Skip to main content

Who profited from the $440 billion Greek bailout? Not Greeks

Hundreds of billions of dollars in loans haven't helped the Greek economy or its people

by Jack Rasmus

This week marks the first anniversary of the 2015 Greek debt crisis, the third in that country's recent history since 2010. Last Aug. 20-21, 2015, the 'Troika'—i.e., the pan-European institutions of the European Commission (EC), the European Central Bank (ECB), plus the IMF-imposed a third debt deal on Greece. Greece was given US$98 billion in loans from the Troika. A previous 2012 Troika imposed debt deal had added nearly US$200 billion to an initial 2010 debt deal of US$140 billion.

That's approximately US$440 billion in Troika loans over a five year period, 2010-2015. The question is: who is benefitting from the US$440 billion? It's not Greece. If not the Greek economy and its people, then who? And have we seen the last of Greek debt crises?

One might think that US$440 billion in loans would have helped Greece recover from the global recession of 2008-09, the second European recession of 2011-13 that followed, and the Europe-wide chronic, stagnant economic growth ever since. But no, the US$440 billion in debt the Troika piled on Greece has actually impoverished Greece even further, condemning it to eight years of economic depression with no end in sight.

To pay for the US$440 billion, in three successive debt agreements the Troika has required Greece to cut government spending on social services, eliminate hundreds of thousands of government jobs, lower wages for public and private sector workers, reduce the minimum wage, cut and eliminate pensions, raise the cost of workers' health care contributions, and pay higher sales and local property taxes. As part of austerity, the Troika has also required Greece to sell off its government owned utilities, ports, and transport systems at 'firesale' (i.e. below) market prices.

Europe's Bankers Got 95 Percent of Greek Debt Payments

The US$440 billion in Troika loans—and thus Greek debt—has not been employed to benefit the Greek people, or to help the Greek economy recover from its eight years of depression; it has gone to pay the principle and interest on previous Troika debt, as that debt has been piled on prior debt in order to pay for previous debt.

A recent 2016 released study has revealed conclusively where all the interest and principal payments on the US$440 billion debt has gone. It has gone directly to European bankers and investors, and to the Troika institutions of the EC, ECB, and IMF, who indirectly in turn recycle it back to private bankers and investors.

According to the White Paper (WP-16-02) published by the European School of Management and Technology, ESMT, this past spring 2016, entitled "Where Did the Greek Bailout Money Go?", more than 95 percent initial Troika loans to Greece went to pay principal and interest on prior Troika loans, or to bailout Greek private banks (owned by other Euro banks or indebted to them), or to pay off European private investors and speculators. Less than 10 billion euros was actually spent in Greece.

The ESMT study further estimates the most recent, third Greek debt deal of last Aug. 2015 will result in more of the same: Of the US$98 billion loaned to Greece last year, the study projects that barely US$8 billion will find their way to Greek households.

The Cost to Greece Eight Years Later

In exchange for the 95 percent paid to the Troika and banker-investor friends, the austerity measures accompanying the Troika loans has meant the following: Greece's unemployment rate today, in 2016, after eight years is still 24 percent. The youth jobless rate still hovers above 50 percent. Wages have fallen 24 percent for those fortunate enough to still have work. The collapse of wages is due not just to layoffs or government and private business wage cutting, both of which have occurred since 2010, but is due also to the shifting of full time to part time work. Full time jobs have collapsed 27 percent, the lowest ever, while part time jobs have risen 56 percent, to the highest ever. The poorest and most vulnerable Greek workers and households have seen their minimum wages reduced by 22 percent since 2012, on orders of the Troika. And pensions for the poorest have been reduced by approximately the same. All that to squeeze Greek workers, households and small businesses in order to repay interest on debt to the Troika, to Europe's bankers, and private investors.

None of the debt, austerity, depression, and collapse of incomes existed before the Troika intervened in Greece starting in 2010. Greece's debt to GDP was around 100 percent in 2007, about where it had been every year for the entire preceding decade, 1997-2007. It was no worse than any other Eurozone economy, and better than most. Greek debt rose in 2008 to 109 percent due to the global recession, accelerating to 146 percent of GDP in 2010 with the first Troika debt deal of US$140 billion. It then surged to more than 170 percent in 2011, where it has remained ever since as another US$300 billion was added in Troika loans in 2012 and 2015.

Greece's debt since 2010 is certainly not a result of Greek government spending, which has fallen from roughly 14 billion euros to 9.5 billion in 2015, reflecting Greece's deep austerity cuts demanded by the Troika. Nor can it be attributed to excessive wages and too many public jobs, as both these have declined by a fourth as debt has accelerated. The debt is Troika loans forced on Greece in order for Greece to pay principal and interest on previous loans forced on Greece.

And Still No Relief 2015-16

What happened a year ago, in the third Troika debt deal of Aug. 2015, was the same that happened in 2012 and 2010: US$98 bill more debt was added to Greece's already unsustainable US$340 or so billion. In exchange, last August Greece had to implement the following even more severe austerity measures:

Generate a budget surplus of 3.5 percent of GDP from which to repay Troika debt-i.e. around US$8 billion a year. Raise sales taxes to 24 percent, plus more tax hikes on "a widening tax base" (i.e. higher taxes for lower income households). Introduce what the Troika calls "holistic pension reform"—i.e., cut pensions up to 2.5 percent of GDP, or around US$5 billion a year, and abolish minimum pensions for the lowest paid and the annual supplemental pension grants. Introduce a "wide range" of labor market reforms, including "more flexible" wage bargaining, easier mass layoffs, new limits on worker strikes, and thousands more teacher layoffs as part of "education reform". Cut health care services and convert 52,000 more jobs to part time. And introduce what the Troika called a more "ambitious" privatization program. And this is just a short list.

And How Has Greece's Economy Actually Performed over the Past Year?

Greek government spending since Aug. 2015 has further declined by 30 percent as of mid-year 2016, except for military spending that has risen by US$600 million. Since Aug. 2015, quarterly Greek GDP has continued to contract on a net basis. Greek debt as a percent of GDP has risen further.

There are 83,000 fewer full time jobs. (But 28,000 more part time jobs). Youth unemployment rates have risen from 48.8 to 50.3 percent. Consumer spending has dropped by almost 10 percent, as consumer confidence continues to plummet, home prices deflate, and business investment, exports, and imports all slow. In other words, the Greek economy continues to worsen despite the added US$98 billion Troika debt and the more extreme austerity measures imposed a year ago.

Is Another Fourth Greek Debt Crisis Inevitable?

The answer is "Yes." Greece cannot generate a 3.5 percent surplus from which to pay the mountain of principal and interest on its debt. Debt repayments in 2016 to the Troika were relatively minimal in 2016. In 2017-18, however, greater debt repayments will come due as Greece's inability to repay will no doubt worsen, when the next Europe-wide recession hits, which is likely in 2017-18 as well. The next Greek debt crisis may erupt even before, as a consequence of the current deterioration in Europe's banking system in the wake of Brexit and the deepening problems in Italy's and Portugal's banking systems. Contagion elsewhere could quickly spill over to Greece, precipitating another fourth Greek banking and debt crisis.

An Emerging New Financial Imperialism?

By imposing austerity to pay for the debt the Troika since 2010 has forced the Greek government to extract income and wealth from its workers and small businesses-i.e. to exploit its own citizens on the Troika's behalf-and then transfer that income to the Troika and Europe bankers and investors. That's imperialism pure and simple-albeit a new kind, now arranged by State to State (Troika-Greece) financial transfers instead of exploitation company by company at the point of production. The magnitude of exploitation is greater and far more efficient.

What's happened, and continues to happen in Greece, is the emergence of a new form of financial imperialism that smaller states and economies, planning to join larger free trade zones and 'currency' unions, or to tie their currencies to the dollar, the euro, or other need to avoid at all cost, less they too become 'Greece-like' and increasingly debt-dependent on more powerful capitalist states to which they decide to integrate economically.

Neoliberalism is constantly evolving and with it forms of imperialist exploitation as well. It starts as a free trade zone or 'customs' union. A single currency is then added, or comes to dominate, within the free trade customs union. A currency union eventually leads to the need for a single banking union within the region. Central bank monetary policy ends up determined by the dominant economy and state. The smaller economy loses control of its currency, banking, and monetary policies. Banking union leads, of necessity, to a form of fiscal union. Smaller member states now lose control not only of their currency and banking systems, but eventually tax and spending as well. They then become 'economic protectorates' of the dominant economy and State-such as Greece has now become.

Source:


Related:







Comments

  1. Find out how 1,000's of individuals like YOU are making a LIVING from home and are living their dreams TODAY.
    CLICK HERE TO FIND OUT

    ReplyDelete

Post a Comment

Popular posts from this blog

Greece is about to become the blueprint for modern feudalism

globinfo freexchange
After almost ten years of an unprecedented crisis, Greece has been trapped into an ongoing, slow motion recession. The economy still struggling hard to recover, with unemployment and national debt being permanently in a red alarm mode.
As has been already pointed out, the result of the recent Greek national elections could be characterized "paradoxical" mainly for two reasons: 
First, the voters gave a clear governmental order to one of the traditional powers of the old political system, which are highly responsible for the Greek crisis that erupted in 2010. Several top names of the new government, and even New Democracy leader, Kyriakos Mitsotakis, have been accused of being involved in various corruption scandals, in the not so distant past.

Second, the fact that the voters elected perhaps the most fanatically neoliberal government ever. This means that Mitsotakis administration is expected to implement the brutal neoliberal policies imposed by Greece&…

How Joe Biden’s privatization plans helped doom Latin America and fuel the migration crisis

On the campaign trail, Joe Biden has boasted of his role in transforming Colombia and Central America through ambitious economic and security programs. Colombians and Hondurans tell The Grayzone about the damage his plans did to their societies.
by Max Blumenthal
Part 8 - Gutting public healthcare, driving more migration
The Alliance for Prosperity also commissioned the privatization of health services through a deceptively named program called the Social Protection Framework Law, or la Ley Marco de Protección Social.

Promoted by Honduran President Juan Orlando Hernández as a needed reform, the scheme was advanced through a classic shock doctrine-style episode: In 2015, close associates of Hernández siphoned some $300 million from the Honduran Institute for Social Services (IHSS) into private businesses, starving hospitals of supplies and causing several thousand excess deaths, mostly among the poor.
With the medical sector in shambles, Hondurans were then forced to seek healthcare from …

As Boris Johnson unleashes ultimate threat against Bremain capitalist faction, the British working class is suddenly in front of a unique opportunity

globinfo freexchange

In the merciless endo-capitalist war around Brexit, Boris Johnson decided to unleash the ultimate threat against Bremain capitalist faction. That is, a snap election with the 'danger' of a Labour victory under Jeremy Corbyn, which would be neoliberal capitalists' worst nightmare.
As already pointed out, despite the capitalist civil war, both major factions of the British capital remain deeply neoliberal in their ideological core. And therefore, both factions see a potential Labour government under Jeremy Corbyn, as a major threat.
Indeed, as ZeroHedgereported
As Prime Minister Boris Johnson faces the prospect of his rule being cut short, wealthy Britons have a message for Johnson's most likely successor: A 'no deal' Brexit makes no difference to them. But if Labour leader Jeremy Corbyn becomes PM, they will flee in droves, taking their money with them

[...]

The chairman of one Swiss asset manager who helps wealthy Britons shield th…

Tucker Carlson accidentally promotes one of the most anti-capitalist, real-Left positions!

globinfo freexchange 
We wouldn't believe it if we wouldn't have seen it and hear it with our own eyes and ears, but the following phrase came out from Tucker Carlson's mouth:

                    Every minute you are angry about race, is a minute you are not thinking about class, which, of course, is the real divide in this country. Working class people of all colors have a lot more in common - infinitely more in common with each other, than they do with some overpaid MSNBC anchor. And if you are allowed to think about that for long enough, you might start get unauthorized ideas about economics. And that would be disruptive to a very lucrative status quo. So, they whip you into a frenzy of racial fear so that it never enters your mind. It's a diversion. Everyone hates each other, they get to keep their money.
Here's why they're pushing racial division: so you won't notice the real divide, which is economic. pic.twitter.com/ZVLvQn2u9O — Tucker Carlson (@Tuck…

Roger Waters for Julian Assange

globinfo freexchange
On Monday, 3 Sept, Roger Waters of Pink Floyd will perform his classic 'Wish You Here' for Julian Assange outside the Home Office (interior ministry) in Marsham Street in the heart of London. John Pilger will be speaking. Join us at 6pm in solidarity with Britain's political prisoner.

On Monday, 3 Sept, Roger Waters of Pink Floyd will perform his classic 'Wish You Here' for Julian #Assange outside the Home Office (interior ministry) in Marsham Street in the heart of London. I will be speaking. Join us at 6pm in solidarity with Britain's political prisoner. pic.twitter.com/Lytg2GCZVQ — John Pilger (@johnpilger) August 30, 2019


Καταιγίδα επιχειρήσεων αποπροσανατολισμού από το Μητσοτακικό καθεστώς με τη βοήθεια της τραπεζομιντιακής χούντας

globinfo freexchange

Ο μηχανισμός του εγχώριου νεοφιλελεύθερου καθεστώτος επιδόθηκε τις τελευταίες μέρες σε έναν καταιγισμό επιχειρήσεων αποπροσανατολισμού προς τέρψιν του πόπολου, το οποίο έδωσε αυτοδυναμία στην πολιτική του συνιστώσα. Δηλαδή, στη χειρότερη δεξιά της μεταπολίτευσης.
Μετά το ταξίδι Μητσοτάκη στη Γαλλία, όπου είδαμε ένα χιλιοπαιγμένο έργο, το σόου του αποπροσανατολισμού ξεκίνησε από το Μάτι. Εκεί είχαμε ένα διπλό χτύπημα. Από τη μια τον Μητσοτάκη να ποζάρει στα καμμένα, διατυμπανίζοντας τη δήθεν αποτελεσματική του κυβέρνηση. Από την άλλη, την διαφήμιση των "καλών ιδιωτών", οι οποίοι ως καλοί Σαμαρείτες, ανέλαβαν δήθεν αφιλοκερδώς (Αφιλοκερδώς ΑΕ, όπως έλεγε και ο αξέχαστος Τζιμάκος), να καθαρίσουν την περιοχή από την επικίνδυνη καύσιμη ύλη.
Αμέσως μετά, απολαύσαμε άλλη μια κωμωδία από τις δυνάμεις καταστολής που έκαναν έφοδο στα Εξάρχεια για να τα "καθαρίσουν" από τους μετανάστες. Οι νεοφιλέλεδες της δεξιάς και τα ακροδεξιά δεκανίκια τους είναι μανο…

Citibank blocks funds for insulin: more than 450,000 Venezuelans affected

The US bank Citibank blocked, in August this year, part of the funds destined to import 300 thousand doses of insulin, a criminal act that affects more than 450 thousand patients, the Venezuelan Ministry of Economy and Finance reported.

On the other hand, the BSN Medical laboratory, based in Colombia, after receiving payment for the purchase of 2 million units of antimalarial treatment, denied the clearance of the drugs.
The ministry indicated that this fact caused the Swiss bank UBS AG to block the transactions made by the country with the Pan American Health Organization (PAHO), destined for the purchase of vaccines for the immunization program.
Given this circumstance, Venezuela and PAHO sought alternatives with banks from other countries, although this situation led to a 4 month delay in the immunization program.

The national government also revealed that other pharmaceutical transnationals such as Pfizer and Novartis refuse to sell medicines, reagents and supplies to Venezuela.
F…

The untold Socialist history of the United States

globinfo freexchange

Abby Martin spoke with renowned Marxist Economist Richard Wolff to discuss the growing popularity of Socialism under Trump and its historical roots in America, misconceptions about Russia and China’s economic success and Marx’s theory of alienation and monopoly capitalism.

Wolff explains:

A hundred years ago, 1916 to be precise, was the first time that the Socialist Party of America put forward a candidate for president. His name was Allan Benson and he ran for president a hundred years ago and he got 600,000 votes in the United States. That worked out to three percent of the vote.
The Socialist Party thought that was a good beginning, so they ran again four years later, in 1920, little less than a hundred years ago, and they had a different candidate. A man named Eugene Victor Debs, a head of the railway Workers Union, very good orator. And he did better. He got 900,000 votes. That's a 50% increase in four years, four percent of the total vote.
Four yea…

US sanctions on Venezuela are 'sociopathic'

The Grayzone
The Grayzone's Max Blumenthal discusses his heated exchange with a former Obama official and a member of Venezuela's far-right opposition over the basis for crippling US sanctions on Venezuela. Max also recounts his recent reporting trip to Venezuela, where he witnessed the impact of US economic warfare and the Venezuelan people's defiant resistance. 

Ο πραγματικός λόγος που ο Μπόρις Τζόνσον πιέζει για Brexit χωρίς συμφωνία

globinfo freexchange

Το Βρετανικό πολιτικό τοπίο μοιάζει να γίνεται όλο και πιο χαοτικό όσο πλησιάζουμε την 31η Οκτωβρίου, ημερομηνία-τελεσίγραφο που έχει ορίσει ο τωρινός Βρετανός πρωθυπουργός, Μπόρις Τζόνσον, ο οποίος μάλιστα απειλεί με ένα Brexit χωρίς συμφωνία. Ολόκληρη η χώρα φαίνεται να βρίσκεται υπό το καθεστώς μιας γενικής νευρικής κρίσης, με τα διάφορα στρατόπεδα υπέρ και κατά του Brexix, το καθένα για τους δικούς του λόγους, να έχουν λάβει θέσεις μάχης σε μια "όλοι εναντίον όλων" κατάσταση. 
Όπως ανέφερε η Εφημερίδα των Συντακτών:  
«Στις Βρυξέλλες και στο Λονδίνο ένα ερώτημα ακούγεται όλο και πιο δυνατά: Mπορεί να αναχαιτιστεί ο Μπόρις Τζόνσον;»… Καυτή και εύλογη η απορία που μετέφερε χθες το πρακτορείο Associated Press, καθώς εντείνεται ραγδαία η ανησυχία και στις δύο πλευρές της Μάγχης πως ο νέος, σκληροπυρηνικός μπρεξιστής, πρωθυπουργός του Ηνωμένου Βασιλείου όχι μόνο δεν μπλοφάρει επιμένοντας πως θα βγάλει τη χώρα από την Ε.Ε. στις 31 Οκτωβρίου με ή χωρ…