What were the finance ministers of Germany, France and Greece thinking when they met each other at a Luxembourg castle for ‘top-secret’ dinner talks on the resurging Greek debt crisis last weekend?
As their five-star banquet was being served, did they discuss the human tragedy that is currently unfolding in Greece? Did they consider the fact that youth unemployment has soared to over 35 percent, living standards have fallen 20 percent, pensions have been cut to 600 euros per month, and suicide rates are reported to have nearly tripled since the outbreak of the crisis?
Unfortunately, yet predictably, concern for the Greek people did not really feature on the menu in Luxembourg. Instead, these important men and women gathered to discuss “more important” affairs, like how to prevent a looming Greek default – or, even worse, in their view, an exit from the eurozone.
By now, it has become painfully obvious that last year’s EU-IMF bailout has failed to address the debt crisis. The draconian austerity measures imposed on the Greek people have, by depressing growth, only made matters worse. The ‘necessary pain’ of the neoliberal medicine is threatening to kill the patient.
Even the pro-market Economist is now recognizing that at present growth and interest rates, Greece simply won’t be able to service its debts.
So if this is the emerging consensus, why do policymakers continue to cling on to the idea that Greece, with some deeper cuts, a few more privatizations and a little bit more time, will eventually be able to able to muddle through? Why are they so terrified of a Greek default?
The answer, of course, is that while a default would unshackle Greece from punitive austerity measures and a permanently overvalued currency, it would simultaneously spell disaster for the European banks that lent so recklessly to Greece’s corrupted elite in the buildup to the crisis.
In a report released last week, the IMF warned that “banks in the core countries of advanced Europe carry substantial exposure to the euro area periphery on their books, and a shock to confidence could spread quickly through Europe.” Clearly, this is already happening.
German and French banks alone are exposed to Greek debt to the tune of $119 billion. Much of this money was lent to the Greek government at extortionate interest rates and in full awareness that the Greek national debt was gradually becoming unsustainable.
Yet BNP Paribas, Société Générale and Kommerzbank, among others, continued to buy up Greek bonds unabated, happily financing the country’s gaping budget deficits with the knowledge in the back of their heads that the EU would never allow Greece to default on these loans.
Indeed, as soon as the financial mafia realized that Greek debt levels were becoming unsustainable, the president of Goldman Sachs, Gary D. Cohn, personally flew to Athens to make the government an offer it couldn’t refuse: using complex derivatives, he could simply make the Greek debt ‘disappear’.
Without the Greek people ever being informed about it, corrupt government officials thus colluded with foreign speculators to sneakily shovel the burgeoning national debt under the carpet. Everyone benefited lavishly from the spoils of this covert casino culture – except for the Greek people.
Even before the crisis, a survey by Kapa Research and the London School of Economics found that a third of Greeks lived near the formal poverty line of 500 euros per month. In the greatest irony of all, EU elites are now expecting these people to take on the herculean task of saving their reckless banks.
When this skewed arrangement finally proved impossible, Dutch finance minister Jan-Kees de Jager simply stated that he refuses to lend the Greeks a helping hand unless they make even deeper cuts. In the ultimate case of the pot calling the kettle black, the rich keep telling the poor that they are living beyond their means.
Luckily, as the Arab spring has amply demonstrated, it’s not only the empty suits who decide over the future of the world. When the winds change, and the revolutionary spirit of North Africa and the Middle East is blown across the Mediterranean, we could see a radical reversal of Greece’s fate.
Indeed, the Greek people are already taking to the streets in the tens of thousands. Last week saw two consecutive days of mass protest as a general strike turned to riot and police forces violently repressed labor mobilization and popular opposition to public sector cuts, beating one protester into a coma.
At the same time, a spontaneous outburst of grassroots civil disobedience is already threatening to derail the government’s neoliberal reforms. The I Don’t Pay movement has mobilized thousands to occupy metro stations and toll booths, urging fellow Greeks not to pay for corruption and speculation.
Another budding movement, aided by the online success of the Debtocracy documentary, is calling for a public audit on the legitimacy of the national debt. If the audit can prove that sections of the debt were accrued illegitimately, international law would allow for the government to default on these loans.
All in all, throughout the country, tens of thousands of people are already crafting the alternatives. Indeed, a resounding roar is emanating from the streets of Athens: the people will not sit back and go down without a fight. In Athens, unlike Brussels and Luxembourg, revolution is still on the menu.