Nov 23, 2015.
As I post this, Greece is finishing up a 24-hour general strike that drew tens of thousands of workers demonstrating in Athens. Much of the world, certainly the U.S., has stopped paying attention to day-to-day political events in Athens because it seemed, when it happened, that Alexis Tsipras’s capitulation to austerity measures to guarantee further EU bailouts of Greece was a decisive nail in the coffin of Greek resistance to neoliberalism and the heavy-handedness of the European Central Bank.
But the drama wears on. The global intelligence analysis wonks at Stratfor report:
The passage of a new set of economic reforms brought with it another pyrrhic victory for Greece. The reforms enable Greece to receive 12 billion euros (about $12.8 billion) in bailout money – 10 billion of which will be used to recapitalize Greek banks – but passing them cost the government several seats in Parliament.
. . .
Creditors will continue to pressure Athens to introduce reforms for the next two years. On Dec. 5, the Greek Parliament will vote on the budget for 2016. The budget will impose additional taxes on the Greeks, including income tax, real estate tax, road tax and value-added tax. And by early 2016, Athens is expected to raise taxes on farmers and to cut pensions and wages in the public sector. Considering how unpopular these measures are, they are sure to raise the chances of social unrest and political infighting.
Prudence dictates that Tsipras will probably try to do what his predecessors did: introduce just enough reform to qualify for EU funds while trying to keep political and social dissent within tolerable margins. But with the Greek crisis entering its sixth year – a year that will be characterized again by recession and rising unemployment – that strategy may be more difficult to pursue, especially if more citizens take to the street to protest. Moreover, Greece’s creditors may be less inclined to compromise with Athens in the future. The German government, for example, is under pressure from conservative lawmakers who believe Berlin should take an even firmer stance against Greece in future negotiations, even though its behavior in the first six months of 2015 could hardly be described as soft.
Meanwhile, more stalwart and committed members of the Syriza in Parliament are breaking ranks over specific, particularly brutal versions of austerity, such as increased foreclosures. Important Syriza veteran Gavriil Sakellaridis has been asked to resign from the party for his opposition to its position on the upcoming vote, but Sakellaridis will get to keep his seat in Parliament, meaning the ruling party has merely created another rogue. And Nikos Nikopolous, leader of a small-but-committed right wing party sharing ruling power with Syriza, reminded his colleagues of their promise “not to let a single home fall into banker hands, and fewer taxes,” promises he says were both broken.
The foreclosures are a big deal, and the demand for them is directly related to the insolvency of the banks–a classic case of poor people paying for rich people’s mistakes. Stratfor reports:
According to the Nov. 17 agreement, only the most vulnerable 25 percent of households will be protected from eviction, while an additional 35 percent will receive different degrees of protection related to their annual income and the value of their property.
This is not a minor issue. Greek banks are dealing with some of the highest rates of non-performing loans in Europe, and any plans to restructure the sector will have to address the problem. In addition, the agreement stipulates that Greece has to come up with a plan for non-performing business loans in December. Athens will hurry to use the deal’s 10 billion euros to recapitalize its banks as well, because tougher regulations over banking bailouts will enter into force in January.
Personalities figure into the narrative here. Former Finance Minister, the folk heroesque Yanis Varoufakis has launched a campaign for financial democracy and transparency across the European Union. TeleSUR reports:
Since resigning as finance minister in August under intense EU pressure, Varoufakis has made over 20 political speeches in different cities across Europe as part of his effort to “transfer the spirit of the Athens Spring to the heart of Europe,” he wrote on his blog. Although the vast majority of Varoufakis’ appearances have been unpaid, some media outlets have lambasted the leftist figure for charging “lavish speaking fees,” as the Telegraph reported, and becoming a “highly paid capitalist,” according to the Times of London.But Varoufakis has condemned such reports as part of a smear campaign against him, making his compensation public to show a 12 to one ratio of unpaid to paid appearances.
This was always an inter-EU rivalry between Germany, which seemed determined to punish Greece as a way of repressing Germany’s historical guilt in the oppression of Greece, and the French and Italians, the former fearing for the future of the European community, and the latter fearing it could be next in Germany’s crosshairs.
Germany’s behavior is equally curious since it could have saved the Greek financial system by showing Athens how well German public banks worked–so well that Germany is fighting the European Central Bank over regulation of German public financial institutions. And Germany is simply being hypocritical about debt. As Ellen Brown and others have pointed out, “the most successful debt jubilee in recent times was gifted to Germany, the country now most opposed to doing the same for Greece. The German Economic Miracle followed massive debt forgiveness by the Allies.” In another post, Brown flat-out calls for Greece to nationalize its banks, something other countries have successfully done.
The Greek government could follow China’s lead and nationalize its private banks, all of which are insolvent. It could then use their digital money machines to pump liquidity back into the economy, by making loans to all those once-viable businesses now starved of funds. Restoring their credit lines would allow them to pay for workers and materials, generating purchasing power and sales, increasing employment and the tax base, and generally reversing the economic death spiral induced by insufficient money in the system to keep the wheels of production turning.
It’s certainly difficult to see how that would produce a worse outcome than what we see happening now–where a once-progressive government is agreeing to massive mortgage foreclosures as part of a managed-misery agreement with the European Central Bank and a bellicose Germany. In the status quo, though, we should expect the protests in Athens to continue.