This is an excellent summary.
How many presidential candidates talk about such issues in this way?
I thank Mike Connelly for calling my attention to this.
Posts Tagged ‘Greek debt crisis’
Bernie Sanders on the Greek debt crisis
August 22, 2015The passing scene – August 17, 2015
August 17, 2015Seven Myths about the Greek Debt Crisis by Stergios Skaperdas, a University of California economics professor. (Hat tip to naked capitalism).
An economist argues that (1) default would not be the worst outcome for Greece, (2) the troika (European Central Bank, International Monetary Fund, European Commission) is not trying to rescue Greece, (3) Greece’s problems are not caused by corruption and bad policy, (4) no Greek government could have carried out the troika’s policies, (5) the troika’s policies would not have benefited Greece, (6) exiting the Eurozone would not be catastrophic for Greece and (7) the Greek government in fact does have bargaining power.
Hillary Clinton Doesn’t Care That Much About Abortion Rights by Ted Rall for Counterpunch.
Instead of trying to persuade judges that abortion is a constitutional right, why don’t Hillary Clinton and other liberal Democrats support legislation to guarantee abortion rights? Ted Rall thinks Democrats hold back because they cynically want to keep abortion alive as a issue. But maybe they’re just timid.
Clown Genius by Scott Adams. (Hat tip to Rod Dreher)
The creator of the Dilbert cartoons thinks most people probably would buy a used car from Donald Trump because his campaign demonstrates mastery of the classic techniques of salesmanship.
Greece and the economic hit men
August 3, 2015Like many people, I once naively believed that banks made a profit by lending money to people who would pay them back. I’m sure that is still true of the many honest bankers still left in the world.
But it can be more profitable for banks to lend money to people who can’t pay them back. The lender collects higher interest rates. Sometimes the loans are securitized and sold to suckers. Foreclosures are profitable if the value of the underlying asset is greater than the loan.
And last, but not least, if the lender is large enough and politically powerful enough, a government will bail him out.
John Perkins, author of Confessions of an Economic Hit Man (which I haven’t read), gave an interview to a Greek radio station explaining how this works.
Essentially, my job was to identify countries that had resources that our corporations want, and that could be things like oil – or it could be markets – it could be transportation systems. There are so many different things.
John Perkins
Once we identified these countries, we arranged huge loans to them, but the money would never actually go to the countries; instead it would go to our own corporations to build infrastructure projects in those countries, things like power plants and highways that benefited a few wealthy people as well as our own corporations, but not the majority of people who couldn’t afford to buy into these things, and yet they were left holding a huge debt, very much like what Greece has today, a phenomenal debt.
And once [they were] bound by that debt, we would go back, usually in the form of the IMF – and in the case of Greece today, it’s the IMF and the EU [European Union] – and make tremendous demands on the country: increase taxes, cut back on spending, sell public sector utilities to private companies, things like power companies and water systems, transportation systems, privatize those, and basically become a slave to us, to the corporations, to the IMF, in your case to the EU, and basically, organizations like the World Bank, the IMF, the EU, are tools of the big corporations, what I call the “corporatocracy.”
via TruthOut.
The so-called “bailout” of Greece is not a bailout of the Greek people and does not reduce the Greek debt burden. It is a bailout of banks by European governments and the International Monetary Fund.
I’d guess that’s the reason the Russian government turned down a Greek plea for help. The Russians would get no benefit from providing funds to Greece that would flow through to European governments that support the Ukrainian government’s fight against pro-Russian separatists. Far better, from the Russian standpoint, to wait until Greece defaults and disconnects from Europe, and then step in.
Ukraine itself will soon be in the same situation. It has greater debts than it ever can repay, and rich assets, especially in agricultural land, that speculators would like to acquire.
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An Economic Hit Man Speaks Out: John Perkins on How Greece Has Fallen Victim to “Economic Hit Men”, an interview by Michael Nevradakis for Dialogos Radio in Greece.
Bailout Money Goes to Greece, Only to Flow Out Again by Jack Ewing and Liz Alderman for the New York Times.
Who Really Benefits From Bailouts? by Barry Ritholtz for BoombergView.
Why did Germany abandon the good path?
July 29, 2015A decade ago, looking at the state of the union the Bush administration, it seems to me that it was the European Union, and Germany in particular, had replaced the USA as the last, best hope of earth. As recently as five years ago, I posted an article on Germany as an Economic Role Model.
Germany had seemingly created an economy based not on cutting costs, but on creating value, investing in people and worker participation in decision-making. The Germans had learned how how to hold their own in international trade and still enjoy high wages, generous social benefits and excellent public services, without sacrificing civil liberties.
Or so I thought at the time. But the Greek debt crisis shows Germany as much in the grip of a financial oligarchy as the USA was.
The German leaders have embraced the idea, very familiar to us Americans, that the purpose of an economic system is not cooperation for mutual benefit, but to reward winners and punish losers.
The best way to help Greece’s creditors is to promote Greece’s economic recovery, so at least a portion of the debt can be repaid. The austerity measures being imposed by the European Central Bank, European Commission and International Monetary Fund are driving Greece deeper into economic depression. They are being imposed as a punishment and a deterrent.
The German leaders also have made the mistake of allowing central banks, rather than the public, to determine economic policy. The problem with this is that bankers have different priorities than the public.
Broadly speaking, bankers want zero inflation and debts to be repaid in full. All other things being equal, these are desirable goals, but not at the cost of rising unemployment, falling wages and non-functioning government services.
Unfortunately the European Central Bank is in charge of European monetary policy, and the public has nothing to say about its policies. It is governed by a committee consisting of 19 national central banks and a six-member executive board appointed by the European Council. I looked up “accountability” on the bank’s web site, and found that this consists of regularly issuing reports.
The best way to enforce accountability for the Greek debt crisis would be to investigate the Greek public officials and their banker advisers who created it, and determined whether they should be charged with malfeasance. Instead the banks have been bailed out, and the public officials escape blame—much the same as in the 2008 financial crisis in the United States.
Goldman Sachs and the Greek debt crisis
July 23, 2015
Click to enlarge. Source: The Independent
Goldman Sachs played much the same role in the Greek debt crisis as it did in the U.S. subprime mortgage crisis.
The bank’s executives induced the governments of Greece and Italy to make foolish investments. It then unloaded those investments on suckers, and then made financial bets that these investments would crash.
Now European officials who came out of Goldman are trying to punish the people of Greece, and maybe of Italty tomorrow, for the result.
This is not to say that the Greek and other governments would not have gotten into trouble by themselves or that Goldman Sachs was the only bank that contributed to the crisis. But, as the linked articles below indicate, Goldman bankers helped the crisis along, profited from what they did and continue to influence government policy.
LINKS
Goldman Sachs: Masters of the Eurozone by Gaius Publius for Down With Tyranny (hat tip to naked capitalism).
What price the new democracy? Goldman Sachs conquers Europe by Stephen Foley for The Independent (2011)
Wall Street Helped to Mask Debt Fueling Europe’s Crisis by Louise Story, Landon Thomas and Nelson D. Schwartz for The New York Times. (2010)
Banks Bet Greece Defaults on Debt They Helped Hide by Nelson D. Schwartz and Eric Dash for The New York Times (2010)
Greece’s debt and the Wiemar Republic analogy
July 14, 2015Historical analogies don’t necessarily hold, but Germany in the 1920s and early 1930s, like Greece today, had a dysfunctional democratic government and was saddled with war debts beyond the nation’s ability to pay.
All well-informed people understood the situation, but the demands of the creditor nations on the Wiemar Republic were uncompromising. Then Hitler came to power, and the debt was forgiven.
I wouldn’t be surprised if the fascist Golden Dawn party came to power in Greece, and I wouldn’t be completely surprised if the creditor nations relaxed their demands for debt repayment.
Banks get bailed out, Greece doesn’t
July 13, 2015Joseph Cannon came across this information on a comment thread on the Moon of Alabama blog. It compares the amounts of the U.S. government bailouts of banks to the bailout needed to save Greece.
Citigroup – Citigroup $2.513 Trillion
Morgan Stanley – $2.041 Trillion
Merrill Lynch – $1.949 Trillion
Bank of America – $1.344 Trillion
Barclays PLC – $868 Billion
Bear Sterns – $853 B
Goldman Sachs – $814 B
Royal Bank of Scotland – $541 B
JP Morgan Chase $391 B
GREECE $370 BILLION
Deutche Bank – $354 B
UBS – $287 B
Credit Suisse – $262 B
Lehman Bros – $183 B
Bank of Scotland – $181 B
BNP Paribas – $175 B
Wells Fargo – $159 B
Dexia – $159 B
Wachovia – $142 B
Dresdner Bank – $135 B
via Moon of Alabama.
What these figures show—I haven’t verified them, but I take them to be correct—is that a rescure of Greece is not beyond the realm of fiscal possibility.
Now you could argue that these comparisons are unfair because the banks paid back their TARP funds. That’s true, but, as Cannon pointed out, they paid them back largely with other government money.
The real reason that the comparisons are unfair is that the bulk of the Greek debt has been transferred from private banks to quasi-public entities. Greece is not comparable to Citigroup or Morgan Stanley. Rather the people are Greece are comparable to the people who lost their homes to mortgage foreclosures.
As Greece goes, so go other debtor nations
July 13, 2015The Greek debt burden is more than the people of Greece can ever repay.
But evidently the creditor nations will not accept this until Greece is bled dry.
Their “austerity” plan is for higher taxes, lower wages and higher prices and the sale of Greek national assets at bargain prices.
Greece is being treated like a nation defeated in war, and, like a defeated nation, it will never prosper until it can free itself from the power of its conquerors.
A trust fund created by Greece’s creditors will sell off 50 billion Euros worth of Greek national assets, with half the money to be used to pay Greece’s debt and half to recapitalize Greek banks. Greeks will not have a voice in what is sold or at what price.
Heather Stewart of The Guardian recently listed 23 nations that, like Greece, are in an external debt crisis, and 14 at high risk of an external debt crisis.
The 23 nations also in external debt crisis are Armenia, Belize, Costa Rica, Croatia, Cyprus, the Dominican Republic, El Salvador, The Gambia, Grenada, Ireland, Jamaica, Lebanon, Macedonia, Marshall Islands, Montenegro, Portugal, Spain, Sri Lanka, St. Vincent and the Grenadines, Sudan, Tunisia, Ukraine and Zimbabwe.
The 14 high risk nations are Bhutan, Cape Verde, Dominica, Ethiopia, Ghana, Laos, Mauritania, Mongolia, Mozambique, Samoa, Sao Tome e Principe, Senegal, Tanzania and Uganda.
My guess is that Ukraine is the next country in line to lose its national sovereignty to creditors; this is likely as soon as the government no longer needs financing to crush the rebellion in Donetsk and Lugansk.
We Americans should remember that the United States is a debtor nation like Greece, not a creditor nation like Germany, Japan or China. What happens to Greece today and to Ukraine tomorrow could happen to the USA someday, too, when our debts are in yuan or some other currency instead of dollars.
LINKS
Beyond Greece, the world is filled with debt crises by Heather Stewart for The Observer.
Global Debt Can’t Be Paid by Briton Ryle for WealthDaily.
Germany got a debt writedown: Why not Greece?
July 9, 2015After World War One, the Allies were saddled with war debts to the United States that were beyond their ability to pay.
Herman Josef Abs, center, representing Federal Republic of Germany, signs a 1953 agreement cutting Germany’s debts to foreign creditors in half.
They hoped to get the money out of Germany, which was obligated to make reparations payments beyond that nation’s ability to pay.
Eventually Germany defaulted on its obligations to the Allies, and the Allies defaulted on their obligations to the USA and its bankers—but not in time to prevent the onset of the Great Depression and the rise of Adolf Hitler.
After World War Two, the Allies learned their lesson. They allowed the German government [1] to write off half its debts.
If this hadn’t been done, the postwar German economic miracle might not have taken place, and the recovery of Europe as a whole would have been delayed.
Today Greece has more debt than it can repay. Eventually there is going to have to be a write-down of this debt.
The question is whether the Greek population will have to be reduced to poverty and Greek national assets sold off at bargain prices before this happens.
Greece and the new cold war
July 6, 2015The big banks in Germany and other countries lent money to the Greek government that they had good reason to believe would never be repaid, with the understanding that they would be bailed out either by squeezing the people of Greece or at the expense of European taxpayers in general.
Source: The Hindu newspaper in India
Their confidence was not misplaced. As the chart shows, they have already been able to offload most of the Greek government debt.
The Greek leaders have spoken to the Russian government about a possible rescue. The Russian government’s reply is that it won’t help as long as Greece is in the Euro currency zone—which, as Ian Welsh pointed out, is as good as saying it will help if Greece leaves.
Independent journalist John Helmer recalled that Victor Yanukovich, the president of Ukraine, accepted a similar bailout offer from Russia and was quickly removed from power. Helmer reported that Victoria Nuland, the Assistant Secretary of State for European and Eurasian Affairs, who engineered the regime change in Ukraine, is now working for regime change in Greece.
All this raises the question of just whose interests the U.S. government—and Germany’s—serve.
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Nuland’s Nemesis: Will Greece Be Destroyed to Save Her From Russia, Like Ukraine? by John Helmer for Dances With Bears.
Consequences of the Greek Oxi (No) Vote by Ian Welsh.
Greece Rejects the Troika by Michael Hudson for Counterpunch.
Behind the Greek Crisis by William R. Polk for Consortium News.
Squeezing Greece won’t help German people
February 14, 2015The Greek debt crisis is not a conflict between Germany and Greece. It is the European Union acting as a debt collection agency for central bankers.
German working people get no benefit from the demand that the government of Greece impoverish the people of Greece so as to pay interest to the European Central Bank and the International Monetary Fund.
They in fact will suffer in the long run, because the more wages and living conditions are driven down in other countries, the harder it will be to maintain them in Germany.
Some five years ago, I wrote a post about how Germany was a good role model for the USA, because its leaders were committed to industrial productivity and a high-wage economy. Unfortunately, the German leaders instead have taken the USA as a role model, and followed our downward path of financialization.
I believe that people who borrow money have a moral obligation to pay it back—if they can. I believe that there are other moral obligations that take precedence, such as the welfare of those who depend on you. That’s why the United States and other nations substituted bankruptcy laws for debtors’ prisons.
The Greek debt problem would have solved itself if Greece had its own currency instead of the Euro. As Greece’s balance of trade worsened, its currency would be devalued and its products and services (including the tourist industry) would become cheaper in terms of dollars and euros.
The great fear of the “troika”–the ECB, IMP and the leaders of the European Union–is that Greece will stop using the euro, and that some of the other 17 countries that use the euro will follow suit. That might be a problem for bond-holders. I don’t see it as a problem for ordinary people in Germany, the USA or any other country.
LINKS
It’s the class conflict, stupid! by David Ruccio on occasional links and commentary.
Europe: Shaking the Temple by Conn Hallinan for Dispatches from the Edge. (Hat tip to Bill Harvey)
From Minsk to Brussels, it’s all about Germany by Pepe Escobar for RT Op-Edge.
Phil Ebersole's Blog 