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
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, 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.