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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.
(Score: 3, Insightful) by Anonymous Coward on Friday July 10 2015, @10:01AM
There have been challenges here to show a single time that "austerity" [alternet.org] has ever worked to improve things for a country's economy.
No one yet has accepted the challenge.
Big hint: Eating the seed corn is a guaranteed loser.
The way you get an economy revved up is with the Multiplier Effect--ordinary people making ordinary purchases.
.
In contrast to the places that have tried "austerity", Iceland took a look at IMF's plan and told their crooked bankers to pound sand.
After a short spell of belt-tightening, Iceland is doing fine (compared to Cyprus). [googleusercontent.com] (orig) [dissidentvoice.org]
Too bad Greece wasn't quicker putting in a REAL Left gov't. [googleusercontent.com] (orig) [commondreams.org]
...and most of what has been coming out of the EU about the Greek situation has been lies. [globalresearch.ca]
-- gewg_
(Score: 2, Insightful) by Anonymous Coward on Friday July 10 2015, @10:15AM
So what you're saying is that the north European countries like, oh I don't know, Germany, would not be such economic losers if they abandoned their "living within their means" dogma? Schäuble should just go hogwild with investments, "black zero" be damned, and Germany would turn into an economic power house?
There is a distinct difference between "eating seed corn" and "making sure you don't have to eat seed corn". Greece was spending borrowed money, not investing it. In a way that is eating seed corn.
(Score: 1, Insightful) by Anonymous Coward on Friday July 10 2015, @10:42AM
I already said that Greece needed a true Left gov't earlier.
I already said that taking advice from IMF is dumb.
Insanity: Doing the same thing over and over and expecting different results.
Isn't it interesting how Germany had their own debts written down after WWI *and* after WWII?
Why won't they do that for Greece?
Why won't Germany pay the debts they still owe Greece from WWII?
Answer: They're still Nazi bloodsuckers.
The Eurozone doesn't work for small, poor countries.
Though it was sold as a protective league, the Big 2 are exploiting the small fries and will continue until they are bled dry.
The smart thing will be for those exploited countries to exit.
Iceland and Argentina offer much better models than Ireland and Cyprus.
...and you need to turn off Faux Noose.
It's filling your head with nonsense.
Try learning some actual History for a change.
-- gewg_
(Score: 0) by Anonymous Coward on Friday July 10 2015, @10:51AM
It's sad how quickly the left resort to name calling.
(Score: 2) by wantkitteh on Friday July 10 2015, @06:47PM
Indeed, referring to the Germans as "Nazi bloodsuckers" is distasteful at best, but there is a point in there worth looking at. Germany has accepted write-downs on it's debts several times in the past during times of world-wide post-war economic hardship. It seems what Greece needs to get it's debts cleared without the economy being ravaged by the marketplace is start a war and lose it.
(Score: 1) by choose another one on Friday July 10 2015, @01:34PM
and the ransom money we paid for king richard - pure and simple criminal kidnapping and extortion, practically bankrupted England at the time.
Exactly - exit and their imports will be more expensive, their exports cheaper and more competitive until balance is achieved again. The market isn't a perfect regulator but it's better than nothing, and in the Euro you have nothing to achieve that balance. Buying imported goods is what is bleeding them dry.
BUT, guess what, the Greeks don't actually _want_ to exit, they want to keep their cheap imports low inflation and stable currency, just like Germany, but without the German's financial discipline. Eventually they will _have_ to exit, but none of their leaders are prepared to say that yet.
Iceland and Ireland perhaps (one in Euro and austerity, one outside and devaluation). I can't see how anyone could possibly see Argentina as a better model than Ireland - 13yrs after default, growth is still minimal and (official) inflation 15% (unofficially twice that). Ireland has exited its bailouts (ahead of schedule I think), has the low inflation and stable currency of the euro, and is now fastest growing economy in the EU ( http://www.theguardian.com/world/2015/feb/05/ireland-fastest-growing-eu-economy [theguardian.com] ).
(Score: 3, Interesting) by sudo rm -rf on Friday July 10 2015, @01:49PM
and the ransom money we paid for king richard - pure and simple criminal kidnapping and extortion, practically bankrupted England at the time.
Sorry, but this is an argument I hear all too often, and it is wrong.
For an interesting read about the *justified* demand of war reaparation (backed by international law), I suggest reading this article [greece.org] (which is in fact a petition, but nevertheless -or because of that- has a few interesting facts).
Excerpt:
Italy repaid to Greece its share of the occupation loan, and both Italy and Bulgaria paid war reparations to Greece. Germany paid war reparations to Poland in 1956, and under pressure from the USA and the UK (to placate Tito and keep him from joining the Soviet block) paid war reparations to Yugoslavia in 1971. Greece demanded from Germany payment of the occupation loan in 1945, 1946, 1947, 1964, 1965, 1966, 1974, 1987, and in 1995 (after the unification of Germany). Before the unification of Germany, using the London Agreement of February 27, 1953, West Germany avoided to pay its obligations arising from the occupation loan and war reparations to Greece on the argument that no “final peace treaty” had been signed. In 1964, German chancellor Erhard pledged repayment of the loan after the reunification of Germany, which occurred in 1990. As the German magazine “Der Spiegel” wrote on July 23, 1990, with the Two (West and East Germany) Plus Four (USA, former Soviet Union, United Kingdom, and France) Agreement that paved the way for the German unification, the nightmare of demands for war reparations by all those damaged by Germany, which could be raised by signing a “peace treaty”, disappears.
Greece never signed that Two Plus Four Agreement.
Indicative of the current value of the German obligations to Greece are the following: using as interest rate the average interest rate of U.S. Treasury Bonds since 1944, which is about 6%, it is estimated that the current value of the occupation loan is $163.8 billion and that of the war reparations is $332 billion. The French economist and consultant to the French government Jacques Delpla stated on July 2, 2011, that Germany owes to Greece 575 billion euros from Second World War obligations(Les Echos, Saturday, July 2, 2011).
(Score: 0) by Anonymous Coward on Friday July 10 2015, @02:30PM
Forget it. That's all there is to say about that. You're chasing the wind.
(Score: 1, Interesting) by Anonymous Coward on Friday July 10 2015, @03:49PM
This guy doesn't seem to think that Germany ever paid its debts (I suppose war reparations aren't paying debts?):
http://thewire.in/2015/07/08/thomas-piketty-germany-has-never-repaid-its-debts-it-has-no-right-to-lecture-greece/ [thewire.in]
(Score: 2) by cyrano on Friday July 10 2015, @03:08PM
Most of this growth is as a tax haven for Apple, IBM and a few other very big corporations who bring little employment but shift boatloads of money from the rest of the EU to countries where they keep their stash...
The quieter you become, the more you are able to hear. - Kali [kali.org]
(Score: 0) by Anonymous Coward on Friday July 10 2015, @03:54PM
Germany is a mercantile industrial state which benefits from the economic stagnation of the poorer states of Europe. I'd love to see the resource-poor and land-poor Germany maintain their position if they could no longer exploit all the European banana economies.
(Score: 0) by Anonymous Coward on Friday July 10 2015, @08:22PM
Ok I will bite.
https://www.reddit.com/r/FinancialIndependence [reddit.com]
I personally went from 180k in debt to about 3x that in cash/stocks. Know how I did it? Financial discipline.
It is amazing walking into a steak house and saying I want the 30 dollar steak because it tastes good. Not getting the 10 dollar burger because it costs less or not going at all because I dont have any money or just adding to the big pile of debt. I rarely do this. Because guess what? It is bad financial discipline.
If you have your money in order everything else is easy. You can borrow money for when it is lean and build capital. You can build things that you could not before.
If you are borrowing money to pay back loans (what they are doing). You end up with, tadaaaaah, more debt. Bankers will jump all over you to make it happen too. They do not care you are a bad risk. They are going to sell the debt to someone else and make money doing it. They are not using that money to build capital and eventually jobs. They are using it to pay peter by borrowing from paul. They are screwed.
Now apply financial independence to the country level. You can do things like 'fix all the roads'. Because you have the money to do it! You can actually have good goals and make things happen. If you listen to bankers they will take all of your money and squander it on their bonuses and tell you need to tighten your belt (sucks to be you!). The bankers even managed to find out a way to put the debt on someone else (specifically the other countries in the EU). Sound familiar? It should. As that is exactly what they did here with 'too big to fail'. I knew many people who borrowed money for homes and within months 'some other company bought my mortgage'. They make the suckers bet someone elses problem.
Austerity should be about balance your goals with what you are spending. You can NOT borrow you way into prosperity (it did not work for pre WWI germany or post WWI germany, both defaulted). Borrowing only works if you build capital goods. If you are just chasing paper money with it and paying off other loans you will *never* get anything other than more debt. If you do not get your house in order the bankers will rape you for more money and make it seem like they are giving you a good deal while they are at it. Yes your growth on the other end will not be as dramatic as others. But you will be built upon a solid foundation where you command what is going on. Not the bank. Your highs will not be as dramatic. But then neither are your lows.
They basically have 3 choices. Suck for short term (austerity, get your shit in order), suck for longer term (keep borrowing, no one is willing to make that bet after awhile), default (suck for a longer term, no one will work with you for years).