Comment
Eric Zuesse an investigative-historian analyzes in a powerful analysis crisis on the crisis in Greece. “How Fascist Capitalism Functions: The Case of Greece” lays bare the crude machinations of global capitalism. He exposes the ruthless way in which big capital and international financial agencies intervene in a crisis only to create spaces for the brazen rich to gain and for the poor and working classes to further degenerate.
Zuesse calls events in Greece by their name: He states bluntly that “there is democratic capitalism, and there is fascist capitalism and goes on to assert that what we have today is fascist capitalism”.
Zuesse discusses how naivety has shaped the question of the crisis in Greece. Too many people, he suggests, have pretended that the problem in Greece would just go away; that Greece will be able to get out of debt without defaulting on it.
The people of Greece have had it up tip their necks. They refuse to be drowned by ‘eurozonizm’ – that ideological notion of capitalism and liberalization which asks that when you are in trouble, borrow and pay back an exorbitant interest package by tightening your belt. If that means you bleed to death, face the choice! In an uneven playing field where the euro gets traded, when the going gets rich, the rich get richer and the poor fall into greater debt.
The Greek masses refuse to take more of the nonsense that Europe wants from them. They have bluntly asked Germany to even pay back US$ 279 billion as reparations for the holocaust. In other words, they are asking Angela Merkel to pay up rather than the other way around. The real debtor, they argue is, ‘you, the Germans’. Each time Greece borrowed and signed up to a new package, they fell deeper into a crisis.
Ever since the region’s sovereign-debt crisis first flared in 2010, European nations have been bailing out Greece’s private creditors. These are mainly German and French banks who have lent to Greece the money to pay off the private creditors. So, in fact, it was the private who got bailed-out were private investors, not ‘the Greek people. A reasonable assumption is that a large part of the Greek debt to the Germans was the result of Greek consumption of German goods and services bought with the German provided credit. The media which was hand-in-glove with the lenders sold the story as one in which consumers receive these bailouts from taxpayers. They actually received none of it. They didn’t receive the loans, and they certainly aren’t receiving any of the bailouts.
The Greek Government currently owes 323 billion euros – the debt rose 213 billion euros, during 5 years of IMF-imposed “austerity”- the Greek depression. Economist-writer, Peter Schiff writes: “It’s hard to feel sorry for the [Greek] people standing in lines at the ATMs when they knew this was coming every day for the last four years.” When you look at the meddling between the lenders the people, you know for sure that the system was corrupt to its very base, and affordable to crass capitalists who made hay while the stable was being burned down. They made money and laughed all the way to the bank under the watchful eyes of their benefactors. It is the story of the crony capitalist and her/his partner in Germany, France and the rest of the Euro Zone engaged in a ‘you-scratch-my-back’ and I’ll scratch yours. The accusation that the ordinary citizen is to blame is ludicrous.
Indeed, this is not democratic capitalism. It is not socialism. It is, instead, fascism. It is dictatorial capitalism. It’s coming to India even as our ruling classes frantically shriek out “Make in India” -a gamble designed to fail the Indian economy and leave us dependant and pauperized. The select rich will remain unaffected. Meanwhile the country will drown in misery.
For those who wish to know some of the basics of the Greek crisis and the churnings in Europe caused by the Greek referendum in which the people overwhelmingly turned the externally imposed austerity measures, the article below by Brian Davey is instructive.
Ranjan Solomon
For Hard Truth
Badayl/Alternatives
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The Greece and Eurozone Crisis Made Simple
By Brian Davey*
One can go into long convoluted explanations but, as I see it, there are two basic problems, one leading into the other. The more superficial problem is that in a single currency zone without the option of devaluation purchasing power will drain to the more competitive countries. To continue buying in the common currency people, companies and governments in less competitive (and poorer) countries have to borrow but this is a temporary solution for the obvious reason that they must pay back with interest so pretty soon borrowing makes this problem worse.
At that point the rationale of the common currency zone is stuck in an unresolvable dilemma. All the twists and turns have merely been “kicking the can down the road” – and each time the problem re-surfaces it is bigger and more threatening. What does “kicking the can down the road” mean? It means borrowing more in order to pay back the last lot of loans.
What makes it a little bit confusing is the way that the debt gets transferred from agency to agency at each can kicking stage. What has basically happened is that the other European states have wanted the Greek state to be turned into a debt collecting agency on behalf of the Eurozone governments and for the IMF. A key problem here is that the Greek elite does not actually pay taxes – they have taken their money and everything moveable to Switzerland or places like the London property market. Like the rest of the global elite they too believe that “only the little people pay taxes” and by now the little people have been ruined. The other option is to sell off the public sector to the creditors. However the Greek people have now elected a government that says that they can’t pay – a government that does not do what it is told by the creditors and whose finance minister did not wear a suit and a tie.
At each stage the debts have mushroomed larger still as Greece has got poorer. Originally these debts were owed to French, Dutch and German banks but now they are mainly owed instead to European agencies. These agencies like the European Financial Stability Facility, run on behalf of 19 governments and based in Luxembourg raised the money to lend to Greece (to kick the can down the road) by borrowing 145billion euros from the bond markets. (Bonds are loans – when you buy them you are handing over money to the bond issuers because they promise to repay eventually and in the meantime pay an interest rate.)
So the solution to the debt – the kicking the can down the road – has been to borrow more – to create more debt and merely transferring whom the debt was owed to. These bonds (loans) were however “guaranteed” by the 19 European governments. To get the bond markets to cough up the money to finance the Greek debt the bond holders were told that if all else fails the governments of the eurozone will get the tax payers of Europe to pay. Many of these governments are in a pretty difficult situation themselves – so that might mean the guarantees being passed back to Germany……and the IMF has admitted that at least one third of the Greek debt are un repayable.
If you kick the can down the road repeatedly you eventually run out of road. What should have happened much earlier in this process was an admission that the French, Dutch and German banks had made a mistake lending to Greece and they should have taken their loss. Perhaps Greek officials and Goldman Sachs, which helped to hide the fact that Greece could not pay, should have been prosecuted. However, as we have seen there is a deeper problem. Eurozone has failed because it has a structural flaw in it. It cannot be mended and it will fall to bits either now, or perhaps later. Meanwhile…at the other side of the world the Chinese stock market just crashed for other reasons. The crisis of 2007/2008 is back….only much bigger this time.
These are thoughts to supplement my explanation above in the light of an interview of Yanis Varoufakis on YouTube at an event in Zagreb where he explains his approach to understanding of the Eurozone problems. If you want to watch it you can find it here: https://www.youtube.com/watch?v=MEUWxNifJJ8
The story I described above is one of dealing with debts arising out of trade imbalances. In the words that Varoufakis would use what was lacking in the Eurozone was a surplus recycling system to recycle the surpluses of the powerful countries (Germany) back to the deficit countries (Greece) so that they could keep on exporting to the deficit countries.
Prior to 2008 this was not such a problem because Germany was exporting also to the USA on a substantial scale and then investing the dollars that they earned through the exports back into Wall Street and its financialisation processes. This gave Germany the money that they could afford to spend into the European periphery countries and inflate bubbles there that kept people buying the Mercedes Benzes. (European money spending on the infrastructures of Spain, Ireland, etc which underpinned the property booms that the banks pumped up). After the crash of 2008 the export market to America crashed and that had two effects. Firstly banks in southern Europe were crushed as the property bubbles there popped AND Germany lost export markets to the USA far more than France, Italy and Spain did. Germany’s exports were more than proportionately effected by the Wall Street crash. Among other consequences of the Eurozone crisis is that it suits Germany to have a weak Euro to retain as much as possible of its shrunken US export market.
The Varoufakis explanation is thus one of coping with imbalances, of demand recycling from the surplus countries so that deficit countries could continue to buy import – and then the breakdown of the mechanisms for demand recycling between countries.
I dare say that this IS part of the story – however from an ecological economics perspectives it seems to me that it is easier to handle imbalances when all are growing because energy is cheap. Here we come to the second, deeper problem that I alluded to in the first paragraph. When all are growing then all are confident and imbalances can be covered by borrowing and lending because there is confidence that debts will be eventually be repaid. Also if all are growing state deficits and state borrowing are lower because tax revenues come in and expenditure on social problems are lower.
So one can turn the Varoufakis argument on its head. Growth was not only the RESULT of the existence of demand recycling mechanisms for surplus countries – the existence of recycling mechanisms for surplus countries could also be explained by the existence of growth. Growth made the recycling easier…. And growth was crucially a result of cheap energy (not part of the Varoufakis explanation).
To repeat – the Varoufakis argument that growth could continue when mechanisms were found to recycle purchasing power from surplus countries to deficit countries can be turned upside down. When growth occurs in deficit countries (even if it is not as fast as in surplus countries) then there is a mechanism to send the purchasing power back – capital export. Thus while Greece (and Spain and Italy and Ireland) was growing there were good reasons to send money to Greece – to invest in the building of holiday hotels for example, or in the building and civil engineering companies that built the hotels and the roads to the resorts. This was not buying and importing Greek goods – but it was putting money back into the pockets of Greeks in the form of investment in the business activities of a growing economy. If deficit countries are growing then mechanisms will exist to recycle purchasing power internationally. Once growth stops then there is no reason to send money to deficit countries and they are in trouble – as has happened throughout southern Europe and Ireland. I think that this is the most plausible way of seeing things. And the reason that growth began to fall off was raising energy prices because of depletion, because we are reaching the limits to economic growth. Because energy enters into all economic activities this undermines growth because people and companies struggle to service their debts AND pay the higher energy prices. That’s the ultimate reason that interest rates had to come down through quantitative easing.
Further it is not an accident that the breakdown of the Bretton Woods occurred when the US had, for the first time, to start importing oil, and when the price of oil rocketed. The dollar went from being on a quasi gold standard to being a quasi oil standard. It was part of the deal with Saudi Arabia and other countries – they sold their oil for dollars. If you wanted to buy oil you needed dollars so to keep putting your surplus back into the US and keeping it in American banks made sense. (The City of London was also able to survive largely because sterling became a petro-currency at this time too.)
*Brian Davey trained as an economist but, aside from a brief spell working in eastern Germany showing how to do community development work, has spent most of his life working in the community and voluntary sector in Nottingham particularly in health promotion, mental health and environmental fields. He helped form Ecoworks a community garden and environmental project for people with mental health problems. He is a member of Feasta Climate Working Group and co-ordinates the Cap and Share Campaign. He is editor of the Feasta book Sharing for Survival: Restoring the Climate, the Commons and Society.