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posted by janrinok on Friday July 10 2015, @08:08AM   Printer-friendly
from the another-view dept.

In the news media (e.g. NPR, BBC, CNN, etc.) there is a dominate consensus that Greece must eventually give in to demands to reduce pensions and make further cuts in government spending in exchange for a new loan to help pay off defaulted loans, even if acknowledging that the Greek people have high unemployment and a failing economy.

However, for those not yet exposed to an alternate perspective which is not generally aired in the news media, you might read this bit of a rant by Prof. William K. Black. William Kurt Black is an American lawyer, academic, author, and a former bank regulator. Black's expertise is in white-collar crime, public finance, regulation, and other topics in law and economics. He developed the concept of "control fraud", in which a business or national executive uses the entity he or she controls as a "weapon" to commit fraud. In this piece, William Black make ssome some interesting points about the Greek crisis, of which I cut and paste a few excerpted points:

1. That economists overwhelmingly believe on the basis of theory and experience that austerity in response to a Great Recession constitutes economic malpractice akin to bleeding a patient until it restores him to health.

2. That austerity has caused, as predicted, a human catastrophe in Greece

3. That austerity and the oxymoronic "labor reforms," by reducing wages and the safety net throughout the eurozone, the bailout of German banks, and the sale of Greek infrastructure and islands to wealthy Germans at fire sale prices are very much in the interests of the elite German corporate and banking CEOs that dominate domestic German politics, the Germany economy, and the troika

4. That when a debtor has unsustainable debts, the normal and desirable response is to negotiate a troubled debt restructuring (TDR) to reduce the debt to a level that can be repaid. Even the IMF, the mother of monstrous austerity, admits that the Greek debt is unsustainable.

5. That a TDR was done for German[y], which was essential to its economic recovery. (after WWII)

6. That the Greek "bailout" was a bailout of foreign EU banks, primarily French and German – not the Greek government or people. That bailout of the eurozone's largest banks is funded by eurozone taxpayers. The muted reaction of the commercial markets to the Greek "No" vote is largely attributable to the fact that the bailout of French and German banks by eurozone taxpayers has been completed. The remaining loss exposure of the large eurozone banks on the loans they made seven or more years ago to Greek banks is tiny. The reason EU elected officials are so apoplectic to the Greek "No" vote is that the eurozone taxpayers are on the hook because they bailed out the (primarily) French and German banks. If the eurozone taxpayers suffer losses in the range of one hundred billion euros those taxpayers might turn on those EU elected officials who represent the interests of elite bankers at the expense of the peoples of the eurozone. The NYT article ignores all this and, without any analysis, treats the bailout as if it were a bailout of the Greek people.

To me it this final point which resonates after witnessing the the U.S. bailout of to-big-to fail banks after making a number of risky (sometimes fraudulent) loans to homeowners.

 
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  • (Score: 2) by dusty monkey on Friday July 10 2015, @09:42AM

    by dusty monkey (5492) on Friday July 10 2015, @09:42AM (#207343)

    The Greece import/export deficit is 2:1. Sustaining this requires the system as a whole to offset the extra 1 every year, by the sum of both public and private debts as well as foreign investments. The governments credit line stinks, so the only way to really get this kind of offset is to make it attractive for foreign capital to come and play. Unfortunately for them the place isnt attractive to investments.

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  • (Score: 3, Informative) by jcross on Friday July 10 2015, @12:47PM

    by jcross (4009) on Friday July 10 2015, @12:47PM (#207396)

    This is an interesting take on the import/export issue and why that might be the case:

    http://thehill.com/blogs/pundits-blog/international/246834-what-the-euros-current-difficulties-really-mean [thehill.com]

    The summary is that Germany and Greece sharing the Euro makes the Euro less valuable as German currency and more valuable as Greek currency, such that German exports are helped while Greek exports are hindered, naturally creating a fiscal imbalance between the two countries. The situation is compared to the more and less urbanized parts of the US, where the imbalance is resolved by transferring money in the form of disproportionate federal spending, but the Eurozone has no equivalent process available.

    • (Score: 0) by Anonymous Coward on Friday July 10 2015, @01:10PM

      by Anonymous Coward on Friday July 10 2015, @01:10PM (#207406)

      The European Union also transfers money through more spending in regions that need it and collecting more in regions that can afford it. Greece has been a major beneficiary of that system. The one thing that Europe doesn't have is that a broke member country isn't put under federal insolvency administration, whereas the US would not just let a broke country keep spending as they please. I don't even want to think about how that would go down with the "proud Greek people".