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Greece: friendless and defenceless

The Greek financial crisis has left the country friendless and defenceless, writes David Giles.

Watching the news on the mainstream media, the coverage of the Greek crisis has recently changed in tone just a little. For many months, there have been pictures of graffiti and broken windows and civil unrest in Athens. Overall, the majority view of commentators has been that Greece had been irresponsible and, like a naughty child, needed to take its medicine. The Abbott government has routinely used Greece as a bogeyman to frighten voters about what a debt and deficit disaster looks like. That coverage is beginning to change. The Greek people are finally being seen as just that – people. Their personal suffering is real.

Here are a few thoughts on the crisis in Greece. At the outset, I should declare an interest: my great grandfather was Greek and my sister married a man from Corfu, where they own villas that are rented out to tourists. They see directly what is happening there.

Greece’s problems are often described either in technocratic language – ‘restructuring’, ‘Grexit’ – or in moralistic terms – ‘people must pay their debts’. Without a human or historical context, this becomes the simplistic story of some naughty, lazy people who are now paying for years of greed and wickedness. The Germans and the Finns, the Dutch and the Austrians are especially hardline about wanting Greece to be punished.

It has been pointed out in recent days that Greece was among the nations that, in 1953, forgave 50% of the monumental foreign debts of Germany after the war, so the squeeze on Greece by Merkel et alia is faintly revolting. German and Austrian debt was partly incurred when those nations invaded the rest of Europe, intent on violence and plunder. Greece invaded no-one. The country ran up its debt trying to become a modern, developed nation without the underlying industries to pay for those aspirations. We should remember that the Greek people were encouraged to have those ambitions by the other members of the EU and bankers went to Athens touting for business from the Greek government.

It should also be remembered that the money Greece owes originally came from private banks. Those loans have been transferred (along with the risk) to central banks, so the bankers who were thrilled to lend the money before their Wall St colleagues crashed the world have once again walked away scot free, privatising profit and socialising risk. The interest rates that banks charge is calculated partly based on the risk of making the loan. The more desperately Greece needed the money, the more interest they were charged. So, a hefty chunk of the ‘debt’ is in fact interest, which is pure profit. Yet even though the bankers either miscalculated the risk or deliberately ignored it, their banks have suffered not a penny of loss. Salaries and bonuses were paid even though this was a case of incompetence or criminal irresponsibility. Nice work if you can get it.

When politicians and their financier pals talk about restructuring economies (not just debts) or praise themselves for their magnanimity in ‘forgiving’ debt, what they extract in return is the right for private companies (such as, er, banks) to buy public assets at fire-sale prices. Greece has been squeezed in just this way. The rest of Europe is now demanding $50 Billion of assets owned by the Greek nation be transferred to someone else. That sort of thing happens all the time in South America and Africa, of course, but it is a shock to watch this naked grab happening in Europe.

Far too many people are happy to describe Greeks as lazy and corrupt and tax-dodgers. Of course, some Greek people are all of those things. However, to a much greater extent, this is another example of the international system of money being gamed by highly sophisticated and entirely amoral financiers who have politicians so confused that they forget where their power comes from: the people. Yet politicians seem to work for the few all over the world, even in the so-called democracies. The Greek people are left friendless and defenceless.

Christine Lagarde, head of the International Monetary Fund, who is highly intelligent and not generally a bad person, was shown to be something of a hypocrite when she demanded that Greeks stopped evading tax when it was revealed that her A$625,000 salary came to her tax-free. The fact that many of the individual bankers (who made the loans) and their banks have avoided/minimised/evaded tax routinely and have helped their wealthy clients to do so for decades (see the HSBC scandal) also makes that kind of criticism ring a little hollow. Yes, people should pay their taxes – and so should corporations, including banks. The individual bankers who have stolen literally hundreds of billions (see all the multi-billion dollar fines paid by banks in the US and elsewhere recently – I recommend Matt Taibbi in Rolling Stone on this subject) should also be stripped of their assets and go to prison – but hardly one of them has. This may seem a bit of a stretch away from the immediate trauma of Greece, but it goes to the credibility of the, as it were, prosecution witnesses against Greece. The bankers who so ably assisted in creating this chaos have slipped, eel-like, past any possibility of being held responsible and now circle like vultures looking for opportunities to make yet more profit from the suffering of others. This is not just a question of money. This really is a moral issue, as Pope Francis’ recent encyclical on climate change and social justice points out.

While we are hearing people braying on about Greece needing to meet its international obligations, let us all recall that the money that is supposedly so important never actually existed; it was created by banks on balance sheets. No-one has run off with the funds of depositors. To scream about needing the money ‘back’ is just theatre – or, to use a Greek word, ‘drama‘. As French economic historian Thomas Piketty has shown, debts have been cancelled many, many times in history and the world has gone on; it is only when profit is put above people that disaster ensues. Real people, like the cleaners who work for my Greek relatives and my sister’s disabled stepson who relies on a state pension, are punished while the financiers who so ably assisted in this calamity have to suffer the unbearable rigours of ordering the Sevruga caviar instead of the better Beluga. Perhaps they might have to wait until next year to replace their string of polo ponies. If you haven’t seen the image of the Greek pensioner, a well dressed man is his sixties collapsed on the ground beside an ATM, weeping like a child, I recommend you look it up. That one image more than any other made me take much more notice.

The great 6th Century BC king of Athens, Solon, saw that a few families had the rest of the population by the short and curlies because the many were in debt to the few. So he cancelled the debts and Athens came into its full flowering. Where is the new Solon?


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  1. Chris

    ‘Greece invaded no one’-Greece invaded Turkey in 1919 and was kicked out in 1922. In Greece every second person works for the government. Ok I am exaggerating but the culture of rewarding government jobs for support for successful political parties is crazy. Also the Greek economy is corrupted and has become a part of Greek culture so will take generations to change if at all.

  2. Harquebus

    Greece has no developed natural resources in which to trade for energy and there are far too many of them. As global resources diminish, deplete and become scarce, other countries will follow.
    This is a wake up call for the rest of the world.

  3. Matters Not

    Greeks as lazy and corrupt and tax-dodgers

    I’ll leave aside the ‘lazy’ bit and just comment on the ‘tax-dodger’ concept largely because it’s verifiably valid.

    The ‘rich’ in both Greece and Turkey regard the paying of tax as an ‘option’ and a choice (to not pay) that’s easily facilitated. Because it’s been going on for decades and decades in both countries, the disparity in wealth is pronounced.

    While the detail can be argued about, generally speaking, in both countries, the top 10 per cent own about 80 per cent of the nations’ wealth. And that wealth is held offshore. And therefore it’s not taxed locally.

    Not that these nations are unique in that regard. Australia, for example, allows those who mine our resources to escape their tax obligations through ‘transfer pricing’.

    Anyone know which country is our biggest buyer of coal and iron ore? And how it (the scam) works?

    Having said that, Greece should not be abandoned and it’s exit from the Euro ought to be aided and abetted.

  4. Hotspringer

    Je suis Grec!

  5. Andreas Bimba

    Thanks David for an accurate and fair assessment. I have read quite a few articles on the Greek crisis recently and yours tallies up well with the better ones.

    The new breed of neo-liberal bankers are truly contemptible bastards and they are extremely successful as they combine politics, bureaucracy and business to, as you mention, privatise huge high stakes profits while socialising the losses. This is just another installment of the neo-liberal GFC banking fraud and it CONTINUES further.

    Greece’s current Syriza led government had a golden opportunity to unravel this European neo-liberal fraud, leave the eurozone, default on its unjust debts and eventually restore employment and dignity to its millions of unemployed and underemployed but they blew it by running back to mummy. Unfortunately mummy is wearing a mask, only lusts for money and power and intends to devour her children.

  6. jagman48

    How easy is it to sit here and blame Greece or any other country. I feel for the people of Greece, the little man, the pensioners and unemployed youth. Have a wee bit of pity for them. Great article.

  7. kizhmet

    Thank you for a balanaced article. I’ve been watching this crisis holding my breath, hoping Syriza would remain defiant and call a break from the Eurozone. The intransigence exhibited by some of the EZ members has me dumb-struck – MSM wins yet again. The world didn’t just allow a coup d’etat to happen, we applauded it. Fiscal sovereignty surrendered – absolutely tragic. Which country is next on the IMF/EB list?

    Time for the Greeks, and the rest of Europe, to start learning German :-(((

  8. jimhaz

    Excuse making. All full of “Well they are in the wrong, so that means we can be wrong as well with impunity”.

  9. Sir ScotchMistery

    @Matters Not – goodness, how close to home is that one. All us strugglers paying taxes and getting chased for $5000 in GST payments while that fat phuque Gina Reinhardt (the proper spelling of her anglicised name), gets away paying none or so little as to make a mockery of the ATO going after Paul Hogan.

  10. Matters Not

    BHP has negotiated a tax incentive from the Singapore government, and as a result it paid $US121,000 ($AUD154,800) in Singapore and $945 million in Australia on profits of $US5.7 billion ($AUD7.29 billion) earned in Singapore between 2006 and 2014.

    On those numbers, BHP paid a tax rate of just 0.002 per cent in Singapore

    A tax rate of 0.002% paid in Singapore, Abbott’s newest ‘best friend’.

    More detail here.

  11. Lee

    Good article, David. It saddens me when I hear people say let the Greeks suffer, they deserve it. There are a lot of very vulnerable people suffering, through no fault of their own. Pure scum are willing to watch them suffer all for the sake of some numbers on a spreadsheet.

  12. 5ime0n

    There are many examples of these National Fire Sale events from all around the world that not enough people are noticing. Naomi Klein refers to this as disaster capitalism and cites similar if not exactly the same tactics used in Pinochet’s Chile,Thatchers Britain, Bolivia, Poland, Russia, South Africa, the 1997 Asian Financial crisis, and the 2003 invasion of Iraq. In many cases, after a period of economic, ideological, or political collapse, scores of corporate salesmen are said to rush in to buy up infrastructure, utilities or resources, depriving the local populations of the chance. Whilst it may seem farfetched, I would love to hear from people on the ground in Greece. Are assets and resources disappearing into private corporate pockets? Is there privatization of previously public held services? And is everyone content with this happening?

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