Archives‎ > ‎

Varoufakis: Golden Dawn to rise. Greece could issue a new Drachma via swipe cards & cell phones, from Peter Myers

(1) Yanis Varoufakis interview with Phillip Adams of Australian
Broadcasting Corporation
(2) Yanis Varoufakis interview with Phillip Adams - mp3
(3) Varoufakis says Syriza betrayal will strengthen Golden Dawn; it will
become the anti-Austerity party
(4) Shann Turnbull comment: Greece could issue a new Drachma via swipe
cards & cell phones
(5) Statement by the Leader of Golden Dawn on the outcome of the referendum
(6) Ilias Kasidiaris: NO to the blackmails of the loan sharks – NO to
the new Memorandum of SYRIZA
(7) Golden Dawn: The next day
(8) The Manifesto Of Golden Dawn
(9) Golden Dawn New York provides English translations to counter lies
and propaganda
(10) Greek MPs vote for Austerity package as violent protest rages
outside parliament
(11) Austerity vote splits Syriza - Varoufakis & Left wing vote NO
(13) Greek Debt Can Be Annulled - Ellen Brown
(14) Eurozone countries should exit the Eurozone  – Richard A. Werner
(Professor of Banking)
(15) German postwar Economic Miracle happened because Allies wrote off
debts - Michael Hudson
(16) Michael Hudson: The Financial Attack on Greece; Replace Central
banks with National Treasuries

(1) Yanis Varoufakis interview with Phillip Adams of Australian
Broadcasting Corporation

Lessons from Greece: The pseudo-left in power

15 July 2015

The events in Greece since the coming to power of the Syriza-led
government in late January are an immense strategic experience of the
working class internationally.

The actions of the “Coalition of the Radical Left” rank among the
greatest betrayals of the working class in recent decades. Brought to
power on a wave of popular opposition to the dictates of the European
Union, Syriza has now accepted what amounts to the transformation of
Greece into a colony of German and European imperialism.

This betrayal is all the more brazen because it occurred within days of
a massive popular repudiation of EU ultimatums, in a referendum called
by the government itself as part of a cynical political maneuver.

On Monday, Prime Minister Alexis Tsipras’ former finance minister, Yanis
Varoufakis, gave an interview to the Australian Broadcasting Corporation
confirming that Syriza, while publicly calling on voters to reject the
EU’s austerity demands, neither anticipated nor desired a “no” vote in
the referendum held on July 5. The real aim was to obtain a “yes” vote,
so that Syriza could blame the Greek people for its own capitulation.

Asked by interviewer Phillip Adams if it were true that Tsipras did not
expect a “no” vote, Varoufakis replied: “I wasn’t expecting a ‘no’ vote
either.” He added that with “a whole week of banks that were boarded up
and ATMs that would churn out a maximum of 60 euros per card per person
per day, I had assumed and I believe so had the prime minister that our
support and the ‘no’ vote would fade exponentially…”

Varoufakis said that on the night of the referendum, after more than 61
percent of the population had voted against the EU’s austerity demands,
there was, in the prime minister’s office, a “certain sense of
resignation,” “an air of defeat.”

The interview confirms the analysis made at the time by the World
Socialist Web Site that the call for a referendum was a “reactionary
fraud, designed to lend a veneer of democratic legitimacy to the looting
of Greece by the banks.” It also substantiates the account provided last
week by Daily Telegraph columnist Ambrose Evans-Pritchard, who wrote
that Tsipras’ plan was “to put up a good fight, accept honorable defeat
[in the referendum], and hand over the keys of the Maximos Mansion.” [...]

(2) Yanis Varoufakis interview with Phillip Adams - mp3

Yanis Varoufakis on Greek crisis

Monday 13 July 2015 10:05PM

A high profile group of economists wrote an open letter to German
Chancellor Angela Merkel saying, "right now, the Greek government is
being asked to put a gun to its head and pull the trigger." Greece then
last week came very close to pulling that trigger when it went to
Brussels with a suite of suggestions that many saw as ‘capitulation’,
betraying the definitive ‘no’ vote in the referendum.

But just today it's been announced that a deal for a bailout has been
struck, but first requires the Greek government to legislate large
chunks of reforms in return for 86 billion Euros to be made available
over the next three years. But there are rumblings of dissatisfaction
among the Greek ranks, and the possibility of a snap election.

What does the near future hold for Greece, its Prime Minister and the
former Finance Minister?


Yanis Varoufakis FormerGreek Finance Minister in the Syriza Government
and professor of economics.

Presenter Phillip Adams ==

The interview is at

(3) Varoufakis says Syriza betrayal will strengthen Golden Dawn; it will
become the anti-Austerity party

interviewed by Phillip Adams

mp3 - at 28 min mark

"if our party, Syriza, that has cultivated so much hope in Greece, to
the extent that we managed to score 61% in the recent Referendum, if we
betray this hope, and if we bow our heads to this new form of Postmodern
Occupation, then I can noit see any other possible outcome than the
further strengthening of Golden Dawn. They will inherit the mantle of
the anti-Austerity drive [...]"

(4) Shann Turnbull comment: Greece could issue a new Drachma via swipe
cards & cell phones

Yanis Varoufakis on Greek crisis

Monday 13 July 2015 10:05PM

Comments (17)

Shann Turnbull :

  14 Jul 2015 12:08:42am

  Listening to Yanis Varoufakis makes it clear that:

  1. Greece should exit the Euro Zone;

  2. The time and cost of introducing a new currency need not be “a
nightmare” as he stated if Greece followed the example of Sweden that
has eliminated the issue notes and coins by issuing swipe cards and/or
applications for cell phones that act as digital purses with payments
made through cell phones and other readers;

  3. The new currency would have a negative interest rate that is paid
to the government so that: (a) money can no longer be a store of value
but only a medium of exchange as widely adopted in the Great Depression
in Europe and the US when “Stamp Scrip” was issued, and (b) the negative
interest rate would generate a profit for the government even if the
money was given away to pensioners and others in need.

  4. Greek decision makers should study the details of the above
proposal that I presented in Thessaloniki on June 2 and in Athens on
June 14 as posted at


Dr Shann Turnbull BSc (Melb); MBA (Harvard) is the Principal of the
International Institute for Self-governance based in Sydney and a
co-founding member of the Sustainable Money Working Group established in
the UK. He is a founding life Fellow of the Australian Institute of
Company Directors, Senior Fellow of the Financial Services Institute of
Australasia, Fellow of the Governance Institute of Australia and Fellow
of the Australian Institute of Management.

(5) Statement by the Leader of Golden Dawn on the outcome of the referendum

Tuesday, 7 July2015 - 14:31

The Secretary General of the Popular Association – Golden Dawn, Nikolaos
G. Michaloliakos, being under house arrest stated on the outcome of the
referendum that the answer of the Greek people to the proposals of the
loan sharks lenders is an overwhelming NO.

He stressed that the next day must find the entire Greek people united
and that the Golden Dawn expressing the will of the people will stand
strongly against any memorandum friendly agreement.

The Leader of Golden Dawn said:

“Greek People,

Golden Dawn welcomes the outcome of the referendum of July 5th, 2015.
The response of the Greek people to the proposal of the “partners”, to
the proposal of Juncker, was overwhelmingly “NO”. This “NO” was strongly
supported by our movement and I want to thank all the MPs, all
Executives, all Golden Dawners, who stood firmly and supported this line.

The next day, however, should find all the Greeks united. The July 6th
should not find half of the Greeks being patriots and the rest being
traitors. We should also stress that the “NO” of the Golden Dawn to the
Juncker’s proposal is definitely not a “YES” to any proposal and to any
agreement reached by the government. We are firmly against the Memorandum.

The Greek People suffered a lot the last week, with all these queues at
food shops and banks. That was an unacceptable phenomenon, for which
there are responsibilities not only from the part of the government, but
also from the part of Europe that coercively moved towards forcing the
Greek People to say “YES” to its proposal.

Golden Dawn did its duty and proved that it is a Movement Patriotic and
Nationalist, which said “NO” to the foreign rule. Finally, the
mudslinging, slander, exclusion and war against us should stop.

Golden Dawn said NO to the foreign rule. Said NO to every Memorandum.
And will say NO to every agreement that will be governed by English Law
and will assign National Sovereignty”.

(6) Ilias Kasidiaris: NO to the blackmails of the loan sharks – NO to
the new Memorandum of SYRIZA

Wednesday, 1 July2015 - 04:35

Golden Dawn’s MP of Attica, Ilias Kasidiaris, was positioned in the
House plenary on the spurious question of the referendum filed by SYRIZA.

Fellow Fighter Kasidiaris stressed that the theater of the alleged
negotiation of SYRIZA proved that the Golden Dawn is the only real
national force resisting the international loan sharks and therefore its
illegal detentions and political persecutions continue.

Golden Dawn says YES to referenda, but denounces the policy of the
present coalition government SYRIZA-ANEL that has posed a host of
unpatriotic bills against the will of the Greek people.

The people must have the opportunity to say: NO to the loan sharks
lenders, NO to the assignment of sovereignty, NO to the proposal for a
new burdensome Memorandum!

The real question should have been for denouncement of the Memorandum
and delete of the illegal debt. The objective of the lenders remains the
complete destruction of the national economy and the seizure of the
national wealth.

Referendum should have been held for the major national problem of the
illegal immigration, so as not to become Greece a colony of debt and
illegal immigrants.

Golden Dawn is still faithful to its firm position. NO to the blackmails
of the international loan sharks, NO to the assignment of sovereignty,
NO to the new memorandum friendly policy of SYRIZA!

(7) Golden Dawn: The next day

by N. G. Michaloliakos Secretary General of the Popular Association –
Golden Dawn

Saturday, 11 July2015 - 13:39

The decision of the Popular Nationalist Movement to support the “NO” in
the referendum of July 5, 2015, was fully vindicated, not only by the
result, but also by the percentage that shows that the majority of the
Greeks is still firmly against the policy of Memoranda regardless the
political position.

A political position which is directly influenced by this position and
to that concept GOLDEN DAWN no matter whether those who consist the
political and economic establishment like it or not, is one of the
winners of these elections!

The crucial political conclusion from this poll is the fact that the
unreliability of the major TV stations was confirmed, while it became
clear the power which has the Internet, a space in which all the Golden
Dawners must fight. To the political terrorism and the persecutions
against the Nationalists should all the proud Greeks, men and women, who
trust the GOLDEN DAWN resist.

A political terrorism that has reached the point to remove essentially
and practically the civil rights from the elected by the people
deputies! Among whom I am, and while I was not given the right
(ILLEGALLY) to vote in the referendum, the next day I was called to
participate in…the council of political leaders!!!

It is for granted that in the political time that follows SYRIZA,
applying the measures of the international loan sharks, and ND which is
dissolved, will suffer damage. Do not forget that among the voters of
SYRIZA only a small percentage is communists, while in New Democracy
very few are the defenders of an inhuman capitalism without limits.

It is certain that Golden Dawn with the consistent and honest attitude
and the steady national position will earn many of our compatriots,
those who today are the victims of propaganda against us. The future
belongs to us and so the intensification of our struggle towards every
direction is imperative. The nation expects a lot from us and we must
not betray it.

(8) The Manifesto Of Golden Dawn

GOLDEN DAWN is a social and nationalist movement with structures,
principles and positions. It is active in the political life of the
country since the mid-90s, having taken part in European elections
(1994, 2009) and national elections (1996, 2009). On 7 November 2010 the
Golden Dawn participated in the municipal elections. In the recent
election of June 17, 2012 it received 7% and elected 18 MPs.

The social nationalist movement of GOLDEN DAWN finds itself at the
frontline of the struggle against the nation-killing memorandum and the
sinful regime of the parties that consist the political establishment.
We fight against altering our racial demographics by the millions of
illegal immigrants, and the dissolution of the Greek society promoted by
both the coalition parties and the so-called left. We propose a national
strategy so that we can overcome the crisis imposed on our country. We
are struggling for a Greece which belongs to the Greeks.


1) I embrace the third major ideology of history, the one that is the
most rooted in the history of my people. Opposed both to communist
internationalism and universalism-liberalism.

2) I embrace the need for a state founded and built based on this
ideology that nourishes and guides continuously our lives as individuals
and as a society. A state that constantly serves the eternal
revolutionary principles of the nationalist worldview, with the ultimate
goal of forming a new society and a new type of man.

3) I embrace the moral imperatives arising from my worldview and aim to
a radical renewal of the obsolete and counterfeit social values. My
ideology is not looking to salvage anything from the installed economic
and social interests that lead nations, peoples and cultures in decline.
So I’m an enemy of every power that perpetuates this sepsis that finds
foothold in plutocracy. Whether this power is a military-financial
dictatorship or a parliamentary dictatorship. Because those are the two
sides of the same coin, and their purpose is tearing down national identity.

4) I ‘m aware that nationalism is the only absolute and true revolution
because it seeks the birth of new ethical, spiritual, social and mental
values. The right and left solutions supposedly fighting each other, are
just a fake theater of two partners who perpetuate the dominance of
cosmopolitan internationalists, anti-national and anti-social forces.

5) I believe the only state that serves correctly it’s historical role
is the social state, where political power comes from the people,
without party promoters. Nationalism sees people not only as a numerical
entity of individuals but as a qualitative synthesis of people with the
same biological and spiritual heritage, which is the source of all
creation and expresses its power in the social state. The only state
that can represent the people as an organic and spiritual living whole.

6) The polticians on both the right and the left are deliberately lying,
democracy means rule of the people, and therefore the society that is
comprised of people of common origin (definition of Citizen in Classical
Athens). The social state of nationalism is the only direct democracy.
The state were the people are the only reality and do not need authority
but leadership. The People are the real sovereign and rule themselves
through their leader. So the social state can fulfill the only possible
equality (derived from thought and that is not of natural, but human
cultural – political creation), equal opportunities. In contrast to the
transient and fleeting majority of parliamentary governing, the will of
the people is the supreme law, and obedience to it results in true
justice from the whole to every unit. ……

7) I realize that in the social state of the nationalist ideology exists
the ultimate equality and the politically structured social equality. In
the social state there is no social stratification based on
income-economic classes. The social classes are collaborating
organically groups of people with different abilities and production
skills each, just like in a living body. The different systems
contribute harmonically and in full cooperation for their survival.
Solidarity is the rule of the social state for the relations between
social-organic classes. The few people who have burgled their organic
relationship with the people are the members of “plutocratic oligarchy”
with their cosmopolitanism, and members of the leading groups of
“Bolshevik party-union oligarchy” with their internationalism. The
oligarchies of money and the tyranny of political parties are the same-
enemies of the Nation and the People.

8) I am an enemy of vast exploitative wealth, either locally or
internationalist, and a champion of small family ownership like the
“kleros” or “temenos” of our ancestors. Money is a mean of necessity,
not a governing principle of life or the purpose of it. The ultimate
goal of the social state is the elimination of tiered false-value of
money and the controlled use of it as a trading mean. The state should
have control over private property so that it is not dangerous for the
survival of the People or can manipulate them. The economy should be
planned so that it serves the national policy and ensures the maximum
self-sufficiency without dependence on international markets and control
of any multinational companies.

9) I believe that the state, the social state, is the political
organization of the nation and that the nation exists from itself
without being an invention. It is an automatic spiritual fact that
springs from the existence of the People, it is a reality that is based
on the existence of the People. Whether or not the People realize the
extent and depth of its existence, the Nation is the highest spiritual
entity. The People are born from the tribes, the types of a race and its
existence gives birth to the nation as a superior spiritual
manifestation (moral, cultural, religious). Derived from the people, the
nation – race, needs to be strengthened and developed through the state.
It may exist without a state but will be steadily declining (See the
national rise of the Greeks after 4 centuries of subjugation and lack of
state). So I understand that international communism and liberal
cosmopolitanism are undermining the nation by stirring up class divisions.

10) I believe in the importance of society, the whole community of the
People, not the individual. The individual acquires a face and forms
it’s shape, it’s “I” identity through the “We” of the total. Individuals
do not have historical significance as opposed to the people who are
condensations spacetime of special qualities of the People and the
Nation. A person can only be one who completes the socialization through
capability, as harmonious comition of social and individual values. This
superior type of person is a new kind of person that nationalism seeks
to create.

11) I honor and respect the tradition because it consists all the
aspects of beauty and the good that occurred and revealed in history.
While grounded in tradition I seek the new creation, the incessant

12) The social state of nationalism delivers social equality of
opportunities grounded in meritocracy and does not ignore the law of
diversity and difference in nature. Respecting the spiritual, ethnic and
racial differences of men we can build a society with egalitarian laws.
This egalitarian laws are the proof of the moral transgression of
nationalism and show that there is no legal modulation to protect the
naturally existing institutional inequalities that are an integral part
of nature and life. In contrast to this, the social – national state
gives the same margin of enhancement and sealing to every different
element of existence. So, as a nationalist, I fight all forms of
destructive policies (regarding nations, races, men), and any false
inequality and oligarchy (money, party, perversion).

(9) Golden Dawn New York provides English translations to counter lies
and propaganda

What Is Golden Dawn New York?

The Golden Dawn American Chapters stand in support of the ideas and
goals of the Golden Dawn Party in Greece. The Greek people are sick of
being lied to and pushed towards the destruction of their indigenous

The New York division of Golden Dawn specializes in 2 major areas, first
is to collect food donations which we ship to the Greek people who have
been starving due to the crisis and political treason, and the second is
to counter the lies and propaganda against Golden Dawn in the English
speaking world by providing official translations of Golden Dawn articles.

The leaders of the Greek war of independence fought, and even sacrificed
their lives for a Greece for Greeks, we reject any ideologies which are
disgraceful to our ancestors sacrifices. The purpose of the Greek state
should be to promote and protect the interests of the Greek people, not
the interests of the European Union, International Bankers or others.

The Golden Dawn is the only political party in Greece today that truly
stands for the sovereignty, security, and dignity of the Greek people.
The party intends to reverse decades of unlimited third world
immigration which has brought crime, unemployment, disease and possibly
terrorism to the once peaceful Greek cities. We stand with the Greek
people who have been driven to poverty and despair by the imposition of
the genocidal IMF and European Union austerity policies that are
decimating the population and turning Greece into a slave state.

We want Greece to stand up for the rights of its people, the promotion
of its culture, and the assertion of the interests of oppressed Greek
minorities in countries like Turkey and Albania, including the immediate
declaration of its exclusive economic zone in the Aegean and Ionian Seas
to fully exploit their recently discovered natural gas resources. The
political parties which have been in power the last 30 years have
brought upon this calamity and still offer no real solution, only more

Our goals are to promote and support the Golden Dawn’s nationalist
ideals and vision for Greece among the Greek diaspora. To preserve our
Hellenic culture, we must resist and overcome the genocidal
multi-culturalist, and anti- Hellenic agenda of the New World Order. The
unholy alliance of the bankers, media, corrupt politicians and the
educational system are rabidly attempting to extinguish all traces of
Hellenism- past, present and future through poverty, historical
revisionism, media distortions and third world immigration.

We intend to bring a new Golden Dawn for Hellenism to inspire all of Europe!


The Golden Dawn North American chapter respects all U.S. Laws and
respects the Constitution. We operate within the guidelines of the First

In case you did not know, this is the First Amendment:

“Congress shall make no law respecting an establishment of religion, or
prohibiting the free exercise thereof; or abridging the freedom of
speech, or of the press; or the right of the people peaceably to
assemble, and to petition the Government for a redress of grievances”

(10) Greek MPs vote for Austerity package as violent protest rages
outside parliament

Greece bailout: MPs vote to pass reform package as violent protest rages
outside parliament

July 16, 2015

Greek MPs have passed controversial austerity laws aimed at paving the
way for a European Union-backed bailout, following a late-night sitting
in the Athens parliament.

The package, the harshest set of austerity measures ever introduced in
the country, includes cuts to pensions and spending, sweeping changes to
labour laws, and tax hikes.

The reforms are wildly unpopular among Greeks who elected prime minister
Alex Tsipras on an anti-austerity platform.

Protesters took to the streets of Athens ahead of the vote, with petrol
bombs being hurled at police outside parliament.

Despite meeting international creditors' demands by pushing the
unpopular measures through, the PM also suffered rebellion within his
own party.

Thirty-two government members out of 149 voted against the package, and
a further six abstained, meaning Mr Tsipras had to rely on the support
of pro-European opposition parties.

A final count showed 229 MPs out of 300 voted in favour of the measures,
with 64 voting against and six abstaining.

After the vote, Mr Tsipras said: "People need hope and prospect. [They]
need opportunity."

ABC Europe correspondent Mary Gearin said the vote was likely to fuel
anger on the streets of Greece.

"There are many people in Greece who feel betrayed by this government,"
she said.

The majority of Greeks voted against similar austerity terms in the
referendum on July 5. Ruling Syriza party fractured after vote divides

The parliament was under pressure to pass the reforms after Greece
struck an agreement with the eurozone to prevent it crashing out of the
euro on Monday.

The vote followed a stormy debate in which dozens of government MPs on
the left of the ruling Syriz

Before the vote, Mr Tsipras urged parliament to back the bailout saying:
"We don't believe in it but we are forced to adopt it."

Former finance minister Yanis Varoufakis, current energy minister
Panagiotis Lafazanis, deputy labour minister Dimitris Stratoulis and
speaker of parliament Zoe Constantopoulou voted against the measures.

Mr Lafazanis said if the prime minister asked for his resignation he
would "place it at his disposal".

Greece's new finance minister, Euclid Tsakalotos, said during the debate
that his decision to back the bailout terms was something that "will
burden me my whole life".

"I don't know if we did the right thing. I do know we did something we
felt we had no choice over," he said.

The result opens the way for talks on a third bailout to begin with
European partners, but leaves the future of the Tsipras government
unclear following the split in his party ranks.

(11) Austerity vote splits Syriza - Varoufakis & Left wing vote NO

Greece's Parliament approves austerity measures

Krishnadev Calamur · NPR · Jul 15, 2015

Updated at 7:42 p.m. ET

Greece's Parliament approved the controversial austerity measures struck
Monday with the country's creditors, but the vote created a rift within
the ruling left-wing Syriza party.

"We don't believe in it, but we are forced to adopt it," Prime Minister
Alexis Tsipras appealed to lawmakers before the vote.

The vote was 229-64, with six abstentions. Thirty-two of the "no" votes
came from Syriza lawmakers; six of them voted present. Also voting "no"
were members of the far-right Golden Dawn.

Tsipras needed the support of 121 government lawmakers. In the end, 124
backed the bill.

Nick Malkoutzis, deputy editor of the Greek daily Kathimerini's English
edition, tweeted that this means "Tsipras keeps head above water."

The measure approved today raises taxes, cuts spending and overhauls the
country's pensions system. The vote allows Greece to begin negotiations
with its creditors on a third bailout.

Joanna Kakissis, who is reporting for NPR from Athens, tells our
Newscast unit that Syriza was elected six months ago to end austerity.
She says:

  "[M]ore than half of the leftist party's central committee signed a
statement slamming the deal signed by their leader, Prime Minister
Alexis Tsipras. Former Finance Minister Yanis Varoufakis compared the
deal to the 1919 Treaty of Versailles, which crushed Weimar Germany and
helped fuel World War II."

"These negotiations failed because the creditors refused the only issue
that would put Greece on a viable path again," Varoufakis said, "the
issue of debt relief."

He was among the prominent "no" voters.

Tsipras said though the deal signed Monday was flawed, the alternative,
an exit from the eurozone, was worse.

Debt relief for Greece was the focus of a study released Tuesday by the
International Monetary Fund, one of Greece's creditors, which called the
country's debt burden "highly unsustainable." The fund said it would not
support the new bailout unless the agreement reduced the country's debt

That position puts the Washington-based IMF in conflict with Greece's
other creditors — the eurozone and the European Central Bank. The New
York Times notes:

  "The deal announced Monday morning stated that the creditors would not
forgive any Greek debt and offered only a general assurance of further
discussions about reducing annual debt payments by stretching out
payment periods or reducing interest rates.

  "The fund's decision to go public with its stance suggested that the
draft agreement would be only the starting point for further
negotiations about the sustainability of Greece's debt and the
willingness of its lenders to recognize they might not get all their
money back."

Greece owes its creditors about $330 billion, according to the Times, an
amount that has been estimated to be 177 percent of the country's gross
domestic product.

(12) ECB/IMF money was created "out of nothing"

From: "Griffiths, Aaron" <> To:
"" <> Date: Thu, 16 Jul 2015
13:43:21 +1000 Subject: RE: Syriza Betrayal of the Greek people paves
the way for Golden Dawn

Here's my brief summary:

PRELUDE: EU created

STEP 1: ECB/IMF/EU forced their loans onto Greece - the "money" was
created by this loaning mechanism. In other words, the money was created
"out of nothing". Not one international banker gave a drop of sweat for
it. It does not represent any real value or labour.

STEP 2: Greece defaulted, due to no small machinations by Goldman Sachs
& Co

STEP 3: The bankers are demanding their "money", which, remember is
produced out of nothing. They would rather see Greek people starve or
jump off of buildings than to forgive the Greeks of the imaginary money
that they "loaned" them.

STEP 4: This step is the sleight-of-hand step that the international
bankers ALWAYS perform...........they "bail them out" or "re-finance the
loan" or "debt restructuring" or whatever term they decide to use. The
net result is more money (ie debt) that is introduced into the system.
In summary, it means that the Greek people and the infrastructure that
they built over decades are collateral and they are the ones that will
pay back the interest on the loans via the inflationary mechanism
(remember, the banks have no concerns about the principal being paid
back; in fact, it is a disastrous event for a bank when an individual or
a country actually pays back the entire principal).

I have missed some smaller steps due to brevity. All the steps above
involve coercion, force, trickery etc. There is a simpler word: SLAVERY.

(13) Greek Debt Can Be Annulled - Ellen Brown

Grexit or Jubilee? How Greek Debt Can Be Annulled

Posted on July 14, 2015 by Ellen Brown

The crushing Greek debt could be canceled the way it was made – by
sleight of hand. But saving the Greek people and their economy is
evidently not in the game plan of the Eurocrats.

Greece’s creditors have finally brought the country to its knees,
forcing President Alexis Tsipras to agree to austerity and privatization
measures more severe than those overwhelmingly rejected by popular vote
a week earlier. No write-down of Greece’s debt was included in the deal,
although the IMF has warned that the current debt is unsustainable.

Former Greek finance minister Yanis Varoufakis calls the deal “a new
Versailles Treaty” and “the politics of humiliation.” Greek defense
minister Panos Kammenos calls it a “coup d’état” done by “blackmailing
the Greek prime minister with collapse of the banks and a complete
haircut on deposits.”

“Blackmail” is not too strong a word. The European Central Bank has
turned off its liquidity tap for Greece’s banks, something all banks
need, as explained earlier here. All banks are technically insolvent,
lending money they don’t have. They don’t lend their deposits but create
deposits when they make loans, as the Bank of England recently
confirmed. When the depositors and borrowers come for their money at the
same time, the bank must borrow from other banks; and if that liquidity
runs dry, the bank turns to the central bank, the lender of last resort
empowered to create money at will. Without the central bank’s backstop,
banks must steal from their depositors with “haircuts” or they will

What did Greece do to deserve this coup d’état? According to former
World Bank economist Peter Koenig:

[T]he Greek people, the citizens of a sovereign country . . . have had
the audacity to democratically elect a socialist government. Now they
have to suffer. They do not conform to the self-imposed rules of the
neoliberal empire of unrestricted globalized privatization of public
services and public properties from which the elite is maximizing
profits – for themselves, of course. It is outright theft of public

According to a July 5th article titled “Greece – The One Biggest Lie
You’re Being Told By The Media,” the country did not fail on its own. It
was made to fail:

[T]he banks wrecked the Greek government, and then deliberately pushed
it into unsustainable debt . . . while revenue-generating public assets
were sold off to oligarchs and international corporations.

A Truth Committee convened by the Greek parliament reported in June that
a major portion of the country’s €320 billion debt is “illegal,
illegitimate and odious” and should not be paid.

How to Cut the Debt Without Loss to the Bondholders

The debt cannot be paid and should not be paid, but EU leaders justify
their hard line as necessary to save the creditors from having to pay –
the European taxpayers, governments, institutions, and banks holding
Greek bonds. It is quite possible to grant debt relief, however, without
hurting the bondholders. US banks were bailed out by the US Federal
Reserve to the tune of more than $16 trillion in virtually interest-free
loans, without drawing on taxes. Central banks have a printing press
that allows them to create money at will.

The ECB has already embarked on this sort of debt purchasing program. In
January, it announced it would purchase 60 billion euros of debt assets
per month beginning in March, continuing to at least September 2016, for
a total of €1.14 trillion of asset purchases. These assets are being
purchased through “quantitative easing” – expanding the monetary base
simply with accounting entries on the ECB’s books.

The IMF estimates that Greece needs debt relief of €60 billion – a mere
one month of the ECB’s quantitative easing program. The ECB could solve
Greece’s problem with a few computer keystrokes. Moreover, in today’s
deflationary environment, the effect would actually be to stimulate the
European economy. As financial writer Richard Duncan observes:

When a central bank prints money and buys a government bond, it is the
same thing as cancelling that bond (so long as the central bank does not
sell the bond back to the public).

. . . The European Central Bank’s plans to create ?1.1 trillion over the
next 20 months will effectively cancel the combined budget deficits of
the Eurozone national governments in both 2015 and 2016, with a
considerable amount left over.

Quantitative Easing has only been possible because it has occurred at a
time when Globalization is driving down the price of labor and
industrial goods. The combination of fiat money and Globalization
creates a unique moment in history where the governments of the
developed economies can print money on an aggressive scale without
causing inflation.

They should take advantage of this once-in-history opportunity to borrow
more in order to invest in new industries and technologies, to
restructure their economies and to retrain and educate their workforce
at the post-graduate level. If they do, they could not only end the
global economic crisis, but also ensure that the standard of living in
the developed world continues to improve, rather than sinking down to
third world levels.

That is how it works for Germany after World War II. According to
economist Michael Hudson, the most successful debt jubilee in recent
times was gifted to Germany, the country now most opposed to doing the
same for Greece. The German Economic Miracle followed massive debt
forgiveness by the Allies:

All domestic German debts were annulled, except employer wage debts to
their labor force, and basic working balances. Later, in 1953, its
international debts were written down.

Why not do the same for the Greeks? Hudson writes:

It was easy to write down debts that were owed to Nazis. It is much
harder to do so when the debts are owed to powerful and entrenched
institutions – especially to banks.

Loans Created with Accounting Entries Can Be Canceled with Accounting

That may be true for non-bank creditors. But for banks, recall that the
money owed to them is not taken from the accounts of depositors. It is
simply created with accounting entries on the books. The loans could be
canceled the same way. To the extent that the Greek debt is owed to the
ECB, the IMF and other financial institutions, that is another option
for canceling it.

British economist Michael Rowbotham explored that possibility in 1998
for the onerous Third World debts owed to the World Bank and IMF. He
wrote that of the $2.2 trillion debt then outstanding, the vast majority
was money simply created by commercial banks. It represented a liability
on the banks’ books only because the rules of banking said their books
must be balanced.  He suggested two ways the rules might be changed to
liquidate unfair and oppressive debts:

The first option is to remove the obligation on banks to maintain parity
between assets and liabilities, or, to be more precise, to allow banks
to hold reduced levels of assets equivalent to the Third World debt
bonds they cancel.  Thus, if a commercial bank held $10 billion worth of
developing country debt bonds, after cancellation it would be permitted
in perpetuity to have a $10 billion dollar deficit in its assets.  This
is a simple matter of record-keeping.

The second option, and in accountancy terms probably the more
satisfactory (although it amounts to the same policy), is to cancel the
debt bonds, yet permit banks to retain them for purposes of accountancy.

The Real Roadblock Is Political

The Eurocrats could end the economic crisis by writing off odious
unrepayable debt either through quantitative easing or by changing bank
accounting rules. But ending the crisis is evidently not what they are
up to. As Michael Hudson puts it, “finance has become the modern-day
mode of warfare. Its objectives are the same: acquisition of land, raw
materials and monopolies.” He writes:

Greece, Spain, Portugal, Italy and other debtor countries have been
under the same mode of attack that was waged by the IMF and its
austerity doctrine that bankrupted Latin America from the 1970s onward.

Prof. Richard Werner, who was on the scene as the European Union
evolved, maintains that the intent for the EU from the start was the
abandonment of national sovereignty in favor of a single-currency system
controlled by eurocrats doing the bidding of international financiers.
The model was flawed from the beginning. The solution, he says, is for
EU countries to regain their national sovereignty by leaving the euro en
masse. He writes:

By abandoning the euro, each country would regain control over monetary
policy and could thus solve their own particular predicament. Some, such
as Greece, may default, but its central bank could limit the damage by
purchasing the dud bonds from banks at face value and keeping them on
its balance sheet without marking to market (central banks have this
option, as the Fed showed again in October 2008). Banks would then have
stronger balance sheets than ever, they could create credit again, and
in exchange for this costless bailout central banks could insist that
bank credit – which creates new money – is only allowed for transactions
that contribute to GDP in a sustainable way. Growth without crises and
large-scale unemployment could then be arranged.

But Dr. Werner acknowledges that this is not likely to happen soon.
Brussels has been instructed by President Obama, no doubt instructed by
Wall Street, to hold the euro together at all costs.

The Promise and Perils of Grexit

The creditors may have won this round, but Greece’s financial woes are
far from resolved. After the next financial crisis, it could still find
itself out of the EU. If the Greek parliament fails to endorse the deal
just agreed to by its president, “Grexit” could happen even earlier. And
that could be the Black Swan event that ultimately breaks up the EU. It
might be in the interests of the creditors to consider a debt jubilee to
avoid that result, just as the Allies felt it was in their interests to
expunge German debts after World War II.

For Greece, leaving the EU may be perilous; but it opens provocative
possibilities. The government could nationalize its insolvent banks
along with its central bank, and start generating the credit the country
desperately needs to get back on its feet. If it chose, it could do this
while still using the euro, just as Ecuador uses the US dollar without
being part of the US. (For more on how this could work, see here.)

If Greece switches to drachmas, the funding possibilities are even
greater. It could generate the money for a national dividend, guaranteed
employment for all, expanded social services, and widespread investment
in infrastructure, clean energy, and local business. Freed from its
Eurocrat oppressors, Greece could model for the world what can be
achieved by a sovereign country using publicly-owned banks and
publicly-issued currency for the benefit of its own economy and its own

(14) Eurozone countries should exit the Eurozone  – Richard A. Werner
(Professor of Banking)

What should be done about Greece – and what is likely to happen

Posted on 5 Days Ago by rawjapan

10 July 2015

By Richard A. Werner

Will Greece default or exit from the euro, or both? First, I will
describe the best course of action, then what I think will happen. The
two are not the same: In Europe, policy actions have diverged from the
optimal course of action for most of the last two decades.

Consider first the 1990s. Like many economists, at the time I pointed
out that the plans by the eurocrats to introduce a single currency were
thoroughly misguided: monetary policy is the most powerful policy arm,
and there is no reason why any government should amputate it. As I
argued then, historically the German D-Mark had been strengthening since
its introduction in 1948 against the currencies of its neighbours, and
this reflected – and compensated for – increased German competitiveness.
Their weakening currencies allowed German trade partners to keep their
export industries in business and their workers employed. By introducing
a single currency, future revaluations of the German currency were
disallowed. This amounted to a de facto future devaluation of German
purchasing power, revaluation of the currencies of the other European
countries, and hence would render non-German economies less and less
able to compete against German exports over time.

To economists – even of the mainstream ilk – it was clear what would
have to follow: Unable to depreciate their currencies, countries such as
Spain, Italy, let alone Greece would need to conduct what is
euphemistically called an ‘internal devaluation’, i.e. wages would have
to fall significantly and domestic purchasing power would have to be
reduced. Countries refusing to implement such austerity policies or
trying to circumvent them would face ballooning trade deficits with
Germany and the need for ever greater borrowing from the German central
bank (via what came to be known as TARGET2). Their debt would swell,
until reaching an unsustainably high level, and then something drastic
would have to happen – default, exit from the single currency, or both.
It was an almost unique instance where most economists – famous for
disagreeing – agreed.

When visiting Europe at the time (I was based in Tokyo in the 1990s),
and meeting my peers, the chief economists at other banks, I would of
course discuss what in my view was the highly worrying prospect of these
plans to abolish the D-Mark. I was astonished by their reaction. About
half of them insisted that those plans were so lunatic that, of course,
they would not be implemented. This was a bad call, since the commitment
to the single currency had been enshrined in the Maastricht Treaty in
1993 and the eurocrats were implementing a pre-ordained implementation
plan resulting, by the end of the 1990s, in fixed exchange rates, and by
2001 a single currency. I had had the opportunity to hear Mr Alexandre
Lamfallusy, the leading technocrat tasked with the introduction of the
single currency, speak in Tokyo around 1996. He presented his road map.
The astonishing aspect was the level of detail. He told us, years in
advance, in which European cities the chiefs of central banks and the
finance ministers would meet and what they would decide; when and where
their deputies would meet and what they would decide; and where and when
the heads of government would meet, and what they would decide: month
after month of detailed scheduled meetings, with a complete script of
pre-ordained outcomes, named after the cities in which the meetings were
to take place. His confident presentation made it clear that he expected
this script to be followed to the letter. I saw no reason to doubt his
words. (Needless to mention, this is what happened).

The other half of the chief economists, like me, recognised that a
single currency would be introduced, no matter how nonsensical the
economics, since it was a political project. (The economics being bad,
the politics was even worse: the end of democracy in Europe). They
agreed with me that it was going to be a disaster. I asked the chief
economist of what was then the fourth largest German bank: “If you think
so, why don’t you speak up about this? You are forecasting gloom and
doom, but I don’t see any reports by you or your bank about it.” His
answer was shocking: He said that there had been clear instructions from
the boards of all the large German banks to their staff that no report
on the abolition of the D-Mark and the introduction of a European single
currency that was in any way negative was allowed to be published. The
economists in the private sector had been muzzled by their bosses. The
same I heard from journalists. So the German media only quoted the
rigged reports from the banking economists.

As I warned in my 2003 book Princes of the Yen, in the event the
European Central Bank was to exacerbate matters greatly by creating
massive credit bubbles, banking crises and recessions in its first
decade of operation. The ECB then ensured a prolonged crisis by not
ending these banking busts, such as in Ireland, quickly and without
costs to the tax payer (as central banks are uniquely able to do).
Instead, the ECB forced governments to incur massive national debts to
rescue their now defunct banking systems. This way, Ireland moved from
fiscal poster boy to virtual default, needing an IMF ‘rescue’.

And this, coupled with excessive consumption and spending during the
boom years, is how Greece got into its current predicament.

So it is high time to recognise that the introduction of the euro was a
mistake. It is time to cut our losses, instead of throwing good money
after bad. Eurozone countries should therefore now show solidarity with
Greece and all exit the eurozone together. This can be done by simply
reversing the procedures of introducing the euro.

By abandoning the euro, each country would regain control over monetary
policy and could thus solve their own particular predicament. Some, such
as Greece, may default, but its central bank could limit the damage by
purchasing the dud bonds from banks at face value and keeping them on
its balance sheet without marking to market (central banks have this
option, as the Fed showed again in October 2008). Banks would then have
stronger balance sheets than ever, they could create credit again, and
in exchange for this costless bailout central banks could insist that
bank credit – which creates new money – is only allowed for transactions
that contribute to GDP in a sustainable way. Growth without crises and
large-scale unemployment could then be arranged.

As to the question of what will actually happen with Greece, we can be
short: President Obama called Angela Merkel a fortnight ago and
apparently told her that it was ‘critical’ to keep Greece in the euro.
Legally, Germany is not a sovereign state; in practice, it is beholden
to the US. It is thus likely that a deal will be made, as the US project
of ‘ever closer union’, the transfer of all powers and sovereignty to an
unelected Brussels elite reporting to Washington, must continue, no
matter the costs for the European peoples.

Professor Richard Werner is Chair in International Banking at the
University of Southampton, Director of its Centre for Banking, Finance
and Sustainable Development, and Chairman of Local First Community
Interest Company.

You can follow Professor Werner on Twitter @professorwerner.

(15) German postwar Economic Miracle happened because Allies wrote off
debts - Michael Hudson

Europe’s three needs: a debt write-down, a real central bank, and a more
efficient tax system

Brussels Talk, Madariaga College, Governing Globalisation in a World
Economy in Transition, June 27, 2012

Courtesy of

What can Europe learn from the United States?

First, the United States – like Canada, England and China – have central
banks that do what central banks outside of Europe were created to do:
finance the budget deficit directly.

I have found that it is hard to explain to continental Europe just how
different the English-speaking countries are in this respect. There is a
prejudice here that central bank financing of a domestic spending
deficit by government is inflationary. This is nonsense, as demonstrated
by recent U.S. experience: the largest money creation in American
history has gone hand in hand with debt deflation.

It is the commercial banks that have created the Bubble Economy’s
inflation, from North America to Europe. They have recklessly lent
mortgage credit and other credit far beyond the ability of domestic
economies to pay. A real central bank can create credit on its
electronic keyboards just as easily as commercial banks can do. But
central banks do not create credit for speculative purposes. They do not
make junk mortgages based on “liars’ loans” (the liars are the banks,
not the borrowers), based on fictitious evaluations by crooked
appraisers, and sold fraudulently to investment banks to package and
sell to gullible Europeans, pension funds and other customers.

In short, there is no need for the present austerity. If Europe acted
like the United States, it could bail out the banks.

But would this be a good thing? My second point is that there are good
reasons not to fund a dysfunctional debt overhead, financial and tax
system. It is preferable to change these systems.

In the United States, Paul Krugman has urged the Federal Reserve to
simply lend banks an amount equal to their bad loans and negative equity
(debts in excess of the market price of assets). He urges a “Keynesian”
program of spending to re-inflate the economy back to bubble levels.
This is the liberal answer: to throw money at the problem, without
seeking structural reform.

The Bank for International Settlements (BIS) disagreed last week in its
annual report. It said – and I believe that it is right – that monetary
policy alone cannot solve an insolvency problem. And that is what Europe
has now: not merely illiquidity for government bonds and corporate debt,
but insolvency when it comes to the ability to pay.

In such circumstances, the BIS explains, it is necessary to write down
the debt to the amount that can be paid – and to undertake structural
reforms to prevent the Bubble Economy from recurring.

The Canadian postal workers union has an informal slogan: “A job that’s
not worth doing is not worth doing well.” I might apply this to Europe
by saying that a badly structured economy is not worth subsidizing or
saving. It should be made well.

This entails, for starters, writing down the debt overhead. That is what
created the German Economic Miracle of 1948: the Allied Monetary Reform
that wiped out debts over and above minimum working balances, and wages
debts owed by employers to employees. It was easy to write down debts
that were owed to Nazis. It is much harder to do so when the debts are
owed to powerful and entrenched institutions – especially to banks.

Take the case of a Greek debt writedown. This would hurt the Greek banks
first and foremost, and also more innocent German insurance companies
and banks.I have a modest suggestion as to how to handle this. First,
let the Greek banks go under. They helped stymie the Greek government’s
attempt to stop tax evasion and money laundering. They have been
described as co-conspirators and corrupt. Of course their depositors
should be made whole by a standardized, public bank insurance scheme.
But bank bondholders and stockholders, and even non-insured depositors,
are another matter.

As for the German institutions, if a Greek Clean Slate pushes them into
insolvency, the German Government should do what the U.S. Federal
Deposit Insurance Corp. (FDIC) is empowered to do: take them over, make
all the depositors and policy holders whole, and operate these
institutions as a public option – either temporarily or permanently.

The alternative is austerity and debt deflation that will leave European
markets shrinking, living standards falling, and turn Europe into what
U.S. Defense Secretary Rumsfeld has said so often: “Old Europe,” as if
it is too late to be saved. Any discussion of the U.S. economy
necessarily involves the global context. So it is necessary to discuss
not only domestic U.S. developments, but also relations with Europe and
the BRICS countries.

The most important dynamic is financial. A continued decline in real
estate prices, coupled with local government debts, has led to debt
deflation. As personal and corporate income are diverted to pay debt
service, spending on new consumption and investment goods is cut back.
Sales and employment opportunities are falling off, especially for new
entrants into the labor force. Major categories of debt cannot be repaid
in Europe and the United States, except by foreclosures transferring
property to creditors. Short-term financial aims overshadow the
long-term adjustments that ultimately will be needed: debt writedowns in
the public and private sectors. The alternative to this “business as
usual” scenario is for the U.S. and European economies to look
increasingly like the Baltics – austerity aggravating economic shrinkage.

The U.S. Government as well as European governments have taken bad bank
debts onto the public balance sheet. This is not a problem for the
United States, whose Federal Reserve can simply create the credit to
roll over its debt. But for Europe, public debts simply cannot be paid
under current central bank constraints. Instead of changing the central
bank rules, the European Union is willing to plunge the continent into
depression and economic shrinkage.

U.S. Austerity and deeper Negative Equity

The U.S. economy is free of the monetary constraint that Europeans
impose on themselves. The Federal Reserve does what central banks are
supposed to do: monetize government deficit spending by buying public
debt. However, the increase in new government debt creation has not been
mainly to finance deficit spending to increase economic activity and
employment, to invest in rebuilding the nation’s infrastructure or
providing states and cities with the revenue sharing that in the past
enabled them to balance their local budgets. Instead, the government has
created debt in an attempt to re-inflate real estate markets back toward
Bubble Economy levels. The idea was for the economy to “borrow its way
out of debt.”

In practice, there was not much hope of success. The banks sent the $800
billion of Federal Reserve’s Quantitative Easing (QE2) in 2012 abroad,
mainly to the BRICS economies in the form of interest rate and currency
arbitrage. The banks’ idea was to earn their way out of their own
negative equity, but not by lending to a real estate market whose prices
continue to decline. This is forcing more properties into negative
equity – and that leaves the banks themselves in a negative equity
position. So there is little new lending for real estate, to consumers,
or to business. Markets are being shrunk by debt deflation.

States and cities also face a shrinking tax base, and many are subject
to constitutional requirements for balanced budgets. The path of least
resistance has been to underfund their pension plans – which have fallen
far behind, especially inasmuch as most plans assume an 8% annual rate
of return. This rate – assuming a savings doubling time of just nine
years – has become even more fictitious today than it was a decade ago.
So some localities have taken risks and lost – with their loss being the
counterpart to earnings by the largest banks on derivatives.

The bottom line here is that the U.S. economy is not in a position to
“borrow its way out of debt.” The outlook thus is for a similar
austerity to that of Europe.

Financial fraud has been effectively decriminalized in the United
States. In a nutshell, people have lost trust in the banks – and the
financial sector itself mistrusts its fellow institutions. So the
non-bank money market funding has dried up for business, and individuals
are afraid to invest in the stock market. [...]

BOTTOM LINE: The U.S. trade balance may improve as consumer budgets are
squeezed, limiting imports, and as domestic shale gas cuts import
demand. But capital inflows are unlikely to increase. And until interest
rates begin to rise, capital outflows will continue (much as was the
case in Japan after 1990). The U.S. is thus suffering a “Japan syndrome.”

Increasing global fracture into regional blocks

Instead of international “cooperation,” I see a regional rivalry among
blocs polarizing between the U.S.-centered NATO bloc and the BRICS,
expanding their influence. Europe looks pretty much left out, as its
markets are not growing and it is not a prime investment area. The BRICS
countries are likely to start erecting capital controls against
easy-credit policies in the United States funding a takeover of their

Financial flows and capital flight are putting upward currency pressure
on the BRICS at the expense of the euro and the dollar. If the euro does
not decline against the dollar, it is largely because both currencies
are equally weak together and share similar problems. Both economies
will shrink, leading to more insolvency for real estate and also for
government budgets. This Euro-American shrinkage is likely to spur moves
in China and other BRICS to rely more on growth of their internal
market. China’s wage levels are likely to rise, prompting production to
aim more to satisfy domestic consumer demand than foreign export demand.

The main problem for China is that one of the first expenditures of
families with rising revenue is to buy autos. The government’s response
is to invest more in public transportation, and is likely to impose an
environmental tax. More dispersion of urban centers is likely in order
to minimize transportation costs – and more infrastructure spending in

Capital controls are likely, and also a denomination of foreign trade
and investment in BRICS currencies rather than the U.S. dollar or euro.

The term “neoliberalism” misrepresents and even inverts the classical
liberal idea of free markets. It is a weaponization of economic theory,
kidnapping the original liberal ethic that sought to defend against
special privilege and unearned income. To classical economists, a free
market meant one free of unearned income, defined as land rent, natural
resource rent, monopoly rent and rent-extracting privilege. But to
neoliberals a free market is one free from taxes or regulation of such
rentier income, and indeed gives it tax favoritism over wages and profits.

Neoliberalism and neo-conservatism are complementary doctrines of power
and autocracy combined with deregulation and dismantling of democratic
law. The aim is to replace government power as used to protect the
people with an oligarchic power to oppress the people.

Today, the neoliberal aim is to cripple government power, enabling a
free-for-all for the financial sector. Protecting civil freedoms are
also heavily signposted, but the high price of legal representation is a
barrier for most. A doctrine primarily of the financial sector, the aim
is to un-tax banks and financial institutions and their major customers:
real estate and monopolies.

Neoliberalism is a doctrine of central planning, which is to be shifted
from governments to the more highly centralized financial centers. This
requires disabling public power to regulate and tax banking and finance.
As a transition, ideological deregulators such as Alan Greenspan and Tim
Geithner have been appointed to the key regulatory positions in the
United States.

The result is a doctrine of financial war not only against labor but
also against industry and government. Gaining the financial power to
indebt economies at increasing speed, the banking and financial sector
is siphoning resources away from the real economy. Its business plan is
not based on employing labor to expand output, but simply to transfer as
much of the existing flow of revenue as possible into its own hands, by
capitalizing all such revenue into interest payments, on loans
collateralized and pledged to creditors.

The effect is no more democratic than the Roman democracy, which
arranged voting by “centuries” headed by the largest landowners –
essentially an acre-per-vote, to make an analogy. In the U.S. case,
votes are bought not by land as such, but by dollars – mainly from the
financial sector. In the end, to be sure, most dollars come from rent

The result must be economic polarization, above all between creditors
and debtors as in Rome. So the end stage of neoliberalism threatens a
Dark Age of poverty/immiseration – most characteristically, one of debt
peonage. And just as Rome’s creditor class and its predatory imperial
expansion brought down the Roman Empire and reduced it to mere
subsistence, so the combination of neoliberalism and neo-conservatism
today seeks to globalize itself, spreading austerity even as it brings
technological progress to sovereign debtors.

(16) Michael Hudson: The Financial Attack on Greece; Replace Central
banks with National Treasuries

JULY 8, 2015

The Financial Attack on Greece: Where Do We Go From Here?


The major financial problem tearing economies apart over the past
century has stemmed more from official inter-governmental debt than with
private-sector debt. That is why the global economy today faces a
similar breakdown to the Depression years of 1929-31, when it became
apparent that the volume of official inter-government debts could not be
paid. The Versailles Treaty had imposed impossibly high reparations
demands on Germany, and the United States imposed equally destructive
requirements on the Allies to use their reparations receipts to pay back
World War I arms debts to the U.S. Government.[1]

Legal procedures are well established to cope with corporate and
personal bankruptcy. Courts write down personal and business debts
either under “debtor in control” procedures or foreclosure, and
creditors take a loss on loans that go bad. Personal bankruptcy permits
individuals to make a fresh start with a Clean Slate.

It is much harder to write down debts owed to or guaranteed by
governments. U.S. student loan debt cannot be written off, but remains a
lingering burden to prevent graduates from earning enough take-home pay
(after debt service and FICA Social Security tax withholding is taken
out of their paychecks) to get married, start families and buy homes of
their own. Only the banks get bailed out, now that they have become in
effect the economy’s central planners.

Most of all, there is no legal framework for writing down debts owed to
the IMF, the European Central Bank (ECB), or to European and American
creditor governments. Since the 1960s entire nations have been subjected
to austerity and economic shrinkage that makes it less and less possible
to extricate themselves from debt. Governments are unforgiving, and the
IMF and ECB act on behalf of banks and bondholders – and are
ideologically captured by anti-labor, anti-government financial warriors.

The result is not the “free market economy” it pretends to be, nor is it
the rule of economically rational law. A genuine market economy would
recognize financial reality and write down debts in keeping with their
ability to be paid. But inter-government debt overrides markets and
refuses to acknowledge the need for a Clean Slate. Today’s guiding
theory – backed by monetarist junk economics – is that debts of any size
can be paid, simply by reducing labor’s wages and living standards, plus
by selling off a nation’s public domain – its land, oil and gas
reserves, minerals and water distribution, roads and transport systems,
power plants and sewage systems, and public infrastructure of all forms.

Imposed by the monopoly of inter-governmental financial institutions –
the IMF, ECB, U.S. Treasury, and so forth – creditor financial leverage
has become the 21st century’s new mode of warfare. It is as devastating
as military war in its effect on population: rising suicide rates,
shorter lifespans, and emigration of the age-cohort that always have
been the major casualties of war, young adults. Instead of being drafted
into the army to fight foreign foes, they are driven from their homes to
find work abroad. What used to be a rural exodus from the land to the
cities from the 17th century onward is now a “debtor exodus” from
countries whose governments owe unpayably high sums to creditor
governments and to the banks and bondholders on whose behalf they impose
their policy.

While pushing the world economy into a state of war internationally,
high finance also is waging a class war against labor – and ultimately
against governments and thus against democracy. The ECB’s policy has
been brutal toward Greece this year: “If you do not re-elect a
right-wing party or coalition, we will destroy your banking system. If
you do not sell off your public domain to buyers we will make life even
harder for you.”

No wonder Greece’s former Finance Minister Janis Varoufakis called the
Troika’s negotiating position “financial terrorism.” Their idea of
“negotiation” is surrender. They are unyielding. Official creditor
institutions threaten to isolate, sanction and destroy entire economies,
including their industry as well as labor. It transforms the
19th-century class war into a purely destructive meltdown.

That is the great difference between today and 1929-31. Then, the
world’s leading governments finally recognized that debts could not be
paid and suspended German reparations and Inter-Ally debts. Today’s the
unpayability of debts is used as leverage in class war.

The immediate political aim of this financial warfare in Greece is to
replace its elected government (supported by a remarkable July 5
referendum vote of 61 to 39) with foreign creditor control by
“technocrats,” that is, bank lobbyists, factotums and former Goldman
Sachs managers. The long-term aim is to impose a war against labor – in
the form of austerity – and against the power of governments to
determine their own tax policy, financial policy and public regulatory

Fortunately, there is an alternative. Here is what is needed. (I
outlined my proposals in a presentation before the Brussels Parliament
on July 3,[2] following an earlier advocacy at The Delphi Initiative in
Greece, convened by Left Syriza the preceding week.[3])

A declaration reaffirming the rights of sovereign nations

Sovereign nations have a right to put their own growth ahead of foreign
creditors. No nation should be obliged to impose chronic depression and
unemployment or polarize the distribution of wealth and income in order
to pay debts.

Every nation has the right to the basic criteria of nationhood: the
right to issue its own money, to levy taxes, and to write its laws,
including those governing relations between creditors and debtors,
especially the terms of bankruptcy and debt forgiveness.

Economic logic dictates what was recognized by the end of the 1920s:
When debts reach the level that they disturb basic economic balance and
derange society, they should be annulled. Another way of saying this is
that the volume of debt – and its carrying charges – must be brought
within the reasonable ability to pay.

Rejecting the “hard money” (really a “hard creditor”) position of
anti-German, anti-labor economists Bertil Ohlin and Jacques Rueff,
Keynes argued that creditors had an obligation to explain to Germany
just how they would enable it to pay its reparations.[4] At that time,
Keynes meant specifically that France, Britain and other recipients of
reparations should specify just what German exports they would agree to
buy. But today, creditors define a nation’s ability to pay not in terms
of how it can earn the money to pay down the debt, but rather what
public domain assets it can sell off in what is essentially a national
bankruptcy proceeding. Debtor countries are compelled to let their
public infrastructure be sold off to rent-extractors to create a
neofeudal tollbooth economy.

Under international law, no nation is legally obliged to do this. And
under the moral definition of nationhood, they should not be forced to
do so. Their right to resist this form of debt blackmail is what makes
them sovereign, after all.

It is true that the principle of the European Union was that individual
nations would cede their rights to a larger entity. The union itself was
to exercise the rights of nationhood, democratically on the basis of a
pan-European constituency.

But this is not what has happened. The EU has no common ability to tax
and spend; those powers remain local. The one area where it does govern
taxes is dysfunctional: EU ideologues insist on taxing consumers (via
the Value Added Tax, VAT) and labor via pension set-asides.

More fatally, the eurozone has no ability – or at least, no willingness
– to create money to fund deficit spending. What it calls a “central
bank” is only designed to provide money to domestic banks and, even
worse, to lobby for the interest of private bankers against the
principle of public central bank money creation.

The EU does not even have a meaningful legal system empowered to fight
fraud and financial crime, prosecute or clean up insider dealing and
corrupt oligarchies. In the case of Greece, where the ECB at least
insisted on the need to clean up such behavior, it was only to “free”
more revenue for foreign investors from public agencies scheduled to be
privatized to pay debts to the ECB and its crony institutions for the
money they had paid private bondholders and banks in the face of
economies shrinking from a combination of debt deflation and fiscal

Taken together, these defects mean that the Eurozone and EU were
malstructured from the start. Control was placed so firmly in the hands
of bankers and anti-labor ideologues that it may not be reformable – in
which case a new start must be made.

In any event, here are the institutional reforms that are urgently
needed. In view of the financial sector’s control of the main
institutions, these reforms require entirely new institutions not
governed by the pro-rentier logic that has deformed the eurozone. The
most pressing needs are for the following institutions.

An international forum to adjudicate the ability (or inability) to pay debts

What is needed to put this basic principle into practice is creation of
a new international forum to adjudicate how much debt can reasonably be
paid – and how much should be annulled. In 1929 the Young Plan (which
replaced the Dawes Plan to deal more rationally with German reparations)
called for creation of such an institution – what became the Bank for
International Settlements (BIS) in 1931 to stop the economic destruction
of Germany by bringing its reparations back within the ability to pay.

The BIS no longer can play such a role, because it has become the main
meeting place for the world’s central banks, and as such has adopted the
hardline “all debts must be paid” position that it originally was
intended to oppose.

Likewise the IMF no longer can play this position. It is hopelessly
politicized. Despite its technical staff ruling in 2010-11 that Greece’s
foreign debts could not be paid and hence needed to be written off, its
heads – first Dominique Strauss-Kahn and then Christine Lagarde – acted
in blatant conflict of interest to support the French bankers demands
for payment in full, and U.S. demands by President Obama and Wall Street
lobbyist Tim Geithner to insist that there be no writedown at all. That
was the price for French bank support for Strauss-Kahn’s intended bid
for the French presidency, and more recently backing for Lagarde’s rise
to power at IMF. Given the U.S. veto power by Wall Street and the
insistence that right-wing anti-labor ideologues (usually French) be
appointed head of the IMF, a new organization representing the kind of
economic logic outlined by Keynes, Harold Moulton and others in the
1920s is necessary.

Creation of such an institution should be a leading plank of Euro-left

A Law of Fraudulent Conveyance, applicable to governments

The private sector has long had laws that prevent money-lenders from
lending a borrower more funds than the debtor can reasonably be expected
to pay back in the normal course of business. If a lender advances, say,
$10,000 as a mortgage loan against a house worth more (say, $100,000),
and then insists that the debtor pay or lose his home, the courts may
assume that the loan was made with this aim in mind, and annul the debt.

Likewise, if a company is raided by borrowers who load it down with
high-interest junk bonds, and then seize its pension funds and sell off
assets to pay their debts, the company under attack can sue under
fraudulent conveyance rules. They did so in the 1980s.

This lend-to-foreclose ploy is the very game that the Troika have played
with Greece. They lent its government money that the IMF economists
explained quite clearly in 2010-11 (and reaffirmed this year just before
the Greek referendum) could not be paid. But the ECB then swooped in and
said: Sell off your infrastructure, sell your ports, your gas rights in
the Aegean, and entire islands, to get the money to pay what the IMF and
ECB have paid French, German and other bondholders on your behalf (while
saving U.S. investment banks and hedge funds from losing their bets that
Greek debts would indeed be paid).

Application of this principle requires an international court to rule on
the point at which debt service becomes intrusive, and write down debts

No such set of institutions exists today.

Creation of Treasuries as national central banks to monetize deficit

Central banks today only lend money to banks, for the purpose of loading
economies down with debt. The irrational demand by bankers to prevent a
public option from creating credit on its own computer keyboards (the
same way that banks create loans and deposits) is designed simply to
create a private monopoly to extract economic rent in the form of
interest, fees, and finally to foreclose on defaulting creditors – all
guaranteed by “taxpayers.”

The European Central Bank is not suited for this duty. First of all, it
is based on the ideology that public money creation is inflationary. The
reality is that central bank money creation has just financed the
greatest inflation of modern history – asset price inflation of the real
estate market by junk mortgages, inflation of stock prices by junk bond
issues, and central bank Quantitative Easing to create the fastest and
largest bond market rally in history. The post-1980 experience with
central banks has removed any moral or economic logic in their behavior
as lobbyists for commercial banks, defenders of their special
privileges, deregulator of financial crime, and extremist right-wing
blockers of a public option in banking to bring basic services in line
with actual costs. In short, if commercial banking systems in nearly
every country have become de-industrialized and perverse, their enablers
have been the central banks.

The remedy is to replace these central banks with what preceded them:
national Treasuries, whose proper function is to monetize government
spending into the economy. The basic principle at work should be that
any economy’s monetary and credit needs should be met by public spending
and monetization, not by commercial banks creating interest-bearing
credit to finance the transfer of assets (e.g., real estate mortgages,
corporate buyouts and raids, arbitrage and casino-capitalist gambles).


Every nation has a right to defend itself against attack – financial
attack just as overt military attack. That is an essential element in
the principle of self-determination.

Greece, Spain, Portugal, Italy and other debtor countries have been
under the same mode of attack that was waged by the IMF and its
austerity doctrine that bankrupted Latin America from the 1970s onward.
International law needs to be updated to recognize that finance has
become the modern-day mode of warfare. Its objectives are the same:
acquisition of land, raw materials and monopolies.

A byproduct of this warfare has been to make today’s financial network
so dysfunctional that nations need a financial Clean Slate. The most
successful one in modern times was Germany’s Economic Miracle – the
post-World War II Allied Monetary Reform. All domestic German debts were
annulled, except employer wage debts to their labor force, and basic
working balances. Later, in 1953, its international debts were written
down. The logic prompting both these acts needs to be re-applied today.

With specific regard to Greece, Syriza’s leaders have said that they
want to save Europe. First of all, from the eurozone’s destructive
economic irrationality in not having a real central bank. This defect
was deliberately built into the eurozone, to enforce a monopoly of
commercial banks and bondholders powerful enough to gain control of
governments, overruling democratic politics and referendums.

Current eurozone rules – the Maastricht and Lisbon treaties – aim to
block governments from running budget deficits in a way that spend money
into the economy to revive employment. The new goal is only to rescue
bondholders and banks from making bad loans and even fraudulent loans,
bailing them out at public expense. Economies are obliged to turn to
commercial banks for loans to obtain the money that any economy needs to
grow. This principle needs to be rejected on grounds that it violates a
basic sovereign right of governments and economic democracy.

Once an economy is fiscally crippled by (1) not having a central bank to
finance government spending, and (2) by limiting government budget
deficits to just 3% of GDP, the economy must shrink. A shrinking economy
will mean fewer tax revenues, and hence deeper government budget
deficits and rising government debt.

The ultimate killer is for the ECB, IMF and EC to demand that
governments pay their debts by privatizing public infrastructure,
natural resources, land and other assets in the public domain. To
compound this demand, the Troika have blocked Greece from selling to the
highest bidder, if that turns out to be Gazprom or another Russian
company. Financial politics thus has become militarized as part of
NATO’s New Cold War politics. Debtor economies are directed to sell to
euro-kleptocrats – on terms financed by banks, so that interest charges
on the deal absorb all the profits, leaving governments without much
income tax.


[1] This is the theme of my Super Imperialism: The Economic Strategy of
American Empire (1972, new ed., 2002).

[2] The video of the day can be found here:
(I’m at about 37 minutes.)


[4] I summarize this debate between Keynes and his antagonists in Trade,
Development and Foreign Debt (new ed. ISLET 2009), chapter 16.

Michael Hudson’s book summarizing his economic theories, “The Bubble and
Beyond,” is now available in a new edition with two bonus chapters on
Amazon. His latest book is Finance Capitalism and Its Discontents.  He
is a contributor to Hopeless: Barack Obama and the Politics of Illusion,
published by AK Press. Hudson’s new book, Killing the Host, will be
published this summer by CounterPunch Books. He can be reached via his

Peter Myers