Greece and the Euro - how to go on?

Sunday, 2015-07-12: Greece has fired its minister of finance, Yanis Varoufakis; in spite of a national referendum which has confirmed the policy of his party Syriza. Alexis Tsipras has consented for the most part to new austerity plans. These plans include austerity measures of which Alexis Tsipras has lately said that he would never accept them. Since the “salvation” of Greece by the Troika Greece is subject to a rigid policy of austerity. The economy continues to shrink. Nevertheless the previous government has failed to get true reforms under way. The Greek ship owners still pay little or no taxes.

Since today it is official: Greece can pay no more. The insolvency of Greece has in deed been disclosed before when the ELA emergency credits were stopped in response to announcing a national referendum. What a perkiness to ask the folk when it comes to such an important decision? The suggested “reforms” are insufficient. The deficit of Greece is apparently much higher than what has been acknowledged by the public so far. From now on securities will be required in addition to reforms because reforms alone can never guarantee that the Greek will pay back what other Europeans have lended them. More clearly this is about privatizations and about pleying on real values. When enforced it may finally defeat the living and the economy in this country.

Wasn`t it the misconduct of the previous government that it did not succeed to bring true reforms on the way? Greece is known by foreign countries for the “little envelope” (i.e. pay-off, an envelope with cash in order to corrupt), for absurd cases of misuse of social security (The majority of the population is said having been declared as blind on a single island) and of course above all for the fact that the elites do not pay tax. Basically everything should have become better with the introduction of Eurocracy: Incorruptible officials and politicians from Bruxelles should have come to show the Greek how things should work: f.i. José Manuel Barroso at that time president of the European Comission traveled to Athens in order to warn the Greek about the populist parties. After that he went on holiday with his family by a dreamliner of Spiros Latsis, a Greek shipowner whom he knew from his days of study. However it was somehow embarrassing when Barroso prevented tigther environmental regulations for ship owners directly after his holidays (Tagesanzeiger, 2004).

Haven`t we paid billions of Euro to rescue Greece? The first rescue package included 73. bio. Euro, 52.9 bio. being paid by other European member states and 20.1 bio. Euro being contributed by the IMF. The second rescue package already comprised 153.88 bio. Euro whereby the IMF contributed no more than 11.98 bio. Euro [2]. Where has all the money gone? The overwhelming majority directly went into servicing debts. The Greek themselves have never seen anything from that money. The states of Europe with Germany participating the most by about 30% have taken over the debts from banks, investors and speculators. They have paid them out making it possible for them to realize high yields.

The measures against the Greek crises have in deed been nothing else than a covered rescue plan for ailing banks. German and other taxpayers will have to bleed for long in order to fund this. Those who wanna save some money also need to pay because of the many rescue packages in diverse countries of Europe: After the ECB has ceased to directly buy public loans the European Central Bank now dispenses the money over commercial banks accepting public debts as securities which can never be paid back. How we could have done things differently shows us the example of Iceland: The population of Iceland has successfully defended itself against politicians wanting to buy ailing banks. In the meantime things go much better in Iceland than in comparable Euro states where banks have been rescued at cost of the taxpayers .

But now let us come back to Greece. This time the European member states will apparently have to lend even more money than before. Not much imagination is needed to see that the deal how it is being negotiated at the time will bring even more sinister and damage over Europe. Over Greece because new austerity together with the aforementioned securities would bleed Greece white. Over the rest of Europe because that would increase public depth in all other countries. The same tragedy is imminent to all countries of Europe. The game only knows a few winners: Those 0.123% of the proprieators who already own 80% of all global playing combines, the growing global capital not assoicated with any country; see: James B. Glattfelder, chapter 4, die Plünderung der Welt (The Plundering of Our World)[1]..

Now, what can we do? Greece is insolvent. We need to file bankruptcy for Greece. The bond holders have lost through their speculation (and so have our governments). They needed to pay. If Greece was a corporation we would call it 'delayed filing of bankruptcy' what our finance ministers have done here. A matter of fact which is liable to prosecution. National debts in relation to the GDP (gross domestic product) have been rising ceaselessly since the start of all the rescue packages. This means that the econcomic performance has shrunken faster than the national debts could have been reduced. Even fixed assets have come under attack. The numbers about economic growth published by the IMF have likely been repeatedly and intentionally miscalculated in order to deceive the public [1].

We are all affected. We are all heavily indebted.

We need to find a way to declare bankruptcy for a whole country because we have failed to file insolvancy for our banks little time ago.

However things can become far worse; and they will if we just do nothing contuing the same way as before. The money printing machines are already working under heavy load since Mario Draghi a former investment banker from Goldman Sachs has announced officially that he would do everything to rescue the Euro. The bank of issue often claims that the newly printed money would flow into the economy. However this is a clear factual error. The money is used for speculations making the 0.123% of the proprietors more rich, those 0.123% of whom we have talked about shortly before. Great Britain has blocked any attempt to regulate the financial sector in the EU so far. Besides this the money will streightly go into the next bubble. The current finance crises has been caused by the subprime bubble. Subprimes were non refundable credits on housing property from the USA which were hidden into complex financial products (The debitors were called NINA: no income, no assets). The precautions concerning the US-legislation which have been necessary to sell these papers with a non-warranty clause has been inaugurated under Alan Greenspan and Bill Clinton [1]. The worthless subprime papers have therupon been rated with AAA by all US rating agencies in order to make this fraud possible. The .com or New Economny bubble was just another monetary bubble produced by the unconstrained money policy of Alan Greenspan having mainly harmed unsuspecting private investors.

Goldman Sachs is a well known big bank [4],[5] which has enriched itself by the subprime crises because of good connections to politics while other big banks like Lehman Brothers have been sent into bankruptcy. Oh my dear! … and there was another issue: Goldman Sachs is the bank which has helped Greece for ready interest money which we all need to pay back to Goldman Sachs now to fiddle its financial statements in order to be assimilated into the Euro zone. The intended deception of the institutions of the EU which can also be called a falsification of the balance was realized by so called swaps. A swap allows to exchange money in the future for a determined exchange rate which may be far away from how the market performs at the given point in time. The loans were taken out in Dollar and swapped back into Euro at an implausible exchange rate in order to hide the true amount of the loan. We will need to think about the fact that an investment bank from the USA which has made a lot of money out of the crises has put its members into different positions at the European Union; Mario Draghi is not the only one [4].

What do we need to do now? We must prevent our politicians to pay out the speculators once more and to accept even higher liabilities for Athens. Syriza needs to withdraw from the Euro. It needs to set up its own currency and it needs to stop paying back the money of its debitors. When a sole trader or private enterpreneur files for bankruptcy he will have to guarantee with his private assets for the debts; once his private assets have been distrained (which has already become the case to a certain extent in Greece) the enterprise is wind up and the former enterpreneur is free of debts. By principle, after that he may found a new enterprise as far as he did not commit a fraudulent bankruptcy or as far as he has not delayed his filing of insolvency (even so he will hardly succeed to gain the necessary own capital in order to do so). This is fair and equitable because under normal circumstances there will always be business harzards. In the case of a state this would mean to newly found the state of Greece discarding all debts. Examples do certainly exist in history where countries have refused to pay the debts from its predecessant government.

How could Greece “survive” this? A breach with the debitors together with a (temporary) exit from the Euro zone and the European Union would of course induce heavy social and economical problems. Nonetheless, after that it should become possible to grow normal relations with Greece at last if the population of other European states will demand this. Living on debts will be over. Greece could not make any new debts because the creditors would not lend any foreign money. It would be better like this. The excessive indebtedness of states leads to a degradation of democracy and a complete loss of autonomy (something that people can already experience e.g. in Spain [6]). At last all citizens only work for those 0.123% of all proprieators mainly made up of banks and financial institutions hardly known by the public that do already own 80% of all combines.

Greece could florish. With a slim, reformized state where the folk controls the legislation. With an own currency that makes imports more expensive fostering exports at the same time. An own currency with a valuation which accomodates to the economic performance of the country would bring people into work and bread. It would naturally avoid new indebtedness. A state which does no more need to serve with a majority of its budget for serving debts would again have sufficient resources for innovation, economic growth and developement. It is important that the population of other EU member states will prevent an isolation of Greece. On short or long term they are all facing the same destiny. All countries in the European Union have too many debts. After massive bank bail outs more than ever before.

What will happen if we just go on like now? We are all experiencing the calm before the storm. The low interest rates and the direct but illegal financing of states we are currently financing debts by more and more new debts. That does directly lead us into abysm. It is not just about high taxes, about social contributions by the state being cut down and about a creeping expropriation of those who save some money (something that costs billions of Euros just to the German savers alone every year). Ultima ratio a property tax as already propesed by the IMF for Europe will come in order to finally expropriate those who own an own house and those who have saved money. In the mean time the whole Euro zone is already indebted by 7.4 trillion Euros. An amount which is on the rise. Those in need and those who have accomplished, saved or built up something will have to pay. They will have to pay for the debts of others. It will hit those the most who have not deserved it at all. Germany and Austria have too many debts as well. We just do not notice it by now because of the low interest rates. However the low interest rates just buy some time for us while they make things much worse. All of it just to enricht those 0.123% of all proprietaors who are mainly from the USA and Great Britain until there will be capital concentration like in the planned economy of the former communist states. However a capital concentration which is not at all here to leastwhile serve the people.

2015-07-12 — .

As far as now we need to say that an exit of Greece from the Euro zone would in deed be a worst case scenario for both sides. As far as this Jean-Claude Juncker has already been talking about an "Anglo-Saxon" bank conspiracy in the case of a Grexit in the May of this year [3]. It needs to be seen as part of the reality. Just think about the virulent attacks against the Euro during the finance crises which could become far worse if a whole country exits from the Euro (We need to mind what the well-reputed US-advisor Zbigniew Brzeziński recommends when it comes to Europe.).

Greece on the other hand would have a heavy problem if all the other states would not abate Greece its debts having to pay back everything in Euro. It may be that other countries are run well with a membership in the European Union and their own currency but that would not apply if Greece had debts to be paid back in Euro. It is far easier as well to speculate against a small currency than against the Euro.

Both sides should win if Greece can stay in the Euro provided that a new rescue package would look radically different from the previous ones supporting the economy and the state rather than bad banks. The way how Iceland has dealt with the crises can be seen as exemplary. Even though it can not be in our interest that people`s savings and deposits get lost it needs to be said that Iceland has succeeded to make shareholders and institutional creditors pay. This is absolutely necessary because tax payers must not be liable for the risks incured by a shareholder driven policy. Shareholders gain with the yields and dividends of the bank; tax payers do not.

It must be possible to put banks into receivership and liquidation while continuing at least those operations which are essential for the real economy by banks founded newly for exactly this purpose. In the European currency union the European Central Bank should uphold the last guarantee for deposits and savings preferably also for those above 100,000€ as needed to keep business operations running (Nobody wants to send a healthy enterprise into receivership just because of a bottleneck in liquidity.). Furthermore a restructuring of the Greek banking sector, as already considered, should not lead to a simple concentration process in the banking sector because small and mid-cap businesses are in need of banks with a respective size which can assess a planned business competently and locally.

Besides this it would certainly be essential that Syriza or which party will ever be put into power in Greece after the new rescue package has been negotiated that it will agree on true reforms together with the other European countriese instead of just making up new austerity measures. The number of civil servants in Greece has increased from 260,000 in 1961 step by step up to 768,000 in 2010 (including public firms there were even a whole million civil servants). Such a high government quota does not go well with just a 5 mio. people working in the private sector [7].

Greece could gain a lot if the European countries and the IMF agreed upon a respective share for a haircut or if the time frame for the refunds would be stretched a lot because in order to eliminate all debts it would likely be necessary to sell the whole state of Greece.

It must not be the consequence that we stop our help for Greece. It would be the worst we could do now while Greece is in need at most. We must demand another policy. Before our parliaments would again vote for a classic bank bailout it would nonetheless be better for all opposition parties and all free thinking members of the parliament to refuse to vote for such a package of corruption.

As far as now it needs to be said that from a perspective comprising the whole of Europe that low interest rates themselves are not that bad as far as commercial banks start to pass the money to the economy in order to stimulate real growth. A lacking control and regulation of the finance markets needs to be blamed for the money having flown into speculation instead of this. Nonetheless it can never be fully guaranteed that too low interest rates can not produce bubbles also in real economy when real values start to acquire as high prices as they can not be maintained in the long term. A finance transaction tax would be directly necessary in order to tax short term speculations in the Euro zone. We are also of the opinion that all finance instruments which can not be justified by an additional value for the real economy, especially derivative finance instruments, need to be forbidden because their only purpose is to enrich a few at the cost of others. Trade in time frames which are below a second (or even better below a minute) needs to be forbidden as there is no justification with regards to real economy as well. All of it is just to gain profits at the cost of other market players all of which is implemented by entirely automatic computer programs nowadays …