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25 July, 2015

How the German media mislead the public about the Greek crisis

by Joe Emersberger

Thanks to the mass media, European elites badly misinform their own people and get away with a quasi-coup in Greece. A July 10 Yougov poll found very solid public support in Germany for the Merkel government’s leading role in the destruction of the Greek economy.

Only 9 percent of Germans blame the Troika - the European Union, European Central Bank (ECB) and International Monetary Fund - for the state of the Greek economy. The level of ignorance is even worse in Sweden and Denmark. Only 6 percent and 4 percent in those countries, respectively, blame the Troika for the crisis in Greece.

In Germany, 59 percent exclusively blame past and present Greek governments for the crisis. In Sweden and Denmark, 65 percent and 70 percent, respectively, exclusively blame Greek governments. These numbers are a grim reminder of how effectively the media undermines democracy.

Consider how Der Spiegel, a German media outlet, summed things up for its readers: “From the perspective of most European Union leaders … Greece is little more than a failed state governed by clientelism and nepotism, a country whose economy has little to offer aside from olive oil and beach bars … That was true already five years ago when the government in Athens admitted to having taken on three times as much debt as previously disclosed, an admission that triggered the start of the euro crisis.”

Putting aside the condescension and near bigotry in the passage above, the “euro crisis” was actually triggered by a global recession that struck in 2009. It devastated countries like Spain which, unlike Greece, had been running budget surpluses and whose governments had not lied about their finances. Moreover, absolving Greece’s creditors by saying they were successfully bamboozled until 2010 is outrageous. Lenders are supposed to identify fraud and bad investment risks. It’s the socially useful function they supposedly perform.

It gets worse for the story Der Spiegel sells its readers. Dangerous trade imbalances within the eurozone - especially in Greece, Ireland and Spain - had been building for several years before the global recession. Dean Baker points out that the ECB was too incompetent to take action. Baker remarks, “Since it is apparently possible to take away the pensions that Greek people spent their life working for, some people may want to know if it’s possible to take back the much higher pensions earned by top officials at the ECB.” ECB officials need not worry provided they remain shielded by Der Spiegel and countless similar European outlets. Greek pensioners, on the other hand, have plenty to endure and worry about. Absolving creditors for what happened in Greece up to 2010 is ridiculous, but ignoring their overwhelming culpability for what has happened since then is on a whole other level of absurdity.

According to Der Spiegel, “Much had improved before Tsipras took over the government, to the point that national revenues had finally exceeded spending. But the Tsipras government loosened up the austerity regime, unsettled the business sector and consumers with contradictory announcements, and refused to privatize state-run enterprises.” The cynicism of this passage would have impressed Goebbels. It is best exposed by a single chart that Paul Krugman pointed out. You can literally draw a straight line between the amount of austerity (budget slashing) the Greek government has imposed over the past five years (as commanded by the Troika) and its brutal economic collapse. Greece’s public debt and the cost of public pensions both increased dramatically relative to GDP as the economy shrunk. A slow recovery had just begun when Tsipras took office, but that recovery was supposed to happen years earlier according to the Troika. Quite simply, the Troika’s orders were very closely followed and it led to a disaster comparable to the Great Depression. The polls I cited above show what a fine job the media in Europe has done to hide this simple truth from its audience, but there is more.

The long overdue recovery in Greece was undone by the malevolence of the ECB, and not, as Der Spiegel claimed, by Tsipras who has only been in power several months and, it should not even need saying, could never operate with very much autonomy from his European overlords. As Mark Weisbrot explained, “Just 10 days after the election, the ECB cut off its main line of credit to Greek banks, even though there was no obvious reason to do so. Shortly thereafter, the ECB put a limit on how much Greek banks could lend to the government – a limit that the previous government did not have.”

When the Tsipras government called a July 5 referendum on the Troika’s June 28 “offer” to Greece, the ECB ramped up its aggression and effectively forced the closure of Greek banks. Unlike people in Germany and Sweden, Greeks are living the gruesome consequences of the Troika’s policies and could not be propagandized or intimidated into voting the way the Troika openly demanded.

The Economist argued, “No one has suggested having a referendum in other countries about bailing out the Greeks, for the very good reason that they know what the answer will be.”

In other words, Europeans who have been completely misled about the Greek crisis, and who are shielded from its consequences, are willing endorse their governments’ cruelty toward Greeks. German officials have openly boasted about how well protected its economy is against collapse in Greece – not an empty boast given the reality of the past several years. People who believe in democracy assume that it gives voters the most influence on decisions that impact them the most. That is why nobody would endorse the citizens of Athens electing the mayor of Berlin and contemptuously disregarding what Berliners think. Anyone who claims that Germany and its allies are acting with democratic legitimacy in Greece are endorsing that kind of nonsense.

In the same article, the Economist also argued that German banks have not been bailed out by the Troika: “if only the banks were the creditors, the whole issue might be easier to deal with. Go back to the 2012 deal; the private sector creditors (the banks) were made to take a 50% write-off…”

As Jerome Roos pointed out, the bailouts began in 2010, not 2012 as the Economist pretends, and even IMF economists stated that the 2010 bailouts “only served to delay debt restructuring and allowed many private creditors to escape … leaving taxpayers and the official sector on the hook”.

Decent people in Germany and elsewhere in Europe who want to hold the Troika accountable and alleviate suffering in Greece should not underestimate the uphill battle they face against the media at home.

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