- Economist Michael Hudson calls it "Replacing Economic
Democracy with Financial Oligarchy" in a June 5 article by that title,
- After being debt entrapped, or perhaps acquiescing to
entrapment, the Papandreou government needs bailout help to pay bankers
that entrapped them. Doing so, however, requires "initiat(ing) a class
war by raising its taxes (harming working households most), lowering its
standard of living - and even private-sector pensions - and sell off public
land, tourist sites, islands, ports, water and sewer facilities" -
in fact, all the country's crown jewels, lock, stock and barrel, strip-mining
it of everything of worth at fire sale prices.
- Why? Because the US-dominated IMF, EU and European Central
Bank (ECB), the so-called "Troika," demand it as the price for
bailout help that wouldn't be needed if Greece wasn't trapped in the euro
straightjacket. Membership means foregoing the right to devalue its currency
to make exports more competitive, maintain sovereignty over its money to
monetize its debt freely, and be able to legislate fiscal policies to stimulate
- Instead they're entrapped by foreign banker diktats demanding
tribute. They call it a "rescue." In May 2010, the Papandreou
government agreed to earlier austerity in return for loans. Now they're
at it again, demanding more or they'll collapse the entire economy, or
so they say. And the same scheme is replicated in Ireland and Portugal.
Moreover, it's heading for Spain, and potentially most of Europe and America
as representative governments head closer to "financial oligarchy."
- In other words, it amounts to financial coup d'etat authority
over sovereign governments unless popular anger prevents it, involving
more than street protests or short-term strikes accomplishing nothing.
- Former Wall Street broker, financial analyst, radio/TV
host, and consummate critic Max Keiser calls it "banker occupation"
for good reason. They:
- -- make the rules;
- -- set the terms;
- -- issue diktats;
- -- pressure, bribe or otherwise cajole or force governments
to acquiesce; and
- -- burden working households with higher unemployment,
wage and benefit cuts, higher taxes, and other austerity measures to assure
financial predators profit - always at their expense, forcing once prosperous
nations to surrender sovereignty to financial oligarchs, ruling world economies
- Hudson said European central planning concentrated financial
power in "non-democratic hands" from inception under European
Central Bank (ECB) dominance. Operating like a financial czar over its
17 Eurozone members, it:
- -- "has no elected government (to) levy taxes;
- -- (t)he EU constitution prevents (it) from bailing out
governments," unlike the Fed able to monetize US debt in limitless
- -- "the IMF Articles of Agreement also block it
from giving domestic fiscal support for budget deficits," saying:
- "A member state may obtain IMF credits only on the
condition that it has 'a need to make the purchase because of its balance
of payments or its reserve position or developments in its reserves.' "
- However, despite ample foreign exchange reserves, IMF
loans are offered "because of budgetary problems," precisely
what it's not allowed to do. As a result, "when it comes to bailing
out bankers," said Hudson, "rules are ignored" to save them
and their counterparties from incurring losses. And it works the same way
in America under the Fed, dispensing open-checkbook amounts to Wall Street
- No wonder Hudson calls finance "a form of warfare,"
operating like pillaging armies, taking over land, infrastructure, other
tangible assets, and all material wealth, devastating nations in the process,
causing unemployment, poverty, neoserfdom, "demographic shrinkage,
shortened life spans, emigration and capital flight."
- Greece's business-friendly fiscal legacy, in fact, caused
today's crisis, squeezing public spending in favor of the rich the rich,
especially with sweetheart tax policies letting much of their income go
- Financial deception followed. On February 8, 2010, Der
Spiegel writer Beat Balzli headlined, "How Goldman Sachs Helped Greece
to Mask its True Debt," saying:
- In 2002, Goldman helped them borrow billions by circumventing
Eurozone rules in return for mortgaging assets. Using creative accounting,
debt was then hidden through off-balance sheet shenanigans, employing derivatives
called "cross-currency swaps in which government debt issued in dollars
and yen was swapped for euro debt for a certain period - to be exchanged
back into the original currencies at a later date."
- Debt entrapment followed, nations like Greece held hostage
to repay it, the usual price being structural adjustment harshness, making
a bad situation worse. In 2010, in return for a $150 billion loan, Papandreou
- -- large public worker layoffs (around 10% overall);
- -- public sector 10% wage cuts, including a 30% reduction
in salary entitlements;
- -- cutting civil service bonuses 20%;
- -- freezing pensions;
- -- raising the average retirement age two years; and
- -- higher fuel, alcohol, tobacco, and luxury goods taxes,
knowing much more lay ahead given Greece's worsening debt problem.
- More bailout help is now needed in return for greater
austerity, as well as selling off Greece's crown jewels as explained above.
On June 24, New York Times writer Stephen Castle headlined, "Europeans
Agree to a New Bailout for Greece with Conditions," saying:
- The deal "came a day after Greece agreed with international
creditors to more austerity measures (requiring parliamentary approval)
as part of revised plans for 2011-15 aimed at" assuring bankers are
first in line to get paid, popular and national interests be damned.
- An agreement in principle expects half the funds offered
to come from new loans, a fourth from state asset sales, and the remainder
from private sector contributions.
- An unspecified larger amount (of around 110 billion euros
in total) will follow an initial 12 billion euro emergency loan with strings.
- -- laying off another 20% of public workers;
- -- privatizing public enterprises and assets on the cheap;
- -- a one-time personal income levy from 1 - 5%, depending
- -- lowering the tax-free income threshold to 8,000 euros
annually from 12,000;
- -- setting the lowest tax rate at 10%, with exemptions
for people up to age 30, over-65 pensioners, and disabled people; and
- -- annually taxing the self-employed an additional 300
- Up to $120 billion in cuts are expected though final
figures haven't been announced, depending on amounts raised from asset
sales and private contributions.
- In response, public anger is visceral through daily protests.
The ruling PASOK party's approval rating is 27%. Over 90% of the public
are dissatisfied with Greece's governance. Another 90% say the country
is "on the wrong path." About 80% are unhappy with their lives,
and 70% are concerned that conditions will keep deteriorating.
- Nonetheless, on June 22, Papandreou won a parliamentary
vote of confidence ahead of two more steps the IMF and Eurozone leaders
require before releasing more funds - agreeing on their demanded austerity
plan and enacting measures to implement it.
- In fact, acting IMF managing director John Lipsky (a
former JP Morgan Investment Bank vice chairman) said no opposition will
be tolerated. In other words, Eurozone nations have no option but to obey
IMF diktats, Lipsky acting more like a commissar than banker.
- At the same time, austerity, privatizations, and greater
debt amounts are self-defeating. Workers, of course, are hardest hit unless
mobilized mass action stops it. Ideally they can do it by general strike,
shutting down the country, setting non-negotiable demands, staying out
until predatory banker diktats are rejected, and prevailing by letting
nations regain their sovereignty and people their rights.
- That's how labor battles are won. It works the same everywhere
when rank and file determination stays the course to victory.
- Stephen Lendman lives in Chicago and can be reached at
- Also visit his blog site at sjlendman.blogspot.com and
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