Category Archives: Greece

Between Berlin and a Hard Place: Greece and the German Strategy to Dominate Europe

Andrew Gavin Marshall writes:

[…] The German bet was that the EU could outrun financial markets, using the crisis as an opportunity to advance fiscal and political integration and impose their demands upon the rest of Europe, while simultaneously preventing markets from creating a crisis so severe that it threatened the euro or the economies of the more powerful nations. Without the pressure of financial markets, the EU could not force its member nations to restructure their economies and societies. Chancellor Merkel would frequently describe the European debt crisis to her colleagues as a “poker game” between financial markets and politicians. The first to flinch would lose.

In 2011, Bloomberg noted that Merkel was “turning Europe’s sovereign-debt crisis into an opportunity to reshape the euro region in Germany’s image,” concluding that she had “pulled ahead for now in her battle to restore policy makers’ mastery over the market.” A biographer of Merkel explained, “It’s policy by trial and error.”

Merkel’s powerful Finance Minister, Mr. Schauble, was one of the chief architects of the German strategy for Europe’s crisis. In March of 2010, he wrote in the Financial Times that, “from Germany’s perspective, European integration, monetary union and the euro are the only choice.” But aid comes with strings attached and harsh penalties for violations. “It must, on principle, still be possible for a state to go bankrupt,” wrote Mr. Schauble. “Facing an unpleasant reality could be the better option in certain conditions.”

The German minister believed “the financial crisis in the eurozone is not just a threat, but an opportunity,” as markets would “force the most debt-laden members of the 17-nation currency union to curb their budget deficits and increase their competitiveness.” This would pressure governments to accept further integration into a “fiscal union” defined and shaped by Germany. “We need to take big steps to get that done,” Mr. Schauble said in 2011. “That is why crises are also opportunities. We can get things done that we could not do without the crisis.”

Financial markets were happy to oblige the German-EU strategy, as the crisis would force the reforms long demanded by banks as a solution to the irresponsible spending of governments: austerity and structural reform. From 2002 to 2012, Josef Ackermann led Germany’s largest bank, Deutsche Bank. In 2011, the New York Timesdescribed Ackermann as “the most powerful banker in Europe” and “possibly the most dangerous one, too,” standing “at the center of more concentric circles of power than any other banker on the Continent.”’

READ MORE…

The problem of Greece is not only a tragedy. It is a lie.

John Pilger writes:

An historic betrayal has consumed Greece. Having set aside the mandate of the Greek electorate, the Syriza government has willfully ignored last week’s landslide “No” vote and secretly agreed a raft of repressive, impoverishing measures in return for a “bailout” that means sinister foreign control and a warning to the world.

Prime Minister Alexis Tsipras has pushed through parliament a proposal to cut at least 13 billion euros from the public purse – 4 billion euros more than the “austerity” figure rejected overwhelmingly by the majority of the Greek population in a referendum on 5 July.

These reportedly include a 50 per cent increase in the cost of healthcare for pensioners, almost 40 per cent of whom live in poverty; deep cuts in public sector wages; the complete privatization of public facilities such as airports and ports; a rise in value added tax to 23 per cent, now applied to the Greek islands where people struggle to eke out a living. There is more to come.

“Anti-austerity party sweeps to stunning victory”, declared a Guardian headline on January 25. “Radical leftists” the paper called Tsipras and his impressively-educated comrades. They wore open neck shirts, and the finance minister rode a motorbike and was described as a “rock star of economics”. It was a façade. They were not radical in any sense of that cliched label, neither were they “anti austerity”.’

READ MORE…

Paul Mason on Greece: “Finance will be used in a hostile way if you flout the sovereignty of Europe”

‘Greece will have to implement the tough austerity measures demanded by its lenders, plus hand €50bn of assets to a privatisation fund, where sales will be used to pay down debt.’ (Channel 4 News)

Greece is the latest battleground in the financial elite’s war on democracy

George Monbiot recently wrote from The Guardian:

Irish famine, original illustrationGreece may be financially bankrupt, but the troika is politically bankrupt. Those who persecute this nation wield illegitimate, undemocratic powers, powers of the kind now afflicting us all. Consider the International Monetary Fund. The distribution of power here was perfectly stitched up: IMF decisions require an 85% majority, and the US holds 17% of the votes.

The IMF is controlled by the rich, and governs the poor on their behalf. It’s now doing to Greece what it has done to one poor nation after another, from Argentina to Zambia. Its structural adjustment programmes have forced scores of elected governments to dismantle public spending, destroying health, education and all the means by which the wretched of the earth might improve their lives.

The same programme is imposed regardless of circumstance: every country the IMF colonises must place the control of inflation ahead of other economic objectives; immediately remove barriers to trade and the flow of capital; liberalise its banking system; reduce government spending on everything bar debt repayments; and privatise assets that can be sold to foreign investors.’

READ MORE…

#ThisIsACoup: Dimitri Lascaris and Michalis Spourdalakis on the Humiliating Eurozone Offer to Greece

Capitalism and Government Debt at Odds in Greece: Interview with Michael Hudson

Michael Hudson is research professor of economics at University of Missouri, Kansas City (UMKC) and a research associate at the Levy Economics Institute of Bard College. In this interview he says that unlike personal and corporate debt, there is no legal framework for writing off government debt, so there is deliberate anarchy in place. (The Real News)

Was Tsipras’ referendum worth it? Paul Mason on the Greek debt crisis

‘The new Greek government proposals, published late last night are clearly based on those submitted by Jean Claude Juncker last Thursday, before the referendum. It’s left many Greeks frustrated, asking: what was the point of the referendum?’ (Channel 4 News)

We Voted ‘No’ To Slavery, But ‘Yes’ To Our Chains: Greg Palast On Greece

Greg Palast is an investigative reporter who has worked for the BBC and the Guardian, among others. He is the author of several books including Vultures’ Picnic and The Best Money Democracy Can Buy.

Paul Mason on Yanis Varoufakis quitting despite Greek referendum victory

Greek Voters Deliver Stunning Rebuke to Austerity: Dimitri Lascaris Interviews Michael Spourdalakis

Michael Spourdalakis is the Dean of the School of Economics and Politics at the University of Athens. In this interview with Dimitri Lascaris, he says that it is time for the Greek government to play hardball with the Troika. (The Real News)

Paul Mason on the Greek referendum: “For the first time in the history of the Eurozone, people power has happened”

Greek Crisis Marks End of Debt Era

Atul Singh writes for Fair Observer:

[…] The Greek debt crisis is about to go global. First, other European countries are bound to be affected. Even France, la grande nation, will eventually come under pressure. Second, even states and cities will face pressure. Already, Puerto Rico’s government has declared that it cannot pay its $73 billion debt. In fact, all government-backed debt from sovereign to municipal bonds will come under pressure. Third, the US and China will eventually face a debt crisis too. The crisis is global and about to amplify.

The ballooning of debt is the biggest challenge facing the world economy. To stave off economic collapse, governments bailed out American and European banks. Central banks then released a torrent of money into the system by lowering interest rates and using quantitative easing, emulating the Bank of Japan. Those who own assets became richer, exacerbating already terrible inequality. Governments support creditors to boost economic confidence, while home owners in the US and ordinary citizens are fed to the dogs.

There is certainly a glut of savings in some parts of the world. China and Germany are awash with capital and are looking to park their money in assets that give them higher return. Yet there are limits to returns in a world awash with capital. The Chinese bubble in real estate and stocks has burst. Yet China is putting more money into its economy. It has made a fourth cut in interest rates since November and has reduced reserve requirements for banks, so they can continue lending. China has also lowered transaction fees and relaxed collateral rules on borrowing to fund share purchases. This is debt-fueled madness.

Like all parties, the Chinese one is coming to an end and stocks have lost nearly 25% of their value since the middle of June. Hence, Chinese money is flocking to the US in search of a safe harbor. Chinese buyers are now purchasing houses in California without even looking at them. China continues to fund US debt and shudders in horror as quantitative easing dilutes the value of its reserves. Unlike smaller countries like Greece, the US will never face default. It has the unique luxury of diluting its debt by simply printing more dollars. As the superpower in-charge of the world’s reserve currency, it can live off debt a little longer. It offers the greatest security to investors in an uncertain world. Yet the music will one day stop playing even for the US.’

READ MORE…

The forgotten origins of Greece’s crisis will make you think twice about who’s to blame

Ana Swanson reports for The Washington Post:

[…] In the mid-1990s, even before it came into existence, markets made a huge bet that the euro would be a reality. Specifically, investors, many in northern Europe, bet that interest rates in northern and southern Europe would converge. At the time, interest rates in southern Europe were much higher than in northern Europe, simply because people thought investing in countries like Greece was much riskier than investing in countries like Germany.

In anticipation of the euro zone, investors put lots of money in the cheap, high-yielding bonds of southern Europe. That helped to drive down yields and fueled borrowing and an economic boom in southern countries.

Ultimately, investors were right – Greek interest rates on 10-year bonds fell from around 20 percent in the early 1990s to only 3 percent in 2002. “They made a lot of money in the north betting against higher interest rates there. That fueled the boom, before the euro came, that overheated these economies.”

As economies overheated, it’s not a surprise that their competitiveness suffered, says Matthijs [co-editor of The Future of the Euro].

In short, many in the north pushed for a financial regime that didn’t fit the Greek economy, because they personally stood to benefit. Many rightly blame the Greeks for its current crisis, but some of the blame belongs farther north as well, he argues.’

READ MORE…

How Europe Played Greece

Alex Andreou writes for Common Dreams:

[…] Faith in European Institutions is thin on the ground. Lines have been crossed. At times of financial strain, a country’s currency issuer, its central bank, should act as lender of last resort and prime technocratic negotiator. In Greece’s case, the European Central Bank, sits on the same side as the creditors; acts as their enforcer. This is unprecedented.

The ECB has acted to asphyxiate the Greek economy – the ultimate blackmail to force subordination. The money is there, in our accounts, but we cannot have access to it, because the overseers of our own banking system, the very people who some months ago issued guarantees of liquidity, have decided to deny liquidity. We have phantom money, but no real money. There is a terrifying poetry to that, since the entire crisis was caused by too much phantom money in the first place.

EU Institutions are now openly admitting that their aim is regime change. A coup d’état in anything by name, using banks instead of tanks and a corrupt media as the occupiers’ broadcaster. The rest of Europe stands back and watches. Those leaders who promised the Syriza government support before the election, have ducked for cover. I understand it. They sympathise, but they don’t want to be next. They are honourable cowards. They look at the punishment beating being meted out and their instinct is to protect their own. ‘

READ MORE…

Joseph Stiglitz: How I would vote in the Greek referendum

Joseph Stiglitz, a Nobel laureate in economics, writes for The Guardian:

Alexis Tsipras, leader of the radical left main opposition party Syriza, greets supporters after a rally of the party in the northern Greek port city of Thessaloniki, January 2015. […] In January, Greece’s citizens voted for a government committed to ending austerity. If the government were simply fulfilling its campaign promises, it would already have rejected the proposal. But it wanted to give Greeks a chance to weigh in on this issue, so critical for their country’s future wellbeing.

That concern for popular legitimacy is incompatible with the politics of the eurozone, which was never a very democratic project. Most of its members’ governments did not seek their people’s approval to turn over their monetary sovereignty to the ECB. When Sweden’s did, Swedes said no. They understood that unemployment would rise if the country’s monetary policy were set by a central bank that focused single-mindedly on inflation (and also that there would be insufficient attention to financial stability). The economy would suffer, because the economic model underlying the eurozone was predicated on power relationships that disadvantaged workers.

And, sure enough, what we are seeing now, 16 years after the eurozone institutionalised those relationships, is the antithesis of democracy: many European leaders want to see the end of prime minister Alexis Tsipras’ leftist government. After all, it is extremely inconvenient to have in Greece a government that is so opposed to the types of policies that have done so much to increase inequality in so many advanced countries, and that is so committed to curbing the unbridled power of wealth. They seem to believe that they can eventually bring down the Greek government by bullying it into accepting an agreement that contravenes its mandate.’

READ MORE…

US Hedge Funds Get Bailed Out if Greeks Pass Bailout Referendum: Interview with Bill Black and Michael Hudson

‘Foreign banks want to bleed the patient when a policy of debt cutting and tax reform would revive the Greek economy, say UMKC’s Bill Black and Michael Hudson.’ (The Real News)

The IMF defaulted on Greece a long time ago

Jerome Roos writes for ROAR Mag:

Post image for The IMF defaulted on Greece a long time agoTuesday marked the deadline for Greece to transfer a 1.6 billion euro debt repayment to the IMF. The country’s Finance Minister Yanis Varoufakis had already announced that his government could not — and would not — pay. And so, at 6pm Washington-time, 1am locally, Greece officially defaulted on the IMF.

The default is an unprecedented event in the history of finance: never before has a developed country fallen into arrears on a loan from the Fund. Unsurprisingly, the international press is already conjuring up unflattering comparisons with notorious failed states like Zimbabwe and Somalia, which are among the few countries to have gone down the same path of utter financial ignominy. With all due respect for Zimbabwe and Somalia, the implication of this media narrative is clear: Greece is about to become a hopeless basket case.

In truth, superficial parallels like these are dangerously misleading. Not only do they compare apples and oranges; they also end up obscuring the IMF’s own role in the decimation of the Greek economy, which basically made an eventual Greek default inevitable. By uncritically reproducing narratives of Greece’s “failure” to repay the Fund, many in the international media are directly overlooking the fierce internal criticism that top IMF officials have expressed about their own responsibility for the utter disaster of the Troika’s bailout programs.’

READ MORE…

As Greece Heads for Default, Voters Prepare to Vote in Pivotal Referendum on More Austerity: Interview with Costas Panayotakis

‘Tens of thousands of Greeks have protested against further austerity cuts ahead of a key referendum on a new European bailout. The demonstrations come as the country confirms it will not meet the deadline for a $1.8 billion loan repayment due by 6 p.m. Eastern time tonight, deepening Greece’s fiscal crisis and threatening its exit from the eurozone. Greece will hold a vote this Sunday on whether to accept an austerity package of budget cuts and tax hikes in exchange for new loans. Greek Prime Minister Alexis Tsipras has urged a “no” vote, calling the proposal a surrender. We go to Greece to speak with Costas Panayotakis, professor of sociology at the New York City College of Technology at CUNY and author of “Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy.”‘ (Democracy Now!)

Robert Mundell, evil genius of the euro

Greg Palast wrote for The Guardian in 2012:

John Maynard Keynes in 1944 at the UN International Monetary Conference in Bretton Woods, NHThe idea that the euro has “failed” is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do.

That progenitor is former University of Chicago economist Robert Mundell. The architect of “supply-side economics” is now a professor at Columbia University, but I knew him through his connection to my Chicago professor, Milton Friedman, back before Mundell’s research on currencies and exchange rates had produced the blueprint for European monetary union and a common European currency.

[…] The euro would really do its work when crises hit, Mundell explained. Removing a government’s control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.

“It puts monetary policy out of the reach of politicians,” he said. “[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.”

He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace.’

READ MORE…

Will the Greek Referendum Force the Troika Back to the Bargaining Table? Interview with Dimitri Lascaris and Leo Panitch

‘Dimitri Lascaris and Leo Panitch discuss the possible consequences of a ‘no’ vote in the July 5th referendum on the bailout conditions offered by international creditors.’ (The Real News)

Joseph Stiglitz on the “criminal responsibility” of Greece’s creditors

Simon Shuster writes for TIME:

A few years ago, when Greece was still at the start of its slide into an economic depression, the Nobel prize-winning economist Joseph Stiglitz remembers discussing the crisis with Greek officials. What they wanted was a stimulus package to boost growth and create jobs, and Stiglitz, who had just produced an influential report for the United Nations on how to deal with the global financial crisis, agreed that this would be the best way forward. Instead, Greece’s foreign creditors imposed a strict program of austerity. The Greek economy has shrunk by about 25% since 2010. The cost-cutting was an enormous mistake, Stiglitz says, and it’s time for the creditors to admit it.

“They have criminal responsibility,” he says of the so-called troika of financial institutions that bailed out the Greek economy in 2010, namely the International Monetary Fund, the European Commission and the European Central Bank. “It’s a kind of criminal responsibility for causing a major recession,” Stiglitz tells TIME in a phone interview.

Along with a growing number of the world’s most influential economists, Stiglitz has begun to urge the troika to forgive Greece’s debt – estimated to be worth close to $300 billion in bailouts – and to offer the stimulus money that two successive Greek governments have been requesting.

Failure to do so, Stiglitz argues, would not only worsen the recession in Greece – already deeper and more prolonged than the Great Depression in the U.S. – it would also wreck the credibility of Europe’s common currency, the euro, and put the global economy at risk of contagion.’

READ MORE…

Greek debt crisis is the Iraq War of finance

Ambrose Evans-Pritchard wrote for The Telegraph earlier this month:

[…] If we want to date the moment when the Atlantic liberal order lost its authority – and when the European Project ceased to be a motivating historic force – this may well be it. In a sense, the Greek crisis is the financial equivalent of the Iraq War, totemic for the Left, and for Souverainistes on the Right, and replete with its own “sexed up” dossiers.

Does anybody dispute that the ECB – via the Bank of Greece – is actively inciting a bank run in a country where it is also the banking regulator by issuing this report on Wednesday [June 17]?

It warned of an “uncontrollable crisis” if there is no creditor deal, followed by soaring inflation, “an exponential rise in unemployment”, and a “collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership”.

The guardian of financial stability is consciously and deliberately accelerating a financial crisis in an EMU member state – with possible risks of pan-EMU and broader global contagion – as a negotiating tactic to force Greece to the table.

It did so days after premier Alexis Tsipras accused the creditors of “laying traps” in the negotiations and acting with a political motive. He more or less accused them of trying to destroy an elected government and bring about regime change by financial coercion.’

READ MORE…

Greece on the brink: Paul Mason on what happens next?

Paul Mason vlogs from Athens and asks: How will the bailout referendum help the country in its ongoing debt negotiations? (Channel 4 News)

Greece is a sideshow. The eurozone has failed, and Germans are its victims too.

Aditya Chakrabortty writes for The Guardian:

Matt Kenyon illustrationNearly every discussion of the Greek fiasco is based on a morality play. Call it Naughty Greece versus Noble Europe. Those troublesome Greeks never belonged in the euro, runs this story. Once inside, they got themselves into a big fat mess – and now it’s up to Europe to sort it all out.

Those are the basics all Wise Folk agree on. Then those on the right go on to say feckless Greece must either accept Europe’s deal or get out of the single currency. Or if more liberal, they hem and haw, cough and splutter, before calling for Europe to show a little more charity to its southern basketcase. Whatever their solution, the Wise Folk agree on the problem: it’s not Brussels that’s at fault, it’s Athens. Oh, those turbulent Greeks! That’s the attitude you smell when the IMF’s Christine Lagarde decries the Syriza government for not being “adult” enough. That’s what licenses the German press to portray Greece’s finance minister, Yanis Varoufakis, as needing “psychiatric help”.

There’s just one problem with this story: like most morality tales, it shatters upon contact with hard reality. Athens is merely the worst outbreak of a much bigger disease within the euro project. Because the single currency isn’t working for ordinary Europeans, from the Ruhr valley to Rome.’

READ MORE…

Greece: The True Face of Golden Dawn

Editor’s Note: This report by Channel 4 News was first published in March 2013. 

Greece shows what can happen when the young revolt against corrupt elites

Paul Mason writes for The Guardian:

‘[…] The fact that a party with a “central committee” even got close to power has nothing to do with a sudden swing to Marxism in the Greek psyche. It is, instead, testimony to three things: the strategic crisis of the eurozone, the determination of the Greek elite to cling to systemic corruption, and a new way of thinking among the young.

Of these, the eurozone’s crisis is easiest to understand – because its consequences can be read so easily in the macroeconomic figures. The IMF predicted Greece would grow as the result of its aid package in 2010. Instead, the economy has shrunk by 25%. Wages are down by the same amount. Youth unemployment stands at 60% – and that is among those who are still in the country.’

READ MORE…

Greece’s New Finance Minister: “We Are Going To Destroy The Greek Oligarchy System”

Zero Hedge reports:

Over two years ago, we first highlighted Yanis Varoufakis’ perspectives on the destruction of Greece and Europe’s bogus growth pacts. Since then he has grown in both reason and popularity as his no-nonsense discussons of the mis-design of the euro (and potential solutions) have made him the front-runner to be Syriza’s new finance minister. Never one to  mince words or play politics, Varoufakis tells Channel 4’s Paul Mason in this brief (but chilling for Brussels) interview, what his party would do if it gets into government in Greece, and admits the prospect of power in Europe is “scary”. As he sums up, “we are going to destroy the Greek oligarchy system,” and with it, we suspect, much of the narrative that holds the fragile European Union together…’

READ MORE…

The SYRIZA Challenge in Greece: Interview with Leo Panitch

Editor’s Note: Professor Leo Panitch is a distinguished research professor of Political Science at York University in Toronto, Canada and editor of the Socialist Register. He is also co-author of ‘The Making of Global Capitalism: The Political Economy of American Empire‘. The interview was recorded earlier last week, before the elections in Greece.

Trojan Hearse: Greek Elections and the Euro Leper Colony

Greg Palast writes:

‘Europe is stunned, and bankers aghast, that polls show the new party of the Left, Syriza, will win Greece’s parliamentary elections to be held this coming Sunday, January 25.

Syriza promises that, if elected, it will cure Greece of leprosy.

Oddly, Syriza also promises that it will remain in the leper colony.  That is, Syriza wants to rid Greece of the cruelty of austerity imposed by the European Central Bank but insists on staying in the euro zone.

The problem is, austerity run wild is merely a symptom of an illness.  The underlying disease is the euro itself.’

READ MORE…

Greece: The Rubber Glove Rebellion

Maria Margaronis reports for BBC Magazine:

Cleaner, protestingYou wouldn’t know to look at it that the messy makeshift camp is the epicentre of a protest that’s touched a nerve in Greece – and given the government more than a mild headache.

There’s a pop-up tent with an inflatable mattress, some plastic chairs, a table, a fridge and a microwave. Posters of red rubber gloves making fists or victory signs adorn the concrete pillars. A banner made from a sheet is splashed with big red letters: “Sit-in protest by the cleaners of the finance ministry.”

Nearly 600 women who cleaned the ministry’s offices around the country were laid off 16 months ago in public-sector cuts demanded by Greece’s creditors. They are middle-aged mothers and grandmothers with no previous experience of activism, but their dogged persistence has caught the imagination of many thousands here whose lives have been derailed by the economic crisis.’

READ MORE…