If you have been listening over the last year or so to the mainstream media discussing Greece, you would have got the impression that Greece is like a spoiled trust fund child used to living a carefree life at others’ expense and now throwing a major tantrum when the ‘adults’ (i.e., the IMF and the European Commission and Germany) say that they are cutting their allowance and can no longer expect the rest of Europe to subsidize their lazy, hedonistic lives.
Brett Arends caricatures this view (but not by much) in an article titled 10 things the media aren’t telling you about the Greece crisis.
The Greeks are in a crisis because they’re a bunch of lazy deadbeats, right?
After all, they work only 10 months of the year — and get paid for 14. They retire at 25 and lounge around in cafes drinking ouzo. They live on handouts from Germany and cheat on their taxes. The troika of the European Commission, the European Central Bank and the International Monetary Fund have tried and tried and tried to help them, but they just won’t listen. And now they’ve gone full moonbat and are refusing to pay back even a scrap of the money they’ve borrowed.
But Arends says that “Almost everything you’re being told about the Greek crisis is a load of complete nonsense”, promoted by ‘experts’ who care more about the health of the banks than of the many people who are unemployed and poor. As I read more about this, it turns out that there is plenty of blame to go around and that the so-called ‘adults’ share much of it.
Here’s the first of the 10 correctives to the myths that Arends gives.
The Greeks have already tightened their belts even more than they were asked to. Since the bailout agreement five years ago, the Greek government has slashed spending, raised taxes and turned a primary government deficit (before debt interest) of 24 billion euros into a surplus of 3 billion euros. It has actually cut its debts even more than the bailout demand. No wonder the IMF itself called the austerity measures “exceptional by any standard” and hailed their “important progress” on reforms.
What is happening with Greece seems to have a lot of parallels with what happened prior to the big financial crisis of 2008 when the bubble based on vast numbers of shaky mortgages collapsed. Lenders lent freely to unqualified borrowers without instituting the usual safeguards, and when people could not repay, governments stepped in to bail out the lenders (the banks) using public money, while doing precious little to help the borrowers (the homeowners). It is undoubtedly true that there was irresponsible borrowing. But the borrowers were urged to borrow by irresponsible lenders. The idea of ‘moral hazard’ seems to apply only to the borrowers (i.e., if they are helped they will continue to be irresponsible borrowers) while no moral hazards apply to the banks who were protected from their recklessness and did not suffer any consequences and in fact continue to go their breezy way, making big profits and paying big bonuses to people who should rightly be in jail.
It is good to see more people now trying to rectify this biased narrative. Economist Thomas Piketty, author of the bestselling book Capital in the 21st Century has blasted Germany for its hypocrisy in refusing to find ways to ease Greece’s debt burden when history shows that Germany was allowed to write of its own debts and would not be where it is now if not for that forgiveness.
Germany, Piketty continued, has “no standing” to lecture other nations about debt repayment, having never paid back its own debts after both World Wars.
“However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them,” Piketty said. “The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.”
Piketty criticized the “infantile” moral uprightness of Germany, whose economic success upon reunification has led it to rebuke nations like Greece for being in similarly weakened financial states as Germany itself was in decades ago.
Piketty argued that the same debt relief accorded to Germany after World War II should be granted to Greece today.
“After large crises that created huge debt loads, at some point people need to look toward the future. We cannot demand that new generations must pay for decades for the mistakes of their parents,” Piketty said. “The Greeks have, without a doubt, made big mistakes. Until 2009, the government in Athens forged its books. But despite this, the younger generation of Greeks carries no more responsibility for the mistakes of its elders than the younger generation of Germans did in the 1950s and 1960s. We need to look ahead. Europe was founded on debt forgiveness and investment in the future. Not on the idea of endless penance. We need to remember this.”
Economist Mark Blyth also lashes out at the so-called ‘adults’ for spreading myths about Greek profligacy when their woes are largely a consequence of the global recession. Like Arends, he too goes down the list of myths one by one. Here are a few.
Most of the countries in the Eurozone were actually decreasing their debt going into the crisis. And even the Greeks if you look at it over a five year period going at the financial crisis, it was flat. There was no orgy of spending – think just isn’t true. Let’s think about pensions. Why’d the Greeks spend 16% of the GDP on pensions? Because they’re the fifth oldest country in the world.
The Greeks have been given 249 billion Euros in loans, but 205 went straight back to the creditors, otherwise known as the banks. Hardly any of it stayed in Greece. The bit that was used to finance Greece’s government operations was a tiny percentage of the total. And yet all we hear is that the Greeks have got all this money and spent it again, it’s just rubbish. It’s just flatly wrong.
Look up international comparisons of labor hours worked. The Germans work about 1,350. The Greeks work over 2,000. They have an old, unproductive economy and they rely on tourism and everybody works two jobs for low pay, so they’re relatively unproductive. This is a structural fact of an old economy in the wrong place. Not because they’re lazy.
So it’s not a question of Greece as blameless: of course they’re blameful. But that doesn’t matter if people were giving them money. You can’t have over borrowing without over lending. Why is all the conversation about the terrible over borrowers rather than the reckless over lenders?
Germany and the IMF and the European Commission are acting like thugs, issuing one ultimatum after another to Greece, and in fact have their own ‘hit men’ who act as enforcers of their ultimatums. One of those former hit men explained what he did.
John Perkins is no stranger to making confessions. His well-known book, Confessions of an Economic Hit Man, revealed how international organizations such as the International Monetary Fund (IMF) and the World Bank, while publicly professing to “save” suffering countries and economies, instead pull a bait-and-switch on their governments: promising startling growth, gleaming new infrastructure projects and a future of economic prosperity – all of which would occur if those countries borrow huge loans from those organizations. Far from achieving runaway economic growth and success, however, these countries instead fall victim to a crippling and unsustainable debt burden.
That’s where the “economic hit men” come in: seemingly ordinary men, with ordinary backgrounds, who travel to these countries and impose the harsh austerity policies prescribed by the IMF and World Bank as “solutions” to the economic hardship they are now experiencing. Men like Perkins were trained to squeeze every last drop of wealth and resources from these sputtering economies, and continue to do so to this day.
What we are seeing on an international scale is the same thing we see within nations in the current world. The big banks rule. Under no circumstances must they suffer any consequences for their misdeeds. Instead, the squeeze must be put on the powerless, whether they be individuals or nations, and their pockets picked to make sure that the banks get their pound of flesh.
Why is this narrative of the troika being the adults issuing well-deserved ultimatums to the spoiled children so dominant? As Arends says, this is because the media are heavily tilted towards the financial sector (since their own wealth is tied up in stocks) as can be seen by their almost worshipful attitude towards the stock market. Anything that drives up the stock market is by definition good. They don’t give a damn for the lives of ordinary people who bear the brunt of suffering as long as financial investors are protected and prosper.
As Arends says:
The “experts” being quoted are all biased. Yes, there are lots of smart people on TV and the Internet are wagging their fingers at the Greeks right now. The problem? They pretty much all work in finance. So their focus is on things like stocks, bonds and other financial assets, not on bread-and-butter things like jobs and household incomes in places like Athens and Thessaloniki.
Austerity is only meant for the poor and powerless. The big banks must never face the consequences of their actions. Nations don’t matter. People don’t matter. Only international financial interests matter.
These are the rules of the new global economy.
It will just get worse unless the people force a change from below. This is why I support the Greek people and government in their current fight against the global financial oligarchs.