Well, youâ€™d be wrong. Surprise! Yep, nobody takes to a good old brain washing like â€˜mericans, especially if it means somebodyâ€™s doing worse than us.
OK, OK, enough with the gratuitous swipes at â€˜merican ignorance of the world. Even whacking a pinata gets tiresome after a while, if itâ€™s never gonna bust open. But seeing how fast the conventional wisdom about Greece formed, and how excessively its reinforced day after day in the press makes oneâ€™s head spin. If its any consolation, the European press has actually been much worse, ladling on extra doses of moralistic scorn as thick as artery-clogging French sauces.
Start with the sovereign debt figures. As previously noted, Portugal, Great Britain and Spain have similar deficits this year, with Ireland worse (14.7%). And that total debt number, 115% of GDP? Italy has the same figure. In fact, on average the percentage in Europe is 87% of GDP, which is almost exactly the total debt load of the good old USA (87% with a bullet, and rising!). So how far out of line is Greece? Yep, not so much. And as far as lying about debt to get into the Eurozone, whatâ€™s German for â€œthey all lied about their levels of sovereign debts?â€ Swinehunds! (I learned that one on Hoganâ€™s Heroes.)
The big difference in Greece is that its sovereign debt was targeted by speculative investment interests in the global casino of corporate globalization, also referred to in essay 3. The entire Greece financial crisis was constructed out of nowhere essentially, with short sellers piling on the Euro to decline, and buying naked credit-default swaps insurance (more on this later), betting that Greece would default on their soon to be due sovereign debts. It was so nice of Goldman Sachs to set up an index on which these credit-default swaps could be used to gamble on Greeceâ€™s solvency, donâ€™t ya think?
Thatâ€™s bad enough, but the real run on Greek debt exploded when the supposedly impartial ratings agencies (Standard & Poors, Moodyâ€™s, etc.) downgraded Greek sovereign debt to junk status, sparking a wholesale run on those afore-mentioned short sales and a massive flight from Greece sovereign debt positions. In a nutshell, Greece got fucked by getting caught in the gun sights of short-term financial speculators (hedge fund division) looking for a short-term killing. The cost of borrowing money to re-finance Greeceâ€™s debts due flew through the roof (to impossible levels), and the European Central Bank (ECB) had to act, to protect the positions of huge German and French banks, and to slow the concurrent run on the Euro with their supposed â€œbailout of Greece.â€
I know, I know, TOO MUCH ECONOMIC CRAP! But hereâ€™s the important point â€“ all of this shit about â€œhow bad Greece isâ€ came AFTER the speculative run on their debt had begun. The sharper amongst you will realize that this is an ex-post-facto rationale to justify predatory financial speculation, NOT an objective assessment of the facts. In other words, the international media became an echo chamber for unrestrained and unregulated financial predators (hedge fund division), spewing ideological bullshit about â€œthe marketsâ€ rationally judging Greece as out of control and needing radical interventions.
Not to put too fine a point on it, but predatory finance is what needs the radical interventions, not Greece. They manipulate the financial markets of corporate globalization for short-term gains, without any concern whatsoever about the effects on real countries and people. Does this sound familiar? Well, it should â€“ this is exactly what destroyed the US housing market in 2007-2008 (and your retirement annuities in Sept, 2008 â€“ remember?). Well, guess who survived (with $TRILLIONS$ of US bailout money) and is at it again? Jason from the Halloween flicks has nothing on these fuckers.
So back to the situation here in Greece. Make no mistake about it, they are getting fucked over big time. As a cost of being â€œbailed out,â€ they are taking on over 100 Billion Euro of new debt to buy out some of the old debts, while being forced to make radical social and economic changes immediately. This was the multiple kilos of flesh demanded by the ECB and Germany for their â€œassistance.â€ Again, donâ€™t forget, these radical changes were the tangible results of the predatory run on Greek sovereign debt for short-term financial gains.
These social and economic changes forced on Greece are classic IMF-style shock therapies ordered up for any number of plundered and still impoverished countries of the world in past â€œassistance programs.â€ Here, the big difference is the very first prescription canâ€™t be filled â€“ massive devaluation of the local currency. This has the effect of making a countryâ€™s people immediately twice as poor as before, as their currency is worth half as much immediately. However, international debts can be paid back in the drastically inflated and worthless currency, the losses from which are written off against the massive earnings of banks holding the debts. Everybody wins, right? Well, not the citizens who are immediately twice as impoverished eh wot?
But Greece uses the Euro â€“ oops, canâ€™t be devaluing that! So theyâ€™ll have to make up for that in even more radical restructuring in the other target areas: drastic cuts in government expenditures on civil servant salaries and social benefits for example, thus the need to demonize the Greeks and their government in global eyes. At the same time, huge tax increases have been mandated as well, boosting the VAT up by 20%, and sending various excise taxes sky high.
So, now do the math: Greece civil servants are expected to absorb huge pay cuts across the board (over 20%), and everyone is paying far higher prices for everything, while the economy goes into recession from the retraction of at least 10% of its GDP in budget cuts and lost revenues. This is obviously a recipe for social disaster. How are they supposed to â€œgrow their way out of recessionâ€ with that much economic retraction and drastically higher costs of living? As there is no historical precedence for success at this, it simply canâ€™t be done.
At the same time, many of the other debtor nations of Europe like Spain, Portugal, Great Britain, and Italy, etc., are also instituting savage budget cuts to â€œavoid the fate of Greece.â€ This will most certainly cause a continent-wide recession, which will further cast any recovery in Greece to eternal damnation (years, in the short-term focus of corporate globalization).
And then thereâ€™s this: Greece is trying at the same time to totally reorient its economy, on orders from the ECB and Germany. Hereâ€™s a startling quote from Greeceâ€™s Economy Minister Louka Katseli (Athens News, 5-21-2010): â€œUntil now, the engine of growth came from consumption and construction. As of 2010, Greeceâ€™s development model is shifting to investments and exports.â€ She goes on to suggest nationally owned properties will be privatized and put up for sale, another IMF mandate for â€œstructural adjustment.â€
A total reorientation of their economy! In the midst of their biggest financial crisis in history!! This is folly of Biblical proportions. Keep in mind, Greece is locked in an unholy embrace with Germany, the king of exports (beyond China). In fact, the German export economy became the worldâ€™s largest after the establishment of the Eurozone, benefiting from the somewhat captive nature of the Greek import economy, as well as others. Thus, it is fraudulent for Germans to claim that they are subsidizing Greece and others, as their export economy has been the prime beneficiary of the union. At the same time, Greece becoming an export economy is a pipe dream at best, bordering on criminal in its mendacity. Greece will never be able to compete with Germany for export markets as long as it is locked into the over-valued Euro.
What is obviously clear is that Greece has been singled out for heavy punishment for the sins of corporate globalization and its Ponzi schemes of layer upon layer of financialized debt toppling over on Europe. It canâ€™t possibly achieve all (or any, for that matter) of the goals mandated by their new occupying army of Euro-bankers.
In the two weeks Iâ€™ve been here, Iâ€™ve seen many examples of the hardships already endured by the people of Greece. The price of gasoline last summer was 1.15 Euro per liter, this year its 1.55 Euro, an increase of over 33%. A new excise tax on cell phones takes 12% off the top of any money added, in addition to increased VAT and other taxes. A bottle of Stolichnaya, which last year cost 9.50 Euro, is now 13.50 Euro, an increase of over 40%. And basic everyday food and supplies are way up across the board. For example, the price of corn flakes (cereal) is up almost 100%.
There is no question that this will not end well for Greece. They are saddled with Billions of Euro more in high interest loans (6%), none of which will help the Greeks at all. Their economy is being reduced to a shambles, while the population is demonized in the international press. And they are being forced to transition to a pipe dream economy, under the harsh embrace of foreign economic occupation. Again I ask, how could the Greeks NOT be taking their anger to the streets?