By Greg Palast forÂ Ï„Î¿ Ï‡Ï‰Î½Î¯Â (Greece)
[updated January 26, 2015]
Syriza won on the promise that it will cure Greece of leprosy.
Oddly, Syriza also promises that it will remain in the leper colony.Â That is, Syriza wants to rid Greece of the cruelty of austerity imposed by the European Central Bank but insists on staying in the euro zone.
The problem is, austerity run wild is merely a symptom of an illness. Â The underlying disease is the euro itself.
For the last five years, Greeks have been told that, if you cure your diseaseâ€”that is, if you dump the euroâ€”the sky will fall.Â I guess Greeks havenâ€™t noticed, the sky has fallen already.Â With unemployment at 25%, with doctors and teachers eating out of garbage cans, there is no further to fall.
In 2010, when unemployment was a terrible 10%, a year into the crisis, the â€œTroikaâ€ (the European Central Bank, European Commission and the International Monetary Fund) told the GreeksÂ that brutal austerity measures would restore their economy by 2012.
Ask yourself, Was the Troika right?
There is a saying in America:Â Fool me once, shame on you.Â Fool me twice, shame on me.
Can Greece survive without the euro?Â Greece is already dead, but the Germans wonâ€™t even bother to bury the corpse. Â Greeks are told that if they leave the euro and renounceÂ its debts, the nation will not be able to access world capital markets.Â The reality is, Greece canâ€™t access world markets now:Â no one lends to a corpse.
Thereâ€™s a way back across the River Styx.Â But itâ€™s not by paddling on a euro.
Thereâ€™s Life after Euro
Many nations do quite well without the euro.Â Sweden, Denmark and India do just fine without the euroâ€”and so does Turkey, which had the luck to be excluded from the euro-zone.Â As long as Turks stick to the lira, even Turkeyâ€™s brain-damaged Islamo-fascist President Tayyip ErdoÄŸan cannot destroy their economy.
Can Greece just dump the euro?Â They have happy precedents to follow.Â Argentina was once pegged to the US dollar much as Greece is tied to the euro today.Â In 2000, Argentines, hungry and angry, revolted.Â Argentina ultimately overthrew the dollar dictatorship, the IMF diktats and the threats of creditors, and defaulted on its dollar bonds.Â Free at last!Â In the decade since, the Argentine economy soared. Â Yes, today, Argentina is under attackÂ by financial vultures, but that is only because the nation became so temptingly wealthy.
I was in Brazil when its President Luiz InÃ¡cio Lula da Silva told the IMF to go to hellâ€”and rejected privatization of the state banks and the state oil company, rejected cutting pensions and thumbed his nose at the rest of the austerity nonsense. Instead, Lula created the bolsa familia, a massive pay-out to the nationâ€™s poor.Â The result: Brazil not only survived but thrived during the 2008-10 Â world financial crisis.Â Despite pressure, Brazil never ceded control of its currency. (It is a sad irony that Brazil is only now faltering.Â Thatâ€™s the fault entirely of Lulaâ€™s successor, President Dilma Rousseff, Â who is beginning to dance the austerity samba.)
Austerity:Â Religion, Not Economics
The euro is simply the deutschmark with little stars on it.Â Greece cannot adopt Germanyâ€™s currency without adopting Germanyâ€™s finance minister, Wolfgang SchÃ¤uble, as its own.
And SchÃ¤uble has determined that Greece must be punished.Â As my homey Paul Krugman points out, there is no credible economic theory that says that austerityâ€”that is, cutting government spending, cutting wages, cutting consumer demandâ€”can in any way help a nation in recession, in deflation.Â Thatâ€™s why, in 2009, Obama ordered up stimulus, not a sleeping pill.
But austerity has nothing to do with economics.Â It is religion: Â the belief by the stern Lutheran Germans that Greeks have had too much fun, spent too much money, and spent too much lazy time in the sunâ€”and now Greeks must pay a price for their sins.
Oddly, I hear this self-flagellating nonsense from Greeks themselves:Â we are lazy.Â We deserve our punishment.Â Nonsense.Â The average Greek works more hoursÂ in a year than any other worker in the 34 nations of the OECD; Germans the least.
The Euroâ€™s Father Describes his Little Bastard
Alexis Tsipras, the leader of Syriza, would like to pretend that austerity and the euro are two different things, that you can marry the pretty girl but not invite her ugly sister to the wedding. Apparently, the Syriza chief is blissfully ignorant of the history of the euro. Â The horror of austerity is not the consequence of Greek profligacy:Â it was designed into the euroâ€™s plan from the beginning.
This was explained to me by the father of the euro himself, economist Robert Mundell of Columbia University.Â (I studied economics with Mundellâ€™s buddy, Milton Friedman.)Â Mundell not only invented the euro, he also fathered the misery-making policies of Thatcher and Reagan, known as â€œsupply-side economicsâ€ â€“ or, as George Bush Sr. called it, â€œvoodoo economics.â€Â Supply-side voodoo is the long-discredited belief that if a nation demolishes the power of unions, cuts business taxes, eliminates government regulation and public ownership of utilities, economic prosperity will follow.
The euro is simply the other side of the supply-side coin.Â As Mundell explained it, the euro is the way in which congresses and parliaments can be stripped of all power over monetary and fiscal policy.Â Bothersome democracy is removed from the economic system.Â â€œWithout fiscal policy,â€ Mundell told me, â€œthe only way nations can keep jobs is by the competitive reduction of rules on business.â€
Greece, to survive in a euro economy, can only revive employment by reducing wages.Â Indeed, the recent tiny reduction in unemployment is the sign that Greeks are slowly accepting a permanent future of low wages serving piÃ±a coladas to Germans on holiday cruises.
It is argued that Greece owes Germany, the IMF and the European Central Bank for bail-out-billions.Â Nonsense.Â None of the billions in bail-out funds went into Greek pockets.Â It all went to bailÂ out Deutsche Bank and other foreign creditors. Â The EU treasuries swallowed 90% of its private bankersâ€™ bonds.Â Germany bailed out Germany, not Greece.
Nevertheless, Greece must pay Germany back, Mr. Tsipras, if you want to continue to use Germanyâ€™s currency,Â that is.
Greece:Â Goldman Sacked
Greeceâ€™s ruin began with secret, fraudulent currency swaps, designed a decade ago by Goldman Sachs, to conceal Greek deficits that exceeded the euro zoneâ€™s 3%-of-GDP limit.Â In 2009, when the truth came out, Greek debt holders realized they had been cheated.Â These debt buyers then demanded usurious levels of interest (or, if you prefer, a high â€œspreadâ€) to insure themselves against future fraud.Â The compounding of this interest premium brought the Greek nation to its knees. Â In other words, the crimes committed to join and stay in the euro, not Greek profligacy, caused the crisis.
The USA, Brazil and China escaped fromÂ depression byÂ increasing their money supply and government spending and taking control ofÂ currency exchange ratesâ€”crucial tools Greece gave upÂ in return for the euro.
Worse, once the Trojan hearse of the euro entered Athens, tourism, Greeceâ€™s main industry, drained to Turkey where hotels and souvenirsÂ are priced in cheap lira.Â This allowed Dr. Mundellâ€™s remorseless wage-lowering machine, the euro, to do its work, to force Greece to strip all its workers of pensions and power.
Greece fell to its knees, with no choice but to beg Germany for mercy.
But there is no mercy.Â As Germanyâ€™s SchÃ¤uble insists, democracy, this weekâ€™s vote, means nothing.Â “New elections change nothing in the accords struck with the Greek government,â€ he says.Â â€œ[Greeks] have no alternative.â€
Ah, but they do, Mr. SchÃ¤uble.Â They can tell you to take your euro and shove it up your Merkel.
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Investigative reporter Greg Palast’s book, Vultures’ Picnic, with the no-BS inside story of the financial collapse, will soon be released in a Greek edition by Livanis.
Greg Palast is also the author of several New York Times bestsellers including The Best Democracy Money Can Buy andÂ Billionaires & Ballot Bandits.
Palast is a Puffin Foundation Fellow for Investigative Reporting.