The Greek conundrum
Taking a closer look at the crisis in Greece, and its impact on the eurozone
Greece and its politicians have been accused of reckless borrowing and then misleading Europe about the true stand of their debt. True as this is, the political chaos and economic collapse that has now hit Greece is not merely the result of irresponsible party politics, but has its roots in the 'growth-on-credit' philosophy that was propagated by America's financial directorate.
The US Federal Reserve under chairman Alan Greenspan, a close ally of Wall Street financial interests, launched a 'global growth campaign'. It was a way of escaping rectification of the worsening disequilibrium between the industrialised and developing economies, to maximise profits. Greenspan elevated 'growth-on-credit' to the norm of clever business management.
The concept of 'globalism', propagated by respectable academics and echoed by the media, induced leading developed nations - including those of Europe - to look abroad for quick and profitable investment turnovers, whilst neglecting their own backyard in Europe's South and East, for long-term funding of infrastructure and productive industrial development. Clearly, the concept of a Europe of balanced growth was giving way to speculative financial practices.
When the Asian honey-pots collapsed in the '90s, those duped by grand theories and vague promises found themselves facing stupendous losses. This is not the place to go into detail, but Bank for International Settlements (BIS) data for 1996 show that European bank exposure in Asia totalled some $US250 billion, with Germany in the lead ($US103 bln), followed by Britain ($US64 bln.), France ($US59 bln.), Netherlands ($US23 bln.), and Spain ($US500 mln.). Europe's total non-performing loans - a total of $US250.5 billion - amounted to 42.2 per cent of total, followed by 32.3 per cent of debt held by Japanese banks, and 10.7 per cent by American banks.
If European nations would have invested these $US250.5 billion in the industrially under-developed parts of Europe, including Greece, there would have been productive jobs, exports, and balanced budgets. As matters stood, the European peripheries remained semi-agrarian and tourism-dependent, but they were tempted to imitate the glamour of Northern European living standards and social services. Hence the governments of Ireland and Greece, of Portugal, Spain and Italy, kept borrowing from 'easy credit' markets, until the day of reckoning, when the credit bubble collapsed and debts were falling due.
They were all duped, Europe's North and South, East and West, by a bunch of unscrupulous financial sharks, lurking now in the background and waiting for the Euro - the challenger to the US dollar - to collapse, and the eurozone to disintegrate. They could then buy up its assets cheap.
Today Greece is ungovernable, its people desperate and confused, swaying between Syriza, the left grouping which outvoted the PASOK social-democrats, and the Golden Dawn neo-fascists coming up.
There is a rising chorus of voices in Brussels to let Greece go. Yet Alexis Tsipras, leader of Syriza, who demands the cancellation of the austerity programme devised for Greece, finds an echo in other European deficit countries - the latest being France and its newly-elected socialist president Hollande.
European leaders have made clear that the reform program is a quid-pro-quo for receiving further payouts from Greece's latest 173 billion euros aid package, without which Greece wouldn't have enough money to pay fore basic services such as schools and hospitals.
Does Syriza have an answer? Tsipras says Greece can manage on its own. By not paying its debts, Greece will have enough cash to pay its workers and retirees. He also proposes cuts in defence spending, cracking down on waste and tackling wide-spread tax evasion by the rich. He further favours nationalising the banking system - anathema to capitalism - so as to better direct lending policies.
He suggested finding "a European solution" for the benefit of both sides, and added that Greece should remain in the eurozone and that the country's national currency was the euro - an exit would have "multiple negative consequences." Indeed, who would exchange goods or services for valueless Greek paper money, the drachma ? There would be massive inflation, no imports of essentials, no travel abroad. Under capitalism there's nothing to be had for nothing.
What Tsipras offers, is not a solution to the country's present predicament. Who will care about Greece, once it leaves the eurozone ? Europe will not drop Greece, even if its conditions are dictated by the exigencies of finance capital, to first save the banks.
Speaking at the G-8 summit in the US on Friday 18 May, Jose Manuel Barroso, President of the European Commission, said Brussels had to insist on Greece fulfilling its agreement - but it would look at other ways to help, such as "channelling more investment funds into the country" isn't this what should have happened 30 years ago? It is a belated admission that industrialised Europe had fallen prey to the "globalism' chimaera by financial swindlers and failed to invest long-term at home, in the first place.
One can only hope that the coming elections on 17 June will bring to power a coalition of the main parties who will put the country's future on a solid - if painful - course.
* Additional quotes and information appeared in the publications Weekend Australian (dated 18 - 19 May) and The Australian "Austerity still key for Greece", published on 22 May.
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