For months Greece has been at the centre of the so-called Eurozone crisis. But how can a country which is one of the smallest economies in Europe, present such a grave danger to the stability of the world’s biggest economies?

Greek workers and bosses alike have paid the price for ‘the good times’, but not in equal measure. Those workers lucky enough to keep their jobs have seen their pay cut by up to 40%, school’s cannot afford any new textbooks whatsoever, while the political elites have had to accept the imposition of a government of IMF technocrats – among them figures who were instrumental in leading Greece into the abyss.

This talk will look at how the Greek ruling class collaborated with the European and international banking and political elite to rinse the system – the results of which have left Greece at the mercy of its powerful former partners as the losses are tallied in a game in which the only rules are ‘might is right’.

In early 2010, it was revealed that successive Greek governments and banks had consistently lied about the country’s official economic statistics in order to keep within the EU’s monetary union guidelines.

Lies, damn lies and statistics

This prompted what has become the dominant theme in the bourgeois press when talking about the Greek debt crisis. Economic charlatans and capitalist apologists point to the figures and claim that the deceitful Greeks fiddled the figures in order to live beyond their means.

Of course, anyone can make any figures show anything they want. Especially if they want to make Greece a scapegoat for the Eurozone crisis, making their own country out to be a victim of a cultural laziness infecting the workers of southern Europe.

The truth is that the entire charade was orchestrated with the help of Goldman Sachs advisors and the collusion of the EU bureaucracy who sailed through the boom years with the attitude of ‘if it ain’t broke, don’t fix it.’

The actual problem was that the level of tax evasion by the Greek Orthodox church and capitalists was so great that it could only be supported by the cheap loans which EU membership provided.

It was not pensions, early retirement or public services which sunk the Greek economy, but rather the fact that those who were milking the Greek and European taxpayer themselves paid zero tax. This includes the politicians who imposed brutal austerity on Greek workers with the memorable phrase ‘we were all eating from the same plate’.

According to Handelsblatt (German language business newspaper) wealthy Greek bosses have stashed an estimated €560 billion in foreign accounts—almost twice as much as the entire Greek national debt. And the US investment bank Merrill Lynch has estimated that in 2007 no less than three million millionaires resided in Europe, with total assets of €7.5 trillion.

Money might not grow on trees, but it does sit around in the bank accounts of billionaires who demand that services, jobs, pensions and welfare are cut far enough to make investing profitable again.

How bad is it really?

In May 2010, the Greek government deficit was estimated to be 13.6%, one of the highest in the world relative to GDP and public debt hit 120% of GDP, one of the highest in the world.

Currently Greece has 142.8% government debt to GDP ratio compared to the United Kingdom at 80%.

There are several reasons for why the economic crisis had such a devastating impact in Greece. In common with other southern European economies it suffers from low productivity and competitiveness relative to powerhouses like Germany.

Another reason is that when countries are doing badly they usually make their currency cheaper – this makes it easier to export goods, and discourage their own population from buying foreign goods,  boosting domestic income. Being locked into the Euro prevented them from doing this, while a return to the drachma would have seen Greece totally sunk by international speculators betting on the value of any new currency.

As a consequence, Greece was unable to turn to the usual means by which capitalist countries manage economic crisis. But the dominant cause was the overriding theme running through this crisis – that debt is central and must be repaid at all costs.

So the Greek deficit was pretty bad. But it was made worse by the crass insistence on repaying the deficit at all costs. The slash and burn policies imposed to keep the wolves from the door plunged Greece into a recession, reducing its income further and precipitating economic collapse.

Why Greek debt is Europe’s problem 

Enter the international markets: the casino capitalists – who have been raking it in throughout the crisis by betting on countries’ ability to cut workers’ jobs and living standards in order to raise the cash to repay their loans – suffered a crisis of confidence in Greece’s ability to repay. Of course, they did not worry about whether Greece could repay the loans before they lent them.

Just why became obvious when in May 2010, Eurozone countries and the IMF lent Greece €110 billion in emergency loans in order to avoid a default. This money of course, went straight back into the banks of the countries putting up the money, resulting in a very tidy arrangement for everyone involved except ordinary European workers who had to stump up the cash out of their pensions and wages.

France, Britain and Germany are taking the lead in imposing this austerity, because they are desperate for Greece to repay its debts, because so much of the debt is owed to French and German banks. These banks have lent so much money to Greece at extortionate rates of interest which it cannot repay that the governments of France and Germany are now obliged to lend Greece the money to ensure it can repay their own banks.

Britain of course has to fall in line, because a Greek default would trigger a collapse of French and German banks, leading to a new recession crushing the European market which accounts for 50% of Britain’s foreign trade.

In order to secure the funding, Greece was required to adopt harsh austerity measures to bring its deficit under control. Their implementation will be monitored and evaluated by the European Commission, the European and the IMF. What was meant by ‘harsh’ soon became obvious. 20% of public sector workforce sacked. 40% wage cuts and 5 year wage-freezes.

A second bailout of 50bn euros went straight into servicing government debt rather than investing in the economy. The country is estimated to need 172bn over next three years with the Greek debt  set at around £33,000 per person.

Increased taxes on utilities and consumer goods. Cuts to education so severe that most schools now have no textbooks or basic educational supplies. Draconian cuts to healthcare and welfare. Numbers alone cannot describe the reality of austerity imposed by their French and German paymasters.

Out with democracy, in with technocracy

But the task of looting the Greek economy to keep the French and German banks afloat is too important to be left to a weak, compromised and totally corrupt Greek political class.

So the EU and the IMF simply laid out the facts. If Prime Minister George Papandreou did not resign and make way for a puppet government of technocrats, appointed and controlled by France and Germany, Greece was not going to get any more money.

He resigned, and France and Germany demonstrated why imperialism does not only apply to military actions. In effect, the Franco-German and international finance capitalists brought their muscle to bear and did away with democracy in favour of ensuring a pliant government who would look after their interests first.

Thus a ‘government of national, that is, capitalist unity’  headed by the former vice-president of the European Central Bank (ECB), Lucas Papademos, and backed by the fascist LAOS party, was installed to implement austerity measures over the massive opposition of the population.

The incoming prime minister and the leaders of the three governmental parties—the social democratic PASOK party, the conservative New Democrats (ND) party and the fascist LAOS—signed a letter to the EU and IMF, promising to implement austerity measures and cut down the public staff.

This is nothing less than a coup d’etat, turning Greece into a protectorate of German and French imperialism.

The greatest irony of all has to be that the new leaders of the Greek government, imposed to ensure fiscal competence etc. etc. are the same people who worked at the Greek Central Bank and Goldman Sachs throughout the 1990s and 2000s to fiddle Greece’s economic figures. That such people are deemed fit to manage the ‘return to normality’ shows exactly what kind of normality the IMF wants to return to.

IMF harvests organs, kills patient 

On Monday, the new Greek government, appointed by the European Union (EU) and the International Monetary Fund (IMF) began implementing the austerity measures demanded by the EU and the IMF. In a first step, up to 16,000 public sector workers were forced into early retirement on 60 percent of their salaries, which have already been cut 30 to 50 %

Cutting the public-sector work force was one of the main demands of the EU and IMF to approve the last €8 billion tranche of the bailout fund that was adopted last year and that is necessary for Greece to avoid an immediate bankruptcy in mid-December.

The mass layoffs show that not a single cent of the bailouts will benefit the workers. These funds will be used to pay off Greece’s creditors among the major banks, who are happy to take a ‘haircut’ writing off a percentage of their loans because they are a raking in astronomical rates of interest, more than covering up for any shortfall in repayments.

Government officials just announced extensive privatisations for the beginning of next year. The gas company DEPA and 35 state buildings are already slated for sale in the first quarter of 2012. Until 2015, the government wants to sell public property valued overall at €50 billion. And where privatisation goes, unemployment follows.

Previous privatisations, wage and pension cuts of up to 50 percent, and tax increases have already led to a deep recession. After 4.5 percent economic decline last year, the OECD estimates another negative growth for this year by 6.1 percent and 2012 by 3.0 percent. The official unemployment rate stands at about 20 percent.

Youth unemployment is nearing 50%, while more than 20,000 people have lost their homes.

But the main point is that their debt interest is SO HIGH that they can’t pay it, while German and the EU tell them they will only have the rates of interest lowered if they make enormous cuts.

The cuts are so severe they are crippling the entire economy. This means they are less able to pay their debt interest, and so the interest they have to pay on their debt rises again, and the cycle continues.

This might seem totally illogical, but to the capitalists it works perfectly. The government might have no money, but that just means there’s no money for schools, pensions and hospitals. With a government of bankers, for bankers, there’s always going to be money for repaying bank loans.

Resistance

Greece has seen 14 24 and 48 hour general strikes over the past 18 months. These have had two principal effects. They have rallied millions on the streets in front of the world’s media, and they have prevented popular anger from exploding out of the hands of the trade union and Communist Party (KKE) bureaucracy.

What they haven’t done is prevent an IMF coup, and wholesale destruction of Greek jobs, homes and public services.

If we accept that the politics of austerity have only one purpose – to intensify exploitation by slashing social spending, wages and returning to a pre-welfare state model of capitalism, then we must accept that the politics of compromise can be given no support by those who refuse to pay with our lives for a crisis we did not cause.

The only progressive solution to the crisis is one which transforms the way in which wealth is produced and distributed in society.

The parasitic hoarders of our wealth – the banks, large corporations and major private fortunes – must be expropriated. This means taking them over, putting them under democratic control and using them to serve the interests of society as a whole.

We must fight for social needs to take precedence over the individual pursuit of profit.

60 years of piecemeal reforms have not achieved this. 600 more years could not achieve it, even if we were not in the midst of a co-ordinated offensive to roll back every social gain embodied in the welfare state.

Success requires a revolutionary movement of the working class. To overcome the resistance of the established parties and capitalist media who will defend their system to the end, we must build a revolutionary alternative to the trade unions and pseudo-socialist parties who’s only role is to chain the working class to our exploiters through a web of negotiation, compromise and betrayal.

Capitalism is a system in decline, and it can be overcome. But in the words of Lenin ‘there is no crisis the capitalists cannot survive so long as the working class is willing to pay for it.’

We say we will not pay. We are committed to building a revolutionary party that can organise the militants in every workplace, on every farm, in every school in an international struggle to overthrow capitalism, and open the road to socialist democracy.

 

Read more

 

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The Capitalist Crisis Explained: Bailout

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The Capitalist Crisis Explained: Austerity

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Call for a general strike

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