“Despair has enveloped Greece. This weekend the bankrupt nation, for that is what it is, began negotiating the latest act of a drama that many fear will end in catastrophe — financially, socially and politically.”
These are the opening words of an article for the Observer by Helena Smith, who has reported from Athens for more than 20 years, and who says the country is “on the edge of a precipice.” On Sunday evening, the Greek parliament accepted a €130bn (£108bn) rescue package from the EU and the International Monetary Fund, to prevent a default, in March, on €14.5bn in maturing debt. However, this also involves a further €3.3bn in wage, pension and job cuts, including axing another 15,000 civil servants’ jobs by the end of the year (and the loss of 150,000 public sector jobs by 2015), and imposing a 22 percent cut in the minimum wage and pension cuts of €300bn, even though Greece is already in a catastrophic state that will not be helped by a further round of savage cuts.
This is because the austerity measures of the last few years have led only to further economic stagnation, and are driving Greece into what I believe it is appropriate to describe as a death spiral. The country is in its fifth successive year of recession, and on Friday a two-day general strike began, and demonstrators took to the streets of Athens, which erupted in fire and violence. Read the rest of this entry »
As the OECD (Organization for Economic Co-operation and Development) delivered some “chilling words on the euro debt crisis” (as the Daily Telegraph described it), warning that policy makers around the world must “be prepared to face the worst,” and that the “euro area crisis represents the key risk to the world economy at present,” and that a “large negative event would … most likely send the OECD area as a whole into recession,” the spotlight has generally shifted from the suffering of those most drastically affected by the economic meltdown in Europe, which is bad news for the people of Greece in particular.
As I explained earlier this month, in my articles, Crisis in Greece: Experts Call for Return of the Drachma, As Prime Minister Cancels Bailout Referendum, We Are All Greece: Expert Explains How the Greek Crisis is Being Manipulated by Banks and Governments to Enslave Us All and New Perspectives on the Euro Crisis, and the Need for Greece to Default, Greece has become the scapegoat for the failure of the Euro project, exposing the harsh reality that, after years of irresponsible lending by richer countries, in which the poorer countries not only became horrendously indebted but also saw their cost of living rise alarmingly, making them less competitive in terms of business, they are being made to foot the bill as a result of the banking crisis of 2007 and 2008, which destabilized Western economies to an extent that few commentators realized.
For Greece, the upshot of a debt crisis that first emerged in May 2010 had been 18 months of savage austerity that has been so severe that it has only served to further strangle the economy it was supposedly designed to revive. Earlier this month, the Greeks suffered a further humiliation, when their democratically elected government was replaced by a technocrat government imposed by the EU and the IMF, designed to further destroy Greece’s already shattered economy, in order to protect the bankers behind the Euro, and not to let Greece default and return to the drachma as some critics of the failure of the Euro project — myself included — recommend. Read the rest of this entry »
Delighted though I am to see the back of Silvio Berlusconi, no one should be reassured that his replacement, the unelected technocrat and former EU commissioner Mario Monti — or another unelected technocrat, Lucas Papademos, a former vice-president of the European Central Bank., who has taken over in Greece from former Prime Minister George Papandreou — are in a position to provide a solution to the financial crisis sweeping Europe.
Even before the unelected technocrats were parachuted in, those intent on addressing the crisis through austerity cuts of unprecedented savagery had a crisis of authority, having failed to consult with the electorates of the countries involved, and imposing unelected leaders is a truly alarming development.
For those seeking to understand why, it is clear that the fault lies primarily with the entire Euro project, and not with individual countries, but understanding that involves certain Northern European countries putting aside their dreadful knee-jerk racism regarding their southern neighbours’ purported laziness and corruption, and understanding that the Euro is and was an inherently flawed project, biased in favour of the richer countries, and essentially presided over by a handful of unaccountable officials.
As the Guardian noted in an article last week, “the latest phase of Europe’s sovereign debt crisis has exposed the quite flagrant contempt for voters, the people who are going to bear the full weight of the austerity programmes being cooked up” by “the Frankfurt Group, an unelected cabal made of up eight people: [Christine] Lagarde, [the head of the IMF]; [Angela] Merkel; [Nicolas] Sarkozy; Mario Draghi, the new president of the ECB [European Central Bank]; José Manuel Barroso, the president of the European Commission; Jean-Claude Juncker, chairman of the Eurogroup; Herman van Rompuy, the president of the European Council; and Olli Rehn, Europe’s economic and monetary affairs commissioner.” Read the rest of this entry »
In response to the ongoing Greek financial crisis, which I discussed in my article on Saturday, Crisis in Greece: Experts Call for Return of the Drachma, As Prime Minister Cancels Bailout Referendum, I was directed by my friend George Kenneth Berger to a video of the Spanish author and professor Pedro Olalla, who has been living in Athens since 1994, discussing the crisis, what it means for Greece, and for the wider European community, in which, in clear language that can be understood by those without specific economic expertise, he explains how Greece’s crisis has largely been manufactured by financial speculators and their willing and unquestioning servants in government.
Like others whose expertise is not in economics, I often struggle to understand quite what has been happening in the world since the financial crisis of 2008, and I found this to be a useful pointer towards a bleak truth that I can, nevertheless, at least partly comprehend from what has been happening in the UK since the Tories managed, with the support of the Liberal Democrats, to form a government 18 months ago. The Tories’ campaign of austerity involves falsely blaming all of Britain’s ills on its deficit — and making the ordinary people pay for it with savage cuts to education, welfare, health and any other services that involve the state — while obscuring the financial sector’s huge responsibility for creating the crisis. In this topsy-turvy world, the banks demanded and received huge bailouts, but then refused to reform their behaviour or to pay the taxes they owe, despite having created a situation that led to increased unemployment, reduced revenues, increased borrowing to compensate for the shortfall and for the increased pressure on the government’s finances.
Pedro Olalla’s 15-minute video, “Palabras desde Atenas — Words from Athens,” was recorded on October 5, and is available below, via YouTube, where, I’m glad to note, over 125,000 people have already seen it. It is subtitled in English (from the original Spanish), and this morning, in an attempt to understand more fully what was being explained, and to provide a permanent record in print, I transcribed the subtitles, and, with some minor edits for style and comprehensibility, have posted it below. Read the rest of this entry »
This week’s G20 Summit in Cannes was overwhelmed by the Greek economic crisis, when Prime Minister George Papandreou (who was not invited) threw a huge spanner into the works by stating, while the ink was still drying on the latest bailout plan for the Greek economy, that he would be submitting the agreement to a referendum. In response, the markets took fright, the G20 leaders ran around like headless chickens, and Papandreou was left fighting for his political survival when his finance minister and long-time rival, Evangelos Venizelos, publicly opposed the plans.
As was reported early this morning, the latest news is that, although George Papandreou narrowly won a vote of confidence last night, he “has agreed to step aside to make way for a government ‘of broad acceptance’” that, it seems, will be led by Evangelos Venizelos. As the Guardian explained, “The deal with Venizelos was struck in a desperate bid to avoid snap elections that Papandreou said would be ‘a catastrophe’ for a country on the edge of political and economic collapse.”
Prominent voices call for the return of the drachma
The referendum may have been cancelled, but that doesn’t mean that the huge problems with the bailout deal for which George Papandreou wanted a referendum have been resolved. In the last few days, these problems have, to my surprise, been most eloquently explored in the mainstream media outside Greece in a column for Fox News by Peter Morici, a professor at the Smith School of Business, University of Maryland School, and former chief economist at the US International Trade Commission.
In his column on Thursday, Morici began by explaining that, although the latest bailout plan for Greece involved writing off half of the debt held by private institutions, it also involved a further round of “draconian austerity measures” that will be ruinous for the Greek people, as they will “further drive up unemployment, and shrink Greece’s economy and tax base at an alarming pace, placing in jeopardy eventual repayment of Athens’ remaining debt.” Read the rest of this entry »
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