Tuesday, February 24, 2015

Greece: Austerity for the Bankers — Sharmini Peries interviews Michael Hudson

Michael Hudson says Greece’s Finance Minister Varoufakis is proposing austerity on the banking class rather than on the working class to balance the budget.
Video and transcript.
MH: …what’s at issue really is a class war. It’s not so much Germany versus Greece, as the papers say. It’s really the war of the banks against labor. And it’s a continuation of Thatcherism and neoliberalism.…
Originally, Varoufakis thought he was negotiating with the troika, that is, with the IMF, the European Central Bank and the Euro Council. But instead they said, no, no, you’re negotiating with the finance ministers. And the finance ministers in Europe are very much like Tim Geithner in the United States. They’re lobbyists for the big banks. And the finance ministers said, how can we screw this up and make sure that we treat Greece as an object lesson, pretty much like America treated Cuba in 1960?…
This is a good one.

Sharmini Peries interviews Michael Hudson

7 comments:

Matt Franko said...

But the overwhelming majority of the Greek debt is owned by governments....

Tom Hickey said...

Right. Private debt held by banks gets offloaded onto governments. So in the EZ the debt falls on the taxpayers. This is the basis of the political argument. The taxpayers of the core don't want to pick up the refusal of the taxpayers of the periphery to pony up their taxes.

If the elite actually ponied up on their taxes and penalties, then the problem would be solved — which is YV's approach.

Jose Guilherme said...

Well, if that is "YV´s approach" then he is dead wrong.

Raising taxes - even on the rich, who save more and spend less of their incomes - in an economy that has contracted some 25% will only serve to depress the economy even further.

This would make sense only if the taxes on the middle class were to be cut at the same time. But since the EU dictates Greece´s policies (we now know that Syriza´s election did not change much in this regard) no tax cuts will be allowed.

Left-wing demagoguery is as bad as the right-wing version.

Malmo's Ghost said...

I expect this crap from the right. Left-wing demagoguery is far worse.

Dan Kervick said...

Raising taxes - even on the rich, who save more and spend less of their incomes - in an economy that has contracted some 25% will only serve to depress the economy even further.

Not if you spend as much as you tax. In that case it's a net shift from savings to consumption.

Neil Wilson said...

"Raising taxes - even on the rich, who save more and spend less of their incomes - in an economy that has contracted some 25% will only serve to depress the economy even further."

Not really. Savings are voluntary taxes. But because Greece hasn't got the offset capability of a sovereign currency, it *has* to convert those voluntary taxes into compulsory taxes to keep the flow of money at the correct level in the economy.

Which is why the Greek government has to tax hard those things in Greece that cannot be moved out of Greece. Since the other problem with the Eurozone is that money is simply moved to Germany, et al where it won't be taxed hard.

The two options in MMT are accommodation and confiscation. Accommodation is off the list due to the intransigence of the ECB, therefore confiscation has to happen.

If the rich people emigrate then that will have exactly the same effect as poor people emigrating - less demand on public services and infrastructure allowing less flow from government.

Even within the straitjacket of the Euro you can still use MMT insights to best effect here - which is to enact policies that best use the *real* resources available in Greece.

Once you get that flow going again you'll find that the entrepreneurs will turn up because there is money to be made.

In some respects chasing the rentiers out of Greece is the same as thinning the forest. It allows new saplings to grow.

Matt Franko said...

Probably a multiplier on it also Dan...

I'm anxious to see what exactly they come up with...

rsp,