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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