Hush, the Greeks are Asleep

To begin with, I would like to offer a short disclaimer; I am not an economist and what I write is just my view on things as they stand. This piece starts with the assumptions which will lead to a, not so groundbreaking, conclusion. 
 

The financial crisis of Greece is called “public debt crisis”. This means that, according to various European financial institutions, and the IMF, the Greek state produces more debt than it can repay. As a result, the financial structure of the country is in danger of collapsing. Faced with danger, Europe created several consecutive “rescue” institutions. The last one is the European Stability Mechanism (ESM). At the time, the “3rd rescue program”  for the Greek economy is running. Therefore we now have enough experience to make some educated judgments on the effectiveness of those bailout programs. I would like to begin by stating that I think that all programs have achieved complete success. This is why.
 

When Greece requested, and was given, the 1st support program, it had a public debt around 120% of the GDP. The idea behind that 1st program was that a new loan would be given to the country, thus further enlarging the public debt, yet a series of reforms would transform the Greek economy into a growing one, that, through the combination of cuts in public spending would make the debt viable. That was just talk.

In reality, what was happening by the end of 2009, was that the banks of various European banks (mostly Germany and France) had been acting even more frivolously than the Greek governments by buying Greek bonds in order to sort them in the financial markets. Let's note that at that time, Greece, as a Eurozone country, held the highest possible rating and Greek bonds boosted the profile of any financial product that included them. So when the then Greek prime minister, Giorgos Papandreou stated that the 2009 primary deficit had reached 15% of the GDP, thick dark clouds started gathering over the financial markets. The problem had become unsolvable and the only institution which had the know-how to come up with complex rescue program (of the banks ) was the International Monetary Fund.
 

The IMF did indeed participate and started the implementation of the plan, officially named a “rescue” program. According to it, the biggest problem of the Greek state was the enormous public sector, the unwise spending of public moneys and the antiquated (non competitive) capitalist system of the Greek economy. Therefore the Fund, “sold” a program which included mass redundancies in the public sector, heavy privatization of the state, horizontal spending cuts, and release of regulated and protected jobs. All this seems rational yet the problem lies on the assumptions it was based on.

The truth is that the Greek state was not exactly as was presented. According to the OECD, Greece was at the exact middle in terms of public servants among European countries while the expenditure on health and education has always been among the lowest in Europe. The biggest spending of the Greek state occurred in military equipment and public works, exactly where the various bribes given by big European companies played a major part in public spending.
 

As for the protected jobs, all those theories and plans now sound like a joke. The Greek economy was not suffering due to the apothecaries, the taxies or any other sector which thrived before the bailout programs begun. When the, until then protected, transportation business opened up, there was no significant lowering in the price of food products (the opposite happened). As for the justice system, it did not solve any of its grave problems when the previous regulations over lawyer practices got lifted.

 

In effect, Greece was thrown into an austerity well, condemned to failure from the very beginning. Reality offers all the necessary proof. After 5 years and two rescue programs, the Greek economy shrunk by 25% -a number previously seen only in countries that had lost a war-society got shattered, unemployment rose by 20%, and the Greek banks became permanently sick, needing constant care and pumping by the European Central Bank.

Did all those analysts and experts of the IMF get it wrong? According to their own, official statements, the programs that they put together had two problems. The first is a simple math mistake. The second stems out of the unwillingness of Greek governments to apply those brave reforms that the programs suggested. But is that the truth?

In reality every Greek government which sat at the helm of the country during all those years of bailout programs has attempted to propose alternative measures than the ones the international lenders demanded. Non of theme were accepted. Those very technocrats who claim that extreme taxation causes further depression and hurdle the success of the bailout programs, refuse any alternative parametric measures that have been proposed to them by the Greek governments. Their excuse; the Greek state is so corroded and its structure so flimsy that it will never manage any results besides the heavy taxation of the poorest strata of society. They even take that stance a step further; the Greek politicians are themselves so corrupt and/or incompetent that it is impossible for them to apply to any alternative proposal. I really do not wish to offer my support to any Greek politcian whatsoever but let us see who those technocrats are themselves. Strauss Khan, a man whose sexual mores and appetites led him to be open to numerous blackmails, Christine Lagarde who is still under judicial scrutiny for bribe-taking in France, J.C.Juncker who is also under scrutiny by the EU tax evasion commission for being the man who invented the tax haven of Luxembourg, and J.Djiesselbloem who's signature, as FinMin of Holland, allows Eldorado Gold to send money it should be paying the Greek government as taxes to be flown to the Barbados islands.

It follows that the problem does really stem from the inability to apply the measures but the measures themselves. That fairy tale about the particularly bad Greek politicians does not stand to any kind of rational comparison to any other politicians. Let us be sincere; the various programs did not fail because they were based on false mathematical assumptions nor because there were not enough reforms. In fact the programs did not fail. On the contrary they succeeded admirably.

 

I believe that one doesn't need to be a learned economist in order to understand that even this 3rd neoliberal program that is now implemented by the SYRIZA/ANEL government is going to fail exactly the way the previous two failed. The regime of that program remains the same: strict austerity and increasing public debt. 

Our creditors know very well that they are never going to get all their money back. Whoever claims the opposite (either abroad or in Greece) is lying on purpose. The evidence is so overwhelming that even Dr.Schaueble is finding it hard to claim that the Greek debt is viable. The institutions might be trying to alter names and math in order to comply with their written codes but the truth is that the Greek drama is seen by all as a damage control case.

The creditors know perfectly well that as long as the increase the Greek debt via further loans and repeated bank recapitalizations, the viability of the debt goes out of the window. For that reason, the only thing that they want to secure is that the debt payments will keep being made dully and continuously. That means that they provide us with just enough money to make our payments. At the same time they assets, they proceed to sell off any Greek public assets, they change the structure of the market in manners which are advantageous to big German companies (in areas where the Greek industry had an advantage, pharmaceuticals and chemicals) they are getting rid of all the toxic Greek bonds by unloading them to central banks and they plunder and share natural resources, energy, water and the most worthy assets of Greek wealth. They are thus creating a system of complete dependency and they are using Greece as a pawn in the geostrategic conflicts with Russia, Turkey and any other possible opponent.

 

It is often said that Greece has served as the environment for a controlled experiment on neoliberal politics and policies. This is most probably an assumption that we made on our own just to victimize ourselves and feel a bit better. Human nature is such that one guard in a German camp could lead 1000 people to the death chambers without being attacked by the victims even a few minutes before their certain death. Humans, unfortunately, can take anything.

A few days ago, I participated in a television panel about the new bailout program, the neew memorandum of understanding between the Greek government and our creditors. At some point, while I disagreed with one of my colleagues, the host mentioned that it is natural fro me to disagree as I am a well known advocate for a Grexit and a return to our national currency. This could not be further from the truth.

The truth is that I am very afraid of a Grexit for reasons that are too numerous to mention in an already long piece such as this. The only difference is that I am making my own, rather different analysis and I am reaching to the conclusion that a return to our national currency is the creditor's plan. I therefore believe that the (deliberately) unrealistic “rescue” programs that we are asked to follow have a short life and that when they reach their end the exit of Greece from the Eurozone has been already decided and agreed upon. This will happen when there will be nothing else left to take away from Greece.

As time goes by, the various analysts who work for the large banking and funding corporations are preparing for just that eventuality (they have said as much on many different occasions). It is certain that, yet again, they will be the only ones who will profit.

For the above reason, I do stop and listen (without being convinced I must confess) to those who claim that we have to inititiate a Grexit and draw the plan for the rescue of the country. 

I am not convinced that an exit from the Eurozone and the common currency is the best solution. I am not even sure that there is a good solution. But I certain about one thing.

 

These days we are reaching the fifth anniversary since the mass demonstrations of what became known as the “indignant” movement. The movement is summarily dismissed as a failure in Greece. I tend to be a bit more lenient in my judgment and I believe that the movement can become the kindle for something much more substantial. 

The true lack of fighting spirit that we see in the public during the last months is nothing but the numbness that comes after the heavy blow that the “indignant” movement suffered. They did turn their indignation into a vote and they voted for SYRIZA, a party which engulfed their indignation and promised that it could become their representative. Thus, according to my non-academic analysis, lies the problem; the “indignant” citizens have not stopped being angry, they just backed a lame horse. It was not only a possibility, it was also highly likely.

Since every time that I write about the financial madness of the various bailout, or “rescue” programs I am faced with those who believe in TINA (There Is No Alternative) and tell me that “it's easy to point at the wrongs of a program but you have nothing to propose” I now have something very specific to suggest.

There is something that could ruin their plans. A new movement  of non compliance. The French example can lead to very useful conclusions. A movement which turned the Nuit Debout into a worker's uprising (naturally the mighty syndicates played a crucial role) and is choking F.Hollande over a bill which has already been voted.

A movement which would create worldwide sensation (such as was created by the “indignants” 5 years ago) would make all the European leaders afraid of a possible spread to their countries. It would then become an effective pressure tool in order to lift all the harsh, unconstitutional measures and laws that have been imposed on Greece under European guidance. A powerful, unflinching movement would fight against those measures which cause a humanitarian crisis in our country and strangling any chance of progress.

A movement like that could even force the opening of a discourse about the future of our country within or without the Eurozone. It is already proven that the systemic parties cannot start such a discourse. Only through such a movement, which will set as its primary goal that all positions, for or against our participation in the Eurozone, will be heard two goals can be achieved; the citizens will become sufficiently informed of the crucial subjects at stake, and more time will be given in order for a new political force to jump out of society. The very existence of such a movement will slow the realization of the rescue programs enough to provide the necessary time.

Six years ago a banner held by the Indignados in Madrid read “Hush The Greeks are Asleep”. This was enough to make the Greek protesters explode. This time the message comes from France. The message remains the same. What is left is to see if we can stand on our feet again.