International shield

For some, the big Greek ‘no’ is further evidence of the country’s irresponsibility.

Certainly, the Greeks are co-authors of their misfortune (see here, here and here for examples). Writing for Byline, Alex Andreou tells the essential truth of it:

“Corruption and tax evasion had been rife for decades. Accounts were falsified in order to facilitate entry into the Euro. Unforgivable economic crimes were committed. These weren’t committed by most ordinary people of course – the very people now asked to take on the burden of the follies of our rich oligarchs. Corrupt politicians who passed the country back and forth like a joint were quick to secure their money in Swiss bank accounts.”

One might quibble with the notion that that ordinary Greeks had nothing to do with this mess; after all, the chain of patronage extended a long way down from the top. Nevertheless, Andreou is right to highlight the protected position that the rich and powerful enjoy – and not just those in Greece.

The culpability of the European elites for this mess hasn’t got half the attention it deserves. Let’s begin with the immediate crisis and work our way back.

Firstly, why are Greek savers queuing outside banks begging for their own money?

“The ECB has acted to asphyxiate the Greek economy – the ultimate blackmail to force subordination. The money is there, in our accounts, but we cannot have access to it, because the overseers of our own banking system, the very people who some months ago issued guarantees of liquidity, have decided to deny liquidity.”

To “deny liquidity” in this context doesn’t mean refusing further bail-outs, it means deliberately choking-off the money supply – a basic service that all central banks provide to enable national banking systems to function. Except that in the case of Greece, the central bank is in Frankfurt and controlled by foreigners. This is an extraordinary position of weakness for a supposedly sovereign country:

“At times of financial strain, a country’s currency issuer, its central bank, should act as lender of last resort and prime technocratic negotiator. In Greece’s case, the European Central Bank, sits on the same side as the creditors; acts as their enforcer. This is unprecedented.”

The Eurozone is under no moral obligation to keep lending money to profligate governments. Its solemn duty, however, is to protect ordinary people who do the right thing – i.e. save. Instead, the Eurozone authorities are effectively confiscating the bank deposits of Greek citizens in order to blackmail their government – a disgusting betrayal of trust.

Admittedly, Greece is in the process of defaulting on the loans made as part of its 2010 bail out. But about that:

Less than 10% of the ‘Greek’ bailout has gone to Greece. The rest has gone to strengthen irresponsible financial institutions, mainly French and German, which were heavily exposed.”

These are the banks that had previously made large amounts of money by selling debt to a blatantly dysfunctional state under cover of the Eurozone. In a sane world, Greece should have defaulted on these recklessly-made loans and the banks (and bankers) should have taken the consequences.

It’s easy to characterise this tragedy as a matter of greedy elites looking after one another’s interests – easy, because it’s true. However, what’s also true is that the fundamental design of the single currency is as much to blame. Unlike the back-room dealings of top-level politicians and financiers, these design flaws were plain for all to see from the outset.

Still, the warnings were ignored – and not just by the politicians and bankers, but also by self-satisfied opinion formers convinced of their sophisticated, internationalist outlook.

I wonder if any of them have apologised yet?

55 comments for: Greek fecklessness, but Europe’s disgrace

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