The IMF Unleashes it's 'Third World' Structural Adjustment Programmes On Europe. From Russia Today:
Lethal Medicine: 'Greece testing ground for EU austerity hell'
http://www.youtube.com/watch?v=BMWqnDp4hnY
http://www.youtube.com/watch?v=BMWqnDp4hnY
The Greek Prime Minister is struggling to get coalition party leaders to buy-in to harsh new international bailout terms. The country must now accept even more painful cuts if it's to get a 130 billion Euro second lifeline from international creditors.
If the deal falls through Greece is expected to default by the end of March.
Professor of constitutional law George Katroungalos says measures imposed by the EU aim at selling Greece's basic infrastructure to Germany.
RT on Twitter http://twitter.com/RT_com RT on Facebook http://www.facebook.com/RTnews
Comments
Korten dropped out of this game, thought about why it always failed, and came up with his alternative theory of development based on indigenous ownership and artisanal means of creating wealth. It is the bottom-up instead of the top-down, and it includes getting Wall St. out of the picture.
More members of the Greek cabinet resign over austerity. They and everyone else knows that these measures are extremely unpopular, and the enrichment of the trillionairs cannot be pushed through in a democracy. That is the most dangerous aspect of this crisis - a permanent postponement of democracy processes and institutions.
by The Associated Press
ATHENS, Greece February 10, 2012, 01:24 pm ET
ATHENS, Greece (AP) — Greece's prime minister is promising an end to the country's recession next year and better-than-expected budget figures in 2012 if crucial debt-relief deals are accepted.
Lucas Papademos said the euro130 billion ($170 billion) new bailout and a related debt-reduction deal with private creditors would help Greece deliver 4.5 percent primary surplus in 2012 — better than an earlier official prediction of 1.1 percent of gross domestic product.
Papademos called an emergency Cabinet meeting Friday to face down dissent with in his coalition government against new austerity measures. He warned that disorderly default would trigger "economic chaos and a social explosion."
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
ATHENS, Greece (AP) — Greece's prime minister has promised to "do everything necessary" to rescue a euro 130 billion ($170 billion) bailout deal, after six members of his cabinet walked out over harsh new austerity measures, triggering a political crisis in the near-bankrupt country.
In a televised address Friday, Prime Minister Lucas Papademos said senior members of his government would be expelled if they oppose the austerity program, due to be voted in parliament late Sunday.
Earlier Friday, a small right-wing party in Papademos' coalition said it would not back the new measures and four of its officials in the cabinet resigned.
(PBS Newshour, ITN) Greece Reels as Government OKs More Austerity Measures
by Robert Stevens
Global Research, February 12, 2012
World Socialist Web Site
Following days of talks in which Greece’s governing parties finally agreed to a massive programme of spending cuts, euro zone finance ministers on Thursday upped the ante, demanding an additional €325 million in cuts in exchange for a loan of €130 billion ($170 billion). Without the new loan from the “troika”—the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF)—Greece will default on its debts of more than €350 billion on March 20. On that date it is required to repay bonds of €14.5 billion it previously sold.
With speculation mounting of a possible forced exit from the euro, the unelected governing coalition led by Prime Minister Lucas Papademos is pledging to meet whatever requirements are demanded of it in a parliamentary vote expected to be held Sunday.
The latest cuts have deepened popular opposition. Following a one-day general strike Wednesday called by the private and public trade union federations, the GSEE and ADEDY, a 48-hour general strike began on Friday. Workers walked off the job, closing government offices, schools, courts, museums and archaeological sites. Public transport ground to a halt and in Athens’ Syntagma Square several demonstrations were held.
The Finance Ministry was occupied following an occupation of the Health Ministry the previous day. Massive numbers of riot police attacked protesters with tear gas and batons. Demonstrators were surrounded, kicked and punched.
The social democratic PASOK party, the conservative New Democracy and the fascistic Popular Orthodox Rally (LAOS) agreed a €3.3 billion ($4.3 billion) cuts programme Wednesday, but Finance Minister Evangelos Venizelos was told at a meeting of the euro zone finance ministers in Brussels that this was insufficient.
The finance ministers demanded that the Greek parliament approve an additional €325 million in cuts by Sunday. They also demanded guarantees that the austerity measures be implemented regardless of the result of upcoming elections. Asked what would happen if the parliament voted down the deal, Jean-Claude Juncker, the chair of the euro group, declared, “The answer is quite simple, it will not reject it.”
The measures already agreed include a €1.1 billion cut in health spending and the sacking of 15,000 state employees this year. A total of 150,000 public-sector jobs are to be wiped out over the next four years.
Huge wage cuts are to be imposed, with the federal minimum wage, upon which 300,000 people depend, reduced by 20 percent from €750 ($975) to €600 ($780). For workers under 25, the minimum wage will be cut by an additional 10 percent. Wages in the private sector are to be reduced by 20 percent. All pay is to be frozen until the unemployment level is reduced from its current 19.2 percent to below 10 percent, which could take decades. Workers will no longer be entitled to permanent contracts at state-owned companies and banks.
Unemployment benefits are to be slashed from €460 ($600) to €360 ($470) a month. Supplementary pensions will be cut by 15 percent. These are only the initial cuts. The agreement envisages that up to €13 billion in spending cuts will be imposed by 2015, almost double the €7 billion originally pledged.
In contrast, Greece’s banks will be “recapitalised” to the tune of €40 billion.
Such is the scale of the social counterrevolution being imposed in Greece that sections of the governing parties are attempting to disassociate themselves from the attacks being made.
On Friday, LAOS leader Georgios Karatzaferis announced that he would not vote for the deal agreed with Greece’s creditors. Seeking to divert protests in a nationalist direction, he said, “Greece can survive outside the EU but cannot survive under a German boot.”
Last week, Karatzaferis made clear his political concerns when he declared, “I am not going to contribute to a revolution that will humiliate us and that will burn Europe.”
Karatzaferis’ gesture does not translate into an attempt to block the proposed measures. His statement was followed by the resignation of all four LAOS cabinet ministers. But two of these, Transport Minister Makis Voridis and Deputy Merchant Marine Minister Adonis Georgiadis, said they would still vote for the loan agreement on Sunday.
Also resigning was Deputy Foreign Minister Mariliza Xenogiannakopoulou of PASOK.
The fear within the Greek ruling elite of a revolutionary movement of the working class is expressed most clearly with the resignation of several other MPs, including figures closely connected to the trade union bureaucracy. The unions are the key to any effort to contain rising social and political opposition and cannot be tainted with directly endorsing the measures.
On Thursday, Yiannis Koutsoukos, deputy employment minister and former leader of ADEDY, stood down, alongside the New Democracy MP Yiannis Manolis, who is responsible for the party’s trade union work.
Calling the latest strike, Ilias Iliopoulos, the general secretary of ADEDY, warned, “The painful measures that create misery for youths, unemployed and pensioners do not leave us much room… We are moving to a social uprising.”
In response to the resignations, a Greek government spokesman commented that the government would not alter a thing. He said, “Whoever does not agree with the government policy will be replaced.”
The government has a majority of 236 of the 300 seats in parliament, of which 16 are LAOS MPs. But despite the government’s pledges and the parliamentary arithmetic, there is little confidence among the global financial and political elite that Greece will not ultimately be forced to default.
The Fitch credit rating agency warned that a default was “by no means completely out of the question.”
Many commentators have concluded that Germany’s demands are so extreme and its stance so intransigent that it has already decided to push Greece out of the euro as a step toward the two-track Europe openly endorsed by French President Nicolas Sarkozy but so far officially opposed by German Chancellor Angela Merkel. “The Germans want the Greeks out. That is the clear message,” the Guardian’s Larry Elliot commented baldly.
If that is indeed the aim of Berlin and Paris, it is a potentially suicidal strategy. It is premised on a calculation that the possibility of contagion has been lessened by the vast sums made available by the ECB to prop up the European banks and guarantee the debts of Portugal, Italy, Spain and other troubled economies, and that defaults by Greece and others can be managed and leave behind a viable inner core of nations still trading in the euro.
But Jens Sondergaard, European economist at Nomura, cautioned: “You cannot surgically remove Greece from the euro zone. Threatening to do so is playing a dangerous game. The bad cocktail of bank deleveraging, low growth and fiscal austerity that worries investors who could invest in the debt of countries like Spain or Italy is still there.”
Fitch Managing Director Tony Stringer warned: “There is likely to be panic both in the Greek banking system—potential for rapid deposit flight, people withdrawing funds to transfer offshore—but then equally the spotlight will turn to other peripheral sovereigns such as Portugal, Ireland and potentially Italy and Spain again.”
Global Research Articles by Robert Stevens
Go Iceland, Argentina and soon Greece. The IMF has never had a success. Check out David Korten on this in AGENDA FOR A NEW ECONOMY.
Also see for the video, from Amy Goodman's Democracy Now!:
"Real Despair" Sweeps Through Greece as Severe Austerity Measures Demanded by E.U.-IMF Cripple Nation
AMY GOODMAN: Greece continues to face political turmoil over a sovereign debt crisis that’s embroiled the country for almost two years. On Monday, the Greek government said it would hold new elections in the face of massive demonstrations against a new austerity package that was approved Sunday in exchange for a European Union-International Monetary Fund bailout.
Under the austerity deal, Greece will fire 15,000—or one in five—public sector employees, reduce the minimum wage by 22 percent, and cut pension plans. Greek union leader Vassilis Korkidis condemned the austerity deal
VASSILIS KORKIDIS: The new austerity measures were voted yesterday from the Greek parliament, but this is only temporary. We think that the Greek economy may, for the time being, be safe. We don’t know for how long. We believe that in six months we’ll be in the same position. And the only thing that we are sure is that the Greek society is poorer, and the Greek political system is bankrupt.
AMY GOODMAN: As lawmakers voted, 100,000 Greeks protested outside the Parliament building in Athens. Some protesters engaged in rioting, looting and setting fire to dozens of stores and buildings. Over 160 people were detained. Dozens were treated for injuries.
The Greek vote paves the way for the European Union and the International Monetary Fund to hand over $72 billion in rescue loans. But following the protests and ahead of a key meeting in Brussels Wednesday, European officials suggested the bailout could be delayed until early next month, adding further uncertainty to an already volatile situation.
To discuss the latest in Greece, I’m joined by Maria Margaronis, London correspondent for The Nation magazine. She has just returned from Greece covering the economic crisis there.
Describe what is happening in Greece, Maria.
MARIA MARGARONIS: Well, Greece is in the throes of a multiple breakdown, economic breakdown. The economy has been in recession for five years. We now have massive unemployment, homelessness among not only poorer people but also middle-class people who never would have expected to find themselves out on the streets but are losing their jobs. Unemployment among young people is about 50 percent. Those who can are leaving the country to find work elsewhere. And it’s—the scenes on the street in Athens are like nothing anyone has seen, I would say, since the 1940s: people queuing for food at soup kitchens, graffiti everywhere—
AMY GOODMAN: Maria, we’re going—we’re calling you on your land line, because, though we’re speaking to you via Skype, the sound just isn’t good enough. I think we’re going to go to a break, and then we’re going to come back, so we can make sure everyone hears what you have to say. Maria Margaronis is The Nation magazine’s London correspondent. She has just come back from Athens. This weekend, 100,000 people protested the austerity plan, which means one in five public workers will be fired. Something like 15,000 people are expected to lose their jobs. We’ll be back with Maria Margaronis in a minute.
[break]
AMY GOODMAN: We return to Maria Margaronis, on the phone now, just out of Athens, Greece. Again, describe what you found there and what is at stake, Maria, in Greece.
MARIA MARGARONIS: Well, what is at stake, Greece is in an almost—I’m sorry, should I turn off the Skype?
AMY GOODMAN: Yes, please.
MARIA MARGARONIS: I’m getting like—OK. OK, there we go.
So, what’s at stake? Greece is in an extremely difficult situation. It’s been set this impossible choice by the European Union, the European Central Bank and the IMF, which is either to default on its loans by March, when it owes a massive loan payment, or to accept this desperate austerity program, which will further sink the economy, which has been in recession now for five years and is really now in a deep depression. As you said, it involves a 22 percent cut to the minimum wage. It involves laying off not 15,000, but 150,000 public sector workers by 2016, and many other changes.
And the Greek people have really had enough of this. People are exhausted and desperate. On the street in Athens, there’s a sense of everything breaking down. A lot of stores have closed. The ones that are open all have 50 percent sales on. You see people looking through garbage for something to eat. Homelessness has increased horrendously, so that where in the past you would only see recent immigrants queuing at homeless shelters, now many Greeks who were formerly middle-class people with good jobs and laptops and cars and so on—you know, the full middle-class lifestyle—are finding themselves out on the streets.
AMY GOODMAN: What about healthcare right now, how people are getting access to healthcare, Maria?
MARIA MARGARONIS: Healthcare is also in a very difficult situation, because when you lose your job in Greece, you also lose your healthcare, so that, for example, last week I went to see a clinic that’s been set up by the Athens Doctors Association to treat people who have lost their healthcare in that way and which is being staffed by unemployed doctors. Some doctors who are working, they’re volunteering, but also young doctors who have graduated but, because there’s a complete freeze on hiring in the public sector, can’t get a job in the public health system. I spoke to one young pediatrician who has a graduate degree in child development from Denver, Colorado, who’s working there for free and who told me that a number of families are now not vaccinating their children because they can’t afford to pay for the vaccines. So, we’re on the verge of a health disaster in Greece, as well.
AMY GOODMAN: Talk about the position of the Greek government, the power of the protesters, and whether there’s any sense that this can be turned around.
MARIA MARGARONIS: OK. The Greek government voted—it’s a coalition government between—it used to be the three parties: the two main parties—the center-right and the center-left—with a far-right party called LAOS. Now, LAOS pulled out before the last austerity vote, because its popularity was dropping as a result of supporting the austerity measures. And we have a caretaker prime minister, Lucas Papademos, who is a former banker from the European Central Bank, who is an appointed prime minister. The vote on—during the vote on Sunday, a third of MPs voted against the new measures—that is, for default, effectively—which is quite an extraordinary number. And as a result, a number of MPs were expelled from the two main parties. So there’s a rejigging of the political system going on now. There’s general rage in Greece with the old politicians for having brought the country to this point. And there’s a real lack of new blood in Parliament, people who people trust to be able to turn things around.
The protests are also a complex scene, because what you see on the street in Athens, both in October and now in—on Sunday, is a complete cross-section of people from all walks of life, all ages—pensioners, working people, unemployed people, students, everybody. There’s also the large group now of hooded black-clad protesters who also are a complex scene. There’s a quite a strong anarchist movement in Greece. Some of them belong to the more violent tendencies of that. There’s also some far-right involvement, possibly. And a lot of people are certain that there are some of these protesters who actually are working with the police to cause trouble. So, a huge demonstration of, I would say, well over 100,000 people in Athens on Sunday.
The first thing that happened is that the police set to with tear gas to clear people from Syntagma Square, which is in front of Parliament, because that’s where all the TV cameras of the foreign stations are lined up on the top floors of the grand hotels. And the policy in the last demonstrations has been to get people out of the square, so that, you know, the demonstration isn’t seen. And then unbelievable street battles began between the police, with tear gas and truncheons and boots, and the hooded protesters, throwing firebombs and Molotov cocktails and marble shards. And 45 buildings in Athens were set alight. It’s a miracle that nobody was killed. And Athens now looks like a devastated war zone.
There’s no—I spoke to a friend who was at those protests, and she described a feeling of real despair, that there’s no vision, there’s no sense of a way out for Greece, apart from default, which is also an extremely painful option, unless the E.U. and the ECB and the IMF change their policy, realize that austerity isn’t working, is never going to work, and that the plan that they’ve now set in motion is only going to lead Greece to default further on down the line.
AMY GOODMAN: Maria Margaronis, how are people organizing?
MARIA MARGARONIS: Well, the interesting thing that’s happening is, a lot of very small local groups, some of whom began last summer in Syntagma Square, where there was the birth of the popular democracy camp, which has now moved into the neighborhoods—so you see people organizing, sometimes through their local councils, to resist the tax that’s been placed—the property tax that’s charged through people’s electricity bill. And the penalty for nonpayment of the tax is that the electricity gets cut off. Now, the government is beginning to retreat on this, partly because a number of boroughs have organized their citizens to just not pay it.
And we’re also seeing a great outpouring of solidarity. I was at a homeless shelter in Athens last week and talking to people there. And while I was there, several people arrived with quilts and blankets. One of the things that’s happening is that you can’t tell anymore who are the clients, if you like, of these shelters and who are the volunteers. I went up to one young woman, and I said, "Hello. Are you a volunteer?" She said, "Yes, I’m a volunteer. I’m also homeless and unemployed." And she had been sleeping on a park bench in Piraeus until she got there and is now both at the shelter and also helping at the shelter.
AMY GOODMAN: Is the fall—
MARIA MARGARONIS: So that’s the heartening thing, is people are really coming together and pulling together.
AMY GOODMAN: Is the fall of the Greek government imminent, do you think?
MARIA MARGARONIS: I don’t think so. They have now scheduled elections for April or possibly early May. I don’t think this government is going to fall before then, unless—and this is—you know, there’s still a real question as to whether the loan will be forthcoming, despite the vote in Parliament. There are still a number of steps that have to be gone through. The party leaders all have to sign up to implementing the measures before the election, which makes the election a bit of a travesty, since they won’t have any choice about what policy to pursue. And then the Bundestag has to approve it, the German Bundestag, and the troika of the E.U., the ECB and the IMF also have to approve it. So, there’s still a real possibility that that loan won’t come through, in which case we have disorderly default in March. And then, at that point, the government may fall. But if that doesn’t happen, I think we will go to elections. But those elections will be very turbulent and very unpredictable, I would say.
AMY GOODMAN: And the effect on Europe? Moody’s Service cut the debt ratings of six European nations on Monday, including Italy, Spain and Portugal—the outlooks.
MARIA MARGARONIS: Right. Well, I think what the troika are trying to do is put a firewall around Greece and somehow cauterize the problem. But I don’t think this is going to work, because I think it’s very clear now that this is a pan-European problem and its root causes are the financial crisis that began in 2008 and also the structural problems in the eurozone, where there was no—there was no policy put in place to deal with profound inequalities between the northern and the southern countries. So, unless those things are resolved, unless some kind of Eurobond system is put in place, unless some sort of investment program for the southern countries and also Ireland is put in place, the crisis in Europe will continue.
AMY GOODMAN: I want to thank you for being with us, Maria Margaronis, speaking to us from London, just returned from Greece. She’s writing pieces for The Nation magazine and The Guardian.
This is Democracy Now! When we come back, a Valentine’s treat. Stay with us.
It will be OWS, Greek style. They will be a lot tougher on the streets, and they have a lot more experience dealing with crashed economies. The banksters will not win. If that wave hits our shores, it could be a good thing for our resolve to do what needs to be done. The GOPimps only offer a domestic IMF austerity plan here. It never works.
Adrian Salbuchi on Greece and Lybia:
'Who runs Greece? Bankers who pit poor vs poor'
Adrian Salbuchi on the conspiracy against sovereign government worldwide.
Assasination of Cnl Muamar Ghaddafi - Interview on RT, 21 Oct 2011
Adrian Salbuchi on the murder of Muammar Gahdaffi
RT Interview on Current Chaos in Libya - 22 Jan 2012
Keiser Report: German Empire vs Greek Carthage (E250)
http://www.youtube.com/watch?v=f12ok9YqluU
In this episode, Max Keiser and co-host, Stacy Herbert, discuss a 'Grexit' after the Carthaginian peace deal and also safety net critics and collateralized hemlock futures. In the second half of the show, Max talks to Chris Whalen of Tangent Capital about Greek deals, gold and raising interest rates to save the economy. KR on FB: http://www.facebook.com/KeiserReport
I wonder how many of these fools are trying to do things according to the U.N. Agenda 21, a twenty year old out of date CF document?
Greg Palast: Greece's Planned Implosion IMF
http://www.youtube.com/watch?v=pjTj9c3LYqk
Greg Palast on Alex Jones' show. On the firesale of Greece, and the direct assault on democracy that centralisation in the Euro zone represents.
Paul Mason in Greece and Albaquerque - From Democracy Now!
As Greece Erupts, BBC’s Paul Mason on "The New Global Revolutions" over Austerity, Inequality
Greece is bracing for protests after eurozone finance ministers concluded a deal that will provide a $170 billion bailout in return for another round of deep austerity cuts. The bailout is opposed by several unions and left-wing groups in Greece over new cuts and layoffs imposed on public sector workers. We’re joined by Paul Mason, economics editor at BBC Newsnight and author of the new book, "Why It’s Kicking Off Everywhere: The New Global Revolutions." He has just returned from Greece. "What makes the headlines are, of course, the riots," Mason says. "What doesn’t make so many headlines is what is happening to real people... We are living in a time where the world has, in the last couple of years, erupted in a way that many people thought they would never see again since the 1960s... The underpinnings of this new global unrest are that...people are sick of seeing the rich get richer during a crisis." [includes rush transcript]
Filed under Greece, Financial Meltdown, Occupy Wall Street
LISTEN
WATCH
Guest: Paul Mason, economics editor of BBC Newsnight. He’s just returned from Greece. His latest book is called Why It’s Kicking Off Everywhere: The New Global Revolutions.
Related stories
* Exclusive: Ex-Greek PM George Papandreou on Greece’s Fiscal Crisis and Why He Backs Occupy Movement
* "Real Despair" Sweeps Through Greece as Severe Austerity Measures Demanded by E.U.-IMF Cripple Nation
* Global Day of Rage: Hundreds of Thousands March Against Inequity, Big Banks, as Occupy Movement Grows
* From Madrid to New York City: Spanish Protester Joins Occupy Wall Street Protest
* Inside Greece’s General Strike: Video Report from Athens as Thousands Protest Sweeping Austerity Cuts
Rush Transcript
This transcript is available free of charge. However, donations help us provide closed captioning for the deaf and hard of hearing on our TV broadcast. Thank you for your generous contribution.
Donate
Related Links
* "Why It’s Kicking Off Everywhere: The New Global Revolutions." By Paul Mason (Verso Books, 2012)
* See Paul Mason's Reports on BBC Newsnight
NERMEEN SHAIKH: We turn now to Greece, which is bracing for protests after eurozone finance ministers concluded a deal Tuesday that will provide Greece with $170 billion in funding it needs to avoid default next month. Greek Finance Minister Evangelos Venizelos hailed the deal.
EVANGELOS VENIZELOS: [translated] Today’s decisions in Brussels are the result of a very complicated and painful negotiation, a negotiation I don’t want to compare to other historical negotiations. But regards to the political consequences, economic impact, and economic and social consequences, it is perhaps the most important of the postwar era.
NERMEEN SHAIKH: The $170 billion bailout for Greece will force Athens to commit to making another round of deep austerity cuts. As part of the deal, Greek workers are expected to suffer further wage cuts larger than the 15 percent already planned for the next three years. Under the agreement, Greece’s private creditors have agreed to take deeper losses on their Greek debts.
The bailout is being opposed by several unions and left-wing groups in Greece. Civil servants have been hard hit by the austerity measures which began in 2010. Wages and pensions have been reduced, benefits cut, and 10,000 people laid off in 2011. Under the new package, another 15,000 civil servants will be laid off this year. Additional pension cuts will affect both the private and public sector. The vice president of the Confederation of Civil Servants has been particularly critical of the deal.
ILIAS VRETTAKOS: [translated] The new loan agreement and, more significantly, the new measures that accompany it are catastrophic for Greek society and the prospects of the country. Not only will it drive people in the society to poverty, but will increase the recession and the state’s problems. In that way, there will be no prospects. We are fighting for different policies, a different policy mix that will take the country to growth.
AMY GOODMAN: For more on the Greek bailout and how people there will be affected by the austerity measures, as well as the financial crisis here in the United States, we’re joined by Paul Mason, economics editor at BBC Newsnight. He just returned from Greece. His latest book is Why It’s Kicking Off Everywhere: The New Global Revolutions.
Welcome to Democracy Now!
PAUL MASON: Hi, Amy.
AMY GOODMAN: You’re just back from Greece. It’s great to have you back here in our studios. Tell us what is happening here and the significance of this latest bailout and, in fact, who’s being bailed out.
PAUL MASON: Well, what makes the headlines are, of course, the riots. And the riots continue. I’ve been covering these events for the last two years. They get more and more intense.
What doesn’t make so many headlines is what is happening to real people. I was able to visit a clinic in the Piraeus port. It had been set up to deal with people who fall through the social security net, which is mainly undocumented migrants. So it was volunteer doctors and free healthcare and free food. That’s about as basic as it gets. In the last six months, they’ve been swamped by Greek citizens, because they—Greek citizens are falling through the safety net in a Europe that is supposed to be—well, what Americans think of it as quasi-socialist. It has a welfare state. And yet, we’re seeing those starving people and homeless people, huge numbers of drug addicts and homeless people on the streets. It looks and begins to look really almost borderline developing world, parts of Greece now.
NERMEEN SHAIKH: Can you explain, though, Paul Mason, why is it that Greeks themselves are falling through the social safety net? I mean, healthcare, why is it that they no longer have access to healthcare?
PAUL MASON: Well, they have a system whereby you pay a little bit into the healthcare, and you pay a bit for your medicines, and you pay a little bit for your treatment. But what’s happened is, of course, the solutions imposed on Greece by the IMF and the European Union have involved raising taxes very dramatically. So they had an austerity tax that they collected through the electricity bill. Somebody showed me their electricity bill: 350 euros per month. Per month. So, what is that in dollars? Four hundred? But most of that is tax. And if you don’t pay it, your electricity stops. Now, this person earned 500 euros per month. So, the money you have to pay for your healthcare, it’s just no—well, it’s food first, then healthcare, and so people just can’t afford it.
AMY GOODMAN: Some analysts see a concerted campaign by eurozone countries to isolate Greece as much as possible in preparation for an eventual default and exit from the euro. But Greek Finance Minister Venizelos yesterday hailed the bailout package and said it demonstrates Greece will remain part of the eurozone regardless of what happens.
EVANGELOS VENIZELOS: [translated] We have the clear, official and explicit commitment from our partners that they will support us, even after the program—in other words, after January 1st, 2015, until Greece believes that it is possible to return to the markets. Thus, this is a long-term support, in other words, a clear political decision that Greece is and will continue to be a member of the eurozone, whatever happens.
AMY GOODMAN: Your response, Paul Mason?
PAUL MASON: Well, look, you would like to believe that they could win, they could beat all odds and stay in the euro and avoid default. But up to now, every one of the failed bailout packages was signed off by the IMF and the E.U., and they all involved meeting, you know, the Greek problem with austerity. So you cut spending, you raise taxes, you impoverish people. Leave aside the minimum wage, wages in general are going to have to fall 15 to 20 percent to meet—in the private sector. This is no longer just a public sector thing. Now, I think, and most analysts think, that they are on a route to default and that the last week’s—or this week’s deal has basically been about ringfencing the rest of the eurozone for if and when that happens. Having been there, I think it’s when.
And then there’s, on top of that, the whole question of political instability. You mentioned left-wing groups in your introduction. I think there’s a bit—in the mainstream media, there’s a bit of a "does not compute" going on. The combined vote, for the communists, Trotskyists and ecologists—so these are left-wing parties with hammer and sickle on their flags—is 43 percent right now in the polls. That dwarfs the equivalent of the GOP and the Democrats. And I think there’s an element of "We don’t want to see that." But that is what you get when people are told, you know, "Your life is—your future is over." There’s no way, I think, from any early election, that a stable government can emerge that can do this thing they have agreed to do.
NERMEEN SHAIKH: So what do you think the effect of that will be—I mean, this change in the political landscape vis-à-vis a couple of things? First of all—well, I mean, immediately, the Greek parliament has to apparently approve the bailout package.
PAUL MASON: Yeah.
NERMEEN SHAIKH: What’s the likelihood that that will happen? And then, in the future, because many, of course, say, including yourself, that this is by far—far from a solution to the problem, will the political landscape change in such a way? I mean, will left-wing parties actually come to power in such a way that whatever subsequent way is found to deal with this crisis, these negotiations will not continue in the same vein?
PAUL MASON: On the question of the parliament, I think, certainly, they’ll pass the measures. What’s happening, though, is the two parties—because these two parties are there from the last election three years ago, so they have a majority right now, even though their popularity is slumping. I think, as they pass them, more and more MPs are chipped off. And these two parties in power splitting is not great, if they then stand for elections, and their own members get to ask them, "Well, what are you going to do about this?" During an election, pressure goes on the mainstream parties as well as the ones at the extreme. And, of course, the right as well as the left are growing as a result of this crisis. And remember, this is a country that had a civil war between the right and left after World War II. So, I think that that’s that on that situation. I think it’s—they’re just not going to be able to make it work. The instability is going to bring down the plan. Or it’s 90 percent certain, in my mind, that the instability in Greece will just—you can’t push through this level of austerity with a weak government.
AMY GOODMAN: I want to go to the people of Greece, where you were, with your report from inside Greece. This is a clip from one of those recent reports, Paul Mason in Greece for Newsnight of BBC.
PAUL MASON: As the crisis deepens, the weakest and the poorest suffer, nowhere more so than those who are not supposed to be in Greece at all. This is Patras, the ferry port that links Greece to Western Europe. Right on the seafront, hundreds of illegal migrants live in this shattered factory. I am taken in by an activist from a local NGO. The migrants got here because government cutbacks have made the Greek border highly porous.
How easy is it to get into Greece?
WASSIM: How easy? It’s too easy.
PAUL MASON: It’s too easy.
WASSIM: Too easy.
PAUL MASON: Why?
WASSIM: Why? Because, you know, the borders are not closed; the borders are open.
PAUL MASON: They survive on charity. They receive no assistance at all from the Greek state. But as the economy has collapsed, so too has sympathy for the migrants.
WASSIM: You know, this is no Europe. Believe me. This no Europe.
PAUL MASON: It doesn’t feel like Europe.
WASSIM: No, no.
PAUL MASON: Why?
WASSIM: No, I used to live London. This no Europe. Believe me, this no look like Europe. The police can hit you. The people can swear you, for no reason. The people hit us like animal. What’s the life there?
PAUL MASON: This man, a graduate from Darfur, is headed for London. He can’t wait to see the back of Greece.
How long have you been in this factory place?
ABDUL AZEEM: In the factory here, I have six months, and three months in the train there.
PAUL MASON: Yeah, you lived in the train.
ABDUL AZEEM: Yeah, before we came here, because the police forced us to leave the train. Then we came here in the abandoned factory. I have six months here.
PAUL MASON: Do you think the economic crisis has made the situation for migrants worse?
ABDUL AZEEM: Yes.
PAUL MASON: Why? Tell me.
ABDUL AZEEM: We are going to the market, so I think that—
PAUL MASON: They give you some food at the end.
ABDUL AZEEM: Some food, some—also there’s some money, you know.
PAUL MASON: And less. There’s less now.
ABDUL AZEEM: Yeah. Now the situation is changing, because of the economic crisis.
PAUL MASON: They drink from a pipe in the ground. Some have died from fires lit to keep warm. It’s shocking to see this in a continent that once prided itself on a social model. But the crisis has turned so much of Greece upside-down.
For Greek youth, the situation too looks dire. Fifty percent of those under 24 are unemployed. And among them, the extremes of politics are growing.
In a bar run by one of the far-left groups, I meet the people who’ve got together to feed and clothe the migrants. None is actually a member of a left party; all intend to vote for one. And all have been participants in disorderly protests.
KATIA ZAGORITOU: There’s no future for us. Generally, there’s no future. We can’t dream. We can’t live. For us, this is a disaster.
PAUL MASON: But I’ve been hearing young Greek people say that to me for three years now. What do you do about it?
KATIA ZAGORITOU: We’re fighting. We’re trying to convince other people and to make them understand that all this crisis is a result of the capitalist system.
PAUL MASON: Do you seriously think there could be a left-wing government in Greece?
ANTONIS DIAMANTOPOULOS: I don’t think it’s going to be a nonviolent government from the left. It’s going to be a civil war.
PAUL MASON: The carpenter, the teacher, the engineer, the social worker—these are professional people. But the ideas they’re espousing have become commonplace. And what it’s about is work. There isn’t any.
EIRINI PAPADOPOULOU: If there’s no work, there is a revolution against the government.
AMY GOODMAN: A report from inside Greece by BBC Newsnight editor Paul Mason, who’s in the studio with us now, has just written the book, Why It’s Kicking Off Everywhere: The New Global Revolutions. Make this broader now, from Greece to Europe and what this also means to the United States.
PAUL MASON: Well, it’s Greece, it’s Europe, it’s North Africa. We are—you know, we are living in a time where the world has, in the last couple of years, erupted in a way that many people thought they would never see again since the 1960s. And I think the Greek events—I mean, Greece isn’t all riots. It’s Occupy camps. There you had one of the first ones, called the indignados camp, in their main square. In Europe, across southern Europe—you know, I think only me and Glenn Beck have been talking about this, in a way. I have seen the crossover, the potential crossover, from North Africa to southern Europe to the United States, and the similarities between what is happening. I take a more—a sort of more sort of standing above it standpoint than Glenn does.
But it’s—there are links. There are common factors. And the most important one, everywhere, is what you saw in that bar, what I call the graduate without a future. You find them on Tahrir Square. You find them in Syntagma Square, Greece. You’ll find them outside—you know, in Zuccotti Park, New York. Once the economic crisis switched off that narrative that things are going to get better, you’ll have a better life than your parents, I think people in the Middle East lost their fear, people in Europe and America have lost their apathy. And there’s a lot to be sort of angry about once you look at real life. In my book, I’ve—one of the chapters in it is where I drive from Oklahoma to L.A., following the route that Steinbeck’s Joad family took.
AMY GOODMAN: Let’s go. Let’s go to that trip. Tell us. Lay the context for us. We have a clip.
PAUL MASON: We’re in a economic crisis. There was a drought in Oklahoma last summer. I thought, well, let’s just drive along 66, or parallel to 66, and see what it’s like now. It’s stunning, what you find. I think much of the mainstream media misses this. One of the most amazing things was to find a homeless encampment in Albuquerque, which, of course, was set up—again, there’s always this parallel—for people who maybe had drug and alcohol problems. But now, what do the people running it say? The people coming in are the American middle class, people who have been running a branch of McDonald’s, holding down a decent managerial job, two weeks later, homeless, jobless and sleeping on the floor with 80-odd people they don’t know.
AMY GOODMAN: Let’s go to a clip of Paul Mason’s report as he traveled across the United States, retracing the steps of John Steinbeck’s Joad family from The Grapes of Wrath. Here, you’re reporting from Joy Junction, that homeless shelter in Albuquerque, New Mexico.
PAUL MASON: Normally, the families who come here are coping with drink, drugs, domestic violence. But now there’s a new kind of customer: the American middle class.
LARRY ANTISTA: I’m Larry Antista. This is my daughter Michelle. We’re here because of the economic times. My spouse took off on us, and that cut our income in half, and we lost our place. And here we are.
PAUL MASON: They’ve been living like this for three months. He’s a truck driver by trade, but he can’t find work. So he works for his welfare payments: $300 a month. Michelle, aged 14, is still at school.
Do the people at school know where you sleep every night?
MICHELLE ANTISTA: No, not really.
PAUL MASON: You don’t tell them?
MICHELLE ANTISTA: No.
PAUL MASON: Why?
MICHELLE ANTISTA: They didn’t ask, so I figure, don’t tell them.
PAUL MASON: So you don’t show up as homeless even in the school statistics?
LARRY ANTISTA: No.
MICHELLE ANTISTA: No.
PAUL MASON: Do the sort of rich of America, really—and the media, really understand that every night thousands of people are bedding down like this?
LARRY ANTISTA: No.
MICHELLE ANTISTA: No.
PAUL MASON: What would you say to them, if you could speak to them right now?
MICHELLE ANTISTA: If they could live just like one day of, like, our lives, they’d see how hard it is and, like, how good they have it. Because a lot of them complain about what they got, which is really dumb.
AMY GOODMAN: Voices of Albuquerque, New Mexico, a homeless shelter, captured by a British observer of the United States, Paul Mason, economics editor of BBC Newsnight, as he traveled across the United States and has just returned from Greece. His new book is called Why It’s Kicking Off Everywhere: The New Global Revolutions.
Paul, I wanted to read to you the Financial Times reporting, that U.S. taxpayers will subsidize part of the $26 billion settlement owed by five leading banks to resolve claims over faulty foreclosures and mortgage practices. A clause in the provisional agreement, which has not been made public, allows the banks to count future loan modifications made under a previous foreclosure-prevention initiative toward their restructuring obligations for the new settlement. This is quite something. So this is a big deal that was worked out with all the U.S. attorneys-general in the United States and the banks, supposedly penalizing them, a $25-$26 billion settlement, but in fact a bailout for them. Are we seeing all of this, these bailouts from Greece to the United States—are they again bailouts for the entities that are "too big to fail"?
PAUL MASON: It’s hard not to see the Greek bailout as a way of protecting the European banking system. It’s hard not to read that report as, yet again, a decision to bail out banks and bankrupt countries, because don’t forget this: the financial markets at the moment are focused on Greece and Europe. At the moment that is solved, they will focus on your country, because you are $14 trillion in debt, and there are—there is doubt about whether your institutions can one day deliver the austerity that those financial markets will demand to make that debt stable.
So I think, look, that the underpinnings of this new global unrest are that from Cairo to Greece to New York to Albuquerque, people are sick of seeing the rich get richer during a crisis. That’s what they’re sick of. And until we start hearing solutions, both at the grassroots level and at the top level in politics, that go beyond that, that explain to us what the new story is about capitalism, these unrests, these revolutions, the unrest, the protests, I think, will go on, because it is about a generation that doesn’t know what the story is anymore. What is the story about how my life is going to get better? Once you do that, and then you add in networking and technology and the ability to express oneself and move around the mainstream media, you’re in for years, I think, of discontent.
NERMEEN SHAIKH: Before we conclude, Paul Mason, I wanted to ask you about a report, a confidential report that was leaked by the Financial Times, which showed that Greece’s debt projections, even under the most optimistic scenario, the austerity measures now being imposed on Athens, risk a recession that’s even deeper—
PAUL MASON: Yeah.
NERMEEN SHAIKH: —than what Greece is in now.
PAUL MASON: They do. And nobody believes the most optimistic scenario. I mean, look, they’re in what economists call a death spiral. So, the economy is shrinking, and the debt is getting bigger. Of course, Greece has had a big debt write-off, and that is tangible. That’s real and material, and it will be welcome. But as they try to implement the austerity, I think most observers think they can’t do it. And if they did, it will produce a deep recession that will make the lives of the people I saw on those streets very angry, very dislocated from politics, even more harsh, and they will get even angrier, if not despairing. Some are already beyond the anger stage. Some are in a state of just individual despair. Greece is an extreme, an outlier, but it does—of course, it does show what happens if you let your debt get out of control. It also shows what happens if you think—if you only see austerity as the solution to indebtedness.
AMY GOODMAN: We want to thank you very much for being with us, Paul Mason, economics editor of BBC Newsnight, just returned from Greece. His latest book is Why It’s Kicking Off Everywhere: The New Global Revolutions. This is Democracy Now! When we come back, a debate on intervention in Syria. Stay with us.
It is time for the IMF to eat its shorts. Where has their austerity craplan ever worked for the people? Of course, nowhere. Greeks have known tyranny and why to fight it. We need to learn from them.
It is time for the IMF to eat its shorts. Where has their austerity craplan ever worked for the people? Of course, nowhere. Greeks have known tyranny and why to fight it. We need to learn from them.
DRC,
The problem with the IMF is that it's on a mission, and has a clear agenda.
Their agenda is to plow the fields of the world economy to make them ready for centralized ownership.
That is why their austerity always devastates the local economy, eliminates local businesses and potential middle classes, and always leads to the transfer of tens to hundreds of billions of dollars (even in 'poor countries') in mineral deposits and utilities companies (water, gas & electricity, food, road construction) to transnational corporations.
That would be the IMF's definition of success. So in a way they are always successful.
And that is also why there is no way I am not buying that there is no collusion between the IMF/WB, privatisation banks (NM Rothschild, check them out), and the extractive corporations who directly take ownership (Anglo-American De Beers, Rio Tinto, Glencore, Chevron, Royal Dutch Shell, Total, etc.).
My theory is that there is collusion, because there is shared ownership of these banks and businesses. At an absolute minimum, we are seeing the ongoing concentration of ownership, like only 6 banks controlling 60% of US GDP. At some point you have to ask who is the frontrunner, which of them finally takes over all GDP, in the US and in the world.
I think that is why we are not allowed to know who owns (who are the shareholders of) the Federal Reserve, IMF, World Bank, and all the Central Banks.
However, the prime suspects are the Robber Baron Era survivors, and teh family that helped set many of them up in business.
It is all about the hyperconcentration of wealth.
Yup, and my point is only that we make this clear rather than allowing any claims that these policies are necesary to save any economy or address what has "gone wrong." It is a lot like "fracking" national economies.
Anyone who wants to get a clear idea of what the IMF does should rent or buy "Life and Debt". I rented it about 10 years back when we still had a mom and pop video store around here. Unfortunately the author doesn't seem to be interested in making it a streaming rental on any of the VOD services like Netflix. She's the daughter of the former President of Jamaica and documented what happened when the IMF took over.
http://www.lifeanddebt.org/
Anyone who wants to get a clear idea of what the IMF does should rent or buy "Life and Debt". I rented it about 10 years back when we still had a mom and pop video store around here. Unfortunately the author doesn't seem to be interested in making it a streaming rental on any of the VOD services like Netflix. She's the daughter of the former President of Jamaica and documented what happened when the IMF took over.
http://www.lifeanddebt.org/
Hi CAPTBEBOPS,
Life And Debt is back up on youtube again.
You can see the entire documentary for free, as long as it lasts.
I agree with Roger Casement (#23). The IMF/WB thugs turn the country being 'helped' into an export engine ... very little good is done for the locals ... why ? Because someone has to pay the loans back, and if the locals had the cash to pay back the loans, they would not need the loans in the first place. Only the (sometimes corrupt) government and the transnationals gain, everyone else feels the pain.
David Korten turned his life around as he thought about what these sickos did. He now works the other way in development theory and crushes this bs with inside knowledge. It only works to serve the plantation/sweatshop owning elite, and never serves the people on the ground. To call it vulture capitalism is to insult honest carrion eaters. To call it vampire capitalism smears the undead.
You know, the ultimate colonial tax is not a tax on your productivity, or even your property (although that's what it looks like), it is a tax on your very existence. The Romans called it the Hut Tax, or Pole Tax (most houses were held up by a central pole at the time). This is a tax you have to pay no matter what your income is, just for existing. You have a house, you must pay the tax. Margaret Thatcher tried to impose it in the UK in the 1980s, and it almost brought down her government. I wonder how long it will take before 'Brussels' imposes a Hut Tax.
From 'Tyler Durden' at ZeroHedge.com
The Colonization Begins: Germany May Send 160 Tax Collectors To Greece
Tyler Durden's picture
Submitted by Tyler Durden on 02/25/2012 12:52 -0500
Since the European colonial state of southern Bavaria Sachs (formerly known as the insolvent Hellenic Republic) no longer even pretends to be anything less than a pass-thru funding colony of its creditors, said creditors (European banks and various insurance companies) are about to send out the first group of colonial scouts in the form of German tax collectors.
Also, since as reported previously, Greece will literally have to collect taxes to fund the Second "bailout package", which is merely a front for on ongoing Greek bailout of European banks (recall that it is Greece who is partially funding the bailout Escrow Account), said tax collectors will assist their Greek counterparts (who will rather likely miss their quote of becoming 200% more efficient in 2012) in collecting money from Greek citizens to pay off German banks. If in the process a few (or all) bars of gold end up missing, so be it.
From Athens News:
The magazine cites German deputy finance minister Hans Bernhard Beus, who explains that a key factor is the knowledge of a foreign language - some of them speak Greek - while the return to active duty of retired tax collectors should not be ruled out.
Many come from the state of North Rhine-Westphalia, whose finance minister, Norbert Walter-Borjans, compares Greece's with 90s East Germany, noting that even the East Germans at the time were suspicious towards the West. "In Greece suspicion will be greater, in part because of the inappropriate language used by some in Germany," he said.
The article also refers to a confidential report from the European Commission, according to which the mechanism of tax collection in Greece is especially problematic.
What "problematic"? If it is not clear by now that the Greeks will happily do nothing to change their predicament (and in fact have exhibited a soaring appreciation for their new stepmother-tongue), this will be literally easier than stealing rehypothecated candy from an insolvent baby.
Ironically, the popular German response in the form of comments at German daily Spiegel is widely adverse to this latest now blatantly open attempt at colonization by a few German "leaders", who just like in every other insolvent developed country, operate solely at the behest of their banker funders.
We fear that such incursions into national sovereignty will only accelerate... until they are finally halted, very violently, and very tragically.
The truth behind the Greek Economic Crisis
http://www.youtube.com/watch?vv=yQpSq8dkzfg
John Perkins (Diary Of An Economic Hitman), on how the World Bank, IMF (and now Goldman Sachs) work and collude to appropriate the world's resources to themselves (their shareholders).
And we work many ways. But per haps the most common is that we will identify a country with resources that our corporations covet. Like oil, and then arrange a huge loan to that country from the world bank or one of it's sister organisation. But the money never goes to that country. Instead, it goes to our corporations to build infrastructure in that country - powerplants, industrial parts, ports, things that benefit only a few rich people in that country, in addition to our corporations, but really don't help the majority of those people at all. However, those people, the whole country, is left holding a huge debt. It's such a big debt that they can't repay it.
And that's part of the plan, that they can't repay it. And so at some point we economic hitman go back to them and say - you've lost a lot of money, you can't repay it, so sell us your oil real cheap to our oil companies. Allow us to build a military base in your country. Send troops in support of ours to some place in the world like Iraq. Or vote with us on the next UN vote. To have their electric utility company privatised and their water and sewage system privatised and then sold to US corporations or other multinational corporations.
So there is a whole mushrooming thing and it's so typical of the way the IMF and the World Bank work.
You put a country in debt, it's such a big debt that they can't pay it, and then you offer to refinance that debt, and pay them more interest, and you demand this 'quid pro quo', which you call a 'conditionality', or 'good governance', basically that they have to sell off their resources, including many of their social services, their utility companies, their school systems sometimes, their penal systems, their insurance systems.
So it's a double, triple, quadruple whammy.
And is anyone in doubt why the World Bank and IMF have never developed an economy, ever?
The purpose of austerity is not national development, it is the transfer of wealth.
Perkins tells the truth.
While too many people just stand by and say "ho hum."
Which is why we need to lift them out of depression and their shock and awe about power as it speaks to truth. I am always shocked about how few know of Perkins or his book. I forget how much people want not to know and are afraid of turning into bitter and angry nasties instead of finding it liberating and soulful. Remember, we bring good news against a bad place to be. We have to communicate that and not just how bad the bad stuff is. Play that funky music, 'whiteboy.'
Austerity is failing/succeeding (if you're a banker) in Greece. This entire crisis is derived from policy. Stop the bailouts, and switch policy to Demand Side Economics. That is all that is needed to prevent this coming Great Depression.
Greek manufacturing slump deepens in Feb: PMI
ATHENS | Thu Mar 1, 2012 4:05am EST
ATHENS (Reuters) - Greek manufacturing shrank at its fastest rate in at least thirteen years in February as production and new orders declined at record rates, driving the sector deeper into recession and forcing firms to shed more jobs, a survey showed on Thursday.
Greece will apply additional fiscal austerity to shore up its finances as part of a new rescue package it agreed with its euro zone partners and the IMF to avert a chaotic default and emerge from a severe debt crisis.
The Markit Manufacturing Purchasing Managers' Index (PMI) for Greece fell to a survey low of 37.7 points in February from 41.0 in January, staying below the 50 mark that divides growth in activity from contraction for each of the past 30 months.
Production and new order volumes fell at the sharpest pace in the near 13 year history of the survey as austerity sapped demand. New export orders fell for a sixth straight month and at the steepest rate since May 2010.
Greece's 215 billion euro economy shrank by an estimated 6.8 percent in 2011, its fourth straight year of recession. It is seen contracting this year as well.
"The latest survey provided another stark reminder of the difficulties the Greek economy is facing. Problems of accessing credit, combined with austerity, are undermining activity and demand with little evidence of this situation improving anytime soon," Markit senior economist Paul Smith said.
Greek firms struggled to access working capital and meet vendor demands for cash payments to deliver inputs. The fall in production led to more job losses.
"While companies are trying to maintain employment via reduced working days and hours, the inevitable impact of rapid declines in output and sales are further cuts to payroll numbers, which fell at a marked and accelerated pace," Smith said.
Greece's unemployment rate hit 20.9 percent in November, the latest available data, highlighting the pain of higher taxes and cuts in public sector pay and pensions which suppress economic activity.
Manufacturers adjusted to competition and weak demand with discounts, meaning their margins remained pressured as output prices fell at the sharpest rate in 33 months.
Deteriorating conditions led firms to lower their purchasing activity and reduce inventories to cut costs. Higher prices paid for fuel, plastics and steel led to a rise in average purchase costs in February.
- Detailed PMI data is only available under license from Markit and customers need to apply to Markit for a license. To subscribe to the full data, click on the link below: here subscribe to the full data, click on the link below: here s
(Reporting by George Georgiopoulos; Editing by Toby Chopra)
By the way, notice how the writer equates 'higher taxes' (on whom - rich or poor) and reduction in social services as equally culpable in reducing economic activity. Or maybe the editor just threw that in? Because other than that misstep, the article makes sense.
The problem is obvious, and so is the solution - higher wages, higher pensions, earlier retirement ages, etc.
But most importantly, the toxic assets and fake national debt run up by IMF/World Bank/Goldman Sachs employees within national governments, must be retired.
I just want to throw out there that, as far as metrics go, GDP leaves a hell of a lot to be desired. So much so that I fail to see how it can be part of any serious discussion.
Garrett78,
I completely agree, especially when much of 'GDP' is generated by transnational corporations. Of course GNP is no longer available.
(YOUTUBE, OECD) Joseph Stiglitz talks about going beyond GDP
To be fair, it should be noted that Stigliz was invited to the White House upon Obama's election. However, the Nobel Laureate has been persona non grata ever since. Obama's chief economic advisors are banksters...not Nobel Laureates..
German banksters will make a bundle financing the transfer of Greece's profitable ports, railways, airports, water systems, etc. to the private sector.. I expect U.S. banksters will get a cut of the pie.
Next up, Italy, Spain and Portugal..The "Great Heist" remains underway It seems it didn't end with the collapse of Argentina...and the loss of its national assets.
If the U.S.. banking industry gets its way,, Obama's first chief economic adivsor, and former head of Goldman Sachs will be appointed by the Pres. to head the World Bank. The Pres. is working on it.
QUOTE: Summers, a former top economic advisor to President Obama, is said to be among the president's top choices to take over the World Bank later this year, when current president Robert Zoellick's term expires
More recently, Summers has drawn ire for his record of pushing back against regulation for derivatives markets -- even though critics argue that a lack of oversight in that area played a direct role in the 2008 financial crisis. Summers has also been criticized for his ties to hedge funds and investment banks, including major Wall Street players like Goldman Sachs, Lehman Brothers and Citigroup.
http://www.huffingtonpost.com/2012/02/24/larry-summers-world-bank-petition_n_1299296.html
Thank you, Mr. President. Click your heels three times and repeat, "The Pres. is not in the pocket of crooked banksters". Maybe it will come true.
The pillage will extend to developing countries, ...the World Bank's area of expertise.. Developed nations aren't alone in the plunder.
Do I hear a bid on the Grand Canyon or Yellowstone National Park...or will just the Interstate System the Postal Service and Hoover Dam come up for grabs at bargain basement prices?.
Retired Monk - "Ideology is a disease"
I feel like Father Guido Sarducci who was being interviewed on Air America when the election of the Pope was under way. He was riffing on the choices with the underlying meme of Not Ratzinger, and then it was "Not Ratzinger!!" OMG, Not Ratzinger.
Larry Summers, failing upwards in full ICBM arc. But, if you really want to bring down the World Bank, what better choice is there?
Well, the World Bank could be really good idea if it functioned on the model of the state-owned Bank of N. Dakota...and if there was a world currency.
It could use fractional reserve banking to loan money into existence for projects benefiting nations and their people just as the N. Dakota bank does for ventures that benefit N. Dakota and its people....and at really low interest rates.
However, it doesn't function that way. It generates revenues for private ventures.and sucks developing countries dry in the process.
Issuing loans nation's can't pay back, and then forcing them to sell off their resources to pay them is just one way it does that.
It even forced Bolivia to sell its rainfall to Bechtel Corporation! If Bechtel's rain fell on your lawn, you had a bill to pay. Bolvia has re-nationalized its rainfall.
So far, the World Bank hasn't required developing nations to privatize air.
Obama's choice of the bankster and former head of Goldman Sachs...Larry Summers... to head it is probably a great choice for banksters and financiers worldwide.
Retired Monk - "Ideology is a disease"
Goldman Secret Greece Loan Shows Two Sinners as Client Unravels
By Nicholas Dunbar and Elisa Martinuzzi on March 05, 2012
Greece’s secret loan from Goldman Sachs Group Inc. (GS) was a costly mistake from the start.
On the day the 2001 deal was struck, the government owed the bank about 600 million euros ($793 million) more than the 2.8 billion euros it borrowed, said Spyros Papanicolaou, who took over the country’s debt-management agency in 2005. By then, the price of the transaction, a derivative that disguised the loan and that Goldman Sachs persuaded Greece not to test with competitors, had almost doubled to 5.1 billion euros, he said.
Papanicolaou and his predecessor, Christoforos Sardelis, revealing details for the first time of a contract that helped Greece mask its growing sovereign debt to meet European Union requirements, said the country didn’t understand what it was buying and was ill-equipped to judge the risks or costs.
“The Goldman Sachs deal is a very sexy story between two sinners,” Sardelis, who oversaw the swap as head of Greece’s Public Debt Management Agency from 1999 through 2004, said in an interview.
Goldman Sachs’s instant gain on the transaction illustrates the dangers to clients who engage in complex, tailored trades that lack comparable market prices and whose fees aren’t disclosed. Harvard University, Alabama’s Jefferson County and the German city of Pforzheim all have found themselves on the losing end of the one-of-a-kind private deals typically pitched to them by securities firms as means to improve their finances.
Goldman Sachs DNA
“Like the municipalities, Greece is just another example of a poorly governed client that got taken apart,” Satyajit Das, a risk consultant and author of “Extreme Money: Masters of the Universe and the Cult of Risk,” said in a phone interview. “These trades are structured not to be unwound, and Goldman is ruthless about ensuring that its interests aren’t compromised -- it’s part of the DNA of that organization.”
A gain of 600 million euros represents about 12 percent of the $6.35 billion in revenue Goldman Sachs reported for trading and principal investments in 2001, a business segment that includes the bank’s fixed-income, currencies and commodities division, which arranged the trade and posted record sales that year. The unit, then run by Lloyd C. Blankfein, 57, now the New York-based bank’s chairman and chief executive officer, also went on to post record quarterly revenue the following year.
‘Extremely Profitable’
The Goldman Sachs transaction swapped debt issued by Greece in dollars and yen for euros using an historical exchange rate, a mechanism that implied a reduction in debt, Sardelis said. It also used an off-market interest-rate swap to repay the loan. Those swaps allow counterparties to exchange two forms of interest payment, such as fixed or floating rates, referenced to a notional amount of debt.
The trading costs on the swap rose because the deal had a notional value of more than 15 billion euros, more than the amount of the loan itself, said a former Greek official with knowledge of the transaction who asked not to be identified because the pricing was private. The size and complexity of the deal meant that Goldman Sachs charged proportionately higher trading fees than for deals of a more standard size and structure, he said.
“It looks like an extremely profitable transaction for Goldman,” said Saul Haydon Rowe, a partner in Devon Capital LLP, a London-based firm that advises global investors on derivatives disputes.
Disappearing Debt
Goldman Sachs declined to comment about how much it made on the swaps. Fiona Laffan, a spokeswoman for the firm in London, said the agreements were executed in accordance with guidelines provided by Eurostat, the EU’s statistical agency.
“Greece actually executed the swap transactions to reduce its debt-to-gross-domestic-product ratio because all member states were required by the Maastricht Treaty to show an improvement in their public finances,” Laffan said in an e- mail. “The swaps were one of several techniques that many European governments used to meet the terms of the treaty.”
Cross-currency swaps are contracts borrowers use to convert foreign currency debt into a domestic-currency obligation using the market exchange rate. As first reported in 2003, Goldman Sachs used a fictitious, historical exchange rate in the swaps to make about 2 percent of Greece’s debt disappear from its national accounts. To repay the 2.8 billion euros it borrowed from the bank, Greece entered into a separate swap contract tied to interest-rate swings.
Falling bond yields caused that bet to sour, and tweaks to the deal failed to prevent the debt from almost doubling in size by the time the swap was restructured in August 2005.
Greece, which last month secured a second, 130 billion-euro bailout, is sitting on debt equal to about 160 percent of its GDP as of last year.
Eurostat Rules
Under Eurostat accounting rules, nations were permitted until 2008 to use so-called off-market rates in swaps to manage their debt. Greek officials, including Sardelis, say they learned that other EU countries such as Italy had employed similar methods to shrink their debts, taking advantage of the secrecy of over-the-counter derivatives compared with swaps traded on exchanges.
Eurostat said Greece didn’t report the Goldman Sachs transactions in 2008 when the agency told countries to restate their accounts.
“The Greek authorities had never informed Eurostat about this complex issue and no opinion on the accounting treatment had been requested,” the Luxembourg-based agency said in a statement last month.
Eurostat said it had only “general” discussions with financial institutions on its debt and deficit guidelines when the swap was executed in 2001. “It is possible that Goldman Sachs asked us for general clarifications,” Eurostat said, declining to elaborate.
Loudiadis Role
Bloomberg News filed a lawsuit at the EU’s General Court seeking disclosure of European Central Bank documents on Greece’s use of derivatives to hide loans. Releasing such information could damage the commercial interests of the ECB’s counterparties, hurt banks and markets, and undermine the economic policy of Greece and the EU, the central bank said last May in a response to the suit. A judgment is pending.
Sardelis, 61, and Papanicolaou, 72, said several banks, including Goldman Sachs, made proposals to manage Greece’s debt. The bank was represented by its top European sales executive at the time, Addy Loudiadis. She was trusted, said Papanicolaou, because she had helped price competitors’ derivatives and in 1999 warned the Greeks against buying a complex swap.
Sardelis, a former bank economist, described Loudiadis, who’s based in London, as “very professional -- a little bit aggressive as is everyone at Goldman Sachs.”
‘Teaser Rate’
The derivative Loudiadis offered Sardelis in 2001 was also complex. Designed to provide a cheap way to repay 2.8 billion euros, the swap had a “teaser rate,” or a three-year grace period, after which Greece would have 15 years to repay Goldman Sachs, Sardelis said. All in, the deal appeared cheap to officials at the time, he said.
“We calculated that this had an extra cost above our normal funding cost on the yield curve of 15 basis points,” Sardelis said. A basis point is 0.01 percentage point.
Loudiadis, now CEO of Rothesay Life, a Goldman Sachs unit that insures longevity risk for U.K. corporate pension plans, declined to comment, a company spokeswoman said.
‘Very Bad Bet’
Sardelis said he realized three months after the deal was signed that it was more complex than he appreciated. After the Sept. 11, 2001, attacks on the U.S., bond yields plunged as stock markets sold off worldwide. That caused a mark-to-market loss on the swap for Greece because of the formula used by Goldman Sachs to compute Greece’s repayments over time.
“If you calculated that when we did it, it looked very nice because the yield curve had a certain shape,” Sardelis said. “But after Sept. 11, we realized this would be the wrong formula. So after we discussed it with Goldman Sachs, we decided to change to a simpler formula.”
The revised deal proposed by the bank and executed in 2002, was to base repayments on what was then a new kind of derivative -- an inflation swap linked to the euro-area harmonized index of consumer prices. An inflation swap is a financial bet that pays off according to the degree to which a consumer-price index exceeds or falls short of a pre-specified level at maturity.
That didn’t work out well for Greece either. Bond yields fell, pushing the government’s losses to 5.1 billion euros, according to an analysis commissioned by Papanicolaou. It was “a very bad bet,” he said in an interview.
“This is even more reprehensible,” Papanicolaou said of the revised deal. “Goldman asked them to make a change that actually made things even worse because they went into an inflation swap.”
Confidentiality Requirement
Greece was handicapped, in part, by the terms Goldman Sachs imposed, he said.
“Sardelis couldn’t actually do what every debt manager should do when offered something, which is go to the market to check the price,” said Papanicolaou, who retired in 2010. “He didn’t do that because he was told by Goldman that if he did that, the deal is off.”
Sardelis declined to comment about the analysis, as did Petros Christodoulou, director general of the debt-management agency since February 2010.
It isn’t unusual for dealers to impose confidentiality requirements on clients in complex transactions to prevent traders from using the information to front-run or trade against the bank arranging and hedging the deal, said a former official who analyzed the swap and asked not to be named because the details are private.
‘Large Number’
Goldman Sachs’s initial 600 million-euro gross profit “sounds like a large number, but you have to take into account what the bank will be setting aside as a credit reserve, the cost to Goldman to fund the loan and the cost of hedging the currency component,” said Peter Shapiro, managing director of Swap Financial Group LLC in South Orange, New Jersey, an independent swaps adviser. “It’s hard to tell what the profit margin would have been.”
The report Papanicolaou commissioned after taking over the agency showed the repayment formula meant that Greece would have to pay Goldman Sachs 400 million euros a year, he said. The coupon and the mark-to-market swings on the swap prompted George Alogoskoufis, then finance minister, to decide to restructure the deal again to limit losses, Papanicolaou said.
Loudiadis and a team of Goldman Sachs advisers returned to Athens in August 2005, according to former Greek officials. The agreement they reached to transfer the swap to National Bank of Greece SA and extend the maturity to 2037 from 2019, gave the Greeks what they wanted, Papanicolaou said.
‘Squeeze Taxpayers’
The 5.1 billion-euro mark-to-market value of the swap was “locked in,” Papanicolaou said. It was that politically motivated decision to restructure and fix the increased market value that did as much damage as the original swap, said Sardelis, now a board member of Ethniki General Insurance Co., a subsidiary of National Bank of Greece.
“You can’t have prudent debt management if you change all the assumptions all the time,” he said.
Gustavo Piga, a professor of economics at University of Rome Tor Vergata and author of “Derivatives and Public Debt Management,” sees a different lesson.
“In secret deals, intermediaries have the upper hand and use it to squeeze taxpayers,” Piga said in an interview. “The bargaining power is in investment banks’ hands.”
To contact the reporters on this story: Nicholas Dunbar in London at ndunbar1@bloomberg.net; Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net
To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net