Where
do we go from here?
by
Michael Hudson
Just after 7
PM Greek time on Sunday, I was told that the “No” vote (Gk. Oxi)
was winning approximately 60/40. The “opinion polls” showing a
dead heat evidently were wrong. Bookies across Europe are reported to
be losing their shirts for betting that the financial right wing
could fool most Greeks into voting against their self-interest. The
margin of victory shows that Greek voters were immune to media
misrepresentation during the week-long run-up as to whether to accept
the troika’s demand for austerity to be conducted on anti-labor
lines.*
It should
not have been so great a surprise. Voting age for the referendum was
lowered to 18 years, and included army members. Faced with an
unemployment rate of over 50 percent, Greek youth understandably
wanted no more euro-austerity.
The Troika’s
demand was for austerity to be deepened solely by taxing labor and
reducing pensions. Its policy makers had vetoed Syriza’s proposed
taxes on the wealthy and steps to stop their tax avoidance. The IMF
for its part vetoed cutbacks in Greek military spending (far above
the 2% of GDP demanded by NATO), despite even the European Central
Bank (ECB) and German Chancellor Merkel agreeing to this.
European
Commission President Jean-Claude Juncker threatened to expel Greece
from Europe, despite no law permitting this to occur. Let us see now
whether he still tries to carry out his bluff, which has been echoed
by right-wing leaders throughout Europe.
His
retaliatory actions from an ostensibly non-political, non-elected
office are not alone. The eurozone class war in support of finance
against labor and industry is now open and in earnest. Instead of
doing what a central bank is supposed to do – provide liquidity
(and paper currency) to banks, ECB head Mario “Whatever it takes”
Draghi forced them to shut down even their ATM machines for lack of
cash. Evidently this was intended to frighten Greek voters to think
that this would be their country’s future if they voted No.
It is an old
strategy. Andrew Jackson expressed his vindictiveness toward the
Second Bank of the United States by shutting it down. When it refused
to appoint his corrupt political cronies, he deposited the U.S.
Treasury’s money in his “pet banks.” The drain of money plunged
the economy into depression. The Southern slave states welcomed
deflation, because they sought low prices for their cotton exports,
and also opposed northern industry with its protectionist policies
and anti-slave politics.
What Greece
needs is a domestic central bank – or failing that, a national
Treasury – empowered to create the money to monetize government
spending on economic recovery. Mr. Draghi has shown the ECB not to be
“technocratic,” but a cabal of right-wing operatives working to
bring down the Syriza government, in a way quite willing to empower
the far-right Golden Dawn party in its stead. In light of his refusal
to carry out the duties of a central bank and act as lender of last
resort when Greek banks run out of cash, Mr. Varoufakis has said
that: “If necessary, we will issue parallel liquidity and
California-style IOU’s, in an electronic form. We should have done
it a week ago.”**
U.S. popular
media echoed the European right by trying to frighten Greeks and
their sympathizers into believing that the vote is whether or not to
remain part of Europe – as if Britain does not have its own
currency while remaining part of the European Union. However, the
vote does throw into question just what it means to be what
pro-austerity advocates call “committed to the European project.”
Eurozone officials are unanimous that it means a commitment to
financial war against labor – to austerity and yet further economic
shrinkage; to faster privatization selloffs (but not to Russians if
they offer higher prices, as Gazprom did) and hence higher prices for
hitherto public utilities; to no rejection of past insider deals
privatization to higher value-added taxes on consumers; and to lower
pensions for labor.
This
prospect was at the center of a meeting at the European Parliament in
Brussels on July 2.*** There was of course unanimous support for a
“No” vote to the anti-
labor,
pro-creditor demands by the IMF, European Central Bank and European
Council. But there also was concern that the Syriza leaders did not
begin immediately upon their January election victory to educate
voters on what actually is at issue: why remaining subject to the
junk-economics dictates by the IMF and ECB, will make the economy
subject to chronic debt deflation. Instead of spending the past six
months educating the public over what is at issue with the Troika,
Syriza focused on playing political rope-a-dope to demonstrate how
firmly the ECB and EC were committed to austerity.
The
left-wing Syriza members with whom I met during the last two weeks in
Athens, Delphi and Brussels felt that more should have been done to
educate the Greek public as to how impossible it is for Greece to pay
the debts with which the Troika had loaded it down, with abject
surrender by its pro-bank Pasok/New Democracy coalition that had
ruled Greece for a generation. (New Democracy leader Samaras resigned
after the vote was in last night.)
One factor
that may have incensed Greeks to vote “No” was the revelation
that an internal IMF Debt Sustainability Analysis – which Lagarde
had sought to suppress – had endorsed what Syriza’s leader Alexis
Tsipras has been saying all along: Greece needs a debt writedown. Its
official debt is unpayable, and never should have been forced upon it
in the first place – under conditions where the Troika removed the
elected prime minister from office to put in their own technocrat
(Lucas Papademos, who had worked with Goldman Sachs to falsify the
government’s 2001 balance sheet to enable it to meet the eurozone’s
entry conditions).
It was
revealed last week that IMF head Christine Lagarde has overruled her
staff and board to defend specifically French interests. As in
2010-11 under Dominique Strauss-Kahn, French banks are major holders
of Greek bonds (including via their ownership of Greek banks).
Strauss-Kahn notoriously overrode his staff when they urged the IMF
not to capitulate to ECB demands to pay French, German and other
private bondholders with Troika bailout loans for which they made
Greek taxpayers liable.
Two weeks
ago the Greek Parliament released a report by its Debt Truth
Commission explaining why Greece’s debt to the IMF, ECB and
European Council was legally “odious.” It was imposed Greece by
the demand by Ms. Merkel and other pro-bank leaders that Greece not
hold the referendum that Pasok Prime Minister Papandreou had proposed
on the bailout of French and German banks at Greek expense.
That was the
root of today’s problems. It also was the occasion on which
European finance and democracy become antithetical, prompting the
late Frankfurt Allgemeine Zeitung editor Frank Schirrmacher to write
his famous editorial, “Democracy is Junk.”****
The Troika
have refused to write down a single euro of unpayably high debt. They
pretended that debt relief is an issue for later. That is what
enabled Tsipras to depict his nation as being victimized by the
eurozone’s vicious class war. The Syriza position has been “We’d
like to pay. But there simply is no money – as the IMF’s own
calculations have clearly and explicitly shown.”
Last
Tuesday, Tsipras explained to Greek voters that the Troika had put
nothing in writing about debt writedowns. This pierced the haze of
media-induced panic. His seeming willingness to surrender simply
dared the Troika to back up their promises in writing. He certainly
was not going to make the tragic mistake that Russian leader
Gorbachev made when he believed the verbal NATO promises that it
would not move into the post-Soviet countries of Central Europe and
the Baltics.
The Troika’s
position was and is: “Impose austerity now. We’ll talk about debt
writedowns later. But first, you must sell off what remains of your
public domain. You must lower wages by another 20%, and force another
20% of your population to emigrate. Only then, when we’re sure that
we can’t get another euro out of you anyway, then we may be willing
to talk about writing down some of your debt. But not until we have
stripped you of anything left to pay in any case!”
Tsipras and
finance minister Varoufakis have been widely criticized in the U.S.
media for seeming to capitulate to Troika demand. The reality is that
they have been civil and polite, even taking conciliatory stance if
only to show how totalitarian and unyielding the Troika has been.
That
contrast between reason and totalitarian “free market” austerity
is what convinced the Greeks to vote No.
Source:
Michael
Hudson’s book summarizing his economic theories, “The Bubble and
Beyond,” is now available in a new edition with two bonus chapters
on Amazon. His latest book is Finance Capitalism and Its Discontents.
He is a contributor to Hopeless: Barack Obama and the Politics of
Illusion, published by AK Press. He can be reached via his website,
mh@michael-hudson.com
Notes.
*James
Galbraith summarizes the misrepresentation in “9 Myths About the
Greek Crisis,” Politico,
**
Ambrose Evans-Pritchard, “Defiant Greeks reject demands as Syriza
readies IOU currency,” The Telegraph, July 5, 2015. He should be
viewed as what used to be called a “certified leak” from the
Syriza negotiators.
***“Peripheral
debts: Causes, consequences and solutions,” sponsored by by the
Eurpean United Left/Nordic Green Left, GUE/NGL (www.guengl.eu). The
video can be found here:
http://www.guengl.eu/news/article/press-conferences/peripheral-debts-causes-consequences-and-solutions.-2-july.
(My speech begins at about 27 minutes.)
Ο Ελληνικός λαός πήγε και ψήφισε φέρνοντας πρωτοφανές ποσοστό νίκης του ΟΧΙ. Δεν πήγαμε όμως εκεί επειδή δεν είχαμε που αλλού να πάμε. Πήγαμε να δώσουμε μήνυμα και να απαιτήσουμε το τέλος της λιτότητας. Θα δούμε αν θα εκτιμηθεί αυτή η ψήφος όπως της αρμόζει.
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