by Duane Campbell
We need to understand the crisis of austerity being imposed
by European bankers on Greece, Spain,
Italy and Portugal, among others. A
catastrophe on the scale of the Great Depression has been forced upon Greece
for over five years under the deceptive description of a “bailout.”
Lets start with a few basics usually not considered in the
corporate media descriptions of the crisis.
1.
What happened ?
2.
Does Germany owe as much money to Greece as
Greece owes to German bankers?
3.
Are current policies of austerity are creating
an economic catastrophe?
What happened ?
1. In 2010 and
2011, mainly German and French banks in pursuit of high profits made massive
loans to Greek firms. When the banks recognized that this was a high risk, they
were bailed out (not Greece) by transferring the debt from the banks to the
public institutions like the European Central Bank and the IMF. Now the ECB and the IMF are trying to force
the Greek government to cut pensions, education, salaries, and health care to
pay for the bail out of the banks.
These funds were transferred from
banks, the ECB, and the IMF to pay back banks, the ECB and the IMF.
Few funds were used to assist the Greek people. That is loans are being
used to refinance the debt. They are recycled back to Germany, France and other nations’ banks. (Macropolis, http://www.macropolis.gr/?i=portal.en.the-agora.2080)
2. The German nation owes almost as much money to the Greek people as
Greece owes to Germany and the European Central Bank combined.
But Greece can not collect from
Germany. Germany has the political and economic power (and allies such as the
U.S.) to enforce debt repayment by starving the Greek economy and forcing the
Greek nation into a great depression. (Hallinan, “Greece, Memory and Debt.” (http://www.dsausa.org/greece_memory_and_debt)
3. The current policies are
imposing a depression on Greece.
Austerity policies have produced a decline in the Greek economy by over
25% since 2010. John Maynard Keynes
explained this effect of imposed austerity during a depression way back in the
1930s, but the bankers and the governments
they control choose to ignore this reality in part because it is not in their
interest.
There are significant and complex economic issues here, but
it is equally important to not allow narrow, technocratic, bankers’ and economists’ insiders views to go unchallenged. The problem is not that they are technocrats,
but that their numeracy (number crunching) disguises a particular set of
political assumptions that enriches and protects the wealthy at the expense of
everyone else.
The domination of discussion in the media and in academia by
a narrow and limited view of economics allows the neoliberal (pro- finance
capital) assumptions to determine policy. To understand this process of wealth
extraction, we need to recognize how debt has been transferred from banks to
nominally “public” institutions such as the IMF and the European Central Bank.
The bankers’ assumptions produce policy choices that make
the rich richer and the poor poorer.
They are not the product of a science of economics but of the well-financed pursuit of self
interest and the promotion of profit by the financial oligarchy.
To begin to comprehend an alternative, you need to
understand, along with Greek Finance Minister Yanis Varoufakes, that this is not a Greek crisis, it is a
Eurozone crisis that is currently having its most devastating effects on the
people of Greece, Spain, Portugal and Italy, and immigrant minorities in
France, among others. See his explanation here: https://www.youtube.com/watch?v=OY3Qxm6BoUI
The crisis is severe. These countries, and particularly
young people, are going through a depression,
similar in scope and magnitude to of the Great Depression of the 1930’s which
brought fascism to power in Germany, Italy and Spain.
The
austerity demands of European bankers and politicians have shattered the
economy of Greece, producing layoffs, wage and pension reductions, and huge
cutbacks in health care. Some 44 percent of the Greek people are now living
below the poverty line.
Pensions for retirees is currently one of the major
sticking points preventing a compromise between Greece and the Eurozone
bankers.
The Financial Times reports,
“main pensions have been slashed 44 to 48 percent since 2010, reducing the
average pension to 700 euros a month … About 45 percent of Greek pensioners
receive less than 665 euros monthly — below the official poverty threshold.” This is about $745 dollars per month. (Mark Weisbrot, http://america.aljazeera.com/opinions/2015/6/germany-is-bluffing-on-greece.html)
Many pensioners
and their families have already been
reduced to poverty, and currently the
European Central Bank and the IMF insist on yet further cuts in pensions. For
honest recording of the many and changing data points, I recommend the Center
for Economic Policy and Research at http://www.cepr.net.
The
crisis was initially created by the general crisis of capitalism in 2008/2009.
During
this period, Europeans, especially in Greece, Spain and Italy, suffered a
recession similar to our own, including use of tax dollars to save major
banks. The looting of the U.S.
economy crashed the world economy and caused the massive cutbacks Greeks and
others continue to suffer. The situation is not improving.
In Europe, as in the U.S., the banks were bailed out at
public expense while the working people were required to pay the bailout costs. Bankers
raised their profits by imposing policies of severe loan paybacks as a part of
the program known as austerity.
Austerity policies are ruining the Greek economy — and you and I should
care, in part because similar policies and programs are at work in the U.S. and are advocated by
most of the Republican candidates for President.
Bankers imposed their plan for austerity through their influence
on government power, and quasi-governmental institutions such as the International
Monetary Fund, the World Bank and the European Union Central Bank.
In the poorer countries of Europe, the imposition of austerity has made
the economic situation worse year by year while maintaining a very profitable
system for finance capital and capitalists.
This is class war of the rich against the poor and impoverished.
Why is this devastation austerity policy being imposed? Austerity is imposed by coordinated economic
power because, in the short term, it serves the interests of finance oligarchs
in Europe and the U.S. If we
misunderstand the nature of the crisis being imposed upon the people of Greece,
Spain, etc, then we are likely to
misunderstand the crisis being imposed upon working people and pensioners and
college students ( among others) here in the U.S.
Under the current system of political economic advantage and
ideological domination in the European Union, the working people, the 99%, cannot
win. They are being forced into
increasing desperation, at times with the support of working people in Germany,
for example, who support their
government’s harsh economic extractions from Greece due to nationalists’ myth making
rather than an analysis of economic
reality. See the excellent essay on Greece:
“Memory and Debt,” at http://www.dsausa.org/greece_memory_and_debt.
A government responding to the needs of the 99% of its own
people, as has the Syriza government of Greece, would need to seek alternatives
to the continuing economic despoliation. If a democratic government is elected in Spain
this fall, they will face similar demands from the bankers and creditors.
The European Monetary
Union is not going to change, because the current system is very profitable for
the financial oligarchy.
There are alternatives. Leading
economists recognize the failure of the austerity approach and have proposed
alternatives, but the banking sector will not consider reform. See “A Modest Proposal”: http://yanisvaroufakis.eu/euro-crisis/modest-proposal/ A significant
number of mainstream economists have proposed reasonable if moderate
alternatives ( Joseph Stiglitz, Thomas Piketty, and others: “Economists Demand
End to Greek Austerity,” http://inthesetimes.com/article/18020/joseph-stiglitz-thomas-piketty-greece-syriza-austerity).
A Greek exit from the Eurozone may be the best of several bad options. They could leave the 19-member Eurozone
(European Monetary Union) but remain in the 28-nation European Union. As an example, Great Britain is in the
European Union but not in the European Monetary Union known as the Eurozone.
Another alternative supported by a left wing in Syriza would
be for Greece to follow the example of Iceland and nationalize the banks rather than bail them out with further bank
and IMF loans that must be repaid by
further cutting of pensions, schools, health care and social services. Certainly, a new policy direction is needed.
So, what do we do as a left in the U.S.?
First, we need to comprehend the
reality of the oligarchy using the governments to impose austerity in Europe
and in the U.S. To do this, we need to
turn to alternative media and economic institutions, since the oligarchy funds
and promotes its views and claims a consensus on the “Greek crisis.” I recommend the several papers at the Center for Economic Policy and Research site: http://www.cepr.net.
The bankers and the governments
that they control argue that Greece is just being irresponsible. This blaming the victim is the same argument that U.S.
finance used to blame the poor and people of color home owners in the U.S. for the real estate crisis
that the banks caused in 2008/2009. The
oligarchy has a significant infrastructure and well endowed economists to
promote their neoliberal economic viewpoints.
Study and analysis and acts of solidarity beyond the
dominant paradigms will help us to develop policies and practices for the needed battle in our own society against corporate
greed and the neoliberal finance oligarchy. These forces control a growing
number of state governments, including Kansas, Wisconsin, Ohio, Louisiana,
Texas and most of the South. The
corporate forces provide the resources for the Republican Party victories in
the U.S. Congress, which consistently promotes austerity policies at the
federal level as well as providing the economic and media advisors of most of
the Republican candidates for the U.S. presidency.
We need to break the stranglehold on what passes for economic
thinking here in the U.S. as well as in Europe.
Duane Campbell is a professor emeritus of bilingual
multicultural education at California State University Sacramento, a union
activist for over 40 years, and former chair of Sacramento DSA and the electoral chair of the Sacramento Progressive Alliance. He blogs on politics,
education and labor at www.choosingdemocracy.blogspot.com
and www.talkingunion.wordpress.com
He recently returned
from Greece.
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