The Greek Debt Crisis and Why Austerity Doesn’t Work in 8 Minutes

with Stephen Paton from @LeftScotland

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  1. Jane Gray says:

    Spot on. As a Scot resident in Greece, I would ask all at Bella to put pressure in any way they can on Scottish politicians in both the Scottish and Westminster parliaments to come to the aid of the people of Greece. The current situation is dire with people living in great fear of the future. There is also a crowdfunding site on Indiegogo which is trying to raise cash. Please support the Greek people.

  2. Douglas Robertson says:

    The more the Greek situation spins out, and the real neo-liberal construction and underpinning of Europe become exposed, it might well be that we will all be voting NO in forthcoming referendums.

    1. David says:

      Tough choice Douglas, leave neo liberal leaning EU in favour of more powers for neo liberal leaning UK. I don’t know for absolute certainty where my cross is going in this ever changing situation running up to the UK referendum on the EU. I do think I still feel project Europe might have more potential for change than project UK but that’s not set in stone.

  3. Adrian Bailey says:

    Thanks for this concise summary and analysis. It brings out strongly how the problems have been caused by the banking systems, the structures of troika, governmental ineptitude and/or cynicism, corruption and tax avoidance and evasion by the wealthy. Most importantly it shows how those hit with life devestation are being even further ground down by absurd ‘austerity’ demands. This analysis is of the greatest relevance to us in Scotland who massively supported our government’s anti-austerity economic policy. Labour’s continued support of the UK’s disgraceful attack on ordinary people will ensure its complete annihilation in years to come. In the meantime, as Jane says, let’s speak out and support the Greek people.

  4. Lincoln Powell says:

    The bits that get missed out of this (as always) are:

    Notwithstanding the points made in the video; while all this was going on, people in Greece (as in many other EU and other countries) were having a great time. Including generous public sector settlements, pensions, public spending, social programmes, other nice things etc.

    Regardless of the corruption and tax evasion going on / corruption and incompetence of the government, people in Greece consistently voted for the Governments that oversaw all this. Because people were having a great time. This was not some undemocratic or totalitarian regime. This was what Greek people chose – because they were having a great time. And now the party is over.

    And, as someone else also pointed out on here the other day; who is the bad guy here? If democratically elected Greek governments oversaw all this, elected by the people, then why should Greek pensioners get relief at the expense of Lithuanian pensioners, or Portuguese pensioners, or Irish pensioners?

    Yes, I expect its true to say that the tax evasion by the corrupt elites aided by corrupt officials in corrupt governments is more to blame for the problem than the general Greek population being ‘lazy’ as the video suggests. But nevertheless, there was also tax avoidance and evasion going on in the wider population too. Greek governments were collecting somewhere around 60% of taxes due (UK = 93%). So why weren’t these Governments challenged by the people about tax avoidance and evasion? Because they were having a great time**.

    (**in fairness, something very similar was happening in the UK; but you won’t find me being sanctimonious about that either).

    The video notes that the ‘idea’ of austerity is to reduce public spending so that the government can recieve more in tax receipts than it spends and seek to move back towards parity and a surplus. The previous Government were heading in that direction (some say fuelled by a big boost in tourism – they won’t be able to count on that now). However after six years of recession, along came Syriza (who are the bad guys) and they started to doing the opposite. Indeed one of their first acts was to reinstate a load of public sector workers, and benefits and pensions etc. Syriza were democratically elected too.

    (Of course what Greece really needs to do is implement economic, tax and other reforms)

    “Less than 10% of the bail-out went to the Greek government”. It was a bail-out; not a hand-out.

    “But now expected the Greek people to pick up the tab” (due to Government overspending based on borrowed money they shouldn’t have been loaned in the first place). The Greek people elected these governments. Who else should be picking up the tab? Lithuanian, Portuguese and Irish pensioners?

    “Is it any wonder the Greek people are pissed off”? Too bad. They weren’t under the yoke of some totalitarian regime. They voted for all this.

    “Germany had its own debt cancelled after the end of the WW2”. They weren’t ‘cancelled’, it was a debt relief arrangement (for which there is an argument in the case of Greece). And some of that was to help finance war reparations.

    “That’s pretty cold Germany”. I’ve noticed increasing chatter on the left, in Scotland and England, of bringing Germany into the “it’s all someone else’s fault’ fold of late.

    I think it is likely that Greece will recieve debt relief, structured over a long period, possibly involving some arrangement where payments above a certain level will only be required while in growth and / or while running a surplus.

    However they will have to implement the economic reforms, and everyone (yes the corrupt elite, but everyone else too) will have to be paying a lot more tax, and letting go of the generous public sector, pension etc. settlements that they enjoyed until 2010.

    Unfortunately, no-one can now trust Syriza to do this.

    “Austerity doesn’t work”.

    Well, that all depends on your point of view.

    http://www.economonitor.com/dolanecon/2015/04/08/did-austerity-work-in-britain-one-chart-tells-it-all/

    1. FlimFlamMan says:

      Are ordinary citizens to blame for the pronouncements of corrupt and incompetent mainstream economists? Economists who claimed that the Euro was soundly structured and would benefit countries who joined. Economists who claimed that financialisation and deregulated markets would bring prosperity. Economists who went so far as to claim that financial markets could be deregulated because they were immune to fraud.

      Are ordinary citizens to blame for an entire political class, even nominally left wing parties, buying into and basing its policies on these economic ‘theories’, even years after the crash?

      When it comes time to vote citizens can only choose between the options presented to them. The nature of those options is partly driven by the political activism of ordinary citizens, but that activism is in turn driven by information and understanding; matters in which the media play a vital role.

      Mainstream media have, as with the politicians, bought into and promoted the economics that led us to this point. And, again as with the politicians, they continue to do so long after the crash. Schools of economic thought – mostly Post Keynesian – which produce accurate forecasts continue to be ignored, by both politicians and the media. Are ordinary citizens to blame for all of that as well?

      The article you link to is based on mainstream, i.e. flawed, economic ideas of what constitutes a discretionary fiscal balance; ideas which are in turn based on mainstream, i.e. flawed, ideas like NAIRU. So no, austerity doesn’t work.

    2. Carnyx says:

      Lincoln Powell said

      “people in Greece (as in many other EU and other countries) were having a great time. Including generous public sector settlements, pensions, public spending, social programmes, other nice things etc.”

      This is not true, Greece had lower social spending than the EU average, it spends and spent less per 65+ person than the EU average, and the average retirement age was slightly higher than Germany’s before the crisis. Greek wages are half those in Germany while living prices are the same (since joining the Euro) which is why pensions paid a higher proportion of previous wages than they do in northern Europe.

      http://blogs.wsj.com/brussels/2015/02/27/greeces-pension-system-isnt-that-generous-after-all/?mg=blogs-wsj&url=http%253A%252F%252Fblogs.wsj.com%252Fbrussels%252F2015%252F02%252F27%252Fgreeces-pension-system-isnt-that-generous-after-all
      https://en.wikipedia.org/wiki/List_of_European_countries_by_average_wage
      http://www.newstatesman.com/blogs/world-affairs/2012/05/exploding-myth-feckless-lazy-greeks
      http://macrobits.pinetreecapital.com/the-myth-of-the-greek-profligacy/
      http://www.thepressproject.net/article/58136/Ignoring-the-data-about-Greeces-debt-why-austerity-is-based-on-a-myth-and-will-not-work

      “people in Greece consistently voted for the Governments that oversaw all this. Because people were having a great time.”

      There were two mainstream parties each as corrupt as the other and functioning with patronage, meaning nobody could get a job nor run a business smoothly without having a political patron in one or other or both parties, they thus simply didn’t have a choice, and they were not happy with it. Greece consistantly showed the lowest regard and greatest distrust of politicians in Europe, they voted PASOK then ND on anti-corruption tickets only for one to turn out as corrupt as the other. I was living there at the time, the Greeks hated their politicians with a vehemence I’ve never seen in the UK. You are simply attempting to weave some kind of punitive petty pinched faced morality fable whereby alleged pleasure must be punished.

      “If democratically elected Greek governments oversaw all this, elected by the people, then why should Greek pensioners get relief at the expense of Lithuanian pensioners, or Portuguese pensioners, or Irish pensioners?”

      Because they are not getting relief, the EZ taxpayer is bailing out Franco German banks not Greeks. Secondly the logic of your argument – that democracy makes a general populations directly responsible to the degree of legitimising collective punishment – is the logic of terrorism. The UK has invaded Iraq, does that make every and any Brit a legitimate target for retaliation?

      “The previous Government were heading in that direction”

      No they weren’t, they simply made such drastic cuts they got close to primary budget surplus, but did long term damage in the process killing the economy as people spent less and were thrown out of work, thus reducing tax revenue in the long term for short term figures. Greece hasn’t recorded one year of growth since 2008, the one quarter of growth last year was a mirage brought about by deflation, it only appeared after adjustment for inflation which was negative.

      “bringing Germany into the “it’s all someone else’s fault’ fold of late.”

      It is Germany’s fault, they indulged in wage restraint to inflate their trade balance at other EZ members expense, that resulted in their banks going on a lending spree, blowing up property bubbles in Spain and Ireland and sovereign debt in Greece.

      http://www.globalresearch.ca/eurozone-profiteers-how-german-and-french-banks-helped-bankrupt-greece/5459633
      http://www.keeptalkinggreece.com/2012/05/24/bloomberg-germany-got-a-bailout-too-financed-by-european-taxpayers/

      “Austerity doesn’t work
      Well, that all depends on your point of view.”

      No it is not it’s a matter of proven facts. Since the start of the 2008 banking crisis the global economy has grown 17.3%, the US avoided austerity despite being at the centre of the crisis and it grew 8.4% and has started to see it’s debt to GDP ratio drop, the UK practised a form of austerity milder than the EZ and it grew 3,4%, the EZ economy had harsher austerity and it shrank 2.2% in the same period. Within the EZ, in the same period, Germany grew 3% France grew 1.5%, Spain shrank 6.4%, Portugal 7,3%, Italy 9.5% and Greece 26% the harsher the austerity the poorer the economy performs. It is a proven fact austerity is a failure, even Germany isn’t doing that well.

      The measure of the success of a policy designed to heal economies after a crisis is rapid return to and surpassing of pre-crisis size, it is not merely a return to growth because economies will always return to growth eventually. It’s been 7 years and none of the PIIGS have recovered to pre crisis size, none of them has reduced it’s debt to GDP ratio. It’s been 7 years, it’s simply too late for austerity to ever become a success.

      Growth figures from –

      http://www.telegraph.co.uk/finance/comment/11531029/The-eurozones-economic-crisis-is-far-from-over.html

      1. Broadbield says:

        Brilliant!! Demolishes the neo-liberal austerity argument like a Stieglitz, or Keen or any number of other recent authors.

      2. Lincoln Powell says:

        “That’s not true”.

        Yes it is.

        What does what was happening in other countries have to do with it? Even the video above accepts that Greece was spending based on borrowing that it should never have been loaned in the first place. Therefore, if they couldn’t afford it, what was being given to people was over-generous.

        All those links you’ve posted are irrelevant. I’ve not once said that the ‘Greeks are lazy’ etc. etc.

        Regarding the Greeks and their political parties – well that was / is their responsibility. If it wasn’t their responsibility, then who’s was it?

        “You are simply attempting to weave some kind of punitive petty pinched faced morality fable whereby alleged pleasure must be punished.”

        No, I’m just saying that what happened in Greece happened in Greece, and its not reasonable, for example, for Lithuanian pensioners to experience detriment because of it.

        “Secondly the logic of your argument – that democracy makes a general populations directly responsible ”

        Err, so are you saying that the Greek people shouldn’t accept responsibility? I’d have much more sympathy if it were a totalitarian regime, but it wasn’t and isn’t. Democracy is a right and a privelige. you can’t have it both ways and say ‘people have the right to vote for who governs their country, but they’re somehow not responsible when it all goes wrong’

        “Greece hasn’t recorded one year of growth since 2008, the one quarter of growth last year was a mirage brought about by deflation, it only appeared after adjustment for inflation which was negative.”

        Probably right, I bow to your superior knowledge on that.

        Germany indulged in wage restraint to inflate their trade balance at other EZ members expense, that resulted in their banks going on a lending spree, blowing up property bubbles in Spain and Ireland and sovereign debt in Greece.

        That’s capitalism for you. It is a bit of a competition in the end, you know.

        “No it is not it’s a matter of proven facts.”

        No, it depends on your point of view. The position that Osborne (love him or loathe him) around inflation, bonds, gilts etc. means that the UK is going to be able to borrow quite cheaply to fund HS2, Northern Powerhouse etc. (great for us here in Manchester). Our recovery still sits pretty well, relatively:

        https://fullfact.org/economy/uk_fastest_growing_gdp_major_economy-41159

        (I’m no ‘austerity’ cheerleader, I’m just making the point that it isn’t, as you state, black and white)

        The telegraph article points to comparisons with Japan, which is very interesting. Sometimes, for many and complex reasons, nothing works; look at Japan.

        1. Carnyx says:

          “What does what was happening in other countries have to do with it? Even the video above accepts that Greece was spending based on borrowing that it should never have been loaned in the first place.”

          They were borrowing, but that doesn’t mean they were spending the money on social services, they weren’t, and I provided links to the figures to prove it. Other countries figures allow a comparison, you cannot say Greece was spending on social provision and this caused their crisis if they were spending less than most of the others considered healthy, less than Germany.

          Greece was spending more on it’s military budget (being in the Balkans) than others, it was also spending on big overpriced German contracts and infrastructure projects, overpriced because Germany took back the cost of the massive bribes they paid to win the contracts. In other words, German businesses was profiting from Greek corruption, conspiring with corrupt Greek officials to get rich at the eventual expense of the Greek people.

          http://www.spiegel.de/international/europe/complicit-in-corruption-how-german-companies-bribed-their-way-to-greek-deals-a-693973.html

          Further as the articles on banking I linked you too above show the Franco-German banks were falling over themselves to lend to Greece (stimulating demand for German goods on credit), in the same way US banks went after the sub-prime market with predatory loans. Banking regulations allowed banks to keep less in reserve if they invested in a EU govt’s bonds, Greece paid a higher return on those bonds. Banks might even have bribed Greek officials, like the other German businesses did for contracts, to take loans Greece couldn’t afford because they thought they could profit and had nothing to lose, and it turns out they were right, because the troika is bailing them out.

          “I’ve not once said that the ‘Greeks are lazy’”

          I didn’t say you did, the articles have relevant figures to support various statements I’m making, read beyond the title. You’re apparently saying they are worse than “lazy” though, they might have even been enjoying themselves, which you apparently see as deserving of later punishment.

          “Regarding the Greeks and their political parties – well that was / is their responsibility. If it wasn’t their responsibility, then who’s was it?”

          The established political class and the oligarchs

          “for example, for Lithuanian pensioners to experience detriment because of it.”

          The money goes to the banks, not Greeks. Your Lithuanian pensioners and the Greeks are both paying to save Franco-German banks from Greek default. You seem to think that’s okay whereas actually helping people is a bad thing.

          Secondly most of the so called “bailout”, the second one in particular, comes from the ECB, Lithuanians are only guarantors for a portion, hence they only pay if Greece defaults and the ECB then insists on it. So the idea Lithuanian pensioners are being impoverished to pay Greeks is entirely false propaganda. Further creditor countries are making a profit on the parts of the first “bailout” they did directly lend to Greece as bilateral loans, because they borrow at a lower rate of interest than they are charging Greece.

          http://greece.greekreporter.com/2015/03/05/german-finance-ministry-greece-has-paid-back-e360-mln-in-interest/

          “Err, so are you saying that the Greek people shouldn’t accept responsibility?”

          About as much responsibility as I have for the actions of Labour and Tory govts, I’ve never lived under a UK govt I liked or voted for. Greeks want reform BTW, they want rid of corruption, which is why they voted Syriza, it’s just that the troika only demands cuts and asset stripping, their “reforms” simply don’t work.

          “The position that Osborne (love him or loathe him) around inflation,”

          The tory’s austerity is not of the degree in the EZ, they’ve kinda taken a middle road between the US and EZ, they had QE, they’ve spent money on heating up the south east’s property market with “Help To Buy” ect, the debt to GDP ratio is still growing but GDP is doing better than the EZ … again inbetween the US and EZ.

        2. Simoh says:

          It is disingenuous to be so simplistic about how democracy works -““Neo-liberal hegemony” didn’t get ‘the ordinary Greeks’ into this; ordinary Greeks did by consistently voting for the governments that got them into this mess” – whist at the same time arguing that understanding whether austerity works or not is “not black and white”. You want us to accept your over-simplification where it suits you and then accept your obsfucation elsewhere when that suits you, too?!

          Democracy is a very blunt instrument that is manipulated, distorted and skewed by hedgemonies the world over to create a cloak of apparent respectibility under which the accumulation of wealth and resources within a tiny percentage of humanity takes place unchecked. Britain is one of the very worst offenders. Look at the way Westminster is currently representing the democratic will of the Scottish people. As it is currently practised, our democracy is little more than totalitarianism dressed up cleverly to look like something much more palatable and this will have been the same in Greece for many years.

          There is a great deal at stake in the Greek vote tomorrow. We’re told it’s going to be close. I just hope the independent scrutineers are up to the job…track every ballot box.

  5. Liam E Don says:

    Great roundup of events and a video worth sharing with people trying to understand the situation in Greece at the moment. The level of wilful misunderstanding and the hoovering up of negative media which places blame upon the ordinary Greek seems quite rampant. Of course it’s obvious why the mainstream media are kowtowing to the German line, god forbid their banks don’t get their blood money.

    On a wider scale it’s Greece’s challenge of austerity and it’s powerful advocates which is the bigger story for me, as a true David and Goliath type battle. The forces of neo-liberal financial hegemony are being challenged for the first time in Europe and my greatest hope is for Greece to stand up to these destroyers of states and people; to show us all what is possible when people are put before political ideology.

    1. Lincoln Powell says:

      “Great roundup of events and a video worth sharing with people trying to understand the situation in Greece at the moment.”

      It is a good potted history but some of the analysis is wrong.

      “wilful misunderstanding”

      How does one misunderstand something wilfully? You don’t ‘chose’ not to comprehend something.

      “which places blame upon the ordinary Greek”

      Ordinary Greeks ARE to blame for consistently voting for the Governments who got them into this mess.

      “The forces of neo-liberal financial hegemony”

      “Neo-liberal hegemony” didn’t get ‘the ordinary Greeks’ into this; ordinary Greeks did by consistently voting for the governments that got them into this mess.

      The Greeks were not dragged into this situation against their will be some totalitarian regime.

      “to show us all what is possible when people are put before political ideology.”

      This ‘putting people first’ as you put it requires its own political idealogy, no? (Some kind of socialism, I guess?)

      1. jimbennett says:

        Hi Lincoln,
        “Wilfully misunderstanding” is what you’re doing e.g. Hreek pensions. Pensions of an aberahe 500 eoros a month are to ne reduced to 300 a month. Nobody is living high on that. You’re wilfully misunderstanding the 50% youth unemployment and 25% increase in suicide numbers
        The people who benefitted from previous Greek Gobernments were big business and the rich

        1. jimbennett says:

          Apologies for the mistyping. Not use to this mobile phone malarkey yet!

      2. FlimFlamMan says:

        “How does one misunderstand something wilfully?”

        By refusing to even listen to people who try to correct that misunderstanding.

        In the context of Greece, putting people first means either changing the eurozone to allow the necessary fiscal transfers and deficit spending – something not in the power of the Greek government or people – or abandoning the Euro.

  6. Anton says:

    A concise and (relatively) accurate commentary, let down by few cheap shots.

    For example, Stephen Paton claims that it’s Germany that’s the stumbling block to debt relief. But other Eurozone countries who’ve lent money to Greece are even more outspoken. See the New York Times a few days ago: “Viewed from Bulgaria and other poorer countries, however, Greece’s suffering draws only curt comparisons. When Greece’s finance minister, Yanis Varoufakis, in an early round of negotiations in Brussels, complained that Greek pensions could not be cut any further, he was reminded bluntly by his colleague from Lithuania that pensioners there have survived on far less. Lithuania, according to the most recent figures issued by Eurostat, the European statistics agency, spends 472 euros, about $598, per capita on pensions, less than a third of the 1,625 euros spent by Greece. Bulgaria spends just 257 euros. This data refers to 2012 and Greek pensions have since been cut, but they still remain higher than those in Bulgaria, Lithuania, Latvia, Croatia and nearly all other states in eastern, central and southeastern Europe.”

    And the idea that it’s “the rich” in Greece who’ve been avoiding tax (and are hence much to blame, according to Stephen Paton) is only true if you define “the rich” as 40% or so of the population who’ve not been paying up. Famously, Greek doctors, for example, claim that in aggregate they actually lose money by working. For the figures, see here:
    http://www.slate.com/blogs/business_insider/2015/02/25/greece_needs_to_clamp_down_on_white_collar_tax_evaders_not_just_the_super.html

    This is clearly absurd. No-one works for a loss (except for tax purposes). And who could forget the famous helicopter shots of Greek doctors’ luxury villas – the so-called “swimming pool index”.

    This is not to say that “austerity works”. In this case, it doesn’t. And it’s also clear that Greece’s debts are unsustainable.

    So the solution is an accommodation on both sides – a political solution to solve an economic problem. The difficulty is that Tsipras was elected on unachieveable promises to the Greek people, and that he and Varoufakis have managed to offend and alienate all their potential allies. I mean, calling the chief of the IMF a “criminal”, as Varoufakis did, probably didn’t help to smooth negotiations, and the fact that Tsipras’s first diplomatic overtures were to Putin at the time of the Ukraine crisis were (I assume) deliberately designed to get up Angela Merkel’s nose.

    As recently as yesterday, Tsipras made a hardline speech to the Greek people abusing EU leaders only hours after accepting most of the terms of a bailout previously proposed by Greece’s creditors.

    The man’s a fool, and I’m not surprised that he’s driven Greece’s creditors to adopt an increasingly hardline position.

    1. Carnyx says:

      The Lithuanian govt has to justify it’s own austerity regime, the one that has all their young people moving to the UK. He is also neglecting to point out that Lithuania only joined the Eurozone this year and hence hasn’t fully experienced the growth of living prices accompanying that move. meanwhile Bulgaria and Croatia aren’t even in the Eurozone at all. Lithuania and other Baltic states were also better prepared for austerity because they have a tradition of growing their own food in allotments to make up for shortages in Soviet times, you can’t quite do the same thing in Athens.

      Lithuania has the lowest per capita pension spending in the Eurozone, however Greece is also below the average on that count.

      http://blogs.wsj.com/brussels/2015/02/27/greeces-pension-system-isnt-that-generous-after-all/?mg=blogs-wsj&url=http%253A%252F%252Fblogs.wsj.com%252Fbrussels%252F2015%252F02%252F27%252Fgreeces-pension-system-isnt-that-generous-after-all

      Syriza never had any allies in an EU dominated by right wingers and red tories, the troika were clearly supporting to corrupt ND/PASOK old guard against them even before they were elected. Nobody in Greece thought Syriza would would get everything they wanted, but they wanted somebody who would fight for the Greek people, instead of using their position to ingratiate themselves into the Euroelite and do everything the troika told them, the fact Syriza have fought has given them huge popularity, that’s because the troika are criminals in most Greek’s eyes.

      1. Anton says:

        Carnyx – Thanks for your reply, though I’m not quite sure why you think that “Lithuania and other Baltic states were also better prepared for austerity because they have a tradition of growing their own food in allotments to make up for shortages in Soviet times, you can’t quite do the same thing in Athens”. Nor can you in Vilnius or the other Baltic capitals.

        But my main point was that this is a political crisis, not an economic one, and one that (in my view) the current Greek Government has badly mishandled. As I said before, current levels of Greek debt are unsustainable, and will have to be adjusted. But the way to do this is by diplomacy and negotiation, not by way of insults and posturing.

        So, for example, I agree that (following revisions) current Greek pension arrangements aren’t now much of an issue – unless the Greek Government makes them so, which is what Varoufakis did in the instance I mentioned. No wonder the Lithuanians got so cross.

        And as for your point that Syriza was elected on the basis of “fighting for Greece”, well sure. Like Pasok before them, they made completely unrealistic promises. No wonder everyone voted for them. But the subtext of their popularity was an implicit return to the old ways of tax avoidance. As soon as Syriza’s electoral victory became clear, the people of Greece basically stopped paying tax, as far as they could. For evidence, see:

        http://www.ft.com/cms/s/0/b47c6d76-a320-11e4-bbef-00144feab7de.html#axzz3ejnp4lGr

        I repeat, this is a political crisis not an economic one. Sadly, the current Greek Government has snatched failure from the jaws of defeat, presumably for electoral advantage.

        But, hey, who knows what the Greek people really think. We’ll find out on Sunday.

        1. Carnyx says:

          “Nor can you in Vilnius or the other Baltic capitals.”

          It was a point I remember from an article I read on Baltic austerity some years ago, that people treated it the same way as they coped with Soviet shortages and grew their own food. A quick search found me this link on how 1 in 3 Estonians grow their own food, maybe I was confusing Estonia with Lithuania.

          http://estonia.eu/news/525-one-in-three-households-grow-their-own-food%3Fstart=20.html

          “But the way to do this is by diplomacy and negotiation, not by way of insults and posturing.”

          It’s been going on since 2010, PASOK and ND, played it the establishment’s way, and the troika insisted on enforcing failing policies just the same. Indeed they vowed to “crush” Greece out of spite.

          http://www.telegraph.co.uk/finance/economics/11226828/Tim-Geithner-reveals-in-the-raw-how-Europes-leaders-tried-to-commit-financial-suicide.html

          This didn’t start with Syriza.

          Also I disagree I think it is both economic and political, fact is the entire EZ banking system would have collapsed if Greece had defaulted in 2010.

          “Greek pension arrangements aren’t now much of an issue – unless the Greek Government makes them so, which is what Varoufakis did in the instance I mentioned. No wonder the Lithuanians got so cross.”

          The troika was insisting on pension cuts in a situation with 60% youth unemployment, where whole generations are dependent on grandparent’s pensions because there is no other form of welfare or health insurance for them, that’s the situation in Greece. The troika were making it an issue, and the Lithuanian minister not quite grasping the effects.

          “And as for your point that Syriza was elected on the basis of “fighting for Greece”, well sure. Like Pasok before them, they made completely unrealistic promises.”

          Uhm PASOK were last elected in 2009, just before the crisis, it was them who brought the troika in after declaring, upon assuming office, that debt was greater than previously reported. They weren’t elected on a ticket of “fighting for Greece” but the issue didn’t exist at that point. PASOK and ND did pretty much anything the troika wanted. Syriza’s hand are tied by their commitment to stay in the Euro, which most Greeks once desired (although that might be changing).

          “No wonder everyone voted for them. But the subtext of their popularity was an implicit return to the old ways of tax avoidance”

          Complete rubbish, Syriza voters tended to be the younger people shut out of the old PASOK/ND patronage system and who wanted change. Syriza were the only clean hands excepting the Golden Dawn. Voting Syriza was a vote for reform and change, against the old kleptocracy. The old beneficiaries of corruption, tax dodging and patronage vote ND or PASOK and now Potami too, the same people the troika want back (which tells you how corrupt they are). You don’t understand how Greece works and who is what, and you are making assumptions based on ideology instead.

          “As soon as Syriza’s electoral victory became clear, the people of Greece basically stopped paying tax,”

          They stopped paying tax because of the elections and everyone being short of cash, the same would have happened whoever won.

          “But, hey, who knows what the Greek people really think. We’ll find out on Sunday.”

          They should vote Oxi, they might not, but the Eurozone offers nobody any decent future.

          1. Anton says:

            Well, I’m sorry to learn you think I “don’t know how Greece works and who is what”.

            But just as matters of fact:

            You say that Estonians (for example) are better prepared than Greeks for “austerity” because “they have a tradition of growing their own food.” Yet European Parliament statistics (on which your link relies) show that a higher proportion of Greeks than Lithuanians “grow their own food”. So you’re quite wrong there.

            You say that apart from pensions “there is no other form of welfare or health insurance”. State healthcare in Greece is provided by the National Healthcare Service (the ESY); unemployment benefit is provided by the Greek Unemployment Agency (the OACD). So what you say is simply untrue.

            You say that the reason so many Greeks stopped paying tax as soon as a Syriza victory became clear was because of “the elections” (I don’t understand your point here) and because “everyone (was) short of cash”. Yet at the same time that so many Greeks stopped paying tax, transfers of money by Greeks to offshore havens like Luxembourg soared colossally. So the facts suggest that they did have the money, but preferred to hide it overseas than to pay their fair share of tax. Once again, the facts are against you.

            Otherwise, you seem to think that the troika have been motivated throughout from “spite”. Incompetence, foolishness, wrongheadedness, bad policy on the part of the troika, I can accept. But the idea that the current crisis, which threatens the financial stability of all of Europe, is caused by mere “spite” does rather strain credulity.

  7. Jane Gray says:

    7.30pm Greece 2/7/15. It would appear that the IMF board have watched your video Stephen, thanks for that. Unfortunately as we move towards Sunday’s vote the people of Greece are being bombarded with panic inducing, fear mongering reports/ads via the media. Some of the stories could literally be cut and paste versions of what the Scots had thrown at them prior to their referendum. We need the support of others to stay strong over the next few days. Any formal statements of support are picked up by the anti-austerity campaigns, so again can I ask Bella folk to try and generate some solidarity from Scottish elected representatives. This is not just about Greece.
    N.B. Some commentators need to get to grips with 20th century Greek history in order to understand how this mess came about. The writing of Mark Mazower is a good place to start.

  8. Broadbield says:

    Perhaps the Greek government has been naive and inconsistent, but although it may be a little harsh to call the chief of the IMF a “criminal”, the troika and Germany are certainly immoral, just as in the same way the UK’s govt is immoral: to put it simply they have rewarded the rich and punished the poor.

    We have to remember this whole financial collapse (in the US and much of Europe) stemmed from the outrageous behaviour of the finance industry, and banks in particular -the dicing and slicing, the predatory lending, the (criminal) rigging and so on. And the response has been to shovel money into the banks and financials (QE, for example), without any strings attached and without any real change in bankers’ behaviour (or bonuses). And to pay for it governments have embarked on austerity of various kinds, but basically they have attacked the living standards of the poor. To paraphrase Stiglitz, never has so much been given by so many to so few.

    You can call that political if you like and in some ways it is – part of the neoliberal project to reward the rich (a rising tide lifts all super-yachts) and shrinking the state and social welfare.

    History is beginning to show that the Thatcher/Reagan “revolution” which brought neoliberalism mainstream was a huge disaster for social justice and equality. But you ain’t seen nothing yet, and I believe history will similarly disparage the likes of Bush, Blair (we’re nearly there on that one), Cameron and Merkel.

    Someone said Greeks voted for “good times”. I don’t know how many did, but in the UK we have a parliamentary dictatorship hell-bent on destroying the welfare state elected on around 25% of the electorate. Call that democracy?

  9. Robin Stevenson says:

    What a great way to present the present crisis in Greece, informative, clear and concise, well done Stephen. Now, that just leaves about 2,520 other issues for you to educate us, [well me] however, at 8 mins a pop that’ll only take a fortnight. 😉

  10. Anton says:

    Carnyx – Oh, and before you point it out, when I referred to Lithuanians in my post, I meant of course Estonians.

    1. Carnyx says:

      “Well, I’m sorry to learn you think I “don’t know how Greece works and who is what”.”

      If you think Syriza represent the old guard clinging to the old corrupt patronage system, then frankly you don’t. I’ve lived in Greece and I’m married to a Greek, what is you experience of Greece?

      “Yet European Parliament statistics (on which your link relies) show that a higher proportion of Greeks than Lithuanians “grow their own food”.”

      Uhm my link in fact cites the Estonian census as it’s source, not the European Parliament. Where’s the reference for your information on Greece? I’d be surprised as over half the Greek population is urban, and there certainly aren’t allotments in Athens like you can find in British cities, not even gardens as most Athens housing is flats, it’s very densely populated, some urban families do still have olive groves inherited from their family’s villages though, maybe that’s what they mean.

      “You say that apart from pensions “there is no other form of welfare or health insurance”. State healthcare in Greece is provided by the National Healthcare Service (the ESY); unemployment benefit is provided by the Greek Unemployment Agency (the OACD). So what you say is simply untrue.”

      Listing institutions doesn’t actually prove anything. Unemployment benefit and health insurance, last two years at a maximum and only for those who have previously worked on a proper two year contract, that excludes many young people, youth unemployment is 60% and has been high since 2008, general unemployment is 25%, some towns have over 50% local unemployment rates. Several generations of whole families are thus dependent on pensions to eat. There are some other benefits, but you have to be homeless to qualify.

      I was last in Athens around xmas, I was staying in a middle class north Athens suburb, not the poorest part of Athens, late at night you could see old ladies rummaging in bins for food, they do it at night because they are middle class and ashamed to have anyone see them.

      “You say that the reason so many Greeks stopped paying tax as soon as a Syriza victory became clear was because of “the elections” (I don’t understand your point here)”

      They stopped paying during the elections, hence using the uncertainty to delay, particularly the massively unpopular extra property tax included in electricity bills, that lead to 350 000 families having their electricity cut cause they couldn’t afford to pay the extra tax with it.

      http://www.keeptalkinggreece.com/2013/11/13/350k-greek-households-without-electricity-thanks-to-property-tax/

      “Yet at the same time that so many Greeks stopped paying tax, transfers of money by Greeks to offshore havens like Luxembourg soared colossally”

      Different Greeks obviously, the old clients of PASOK/ND have been taking their cash abroad for years, they actually put up the UK house price rate around 2011 by buying high end properties for their kids in London.

      “But the idea that the current crisis, which threatens the financial stability of all of Europe, is caused by mere “spite” does rather strain credulity.”

      Well, ask Geithner, as my link indicated, he claimed north European leaders swore to “crush” Greece out of anger with it’s leaders (PASOK at the time) and that they were so intent on this they were prepared to risk the entire EZ economy in the process!

      “Oh, and before you point it out, when I referred to Lithuanians in my post, I meant of course Estonians.”

      Hey, It was me who referred to “Lithuania and other Baltic states” … who apparently had such diverse historical and social experiences since WW II, despite being so close together.

      1. Anton says:

        Well, I don’t really want to get into a lengthy discussion, especially as I suspect we have more areas of agreement than disagreement.

        But just in passing…

        The European Parliament figures are based on local statistics from each country so there’s not necessarily any inconsistency here, though it’s true that “growing your own food” is an imprecise measure.

        You previously claimed that apart from pensions “there is no other form of welfare or health insurance”. You now concede that this statement is incorrect, although you add the proviso that these benefits are, in the scale of things, insufficient. And I’d agree.

        You also say that one of the reasons the Greeks (to a large extent) stopped paying tax as soon as a Syriza victory became clear was because Greek taxes, and especially the property tax, were “unpopular”. Again I would agree, though I’m not sure that “unpopularity” is sufficient justification for tax avoidance.

        You say that stashing undeclared money abroad has always been a feature of the Greek attitude to taxation. This may well be true, but the levels of capital flight has hit billions since Syriza’s victory became clear. You say that this “obviously” follows the actions of “different Greeks”. Different to whom? Other Greeks?

        As for Geithner, I still find it hard to believe that the members of the Eurozone should have brought financial and monetary crisis on themselves purely out of “spite” against Greece.

        But as I said last week, we’d find out on Sunday what the Greek people really think. And so we did. Luckily, Varoufakis promised voters that in the event of a “no” vote Greek banks would re-open as usual tomorrow. Oops, scrub that, he’s gone and the banks aren’t opening tomorrow.

        I’m not sure whether you’d think that a good result or a bad one.

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