Greece and the Global
Debt Crisis Thomas H. Greco, Jr.
The Greek debt crisis is emblematic of a more general, decades-long pattern of economic exploitation and reactionary politics that threatens not only the European Union but the stability of the global financial infrastructure and Western democratic civilization. The situation calls for a different form of globalization, not one that is dominated by transnational banks and corporations, but one that is built upon local self-determination and self-reliance, and based on local and domestic control of money, credit, and finance. Greece (and other debtor countries) can recover a measure of sovereignty and rebuild its economy by combining “debt triage” with public and private actions for creating domestic liquidity.
In the summer of 1977, I first ventured abroad from North America on a journey to explore ancient civilizations, cultures, and religions, and to experience contemporary life in Egypt, Israel, and Greece. During my six-week odyssey, I was able to visit the Pyramids, amble over the Holy Land, and visit the temple ruins of Athens and Delphi.
At one point while in Cairo I came upon a scene that greatly troubled me. There was a small burro hitched to an enormous cart that was laden to the hilt with onions. I felt nauseous as I watched the poor animal lying on its side being flogged by a man in a vain effort to rouse it to the task of moving what seemed to be an impossible load. As a stranger in a strange land, I felt helpless to intervene and quickly moved away. I often wonder what might have been the ultimate outcome, but in my imagination I see the man with the whip standing over the lifeless body of that animal lying in the street, and weeping in worry and frustration.
Now, when I contemplate Greece’s current predicament, that image comes to mind. I see Greece as that beaten and dying animal, overburdened with debt that is beyond its capacity to service, and being ﬂogged by its creditors in a vain attempt to get it to pay up. In my mind’s eye I see a future in which the dead carcass of Greece is being carved up and distributed amongst the creditor institutions. In actuality, Greece will survive, but under new (foreign) management, as she is forced to sell oﬀ her assets at ﬁre-sale prices.
In the eyes of the Germans and other creditors, represented by the so-called “troika” institutions (the European Commission, the European Central Bank, and the International Monetary Fund), the Greek people are lazy freeloaders who have been living “high on the hog” at their expense, and who now balk at repaying what they borrowed.
But there is another side to the story that paints a different picture, and even if there is a bit of truth in that characterization, what is there to be gained by creditors insisting upon their “pound of ﬂesh”? As civilization has advanced, debtor prisons have been eliminated and bankruptcy laws have been instituted to protect people and companies from creditors who insist upon collecting more than debtors, for whatever reason, are able to pay. Why can’t nations be aﬀorded the same considerations?
First of all, it was not the Greek people who did the borrowing, it was a series of Greek governments that were either corrupted, coerced, or seduced into taking on a series of debts that were increasingly burdensome. Greece was lured into the debt trap from which it seems impossible to escape. Ellen Brown has summarized in her article, The Greek Coup: Liquidity as a Weapon of Coercion, some of the many moves that were made to ensnare the Greek government, and by extension, the Greek people. … more.
Responding to charges of treason leveled against him by his “self-styled persecutors,” former Greek Finance Minister, Yanis Varoufakis, on his personal blog, has laid down the gauntlet, accusing “Greece’s oligarchic establishment” as being “troika-friendly.” In his post of July 28, Varoufakis defended his “defiant negotiating stance” saying: My dastardly ‘crime’ was that, expressing the collective will of our government, I personified the sins of: • Facing down the Eurogroup’s leaders as an equal that has the right to say ‘NO’ and to present powerful analytical reasons for rebuffing the catastrophic illogicality of huge loans to an insolvent state in condition of self-defeating austerity • Demonstrating that one can be a committed Europeanist, strive to keep one’s nation in the Eurozone, and, at the very same time, reject Eurogroup policies which damage Europe, deconstruct the euro and, crucially, trap one’s country in austerity-driven debt-bondage • Planning for contingencies that leading Eurogroup colleagues, and high ranking troika officials, were threatening me with in face-to-face discussions • Unveiling how previous Greek governments turned crucial government departments, such as the General Secretariat of Public Revenues and the Hellenic Statistical Office, into departments effectively controlled by the troika and reliably pressed into the service of undermining the elected government.
Varoufakis also claimed a moral victory, arguing that “The debate about the democratic deficit afflicting the Eurozone is now unstoppable.”
After almost six months of “negotiations,” the Greek government has surrendered to the demands of the powers-that-be. In an interview that was conducted shortly after his resignation but prior to the deal just concluded between the Greek government and the European “institutions,” former Greek Finance Minister, Yanis Varoufakis, indicated that the outcome was determined from the very beginning. Pointing to a “complete lack of any democratic scruples, on behalf of the supposed defenders of Europe’s democracy,” he said, “At some point it was put to me very unequivocally: ‘This is a horse and either you get on it or it is dead.’”
Regarding contingency plans, Varoufakis commented that “if they dared shut our banks down,” strong action would need to be taken “..but without crossing the point of no return.” He said, “We should issue our own IOUs, or even at least announce that we’re going to issue our own euro-denominated liquidity; we should haircut the Greek 2012 bonds that the ECB held, or announce we were going to do it; and we should take control of the Bank of Greece. This was the triptych, the three things, which I thought we should respond with if the ECB shut down our banks.” But his recommendations were voted down by his colleagues.
Some further excerpts:
“Nothing shocks me these days – our Eurozone is a very inhospitable place for decent people. It wouldn’t shock me either [for Prime Minister Tsipras] to stay on and accept a very bad deal. Because I can understand he feels he has an obligation to the people that support him, support us, not to let this country become a failed state.
But I’m not going to betray my own view, that I honed back in 2010, that this country must stop extending and pretending, we must stop taking on new loans pretending that we’ve solved the problem, when we haven’t; when we have made our debt even less sustainable on condition of further austerity that even further shrinks the economy; and shifts the burden further onto the have-nots, creating a humanitarian crisis. It’s something I’m not going to accept. I’m not going to be party to.”
By Thomas H. Greco, Jr. Revised, May 20, 2019 Liquidity Quite simply, liquidity is the ability to pay. We are all accustomed to paying for purchases with legal tender money. We do that in one of several ways, either by … Continue reading →
Greece and the Global Debt Crisis Thomas H. Greco, Jr. ABSTRACT The Greek debt crisis is emblematic of a more general, decades-long pattern of economic exploitation and reactionary politics that threatens not only the European Union but the stability of … Continue reading →
I was right about “quantitative tightening” by Thomas H. Greco, Jr. Just about two years ago, someone sent me a link to an article titled, Why America’s Federal Reserve might make money disappear, that appeared in The Economist on April … Continue reading →
Rebuilding after Collapse: Political Structures for Creative Response to the Ecological Crisis Edited by John Culp As society grapples with the reality of climate change, many believe that technology will somehow save the planet. As this book argues, that is … Continue reading →
2019 Spring Newsletter Summer travel plans Announcing Beyond Money Podcast Jubilee Elections 2020 Global War Profiteers vs. the People of the United States _________________Summer travel plans My travels last year were quite limited for various reasons. This year I’m planning … Continue reading →
How to enable business where money is scarce What poor people lack, more than intelligence, knowledge or skills, is money, i.e., a way to pay and be paid. Social entrepreneur Will Ruddick tells the story of how community currencies in … Continue reading →
In 2018, the United Nations Human Rights Commission (HRC) sent its former Secretary, Alfred de Zayas to Venezuela to investigate the situation there. De Zayas is an American lawyer, writer, historian, a leading expert in the field of human rights … Continue reading →
Fascism should more appropriately be called Corporatism because it is a merger of State and corporate power. —Benito Mussolini (1883-1945), Fascist Dictator of Italy The liberty of a democracy is not safe if the people tolerate the growth of private … Continue reading →
I have long argued that the interest-based, debt-money, central banking regime is both dysfunctional and destructive, and advocated for the decentralization of control over credit and the creation of exchange alternatives that use privately issued currencies and direct clearing of … Continue reading →
The American people elected Donald Trump to shake things up, and, for better or for worse that is what he’s been doing. Most of what Trump has done in the first two years of his presidency has been destructive—to the … Continue reading →