Mideast’s most reactionary power, you can read Fred Weir in the latest issue of the Christian Monitor. For those of you unfamiliar with Weir, I can assure you that he is a long-time Marxist even though his first-rate journalism avoids any kind of editorializing. He writes:

Mr. Putin and Prince Salman sat down for a friendly meeting on the sidelines of a St. Peterburg economic forum last month, where they reportedly signed six deals, including a nuclear cooperation agreement that could see Russia helping to build up to 16 atomic power stations in the desert kingdom. They also are reported to have inked contracts on  space cooperation, infrastructure development, and a deal on high-end Russian weaponry.

For the Kremlin, the effort to establish good relations with a major Mideast player that has long shunned Russia comports well with what Ms. Zvyagelskaya calls “Moscow’s long-standing policy of trying to be friends with everyone.”

Does this business about trying to be friends with everyone ring a bell. It should because it is essentially another way of expressing what Kissinger said: “America has no permanent friends or enemies, only interests.”

Meanwhile for all the talk of “sticking it to the man”, one has to wonder why Russia does not come to the aid of Greece that is locked in a battle with the European bankers, the IMF and the EU, which supposedly are part of the economic and geopolitical forces that want to turn Russia into a Yeltsinite colony. One would think that helping Greece to withstand these vultures would be in Russia’s interests.

Ertugrul Kurkcu, a parliamentary representative of the HDP, a leftist party that emerged out of the Kurdish struggle that has been called the Syriza or Podemos of Turkey, has shown the kind of solidarity that is absent from the Kremlin. The Washington Post reported on June 30:

On Tuesday, support for Greece and its leftist government led by Prime Minister Alexis Tsipras came from a rather unlikely place. Across the Aegean Sea in Turkey, one member of parliament urged his government to help bailout their neighbors.

“It is the biggest help that Turkey can do for its neighbor when times are tough,” said Ertugrul Kurkcu, of the opposition Peoples’ Democratic Party, known by its Turkish abbreviation HDP.

Kurkcu, who hails from the western Turkish port city of Izmir, urged Ankara to extend a 1.6 billion-euro “zero interest loan” to Greece to help repay its debts to international creditors, according to the Daily Sabah.

“Turkey’s humanitarian help in 2013 was $1.9 billion. Turkey’s resources are sufficient enough to make this aid to Greece,” Kurkcu said.

Russia’s GDP was equivalent to 2.097 Trillion dollars in 2013, which is about a thousand times the amount that Greece is being forced to deliver to the IMF. If Putin really was the leader of the “Axis of Resistance”, you’d think he’d pony up with the dough. What explains this reluctance? Are we dealing with the “Axis of Resistance” or maybe the “Axis of Compliance”? Maybe Putin was not cut from the same cloth as the Turkish HDP leader who understands what it means to struggle against oppression and exploitation. Maybe Putin has more in common with the businessmen he has put down the red carpet for rather than the pensioners and workers of Greece, at least that’s the conclusion one would draw from forexlive.com, a news aggregator geared to investors:

Screen Shot 2015-07-03 at 4.02.28 PM

June 29, 2015

Greeks rally for “no” vote

Filed under: Greece — louisproyect @ 9:55 pm

From the NY Times:
Screen Shot 2015-06-29 at 5.52.56 PM

 

Greeks on Monday gathered in Syntagma Square outside the Parliament to support the government of Prime Minister Alexis Tsipras and his call for a July 5 referendum on whether to accept proposals by European creditors that his government rejected.

An estimated 20,000 people, many waving flags and some beating drums and chanting slogans against austerity measures, rallied for a “no” vote that risks Greece’s exit from the eurozone.

The protest was peaceful, and had been encouraged by Mr. Tsipras’s Syriza party.

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