(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 http://www.wsws.org/en/articles/2015/07/15/pers-j15.html 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 http://www.abc.net.au/radionational/programs/latenightlive/yanis-varoufakis-on-greek-crisis/6616430 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? Guests Yanis Varoufakis FormerGreek Finance Minister in the Syriza Government and professor of economics. Presenter Phillip Adams == The interview is at http://mpegmedia.abc.net.au/rn/podcast/2015/07/lnl_20150713_2205.mp3 (3) Varoufakis says Syriza betrayal will strengthen Golden Dawn; it will become the anti-Austerity party interviewed by Phillip Adams http://mpegmedia.abc.net.au/rn/podcast/2015/07/lnl_20150713_2205.mp3 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 http://www.abc.net.au/radionational/programs/latenightlive/yanis-varoufakis-on-greek-crisis/6616430 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 http://ssrn.com/abstract=2609971. == http://www.onlineopinion.com.au/author.asp?id=491 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 http://www.xryshaygh.com/en/view/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 http://www.xryshaygh.com/en/view/ilias-kasidiaris-no-to-the-blackmails-of-the-loan-sharks-no-to-the-new-memo 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 http://www.xryshaygh.com/en/view/golden-dawn-the-next-day-article-by-n.-g.-michaloliakos 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 https://xaameriki.wordpress.com/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. WHAT BEING A GOLDEN-DAWNER MEANS 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 evolution. 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 https://xaameriki.wordpress.com/about/ 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 homeland. 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 problems. 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! ZHTO H ELLAS! GOLDEN DAWN FOREVER! The Golden Dawn North American chapter respects all U.S. Laws and respects the Constitution. We operate within the guidelines of the First Amendment. 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 http://www.abc.net.au/news/2015-07-16/greece-bailout-parliament-passes-reforms/6623512 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 members 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 http://www.mprnews.org/story/2015/07/15/npr-greek-austerity 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 burden. 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" <Aaron.Griffiths@hylcjv.com.au> To: "peter@mailstar.net" <peter@mailstar.net> 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 http://ellenbrown.com/2015/07/14/grexit-or-jubilee-how-greek-debt-could-be-annulled/ 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 collapse. 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 property. 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 Entries 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 people. (14) Eurozone countries should exit the Eurozone – Richard A. Werner (Professor of Banking) https://professorwerner.wordpress.com/2015/07/10/hallo-welt/ 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 https://www.prosper.org.au/2012/07/13/the-weaponisation-of-economic-theory/ 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 michael-hudson.com 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 assets. 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 general. 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 extraction. 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 http://www.counterpunch.org/2015/07/08/71809/ JULY 8, 2015 The Financial Attack on Greece: Where Do We Go From Here? by MICHAEL HUDSON 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 policy. 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 deflation. 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 politics. 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 accordingly. No such set of institutions exists today. Creation of Treasuries as national central banks to monetize deficit spending 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). Summary 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. Notes. [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: http://www.guengl.eu/news/article/press-conferences/peripheral-debts-causes-consequences-and-solutions.-2-july (I’m at about 37 minutes.) [3] http://www.counterpunch.org/2015/06/26/the-delphi-declaration/ [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 website, mh@michael-hudson.com -- Peter Myers Australia website: http://mailstar.net/index.html |
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