China and the Saving of Europe

By Simon Johnson

The Greek government owes more than it can afford to pay, now or in the near future, at market interest rates.  There are two options: reduce the payments through some form of restructuring, or move the debt into the hands of people who are willing to charge below market rates for the foreseeable future.

In this decision, the International Monetary Fund has relatively little say – this is really a political decision to be made by the European Union, with discrete backing from the US and China.

While the EU leadership is surely tired of Greek politicians at this point, they also fear greatly the implications for other eurozone countries if Greece says it can’t pay or won’t pay.  The realization that spreads on Spanish government debt will rise sharply concentrates the mind wonderfully. 

And the damage would not be limited to Spain – do not underestimate the smugness with which the eurozone has completely and utterly failed to prepare for any kind of sovereign default.  The lack of loss-absorbing capital in major European banks is a first-order scandal that could bring down governments.

Fortunately for the undeserving European policy elite, the IMF has plenty of money it can lend at low rates and the Europeans have plenty of votes at the IMF.  The IMF can also access considerably more funding as needed, with the agreement of the United States – which really does not want another short-term shock to the world economy.  And funding is available from China and other emerging market countries with large stockpiles of foreign exchange reserves.

China has every interest in making sure that the euro survives and prospers as a major reserve currency – to make sure that, over a longer period of time, the US dollar will decline as the primary place in which to hold public and primary rainy day funds.

The IMF will do as it is told by its major shareholders: help to refinance Greece, effectively protecting creditors and eurozone politicians to the fullest extent possible.

An edited version of this post appeared this morning on the NYT.com’s Room for Debate; it is used here with permission.

49 responses to “China and the Saving of Europe

  1. Exactly, they failed to prepare for any kind of sovereign default…which at this stage it will be a self-fulfilling prophecy as there is too much debt around the world and the Ponzi scheme cannot continue.

  2. I would say let China invest their money where ever they see fit. But why do actual amounts always become 10 x what the original amount was, just to butter up the suckers who overheated the printing press in the first place? I personally woudn’t do it.

  3. Moses Herzog

    I wonder why Stanley Fischer (the most qualified and knowledgeable candidate by far) was so quickly told to put his erector set back in the box before he could even get on an airplane??? It’s such a mystery, isn’t it……. Could it be that Mr. Fischer had some restructuring of debt ideas flittering across his mind?? Could it be that Mr. Fischer wasn’t going to play the role of Mommy Lagarde, telling all bondholders that Mommy Lagarde was going to make all their booboos and scratches ok?? And unlike Mommy Lagarde, could it be Fischer would probably punish big banks for scraping away their vegetables (such as higher reserve requirements and proven, tangible collateral for capital on loans and proven, tangible capital for derivatives losses, improved credit analysis of borrowers) into a potted plant and eating dessert??? Could it be that Fischer wasn’t there to tell French national banks and European bondholders that Mommy Lagarde would magically make all their troubles go away??? Too bad Fischer isn’t from a country currently with its head up its a. s.s. and a bunch of large banks potentially on the line to be wiped out by Greece and PIIGS, or Fischer would have found all IMF officials asking him what line of skincare he used to look so damned young.

  4. jeff simpson

    Unless the restructuring option includes this, a third option exists that is the white elephant in the room about which nobody will talk: the haircut. The creditors can acknowledge that they should not have made these ill-advised loans and that ‘one cannot get blood from a stone.’

  5. **discreet** backing from the US and China

  6. “While the EU leadership is surely tired of the Greek politicians at this point (ie. if,… Greece says it can’y pay or won’t pay)”

    The sine`qua`non are reasonable, fair and manageable lowered payments with a shorter mature date! Basically — a living breathing inference of niceties… both ugly, and pretty, that a marriage of convenience could only tolerate…or else!

    I find the parallels (perplexing to say the least?) of these so called latter-day PIIGS, quite similar with America’s (National City Bank/ Rockefeller’s Piggy Bank – today known as JP Morgan Chase without the Morgan?), and France’s… “Haitian Gold (Sugar) Mine Day’s” of the early 19th century, where ironically the sweetener was literally the indigenous peoples’ incarceration, or better said diluted hemlock drink.

    The examples of irrefutable corruptness in Greece’s political (structural – Top to Bottom only) system are all to familiar…where bribery, malfeasance, with absolutely no accountability or oversite are exact poster child’s as that of past Haitian leaders ( please note – other than the brutal violence).
    “Greek Prime Minister (PM) George Papandreou replaces his Finance Minister {[FM] [6-17-11]} in a broad cabinet reshuffle. The critical position was held by George Papaconstantinou since the Debt Crises in late 2009, will be taken over by Evangelos Venizelos.”

    But — if these new leaders in Greece remain… and of the very same inbreeding (integrity knot?) fossilized mindsets that got them where they are today, “Greece will be more than just a posthumous Tragedy”! Just dial back time to a century plus, or so ago, to really experience the grandest of assault …using, “Weaponized Usury” on the citizen’s of Haiti!
    Haitian Dictator’s Papa Doc, and Baby Doc Duvalier’s…and please excuse me for almost leaving out Elie Lescot were props for a fledgling “Global Trade” (ya all remember that?)? I’m using Haiti for obvious reasons, but you get the picture, and if you don’t , just look up the “Versaille’s Treaty” that was somewhat force-fed down the German’s throat by the French, English , and American’s (can anyone say the birth of Adolf?)

    Ref: A History of Exploitation (Feb/2011) by Bishop Gumbleton (Thomas J. Gumbleton) @ Google

    http://www.bishopgumbleton.org

    http://www.bishopgumbleton.org/HaitiAHistoryofExploitation.html

    * Must link -up through Google

    It is a great wrong to enslave a sovereign… just as it is to nostalgically misalign a ‘remembrance of things past’ via raison d`etre and the right of tubula`rasa absolution as the ancient Babylonian’s wisdom ‘Cogito, Ergo Sum” [?] would speak if time were to stand still… “Savoir`faire”?
    Thakyou Simon and James

  7. CBS from the West

    “Fortunately for the undeserving European policy elite, the IMF has plenty of money it can lend at low rates…”

    And that money comes from where? It is confiscated from the taxpayers of the member nations of the elites, or borrowed by those governments in the private markets, again with the taxpayers on the hook for the payback.

    Can anybody explain to me why the taxpayers of Europe, let alone those of other countries, should get scalped so that the bankers of Europe (and to a lesser extent the US and UK) don’t have to get a haircut? If it really would prevent a global financial crisis, one might have a case if accompanied by serious banking reform (ideally, nationalization and break-up) in the “donor” nations. But it grows clearer each day that Greece will default in any case–it is just a matter of when, not if. The proposed austerity measures are already provoking social instability, and even if imposed at the point of a gun (EU civil war coming up? Germany invades Greece to enforce austerity?) they are self-defeating because they just further depress economic growth of an economy that is already crippled by an unpayable burden of debt.

    The Greeks should bolt the Eurozone, repudiate their Euro-denominated debt and offer payment in deeply devalued drachmas instead. Yes, this is default, and they will have difficulty accessing credit for many years. And that fact alone will impose severe austerity, whether their parliament votes for it or not. But at least from that point on the Greeks will be working to build their own prosperity, and not just suffering pain so that German, French, and other bankers can party on without so much as an inconvenience.

  8. Whatever happens, the TBTF banksters will thrive. Masters of the universe.

    http://www.counterpunch.com/mokhiber06172011.html

  9. Should not, could not… China save the United States first? After all, it’s so… so obvious? If not – then why Europe? Am I missing some kind of ageless chivalry playing out with a touch of romanticism sequestered within a Pans`sees’ euphemistic wording,…”the heart has its reasons that reason does not know”, concerning unwanton gratuity?
    Confused in Florida.
    Ref: “A Candid Appraisal of the Recovery”— (eg. $138 Trillion in Debt [?] versus a puny GDP/GNP)…. posted 9/28/2010

    http://www.seekingalpha.com/article/227343-a-candid-appraisal-of-the-recovery

  10. Greece should follow Iceland’s example. If history rhymes, the Euro-zone will be full of cautionary limericks soon.

  11. The Greeks should bolt the Eurozone, repudiate their Euro-denominated debt and offer payment in deeply devalued drachmas instead. Yes, this is default, and they will have difficulty accessing credit for many years. And that fact alone will impose severe austerity, whether their parliament votes for it or not. But at least from that point on the Greeks will be working to build their own prosperity, and not just suffering pain so that German, French, and other bankers can party on without so much as an inconvenience.

    @ CBS: You make extremely valid points but don’t quite understand the system so well. Initially is the law that bonds pay first, before cops , teachers and all others, so the rich place their money in bonds that the tax payer picks up either way, 2ndly are the other nations, and that includes the US, that are actually in a very similar boat, and would follow Greeces lead to solve their own debt problems. Thirdly, since the bond holders had nothing more to do, they created a CDM that basicly says if X (greece defaults) then Y (someone else gets paid) on a side bet to make money, and that was sold around the world in many shapes and styles. [ I mean these people really had nothing better to do but make up a new casino game to ensure they {the house} wins.] So you see its a win- win for people with money and a lose-lose for those who have none. The winners have gvts on their side, plus armys on their side, and a financial system on their side. They have no intention of losing before all the others lose first, and even then they struggle with it.

  12. Simon,

    What is the mechanism, if it exists, for either expulsion or “voluntary” exit from the EU?

  13. The banks have become bookies and loansharks. No, actually, they’ve become WORSE than bookies and loansharks.

    No bookie or loanshark expects to make money ALL the time. The banks do. No bookie or loanshark asks somebody else to cover their bad bets or bad loans. The banks do. No bookie or loanshark has ever threatened to break the legs of the world financial system. The banks have—-and will do so in the future.

    In fact, good bookies and loansharks don’t break legs at all; they get as much as they can out of a deadbeat client (e.g. payment plan) and then write off the balance. But then, the good ones also don’t borrow money in order to make money. They use their own capital. That way, they stay out of trouble—-and don’t have to resort to extortion.

  14. The very same persons who helped breed this mess are calling now for austerity measures. The rational complicated structured financial mechanisms appears to be the simplest bet game – only for the bidders. It sounds more as a provocation to a disillusioned person rather than a call for awareness and logical reaction. If it is all about money printed on paper, fire shall be the weapon of the weak.

  15. The script is not new. It was laid bare in the Shock Doctrine. These are blood sucking parasites. Grecian people ( thanks George W for THAT gem)….OK, Greek people: tell the bankers, and that corrupt government, to take a flying leap at a rolling donut.

    If you don’t, you want be able to afford the price of a glass potable water in the near-term future.

  16. Yes, Woop; The Greeks have the upper hand (it’s relative) over the Eurozone bankster proxies. They would do well to call the Eurocrats bluff on austerity by giving them the straight one instead of bowing before the bankster puppets.

    “So what’s obvious is, if Greece goes, Ireland and Portugal are sure to follow—and if they go, then Spain is next—

    —and Spain can’t be saved.

    It’s as simple as that. Spain is too big—roughly half the size of Germany. If Spain goes, it will drag down all of the European continent with it—that is, bank failures (on both sides of the pond), a crash of the eurozone as a currency, massive unemployment, a European economy that would grind to a halt—

    —basically, the worst parts of the Great Depression.

    So you see why Greece matters?

    The European leadership have got to quite dicking around! They have got to make up their minds once and for all: Either save Greece, or let it die.”

    excerpt from:

    http://gonzalolira.blogspot.com/2011/06/if-greece-defaults-what-happens-to.html

    *******************************************************************************************

    “In fact, we never really bailed out Greece, Portugal or Ireland. We bailed out Ackermann and his friends. And soon, we’ll be forced to bail out Trichet as well. In the greatest irony of all, the initial lie that a Greek default would have disastrous consequences for Europe, was repeated so often that it was turned into a reality. If we had acted a year-and-a-half ago to allow a Greek debt restructuring, the financial fallout could have been limited.

    But now that the ECB is severely exposed, Ackermann’s scaremongering has become a self-fulfilling prophecy. So let this single truth be told to all: we are still living under the dictatorship of financial capital, where two bankers have the power to shape reality for all of us. And until we confront those banksters and rise up to break out of their invisible chains, we will steadily be led to ruin.”

    excerpts from:

    http://roarmag.org/2011/06/deutsche-bank-ecb-greek-debt-crisis/

  17. China, my god, do you not think they themselves are standing on the edge of a banking crisis precipice ? Furthermore, the Chinese do not seek additional transparency and global cross-shareholdings … if they were seeking above trend ROIs they would have bought Wachovia when they had the chance. The Greeks need to be evicted, period.

  18. We helpless taxpayers in eurozone are ruled by Pharaohs (h/t P. Krugman),

    Pharaohs (e.g Kings of Denial) don’t accept the truth : Greek government owes more than it can afford to pay. We Finns are looking this play with utmost disbelief. Finland had it own severe depression in 90’s. However we survived by ourself. We didn’t ask help from american taxpayers by calling IMF to lend money to us. Yes, we cheated others. We devalued our currency to improve our products competivness in world markets. However our government debt was in other currencies so the debt exploded. Painful asterity with a helping hand of economic growth at the same time stabilized our economy.

    Now we are in a hook of EFSM, EMS etc… giving guarantees and loans to others. We are putting our own government in danger because we are burdened with more and more risks. And all this because poor german and french banks have to be rescued. Our banks didn’t lend to Irish reckless bankers, our banks didn’t lend to reckless Greece politicians… eurozone needs us to rescue investors and bankers because we have the best possible credit rating from all credit rating agencies. To us this unfair.

    To make things from bad to worst Pharaohs in ECB launched SMP. Securities Market Program. It has been buying Greece, Portuguese, Irish bonds in the secondary market. With nothing what so ever impact. Only result was that ECB is now in hook with losses if those bonds loose value.

    Why doesn’t our Pharaos consider for example some sort of “Brady Plan”. Those bad debts has to be written down. Somebody has to face losses. Just moving those bonds from bankers to taxpayers won’t solve anything. It won’t help debtors. Only the creditors names are changing. Are we prisoners of Too Big to Fail ?

    What about CDS ? Our Pharaohs have a mission : no debt restructuring is possible for Greece because credit event wil trigger the CDS. Why is there CDS for sovereign debt in a first place if these contracts never ever in no circumstances can hit the CDS sellers ?

    Pharaohs have a plan : “kicking the can down to road”. Someday a miracle will happen and we taxpayers in Finland and Germany as well as the people in Greece, Portugal and Ireland will have a happy day. Maybe the miracle is the Confidence Fairy. Unfortunatley the confidence to our Pharaohs is diminishing day by day …

  19. Until the creditors are held responsible for the loans they make and the the CDS’s they sell, they will continue to make reckless lending decisions. It is time for them to take the losses instead of forcing the rest of us to pay for their foolishness.

  20. Moses Herzog

    Nomi Prins was on RT. She arrives at around the 15:30 mark of the youtube video. If you’re into eye-candy and have time you can watch the entire 57 minute show. The hostess is an eyeful—God bless America.

  21. I must say I wonder why this is a good thing.

    Are we going to provide special treatment to every country that cannot pay its debts? Why is that good? Anyway, why is it good that bondholders and banks be subsidized by others? And who, exactly, is going to make these decisions transferring income from Americans to European banks and bondholders, and why should they be the ones that make this decision? Even if American banks and bondholders were directly involved, why should average Americans suffer from the stupidity of bankers, hondholders and policymakers who usurp this decisionmaking authority to demand that others pay the bills for their folly?

    So the IMF has plenty of money? I suppose it does. But every $1 billion it hands out costs each and every American, young and old, rich and poor, about a $1. When it and the world’s central banks hand out hundreds of billions and trillions of dollars to the financial community they are reducing the income and wealth of every American by thousands of dollars. Why? These are people who had no role whatsoever in the decision-making leading to these financial disasters yet they forced to pay the price for errors made by others. And in the ultimate insult, the overpaid bastards on Wall Street, in the City, and in the other financial centers of the world will continue to take home salaries of tens of millions a year.

    If governments, central banks and the IMF are going to steal the income and wealth of average people, would it be too much to ask that those responsible for this mess in the financial community, in government financial ministries and central banks, and at the IMF be fired?

    If you wonder why the Tea Party has such support the answer is simple: They are looking at their wallets as their income disappears to fill the wallets of those on Wall Street and other international financial centers.

  22. Yes, Engelman, you diagnose the deluded, simple-minded Tea Party dolts with skill. If ever an inarticulate, confused, and depressed group of people ever existed, these folks fit that description.

    And, they can’t stand the guy with the mocha-skin-tone being POTUS; that’s a huge part of where they’re at.

  23. I must say I am amazed at the comment of Woop.

    While not a member of the Tea Party I have attended several of their events. They were intelligent and articulate in expressing their concerns, concerns I for one share. I heard not a word that could in any way be interpreted as racist. Indeed, there were people of all races attending and speaking. The idea that the Tea Party is “a sea of white faces” is simply false. In fact, more than 80 per cent of the adults in the country are white and many classified as non-white look white. Any random selection of Americans attending any meeting will appear overwhelmingly white.

    In any event, what does this have to do with the economic and financial problems before the country and the world? The simple point made in my comment is that “the-powers-that-be” in the financial realm are throwing with no positive effect huge amounts of other people’s money at problems they created. More than this, these people are not being held accountable for their failures but on the contrary continue to benefit personally and professionally from decisions they impose on the rest of us.

    Public policy when dealing with the financial crisis both here and in Europe has been to transfer the sour assets of the private sector to the public sector. I and many others, some of them commenters here, challenge this approach as unfair and ineffective. We are of the view it would have been much better to impose much of these costs on the bondholders from the very beginning. If financial institutions suffered but were essential to the overall health of the economy, they should have been directly re-capitalized, if necessary by the government, but with new management. Even now, postponing the needed adjustment and continuing to shift costs to the public purse unnecessarily raises the evenual burden on our children.

    Let me also suggest that the Tea Party is right in their assessment of the usefulness of the IMF and central banks when dealing with problems now before the world economy. These insitutions have been captured by special interests which distort the policy making process. Frankly, they have become dangerous in their confusion and bias. If they do not reform themselves and take on a much more modest role in governing financial systems, they will be eliminated and the world will lose the contribution they could make to a more stable and prosperous world economy.

  24. “The protests in Greece concern all of you directly.

    What is going on in Athens at the moment is resistance against an invasion; an invasion as brutal as that against Poland in 1939. The invading army wears suits instead of uniforms and holds laptops instead of guns, but make no mistake – the attack on our sovereignty is as violent and thorough. Private wealth interests are dictating policy to a sovereign nation, which is expressly and directly against its national interest. Ignore it at your peril. Say to yourselves, if you wish, that perhaps it will stop there. That perhaps the bailiffs will not go after the Portugal and Ireland next. And then Spain and the UK. But it is already beginning to happen. This is why you cannot afford to ignore these events.”

    Excerpt from:

    http://sturdyblog.wordpress.com/2011/06/18/democracy-vs-mythology-the-battle-in-syntagma-square/

  25. @earle,florida: Your pointer to the abbreviated history of Haiti should give us a break. The Euro system was created to keep the Germans in check. Greece must have been force fed into that system to allow some historic leverage over the whole enterprise. Which it did. Now the question is about politics and contagion. The answer draws from how determined the Germans and the US are about the fate of the Euro. From how Simon write, it seems that the Chinese are not too far away…

    To return to earle,florida, Mazower was the first (historian) to make me aware that Hitler’s project was to subject European peoples to the treatment of the colonial subjects. I guess, that’s still an option. What some people fail to understand is that no palace can be too inviting when located in a slump. Geography is destiny.

  26. I have new eyeglasses Engelman; perhaps you can borrow my old pair, because apparently, you missed their myriad racist signs held aloft.

    In any event, social phenomena can’t be separated from the financial and economic issues, giving rise to such “movements” as the Tea Party, now controlled by the fifth richest person in the USA.

    On the role of central banks, we find convergence of viewpoints.

  27. “Too Small to Fail” (TSTF) – Indeed that is what I’ve said about the twisted logic now taking hold of “Mankind’s Weak Mind’s – regarding the bailout of Greece! There are manipulators, and there are fool’s…what separates the two is not! They’re one in the same with greed the fruit of their labor?
    Greece’s has a powerful ally…that being the European Community which has set a place at the table too signature this foisted abomination,…this Faustian bargain of perpetual enslavement! Oh, Socrates, …where is thy foreboding spirit of contempt? Show your disdain for the caretakers of thy lost brethren!
    In ancient China, people committed suicide by eating a pound of salt. But, here in modern Greece, people commit suicide by esoteric usury.

    “as experience sculpts our sacred individualities ;
    it is fate that hollows out the void of despair ;
    this personified mask worn within ;
    scarred by blind spots of ambiguity tethered ever so daintily to rationale ;
    the very arbitrator to our existence ;
    whoa to all who succumb to the pantheon of cowardliness ;
    should this moment be lost to misanthropy zeitgeist’s ;
    pandering fool’s gold”

    I hope the Greek people – “reject this plague of delusional austerity” – this pile of “Crap – enough is enough! (JMHO)

    Thankyou Simon and James, and please never stop your “Digging for America’s Sake”!

    God Bless You, Julian Assange :-)

  28. @ Trouserman: you’ve penned the best analysis of the banksters of any I’ve seen in the years since this latest debacle commenced.

    “No bookie or loanshark expects to make money ALL the time. The banks do. No bookie or loanshark asks somebody else to cover their bad bets or bad loans. The banks do. No bookie or loanshark has ever threatened to break the legs of the world financial system. The banks have—-and will do so in the future.”

    Once these crooked privatizers buy up the all the civil infrastructure they can get their greasy hands on, for pennies on the dollar, to serfdom we all return.

  29. Moses Herzog

    I think James has the baselinescenario settings where these video embeds are hard to put in, but I’m gonna give it a shot here and cross my fingers:
    http://www.msnbc.msn.com/id/32545640Visit msnbc.com for breaking news, world news, and news about the economy

  30. Moses Herzog

    OK, typical msnbc c*cksucker BS, I wanted a video of Andrea Mitchell’s show and msnbc have it set to go to the nightly news mothership. And they wonder why people hate MSM, anyway…..

    I wanted to show that Republican House representative Darrell Issa, who is known as “the master of congressional subpoena’s” has for some reason decided not to subpoena the big bankers when TBTF bankers ignored a Congressional request for papers related to fraudclosure on homes.
    You can read about it here:

    http://thehill.com/blogs/on-the-money/banking-financial-institutions/167593-cummings-presses-issa-to-subpoena-banks-over-foreclosure-practices

    And watch the video I had intended to show in the link in my comment just above this one, here:

    http://crooksandliars.com/john-amato/darrell-issa-blocks-elijah-cummings-ope

  31. The Greeks are being cannibalised to save the banksters and the Eurozone experiment, just like the Americans were and continue to be to save the Wall Street casinos.

  32. So what are the consequences if the world doesn’t just allow Greece to default, as it seems like it should. I mean, this is all, still, really, a default by another name, right? How are the rest of us paying for it?
    Because these investments by China and the IMF and others really just can’t pay off in the end, can they?

  33. “They’re attempting to go turn the prudent Europeans of the north into permanent tax slaves in order to bail out the big banks in France and Germany and elsewhere who don’t deserve a bailout,” he said, adding that, “In order to accomplish that, they will attempt to turn the millions the of people who live in southern Europe into permanent debt slaves in order to pay the piper from the guarantees coming from the north.”…“The IMF is an absurd institution,” he said. “It’s destructive. It’s the source of holding this whole thing together with bailing wire.”

    “And the sooner their number is called, he said, “The better off I think we’ll all be.”

    quoting David Stockman; excerpts from:

    http://www.economicpolicyjournal.com/2011/06/stockman-warns-on-us-bond-armageddon.html

  34. Interesting that Chair Bernanke says U.S. banks have little exposure to Greek debt. What is he calling a “bank”? Dimone & Co. apparently have insured something like $25 billion of this debt. Although European banks have greater direct exposure, I have heard that U.S. banks have the lion’s share of insurance on this debt. Seems like a side effect of TBTF and of Ben driving down U.S. yields, forcing U.S. investors abroad.

  35. Moses Herzog

    I just picked up some good news on David Letterman that may be quite a relief to many American citizens: They said Newt Gingrich is too fat to take an unobstructed picture of his own genitals with a phone camera.

  36. Did Apple come out with a new phone, one equipped with an electron-scanning microscope?

  37. CBS from the West

    @Moses Herzog and Woop

    Sorry to be a stuffed shirt, but I think this blog aims for a higher level of discourse. Please!

  38. Moses Herzog

    Hey CBS from West,
    I know it was kind of low to insert Gingrich into the conversation. But we can all agree genitals and poo jokes are universal, things we can stand for regardless of party affiliation.

    I do sincerely apologize again for mentioning Gingrich.

  39. “The fight for Europe’s future is being waged in Athens and other Greek cities to resist financial demands that are the 21st century’s version of an outright military attack. The threat of bank overlordship is not the kind of economy-killing policy that affords opportunities for heroism in armed battle, to be sure. Destructive financial policies are more like an exercise in the banality of evil – in this case, the pro-creditor assumptions of the European Central Bank (ECB), EU and IMF (egged on by the U.S. Treasury).”

    “As Vladimir Putin pointed out some years ago, the neoliberal reforms put in Boris Yeltsin’s hands by the Harvard Boys in the 1990s caused Russia to suffer lower birth rates, shortening life spans and emigration – the greatest loss in population growth since World War II. Capital flight is another consequence of financial austerity. The ECB’s proposed “solution” to Greece’s debt problem is thus self-defeating. It only buys time for the ECB to take on yet more Greek government debt, leaving all EU taxpayers to get the bill. It is to avoid this shift of bank losses onto taxpayers that Angela Merkel in Germany has insisted that private bondholders must absorb some of the loss resulting from their bad investments.”

    “The bankers are trying to get a windfall by using the debt hammer to achieve what warfare did in times past. They are demanding privatization of public assets (on credit, with tax deductibility for interest so as to leave more cash flow to pay the bankers). This transfer of land, public utilities and interest as financial booty and tribute to creditor economies is what makes financial austerity like war in its effect.”

    “Socrates said that ignorance must be the root of all evil, because no one deliberately sets out to be bad. But the economic “medicine” of driving debtors into poverty and forcing the selloff of their public domain has become socially accepted wisdom taught in today’s business schools. One would think that after fifty years of austerity programs and privatization selloffs to pay bad debts, the world had learned enough about causes and consequences. The banking profession chooses deliberately to be ignorant. “Good accepted practice” is bolstered by Nobel Economics Prizes to provide a cloak of plausible deniability when markets “unexpectedly” are hollowed out and new investment slows as a result of financially bleeding economies, medieval-style, while wealth is siphoned up to the top of the economic pyramid.”

    Excerpts from:

    http://michael-hudson.com/2011/06/whither-greece/

  40. @ Anonymous

    Excellent!!! :-))

  41. Yes, Hudson always nails it, Earle. Saving Europe means saving the banksters at all costs, just as saving the U.S. in 2008 was. The U.S. economy is today wrecked thanks to the ongoing bailout to the TBTF U.S. and European banksters. Now Europe is bent on following the same course. Greece is today an occupied nation, their puppet politicians scrambling to give the banksters and their Euro proxies everything they want. Where will it end?
    ************************************************************************
    “We are indignant because others decide for us without us and mortgage our future; they impose loans that do not benefit the people but the banks and governments’ interests. We are indignant because they terrify us using the deterrent of bankruptcy. Not only do they try to scare us but they also try to set people against each other.

    – We do not want any more support loans.

    – We do not want public property to be sold off.

    – We do not want the medium-term program to pass.

    – We do not want the socialization of losses and privatization of gains.

    Unite your voice with ours.

    They are using our sacrifices and yours so that few acquire wealth.

    We are here today, you will be here tomorrow.

    We take to the streets everyday.

    Every Sunday hundreds of thousands of citizens gather at the squares of all Greece, Syntagma being the core.

    The medium-term austerity program will not pass.

    Journalists hush, we do not.

    We urge all the people of Europe and all trade unions to organize solidarity and mutual support actions on the day of the medium-term program vote.

    All together, so that we take our lives in our hands.”

    Excerpt from:

    http://www.occupiedlondon.org/blog/

  42. “In short, gradually the Greek escape route out of the euro to reconstruct its economy is being blocked. However, things cannot go on as they are, with drip-feed bailouts while the desperate problems of the Greek people grow worse.”

    “So it will not be long before the would-be collective Emperor in Brussels announces that Tebbit was of course right all those long years ago when he told Chancellor Clarke that no currency can have two, let alone a couple of dozen chancellors and there must be One Euro, One Chancellor, One Finance Ministry, One Tax Rate and One Europe or the whole European economy, including ours, will be brought down.”

    “Could that be a democratic state? Please do not ask awkward questions like that. Just do as you are told. If not, it will be all the worse for you. You must be ready to pay the price for peace (of a kind) and prosperity (of a sort).”

    Excerpts from:

    http://blogs.telegraph.co.uk/news/normantebbit/100093584/the-greek-crisis-brings-us-even-closer-to-the-long-planned-european-empire/

  43. “The entire debt economy was forced upon civilization from the top down. It was done in order to deliver humanity into the hands of history’s worst villains. Financialization has been the core of the neoliberal strategy. Inducing your intended victim’s indenture can be just as much an aggressive plot against him as crafting a gun with which to physically kill him. (Of course, they’ve made and used plenty of physical weapons as well.) This liquidation phase of neoliberalism is war by other means. It is vicious war by criminal elites upon the people. It is class war; it is civil war. The goal, intent, and procedure are veritably totalitarian.

    The whole bubble-crash-bailout-austerity-feudal enslavement process is a planned strategy for the complete looting of nations and the imposition of tyranny upon them.

    We the people must respond in kind:

    We owe nothing. On the contrary, only the existence of the society built by people who work ever enabled finance extractors and other leeches to exist at all. So they were already our creatures even before the crash they inflicted upon us and the bailouts they stole from us. The latter have only cinched it once and for all. Through the bailouts we the people own the banksters and their political lackeys. We own them, we own their banks, we own their corporations, we own every cent any of them stole on a personal level, we own it all. They owe us everything they have. They must repay it all upon demand.

    Then there’s their systematic assault upon our jobs, upon the real economy, upon the safety net we paid for, upon civil society itself. There’s their intentional crashing of the economy, and the systematic robbery of trillions for which they used this crash as the pretext. The restitution they owe for these crimes is beyond tally. Here again, they owe us everything they have, and vastly more. They must repay it all upon demand.

    The banksters and corporatists are chattel of we the people. They’ve stolen so much that if we put them all in chains tomorrow, it would take a million years for them to work off their debt to us. It’s they who owe such a monumental debt to the people of Greece, not the other way around. What’s true for Greece is true for all other countries – Latvia, Ireland, Portugal, Spain, Italy, and on up to the Britain and America. All nations.

    To recap:

    1. They were never anything but parasites upon us in the first place.

    2. They intentionally crashed the economy (by blowing up a bubble and then picking their moment to puncture it, using the allowed collapse of Lehman as the political pretext for the Bailout).

    3. Although they forced the Bailout upon us, nevertheless our money was stolen for it, so the Bailout means we the people are now the formal owners of the banks, in addition to how we already morally owned them.

    4. Meanwhile the banksters have engaged in a monumental criminal conspiracy against our economies and polities. The induced crash, stolen bailouts, and austerity assaults comprise the climactic phase of this long arc of crime.

    The debt they owe us is literally infinite. We owe them nothing.

    This is the simple, wholesome, true consciousness all of humanity must develop, if we intend to continue as human beings at all, instead of being terminally reduced to the most wretched servitude.

    All of humanity is standing tall in Syntagma Square.”

    FROM:

    http://attempter.wordpress.com/2011/06/24/a-brief-statement-of-the-facts/

  44. @ Anonymous :-)) / :-))

    This also is for the Greeks, and all oppressed,…

    “Homer speaks;

    So, so… ooh;
    what is it you want this time;
    it seems the weather always changes upon your beckoning scent;
    is it the melancholy rain or the subtle laughter of sunshine that brings you here this time;

    So, so… ooh;
    what is it you want my fair weather friend now that the wayward wind has brought your presence once again;
    is it sorrow I sense, or is it despair I feel, or the unbridling of innocent jubilation;
    always mixed messages of serendipity does your zephyr breath breathe upon this drowsing yet awakening open heart;

    So, so… ooh;
    what is it you want this time from my forlorn yet naked fervent soul at your bequest, never quenchless nor intent regarding the future as yesteryear’s past, for all but today is what matters;
    you say times have changed you, why your destinies child is but a morrows darling of mystique, vacillating… succumbing to acquiescence, your cunning makes a darling of no fool;

    So, so… ooh:
    whatever it takes, take from my open heart, always, forever always laid bare to your mysterious whims, my dearest whims do I pleasure you with;
    your tears are my rain;
    your sunshine my happiness;
    your sorrow my guilt;
    your jubilation my ever ending lust for your spontaneous love does never not my courtship covet shamelessly;

    So, so… ooh;
    what will it be this time, where my time is endless;
    your confused , yet your softly spoken words touch my senses as the summer breeze catches its breath off the golden ponds of tranquility pressing onward;
    this whirlwind hidden in the nights crescent thoughts of endless mediocrity sweet nothings;
    fixed are they in sightless dreams, only ruptured my your stillness to be;

    So, so… ooh;
    this sudden deafness brought about by (2008) having come and gone; leaving in its wake a tidal wave of drowning forbearance;
    whilst (2011) the presence of today is upon us, as years haunt the age, wassailing with undaunting exuberance, drunk with amnesia of past depressed aggression;
    this gentle, yet collectively naive future renaissance within, this glorious nascent holistic entourage that has shown so bright has somehow reached its zenith;
    so young to have such despair, whilst the shadows movements mark my grave;
    the morrows always look their brightest when ascending from the epicenter, but ignorance placated by complacency almost always illuminates a false image of cloaked transparency, painted mirror corners of golden opportunity;
    whilst, holding captive, the (Greece) serfdom at the end of a euro slug, mired in a chiaroscuro landscape, this imposing occidental moment of dire enlightenment having been raped in broad daylight;

    So so… ooh;
    it is you, Homer,… father of my history to make this fragmentary mosaic right;
    choose a time forward to mark your peoples’ destiny;
    our time of atrophy has slithered through obviated redress;
    stripped of all measurable discourse, weighted by death’s stench posited upon usury;
    indeed this pitiful dialogue will certainly incense your patronage of thy wayward brethren;
    this failed anachronism as a template for satan himself, to having believed prosperity’s destiny must be anchored to one, where one’s wholeness is the foundation of all sovereign nations;

    Hear me,… Homer;
    hasten your wisdom, as Homer has listened with a loving father’s ear”

  45. Emerging economies accrued their war chests by starving domestic consumption and refusing currency appreciation. As China, bails out the Euro it just continues the global imbalances that led us to 2008 in the first place.

  46. :-) @ Earle: cheers, and here’s a less flowery chaser:

    “The game is over. We lost. The corporate state will continue its inexorable advance until two-thirds of the nation and the planet is locked into a desperate, permanent underclass. Most of us will struggle to make a living while the Blankfeins and our political elites wallow in the decadence and greed of the Forbidden City and Versailles. These elites do not have a vision. They know only one word: more. They will continue to exploit the nation, the global economy and the ecosystem. And they will use their money to hide in gated compounds when it all implodes. Do not expect them to take care of us when it starts to unravel. We will have to take care of ourselves. We will have to rapidly create small, monastic communities where we can sustain and feed ourselves. It will be up to us to keep alive the intellectual, moral and cultural values the corporate state has attempted to snuff out. It is either that or become drones and serfs in a global corporate dystopia. It is not much of a choice. But at least we still have one.”

    excerpt from:

    http://www.adbusters.org/magazine/96/chris-hedges-revolution-in-america.html

  47. @ Anonymous

    “The great,… perhaps the greatest non-fictional writer of the millennium?”

    Indeed, the honorable Mr. Eric Blair – the quintessential Cassandra,… this “Nom`De`Plume” – George Orwell!

    Let me ask,… where are we on the timeline that is rapidly approaching dystopia – and where are we between the endpoints of a collision with the “New World Oder”, and its soon to be aborted,… symbiotic, comatose, and classless society of worldwide inhabitant’s? May I ask,… what have they done lately to prove their (Oligarchy) worthiness, juxtaposing “A Modest Proposal” of constitutional currency, that is only signatory upon their “Pickwickian (Sense) Paper’s”! Such Nonsense!

    What say you, that we have become,…or better said, sooner rather than later (crossing the threshold?) too become?
    excerpts:
    “a totalitarian race,
    ruled by a omnipotent dictator, called “Big Brother”,
    a seamless global society called “Oceania”,
    where the plebeian’s thoughts are controlled as well as their actions compressed,
    Government (United Nations/ Blue Helmet Brigade’s?) propaganda, 24/7, force fed by “Thought Police” who perpetually engage in endlessly-looped and updated propaganda,
    “Big Brother is Watching You”,… posters,
    improper surveillance,
    “DoubleSpeak”, the creme`de`la`creme behind the propaganda where the number two is actually “Zero””

    My suggestion is to pick up a copy and read, “George Orwell’s 1984″,… (JMHO)

    http://en.wikipedia.org/wiki/George_Orwell

  48. “We’re all familiar to the point of nausea with what’s happening in Greece. The government ran up tremendous debt to fund the extractions of the rich while not having to tax them. It allowed the entire taxation system to be flouted even as it engaged in this spending. Little of the short-term bounty went to the people. But the Greek government seeks to saddle them with the odious debt. Now that the banksters have crashed the European economy and revealed the insolvency of the German and French banks who engaged in this predatory lending, the goal of the “troika” (the ECB, EU, IMF) is to use these debts as the pretext for a disaster capitalist looting binge. The plan is nothing less than to steal all real assets in Greece through privatization while dismantling all remaining public interest spending, and to extend the robbery by raising taxes (and presumably collecting them this time) on the non-rich of Greece.”

    FROM:

    http://attempter.wordpress.com/2011/06/28/school-of-athens-the-greek-general-strike-against-the-austerity-assault/

  49. Greece has a modest real deficit, of the order of a few billion, and a huge debt of over €300 bn. Greece’s deficit is its own problem and painful to solve. However the crisis is a speculative attack on the rollover of Greek debt. The market is charging higher and higher interest rates to renew bonds, currently spiralling above 28%, and betting the rich EU states will bail out either Greece (so it defaults later) or the banks (when it defaults).

    If Greece didn’t exist, the next weakest country such as Portugal would be the victim of the attack. The incomplete Eurozone integration makes this attack possible. The Eurozone needs to move quickly to stronger integration, or fall apart as its detractors would have it.

    My (amateur, I’m not an economist) analysis here: http://pavlos.geekhost.org/2011/06/28/greek-debt-crisis-update/