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Greece's debt is immoral and should be wiped

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.



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