The Greek bailouts were a banking crisis in disguise. In an excerpt of her upcoming book, editor-in-chief, Claire Connelly, explores how Greece took the fall for decades of irresponsible lending by French and German banks. If Greece continues to participate in the European Union, democracy is doomed.
It is somewhat fitting that the birthplace of democracy is now the battle ground for its continued existence.
The cliche of opulence and laziness disguises real Greek misfortune at the hands of the European community – and America – resulting in one of the most offensive punchlines of all time: Somehow Greece deserves the economic disaster wrought upon it, a severity not seen since The Great Depression.
In reality, the country’s long financial crisis is one big deliberate illusion created by some of the world’s largest banks and multinational conglomerates that have sidelined governments and made the rule of law and the will of the people all but irrelevant.
It has prioritised multinational profits over the economic needs of Eurozone countries, and even those outside of the union. With no sovereign currency with which to balance the score, Greece has become utterly subject to France, Germany, the International Monetary Fund (IMF) and the European Central Bank, (ECB).
The money from the three bailouts did not go to Greece at all and did not restore prosperity – it was never designed to in the first place – but flowed straight back into the coffers of French and German banks whose bad decisions over the last half century became the burden of the Greek people.
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France’s top three banks had loaned €627 billion to Italy, Spain and Portugal and €102 billion to Greece and were staring down a 30 to 1 leverage ratio, meaning that if it lost only 3.33% of its loans to defaults, its capital would be wiped out and banking regulators would be forced to shut the banks down.
And if Greece defaulted on its debt, the banks were concerned Spain, Italy, Portugal and Ireland would follow, resulting in a 19% loss of French debt assets, far and above the 3% that would lead to its insolvency.
The three French banks needed a €562 billion bailout, but unlike the US which can shift its losses to its central bank, the Federal Reserve, France a) had no such central bank to shift its losses to, having dismantled it in favour of the European Central Bank, and b) the ECB was prohibited upon its formation to shift bad debts onto its books.
Likewise, Germany’s banks also went bust and required a €406 billion bailout – which it received – but it was barely enough to cover its US-based toxic derivative trades which led to the crisis in the first place, let alone what they had leant to their European neighbours. The banks came back begging, mere months after being cut a €406 billion cheque by the German government.
Bankers are evil, but Greek politicians voluntarily let them rape Greece in return for politicians being put on the bankers’ payroll. This started when Greek politicians adopted the euro on 1 Jan 2001.
ReplyDeleteGreece has a trade deficit, and the Greek government cannot create euros out of thin air. (Only banks can do that, as loans.) Hence Greece can not avoid going further and further into debt and austerity. Greek politicians knew this but they didn’t care, since they were personally well taken care of, and they remain so today.
As for “democracy,” Greece has none. Greece is ruled by bankers.
“The cliché of opulence and laziness disguises real Greek misfortune at the hands of the European community – and America – resulting in one of the most offensive punchlines of all time: Somehow Greece deserves the economic disaster wrought upon it, a severity not seen since The Great Depression.”
Greece does deserve it, since average Greeks refuse to face simple truths about money. Average Greeks imagine that by clinging to the euro that is killing them, they are more “respected” in Europe. They imagine that by attacking populist groups like the Golden Dawn, they are more “respected” by Brussels.
The truth is that slaves are always despised by their owners, simply for agreeing to be slaves. Greece is despised because Greece chooses to be wretched.
“In reality, the country’s long financial crisis is one big deliberate illusion created by some of the world’s largest banks and multinational conglomerates that have sidelined governments and made the rule of law and the will of the people all but irrelevant.”
The will of the people is always and everywhere supreme. NO EXCEPTIONS. If an entire nation is impoverished, it is because its people choose to let themselves be impoverished. The masses choose to selfishly, self-righteously, and hypocritically attack each other, and to worship scum, and vote for scum. They choose to gather into mobs that stampede to the slaughterhouse.
Oligarchs know that the masses wouldn’t know what to do with freedom. As soon as the peasants are let out of their torture dungeons, they work hard to put themselves back in it.
It is possible to train the peasants to grow brains, but this takes time and a leader who is strong enough to resist attacks by other nations. Strong enough to persevere despite knowing that if anything goes wrong, the peasants will vilify him forever.
“The Greek bailouts were a banking crisis in disguise.”
ReplyDeleteGreek bailouts are debt bombs. Bankers lend to Greece, and when Greece cannot pay the bankers back (which is ALWAYS) the bankers get paid back (i.e. bailed out) by the Troika, while Greece remains in debt, only now to the Troika, not the same bankers as before.
For Greece itself there is never any debt relief. Never any bailout.
You’d think that after twenty years of this, 10.7 million Greeks would wake up to the scam, but no.
Greeks have always been at war with each other, from the time of the ancient city states.
If the banks created the money out of nothing, how could they have lost anything? It should be easy to write off something that never existed in the first place.
ReplyDeleteYes, if banks create loan money out of thin air, then banks should be able to write off non-performing loans.
ReplyDeleteBut humans are deranged.
Humans pretend that the emperor's new clothes are splendid.
Humans pretend that money is physical and limited.
Humans pretend that banks will suffer a "loss" if they write off loans.
Humans pretend that when a bank extends a loan (using money created out of thin air) the bank has "moral superiority" over the debtor.
Humans pretend that a monetarily sovereign government "has no money" for social programs that help average people.
It's all quite insane.
Even worse, powerful players dismiss or distort the pretense at will. For example, Spain stole Cuba from the natives. When the USA stole Cuba from Spain, the Spaniards demanded repayment of debts owed by its former colony. The USA responded that Spain was not entitled to repayment for “odious debt.”
Since then, the IMF and World Bank (controlled by the USA) have been the planet’s worst purveyors of “odious debt.”
Much of life consists of a weaponized version of the emperor’s new clothes.