Monday, July 06, 2015

It Doesn't Get Much Uglier Than This. Well, It Does, Eventually.

The closer you look into the Greek economic fiasco, the more you'll see of a cautionary tale the rest of us need to absorb.  The Troika - the IMF, the European Commission and the European Bank - weren't just demanding austerity. They demanded the punishing impacts be placed entirely on the shoulders of the Greek people, not the elite.

Purple Library Guy kindly sent me links to this, from Counterpunch:

The Troika’s demand was for austerity to be deepened solely by taxing labor and reducing pensions. Its policy makers had vetoed Syriza’s proposed taxes on the wealthy and steps to stop their tax avoidance. The IMF for its part vetoed cutbacks in Greek military spending (far above the 2% of GDP demanded by NATO), despite even the European Central Bank (ECB) and German Chancellor Merkel agreeing to this.

European Commission President Jean-Claude Juncker threatened to expel Greece from Europe, despite no law permitting this to occur. Let us see now whether he still tries to carry out his bluff, which has been echoed by right-wing leaders throughout Europe.

His retaliatory actions from an ostensibly non-political, non-elected office are not alone. The eurozone class war in support of finance against labor and industry is now open and in earnest. Instead of doing what a central bank is supposed to do – provide liquidity (and paper currency) to banks, ECB head Mario “Whatever it takes” Draghi forced them to shut down even their ATM machines for lack of cash. Evidently this was intended to frighten Greek voters to think that this would be their country’s future if they voted No.

Paul Krugman hinted at the creditors' male fides in his New York Times column this morning.

...In advance of the referendum, the European Central Bank cut off their access to additional funds, helping to precipitate panic and force the government to impose a bank holiday and capital controls. The central bank now faces an awkward choice: if it resumes normal financing it will as much as admit that the previous freeze was political, but if it doesn’t it will effectively force Greece into introducing a new currency.

...In the failed negotiations that led up to Sunday’s referendum, the central sticking point was Greece’s demand for permanent debt relief, to remove the cloud hanging over its economy. The troika — the institutions representing creditor interests — refused, even though we now know that one member of the troika, the International Monetary Fund, had concluded independently that Greece’s debt cannot be paid.

And then there's the bloated Greek defence budget, over 2% GDP, one of the highest in NATO.  This, again, is a clear giveaway of what the Troika has really got in mind.

Yiannis Bournous, the head of international affairs for Greece’s ruling Syriza party, heartily endorsed defense cuts as a way to meet the fiscal targets of Greece’s international creditors.

“We already proposed a 200 million euro cut in the defense budget,” Bournous said at an event hosted by the Center for Economic Policy and Research and the Rosa Luxemburg Foundation, referring to cuts in Syriza’s most recent proposal to its creditors. “We are willing to make it even bigger -- it is a pleasure for us.”

A German newspaper reported on Saturday that the International Monetary Fund (IMF) had vetoed a compromise plan put forward by the European Commission that would have allowed Greece to substitute 400 million euros in pension cuts for equivalent military spending cuts.

Why would the Troika demand Greece accept a debt load they know full well it could never pay?  Why would they insist that crushing debt be placed squarely on the shoulders of ordinary, working Greeks?  Why would they block Greek government proposals to hike taxes on the wealthy and implement policies to stop their massive tax avoidance? Why would they veto a bankrupt nation's request to slash its bloated defence budget?  

If you believe the Troika when it claims that this is all about debt and responsibility and repayment, all of these gambits are more than counter-intuitive, they're madness.  But this isn't the work of mad people and it's not about the debt Greece owes or how it will repay its creditors.  It's something far more sinister than that, something that all people across the West need to understand.

This is nothing less than class warfare, capital versus labour, cloaked in a guise as transparent as the Reichstag Fire.  This is an experiment in coercive social engineering and, if it succeeds in Greece, it will be repeated again and again whenever the excuse, real or contrived, arises.  You can practically hear them humming the tune to Horst Wessel Lied.


Toby said...

As a school project some years ago (post retirement) I did some research on the European Union. By chance I stumbled on the Nazi plan for the unification of European finance. Now, I don't want to imply that the EU is run by a bunch of Nazis. What I noticed was that the EU financial control is surprisingly similar to the Nazi dream. The EU set up its central bank in Brussels instead of Berlin and uses the Euro instead of the Mark but the basic plan is almost an overlay. At least that's the way I saw it at the time. Maybe central banking always has a universal theme. (There was more to it than I've written but you get the idea.)

The dream of a unified Europe goes back at least as far as Julius Caesar. All of them previous to the EU were based on force and/or religion. The EU is strictly a financial federation. With respect to Greece the ugly stuff is surfacing.

Steve said...

wow, the Man never sleeps does he!

Troy Thomas said...

Well, Nuland's in Greece. Now how long till the fascist military coup?

The Mound of Sound said...

Thanks for the insights, Toby. The EU has been credited with many things, such as ending wars between European powers which I think is gilding the lily. I doubt that economic integration has been the decisive factor. If anything it was the formation of the UN with its assurance of territorial integrity and even Cold War I that kept the Euros from attacking each other.

The Euro nations seem to have gone into their monetary union without enough thought. The economic divide between the southern European countries and the powerhouse states of the north ensured that the north would dominate EU monetary policy - a ticking time bomb for the weaker economies.

It took me a long time to come around to Krugman's way of thinking on the Euro but I now think he's generally right.

The Mound of Sound said...

Hi, Troy. I took some time mulling over your comment about Victoria Nuland. I really hope you've got this one wrong.

A military coup in a member state of the European Union seems unthinkable. Toppling the democratically elected Syrzia that just won a decisive referendum victory would trigger upheaval in Greece of the sort that would spill over to other EU states, especially Italy and Spain. It wouldn't take long for that unrest to break out on the streets of Berlin, Paris, perhaps even London. If it got pinned on Washington interference it would lead to a social conflagration.

Europe is in no position to weather that sort of chaos. Imagine what it would do on global bourses.

That said, I don't trust the judgment of gaffe-prone Nuland.

Purple library guy said...

The Americans do always seem to think they can get away with anything, and chaos is their brand--again, they always seem to think that either they'll be able to pick up the pieces and dominate whatever players emerge in the aftermath, or at a minimum that every country ruined is less competition for the US. It sometimes seems as if their ultimate ideal would be for every country outside the US to be a lawless basket case full of roving gunmen, none of them strong enough to stop multinationals with more organized guards from extracting resources for free or running sweatshops at gunpoint.
So it's not inconceivable that they'd try it on. Dunno if it would succeed though.

Anonymous said...

Toby..last eveing I listened to a late night CBC program..can't remember what it was called but said much of what you say in your comment. It has been something I had been thinking as well. Cheers Submitted....Anyong