by Stuart
Munckton
Greece's
austerity-and-debt-driven crisis has prompted a humanitarian
catastrophe.
The
Australia-Greece Solidarity Campaign says half of all young people
cannot find work, there is a growing shortage of essential medicines
and child malnutrition rates have reached levels not seen since World
War II. Pensions, meanwhile, have been cut by 15–44%, with 45% of
all pensioners living below the poverty line. Suicide rates have
skyrocketed.
All very
sad, no doubt, but surely you cannot just allow reckless behaviour by
the Greek people without any consequences?
After all I
am sure, like me, you still recall the way the greed-addled Greek
pensioners nearly brought down the entire global financial system
with their unregulated, reckless speculation.
Why should
we have sympathy for the tens of thousands of Greek public servants
sacked under austerity measures demanded by Greece's creditors —
the “Troika” of the European Commission, European Central Bank
(ECB) and International Monetary Fund (IMF) — when they brought
down the likes of Lehman Brothers?
OK, maybe
that was the large financial institutions that made billions out of a
financial bubble based on cheap credit. And then, when the bubble
burst in the Global Financial Crisis (GFC) that began in 2007, many
financial institutions across the US and Europe were bailed out with
public funds, while those responsible for the crisis went — to a
suit — entirely unpunished.
But does
that mean Europe can really take no action when faced with a country
whose combination of total public guarantees to private entities
combined with formal government debt amounts to no less than 222% of
its gross domestic product?
Maybe not,
but then that country is Germany, according to a Financial Times
article in February, and the figure is 30 percentage points higher
than Greece's.
The reason
Greece, not Germany, has been targetted for bailout loans and
austerity is entirely political — it is about power.
Greece's
debt was built on the cheap credit that flowed freely across the
world economy before the GFC hit in 2007 — but in that, it was
hardly alone.
With the
deep financial instability caused by the GFC and large amounts of
potentially unpayable debt sloshing around the economy, financial
institutions started looking at exactly who could be made to cough
up.
The markets
eyed Greece, which had a high debt-to-GDP ratio and was small and
weak enough to be bullied. The same credit agencies that gave AAA
ratings to debt proven by the GFC to be junk began to raise concerns
over the status of Greece's debt.
This made it
more expensive for Greece to access credit, eventually pushing the
Greek government to agree to bail-out loans to pay its debt. Not only
were the loans tied to austerity, but the interest on the new loans
loaded Greece up with still more debt.
It may be
true that Greece's politicians were reckless, and it is certainly
true that Greece's rich are infamous for failing to pay tax, with the
richest known to have stashed billions of euros in bank accounts
outside the country.
But ordinary
Greeks had as little control over their government's decision on debt
as we do in Australia, let alone over the endemic tax dodging by
their mega-rich. This is like ordinary Australians being punished for
the actions of Gina Rinehart.
Greece's
people are caught in a giant economic rort. The austerity measures
have driven Greece into depression, making it dependent on
negotiating more bail-out loans to pay its debts.
Not only do
the loans come with interest payments that increase Greece's debt,
but the austerity measures on which the funds are conditional ensure
Greece remains in depression — and thus dependent on creditors.
This rort,
which rips wealth from ordinary Greek people and gives it to the
banks and financial institutions, pays well for some. If Greece pays
the €1.6 billion in debt now overdue to the IMF, for instance, it
will have made a €2.5 billion profit out of the bail out packages,
Jubilee Debt Campaign (JDC) said.
A JDC study
in January found that more than 90% of the bail-out funds went
directly to paying off Greece's creditors. Yet the Greek people have
been saddled with greater debt, with Greek government debt rising
from 134% of GDP in 2010 to 174% by January.
Far from
being the beneficiaries of “European generosity”, the Greek
people are its victims.
With the
austerity programs, Greece has also become a laboratory for
dismantling all the gains of working people across the industrialised
world since World War II.
This
involves dismantling the social safety net — including the right to
retire at a decent age with a decent pension, universal access to
health and education, and, crucially, the right to collectively
bargain, which the Troika still seeks to destroy.
If the
powers-that-be can do that to Greece, it makes it easier to do it
elsewhere — and the austerity measures in Greece are being mirrored
in other European nations.
Europe's
economic and political elites have shown their contempt for
democracy. When, after five years of austerity-driven crisis, the
Greek people elected the radical left SYRIZA government in January on
an anti-austerity platform, the ECB turned the screws, restricting
access to needed credit.
With every
compromise offered by SYRIZA, the ECB's response has been to
strengthen its stranglehold — driving Greece's banking system
towards total collapse.
After months
of futile talks, with the creditors refusing to seriously consider
any of SYRIZA's proposals, SYRIZA refused to sign a deal that
amounted to a near total surrender on the platform on which it was
elected.
Instead, the
government called a referendum on July 5 — with the ECB responding
by refusing to extend the limited credit available to Greece, forcing
the closure of banks.
When the
Greek people voted “no” to creditor demands by 61.5%, the ECB
tightened the screws even more. It is clear the Troika wants total
surrender — to hammer home the message that “there is no
alternative”.
In reality,
the only fair way out of the crisis is to write off the debt that is
not just unpayable — as even the IMF admits behind closed doors —
but illegitimate.
This is not
mere rhetoric. The Greek parliament commissioned an audit into
Greece's debt, and the official report found the debt was “illegal,
illegitimate and odious”.
All forms of
economic blackmail against Greece should end and it should be freed
from any obligation to impose austerity. Many economists have noted
that continuing the austerity measures that drove Greece into
depression blocks all hope of recovery.
This is not
simply a “Greek” issue, or even a European one, and not just
because the uncertainty has caused drops in markets all over the
world, including Australia. The issues at stake affect all of
humanity. The most important is whether banks and private profit
should reign, or democracy.
Source:
Comments
Post a Comment