The bail out of Greece by the Euro-Zone (or “German Europe” as we have always called it and which has become clearer than ever in the Greek crisis “resolution”) is a Greco-German suicide pact with a further €86 billion of debt on top of the €330 billion already crushing the Greek people.
Cameron and Obama have as usual stood back and allowed, indeed encouraged, the horrendous destruction of the Greeks on the altar of the impossible Euro, when both had it in their hands to recognise the Euro’s unprecedented human cost in economic collapse, financial bankruptcy, social alienation, health care collapse and depopulation of the Mediterranean countries of which Greece is merely the most immediate example.
The British and American corporatist and foreign policy establishments have betrayed the sacrifice of their own people and armed forces who after 50m deaths between 1939 and 1945 had by the mid 1950s re-established a free Europe, based on democratic nation states defended by NATO, supported by the financially generous Marshall Plan and opened up to a post war system of free trade and currency stability.
Then the Americans were misled, as the British people were by Heath in 1972 and Margaret Thatcher was by the “Single European Act” of 1986 into believing that the 1957 European Economic Community was a devotion to Anglo Saxon free trade. It was not – it was an embryo Euro-State based on German hegemony, Statist corporatist policies and the crushing of nation states.
Once on that “train” as German politicians from Hitler to Kohl asserted and with the “points set” (“Weichen gestellt”) the frighteningly naive political establishments in London and Washington were and are to this day swept along with the European authoritarian, imperial polity we thought they had vanquished in 1945.
The final nail in the coffin of a free Europe was the Euro. It drew its power, not because it was successful but precisely because it failed disastrously and the German corporate and political class knew that the disaster would lead not to break up but to opportunities to gain power, centralise political and economic control and destroy the nations and democracies of Europe. The German political mind – in complete contrast to Anglo Saxon belief – thought that mass suffering and social collapse would lead not to opposition but to surrender.
Even before the economic collapse brought about by the Euro in Ireland the Irish were hounded into reversing their “No’s” to EU Treaties. After the Euro destroyed their economy they voted for even more “Europe”. So also in Greece today the people, while rejecting their impossible social and economic situation, said they wanted to stay in the Euro. Their Parliament has voted to accept the most humiliating, hopeless and destructive “bail out” with its crushing of any remaining national sovereignty.
Today we have a Europe where fear trumps rationality, where supranational power trumps democratic sovereignty, and where bureaucratic orders from afar trump the resistance of the people. And all this is supported, indeed praised, by those great “democratic leaders” Cameron and Obama.
ODIOUS DEBT AS CONQUEST
While we democratic sovereigntists (who see the nation state as the best guarantor of democracy and free trade and defence alliances the best guarantor of freedom and prosperity) see excessive debt as a prison for exploited peoples the constructors of the Euro-State see debt as the most effective of all conquerors.
As I have pointed out on this site before a distinguished economist friend of mine attended a Bundesbank conference in Germany before the launch of the Euro. When he said to one Bundesbank Director that the Euro would cause massive distortions and troubles the latter said “Good – then we will be able to take controls which would otherwise be denied us”. My friend was appalled since not even the most insane British political or economic figure would have thought along such lines – but the German political class did. And in July 2015 when Greece finally surrendered all economic and democratic sovereignty and bowed before German Europe’s imposition of its impossible debts that attitude was evident in tooth and claw.
Debt grinds people down.
Debt requires the daily burden of interest payments regardless of our means to pay.
Debt for a nation makes that State dependent on the creditor and makes it vulnerable to political manipulation.
A nation’s debt is usually rolled over or postponed rather than forgiven so that generations to come are burdened with debts they did not incur.
But when a nation’s debt becomes so overwhelming (“odious debt”) that the debtor sees no way out and the creditor’s ”bad debts” also turn him into a bad risk for others – as is the case with Germany today as it loads onto Greece the burden of saving not Greece but the disastrous Euro – then the relationship between the debtor (Greece) and the creditor (Germany) becomes a suicide pact which threatens to bring down all they are associated with.
While Germany – with a record (and unacceptable inside a currency union) balance of payments surplus of 6% of GDP – was lending ever more to Greeks so they could buy German goods (€750,000 to buy just one German car for the Greek Prime Minister) the German State could profit. But now that so many Greek IOUs cannot be paid it is the Germans who must worry. Fortunately for Merkel she has been able to postpone the recognition by her voters of the massive losses they have made lending to the mediterranean countries by forcing Athens to pile on even more impossible debts which will be used not to relieve Greeks but primarily to repay debts to other creditors!
Had Germany allowed Greek default on its debts then the massive loans to Ireland, Portugal, Italy and Spain would have been put in jeopardy and German (and other Eurozone taxpayers) would have suffered huge losses – not easily disguised!
Before Greece joined the European Exchange Rate mechanism in preparation for joining the Euro its debt to GDP was 70%, not good but manageable. Today it stands at 175%.
Country Before joining Euro 2015
France 60% 95%
Germany 62% 75%
Spain 62% 97%
Finland 46% 59%
Italy 112% 132% (2014)
Portugal 50% 130%
Greece 90% 175%
Even those countries which have done quite well at the core of the Eurozone like Finland and the Netherlands have still not reached the level of GDP attained in 2008. Germany and France, the political if no longer the economic core of the Euro, are together exposed to Greece for €160 billion of credit most of which is unlikely to be paid.
GREECE WILL NOW FALL FURTHER
Greece, having suffered a 25% fall in GDP in the last 5 years and a further 2-4% fall since January will now endure a squeeze through higher taxes and lower State spending which will reduce GDP by a further 3%. Cyprus collapsed by 6% of GDP when they were “rescued” by the Eurozone, even though most of the losses in the bank’s bale in were incurred by Russians and other foreign depositors! God knows what will happen in Greece.
Some €50 billion of funds are supposed to come from a fund of Greek State assets which will be privatised (along with the EU rescued banks) but there is no market for Greek privatised assets when the probability of a return to the Drachma and the massive devaluation of those assets naturally frightens off international investors. If Greece stays in the Euro then the debts the fixed currency will cripple the economy and the assets will be worth even less.
The EU lives in a deluded world in which it actually believes it is rescuing those it is killing. While the profitable German economy (for the State and big business but not for Germans) gives a misleading impression of the total debt and production figures for the Eurozone as a whole nevertheless the Eurozone has a total debt to GDP ration of 90% – too high for comfort and likely now to rise further to accommodate the latest Greek bale out.
On top of these omens we now have a growing chasm between the IMF (which has at last woken up to its principles and responsibility to areas other than Europe!) and the EU and the European Central Bank. Unless Germany and the EU agree to Greek (and probably other med countries’) debt write offs the IMF is unlikely to cooperate. German politicians claim a haircut for creditors would be a violation of Article 125 of Lisbon Treaty – even though of course they are happy to violate the 2010 agreement on the use of the EFSM fund which, as the British point out, prohibited the use of such funds for bale outs.
It has been clear for decades what a disaster the Euro was and what its consequences would be (see for instance the relevant chapters in my 2001 book “Fascist Europe Rising” – soon it will hit the European and in particular German taxpayers in the pocket and ‘the European project” for which those German bankers (above) were so keen to see politically useful sacrifices, will really be seen for the disaster it is.