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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: 3, Insightful) by threedigits on Friday July 10 2015, @01:45PM

    by threedigits (607) on Friday July 10 2015, @01:45PM (#207429)

    The Greek debt was very sustainable until Syriza's rise to power caused capital flight and crashed the economy starting at the end of 2014.

    Curiously enough, it wasn't until January 2015 that Syriza came to power.
    Also, the Greek debt was never sustainable. It was growing, without sign of turn around, until the European Central Bank started buying sovereign debt (as they should have been doing from the beginning). Before that, the only way Greece could finance their payments was in the private markets, with astronomical interest rates. Here you have the two main reasons for the enormous debt: the European Central Bank applying the austerity mantra, and the private bankers making very lucrative "risk" investments (something that's easy when you have a safety made of of taxpayers money).

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  • (Score: 1, Interesting) by Anonymous Coward on Friday July 10 2015, @02:06PM

    by Anonymous Coward on Friday July 10 2015, @02:06PM (#207443)

    The political changes were already visible at the end of 2014, and a lot of people stopped paying their taxes because Syriza had promised lower taxes.

    The Greek debt caused the crisis, so obviously at that point it wasn't sustainable. You didn't miss that I mentioned the 2012 haircut and restructuring of the debt, did you? Obviously I meant that the measures which have been taken by the IMF, the ECB and the Eurozone countries had resulted in debt sustainability from then on, until Syriza "turned the country around" by promising the end of austerity.