Thread: Banker Occupation Of Greece

Banker Occupation Of Greece

By Stephen Lendman
6-26-11

Economist Michael Hudson calls it "Replacing Economic Democracy with Financial Oligarchy" in a June 5 article by that title, saying:

After being debt entrapped, or perhaps acquiescing to entrapment, the Papandreou government needs bailout help to pay bankers that entrapped them. Doing so, however, requires "initiat(ing) a class war by raising its taxes (harming working households most), lowering its standard of living - and even private-sector pensions - and sell off public land, tourist sites, islands, ports, water and sewer facilities" - in fact, all the country's crown jewels, lock, stock and barrel, strip-mining it of everything of worth at fire sale prices.

Why? Because the US-dominated IMF, EU and European Central Bank (ECB), the so-called "Troika," demand it as the price for bailout help that wouldn't be needed if Greece wasn't trapped in the euro straightjacket. Membership means foregoing the right to devalue its currency to make exports more competitive, maintain sovereignty over its money to monetize its debt freely, and be able to legislate fiscal policies to stimulate growth.

Instead they're entrapped by foreign banker diktats demanding tribute. They call it a "rescue." In May 2010, the Papandreou government agreed to earlier austerity in return for loans. Now they're at it again, demanding more or they'll collapse the entire economy, or so they say. And the same scheme is replicated in Ireland and Portugal. Moreover, it's heading for Spain, and potentially most of Europe and America as representative governments head closer to "financial oligarchy."

In other words, it amounts to financial coup d'etat authority over sovereign governments unless popular anger prevents it, involving more than street protests or short-term strikes accomplishing nothing.

Former Wall Street broker, financial analyst, radio/TV host, and consummate critic Max Keiser calls it "banker occupation" for good reason. They:

-- make the rules;
-- set the terms;
-- issue diktats;

-- pressure, bribe or otherwise cajole or force governments to acquiesce; and
-- burden working households with higher unemployment, wage and benefit cuts, higher taxes, and other austerity measures to assure financial predators profit - always at their expense, forcing once prosperous nations to surrender sovereignty to financial oligarchs, ruling world economies like fiefdoms.

Hudson said European central planning concentrated financial power in "non-democratic hands" from inception under European Central Bank (ECB) dominance. Operating like a financial czar over its 17 Eurozone members, it:

-- "has no elected government (to) levy taxes;

-- (t)he EU constitution prevents (it) from bailing out governments," unlike the Fed able to monetize US debt in limitless amounts; and

-- "the IMF Articles of Agreement also block it from giving domestic fiscal support for budget deficits," saying:

"A member state may obtain IMF credits only on the condition that it has 'a need to make the purchase because of its balance of payments or its reserve position or developments in its reserves.' "

However, despite ample foreign exchange reserves, IMF loans are offered "because of budgetary problems," precisely what it's not allowed to do. As a result, "when it comes to bailing out bankers," said Hudson, "rules are ignored" to save them and their counterparties from incurring losses. And it works the same way in America under the Fed, dispensing open-checkbook amounts to Wall Street on demand.

No wonder Hudson calls finance "a form of warfare," operating like pillaging armies, taking over land, infrastructure, other tangible assets, and all material wealth, devastating nations in the process, causing unemployment, poverty, neoserfdom, "demographic shrinkage, shortened life spans, emigration and capital flight."

Greece's business-friendly fiscal legacy, in fact, caused today's crisis, squeezing public spending in favor of the rich the rich, especially with sweetheart tax policies letting much of their income go undeclared.

Financial deception followed. On February 8, 2010, Der Spiegel writer Beat Balzli headlined, "How Goldman Sachs Helped Greece to Mask its True Debt," saying:

In 2002, Goldman helped them borrow billions by circumventing Eurozone rules in return for mortgaging assets. Using creative accounting, debt was then hidden through off-balance sheet shenanigans, employing derivatives called "cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period - to be exchanged back into the original currencies at a later date."

Debt entrapment followed, nations like Greece held hostage to repay it, the usual price being structural adjustment harshness, making a bad situation worse. In 2010, in return for a $150 billion loan, Papandreou imposed:

-- large public worker layoffs (around 10% overall);

-- public sector 10% wage cuts, including a 30% reduction in salary entitlements;

-- cutting civil service bonuses 20%;

-- freezing pensions;

-- raising the average retirement age two years; and

-- higher fuel, alcohol, tobacco, and luxury goods taxes, knowing much more lay ahead given Greece's worsening debt problem.

More bailout help is now needed in return for greater austerity, as well as selling off Greece's crown jewels as explained above. On June 24, New York Times writer Stephen Castle headlined, "Europeans Agree to a New Bailout for Greece with Conditions," saying:

The deal "came a day after Greece agreed with international creditors to more austerity measures (requiring parliamentary approval) as part of revised plans for 2011-15 aimed at" assuring bankers are first in line to get paid, popular and national interests be damned.

An agreement in principle expects half the funds offered to come from new loans, a fourth from state asset sales, and the remainder from private sector contributions.

An unspecified larger amount (of around 110 billion euros in total) will follow an initial 12 billion euro emergency loan with strings. They include:

-- laying off another 20% of public workers;

-- privatizing public enterprises and assets on the cheap;

-- a one-time personal income levy from 1 - 5%, depending on income;

-- lowering the tax-free income threshold to 8,000 euros annually from 12,000;

-- setting the lowest tax rate at 10%, with exemptions for people up to age 30, over-65 pensioners, and disabled people; and

-- annually taxing the self-employed an additional 300 euros.

Up to $120 billion in cuts are expected though final figures haven't been announced, depending on amounts raised from asset sales and private contributions.

In response, public anger is visceral through daily protests. The ruling PASOK party's approval rating is 27%. Over 90% of the public are dissatisfied with Greece's governance. Another 90% say the country is "on the wrong path." About 80% are unhappy with their lives, and 70% are concerned that conditions will keep deteriorating.

Nonetheless, on June 22, Papandreou won a parliamentary vote of confidence ahead of two more steps the IMF and Eurozone leaders require before releasing more funds - agreeing on their demanded austerity plan and enacting measures to implement it.

In fact, acting IMF managing director John Lipsky (a former JP Morgan Investment Bank vice chairman) said no opposition will be tolerated. In other words, Eurozone nations have no option but to obey IMF diktats, Lipsky acting more like a commissar than banker.

At the same time, austerity, privatizations, and greater debt amounts are self-defeating. Workers, of course, are hardest hit unless mobilized mass action stops it. Ideally they can do it by general strike, shutting down the country, setting non-negotiable demands, staying out until predatory banker diktats are rejected, and prevailing by letting nations regain their sovereignty and people their rights.

That's how labor battles are won. It works the same everywhere when rank and file determination stays the course to victory.

http://www.rense.com/general94/banker.htm

Greek debt crisis prompts fears of EU disintegration

As a Brussels correspondent in the 1990s, Toby Helm reported on the EU at its zenith. Now, as Observer political editor, he returns to a city of uncertainty – over the Greek debt crisis, the future of the euro and the whole political project

80 Comments
o Toby Helm
o guardian.co.uk, Saturday 25 June 2011 20.56 BST


The European and the Greek flags fly above the ancient temple of Parthenon. Photograph: Aris Messinis/AFP/Getty Images

Norbert Schwaiger is a true veteran of EU summits. Now in his early 70s, the amiable German recalls with relish the triumphs and disasters from 34 years of service in Brussels as if they all happened yesterday. He chats about Delors, Kohl, Mitterrand, Chirac, Thatcher and the great rows with the British over money. The epic moments of European construction, from the Single European Act in 1986 to the Maastricht treaty in 1992 and the birth of the euro in 1999, are all fresh in his mind.

To catch up with Europe's progress, Schwaiger, a former press officer who retired in 2003, returned to a Brussels summit last week to take the temperature. Much had changed. "The historical idea has faded," he said wistfully. "When we started it was about Germany and France and the Benelux countries building a new Europe to stop the endless wars. Germany, and that generation of Germans, was ashamed of Hitler. It was about creating security, a secure Europe and a secure economy. Then they wanted to have Europe as their new home country."

As EU officials from 27 countries milled around the giant Justus Lipsius building, the venue of a summit dominated by the dire economic plight of Greece and the resulting existential threat to the euro and the EU itself, the contrast in mood could not have been starker from the heyday of integration that Schwaiger had known.

The talk was no longer of high ideals and "more Europe", but of mere survival for the European project. Where they used to talk of "ever closer union" in the commission press conferences, the phrase i s now rarely, if ever, heard except when referring to history. José Manuel Barroso, the pragmatic European commission president, set his sights at this summit on "stability" for the foreseeable future, meaning the EU will do well to steady the ship in the face of Greece's financial implosion and possible exit from the single currency. Never mind any new European dreams.

From Schwaiger's perspective, one of the reasons why Europe has run out of idealism is the passage of time. He argues that Germany's postwar guilt, which did so much to power the European project, no longer drives young Germans to think about the EU as their parents and grandparents did. "In Germany the new generation, just out of school, has no memory of this," he says. Instead the young see a Germany united from its former east and west, communism fallen and a continent no longer haunted by its past or racked by the fear that it could plunge back into war. Much of Europe's original raison d'être has disappeared and Germany is now less willing to be its unquestioning, selfless paymaster.

Greece's plight has greatly sharpened the sense, evident for several years now, that Europe has lost its drive and, in some quarters, is losing its self-belief.

But some things in the European Union, particularly in Brussels, never change, and therein, perhaps, lie the roots of its problem. Outside the unreal echo chamber that is the Justus Lipsius, the building work for the EU empire of which the founding fathers dreamed continues apace. Vast new glass edifices are being erected in the perpetual chaos of dust and noise that is part of life in the EU's capital.

The physical construction of a united Europe seems to carry on in ignorance of the crises unfolding in the wider world. Up the road from the Justus Lipsius they are preparing the home for a new European diplomatic service, where many hundreds of mandarins will be based. Herman Van Rompuy, the first permanent president of the European council, briefed heads of government last Thursday night over dinner about the spanking new £280m base in which he will entertain EU leaders from 2014. David Cameron was apparently incensed and briefed the British press the next morning that European leaders did not "get it" as they showed off their "gilded cages" while Europe's citizens endured austerity and Greece was on the rocks.

Van Rompuy's talk of his new "palace" offered a perfect excuse for Cameron to court popularity at home by attacking a Europe with its head still stuck in the clouds. But whether or not it was political opportunism, the prime minister had a point. Barroso may show refreshing realism, but too many of those at the centre of the EU project still remain in semi-denial. The new pragmatists seem at odds with an old order that refuses to give up. "We do have to respond differently and too often we fail to do so. We all have to rid ourselves of this idea that we are just programmed to march ever onwards," said one EU official.

Early in 1999, shortly after the launch of the euro, Romano Prodi, then president-elect of the commission, was not content with realising Europe's most ambitious venture thus far, the merging of 11 national currencies into one. Instead he put his foot harder down on the integration pedal. "The single market was the theme of the 80s," he declared. "The 90s was the decade of the single European currency. We must now face the difficult task of moving towards a single economy, a single political unity."

Europe worked in those days on the assumption that if it ever stood still it would fail. As a result, it went at breakneck speed and bent its own rules along the way. In the planning of the euro the desire to create a massively ambitious currency union across much of the EU was achieved only by ignoring its own economic rulebook.

In the run-up to the euro's launch, painful battles were fought between France and Germany to establish a stability pact to ensure members of the currency zone observed fiscal discipline. Euro countries, it was agreed, would have to have debt-to-GDP ratios of no more than 60% and deficit-to-GDP ratios of no more than 3%. "It was about Germany getting a stable euro, a euro like the deutschmark," observed a German official. But when the original 11 countries were admitted in 1999, no fewer than six were allowed in with debt levels well over the required level. The rules were waived as long as their debts and deficits were moving in the right direction.

In the case of Belgium and Italy, their debt was nearer 100% of GDP than 60% – but in they went. The same leniency was shown when Greece joined in 2001, with a debt ratio heading towards double the level required. "We might have been a little too relaxed with Greece," said Richard Corbett, a former Labour MEP who now works as an adviser for Van Rompuy. Within a few years, France and Germany were also busting the stability pact rules.

Twelve years on from the birth of the euro, as the EU prepares to lend more billions to Greece after an initial €110bn failed to do the trick, serious figures in the European debate now believe the euro's crisis could cause the entire EU project to implode. Sir Stephen Wall, Britain's ambassador to Brussels under John Major and Tony Blair – and no kneejerk Eurosceptic – declared recently that the EU was "on the way out". He added: "After all, very few institutions last for ever." A decade ago he could never have predicted he would say such a thing.

On Wednesday, the Greek parliament will vote on a new package of austerity cuts and sweeping economic reforms. If the vote is in favour, the EU will press ahead with its next bailout. No one is sure, however, whether pumping in more EU money will be enough to prevent Athens from defaulting on its massive debts. The fear is that it will not be, and that a Greek default will cause Portugal, Ireland and even Spain to do the same. The effects of that would be appalling, destroying the credit of banks across Europe and further afield that are exposed to Greek debt, wrecking their ability to lend, and landing the default insurance market across the globe with untold costs. The nightmare scenario is another economic crisis on the scale of 2008.

But still the idea – increasingly entertained by economists – that it could all end with Greece being forced out of the euro is not one anyone in Brussels will readily accept. "Greece leaving would just make matters worse, as the Greek currency would devalue, while its debt would remain in euros," said Corbett. "And people would take fright and move their money out of the country."

Kostas Karkagiannis, the Brussels correspondent of the Greek newspaper Kathimerini, says the Greeks will fight to stay in the euro and the EU because it is their best hope. Greeks, he says, see the EU as a haven. "All these European laws are so much better than ours. At least with the EU laws you have a chance of them being implemented. What will happen if we leave the euro with all our debt in euros? Think about the devaluation, think about the inflation. We will go back 25 or 30 years."

That may be the view in Greece, but the prospect of throwing so much money to the stricken country is not one that appeals to other states in an EU of supposedly equal partners. Tensions are deepening between the union's wealthier northern nations and poorer south.

The immediate challenge for Brussels is to ease the Greek crisis and hope that its economy can be revived. The aim is to get private banks that are exposed to Greek debt to exchange them for new loans. Then pray the rescue measures work. In the meantime, plans are being pushed through the European parliament to toughen up the kind of rules that were supposed to apply under the stability pact. There will be new surveillance "early warning" measures aimed at ensuring eurozone countries are not heading into economic trouble, such as unsustainable property booms.

Optimists in the EU try to convince themselves that something good could come from the crisis – meaning more economic integration and harmonisation of taxes – steps towards the single EU economy of which Prodi dreamed. One of the arguments the commission deploys to calm anxiety is to make out that Europe is no stranger to crises – indeed, it says, it has always thrived on them.

Mark Gray, a spokesman for Barroso, said: "The temptation is to look back at the past through rose-tinted spectacles. But there were always peaks and troughs." He points to the queue of countries wanting to join the EU and the euro as evidence that they are more relevant than ever in a globalised world. Corbett believes that Europe could even emerge stronger. "That is what we hope will happen," he says. "But you don't hear much about that in the British press."
THE EURO: FROM IDEALISTIC BIRTH TO CRISIS

February 1992

The Maastricht treaty, negotiated in the last months of 1991, is signed, setting out a path to the single currency. Britain secures an opt-out from its final stage.

January 1999

The euro is born and begins trading at $1.17. The European Central Bank takes over responsibility for monetary policy in the 11 member states. Currencies such as the franc, peseta and lira continue to circulate for the time being, but as "sub-units" of the euro.

2001

Greece, originally omitted because of its weak economy, joins the euro.

January 2002

Euro notes and coins become legal tender in eurozone countries, becoming the sole currency in all 12 by the end of February.

2007-2009

Following the enlargement of the European Union, several new member states join the euro: Slovenia in January 2007, Cyprus and Malta in January 2008, Slovakia in 2009 and Estonia at the beginning of this year, bringing the total number of eurozone countries to 17.

May 2010

The euro falls to a 14-month low of $1.25 as the growing Greek debt crisis rocks global markets.

June 2011

The International Monetary Fund warns European leaders they must act to resolve the problems in Greece, or risk another financial crisis.

http://www.guardian.co.uk/world/2011/ju ... pean-union

Where Greece goes now, we will soon follow

Last week, the deficit on our Government's annual spending widened yet again, to £143 billion. We cannot avoid a reckoning for ever, warns Christopher Booker.


http://www.telegraph.co.uk/comment/colu ... ollow.html

Mario Draghi Ran Goldman Sachs Greece Derivatives Scam

http://maxkeiser.com/2011/06/24/eu-lead ... eek-swaps/