Tuesday, February 14, 2012

Keep An Eye on Greece

For some time now, the cradle of Western civilization, as it were, Greece, has been in the news as the poster child for financial crisis. It is interesting how the media narrative has been twisted to turn the issue sideways, if not necessarily on its head, and this narrative is relevant because it fits the arguments and suits the purposes of a substantial element of the "conservative" side of politics in the United States of America. It is going to be even more relevant, judging from the hue and cry coming from the Republican side of the spectrum after the Empty Suit released his budget yesterday.
All over Europe, nations have been adopting varying degrees of "austerity" budgets designed to keep "debt" under control--and watched as in country after country (Ireland, Iceland, Great Britain, Spain) economic growth and health has come to a screeching halt and gone into reverse. Greece, though, is considered to be the worst case of all--not because it has been in austerity mode, but because it owes a lot of banks a lot of money, and hasn't been paying them. The rest of the European Union has been increasingly vehement about making the Greeks cut expenses and start paying back those loans, threatening to kick Greece out of the EU if their government did not pass a budget that, without irony (since Draco was Greek), is perhaps the most draconian plan that an allegedly First-World country has ever been asked to put into place.
And there is massive, near-total discontent and anger in the country itself, as ordinary Greeks are understandably not enthused about devoting nearly all of the country's revenue to bankers in other countries while virtually every service in the country is slashed to the bone or eliminated. I'm not an economist, but there are two really simple points here that need to be emphasized and the media, controlled and sympathetic to the interests of big finance as it is, are not emphasizing. The first is that the "austerity" budget is not designed to help Greece; it is designed for the benefit of the banks who lent them the money. In most cases, the banks knew full well that there was significant risk to the loans; that there were fewer restrictions and oversights placed on the loans then were proper; and that like most of the financial transactions around the world in the last decade, no one not deeply involved in finance matters could understand the terms and destination of the loans. It bears repeating; this entire crisis has been an increasingly urgent and hardline effort of bankers trying to get their money back--at the cost of sending an entire country's population into deprivation and poverty. The bankers don't care. And they don't care here, either, when the issue of "debt" is brought up. It takes two, usually, to make a problem, and in so much of the cases here in this country, much "debt resolution" seems to not take into account that the loans were given by people who didn't do their jobs right or were engaging in deceitful practices in the first place--but it's the recipients who are being told to pay all of the consequences. Kind of like the EU is demanding of Greece.
And the second point is that there is a relatively easy way for Greece to get out of this, for Greece: default. Rather than impoverish its own citizenry to a point where it might not be possible to come back, it could just say, "we aren't paying." Would it kill, in the short term, the ability to borrow more money? Certainly. But it would also mean that all the capital in the country could go toward meeting the needs of the people who live in it, instead of a huge portion of it flowing out in debt service. It would necessitate a reordering of priorities and probably result in some reduction in expenses--but it bears repeating: the money in the country would stay in the country. And countries that have defaulted in the last twenty years survived rather well. Russia, buoyed by having a commodity that the world needs in prodigious quantities, has become relatively prosperous after a default fifteen years ago. Argentina defaulted several years ago, and came through relatively unscathed. The point is that it is not the end of the world as we know it if greedy and stupid bankers and institutions don't get their money back on loans they should not have made and that, in many cases, had ruinous terms of interest to begin with.
In a sentence, fuck the bankers. They're not going to go under; they've rigged the game in enough places to continue on just fine. If the price is Greece's expulsion from the European Union--oh, well. Greece is a marginal member of the main EU at best, anyway. The EU is going to remain an economic colossus whether or not Greece is a part of it or not. And Greece is never going to find its way to health again bleeding itself dry to pay German bankers interest on loans.
The government chose to adopt the severe austerity budget imposed from abroad, and there is widespread unrest and discontent. The story is not over; indeed, it may be just beginning. If there is an uprising in Greece and the agreement is either repudiated or never implemented, it will have repercussions around the world.

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