Have banks become today’s tanks? Their attempted coup in Greece..

He reflects on the ongoing Greece crisis (for how long will it continue). He says how earlier tanks took over countries and now it is banks:

After the submission of this article on 8 July, many drastic events took place:

● On 8 July, the US Treasury Secretary, Jack Lew, and the IMF Managing Director, Christine Lagarde—a Franco-American front—tried to increase pressure on Germany to grant debt relief to Greece and help it avoid an exit from the Eurozone.

● On 9 July, Syriza made a final counteroffer differing from the Troika offer rejected by the Greek voters only in two minor details.

● On 10 July, the counter-offer was voted in the Greek Parliament and approved by a 251-member majority out of 300.

● On 11 July, the finance ministers of 18 of the 19 Eurozone member-states, excluding Greece, met to discuss the Greek counteroffer and make a recommendation to the EC meeting to be held the next day. Presumably, the faith of Greece was to be determined in the 12 July EC meeting.

● On 12 July, the EC meeting was cancelled and the Eurozone finance ministers continued their deliberation. Also on the same day, Greek, German and French leaders had a special meeting for further negotiations. Deliberations continued past midnight.

● On 13 July, early in the morning, Greece was given an ultimatum to hand the Greek sovereignty to the Troika.

Not only that the conditions of the ultimatum were much harsher than the 25 June Troika offer, but also that this ultimatum demanded Greece hand €50 bn of assets to a privatisation fund, where sales will be used to pay down debt. The same morning, in his first interview since resigning as Greek finance minister, Yanis Varoufakis referred to the 1967 coup that installed a military dictatorship in Greece and said:

In the coup d’état the choice of weapon used in order to bring down democracy then was the tanks. Well, this time it was the banks. The banks were used by foreign powers to take over the government. The difference is that this time they’re taking over all public property.

We are witnessing a world-historical event that may have started the end of the EU as it unfolds and who knows what may happen tomorrow?

🙂

Banks and Tanks rhyme really well. Pandit Nehru had also noted this rise of role of global finance in world politics in his epic Glimpses of World History.

The author takes a dig at Ivy league econs:

Since the onset of the crisis, Greece had gone through two “bailout” programmes the Troika structured; one in May 2010 and the other in March 2012. Despite these two “bailouts” Greece has been in depression since the beginning of 2009. From its peak in 2008, the Greek gross domestic product (GDP) is down about 27%, unemployment is above 25%, youth unemployment is above 60%, and the Greek debt to GDP ratio is about 180%.

In return for these programmes, the Troika demanded some, so-called, fiscal, structural and financial reforms. What was demanded in the name of fiscal reforms was more and more austerity, that is, less and less spending by the households and the government. Furthermore, the structural reforms required, among other things, cuts in retirement and other social benefits, further reducing the purchasing power of the households. In addition, under the rubric of privatisation to increase “efficiency,” these “reforms” required Greece to put up its public assets for sale to the benefit of rentiers rather than to the benefit of its rightful owners, thereby reducing the income that could have been earned from their fair sale.

How can an economy grow if its households and government spend less and less,  and earns a measly sum from the fire sale of its assets, unless its firms increase their spending substantially? Why would its firms increase their spending substantially, if they cannot sell what they produce to the rest of the economy and, after a devaluation of the currency (which cannot be done under the euro), to the outside world?

Does one need a PhD in Economics from a top Western university to see that an economy cannot grow if all of its sectors spend less and less? Would spending less and less not deepen an ongoing depression? Of course, it would, and it did. Yet, the “civilised” Troika plutocrats—many of whom with PhDs from “respected” American and European universities—either pretend that they believe reducing spending can increase growth or they are ardent believers of some religion which says it can or, maybe, they have a different agenda.

Indeed, rather than bailing out Greece, these programmes bailed out the pre-2010 creditors of Greece—mainly the German and French banks. According to data from the Bank of International Settlements (BIS), while as of December 2014 the German and French bank exposures to Greek debt were €10.6 billion and €1.3 billion respectively, the corresponding exposures as of March 2010 were €32 billion and €52 billion respectively. Indeed, 92% of the €240 billion “bailout” loans to Greece since May 2010 went to European and Greek banks.

No one can doubt that this is a bailout. But, of the banks, not of Greece.

Greece crisis is much more than just an economy sliding down. It is a huge political thriller of how certain political ambitions just go so awry..

 

 

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