World Headlines Review: Greek Sovereign Debt Crisis a Sovereignty Crisis

Greek Parliament, Syntagma Athens - by kouk

News outlets around the world have focused heavily on the so-called Greek Sovereign debt crisis this week. The proposed solution–an IMF loan package requiring “austerity measures” and a fire-sale of public assets–has sparked massive unrest in the capital, where people from all walks of life are decrying a loss of democracy, sovereignty, economic means, public services- the viability of their futures and of Greece itself.

Many have insisted that these “measures” are necessary. If one is speaking about maintaining the share value of many European banks and institutional investors, such is true. The IMF loan package to Greece, boiled down, is a global taxpayer bailout of European banks which have made poor investment decisions in purchasing Greek bonds.

Even while the US debt has reached its ceiling, the US Senate has recently rejected a Republican measure attempting to restrict the IMF’s ability to dip directly into the US treasury to the tune of $100billion. In the twisted game of hot potato that now typifies international finance, the IMF is making loans to Greece so that Greece can pay back its loans to the various private European banks and investors holding Greek bonds, while the member nations of the IMF, all of whom are similarly in debt to private banks, will have to seek more loans from private international banks (or China) in order to cover additional deficits that the IMF causes them as it takes their money and dumps it into the sieve that is the Greek economy. Almost every tax-payer in the world will see a portion of their taxes swept into this bailout scheme for these investment institutions, which over many years have irresponsibly funded the institutionally corrupt Greek government. More and more, the European Union–if not the globalised economy entirely–appears to be a supranational bank-controlled state-capitalism and less and less the free market as it is advertised.

Flush with this bailout of world taxpayer money channelled through the IMF–money which in a truly free market should have been lost as a consequence of the impropriety of lending to a state which everyone now seems ready to admit was rife with corruption–private European banks and investment firms will, like rapacious vultures, descend upon the carcass of the Greek economy. The transportation and social service infrastructure of Greece will be bought up at fire-sale prices, as will small and mid-size local businesses that are struggling in an increasingly volatile economy and facing an extremely uncertain future. As is their legal obligation to their shareholders, these foreign corporations will attempt to squeeze as much profit as possible from their Greek buyouts, through further rounds of asset-stripping and layoffs, the profits of which will be repatriated to investors outside Greece. As Greeks lose their jobs and their businesses, as those lucky enough to keep their jobs lose income to pay cuts and higher taxes, as retirees lose income to pension cuts, as credit becomes scarce and money circulation becomes restricted, many will be forced into personal asset liquidations and home foreclosures in a depressed market paying pennies on the Euro. This will come just as the people of Greece will desperately need reasonable access to the services being hawked by the Papandreou government and whatever remains of Greece’s gutted social security net.

The whole enterprise reaches a higher level of absurdity in light of the fact that a similarly massive loan package last year failed to do anything but forestall the problem for a year. Anyone who has juggled debt between two lines of credit knows that borrowing from one to pay the other leads to precisely nothing but a higher debt-load due to accumulating interest. The only step in the right direction, and likely in any case inevitable, is a default by Greece on their debt, orderly or not. Independent economists at the UN and elsewhere agree: Austerity measures increase unemployment and reduce wages, thus lowering economic activity and tax revenues needed to repay national debts. They do not work.

In this context, the governments and investment community of Europe–by their actions–seem keen to ensure that the Greek people are made destitute by having their collective assets stripped down and turned over to foreign interests before allowing a default. That is what this is about. Business and media have propagated the idea that the fault of the Greek debt crisis lies squarely with the Greek people, and this is the bitter pill they must now swallow. However, those who pay the costs will not be the benefactors of Greece’s famously corrupt “culture” of bribes and patronage that everyone wants to blame. Rather, it will be the middle and lower-classes who have all along suffered paying these bribes and corruption to have access to fundamental services. These are the people now protesting in majority across Greece and in Syntagma square of Athens. The police, who have lost all credibility as defenders of public security, have employed exemplary violence. There are several videos posted to YouTube of police attacking restaurants bars and cafes near the protests, as well as the corralling and kettling people into sidestreets and subway stations, pelting them with tear gas and rocks, and beating them with shields and batons as they try to escape through police lines. They have even been accused on Greek TV–with amateur video seeming to corroborate–of the deployment of agents-provocateurs among the protests: police posing as anarchists dressed in black, damaging property and threatening violence in order to give pretext for and initiate the police crackdowns. While it will likely be impossible to verify these charges through police admission–as the Quebec Provincial police admitted to doing in Montebello, Canada in 2007–one might weigh the evidence and draw a parallel line: if it is possible in Canada, it is possible in Greece.

The schizophrenia of fiscal policy, or the flock of interests it serves, is evident when the situation in Greece is juxtaposed with the global financial crisis of a few years ago. While it is demanded of Greece to sell off public assets and cut social spending, including gutting pensions and laying off civil servants–which is ostensibly supposed to restore the viability of and confidence in their economy- the US faced their crisis by going in the opposite direction: Employing a Keynesian program of public spending to increase employment and economic activity. Rather than allow critical industries to be gutted by private markets, companies such as GM were partly nationalised until they could recover, to prevent massive unemployment. The recovery plan in the US was funded by “money creation,” when the US federal reserve wrote into existence billions of dollars to buy a new issue of US T-bills to fund the government. While neither of these solutions is desirable, their “necessity” is rooted in the same problem.

Some time ago Greece, like most of the world, gave into the liberal economic idea that private banks should be allowed to create Greece’s money. Evidently, under the yoke of the European Economic Community, Greece has now completely lost its sovereign right to create any of its own money at all. They cannot repatriate their debt or use inflationary means to mitigate it. Thus, Greece has lost its freedom and nationhood. According to the words of Prime Minister of Canada William Lyon MacKenzie King, who in 1935 addressed the issue which is clearly at the root of the debt crises of not only Greece, but of Portugal, Spain, Ireland and the US, “Once a nation parts with the control of its currency and credit, it matters not who makes that nation's laws. Usury, once in control, will wreck any nation. Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile.”

The videos below attest to the different tactics Police have used to break-up demonstrations and impose their will on the local community in Athens.

Watch Police attack a restaurant: