Germany's Double Standard on Debt

                               

 By Reginald Johnson

              

              It was good to see Greek Prime Minister Alexis Tsipras yesterday rebuke the representative of Germany in the European Parliament over the issue of Greece's debt.

          Germany, France and other members of the Euro Zone have been acting indignant over Greece’s inability to pay back loans made by Euro Zone members, as well as banks and the International Monetary Fund.

   German officials in particular have been insisting that the debts must be repaid, despite the harsh austerity Greeks have been enduring in recent years. They say that the Greek demands for debt reduction and more favorable repayment terms are out of line. In a referendum last weekend called by Tsipras, Greek voters decisively rejected plans for more austerity in return for more loans from the EU.

  German EU member Manfred Veber accused Tsipras of having misled Greek voters, destroyed trust in Europe, and insulted other leaders.

    In a speech seen on Euro News, Tsipras responded,  “I want to remind you, Mr. Veber, that the strongest moment of solidarity in Europe was in 1953 when your country came out indebted and looted after two world wars and Europe and all European countries showed the greatest solidarity in a 1953 London agreement and they decided to write off 60 percent of the German debt and agreed to a growth plan. That was the greatest moment of solidarity in recent European history.”

   Tsipras, other Greek officials, as well as some notable economists such as Thomas Piketty and Richard Wolff, have recently been pointing out the German hypocrisy on the issue of Greece’s debt. In fact, Greek officials said earlier this year, that Germany had still not paid Greece for the agreed-upon debt from World War II. Under the Nazi regime, Germany invaded and occupied Greece during the early 1940s.

   Piketty, who rose to prominence last year with a book on inequality, told the German magazine Die Zeit: “When I hear the Germans say they maintain a very moral stance about debt, and strongly believe debts must be repaid, then I think, what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.”

  Greece now owes in the neighborhood of 350 billion euros, on loans made by governments, private banks and the International Monetary Fund. In return for bailout money, Greece agreed to an austerity program involving wage and pension cuts and service reductions. The nation’s economy has gotten worse and Greece is virtually bankrupt.

  Following the referendum on Sunday, Greek and EU officials have been meeting to try to arrive at some sort of agreement where Greece will get more bailout funds and possibly a long-term debt reduction, or “haircut.”

  Even IMF leaders said in a recent report that the terms of debt for Greece had been too harsh, there had been negative results, and that a debt reduction is now needed.

   But German Chancellor Angela Merkel isn’t budging, saying on Thursday that debt relief was out of the question.

  If an agreement can’t be reached, Greece would be forced out of the Euro Zone and credit would be cut off. The nation would then have to print its own money.

  Greek banks reportedly only have enough money to last until Monday.

 James S. Henry, an economist, lawyer and senior fellow with Columbia University’s Center for Sustainable International Investment told the CounterPoint radio show on WPKN that it was time for officials of the EU and the European Central Bank to stop being so hard-headed about Greece, and work out a more favorable deal for that nation.

 

  “Any settlement has to contain debt relief from an objective standpoint. The current debt level is not serviceable,” he said. http://btlonline.org/2015/seg/150717af-btl-henry.html

 

  

The Greek Tragedy Goes On

By Reginald Johnson

             It’s a crime what’s happening to Greece.

             A country is slowly being destroyed while the rest of the world --- principally the richest countries like the United States --- do nothing. In fact, it’s those prosperous nations --- dominated by corporate elites and their political puppets--- that are the problem.

        Greece has been under a brutal austerity regime for the past five years. It’s bled the country dry. The austerity has been ordered by the International Monetary Fund and European Union leaders in return for financial aid packages to keep the Greek government afloat, as the nation still tries to recover from the disastrous economic downturn of 2008-09.

       That crash was not caused by Greece; it was in fact caused by the reckless investment practices of banks in the U.S. and the countries of western Europe, such as England, France and Germany.

  For years, the Greeks have had to endure all the ill effects of austerity: wage cuts, pension reductions, cuts in services, and an economy made worse by the lack of government spending. Unemployment is widespread, and so is despair. Suicides are on the rise.

   A new left-wing government in Greece this year has tried to work out more favorable terms for Greece’s financial aid. But after months of negotiations, European officials are not budging, and still demanding austerity by the Greek people in return for aid. They’re also not offering any real proposals for debt relief.

   Finally, it appears, many Greeks and certainly the Syriza government now leading the country, are saying “Enough.” They’re tired of suffering and tired of the harsh demands by creditors.

    Syriza leaders have set up a referendum on Sunday, in which the Greek people will be asked to vote “yes” or :”no” on whether to accept the EU’s latest austerity-aid package.

    If the people vote no, it could mean the end of any bailouts for Greece, and it could also mean the nation will be forced out of the Eurozone. A yes vote means more aid, but more austerity for years to come.

   Some top economists like Joseph Stiglitz, a nobel laureate, are saying the Greeks should vote no. If they leave the Eurozone, he suggests, it will be difficult, but the country may be able to start over, free of the dictates from the European Union.  The nation might be able to rebound, sort of like Argentina did some years ago after it defaulted on debt obligations.

   As Stiglitz wrote in The Guardian recently, “Greeks might gain the opportunity to shape a future that, though perhaps not as prosperous as the past, is far more hopeful than the unconscionable torture of the present.”

   But polls are showing a real split among the Greeks on which way to vote. While everyone wants an end to austerity, many people in Greece are worried they will lose everything if the nation rebuffs the IMF/creditor demands, and then is pushed out of the Eurozone. Pensioners, for instance, worry that if the nation leaves the Eurozone and outside aid stops, Greek banks might collapse entirely, and they will be wiped out.

   Others though, want to tell European leaders that Greece is not a slave, and they’ve had enough of taking orders. Greek Prime Minister Alex Tsipras told a huge rally in Athens Friday that Greece will not accept “ultimatums” anymore.

   No matter what happens in the election, Greece is going to keep suffering, at least in the short-term.

   My wife and I know a Greek couple, George and Eva Hatzikostas who operate a restaurant on Bridgeport’s north Main Street, called “Eva’s Deli --- All Things Greek.”

   Both Eva and George are very sad over the turn of events in Greece. They still have family there.

   I asked Eva about which way the referendum would go. She said she didn’t know for sure. But she believed many people would vote “yes,” because they’re terrified about the future if Greece no longer has a lifeline to the Eurozone.

   “Either way, Greece is bleeding,” said Eva, as tears came to her eyes. “It makes me cry to say that.”