(1) Syriza to govern with Independent Greeks, who oppose Austerity but also oppose Culture War (2) Syriza to govern with Independent Greeks, who oppose immigration & multiculturalism (3) EU Showdown: Greece Takes on the Vampire Squid - Ellen Brown (4) Syriza will return to the Drachma; Greece Eurozone Exit is in the Wind (5) Troika Punches Panic Button on Greece and Spain (6) Protection in 1930s benefited Deficit countries - Michael Pettis (7) Panicked super rich buying boltholes with private airstrips to escape if poor rise up (1) Syriza ally with Independent Greeks, who oppose Austerity but also oppose Culture War - by Peter Myers, January 28, 2015 I recently backed Syriza, even though they are Trotskyist or allied to Trots. My reasoning was that, in the economic emergency, they would dispense with Culture War. This has now been borne out. They will govern with a minor party, Independent Greeks, which opposes Austerity but also opposes the Culture War (immigration, multiculturalism, Gay Marriage). (2) Syriza to govern with Independent Greeks, who oppose immigration & multiculturalism Independent Greeks: Who are Syriza's right-wing coalition partners and what do they want? Monday 26 January 2015 Socialist party Syriza might have won a surprising victory in Greece's elections but it will only be able to govern with the help of the Independent Greeks, an unlikely coalition partner described by some as the country's equivalent of Ukip. Who are the Independent Greeks? The party was founded in early 2012 by leader Panos Kammenos, Greece's former shipping minister who defected from the centre-right New Democracy party along with several fellow MPs. Its founding declaration vowed to end the "national humiliation and violent economic attack" on Greece in measures imposed by the European Commission, European Central Bank, and International Monetary Fund. The party immediately took a socially right-wing stance, supporting patriotism and the role of the Greek Orthodox Church in family life and education. The Independent Greeks vocally oppose immigration and multiculturalism, emphasising the importance of "Greek history and culture". Have they been successful? Moderately. The Independent Greeks started with 13 MPs in 2012 - 10 incumbent defectors from New Democracy and one from the Panhellenic Socialist movement. Read more: Greece forms new coalition government Everything you need to know about Syriza Euro falls to 11-year low amid Greek election fears In its first parliamentary election of May that year, the party gained almost 11 per cent of the vote and 33 MPs, but quickly lost out in the snap legislative election called just a month later, where it received 7.5 per cent of the vote, slashing its group to 20 MPs. The result yesterday was worse again, with 5 per cent of the vote and just 13 MPs. But the number was just enough to make the Independent Greeks an attractive coalition partner for Syriza, with their combined representation of 162 seats giving the new government a slim majority in Greek's parliament of 300. Independent Greeks leader Panos Kammenos talks to media after his meeting with Alexis Tsipras at Syriza's headquarters in Athens on January 26, 2015. Panos Kammenos' Independent Greeks have been described as a 'conspiracy-prone nationalist party' What are their main concerns? Apart from the ultimate aim of throwing out Greece's loan agreement, a key issue is immigration, with the party's manifesto dictating a maximum figure of 2.5 per cent of the country's population as long as the number of migrants is "economically and socially sustainable". It does not state how such a figure would be enforced. The Independent Greeks want to re-claim war repatriations the party claims the country is owed by Germany, dating back to the Axis occupation in the Second World War. It also wants to lift the legal immunity protecting ministers, parliamentarians, and officials who bear the blame for the economic crisis from prosecution. Mr Kammenos has emphasised the role he sees in Greek life for the Orthodox Church in speeches, in contract to the leader of Syriza, who is an atheist. The Independent Greeks' founding declaration says members believe in the "values and the timelessness of Orthodoxy", potentially contributing to a conservative stance on issues such as gay marriage. Do the Independent Greeks want to leave the EU? No, but the party claims it wants to see "a united Europe of solidarity and cooperation, where all Member States are equivalent, while maintaining their national status and dignity". The founding declaration claims the alliance has been turned into a vehicle to further the interests of "the most powerful countries and the global banking system", in a thinly-veiled stab at Germany and the troika. Syriza party leader Alexis Tsipras Syriza party leader Alexis Tsipras will be the head of the coalition Are there many differences with Syriza? The opposition to Greece's loan agreement and forced austerity is one of the only areas in which the two parties agree. Syriza has a socialist foundation, while the Independent Greeks favour the free market. Syriza's former manifesto pledges vowed to withdraw all Greek troops abroad, quit Nato and dramatically reduce military spending, while the Independent Greeks want to strengthen defence and stay in Nato. Syriza has a broadly liberal outlook on social issues, while its coalition partner's commitment to the Orthodox church could cause arguments. [...] (3) EU Showdown: Greece Takes on the Vampire Squid - Ellen Brown EU Showdown: Greece Takes on the Vampire Squid Ellen Brown Posted on January 6, 2015 Greece and the troika (the International Monetary Fund, the EU, and the European Central Bank) are in a dangerous game of chicken. The Greeks have been threatened with a “Cyprus-Style prolonged bank holiday” if they “vote wrong.” But they have been bullied for too long and are saying “no more.” A return to the polls was triggered in December, when the Parliament rejected Prime Minister Antonis Samaras’ pro-austerity candidate for president. In a general election, now set for January 25th, the EU-skeptic, anti-austerity, leftist Syriza party is likely to prevail. Syriza captured a 3% lead in the polls following mass public discontent over the harsh austerity measures Athens was forced to accept in return for a ?240 billion bailout. Austerity has plunged the economy into conditions worse than in the Great Depression. As Professor Bill Black observes, the question is not why the Greek people are rising up to reject the barbarous measures but what took them so long. Ireland was similarly forced into an EU bailout with painful austerity measures attached. A series of letters has recently come to light showing that the Irish government was effectively blackmailed into it, with the threat that the ECB would otherwise cut off liquidity funding to Ireland’s banks. The same sort of threat has been leveled at the Greeks, but this time they are not taking the bait. Squeezed by the Squid The veiled threat to the Greek Parliament was in a December memo from investment bank Goldman Sachs – the same bank that was earlier blamed for inducing the Greek crisis. Rolling Stone journalist Matt Taibbi wrote colorfully of it: The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who’s Who of Goldman Sachs graduates. Goldman has spawned an unusual number of EU and US officials with dictatorial power to promote and protect big-bank interests. They include US Treasury Secretary Robert Rubin, who brokered the repeal of the Glass-Steagall Act in 1999 and passage of the Commodity Futures Modernization Act in 2000; Treasury Secretary Henry Paulson, who presided over the 2008 Wall Street bailout; Mario Draghi, current head of the European Central Bank; Mario Monti, who led a government of technocrats as Italian prime minister; and Bank of England Governor Mark Carney, chair of the Financial Stability Board that sets financial regulations for the G20 countries. Goldman’s role in the Greek crisis goes back to 2001. The vampire squid, smelling money in Greece’s debt problems, jabbed its blood funnel into Greek fiscal management, sucking out high fees to hide the extent of Greece’s debt in complicated derivatives. The squid then hedged its bets by shorting Greek debt. Bearish bets on Greek debt launched by heavyweight hedge funds in late 2009 put selling pressure on the euro, forcing Greece into the bailout and austerity measures that have since destroyed its economy. Before the December 2014 parliamentary vote that brought down the Greek government, Goldman repeated the power play that has long held the eurozone in thrall to an unelected banking elite. In a note titled “From GRecovery to GRelapse,” reprinted on Zerohedge, it warned that “the room for Greece to meaningfully backtrack from the reforms that have already been implemented is very limited.” Why? Because bank “liquidity” could be cut in the event of “a severe clash between Greece and international lenders.” The central bank could cut liquidity or not, at its whim; and without it, the banks would be insolvent. As the late Murray Rothbard pointed out, all banks are technically insolvent. They all lend money they don’t have. They rely on being able to borrow from other banks, the money market, or the central bank as needed to balance their books. The central bank, which has the power to print money, is the ultimate backstop in this sleight of hand and is therefore in the driver’s seat. If that source of liquidity dries up, the banks go down. The Goldman memo warned: {quote} The Biggest Risk is an Interruption of the Funding of Greek Banks by The ECB. Pressing as the government refinancing schedule may look on the surface, it is unlikely to become a real issue as long as the ECB stands behind the Greek banking system. . . . But herein lies the main risk for Greece. The economy needs the only lender of last resort to the banking system to maintain ample provision of liquidity. And this is not just because banks may require resources to help reduce future refinancing risks for the sovereign. But also because banks are already reliant on government issued or government guaranteed securities to maintain the current levels of liquidity constant. . . . In the event of a severe Greek government clash with international lenders,interruption of liquidity provision to Greek banks by the ECB could potentially even lead to a Cyprus-style prolonged “bank holiday”. And market fears for potential Euro-exit risks could rise at that point. {endquote} [Emphasis added.] The condition of the Greek banks was not the issue. The gun being held to the banks’ heads was the threat that the central bank’s critical credit line could be cut unless financial “reforms” were complied with. Indeed, any country that resists going along with the program could find that its banks have been cut off from that critical liquidity. That is actually what happened in Cyprus in 2013. The banks declared insolvent had passed the latest round of ECB stress tests and were no less salvageable than many other banks – until the troika demanded an additional €600 billion to maintain the central bank’s credit line. That was the threat leveled at the Irish government before it agreed to a bailout with strings attached, and it was the threat aimed in December at Greece. Greek Finance Minister Gikas Hardouvelis stated in an interview: The key to . . . our economy’s future in 2015 and later is held by the European Central Bank. . . . This key can easily and abruptly be used to block funding to banks and therefore strangle the Greek economy in no time at all. Europe’s Lehman Moment? That was the threat, but as noted on Zerohedge, the ECB’s hands may be tied in this case: [S]hould Greece decide to default it would mean those several hundred billion Greek bonds currently held in official accounts would go from par to worthless overnight, leading to massive unaccounted for impairments on Europe’s pristine balance sheets, which also confirms that Greece once again has all the negotiating leverage. Despite that risk, on January 3rd Der Spiegel reported that the German government believes the Eurozone would now be able to cope with a Greek exit from the euro. The risk of “contagion” is now limited because major banks are protected by the new European Banking Union. The banks are protected but the depositors may not be. Under the new “bail-in” rules imposed by the Financial Stability Board, confirmed in the European Banking Unionagreed to last spring, any EU government bailout must be preceded by the bail-in (confiscation) of creditor funds, including depositor funds. As in Cyprus, it could be the depositors, not the banks, picking up the tab. What about deposit insurance? That was supposed to be the third pillar of the Banking Union, but a eurozone-wide insurance scheme was never agreed to. That means depositors will be left to the resources of their bankrupt local government, which are liable to be sparse. What the bail-in protocol does guarantee are the derivatives bets of Goldman and other international megabanks. In a May 2013 article in Forbes titled “The Cyprus Bank ‘Bail-In’ Is Another Crony Bankster Scam,” Nathan Lewis laid the scheme bare: At first glance, the “bail-in” resembles the normal capitalist process of liabilities restructuring that should occur when a bank becomes insolvent. . . . The difference with the “bail-in” is that the order of creditor seniority is changed. In the end, it amounts to the cronies (other banks and government) and non-cronies. The cronies get 100% or more; the non-cronies, including non-interest-bearing depositors who should be super-senior, get a kick in the guts instead. . . . In principle, depositors are the most senior creditors in a bank. However, that was changed in the 2005 bankruptcy law, which made derivatives liabilities most senior. In other words, derivatives liabilities get paid before all other creditors — certainly before non-crony creditors like depositors. Considering the extreme levels of derivatives liabilities that many large banks have, and the opportunity to stuff any bank with derivatives liabilities in the last moment, other creditors could easily find there is nothing left for them at all. Even in the worst of the Great Depression bank bankruptcies, said Lewis, creditors eventually recovered nearly all of their money. He concluded: When super-senior depositors have huge losses of 50% or more, after a “bail-in” restructuring, you know that a crime was committed. Goodbye Euro? Greece can regain its sovereignty by defaulting on its debt, abandoning the ECB and the euro, and issuing its own national currency (the drachma) through its own central bank. But that would destabilize the eurozone and might end in its breakup. Will the troika take that risk? 2015 is shaping up to be an interesting year. (4) Syriza will return to the Drachma; Greece Eurozone Exit is in the Wind Greece Eurozone Exit Is In The Wind. Is it A Harbinger of EU Disintegration Process? Valentin KATASONOV | 13.01.2015 Greek debt – core problem to affect Athens-Brussels relationship One of the issues to hit the news in early 2015 is the possibility of Greece leaving the eurozone, or, even, the European Union. German weekly Spiegel reported that Chancellor Angela Merkel now believed that the eurozone could cope with Athens leaving the common currency in case the Coalition of the Radical Left (SYRIZA) wins the January 25 parliamentary election. Rejections followed (allegedly Chancellor Merkel said something else) but there is no smoke without fire. The Greece eurozone exit has been in the wind since a long time. On the one hand, it can remedy the eurozone economic situation. On the other hand, the very fact of such a possibility being discussed could be perceived as a harbinger of EU disintegration process about to kick off. There will be mixed consequences for Greek economy in case the conjecture becomes a reality. The core problem to affect the relationship between Greece and the European Union is the Greece’s government debt (see the graphic below): The relative amount of Greek sovereign debt by far exceeds other eurozone countries and members of the European Union. As of 2013, Italy, the second largest debtor in eurozone, had the debt equal to 132, 6% of GDP, Portugal was the third with the debt equal to 129, 0% of GDP. According to the estimates of Greek government, the country’s debt was to be 318 billion euro at the end of 2014 but media reported in early 2015 that it went up to 322 billion euro. It’s worth to note that external (or foreign) debt of the eurozone and other EU member-states (the debt includes private and national debt) is hardly ever mentioned. By the way, Greece is far from being the largest external debt holder. By the end of 2012 the Greek external debt was $568, 7 billion or 234% of GDP ($52 thousand per capita). At the very same time the external debt of Great Britain was $10 trillion or 400% of GDP. But, as they say, Quod licet Iovi, non licet bovi or what is permissible for Jove is not permissible for an ox. Greece is not even an ox, it’s rather a scapegoat. In the 2000s it got mired in public and government debts. The global lenders wanted to make this South European country a milking cow. They went too far. The cow could not give milk anymore. Now it’s good only for the role of scapegoat. How the Troika – the IMF, the ECB and the European Commission - «rescued» Greece During a few years world financial circles have been tried to make the Greek «cow» bounce back. In the spring of 2010 the European Union in concert with the International Monetary Fund introduced unprecedented measures, including the loan of €110 billion granted to Greece. It did not work. Then they launched a new bigger aid package equal to €130 billion. Actually a large part of sovereign debt was written off then. The International Monetary Fund and the European Union had to reason it out and find arrangements with the major Greek bonds holders who agreed to «forgive» a part of the debt. It was a fait accompli for minor bonds holders. By the end of 2013 the IMF and Brussels started talks with Athens on the third aid package but the economic situation in Greece did not improve. The government did not fully comply with the conditions put forward by creditors to make the money flows slow down. Greece cannot receive the next €7 billion tranche. The creditors (the big three including the International Monetary Fund, the European Central Bank and the European Commission) tend to believe that the «cow» is not good for milking anymore. Disillusionment became overwhelming in Greece too. The country keeps on plunging into the money pit. Neither austerity measures, nor privatization of remaining state property, nor the attempts to attract investors by bringing down taxes – nothing works. Even according to official data, unemployment exceeds 20%. The figure is 40% for the young people. In 2014 around €6 billion (11%) out of €56 budget expenditure was spent to service the public debt. Partly the debt was paid off at the expense of profits received from privatization. But Greece managed to scrape together only €2, 5 billion from this source. Many politicians and people understood that the «debt restructuring» was nothing but a trick. Proportionally the debt was not reduced: over €100 billion were written off while the debt in 2011-2013 decreased only by €52 billion. A half of the written off debt was immediately replaced by new debts to pay off. So called privileged creditors and lenders took no part in the restructuring and writing off. They continue to receive all the money Greece owes to them. For instance, the International Monetary Fund. Grexit – a symbol of «pure relationship» between Athens and Brussels As far back as 2010, Greeks lost hope to find a way out of the dead end as the crisis set in. Those days the first calls for eurozone (and even the European Union) exit were voiced. A new term appeared – Grexit (Greece and exit). They threatened Brussels with the prospect of holding a referendum on leaving the eurozone. The European Union did its best to quell such sentiments. It realized there would be serious implications for the European Union. But today the situation is different in Greece and elsewhere. The eurozone exit idea has gained great support inside Greece. Yes, it’ll be hard at first, but he return to drachma (Greek national currency before the euro) would allow adopting independent fiscal and economic policy. Greeks are fed up with control exercised over their country by Washington (the International Monetary Fund), Brussels (the European Commission), Frankfurt (the European Central Bank) and Berlin (the German government calling the shots in the eurozone). At the same time the «big three» and Germany are tired of shouldering the problems of Greece – a cow to feed with no prospects for milking in the foreseeable future. According to the opinion of Angela Merkel and Brussels officials, the eurozone has become stronger in the recent two years. Of course, the withdrawal of Greece from the eurozone will have negative consequences, but it won’t be the end. Syriza and its economic program The main provisions of the Syriza economic program envision the withdrawal from the eurozone and return to the national currency – drachma that existed in the days of ancient Hellade to be back in circulation after the country got rid of Turkish yoke in 1832. This measure will allow adopting national fiscal policy, something Greece sacrificed in order to enter the eurozone on January 1, 2001. Then the nationalization of all strategically important enterprises and banks will follow. The Syriza leaders understand well that even the restoration of Central Bank’s national status is an imperative, but it’s not enough for implementation of independent national fiscal policy. They propose to introduce capital controls to prevent financial speculators from entering the country. Instead of lowering the taxes as recommended by the IMF and Brussels, they want to raise them and restore the social programs cancelled by the International Monetary Fund. As the debt problem exacerbated in recent years Syriza started to study the ways to tackle the issue. It has rejected the traditional recommendations of the International Monetary Fund like privatization of state property. Instead it offered …reparations to be used as an alternative. Syriza raised the issue of the reparations underpaid by Germany to compensate Greece for the WWII losses. True, Greece has received some reparations from Germany. The first tranche was received in late 1940s – early 1950s. Mainly the reparations included industrial products (equipment, machines) for the total sum of 105 deutsche marks (the sum equals around $25 million or €25 billion at current prices). The second tranche of reparations arrived in the 1960s. In 1960, Greece and the Federal Republic of Germany signed an agreement whereby 115 million marks were given to Greek victims of Nazism. The payments were tied to the Greeks’ abandoning any additional claims for individual compensation. In 2013, the National Council for German War Reparations headed in Greece by war veteran Manolis Glezos put the amount of damages at half a trillion euros. In March 2014, Greek President Karolos Papoulias once again demanded that Germany pay reparations for damage inflicted on the country during the war. Greece is claiming €108 billion euro as compensation for damages and €54 billion for loans issued to Nazi Germany by the Bank of Greece and never repaid. The total amount of reparation claims by Greece stands at €162 billion. At current price levels, this equals 5,000-6,000 tons of gold. The sum is enough to repay a half of current debt. Syriza vs. world money lenders The most radical measure offered by Syriza is writing the debt off. At least 50% of it. Once in power the coalition plans to hold talks with the main creditors and bond holders. At first glance, it resembles the restructuring of 2012 but there is a big difference. Back then the process was guided from «top», now it is to be initiated from «bottom» by Greece itself. In June 2012 the center-right New Democracy has won the election. It gave its consent to implement the policy of economic strangulation imposed by Washington and Brussels. Back then Syriza raised the issue of writing the debt off or at least imposing a moratorium on payments. Vangelis Apostolou, an MP and a Syriza activist, said before the 2012 parliamentary election that the party stood for debt restructuring. Syriza believes that a large part of the sum is the result of illegal international operations. The party calls for establishing a special international commission to assess the state of Greek economy. If Greece agrees to repay what is left, then a moratorium on interest payments will take effect for the period of three-four years. Apostolou said it was the only way to carry out the obligations before people and the only acceptable solution to make Greece remain in the eurozone. Then the amount of payments would be pegged to the economic growth indicators. The priority would be social needs, not interest payments. Greece would pay if it can and not pay if it can’t. According to other statements coming from Syriza members, the moratorium and restructuring are not the only viable options on the table. A sovereign debt default is not excluded. According to Greek politicians, it’s not the first time - the country saw defaults on government debts in 1898 and 1932. Actually there is only a relative difference between a moratorium, a debt restructuring and a default. It all boils down to warning about the upcoming default. Restructuring may imply a temporary suspension (grace period) of interest or principal repayments. The most resolute Syriza representatives say if Greece fails to reach an agreement with creditors and money lenders on restructuring then a new government would take a unilateral decision on moratorium and partial writing off the debt. In early January Alexis Tsipras, the Syriza party leader, said, «What we demand is a European conference, to tackle this European problem together, and there cannot be a solution without writing off a large part of the debt, a moratorium on repayments and a growth clause.» He said coordinated technical measures could be used to avoid a solution at the expense of Europeans. Syriza vows to write down most of the nominal value of Greece’s debt once elected. «That’s what was done for Germany in 1953, it should be done for Greece in 2015,» Tsipras said in a speech delivered this January. He added that an agreement will include an amendment to make debt payments tied to the indicators of economic growth, not state budget surplus. The party will ask for a grace period or a moratorium to accumulate money for economic development and restructuring. * * * Today the legendary Manolis Glezos is the informal leader of Syriza. On May 30, 1941, he and his friend climbed on the Acropolis and tore down the swastika, which had been there since April 27, 1941, when the Nazi forces had entered Athens. Before the 2012 election said that «all the agreements concluded with loan sharks, not partners or creditors, but loan sharks – as that’s what they are – will be nullified...We’ll say from the very start we don’t owe you anything». Today he repeats the same thing. Greece owes them nothing. Manolis Glezos hopes to see his party win the election and tear up the shackling agreements imposed on Greece by the European Union and the International Monetary Fund. There is some similarity between the events in Greece and Russia. Before the New Year Member of Russian State Duma Committee on Budget and Taxes Yevgeny Feodorov had prepared amendments to the Civil Code providing for the freezing of Russian debt servicing in force majeure circumstances. The list of conditions to justify the measure includes the economic sanctions that impede the functioning of Russian companies and organizations making impossible to service foreign debts. Many experts believe the introduction of such measures would be timely. It will allow to introduce a moratorium on foreign debts repayments. No doubt, it would be expedient for Russia to take a page out of the Greek book and see what it’s like to declare a moratorium on sovereign debt payments. It’ll be possible if the Syriza coalition wins in Greece on January 25. Valentin KATASONOV D.Sc. (Economics), Economist and the chairman of the S.F. Sharapov Russian Economic Society (5) Troika Punches Panic Button on Greece and Spain by Don Quijones * January 24, 2015 After four years of inflicting economic pain and misery on Europe's semi-bankrupt periphery, the Troika (IMF, ECB and European Commission) is suddenly in a lather over the potential political consequences of its disastrous economic policies: "I wouldn't like extreme forces to come to power. I would prefer if known faces show up," said European Commission president Jean-Claude Juncker regarding the upcoming Greek elections. Speaking at a press conference in Pekin, the IMF's Chief Economist Oliver Blanchard warned that unemployment in Spain remains too high, fueling a surge of support in "populist movements" and "political parties that do not want to form part of the euro." Blanchard's words were a barely veiled reference to the phoenix-like rise of Podemos, a stridently anti-establishment but far from Eurosceptic political party. In recent polls of voter intentions for the upcoming municipal elections (March) and general elections (September), the new party, now in its second year of existence, has consistently commanded between 25% and 30% of the votes - more than either of the two main parties. The fear among the political elite, both in Madrid and Brussels, is palpable. In the last few days, Prime Minister Rajoy dispatched his Vice-President, Soraya Sáenz de Santamaria, and Minister of Industry, José Manuel Soria, on a vital mission to persuade Spain's biggest media conglomerate, Grupo Planeta, to adopt a more critical tone in its reporting on Podemos. In return the government will offer the broadcaster more licenses for more channels. Bienvenido a España! The Troika Effect It no longer matters what dastardly ploys the Rajoy government tries to pull off in its desperate bid to hold onto power; with the exception of hardcore PP voters, the Spanish electorate has had enough. Like Samaras' party in Greece, all the Rajoy government can serve up is a continued diet of fear, lies, and distortion. Podemos, by contrast, offers the prospect of change, for better or worse. Senior business executives, small business owners, teachers, lawyers, doctors, nurses, civil servants, hijos de ricos en el paro (the unemployed children of rich parents), even their rich parents... all have told me that they intend to vote for Podemos in the upcoming elections. Their main reason? The current government's naked corruption, criminality and its shameless resurrection of the ghosts of Spain's Francoist past. The Troika's austerity regime comes a close second. As in Greece, the people of Spain are tired and weary of paying for the excesses and failings of a corrupt, self-serving political and economic elite. The austerity measures the Troika has imposed on countries like Greece, Portugal and Spain - in return for bailout funds that in the main have gone toward buttressing Europe's too-big-to-fail banks - have done nothing but exacerbate the underlying economic conditions on Europe's periphery. In late 2011, Rajoy's government took to austerity with barely concealed glee. Since then, unemployment has failed to budge under 24%; essential public services, drained of vital resources, are being amputated limb by limb; and wages in both the public and private sectors continue to slump. Meanwhile, the country's public debt has increased by more than half, from 60% of GDP in 2011 to 92% today. So much for austerity! Naturally, the compound interest on that debt has also swollen: in 2007, the interest payments represented 4.4% of total public spending; by 2013 they had reached a whopping 9.3% - more than the government spends each year on education. What's more, the amended version of Article 135.3 of the Spanish constitution - a prerequisite of the Troika's 2012 bailout of Spain's bankrupt saving banks - gives "absolute priority" to the payment of interest above all other areas of public spending. As for Greece, its total public debt has grown from an already staggering 126 percent of GDP in 2010 to 175 percent today - and that despite two de facto defaults and ruthless bond haircuts! More than three-quarters of that debt now consists of bailout loans from the Troika. In other words, both Greece and Spain remain on wholly unsustainable economic paths, despite all the economic misery and pain inflicted by the Troika's economic shock therapy. A New Age or Another False Dawn? Whatever your opinion of Syriza or Podemos or their respective leaders, Alexis Tspiras and Pablo Iglesias, it is clear that an electoral victory for either party would represent a significant blow against the raggedy status quo. According to Yanis Varoufakis, a university professor of economics hotly tipped to be Syriza's first ever finance minister, a Syriza government's first task would be to "destroy the Greek oligarchy system." If Syriza wins enough votes to control parliament and its leadership honors its electoral pledges - granted, a massive if! - then perhaps, just perhaps, the country might have a slim chance of getting off rock-bottom as well as setting a more socially inclusive standard of economic governance. As for those shrieking about Greece's sacred duty to pay off all its debts, I present Michael Hudson's mantra of perfect logic: "Debts that can't be repaid, won't be repaid." It is the overriding dilemma of our times. As Australian economist Steve Keen says, the only sane and effective response to this dilemma is to ask ourselves "not whether we should or should not repay this debt, but how we are going to go about not repaying it." If the Syriza bloc does win a landslide victory it will be placed under almost unbearable pressure to toe the Brussels line. The ECB's choice of timing for its virgin round of Quantitative Easing, just four days before the Greek elections, was surely no coincidence. Nor was the central bank's decision not to extend its QE program to Greece unless, that is, it concludes the pending Troika review. As if that were not enough, the ever-dependable U.S. rating agency Standard & Poor's just issued a statement that it may downgrade the rating of European countries where Eurosceptic parties may assume power. According to the rating agency, the most "credit negative" parties are SYRIZA and Podemos, since they both favor increasing public spending and restructuring their debts. Pro-Euro, Anti-Austerity: A Perfect Paradox The irony is that neither SYRIZA nor Podemos are Eurosceptic - at least not openly! Instead, what they represent is a manifestation of popular rejection of Troika-imposed austerity. As Tspiras said in a public address yesterday, "The bailout is over. Blackmail is over. Subservience is over." Unfortunately, Tspiras is either badly mistaken or he's knowingly misleading voters. For as long as Greece is in the euro, subservience will forever be its fate. As I wrote many moons ago, the introduction of the single currency had one primary purpose: To slowly, almost imperceptibly, weaken nation-state institutions to the point of total dependence on Brussels and Frankfurt; and ultimately have them supplanted with EU institutions. It is the financial equivalent of death by a thousand cuts. It was ever thus and all by design. As Robert Mundell, the Nobel prize-winning father of the euro, admitted to Greg Palast, the euro is what allows congresses and parliaments to be stripped of all power over monetary and fiscal policy. Bothersome democracy is removed from the economic system as the wholly undemocratic and Goldman-compromised European Central Bank is gifted the reins of economic power. "Without fiscal policy, the only way nations can keep jobs is the competitive reduction of rules on business." As such, if SYRIZA genuinely sought to save the Greek people from the Troika's kiss of economic death, their only option would be a dignified exit from the single currency. Either that or accept the occasional ECB-provided crumb of sustenance (a little shot of QE here and there) and the slight - and no doubt temporary - loosening of the monetary strait jacket. Meanwhile, Brussels' ever opportunistic elite would no doubt exploit this new crisis to claw its way that little bit closer to its ultimate goal: fiscal and political union. By Don Quijones. And a watertight means for multinational corporations to trump national legislatures? It's close to becoming reality, but people are starting to open their eyes. (6) Leaving the Euro; Protection in 1930s benefited Deficit countries - Michael Pettis Some things to consider if Spain leaves the euro By Michael Pettis · May 25, 2014 It might seem almost churlish to wonder what would happen if Spain were to leave the euro. The official European position is that the battle of the euro has been pretty much won, and anyone who argues otherwise will be accused of being a euro hater, an Anglo-Saxon or, even worse, a writer for the Financial Times. But there is more than one “battle” around the euro. While the battle of liquidity seems to have been won, the solvency and the unemployment battles (the latter of which is really a battle of unbalanced demand) have not even been addressed. [...] How much longer is the rest of Europe willing to maintain high unemployment in order to support the German economy? [...]e. For now the policy-making elite in peripheral Europe continues to insist that there will be absolutely no flexibility on the matter of the euro. But in the 1920s the British policy-making elite, who insisted then that there would be absolutely no flexibility on the matter of free trade, was forced to abandon its principles as high unemployment and voter revolt forced it into devaluing sterling and setting up tariffs. There is huge controversy on the sequence and causality (not surprisingly), but there is little doubt that after these occurred the British economy improved significantly and unemployment dropped. Meanwhile it was trade-surplus America that suffered mightily from the rise of global protection, not trade-deficit England. What does this mean for the survival of the euro? Perhaps that when the policy-making elite is determined to act “responsibly” and maintain its highest principles (protect the bankers), but mainly at the expense of the working and middle classes, policymakers are eventually forced into retreat by an angry electorate. And perhaps it also means that the electorate isn’t quite as stupid about economic policymaking as the elite might think. [...] By refusing to allow the introduction of any flexibility into the discussion of the long-term outlook for the euro, Brussels is forcing Europeans to choose among two absolutes: stay in the euro as it is, or break the currency union permanently. [...] What does withdrawal look like? Along those lines I have been thinking about what would happen if Spain were to leave the euro. I confess I know very little about the legal and political implications about a euro exit, and although I have heard often enough that it is impossible to leave the euro, I don’t think anything such thing can be true about a sovereign nation. It may be difficult, it may be messy, and it certainly will be unpleasant, but it can happen. But aside from legal issues, there are a number of economic and financial considerations that I base on my fifteen years of trading the sovereign debt of defaulted and restructured countries and my addiction to financial history. Here are the things I considered as being relevant to any breakup. 1.First and most obviously if Spain leaves the euro its debt burden will soar. If Spain left the euro and returned to the peseta, the peseta will immediately fall, and as it does the peseta value of the euro-denominated debt will rise commensurately. Let us assume that when this happens Spanish external debt is 110% of GDP. In that case a 20% decline in the value of the peseta will immediately raise the debt to 137.5% of GDP and a 50% devaluation of the peseta will raise the debt to 220% of GDP. [...] Spain can replace debt claims with a different set of claims whose payment schedule is positively correlated with economic performance. Instruments that pay according to GDP growth, the performance of the stock market, or land prices, for example, are the right way to line up the interests of the Spanish economy with those of the creditors. These are not unprecedented – Argentina provided GDP warrants on its defaulted 2001 debt – but they are used far too little. If a devaluation plus a sharp cut in Spanish debt causes Spain’s economy to come roaring back, as it most certainly will, creditors will be paid on the basis of how well the economy does, and can eventually recover a substantial part of the value of their original claims. [...] (7) Panicked super rich buying boltholes with private airstrips to escape if poor rise up Jan 26, 2015 12:14 By Alex Wellman Hedge fund managers are buying up remote ranches and land in places like New Zealand to flee to in event of wide-spread civil unrest Super rich hedge fund managers are buying 'secret boltholes' where they can hideout in the event of civil uprising against growing inequality, it has been claimed. Nervous financiers from across the globe have begun purchasing landing strips, homes and land in areas such as New Zealand so they can flee should people rise up. With growing inequality and riots such as those in London in 2011 and in Ferguson and other parts of the USA last year, many financial leaders fear they could become targets for public fury. Robert Johnson, president of the Institute of New Economic Thinking, told people at the World Economic Forum in Davos that many hedge fund managers were already planning their escapes. He said: “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway." Mr Johnson, said the economic situation could soon become intolerable as even in the richest countries inequality was increasing. He said: "People need to know there are possibilities for their children – that they will have the same opportunity as anyone else. "There is a wicked feedback loop. Politicians who get more money tend to use it to get more even money." His comments were backed up by Stewart Wallis, executive director of the New Economics Foundation, who when asked about the comments told CNBC Africa: "Getaway cars the airstrips in New Zealand and all that sort of thing, so basically a way to get off. If they can get off, onto another planet, some of them would." He added: "I think the rich are worried and they should be worried. I mean inequality, why does it matter? "Most people have heard the Oxfam statistics that now we’ve got 80, the 80 richest people in the world, having more wealth that the bottom three-point-five billion, and very soon we’ll get a situation where that one percent, one percent of the richest people have more wealth than everybody else, the 99." |
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