Money Myth #112: Greek bailouts a fiction
The following is an excerpt of my upcoming book: Big Little Lies — How the world really doesn’t work:
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: That somehow Greece deserved the economic disaster wrought upon it by the international community, the severity of which has not been experienced 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. All while sweeping three Prime Ministers from office for having the audacity of attempting to defy the troika’s austerity demands. (Eventually the troika — the European Commission, European Central Bank, and International Monetary Fund — found a leader willing to capitulate in Alexis Tsipras who was re-elected after resigning in 2015 having reluctantly negotiated an austerity package that suited its needs).
Banks never pay for their own mistakes. The European Union was formed — at least in part — to avoid the wars, destruction and barbarism of the 1920s, ’30s, and ’40s — but a monetary union with no federal mechanisms and no recourse for exploitation has led to war by other means. (It is no coincidence that fascism has reared its ugly head in Europe’s economically weaker nations while Germany continues to dominate the Eurozone).
If Greece continues to participate in the European Union, democracy is doomed.
I note that Varoufakis has launched Diem25, a bid to save the EU from itself and restore democracy to its core. But it requires the consent of the participating bureaucracies and its tens of thousands of lobbyists. I see no way for its objectives to be taken up.
The EU was created as an industrial cartel with the sole purpose of diminishing democracy and made the rule of Parliaments all but irrelevant. These technocrats and finance moguls will not simply hand back back their power to Europe.
Greece and its participating Eurozone partners should take the bold decision to leave the EU to save Europe from itself.
But first, some history
The EU began as a cartel of coal and steel industries that blatantly controlled prices and output via multinational bureaucracies with powers that transcended the rule of national governments.
It was formed in response to death of the Bretton Woods agreement, the gold standard and the New Deal along with them.
The goal was the creation of a European New Deal — albeit one that benefited France and Germany over all other member states — the kind that doesn’t require the help of the American mothership which had helped restore prosperity to the continent following WWII by providing exchange rate stability.
America, in a bid to contain the Cold War and Soviet influence had decided to rehabilitate German industry by pressuring its European debtors to forgive half its debt following WWII (an irony that should not be lost on anyone).
If Germany did for Greece what the rest of the world did for Germany following WWII, (Greece among them), it perhaps would not be in the situation it finds itself in today. For the third time in history German economic and monetary dominance has brought Europe to its knees. And this time it didn’t need a war to do it.
While the EU is made up of countries including Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain, it is largely dominated by and was formed to serve the interests of French and German competing economic and commercial power. The rivalry between the two countries was a dominating factor in its inception and has continued to play an outsized role in its disfunction.
It was hoped that a European monetary union could compete with US, Japanese and Chinese commercial powers by forming a common market across Western Europe. It took a variety of forms before an official Eurozone was created beginning with The Council of Europe, founded 5 May 1949, the European Coal and Steel Community under the Treaty of Paris, 1951, the European Economic Community formed under the 1957 Treaty of Rome, The European Communities under the Merger Treaty in 1967, and eventually, the European Union formed under the Maastricht Treaty on the 7th of February 1992.
The European Central Bank was formed in 1998 and was created in the image of Germany’s central bank, The Bundesbank, and was designed to impose austerity upon countries with weaker economies, France included. It also lacks a central treasury to provide the fiscal backing required to make the ECB the lender of last resort that it needs to be, and deprives member nations of sovereign credit, (banking credit of ‘sovereign countries’ — nations with governments that issue their own currency — that is ‘backed’ — or insured — by the state).
EU member states have been required to deflate their economies by reducing production costs, to boost exports, while slashing incomes, pensions and public spending. With a common currency, and little room for recourse beyond austerity, it resulted in widespread chaos, dramatic cuts in public spending, prolonged mass unemployment and reduced wages.
While America may not have wanted to continue exchanging European gold for US dollars, it certainly wasn’t going to see a new, powerful, financially independent Europe form of its own accord.
The US played a central role in the formation of the EU from the outset, ensuring that European profits flowed into American Federal Reserve accounts by way of Wall Street. The financialisation of the global economy that we are so familiar with today could not have been achieved without the EU and America’s steady hand.
Far from creating democracy, the EU encouraged the outrageous derivative trading and irresponsible lending that caused the 2008 financial crisis.
It wasn’t Greece’s debt
The Greek financial crisis was actually a French and German banking crisis for which Greece took the fall, the result of decades of irresponsible spending and lending…