The Troika’s Policy in Greece: Rob the Greek people and give the money to private banks, the ECB, the IMF and the dominant States of the Eurozone
On
20 August 2018, the Greek government of Alexis Tsipras, the IMF and
the European leaders celebrated the end of the Third Memorandum.
On
this occasion, the major media and those in power spread the
following message: Greece has regained its freedom, its economy is
improving, unemployment is on the decline, Europe has lent Greece 300
billion and the Greeks will have to start repaying that debt in 2022
or in 2032.
The
main claims are completely unfounded as Greece remains under the
control of its creditors. In compliance with the accords that the
Alexis Tsipras government signed, the country must imperatively
achieve a primary budgetary surplus of 3.5% which will force it to
continue brutal policies of reduction of public spending in the
social sector and in investment. Contrary to the dominant message
that Greece will not begin to repay its debt until some time in the
future, it should be clearly understood that Greece has been repaying
considerable amounts constantly all along to the ECB, the IMF and to
private creditors, and this prevents it from responding to the needs
of its population.
by
Eric Toussaint
Part
17 - Looking back at how Greek banks responded to the public debt
We
should emphasize that between December 2008 and December 2009, Greek
banks had increased their purchase of Greek public securities by 33%.
In December 2008, Greek banks held €30 billion in Greek securities
while one year later the amount reached €40 billion. This shows
that Greek banks derived profits from holding Greek securities at a
time when the IMF and the ECB’s director claimed that the Greek
treasury was heading for disaster.
Later,
between December 2009 and December 2010, Greek banks somewhat reduced
the number of Greek securities they held. It fell from €40 to 36
billion on 31 December 2010. Yet if we add their purchase of
short-term public securities (treasury bills under one year), the
total amount stays at €42 billion. This clearly shows that they
were not anticipating the Greek State to default and that they
derived several advantages from holding those securities while
international media ran big headlines on the sovereign debt crisis in
Greece!
Only in
2011 did Greek banks significantly reduce the number of Greek
securities over one year; it fell from €36 billion on 31 December
2010 to €24 billion in December 2011. On the other hand Greek banks
increased their purchases of short-term Greek securities by 40%, from
€5.8 billion to €8.3 billion.
How can
this be explained?
Easily
enough: Greek banks know that a restructuring of the Greek debt is
being negotiated and that the value of securities will be cut, so
they cautiously resell some of them. But they are also told that they
will receive compensations and thus feel reassured. Besides, holding
short-term securities (3, 6 or 9 months) further reduces the risk
banks run since they can decide not to keep them if they consider
that a risk becomes likely. There is another explanation for their
buying securities under one year: these will not be affected by value
cuts, but will be paid at 100% at maturity and yield high interests.
Moreover
if Greek banks keep a lot of Greek debt securities in their assets,
it is also because these increase their equity/total assets ratio, as
explained above. Lastly, since the ECB maintained its credit line to
Greek banks, they can exchange their Greek securities against the
liquidities they need.
Greek
banks had been helped in 2008-2009, and they were bailed out again
with public money. Indeed, part of the loans granted in the context
of the first MoA was injected into Greek banks. The four largest
Greek banks thus increased their hold on the Greek banking market as
they absorbed smaller ones. Not only did those large banks claim
they had suffered losses and thus eschewed taxation but they carried
on with their mafia practices (see illustrations developed by Daniel
Munevar about the Proton and Piraeus banks in “Greece: The PSI and
the process of bank recapitalization (2012-2016)”,
http://www.cadtm.org/Greece-The-PSI-and-the-process-of).
Not one single bank executive was imprisoned. Greek banks moved as
much capital abroad as they could when their country’s economy
badly needed them. The proportion of non-performing loans increased.
Banks cut off loans to households and SMEs.
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