Bank of Greece after Direct Hit by the Guns of Navarone

Would the last person to leave please turn out the lights? (Photo: Reuters/FT)

A Specter is Haunting Europe: The Spectral Theory of Money, and Why Puerto Rico is not Greece

Barry Eichengreen has a stimulating recent essay at Spiegel Online (English version) on the differences and similarities between the debt crisis in the US Territory of Puerto Rico and the Eurozone Territory (sorry—sovereign state) of Greece.

So Puerto Rico is, in a literal sense, Greece in another guise. But can you imagine the United States putting all other domestic and foreign policies on hold while it attempts to resolve the crisis? The idea is ludicrous. But that is precisely what Europe has done.

Point well taken. Puerto Rico’s problems (like Detroit’s not too long ago) will be resolved in bankruptcy courts. Greece’s, in contrast, have led to a five-month marathon reenactment of Luis Buñuel’s 1961 surrealist film The Exterminating Angel. That there are fundamental governance differences between the Eurozone and the United States is something I examined some time ago.

But there is another, more fundamental, difference between the Greek and the Puerto Rican cases that has become glaringly apparent since the European Central Bank (ECB) unleashed the Guns of Navarone on Greece, that Eichengreen doesn’t address. Can you imagine the Federal Reserve Board cutting off its financial backstop (discount window) to all Puerto Rican banks because their local government was insolvent on its municipal bonds, thus imposing bank holidays and capital controls on the islands? For that is what the ECB, the Eurozone’s equivalent of the Federal Reserve, has done in Greece.

Why is it inconceivable for the Federal Reserve Board to do so but already tough love (though not uncontroversial) between the ECB and Greece? To obtain central banking liquidity, Greek banks have to put up collateral (rediscounting). But what does their collateral consist of? In the US it would be US Treasury Securities, bonds issued by the Federal Government. The Fed has never accepted state or municipal bonds as collateral (although it traditionally, i.e., before the 1930s, and perhaps even today, accepted best commercial paper as collateral, whatever that is), and that’s why banks do not hold them as capital reserves. The corresponding instrument in the Eurozone would be Eurozone central sovereign debt, but, alas, no such thing exists (except for a small amount of European Investment Bank paper). What does exist? National bonds of the 19 constituent member states of the Eurozone, i.e., in American terms, municipal and state bonds, something the Fed would never dream of discounting. Since the EZ banks largely hold bonds of their own country (increasingly so since the 2008 crisis), this has created the famous bank-sovereign debt doom loop. As long as the ECB is unwilling to act as lender of last resort using any of the 19 national sovereign debt instruments equally, we will get the famous “fragility of the Eurozone” centrifugal self-destruction feedback loop described by Paul De Grauwe in 2011. But in doing so, the ECB opens itself up to the objection of the German Bundesbank’s President Jens Weidmann that the ECB would be thereby engaging in illicit monetary financing of governments (to the point where the Bundesbank sued the ECB before the German and European Constitutional Courts). It was probably the threat of more of this Bundesbank blackmail that induced the ECB to deploy the Guns of Navarone against Greece.

This hamstrung construction of the Euro derives from a fundamental misconception of what a currency is. A currency is not merely circulating notes and coins (and central bank deposits)—what economists call the monetary base—issued by a central authority and deemed legal tender. In a system of fractional reserve banking, it must be a whole gamut of debt instruments of a wide spectrum of maturities and (fixed-income) returns guaranteed by this selfsame issuer. Notes and coins, what I call money of order 0, constitute the most liquid component and are also a form of sovereign debt. But banks normally want to keep their reserves in something interest bearing, rather than in cash, which means that they must also be supplied with “risk-free” instruments of maturities of all orders (1, 3, 6, 12 month T-bills, 2-10 year T-notes, 30 year T-bonds, and in the past perpetual bonds like British consols). It is the obligation of the central bank to do this in a way that is non-inflationary and serves the other macroeconomic goals of policy-making (e.g., full employment), by influencing the yield curve with open-market operations, discount rate adjustments, reserve and capital requirements, etc. I call this the Spectral Theory of Money.

From this point of view the national debt is not an evil to be eliminated, but a necessary service the central bank provides to operate a modern economy. Not a subterfuge the profligate government foists on society to finance evil wars and a wasteful welfare state (although it can and historically has indeed done both), but a necessary supply of a range of lubricants to keep a monetary economy running smoothly. And if we examine the history of the longest continuously running modern currency system in the world, the Bank of England, this is exactly what we find. In 1694 a group of merchants bought up the poorly managed debts of the English king and obtained the privilege of issuing pound notes and coins, and bonds and later consols, as the Bank of England (then still a quasi private enterprise). And while the national debt of England subsequently only ballooned while the country gorged on a successful but expensive program of imperial expansion, its financing costs fell radically. Something the French kings, who failed to establish a viable central bank and state finance after the South Sea/Mississippi Bubbles, could only regard with envy.

If Eurobonds had existed, and all Eurozone banks were capitalized by statute with them, this problem could never have arisen, and the Guns of Navarone could never have been fired. Alexander Hamilton, the first American Secretary of the Treasury, understood this clearly in 1791 when he bought up the outstanding debts of the thirteen revolutionary states, and consolidated them into a single national debt serviced by national tariffs and taxes.

Until such time as the Eurozone catches up with Hamilton and begins issuing Eurobonds, and exclusively capitalizing its banks with them, it will never be a viable currency zone, as the Greek debt crisis has amply demonstrated. At best it will degenerate into a German protectorate cowering under the Guns of Navarone.

Donald Tusk shines in Buñuel film reenactment, says Financial Times!

“Sorry, but there is no way you are leaving this room,” the former Polish prime minister said.

Council of Europe President Donald Tusk speaking to Angela Merkel and Alexis Tsipras at 6 am this morning in Brussels (according to the inside account in today’s Financial Times).

 

Donald Tusk performing in the Brussels all-night marathon reenactment of Luis Buñuel’s masterpiece The Exterminating Angel (left), and film still from the 1961 original (right).

The Financial Times report continues:

It was extremely hard, violent even,” said one participant…

In the end, some bleary-eyed diplomats emerged unsure who had prevailed in the marathon session. But they seemed agreed as to who had suffered most.

“They crucified Tsipras in there,” a senior eurozone official who had attended the summit remarked. “Crucified.”

This undoubtedly would have been a field day for Buñuel’s camera had he lived to witness it!

Film still from Buñuel’s 1930 surrealist masterpiece L'Age d'Or. How would the master have filmed this morning’s Brussels Crucifixion?

Sketches in European Solidarity IV: Wolfgang Schäuble’s Sympathetic Magic Understanding of European Solidarity

Is German Finance Minister Wolfgang Schäuble’s economic philosophy basically a form of sympathetic magic? (Picture credit: Keystone)

In my last post I cited extensively from Timothy Geithner’s memoir Stress Test to document that German Finance Minister Wolfgang Schäuble has always led the Grexit, “amputate the festering Greek leg” camp in the German government since at least 2012. And that the new Greek government may have been unwittingly playing into his hands the whole last five months. In any event it is disingenuous or seriously naive to wake up suddenly to this possibility only last Saturday, as Yanis Varoufakis did in The Guardian, a charge he is planning to repeat in coming Thursday’s Die Zeit.

In retrospect it is clear that a fiscally and statistically troubled Greece should never have been admitted to the Euro (and also that the Euro should never have been launched in the form it was). So there is some sense behind contemplating Grexit, even if it represents a rather impressive failure of due diligence and supervision on the part of the European Commission, but correcting an error may not mandate the same policies as not making it in the first place. But what I find almost more shocking about Schäuble is something else—his sense of what constitutes European solidarity and effective policy, for it reveals a level of economic illiteracy truly shocking in such a powerful finance minister.

In his memoir Geithner also recounts another conversation he had with Schäuble in 2010:

The most powerful country in Europe, Germany, was deeply committed to a strategy of austerity, and skeptical of forceful financial rescues. I had met Schäuble, a survivor of an assassination attempt that left him in a wheelchair, for the first time in Iqaluit, and I had found him compelling—direct, smart, strong. On substance, though, we were often far apart. He had a clear view: Greece had binged, so it needed to go on a strict diet. Other nations with unsustainable deficits had to do the same, even though it would cause pain for their citizens, even though many [in fact, all except Greece] had been fiscally responsible before the crisis. Schäuble said Germany would slash its own budget in solidarity with the rest of the continent, to show that it wouldn’t ask for sacrifices it wouldn’t make itself [my emphasis]. I thought that would just make the problem worse; in the near term, the German government and German citizens needed to do more spending and less saving.

“You know, you sound a bit like Herbert Hoover in the 1930s,” I said. “You need to be thinking about growth.” [Kindle edition position 6681]

That slashing the German budget could be an act of solidarity with the financially strapped rest of Europe is a vision of such abject economic ignorance that it leaves one breathless. Anthropologists call this style of reasoning “sympathetic magic.” Like voodoo, “sympathetic magic is based on the metaphysical belief that like affects like.” The Skeptic's Dictionary continues:

Anthropologists consider magical thinking a precursor to scientific thinking. It is indicative of a concern with control over nature through understanding cause and effect. Nevertheless, the methods of magic, however empirical, are not scientific. Such thinking may seem charming when done by our ancestors living thousands of years ago, but today such thinking may indicate a profound ignorance or indifference towards science and a testable understanding of the world.

Recall that in 2010 Germany was running a current-account surplus of over 5% of GDP. Its public investment rate was at an historical low. The share of labor in national product was historically low and falling. It was benefitting from unprecedentedly low interest rates as a safe haven in the crisis. Its substantial excess savings were (and still are!) flowing into its foreign trade surplus.

This does even qualify as an example of Keynes’ famous dictum

Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

There is no academic scribbler behind such stupidity, it is just stupidity pure and simple. Hoover (actually his Treasury Secretary Mellon, although we have only Hoover’s word for it in his memoirs) may have advocated “liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system,” but at least he might have been distilling this policy from the academic scribbler Friedrich Hayek (though this is unlikely, and Mellon actually pressed for lower interest rates). What excuse does Schäuble have? A schwäbische Hausfrau's common sense and an inability to understand the paradox of thrift?

So what’s on the Eurotelly tonight? 1. Austerity for Our Time, 2. Rosencrantz and Guildenstern are Dead, 3. The Guns of Navarone

The Euro has many faults that have rightly given it the nicknames ‘machine from hell’ and ‘burning building with no exits.’ But one of its most pernicious is that, conceived as an irrevocable currency union, no legal pathway was foreseen for evicting one member if all the other members wanted it out but it still refused to leave, or even for it to leave of its own volition. And a debtor that had fallen on hard times could not pursue any kind of adjustment coupled with compensatory expansionary policies, since its hands would be tied without access to exchange and monetary policy, and a lender of last resort. Like in the old Gold Standard days (read 1930s), it would be nailed to a cross of Euro.

This seems to be the current situation with respect to Greece, and as I shall argue, it didn’t arise only after the Syriza anti-austerity coalition came into power in January. It seems that Greece was on a path to Grexit long before, and that Tsipras  and Varoufakis had only become its unwitting agents (dupes?), much like Rosencrantz and Guildenstern* in Shakespeare’s Hamlet. This would make the negotiations a political farce, ‘full of sound and fury, signifying nothing’ (Shakespeare’s Macbeth this time), staged simply to intimidate the various Eurozone national electorates into accepting a foregone conclusion. But a foregone conclusion that has taken five years to play out, and has had every resemblance to a Konkursverschleppung (criminal concealment of insolvency) at the expense of the Greek people and Eurozone taxpayers, as Wolfgang Münchau pointed out back in 2013 and again this week.

Yet no sooner had I written the above paragraphs Thursday morning then a new deal seems to be in the offing, with Greece, astonishingly, capitulating to possibly stricter austerity requirements than it had just rejected in the referendum last Sunday, now sweetened with a vague new promise of debt relief (a promise, one should note, that was made before, in November 2012, but never fulfilled – see below for more).

So what gives? I think the only possible explanation is that both sides panicked in the overtime period when they got exactly what they seemed to want: the present Greek government by so resounding winning its own referendum, and the creditors, by forcing Greece into an economic meltdown, and inexorable ‘voluntary’ Grexit. Paradoxically, by unintentionally calling each other’s bluffs, they created a situation neither could ultimately live with. And just winning the blame game (game of turkey), at least in the eyes of their own constituencies, would not be sufficient compensation. Thus we seem to be repeating the pattern of 2012, when German Chancellor Angela Merkel pulled back from the brink of ‘amputating the festering Greek leg’ (as recommended by her finance minister Wolfgang Schäuble) and agreed to the second Greek bailout (for the spicy inside details, see Peter Spiegel’s blow-by-blow account in the Financial Times). But will this solution—Austerity 3.0+Debt Relief–prove any more durable than the last one?

First, a brief sketch of the two diametrically opposed brinkmanship scenarios, and the real powers of enforcement behind either—the ECB’s ‘Guns of Navarone’, on the program tonight.

Scenario 1: Abject Greek capitulation, ‘Austerity for our time’

Will a new Brussels Agreement be likely to last any longer than Chamberlain’s 1938 Munich Agreement? (Picture credit: Wikimedia Commons)

This seemed to be where we were headed when I wrote my June 24 post: Tsipras returns in triumph to Athens bearing a Brussels Agreement, declaring “austerity/prosperity (take your pick) for our time”. In reality he has capitulated across the board to the creditors’ demands, but tries to sell it as a Greek victory. But the creditors did not even do him this favor, instead, upping their demands the nearer they reached an agreement, forcing him to call the Sunday referendum to save face in a hopeless situation (at least by his own account), and implying that the creditors were never negotiating in good faith in the first place (something I suspected as long ago as April 1). Today, despite winning his snap referendum (or precisely because of it?), he is back in Brussels abjectly capitulating to those same demand, with some vague promise of talks about debt relief in the future. But it is not even certain at this hour that the Eurogroup, and especially German FM Schäuble, will even approve this last appeal, despite support from France, the IMF, and the former Polish PM and President of the European Council Donald Tusk.

The trouble with the dangled promise of debt relief is that such a promise has been made before, in fact in November 2012, a little-known fact:

Commitment, though, is a two-way street and Greece would be within its rights to accuse its eurozone partners of failing to live up to their commitments to Athens. On November 27 2012, the Eurogroup agreed to provide further debt relief to Greece once it achieved a primary surplus.

The relevant extract from the common statement on that day reads: “States will consider further measures and assistance, including inter alia lower co-financing in structural funds and/or further interest rate reduction of the Greek Loan Facility, if necessary, for achieving a further credible and sustainable reduction of Greek debt-to-GDP ratio, when Greece reaches an annual primary surplus, as envisaged in the current MoU, conditional on full implementation of all conditions contained in the programme.”

Despite this commitment and even though Greece achieved a primary surplus in 2013, a year ahead of schedule, no measures on further debt relief were offered. The previous government was told at the end of 2013 to wait until the primary surplus was rubber stamped by Eurostat in March. Then, it was told to wait until after the European Parliament elections in May. Then, it was told to wait until after the completion of the troika review that began last September. Greece’s lenders attempted to cover their reluctance with the fig leaf of claims that Greek debt was on a sustainable path.

Ex-Prime Minister Antonis Samaras must be vexed at hearing his former counterparts talk about “commitments” because one of the main reasons he finds himself out of office today is that the Eurogroup did not live up to one of the key pledges it made to him. [Yiannis Mouzakis & Nick Malkoutzis at macropolis.gr, 20 Feb 2015]

For those inclined to doubt the veracity of a Greek blog post, I refer you to two Reuters reports about the promise and its limbo status. If the Troika and the German government were so dismayed by the Syriza electoral victory in 2015, then why did they do so little to help Samaras stay in power? Because Angela Merkel (who of course is available for business 24/7) found him ridiculous after he boasted to her that he was even available to his aides on weekends (as reported in last week’s Der Spiegel)?

Scenario 2: Grexit–Amputate the festering leg (the ‘Rosencrantz and Guildenstern are Dead’* scenario)

 

Will Varoufakis and Tsipras (left) share the fates of Greek PM Samaras (center) and Rosencrantz and Guildenstern (far right), despite refusing to wear ties? (Picture credits. Left: Cartoon from Belgian L’Echo explaining why the new Greek ministers do not wear ties ‘because’ their predecessor Samaras had been hung by his tie by German Chancellor Merkel; Right: Scene from stage production of Tom Stoppard’s spoof Rosencrantz & Guildenstern are Dead)

If the creditors were not negotiating in good faith, what did they want? Grexit/Graccident, but with the blame placed squarely on the recalcitrant, obstreperous, and immature Greeks `For this purpose the self-styled Marxists Tsipras and Varoufakis were made to order and more suitable than their malleable center-right predecessor Samaras. Let them pursue their revolutionary romantic quixotic tilting at austerity windmills until they fall off the fiscal cliff and have to face the music of financial collapse. This reality check would kill two birds with one stone: make a devastated Greece a deterrent to other populist parties contemplating upsetting the austerity order (think of Spain, Italy, Ireland, France), while getting the Greek people to turn on Syriza for maneuvering them into this disaster. And it would solve the legal conundrum of the Eurozone—how to expel a country by making it go ‘voluntarily’ under suitable but deniable duress, without leaving too much egg on the face of the creditors.

That this scenario might always have been German Finance Minister Wolfgang Schäuble’s intention (at least since 2012’s Greek crisis) finally seems to have dawned on recently resigned Greek Finance Minister Yanis Varoufakis (aka Rosencrantz or Guildenstern?), as he admits today in an otherwise highly intelligent op-ed in The Guardian and on his blog. As evidence he cites Nils Pratley’s May 11 Guardian piece which has Schäuble mouthing Arnold Schwarzenegger’s immortal line “Go ahead Greece, make my day” in the caption.

But that Schäuble led the “amputate the festering Greek leg” camp in the German government during the 2012 iteration of the Greek debt crisis has been well known since Peter Spiegel’s May 2014 How the Euro Was Saved pieces in the Financial Times, as well as former US Treasury Secretary Timothy Geithner’s 2014 memoir Stress Test, i.e., for almost a year before Rosencrantz and Guildenstern (sorry—Tsipras and Varoufakis) came to power. In case anyone had forgotten, Andrew Ross Sorkin reminded us of this again on June 29 in the New York Times. Geithner recalls in his memoir:

A few days later [i.e., late July 2012], I flew to meet Wolfgang Schäuble for lunch during his vacation at a resort in Sylt, a North Sea island known as Germany’s Martha’s Vineyard. Schäuble was engaging, but I left Sylt feeling more worried than ever. He told me there were many in Europe who still thought kicking the Greeks out of the eurozone was a plausible — even desirable — strategy. The idea was that with Greece out, Germany would be more likely to provide the financial support the eurozone needed because the German people would no longer perceive aid to Europe as a bailout for the Greeks. At the same time, a Grexit would be traumatic enough that it would help scare the rest of Europe into giving up more sovereignty to a stronger banking and fiscal union. The argument was that letting Greece burn would make it easier to build a stronger Europe with a more credible firewall.

I found the argument terrifying. Letting Greece go could create a spectacular crisis of confidence, regardless of what Europeans committed to do afterward. It wasn’t clear why a German electorate that hated the Greek bailouts would feel much better about rescuing Spain or Portugal or anyone else. And the flight from Europe, once it got momentum, might be impossible to reverse.

[Stress Test, Kindle edition position 7238—can you believe Kindle for PC does not show you page numbers?]

* Rosencrantz and Guildenstern, sycophantic childhood friends of Hamlet, are sent by Danish King Claudius to accompany Hamlet on a ship to England. They bear a sealed letter to the King of England requesting Hamlet’s execution (unbeknownst to themselves). Distrusting them, Hamlet secretly substitutes a letter of his own calling instead for their execution, and escapes back to Denmark. Clueless, they deliver this letter to the King of England and, we are later told, are indeed duly executed. Substitute ‘anti-austerity campaign’ for King Claudius, Wolfgang Schäuble for Hamlet, and the troika for the King of England, and you have a nice little contemporary parable (with of course Tsipras and Varoufakis interchangeably as Rosencrantz and Guildenstern). Tom Stoppard spins the Hamlet tale further in his spoof Rosencrantz & Guildenstern are Dead, which is often compared with Beckett’s Waiting for Godot. And Waiting for Godot, in turn, has also been invoked as a relevant literary metaphor for Germany’s role in the Euro crisis.

3. The Guns of Navarone

Film still from the 1961 Hollywood epic The Guns of Navarone. This fictional account of a successful British commando raid on German superguns hidden deep within a made-up Greek island controlling the Aegean sea-lanes is based on the 1943 Battle of Leros, which was in reality the last hapless debacle of the British and their new-found Italian allies against a still triumphant Wehrmacht. It took Hollywood to snatch victory from the jaws of defeat. Today the superguns are being wielded by an Italian at the helm of the ECB in Frankfurt.

Whichever way the Greek scenario goes this weekend, one lesson has been unequivocally learned: the ECB has the superguns (access to ELA funding, QE–aka “Querency Easing”, OMT “whatever it takes”), and it is prepared to use them, for good or evil. Whether the ECB is an independent central bank of unelected official or not, it is ultimately calling the shots because only it has its finger on the triggers of the financial weapons of mass destruction. And woe betide anyone in the Eurozone who dances out of line, as the present Greek government has discovered to its dismay.

Charles Wyplosz has a very trenchant 29 June piece on why the ECB’s decision, against the assessment of the IMF, not to write down Greece’s debt in 2010 and instead become one of the country’s creditors, compromised its position and has now led to this pass. He writes:

No other central bank in the world tells its government what reforms it should conduct, nor how sharp should fiscal consolidating be. As a member of the Troika, the ECB was instructing Greece to carry out deeply redistributive policies, for which only elected politicians have a democratic mandate. In the end, it must accept the blame for poorly designed policies that have provoked a deep depression and its political consequences.

The decision to freeze ELA is taking this politicization process to a new height. In effect, the ECB is pushing Greece out of the Eurozone. Politicians may debate about the wisdom of making Greece leave. As non-elected officials, the people who sit on the Governing Board of the Eurosystem have no such mandate. A charitable interpretation is that they felt that many governments would harshly criticize keeping the flow of liquidity to Greek banks open after the Greek government in effect closed the negotiations by calling a referendum. This is true, but central bank independence is designed to prevent this kind of pressure.

So, dear audience, I hope you are satisfied with the diverse range of programming of the very highest cultural quality being brought to you tonight on your Eurotelly. Rest assured that your television taxes are being well spent!

Greek Debt Negotiations: Just a Eurozone Reenactment of Buñuel’s Surrealistic Masterpiece “The Exterminating Angel”?

Have the five grueling months of Greek debt negotiations been simply a reenactment of Luis Buñuel’s 1962 surrealistic film The Exterminating Angel, where the guests at the above dinner party, for some inexplicable reason, cannot leave the music room? (Film still credit: The Guardian)

British politician and onetime foreign secretary William Hague once called the Euro a “burning building with no exits.” And for five months, representatives of Greece and its creditors (we are now permitted to call them the troika again) have been locked in various rooms purportedly playing various games (chicken, turkey, rock-paper-scissors—which may have more accurately reflected what they had had to eat than what they were actually playing) while Greece slowly burned.

The Wikipedia begins to make a stab at summarizing the plot of the convoluted film as follows:

During a formal dinner party at the lavish mansion of Señor Edmundo Nobile and his wife, Lucia, the servants unaccountably leave their posts until only the major-domo is left. After dinner the guests adjourn to the music room, where one of the women, Blanca, plays a piano sonata. Later, when they might normally be expected to return home, the guests unaccountably remove their jackets, loosen their gowns, and settle down for the night on couches, chairs and the floor.

By morning it is apparent that, for some inexplicable reason, they are psychologically, but not physically, trapped in the music room. Unable to leave, the guests consume what little water and food is left from the previous night's party. Days pass, and their plight intensifies; they become quarrelsome, hostile, and hysterical …

While Greek PM Tsipras appeared to definitively leave the room by calling his snap referendum on 27 June, after overwhelmingly winning it on 5 July with a “No” vote to the creditors’ proposal (which was off the table anyway at this point) he has now returned to the room to abjectly capitulate to even harsher conditions after the ECB forced Greece to close its banks, impose capital controls, and plunge the country into economic chaos. (Evans-Pritchard claims that Tsipras was actually expecting and hoping to lose the referendum, thus allowing him to resign in dignity after having fought and lost the good fight. Alas, he had no such luck.) The creditors had threatened that a “No” vote would be a vote for exiting the Euro (Grexit), but now that this has happened, they have backpedaled (Juncker’s “small vs. large egos”) and are now in no apparent rush to throw Greece out.

No one seems able to leave the room. The Eurozone actors’ behaviors have become so inconsistent and absurd they make Buñuel’s figures seem paragons of reason and bourgeois propriety, something he had set out to parody.

The film’s ending (again drawing on the Wikipedia summary) opens up another range of fanciful Eurozone analogies, which I leave to the reader’s imagination to construct:

Eventually, Raúl suggests that Nobile is responsible for their predicament and that he must be sacrificed. Only Dr. Conde and the noble Colonel Alvaro oppose the angry mob claiming Nobile's blood. As Nobile offers to take his own life, a young foreign guest, Leticia (nicknamed "La Valkiria") sees that they are all in the same positions as when their plight began. Obeying her instructions, the group starts reconstructing their conversation and movements from the night of the party and discover that they are then free to leave the room. Outside the manor, the guests are greeted by the local police and the servants, who had left the house on the night of the party and who had similarly found themselves unable to enter it.

To give thanks for their salvation, the guests attend a Te Deum at the cathedral. When the service is over, the churchgoers along with the clergy are also trapped. It is not entirely clear though, whether those that were trapped in the house before are now trapped again. They seem to have disappeared. The situation in the church is followed by a riot on the streets and the military step in to brutally clamp down on the rioters. The last scene shows a pack of sheep entering the church in a row, accompanied by the sound of gunshots.

gobble, gobble, gobble hoch zwei: Eurozone barnyard brawl attains level 2 of game of turkey

Berlin has delivered a blistering attack on Greece’s beleaguered radical prime minister, Alexis Tsipras, accusing him of lying to his own people and seeking scapegoats for the country’s misery everywhere but in his own ranks…

Tsipras referred to leaders of other eurozone nations as “extremist conservative forces” and blamed them for the capital controls that have forced the banks to shut down and ration cash.

[Guardian 1 July 2015 19.39 BST]

In case you forgot the definition of the game of turkey, please go back to April Fool’s Day post.