Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
When A 16-Year-Old Earns $3 Million, You Know It's Not A 'Silly Fad' - 24th Aug 19
The Central Bank Time Machine - 23rd Aug 19
Stock Market August Breakdown Prediction and Analysis - 23rd Aug 19
U.S. To “Drown The World” In Oil - 23rd Aug 19
Modern Monetary Theory Could Destroy America - 23rd Aug 19
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

The Fall of Greece, Is it a Capitalist Plot?

Politics / Global Debt Crisis Mar 04, 2010 - 08:38 PM GMT

By: Global_Research

Politics

Best Financial Markets Analysis ArticleDiana Johnstone writes: For Europe’s poorest countries, European Union membership has long held out the promise of tranquil prosperity. The current Greek financial crisis ought to dispel some of their illusions.

There are two strikingly significant levels to the current crisis. While primarily economic, the European Economic Community also claims to be a community, based on solidarity -- the sisterhood of nations and brotherhood of peoples.  However, the economic deficit is nothing compared to the human deficit it exposes.


To put it simply, the Greek crisis shows what happens when a weak member of this Union is in trouble.  It is the same as what happens on the world scale, where there is no such morally pretentious union perpetually congratulating itself on its devotion to human rights. The economically strong protect their own interests at the expense of the economically weak.

The crisis broke last autumn after George Papandreou’s PASOK party won elections, took office and discovered that the cupboard was bare. The Greek government had cheated to get into the EU’s euro zone in 2001 by cooking the books to cover deficits that would have disqualified it from membership in the common currency. The European Treaties capped the acceptable budget deficit at 3 per cent and public debt at 60 per cent of GDP respectively.  In fact, this limit is being widely transgressed, quite openly by France. But major scandal arrived with revelations that Greece’s budget deficit reached 12.7 per cent in 2009, with a gross debt forecast for 2010 amounting to 125 per cent of GDP.

Of course, European leaders got together to declare solidarity.  But their speeches were designed not so much to reassure the increasingly angry and desperate Greek people as to soothe “the markets” – the real hidden almighty gods of the European Union.  The markets, like the ancient gods, have a great old time tormenting mere mortals in trouble, so their response to the Greek problem was naturally to rush to profit from it.  For instance, when Greece is obliged to issue new bonds this year, the markets can blithely demand that Greece double its interest rates, on grounds of increased “risk” that Greece won’t pay, thus making it that much harder for Greece to pay.  Such is the logic of the free market.

What the EU leaders meant by “solidarity” in their appeal to the gods was not that they were going to pour public money into Greece, as they poured it into their troubled banks, but that they intended to squeeze the money owed the banks out of the Greek people.

The squeezing is to take the forms made familiar over the past disastrous decades by the International Monetary Fund: the Greek state is enjoined to cut public expenses, which means firing public employees, cutting their overall earnings, delaying retirement, economizing on health care, raising taxes, and incidentally probably raising the jobless rate from 9.6 per cent to around 16 per cent, all with the glorious aim of bringing the deficit down to 8.7 per cent this year and thus appeasing the invisible gods of the market.

This just might propitiate both the gods and German leaders, who above all want to maintain the value of the euro.  The financial markets will no doubt grab their pound of flesh in the form of increased interest rates, while the Greeks are bled by IMF-style “shock treatment”.

And what about that great theater of human rights and universal brotherhood, the European Parliament?  In that  forum everyone gets to speak for a carefully clocked 1, 2, or 3 minutes, but when it comes to the most serious matter, the budget, the authoritative voices are all German. 

Thus the chairman of the EP’s special committee on the economic and financial crisis, Wolf Klinz, has called for sending a “high representative” of the EU to Greece, an “economies commissar” to make sure the Greeks carry out the austerity measures properly.  The Greek crisis can allow the EU to put into practice for the first time its “Treaty instruments” concerning “supervision of budgetary and economic policy”.  Interest rates may go up because of “risk”, but there is to be no risk.  The pound of flesh will be delivered.

There was no such supervision of the financial fiddling which caused this mess.  The EU statistics agency Eurostat recently discovered and revealed that in 2001, Goldman Sachs secretly (“but legally”, protest its executive officers) helped the right-wing Greek government meet EU membership criteria by using a complicated “currency swap” that masked the extent of public deficit and national debt.  [See Andrew Cockburn and Marshall Auerback, on this site.] Who understands how that worked? I think it is fair to guess that not even Angela Merkel, who is trained as a scientist, understands clearly what went on, much less the incompetent Greek politicians who accepted the Goldman Sachs trickery. It allowed them to create an illusion of success – for a while.  Success meant being a “member of the club” of the rich, and it can be argued that this notion of success has actually favored bad government at the national level.  Belonging to the EU gave a false sense of security that contributed to the irresponsibility of incompetent political leaders.

Having euros to buy imported goods (notably from Germany) pleased rich consumers, while the euro priced Greek goods out of their previous markets.  Now the debt trap is closing. The traditional way out for Greece would be to leave the euro and return to a devaluated drachma, in order to cut imports and favor exports.  This way, the burden of necessary sacrifices would not be borne solely by the working class.  But the embrace of EU “solidarity” is there to prevent this from happening. German authorities are preparing to lay down the law to the Greeks, after reducing the income of their own working class in order to benefit Germany’s export-oriented economy. 

Austerity measures are the opposite of what is needed in a time of looming depression.  Rather, what is needed are Keynesian measures to stimulate employment and strengthen the domestic market. But Germany is firmly attached to the export model, for itself and everyone else (“globalization”).  For a country like Greece, which cannot compete successfully within the EU, exports outside the EU are crippled by its use of a strong currency, the euro.  Bound to the euro, Greece can neither stimulate its domestic market nor export successfully.  But it is not going to be allowed to extricate itself from the debt trap and return to its traditional currency, the drachma. Poverty appears to be the only solution.

There is discontent within the German working class at their country’s policies aimed at shrinking wages and social benefits for the sake of selling abroad. In an ideal “social Europe”, workers in Germany would come to the aid of workers in Greece by demanding a radical revision of economic policy, away from catering to the international financial markets toward building a solid social democracy.  The reality is quite different.

The Greek financial crisis exposes the absence of any real community spirit in the EU. The “solidarity” declared by the country’s EU partners is a solidarity with their own investments.  There is no popular solidarity between peoples. The EU has established a surrogate ideology of internationalism: rejection of the nation-state as source of all evil, a pompous pride in “Europe” as the center of human rights, giver of moral lessons to the world, which happens to fit in perfectly with its subservience to United States imperial foreign policy in the Middle East and beyond.  The paradox is that European unification has coincided with decreasing curiosity in the larger EU states about what happens to their neighbors. 

Despite a certain amount of specialized training needed to create a Eurocrat class, the general population of each EU member is only superficially acquainted with the others.  They see them as teams in soccer matches.  They go on holiday around the Mediterranean, but this mostly involves meeting fellow tourists, and study of foreign languages has declined, except for English (omnipresent, if mangled). Mass media news reports are turned inward, featuring missing children and pedophiles ahead of even major political events in other EU member states.

Northern European media portray Greece practically as a Third World country, peripheral and picturesque, where people speak an impossible language, dance in circles on islands, and live beyond their means in their carefree way. The crickets in the Aesop fable, scorned by the assiduous ants.

Media in Germany and the Netherlands imply that IMF-style shock treatment is almost too good for them. The widening polarization between rich and poor, between and within EU member states, is taken for granted.

The smaller indebted countries within the EU are amiably designated by the English-speaking financial priesthood as the PIGS – Portugal, Italy (perhaps Ireland), Greece, Spain – an appropriate designation for an animal farm where some are so much more equal than others.

Diana Johnstone is author of Fools’ Crusade: Yugoslavia, NATO and Western Delusions (Monthly Review Press). She can be reached at diana.josto@yahoo.fr

Diana Johnstone is a frequent contributor to Global Research.  Global Research Articles by Diana Johnstone

 

© Copyright Diana Johnstone , Global Research, 2010

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Ibrahim
05 Mar 10, 16:28
The fall of Greece

As a Turkish citizen, it really disturbs me europeans to put Greece in such a shameful position. Sell your islands that is what the Germans say ,those people (Greeks) are not the ancient ones they are more Turkish that is what Dutch say...The world became a really strange place....we(Turks) got to get some lessons ..


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules