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Last week, Greece’s Prime Minister Alexis Tsipras did the one thing that Angela Merkel and the EU feared: schedule a national referendum for the country to decide whether or not Greece should accept the bailout conditions proposed jointly by the European Commission (EC) the International Monetary Fund (IMF) and the European Central Bank (ECB) — also known as the Troika.
Terms of the new bailout would have meant more austerity measures — higher taxes, more pay cuts and pensions held. The cash the EU promised to keep Greece afloat would have essentially crushed the country.
In other words, more of the same for Greece, only worse. As a result of Tsipras’ referendum on Sunday, 61% of the country voted “OXI” (pronounced oki), or “no,” to the proposed austerity package.
The Prime Minister and his Syriza Party, which came into power less than six months ago, encouraged the country not only to reject the Troika’s austerity package, but to use yesterday’s national mandate as leverage to re-enter negotiations with the EU to ease Greece’s debt burden, and soften the EU’s loan terms until the country can recover. Imagine that, using his country’s permission to decide whether or not they want to be financially enslaved for decades.
The referendum’s results have placed Greece on the edge of an uncertain future. Days after defaulting on a €1.6 billion loan payment to the IMF, Greece was at the brink. Upon default of the loan repayment, the ECB refused to put more cash into Greek banks, forcing the Greek government to limit ATM withdrawals to $40 a day per citizen; this forced Greece to close its banks the week before the referendum. The country was in an economic tailspin within days of Sunday’s vote.
As a result of yesterday’s vote, Greece has been threatened with expulsion from the European Union, which is something the majority of Greeks do not want. Yet, for a country that has borne three years of crushing austerity under the Troika’s terms, they had nothing left to lose. By voting ‘no’ they opened themselves to choosing a fate to be determined.
Austerity measures were imposed on Greece in 2011 to recover billions borrowed from the IMF when they first joined the EU in 2001. Through various shady deals amongst corrupt Greek government officials and certain members of the Greek 1%, that debt was never repaid. Greece was already in deep trouble in 2010-11, around the time the IMF had troubles of its own, which I wrote about here at Planet Waves.
Instead of helping, the EC’s new 2011 austerity program further crippled a country deeply in trouble. The new austerity precipitated economic conditions much worse: higher taxes, a 26% unemployment rate nationwide and the cost of pensions rising. There were not enough younger people employed to pay into the pension fund. Greece’s unemployment rate for its young adults rose to a whopping 60%.
Greece could not produce enough money to pay down its massive debt. Its economic conditions mirror our own recent past. Prior to our troubles brewing under the surface in 2007-08, the sub-prime lending industry was profiting from wild speculation on bad housing loans. People lost their shirts paying escalating interest rates on variable rate mortgages with ballooning debt payments causing the loss of homes and life savings. This ultimately lead to the economic collapse of September 2008, when Lehman Brothers — among other “too big to fail” predatory banks that made money off of derivatives deals capitalizing on bad home loans — crashed and burned.
The Greek referendum reveals a painful truth about the EU — as a union of economically disparate countries with a shared economy, it is not yet in a position to work — not with a grouping of countries of such varied industrial profiles and economic straits. Take a moment to watch this Vox video posted by Ezra Klein, which explains the problems of the EU constituency in a quick three minutes.
The difference between the U.S. collapse in 2008 and Greece’s situation with the EU is that ours was in-house. The U.S. is a union of states with various levels of economy under one country. The EU is several countries under one economic union. The U.S. has the ability to support its struggling states through a federal system of taxes, government programs and short-term stimulus packages employed across the board, with economic mobility that allows us to move to better opportunities across the country should we choose.
Greece’s economic pressures were imposed by the EU countries that have more robust economies — namely Germany. The more robust EU nations hold Portugal, Ireland, Greece and Spain (or PIGS) to impossibly high standards: costs are too dear to sustain, and there is no way for the people of those countries to emigrate to better opportunities across their union. Greece’s rejection of the Troika’s terms awakens the EU’s worst fear–Grexit; it has been called a contagion that would could spread to other PIGS nations. As if any country daring to declare independence from debt is a dreadful disease.
Ever since Tsipras was elected in January 2015 on his leftist Syriza party’s anti-austerity platform, the EU has been on high alert. Some Syriza party members called the Troika’s economic pressure on Greece’s new leftist government a tactic to initiate regime change. It was not about the economy. It was about control.
Earlier this year, in a Der Spiegel concern-trolling article on the success of the Syriza Party and Tsipras’ election, an average Greek citizen had this to say about their new leftist leader in the article’s comments section:
It was a tough choice voting for Alexis. I knew I really should have had more consideration for you Germans and voted more responsibly. The choice was 5 more years of the kids begging in the streets if we voted New Democracy or, with Syriza, possibly seeing them back in school again, and even my wife and I getting our old jobs back. I can understand why so many thought we would stick with the austerity that we knew! We know it is highly irresponsible for us both to want to have jobs, and pay the rent and maybe see our local hospital re-open. But that is the Greeks for you! Always choosing the selfish option!
We see it in the crowds that are thronging to Bernie Sanders’ campaign events in the U.S. Nerves are being hit in high offices and on Main Streets. People have had enough of rules imposed by an invisible oligarchy and the governments they own. We don’t have to buy into fear-inducing threats, and we certainly don’t need to cower before bullies.
We don’t believe the news, which hardly ever covers Sanders’ candidacy with any seriousness. The people have one, daring move to make: expressing their free will through a full democratic process. Greece’s “OXI,” or “No,” was the right thing for them to do.
Demokratia — the political process of rule by the people that the Greeks invented over 2000 years ago, was perfected this week through the will of the people responding to economic oppression.
Today, we are reminded of Winston Churchill’s words when he said, “Homer, today the Greeks did not fight like heroes, the heroes fought like Greeks.” Take this to heart. This will be very useful in the days ahead. Remember it. Remember it well.
*******
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Thanks very much for this, Fe. And I love that quote 🙂
I have an astrologer-friend in Greece who is really worried about what this will mean in terms of results, but even she, as a Yes supporter, is feeling proud that the people have spoken. And as you say, it’s not as if the EU has done Greece any favours.
The time for the closing of the polls, by the way, had the Sun within ten arc minutes of Greece’s (1974) natal Ascendant. The poll closing chart itself had Pallas rising. Let’s hope these are good omens.
Amy:
We should know more Tuesday night, when Tsipras meets with the EU, ECB and IMF players. I hope Jupiter and Venus stay bright over Tsipras’ Leo Sun (b. 7/28/74, Athens GR). May he have a great solar return!!
Krugman says the EU is like “medieval doctors bleeding their patients.” This is THE example of austerity for our time, and I hope everybody watching gets the message. The Greeks are showing us the courage of their principals, let’s hope that kind of fire in the belly spreads like a virus!
Sanders put out a statement in support of Greece, putting a FACE on those in need — “the poor, the children, the elderly.” The financial world seldom takes more than a passing glance at who suffers from their manipulations; this time, it’s hard to miss. Thanks for a closer look, Fe.
An excerpt from Thomas Piketty’s interview with Die Zeit:
On Germany’s history:
Piketty: When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.
…after the war ended in 1945, Germany’s debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece… Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.
Die Zeit: Many Germans believe that the Greeks still have not recognized their mistakes and want to continue their free-spending ways.
Piketty: If we had told you Germans in the 1950s that you have not properly recognized your failures, you would still be repaying your debts. Luckily, we were more intelligent than that.
I live in the EU and visit Greece regularly.
What strikes me the most in Greek responses to this vote is the childlike presumption that the outcome will compell the ‘enemy’ percieved as an anonymus organization, to forget about their debt.
The Greek state owes a lot of money to EU central bank and If they don’t pay then the other European citizens have to suffer the consequences. Is that fair?
If I take a loan with you to buy a car and my husband, my dog and I democratically decide not to repay would you still be so enthousiastic about it?
Doornroosje:
I hope that is not true. Frankly, I don’t think complete debt forgiveness is possible, but debt re-structuring is. I wonder what the discussion between the EU and Tsipras will decide?
Thanks Fe; this says it all. . . “it was about control”. I agree about this being something to observe and learn from. The Greek people are showing in realtime how their chart describes them; Moon conjunct Pluto . . .exact at 4+ Libra. The Moon rules this chart’s ascendant in Cancer.
When transiting Saturn stations direct in August at 28+ Scorpio, it will be in Greece’s 6th house of service and work and health, and it will be ever-so-close to a square (challenge) with the Greek natal Mars in the 2nd house of personal wealth and values at 27+ proud Leo. Then in November, transiting Neptune will station direct at 7+ Pisces, exactly square Greece’s natal Neptune at 7+ Sagittarius.
That same month, November, 2015, transiting Jupiter at 17+ Virgo will oppose Greece’s natal Jupiter at 17+ Pisces, conjunct natal Juno at 18+ Pisces retrograde, which squares the natal nodes at 18+ Sagittarius (north) and 18+ Gemini (south), putting natal Jupiter and Juno in the north bending where help and guidance is received. (The Greeks version of Juno was called Hera meaning “hero”)
Much like the North Node itself, the north bending provides a path forward. Transiting Jupiter on the other hand, will be in the south bending (of the Greek natal chart) where something that no longer serves is given away.
Meanwhile, this month the transiting North Node (follow this path) is one with the Greek People (Moon+ Pluto) at 4+ Libra. Something I find fascinating is that the Greek natal Sun at 0+ Leo opposes it’s natal Pallas (the Strategist) at 1+ Aquarius. Remember the Sabian Symbol for 0+ Leo (Leo 1)?
BLOOD RUSHES TO A MAN’ HEAD AS HIS VITAL ENERGIES ARE MOBILIZED UNDER THE SPUR OF AMBITION. . An irruption of bio-psychic energies into the ego-controlled field of consciousness. Dane Rudhyar calls it “a rising of energy from the heart to the head. .”
May the gods and goddesses be with these Greek people as we watch and learn from them.
be
On the Diane Rehm show today a couple of guests on her panel were being pretty hard on Greece. They were just hella cynical. Two of the guests that were obviously in favor of austerity kept saying the current government is on its way out, no doubt about it, they have to go. Maybe I’m being hypersensitive, but their tone was void of compassion. Who are these cheerleaders for Greece’s creditors, and what do they have to gain by it? I imagine Greece will be used by republican presidential candidates as an example of how America will end up if Bernie Sanders gets elected. After all, he is a “socialist” who will spend all our money supporting lazy Americans that don’t want to work.
One guest on the show, however, did explain something I had not heard; that the debt has actually already been restructured, and the way he was explaining it, they really don’t have to pay anything back as it is. Personally, I think that’s horseshit. I mean if that’s true, what’s all the fuss about?
“…that the debt has actually already been restructured, and the way he was explaining it, they really don’t have to pay anything back as it is. “
Mike:
We should do some investigating on the sources, because EU media is just as well-financed and controlled as the US.
I welcome other media finds on the events in Greece. Planet Waves community — let ‘er rip!
http://www.nationofchange.org/2015/07/05/greece-what-you-are-not-being-told-by-the-media/
Fe I don’t know if this article is true but I read it with a sort of anguish.
I read it. Its highly plausible. There is dirt on everyone’s hands, and the players are highly unsavory.
The EU seems to have been constructed, at least partly, on the basis that all public assets would be sold off to multinationals.
Amy:
Which seems to make a lot of sense, given what’s happening in the developing world — especially equatorial countries. Some ground is cracking underneath here.
I’ll try to find the link but I read that the IMF (under DSK) in effect helped bail out the European banks and Greece’s terms were linked to that, and that the IMF has withdrawn from current discussion saying that debt relief whould be included in any talks with Greece.
It would be interesting to read that, pam. Please link it here once you find it. I have a suspicion that DSK’s debacle might be connected in some way to the current mess.
http://www.telegraph.co.uk/finance/economics/11654639/IMF-has-betrayed-its-mission-in-Greece-captive-to-EMU-creditors.html (this is the article)
http://profit.ndtv.com/news/economy/article-despite-lagardes-initial-reluctance-imf-on-the-hook-for-greece-776678
https://twitter.com/dstrausskahn/status/614846993253298176 DSK proposed to give Greece 2 years to stabilise (ie no outside financial obligations at all) and then to have a vastly reduced debt to repay.
http://www.globalresearch.ca/fast-tracking-tisa-stealth-block-to-monetary-reform-the-banking-game-exposed/5455231
http://monetaryreflections.blogspot.fr/2015/06/kaldor-on-endogenous-money.html#comment-form
http://johnhcochrane.blogspot.co.uk/2015/06/last-greek-thoughts.html
‘The argument is not about “lending” to Greece, i.e. covering this year’s primary surplus. The argument is whether the IMF, ECB, and rest of Europe will lend Greece money to… pay back the IMF, ECB, and the rest of Europe. This is a roll over negotiation, not a lending negotiation.
The loans were not intended to be paid back now. The loans were intended to go on for decades. But with conditions. The negotiation is about enforcing or modifying the conditions for a roll-over.’
http://www.theguardian.com/world/2015/jul/07/alexis-tsipras-angela-merkel-polar-opposites-greece-eurozone
http://www.theguardian.com/business/2013/jun/14/greek-debt-crisis-lessons
http://www.telegraph.co.uk/finance/economics/11654639/IMF-has-betrayed-its-mission-in-Greece-captive-to-EMU-creditors.html
should: (debt relief should be included in any talks with Greece)
I never feel I see clearly in politics – cloak and dagger and things not being what they seem always.
http://www.project-syndicate.org/commentary/greece-debt-crisis-eurozone-by-jeffrey-d-sachs-2015-07
http://www.rcfea.org/RePEc/pdf/pre01_11.pdf
https://ideas.repec.org/p/rim/rimpre/01_11.html
often cited:
http://www.doiserbia.nb.rs/img/doi/1452-595X/2010/1452-595X1004391K.pdf
http://www.economist.com/media/pdf/subprime_solution_schiller_.pdf
http://www.voxeu.org/article/greece-solvent-illiquid-policy-implications (and many other of Mr de Grauwe’s articles)
http://www.wsj.com/articles/imf-chief-lagarde-signals-greek-debt-relief-still-necessary-1433433378
The most recent articles seem to say reform is necessary before debt relief
A few points regarding this article:
1 – The EU is not “several countries under one economic union” – a number of EC members including the UK and Sweden are not part of the Eurozone, so comparing it economically to the US isn’t really accurate. How well would the US function economically if Texas or California had a different currency and central banking system?
2 – While Greece certainly has been threatened with expulsion from the Eurozone, as I explained above the Eurozone and the EC are not synonymous. As far as I’ve read so far, there are no plans to force Greece out of the EC – in fact, as it’s never happened before, there is currenly no mechanism for it to even occur – unless Greece just upped and left.
3 – Far from there being “no way for the people of those countries to emigrate to better opportunities across their union” the free movement of workers “is a fundamental principle of the Treaty enshrined in Article 45 of the Treaty on the Functioning of the European Union and developed by EU secondary legislation and the Case law of the Court of Justice. EU citizens are entitled to:
look for a job in another EU country
work there without needing a work permit
reside there for that purpose
stay there even after employment has finished
enjoy equal treatment with nationals in access to employment, working conditions and all other social and tax advantages”
More here:
http://ec.europa.eu/social/main.jsp?catId=457
Hmmm….
Davina:
Thank you for your clarification on employment mobility within the Eurozone.
Following the lead of Ezra Klein’s video, I used the US as sample for American readers to understand Eurozone 101, since many, including myself, are just learning about the complexities of Greece’s situation.
Yes, US and EZ are two distinctly separate entities. The US is a political unification through a Constitution (not an economic union) of 50 states in one country, federally represented with equalized membership in the Senate and district population representation in Congress. It is not a union of 50 countries, though sometimes given today’s political climate, I wonder sometimes.
Does that clear things on that score or muddy the waters?
Hi Fe
I can see that using the model of the US to explain current European events is basically a sound idea – there are plenty of people over here who struggle to understand it sometimes as well, and have very little idea how Greece has landed itself in this mess in the first place – but, as a model it can only go so far, of course.
The EC consists of 28 member states, of which only 19 are current members of the Eurozone – 3 of the 8 biggest economies in the EC aren’t currently members and the UK, Denmark and Sweden all have opt-outs, basically meaning they never have to join if they don’t want too. That was my point in my earlier post about how the US economy would work without Texas or California.
Also, using the Eurozone as a catch-all term for the EU can cause some confusion – as the two entities are not the same thing. Incidently, the EU has a elected parliment, a court of justice and a central bank – and has been working its way towards a constitution for a while (although that process has stalled badly in recent times) it could be argued that a full political unification may well occur one day – although with the considerable differences between member states it could be a very long process…
Davina:
Thank you. And good jump point for discussion. So here is my dumb question:
Why would “Grexit” be such a bad idea? I see that from both sides. Its that which concerns me. Its obvious Greece can’t pay down their debts under a timeline set by the EZ, if at all. So why couldn’t the EZ let Greece leave the union to heal itself economically and rejoin the union at a later date?
I would imagine the country’s political instability as well as constant insolvency would be a big concern for EZ members — playing a major part in Greece’s ongoing crisis of credibility. Merkel has been there long enough to see 5 Greek Prime Ministers. She’s almost like the Pope, or Queen Elizabeth.
Fe isn’t one big question one about good and bad faith? If the Greek crisis is tied up with Europe using Greece to finance their own debts or greed then that changes everything doesn’t it.
http://johnhcochrane.blogspot.co.uk/2015/06/last-greek-thoughts.html
‘The argument is not about “lending” to Greece, i.e. covering this year’s primary surplus. The argument is whether the IMF, ECB, and rest of Europe will lend Greece money to… pay back the IMF, ECB, and the rest of Europe. This is a roll over negotiation, not a lending negotiation.
The loans were not intended to be paid back now. The loans were intended to go on for decades. But with conditions. The negotiation is about enforcing or modifying the conditions for a roll-over.’
Another point is that the EU countries merely share a currency and that absolutely doesn’t work when their economies are ‘independent’ and at different stages of growth. ie you can’t refloat your economy by printing more money because you share the euro
Debt/loans being counted as a credit is also a mixing up factor to muddy the waters.
http://johnhcochrane.blogspot.co.uk/2015/06/greek-roll-over.html
In above my head in terms of comprehension, but the comments on many of these articles are as interesting as the articles themselves
No matter if it’s a bad or good idea, I think it may well be the only way ahead. Greece’s banks will most likely run out of money in a matter of days and that will force this issue I think. Here’s an article from the BBC website that looks at a few of the possibilities:
http://www.bbc.co.uk/news/world-europe-32332221
http://www.theguardian.com/world/2015/jul/07/help-greece-go-on-holiday-cheap-beautiful
http://www.theguardian.com/commentisfree/2015/jul/10/germany-greek-pain-debt-relief-grexit
I think everything is in flux still, Pam. I am hoping that at least. But the idea of stringent austerity has to bite the dust like the Confederate flag is. Bit by bit, pole by pole.
BTW – they WANT Tsipras out. The next alternative would be the discredited New Democracy Party or worse, the neo-Fascist Golden Dawn.
Send out energy, folks. Our good friends in Greece need it.
Yes Fe there is this comment too under the Varoufakis article – and then how do we get to good faith and integrity in our lives and politics
jimmurphysbrassneck:
If governments are not allowed to create their own money from thin air, then all of the credit the economy needs is created by the commercial banks.
That’s the rub Yanis and a very big one that you’ve missed. You should ahve phoned Michael Hudson
Ever since 1979 goverments have been hijacked and their fiscal policies destroyed as fiscal Conservatives brainwash their own people that a Zimbabwe, Weimar Republic is just around the corner. When nothing could be further from the truth.
Central banks create money, you can say. And commercial banks create credit. The last six years since September 2008 have seen the largest money creation and credit creation in history in the United States. And, yet, prices have not gone up at all. That is, consumer prices have not gone up since 1980. Wages in the United States have drifted downwards for 30 years. And consumer prices and commodity prices have been stable.
But there has been an immense inflation; the largest bond market price increase in history has occurred, as interest rates have fallen from 20% to only one-quarter of 1% today. What has gone up is the price of real estate, the price of bonds, the price of stocks. So, the result is that the value of wealth—and most wealth is held by the wealthiest1% of the population—wealth has gone way up relative to wages. The result is a new kind of class war, as I said last night. It’s not the typical kind of class war between employers and employees. It’s a war of finance against the economy.
And when the commercial bank credit creation leads to debt deflation and the government cannot finance the deficit to pay the interest then the commercial banks say: Alright, sell off and privatise your infrastructure. This is what we’re seeing in Greece today, in Ireland. You’ve seen it in Icelandand the UK. What you are seeing is a financial grab of infrastructure that is taking place by the ability of commercial bankers to prevent the central bank from creating credit.
“What we are seeing now is a fight for what is going to be the rest of the 21st century by creating a new kind of class, a new class much like the invasions of Europe a thousand years ago. A thousand years ago, invaders from the north and from Italy would grab land and grab public utilities by military means. But today—ever since the United States went off gold in 1971—aggressors can no longer afford military war. So, what you have today is a new kind of a war. It’s a financial war. You can get by privatisation and financialisation what armies used to get by force of arms. This is not the class war that people spoke of a hundred years ago. It is a financial war. And it is a war that classical economists warned against.
“300 years of classical political economy sought to get rid of landlords and bankers. A hundred years ago people spoke of technology. Nobody believed that the vested interests could fight back. But they did fight back in the way that parasites do in biological nature.
People think about parasites, as taking the host’s energy and lifeblood. But, in biology, the smart parasites do something else: They take over the brain of the host. They make the brain think that the parasite is part of the body, to be protected.
By stopping the central banks from creating currency ( banning deficts) and allowing the commerical banks to create credit instead. The neoliberals have created an asset stripping machine that will gobble up everything before it – pure and simple.
Fe, asking around, it seems that the whole situation is very complicated (a mishmash on all sides)
And asking the oracle!
What is the best possible course for Greece and Tsipras to set?
Jun 01, 2002
Aquarius – Monthly
When we create people, things and processes in our lives, we can seem to be owned by them. There is often a beauty to the devotion, and when those people are our children, there is a solemn quality to the commitment because so much seems to ride on it. But within all of these processes, there is room for adjustment. They were created by the creative process, and that process goes on, and can be used to expand the boundaries of what you once knew. Be on the lookout, however, for an obligation you did not know you had and which may be keeping you bound to certain circumstances unnecessarily, and blocking your ability to express your joy. You may have looked at this many times and not seen it. You may have chosen to leave it in place because fear is often easier to abide than freedom. But no longer.
Wow.