Owen Jones: The elites are determined to end the revolt against austerity in Greece

[Ken Burch]

Europe's great powers won't be satisfied until they break Syriza, and stop an anti-austerity movement spreading across the continent.

http://www.newstatesman.com/politics/2015/07/owen-jones-elites-are-determined-end-revolt-against-austerity-greece

Contagion: this word sums up how the Greek disaster has been allowed to descend into catastrophe. Not economic contagion, or any real fear that Greece is a Hellenic Lehman Brothers-in-the-making, whose implosion will send dominoes toppling from Berlin to Lisbon, but political contagion. An attempt is being made to suppress the contagion of its anti-austerity movement. In a eurozone where more than 11 per cent of the citizens are without work, including half of all young Spaniards, the social devastation endured by the poor has been sustained by a simple doctrine: “There is no alternative.” If Greece threatens that narrative, it has to be punished.

After France’s François Hollande abandoned his left-wing mandate almost as soon as he marched into the Élysée Palace, Syriza’s dramatic triumph in January represented the first time Europe’s anti-austerity movement had seized power in a national election. Since then, Europe’s great powers – the European Union, the eurozone’s unaccountable Central Bank, the IMF, the German government – have all conspired to make an example out of the party. Greece is a rebellious eurozone province, and if its democratically elected insurgents are allowed to succeed, the doctrine of “There is no alternative” will be shattered and a growing populist left will be emboldened. Why wouldn’t Spain’s austerity-weary voters give a decisive mandate to the radical left Podemos in a general election due by December? And why not then Ireland, Portugal, Italy, the Netherlands and so on?

Syriza has to be broken, or so the EU great powers decided long before it was even elected. But how? First: compel it to impose another dose of disastrous austerity, in violation of the party’s clear electoral mandate. This would inflict on it the same fate as the Greek social-democratic party Pasok, which so alienated its support base that its vote plummeted from 44 per cent in 2009 to 4.7 per cent by 2015. A second possible strategy: strangle Greece’s economy until the people decide that the lesser catastrophe would be to resign themselves to endless austerity within the eurozone. This is the current course of action.

The third strategy: force a default and drive Greece out. However, this might expose the eurozone’s Achilles heel. A precedent would be set: the eurozone would no longer be an indivisible currency union, but a club that weaker members can leave or from which they can be de facto ejected. Italy, say, could find itself the subject of extreme market speculation.

[Ken Burch]

1. More:

http://www.newstatesman.com/politics/2015/07/owen-jones-elites-are-determined-end-revolt-against-austerity-greece

And there is another danger for the elite: although defaults are invariably followed by the ejection of the ruling government – so, goodbye, Syriza – what if a temporarily hobbled post-euro Greece enjoyed a recovery comparable with Argentina’s after the default of 2002? Other countries locked in economic misery would have an example to emulate. For these reasons, a Greek default will have to be as painful as possible, pour encourager les autres.

Syriza’s fate will also be used to hammer opponents of austerity. Resisting the prevailing economic common sense of our time (it will be claimed) is demonstrably futile and self-defeating. Greece’s woes are the product of overspending, and so on. That the likes of Goldman Sachs helped to massage Greece’s books to allow it to enter the eurozone in the first place will be forgotten. The irresponsible lending of German and French banks will be forgotten, too.

The global financial crisis is generally not blamed on low-paid Americans for accepting sub-prime mortgages, but on those who lent to them irresponsibly. The same should apply to Greece: greedy banks, acting in the short-term interest, which lent money, setting aside risk for the sake of profit. As the Jubilee Debt Campaign has pointed out, it was German and French banks that were bailed out, not the Greek people.

Since then, successive bailouts with ruinous austerity measures attached to them have shored up private-sector institutions while slicing a quarter off the Greek economy. Poverty rates have more than doubled to over 40 per cent, unemployment is now a quarter and debt consumes 177 per cent of the country’s GDP. Greece has been instructed to extend policies that have so far achieved only ruin. Yet such is the pressure being exerted on the Greek people that acceptance of (or rather, resignation to) the creditors’ demands is surely likely.

[BrotherIvan]

9. ^^This

Fucking correct. But our DU conservatives have bought the right wing line and are pushing it. Fuck that.

[Warpy]

2. They break Syriza, the communists are likely to swoop in

I don't think the population is in much of a mood to welcome the right wing back.

If the ECB and IMF were serious about getting debts repaid, they'd go after the people with the money, not starving the average working slob.

They won't do that, of course, loyalty among the wealthy being what it is.

[daleanime]

4. Sadly it's not about the money.....

it's about control.

[Warpy]

5. Yep.

The proof of that is also in who they're going after.

[Dawson Leery]

6. The best thing would be to break the IMF and the ECB.

The Euro needs to die.

[Warpy]

7. It's turning out the doom and gloomers were partially right about it.

It could have managed to work if irresponsible lenders hadn't bribed governments into being irresponsible borrowers.

There a doctrine of "odious debt." Greece needs to do an audit and invoke it.

[Dawson Leery]

10. I despise Thatcher. I give her credit for understanding what

would happen if the Euro came into existence.

[Wellstone ruled]

3. Yes,

[bemildred]

8. Financial Nonsense Overload

“Those whom the gods wish to destroy they first make mad” goes a quote wrongly attributed to Euripides. It seems to describe the current state of affairs with regard to the unfolding Greek imbroglio. It is a Greek tragedy all right: we have the various Eurocrats—elected, unelected, and soon-to-be-unelected—stumbling about the stage spewing forth fanciful nonsense, and we have the choir of the Greek electorate loudly announcing to the world what fanciful nonsense this is by means of a referendum.

As most of you probably know, Greece is saddled with more debt than it can possibly hope to ever repay. Documents recently released by the International Monetary Fund conceded this point. A lot of this bad debt was incurred in order to pay back German and French banks for previous bad debt. The debt was bad to begin with, because it was made based on very faulty projections of Greece's potential for economic growth. The lenders behaved irresponsibly in offering the loans in the first place, and they deserve to lose their money.

However, Greece's creditors refuse to consider declaring all of this bad debt null and void—not because of anything having to do with Greece, which is small enough to be forgiven much of its bad debt without causing major damage, but because of Spain, Italy and others, which, if similarly forgiven, would blow up the finances of the entire European Union. Thus, it is rather obvious that Greece is being punished to keep other countries in line. Collective punishment of a country—in the form of extracting payments for onerous debt incurred under false pretenses—is bad enough; but collective punishment of one country to have it serve as a warning to others is beyond the pale.

Add to this a double-helping of double standards. The IMF won't lend to Greece because it requires some assurance of repayment; but it will continue to lend to the Ukraine, which is in default and collapsing rapidly, without any such assurances because, you see, the decision is a political one. The European Central Bank no longer accepts Greek bonds as collateral because, you see, it considers them to be junk; but it will continue to suck in all sorts of other financial garbage and use it to spew forth Euros without comment, keeping other European countries on financial life support simply because they aren't Greece. The German government insists on Greek repayment, considering this stance to be highly moral, ignoring the fact that Germany is the defaultiest country in all of Europe. If Germany were not repeatedly forgiven its debt it would be much poorer, and in much worse shape, than Greece.

http://cluborlov.blogspot.com/2015/07/financial-nonsense-overload.html