The Greek crisis that was caused by artificial debts manufactured by investment banks such as Goldman Sachs, Deutsche Bank AG, Nathan Meyer Rothschild, HSBC and hedgefunds like Blackrock climaxes with leftist party Syriza bringing home a clear victory today in Greece’s parliamentary elections. But, failing to win an absolute majority requires Syriza to chose a coalition partner.
Communist KKE with it’s 5.4% would be kind of the natural partner but would push Greece further to the left and also made clear that unless a real revolution would be started doesn’t want to participate in a coalition. Another potential partner for Mr. Tsipras could be the To Potami (“the river”), a rather neo-liberal social democratic party that holds 5.9% in the new parliament or the patriotic right-wing party ANEL, a fraction of the old government-party Nea Democratia.
It would be tragic to see that there are no political parties to be found in Greece that are not part of the old system and would be willing to nullify the Troika-agreements, other than ANEL to form a coalition with. But, same would apply to other EU member states such as Spain or even Germany, where leftists would also not find any coalition partner being ready for the necessary steps.
The selection of the coalition partner will answer the question how serious Mr. Tsipras is with his promise to change the entire system. To Potami would give him comfortable excuses not to deliver everything that he promised in order to win the elections but after less than two years Greeks might be fed up with a government that does not hold what it has promised and then let the fascists rise.
But for the moment, the shockwaves from the political Earthquake in Greece can be felt around the globe since for the first time after WWII a truly socialistic party will form a government in Europe resulting free and democratic elections.
Washington, Brussels, Frankfurt, Berlin are on full alert as the debt cut Prime Minister-in-waiting Alexis Tsipras has promised will no longer hit the investment banks who brought about the trouble with their ruthless speculation with Greek bonds and Credit Default Swaps but the IMF, the EU Commission, European Central Bank and last but not least the German government because it will be the taxpayer who has to foot that bill.
Psychologically, the victory of Syriza over oligarchs who controlled the media while bribing governments who conspired with major international banks, the message is being sent from Athens that yes it is possible to overturn a corrupt system by a democratic election. No bloodshed needed but a peaceful revolution that might be possible in other EU member states, too.
The haircut Alexis Tsipras already discussed with German finance minister Wolfgang Schäuble in January 2013 when he visited Berlin has been seen as a last resort that now becomes inevitable.
Many observers believe that Mr. Tsipras has cut a deal with the powerful EU institutions and will become rather a Social Democrat preserving the capitalistic model by reforming the system. In this sense he would be a stabilising factor even in the eyes of oligarchs.
I asked Mr. Tsipras after his meeting with Mr Schäuble how he had reacted to his proposals and Mr. Tsipras replied that he had told Mr. Schäuble that if they did not “cut debts by a serious margine there would be the threat of the return of fascism in Greece”. It is unknown whether Mr. Schäuble fully comprehended the scope of that possibility.
In any case it would be prudent for our leaders to study not only the political and military but also the financial history of the past centuries. This might help them to think outside the box and see that the interest-based monetary system always leads to state-bankruptcies.
One of the latest haircuts had happened in the aftermath of the neo-liberal era of Menem in Argentina in 2002 when the governments of Eduardo Duhalde and Nestor Kirchner pushed through a 75% cut that let the country’s economy recover.
In history there are many good examples for nullifications of debt. In its early years as a sovereign state France had been in trouble over late payments for eight times. Spain has not been able to cover its foreign debt before 1800 for six times and in the 19th century for 7 times. In the past 300 years there have been 250 foreign debt crisis that resulted in at least partial nullifications and write-offs of debt.
Last but not least, the United States’ decision in 1971 to lift the gold standard in order not to be obliged to pay France in gold as President de Gaulle had demanded it has been nothing less than a cold bankruptcy of the US since this has been the unilateral decision to break an agreement over such a sensitive issue as debt and it usually would result in a war.
Neither the US nor Argentina or any other state needed a “state bankruptcy law” for their haircuts. The EU also wouldn’t require this if in a rather concerted action it decided to declare 75% or 100% of its old debts null and void. But, one should, of course, protect small deposits of up to 500,000 € as these are genuine savings accounts of the average citizens.
In Germany this would mean that ‘Bundesschatzbriefe’ that are almost entirely being held by small investors, employees and SMEs be exempt while the ‘Bundesanleihen’ held by institutional investors such as private banks and insurance companies as well as ultra-rich high net worth individuals (“UHNWIs” as Merrill Lynch calls them) should be written off.
All old debts of the Euro-zone in 2010 reached €7.7 trillion. Altogether, the EU member states account for €9.6 trillion of debts. If most of these debts were declared null and void most of the private banks in Europe probably would become insolvent. In order to avoid a dreadful chain-reaction and by this the devaluation of the ordinary savings one would have to nationalise, recapitalise and restructure these banks. This would be very easy if one made the wealth accumulated through the irrational speculation of the past decades become liable for the nullified debts.
This would only hit the ultra rich multi millionaires and billionaires. According to the world wealth report of “investment” bank Merrill Lynch in 2009 these privateers owned and controlled a financial bubble of €9.4 trillion – almost exactly the amount owed by all EU member states.
These funds had quadrupled in the past 10 years and even in the crisis year 2009 had skyrocketed by double digit figures. That is the wealth bubble that stands on the other side of the balance sheet.
Much is being said about public debt, not only in Greece and Ireland but also countries like Germany but mainstream media always tends to sketch the problem as a result from over-spending and a too generous welfare system that supposedly leftist governments had created.That is wrong.
The state quota did not rise during the past 4 decades because of some kind of socialistic Keynesianism. It is a myth that under social democratic or socialist governments the welfare state expanded. It usually is the opposite.
Today’s public debts aren’t primary the result of a classical Keynesian stimulus cycle that had countered an economic downturn.
According to the AMECO database the primary deficit of industrialised nations between 1975 and 1997 has been constantly negative. Only for the time after 1997 an up and down of the state indebtedness can be noticed that would match the classical Keynesian theory of stirring growth by state interventions.
But, a closer scrutiny reveals that the debts were hardly used for public investments or for stimulation of the economy by an increased consumption.
Not leftist, “socialist” governments piled up these debts by generously distributing social benefits, but it is conservative or right wing governments that behave like Santa Claus – to the rich. That’s where debts on the one side of the balance sheet and wealth on the other come from. The German state piled up totally unnecessarily huge debts after unification instead of collecting taxes from the ultra-rich.
In order to revive our economy and protect the average citizens we have to let the air out of both, the wealth- and debt-bubble, in a controlled way. Our states would be able to function again and provide for public subsistence, health care, social benefits, education and cultural life again. And, our SMEs would be enabled to refinance themselves again while the financial casino would permanently be closed.
When talking about the Greek debts causing the first state-bankruptcy in Europe after WWII one hardly hears anything about those who benefited from that debt. It is a known fact that Deutsche Bank AG, Goldman Sachs, Nathan Meyer Rothschild, HSBC, Lazard Freres SAS and others had made billions by speculating with Greek bonds and Credit Default Swaps (CDS) and were later employed by the Greek government as “advisors” to select the raisins in the pie that need to be privatised in order to fulfil the Troika’s demands.
Then, ALPHA BANK A.E., N M Rothschild & Sons Ltd. and UBS Ltd. got appointed by the Greek government to sell off all silver cutlery. Of course, all these banks have rich clients who might want to buy the profitable pieces of Greece’s assets. That’s where the largest hedgefund BlackRock (Inc.) came in.
When I asked Prime Minister Samaras in January 2014 how much influence Blackrock had on government decisions he of course denied to know about it. But German ARD TV published a detailed report on BlackRock’s activities in Greece.
As corrupt as all this already sounds, this is not the bottom of the barrel, yet. One may wonder where all these debts came from and why Greece’s population was not incredibly rich (except for their upper class). Closer scrutiny reveals that Greece chronically suffered from a negative trade balance. That is not a big surprise either.
Greece imported more than it exported. Not new. And, like almost all Eastern and South – Eastern EU member states Greece piled up debts because of an enormous trade imbalance resulting from consumer goods.
All EU member states (except for the Czech Republic) who joined in 2004 were forced to import top-shelf products from the West while their own industries ran out of business or were taken over by Western companies.
But, in case of Greece all this wouldn’t add up. Greece did not notice such a rise in consumption that the newcomers from Eastern Europe did. Greece imported something else that was far more expensive and that could hardly be ‘consumed’: arms.
At the same time when Greece’s debts skyrocketed, Germany under the Social-Democratic-Green government of Gerhard Schröder and Joseph (“Joschka”) Fischer, doubled its arms export. Most of the weapons were exported to Greece.
So, it has not been the average Greek citizen who indulged in the consumption of luxury goods and by this created the tremendous debts that EU and IMF pretend had to be bailed out, for which a harsh austerity program is to be imposed leading to brutal wage cuts and barbaric social cuts.
But although hundreds of billions were being pumped into the system, through the means of the EFSF, Greece’s, Ireland’s, Portugal’s and Spain’s debts were not shrinking, but still growing.
Instead, the programs presented by the Troika were not aid but killer-programs. Greece will never be able to pay back its debts. Everyone knows this, so why, one may wonder, are our elected leaders so eager to prolong the death of the Greek patient?
The answer is easy: the political leadership wants to put the entire burden of Greece’s inevitable insolvency onto the taxpayer’s shoulders.
The later Greece will be declared bankrupt, the better for institutional investors, banks, hedge funds and speculators, and the more expensive for the taxpayer.
Already today a 50% cut of the Greek debts would cost the German taxpayers €14 billion, but German banks, insurance companies and other speculators would loose only €6 billion, the reason why the majority of German citizens reject dumping more money in that black hole of the financial market. One and a half years ago this relation would have been reversed.
This does not speak against a radical debt-cut but against a system in which a few investment bankers, hedge fund junkies and insane rating analysts, who had already provoked the crash in September 2008 by their chronically erroneous conclusions, dictate to sovereign, democratically elected governments their profit maximization conditions.
When Socialism collapsed 25 years ago, it accepted to be dictated the conditions by the winners. Now, that Capitalism finds itself in a similar position, its protagonists still believe they can dictate how they shall be rescued. That is absurd as it not only leads to the bankruptcy of entire states, but also to the end of democracy. Today, Greek voters managed to reverse the course of history. A good example for the rest of the World.