Thirty years ago, Greece joined the European Union. Fifteen years ago, at a science-fiction convention in Chicago, I was staying in a huge flat near the Loop which had been turned into a kind of dormitory for all three of the flatmate’s SFnal friends: I was the only Brit in the mix, and indeed the only European. A woman I knew came into the main living room and asked the room generally “Who on EARTH has Greek toothpaste?”
I waved my hand. (My toothpaste in fact had writing on the tube in all the languages of the European Union, but the Greek lettering was the most conspicuous.) Everyone looked at me.
“Why do you have Greek toothpaste?” she asked me.
“I am a citizen of Europe,” I told her happily, and that silenced all the North Americans in the room.
I have been seeing cheerful headlines around the news quite a lot, declaring that the Greek Parliament’s vote to accept the bailout means the “long nightmare is over”, that Greece is “rescued” at last. This is nonsense.
For Greece, the nightmare is just beginning. And it will look like this:
There is no money for a lot of things around here, not since Jefferson County, population 658,000, went bankrupt last fall. There is no money for holiday D.U.I. checkpoints, litter patrols or overtime pay at the courthouse. None for crews to pull weeds or pick up road kill — not even when, as happened recently, an unlucky cow was hit near the town of Wylam.
“We don’t do that any more,” E. Wayne Sullivan, director of the roads and transportation department, said of such roadside cleanup.
This is life today in Jefferson County — Bankrupt, U.S.A. For all the talk in Washington about taxes and deficits, here is a place where government finances, and government itself, have simply broken down. The county, which includes the city of Birmingham, is drowning under $4 billion in debt, the legacy of a big sewer project and corrupt financial dealings that sent 17 people to prison. New York Times, 18th February 2012
I found the above story via Slacktivist’s Jubilee series of posts. Fred Clark notes rightly:
That’s the opposite of Jubilee. The creditors will be paid, but the debtors will never be freed of their debt.
That’s immoral. It’s also impractical. Greece and Jefferson County are not isolated entities. They’re part of an interconnected global economy and a network of mutuality. To satisfy their creditors without liberating or restoring them means that they will continue to limp along, and all those who are affected by them will continue to suffer as well.
Greece remains a member of the European Union thanks to the bailout, which means every Greek who can (and most of them can’t) will be heading for the EU countries to find work, anywhere they can. A condition of the bailout is that there will be no money for any of the things cheap-work conservatives hate: education, healthcare, any kind of public welfare: the Greek Parliament is required as one of the conditions of the bailout to pass a law giving priority to paying off the interest on their country’s debt over paying the salaries of people who work for the state. So Greece will lose teachers and doctors and nurses – some of whom may be able to get jobs at their educational level elsewhere in EU, but many of whom will be cheap workers. Just what’s wanted, if you’re a roll-back-the-clock-to-1834 cheap-work conservative: people desperate for work and willing to accept any wage at all. £2 an hour? Less.
In 2010, after the first EU-IMF deal for Greece, it was predicted that
Economic contraction of 4 percent [predicted for 2010] and 2.6 percent in 2011. Growth will return in 2012 at 1.1 percent and 2.1 percent in 2013 and 2014.
The economy shrank 4.5 per cent in 2010 and was estimated to have contracted by more than 5.5 per cent in 2011. The economy is forecast to shrink 2.8 per cent in 2012 and then return to growth of 0.7 per cent in 2013.
That would be after the Greek Parliament passes a law saying that the country has to service the interest on its debt before it can pay state employees. That’s one of the conditions of the bailout. Not just teachers and doctors. Tax collectors. Police. Fire brigades. Road menders. Road cleaners. In Jefferson Country, if a car hits a cow, the cow is going to stay rotting by the side of the road: there is no means of paying anyone to clean up. Nor will there be, in Greece. Even tourist income is going to go down, inevitably – Greece simply won’t be a very pleasant country to visit, unless you’re immensely rich. But we’ll see more and more Greek exports – cheap fruit and vegetables flown in to Marks & Spencers, cheap workers hopeful of earning something – and complaints from right-wing media that after all this money has been given them, Greeks are still complaining. While regular Greek families don’t have enough to live on, middle-class Brits will be buying Greek kiwi-fruit from M&S.
The Greek finance minister, Evangelos Venizelos, claimed that the deal has helped Greece to avoid a “nightmare scenario” and given it a “new opportunity”. But it’s hard to see how he isn’t lying like Iain Duncan Smith – everyone involved in the “deal” knows that there will have to be more money in a few months, as the Greek economy shrinks again, because the tax income that the bankers want to get from Greece just simply won’t be enough even to keep paying the interest. The Greek debt to the bankers is going to grow as the Greek economy shrinks.
A report written by “experts from the European Commission, the European Central Bank and the International Monetary Fund” which was published by Reuters on 15th February, admits that the “political risks” to the bankers’ plans for Greece include the problem that:
“economic agents” (workers) may resist wage cuts and flexibility, “strong vested interests” may continue to resist opening up closed professions and liberalizing product markets, and bureaucracy may continue to shackle business reforms.
In short, the people of Greece are strongly objecting to the current plan to sink them into an economic dungeon in which – if they can find work – they labour hard for less money, and see everything they produce go to profit the bankers who own their debt.
These kind of people are happy:
“It is good to have cleared the Greek Damocles sword for a few months,” said Raphael Gallardo, the head of economic research at Axa Investment Managers in Paris, which oversees about 515 billion euros ($680 billion). “The euro area governments and European Central Bank have won some time, two months at least. It is positive for risk assets in the short run.”
The bailout “for Greece” will be 130 billion euros – £109,526,842,000 in GBP. The largest Euromillions lottery prize ever won in the UK is £161,653,000. This bailout is the equivalent of 677 such winners.
Although this will be repetitively sold to us as “for Greece”, this money is not actually going to Greece at all. It’s going to the creditors.
It works like this. You get De La Rue to print £14bn of banknotes, roughly the amount extracted from high-street spending in extra VAT this year. You send a fleet of vans to transfer the money to Northolt and other regional airports. You load it into squadrons of RAF helicopters and, in full view of television cameras, scatter it over shopping streets the length and breadth of the land. The notes are designed to disintegrate within six months and can be banked only by registered firms. Those finding them must spend them fast on goods and services.
“Helicopter money”, once a satirical monetarist metaphor, suffers only one serious objection as a cure for a nation suffering from collapsed demand. It is vulgar and undignified. It seems tacky, populist, messy, a smart-alec suggestion not fit for consideration by ministers, bankers or economists.
As Greek bailout talks gathered steam throughout the start of 2012, and an imminent bailout seemed to be in the cards, these stocks have recovered some lost ground. As of February 17, 2012, Goldman Sachs has appreciated 28% to $115.19, Morgan Stanley has appreciated 26.6% to $19.16, Citigroup has appreciated 25% to $32.92 while BofA has appreciated 44% to $8.02.
The population of Greece is nearly 11 million. Cut the bailout by 90% and instead of giving £110 billion pounds to Goldman Sachs give each Greek 1200 euros (£1017) – that would make a real difference, and cost much less.
“The very wealthy are spending,” says Richard J. Kurtz, a New Jersey developer of estates for the rich. “Everyone below that is holding back.” But the rich-rich-rich? “They’re so wealthy it doesn’t change their lifestyle. If they want a boat, they’re gonna get a boat.”
And if they want to rent a private island for a birthday party, they’ll do that, too. Recently, a client of Sanctuare, a luxury-villa-rental agency, reserved Musha Cay, a private island in the Bahamas, for a nine-night 50th-birthday party with a dozen friends at $40,000 a night. “It made my jaw drop, and I’m in the business,” says Sanctuare’s president, John Steinle. “That’s more than an awful lot of money. I do fewer transactions now, but the ones I do are no less spectacular.” Newsweek, 28th November 2011
“Every night I cry alone at home, but what can I do? It hurt my heart, but I didn’t have a choice,” [Maria] says. She spent her days looking for work, sometimes well into the evening and that often meant leaving eight-year-old Anastasia alone for hours at a time. The two of them lived on food handouts from the church. Maria lost 25kg. In the end she decided to put Anastasia into foster care with a charity called SOS Children’s Villages. “I can suffer through it but why should she have to?” BBC, 12th January 2012
Ask yourself: Who do you want to help? The bankers who can afford to hire private islands, or Maria and Anastasia?
Why are we bailing out Goldman Sachs, again?
The bank’s unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumer credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you’re losing, it’s going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it’s going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals. Rolling Stone, 5th April 2010
Goldman Sachs, responsible for creating Greece’s problems, is now running both the National Bank of Greece and the Greek government.
The bank’s traders created a number of financial deals that allowed Greece to raise money to cut its budget deficit immediately, in return for repayments over time. In one deal, Goldman channelled $1bn of funding to the Greek government in 2002 in a transaction called a cross-currency swap. On the other side of the deal, working in the National Bank of Greece, was Petros Christodoulou, who had begun his career at Goldman, and who has been promoted now to head the office managing government Greek debt. Lucas Papademos, now installed as Prime Minister in Greece’s unity government, was a technocrat running the Central Bank of Greece at the time. Independent, Friday 18 November 2011
Why aren’t we helping Maria? Why is it more important to add to Goldman Sachs’ billions than to give her the chance of a job, food, a home, and a life to share with her daughter?
Helicopter money is what the EU is about to drop into the coffers of the banks who own Greece’s debt. Over one hundred billion euros.
Dropping the stuff from helicopters is more effective since it does what it says on the tin: it instantly unleashes demand. It is an emergency blood transfusion straight into the veins of the economy, through high-street tills, job recruitment, restocking, warehouses and order books. It does not pass through the constricted arteries of bank managers.
I am a citizen of Europe. I vote for giving Maria and Anastasia a couple of thousand pounds, and against giving Goldman Sachs one more penny.