rules trap 17 dissimilar countries. Greece proved most vulnerable. It's
cratering under imposed austerity.
It's the epicenter of Europe's deepening economic crisis. Fed up Greeks
want change. May 6 parliamentary elections favored anti-austerity candidates.
Coalition talks failed. On June 17, new elections may or may not settle
things. Round one runner-up SYRIZA (the Coalition of the Radical Left)
campaigned on "tear(ing) up the barbaric accord."
On Greece's NET TV, its leader Alexis Tsipras said:
"We are being asked to agree to the destruction of Greek society. SYRIZA
won't betray the Greek people."
It's expected to emerge first and gain an automatic extra 50 parliamentary
seats. Polls show it's gaining strength. With or without enough support,
forming an anti-austerity coalition looks problematic.
How far an eventual government will go remains to be seen. Policies
usually belie campaign rhetoric. Beleaguered Greeks want promises made
fulfilled. Getting relief is another matter entirely.
According to Michael Hudson:
Across Europe, "(l)eft-wing parties, socialist parties, labor parties
all say that they’re going to preserve the social contract, and as soon
as they get into power, they sell out to their financial backers, they
double cross labor."
Preserving Europe and saving banks comes first. People needs don't matter.
Sacrifice demands deep social cuts, unemployment, and poverty. Few have
the political will to refuse. So far, no Eurozone country dared.
Expect hard times to get harder unless public rage forces revolutionary
change. That's a bridge not yet crossed.
On May 11, the Financial Times headlined "Greece is falling out of Europe,"
Greeks reject austerity. "You can scarcely blame them for throwing out
a corrupt political establishment. It is also indisputable that the
economic prescription written by its international creditors is astonishingly
Nonetheless, the FT claims:
"Greece is sailing between the Scylla of creditor-imposed depression
and the Charybdis of the chaos of unilateral debt repudiation and exit
from the euro."
Breaking up is hard to do. So is major surgery. Healing and recovery
take time. It's done because the alternative is unacceptable. Greece
faced that choice long ago. It kicked the can down the road and did
nothing. It agreed to impoverish its people to pay bankers.
It delayed, equivocated, sacked an elected prime minister, and replaced
him with a Goldman Sachs connected unelected one. Temporary government
will serve until elections produce a new one.
Council of State (the Supreme Administrative Court of Greece) head Panagiotis
Pikramemos serves as interim premier. President Karolos Papoulias appointed
him. Technocrats are in charge until post-election. It's main task is
to prepare for June 17. According to Greece's constitution, it can't
enact new laws.
Earlier Pikramemos ruled that bailout conditions and IMF mandates don't
violate Greece's constitution. Austerity remains policy. A SYRIZA-led
government may be too weak to change it.
Elections rarely settle things. Whether public rage shifts the balance
isn't known. It's close to exploding. People don't want new bums replacing
old ones. They won't likely get what they want.
Likely coalition partners SYRIZA and the Democratic Left (DIMAR), its
spinoff, oppose austerity. They also insist Greece must maintain the
euro "at all costs." Tsipras said leaving would be "disastrous." He'll
"do all (he) can" to prevent it.
To form a new government, he'll need one or more conservative partners
unless SYRIZA's popularity soars well above its 28% level. DIMAR has
Keeping the euro requires following Troika (EU, ECB and IMF) diktats.
Otherwise expect Eurozone expulsion. Bailout funds going mostly to bankers
end. SYRIZA faces heavy pressure to yield.
Tsipras wants bailout terms renegotiated. He pledged to cancel "austerity
measures and (rebuild Greece) from the ruins left behind by the parties
of the cuts."
No concrete demands were made. Troika leaders won't renegotiate. A SYRIZA-led
government won’t get much choice. In the end, expect business as usual
to continue. At most, Troika rules may be modestly softened. It'll be
too little to matter. What's next is anyone's guess.
Opinions vary on Greece leaving the euro. Some analysts ask if it's
ready to go it alone? Others say it's inevitable. Will exiting trigger
other departures? Other troubled economies could follow. Ireland, Spain
and Portugal are especially vulnerable.
Falling euro currency valuations suggest uncertainty. Even before exiting,
Greek banks could collapse. From January 2010 through March 2012, nearly
one-third of deposits were withdrawn. In recent days, nearly another
$1 billion sought safety. More does daily to avoid devaluation if the
Greek bankers told President Papoulias they're worried about surviving
if depositors shift funds abroad. According to economist Yannis Loannides,
it's a "very serious problem." The only way to stop a bank run is for
the ECB to guarantee deposits held by regional lenders to guard against
In March, commercial and personal deposits in Greek banks totaled 165.4
billion euros. Greece's government has enough cash for another six weeks.
Without help, bankruptcy and default loom. Restructuring is long overdue.
In the 1990s, Argentina swore never to abandon its currency board. In
2001, it yielded under severe pressure. Deep recession and severe pain
ensued. Strong growth followed restructuring. Creditors had no choice.
Greece can go the same way. Restructuring will leave it debt free. Exiting
euro straightjacket rules means regaining control of its monetary and
fiscal policy. Once crisis conditions pass, growth can follow.
Like Argentina, Greece has sovereign rights. It's high time it reclaimed
them. Moreover, it'll set a long overdue precedent for other troubled
Eurozone countries to follow.
Creditors and banksters should eat losses, not ordinary people who had
nothing to do with creating them and current crisis conditions. Having
things turn out that way faces long odds.
An unwritten contract endows banking giants with an inalienable right
to plunder taxpayers for their own self-interest. Elected officials
are bribed, bullied and pressured to go along.
Tactics used work. An occasional "flash crash" and mountains of ready
campaign crash gain supporters. Unknown under the table amounts sweeten
deals and seal them with some on the fence.
More of the same assures harder than ever hard times. Crisis conditions
across Europe build. Greece is the canary in the coal mine. Spain, Portugal,
Ireland, and Italy aren't far behind.
On May 31, Irish citizens face a choice, or do they? They'll vote in
a national referendum on EU fiscal policy. Many oppose renewing the
current treaty. Others favor it. Some aren't sure either way.
The governing Labour-Fine Gael coalition and opposition Fianna Fail
support austerity and banker bailouts. Tactics include intimidating
voters to expect economic collapse unless continue.
Finance Minister Michael Noonan said deeper social cuts will follow
a no vote. Large investors warn they'll shift funds elsewhere. At the
same time, cuts assure deeper ones and greater crisis conditions.
Unemployment and poverty grow. How much people will take remains to
be seen. Parties on both sides and union bosses offer no fundamental
change. Instead of repudiating a corrupted system, they support it.
In Ireland and across Europe, ordinary people are alone in the fight
for change. Getting it won't be easy. One referendum up or down barely
scratches the greater problem.
Perhaps Greece or another country declaring bankruptcy will send a message
too resonant to ignore. Eventually it looms. What can't go on forever,
A Final Comment
What's hitting Europe affects America. Data releases show it. Most recent
ones fell below expectations. Household survey employment dropped two
Labor force participation plunged to a 30-year low. Minus Q I mild weather,
real GDP stagnated. Nonresidential construction contracted. So did business
spending and durable goods orders.
Production is softening. The May Philadelphia Fed May manufacturing
index plunged. From April's +8.5, it dropped to -5.8. Economists expected
an increase to 10.0. New orders and hiring expectations also contracted.
The March production diffusion index dropped from 62.8 to 44.6. It's
the lowest level since mid-2009.
The Conference Board reported its index of leading economic indicators
fell 0.1% in April. Economists expected a gain. Real final sales fell
at an annual 1% rate. Real wage-based incomes fell for the past two
months as well as four of the last five.
Households on food stamps, receiving disability benefits, and having
withdrawn from the labor force are at record highs. Consumer confidence
reflects recession, not growth.
Near-zero interest rates punish savers and retirees. Approaching retirement
for many reflects uncertain darkness at the end of the tunnel.
A new University of Michigan study found one-fifth of outstanding household
credit card balances, student loans, medical bills, and other unsecured
debts exceed savings.
The percent of household with no savings or negative net worth approaches
25%. Things aren't improving. They're worsening. Growth is nowhere in
Since 2009, Obama's $1.5 trillion fiscal stimulus went largely to corporate
favorites and America's super-rich already with too much. Less than
$100 billion targeted infrastructure spending, and much of that hasn't
Less than $50 billion went to beleaguered homeowners and other ways
to resurrect housing. At the same time, trillions were provided for
banker bailouts. Totals are unknown. Official ones top $9 trillion.
Tax cuts for the rich and bailing out banks at the expense of the economy
assure protracted hard times. Job creation has been largely moribund.
Good ones are are hard to find.
Nothing done since 2008 turned a sick economy into a healthy one. Severe
problems remain. They fester. Unemployment and poverty are at Depression
levels. Hiring plans are down, not up. Layoffs continue. Government
payrolls declined by nearly half a million.
A housing crisis continues. Wages for most workers are flat. Adjusted
for inflation, they're down. Over the past decade, they declined over
10%. In Q IV 2011, federal spending dropped 6.9%. State and local levels
They reflect major protracted economic drags. In Q I 2012, manufacturing
exports slowed. Q II continues to look weak. In an election year when
incumbents need growth to attract votes, a downward trajectory spells
trouble. Expect worse results ahead.
Mainstream economists expected US growth to stimulate EU recovery and
sustain emerging market strength. Evidence grows Europe is in deep trouble
and BRIC countries are heading for hard, not soft, landings.
Decoupling from the global economy doesn't work. What affects Europe
hits America. As they go, so does the world.
Today's downward trajectory is steepening. Months from now expect worse,
and post-election worst of all when bipartisan agreement to slash another
$4 trillion in mostly social spending over the next decade kicks in.
How long will growing millions put up with what's intolerable? How long
before they explode? Expect it when they're broke, out of luck, on their
own, and know federal, state and local help won't come.
Expect it when rent payments can't be made and families can't be fed.
That's when push comes to shove. Will it make a difference? Only the
fullness of time will tell.
Stephen Lendman lives in Chicago and can be reached at email@example.com.
His new book is titled "How Wall Street Fleeces America: Privatized
Banking, Government Collusion and Class War"
Visit his blog site at sjlendman.blogspot.com and listen to cutting-edge
discussions with distinguished guests on the Progressive Radio News
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