As Greece defaults and faces a referendum this Sunday on a new bailout package, watch Noam Chomsky on Europe’s “savage response” to the pushback against austerity demands. He spoke to Democracy Now! in March.
AMY GOODMAN: I wanted to ask you about Syriza in Greece, a movement that started as a grassroots movement. Now they have taken power, Prime Minister Alexis Tsipras. And then you have Spain right now. We recently spoke to Pablo Iglesias, the secretary general of the group called Podemos, that was founded, what—an anti-austerity party that has rapidly gained popularity. A month after establishing itself last year, they won five seats in the European Parliament, and some polls show they could take the next election, which would mean that Pablo Iglesias, the 36-year-old political science professor and longtime activist, could possibly become the prime minister of Europe’s fifth-largest economy. He came here to New York for just about 72 hours, and I asked him to talk about what austerity measures have meant in Spain.
PABLO IGLESIAS: Austerity means that people is expulsed of their homes. Austerity means that the social services don’t work anymore. Austerity means that public schools have not the elements, the means to develop their activity. Austerity means that the countries have not sovereignty anymore, and we became a colony of the financial powers and a colony of Germany. Austerity probably means the end of democracy. I think if we don’t have democratic control of economy, we don’t have democracy. It’s impossible to separate economy and democracy, in my opinion.
AMY GOODMAN: That was Pablo Iglesias, the head of this new anti-austerity group in Spain called Podemos, which means in English “We can”. The significance of these movements?
NOAM CHOMSKY: It’s very significant. But notice the reaction. The reaction to Syriza was extremely savage. They made a little bit of progress in their negotiations, but not much. The Germans came down very hard on them.
AMY GOODMAN: You mean in dealing with the debt.
NOAM CHOMSKY: In the dealing with them, and sort of forced them to back off from almost all their proposals. What’s going on with the austerity is really class war. As an economic program, austerity, under recession, makes no sense. It just makes the situation worse. So the Greek debt, relative to GDP, has actually gone up during the period of—which is—well, the policies that are supposed to overcome the debt. In the case of Spain, the debt was not a public debt; it was private debt. It was the actions of the banks. And that means also the German banks. Remember, when a bank makes a dangerous, a risky borrowing, somebody is making a risky lending. And the policies that are designed by the troika, you know, are basically paying off the banks, the perpetrators, much like here. The population is suffering. But one of the things that’s happening is that the—you know, the social democratic policies, so-called welfare state, is being eroded. That’s class war. It’s not an economic policy that makes any sense as to end a serious recession. And there is a reaction to it—Greece, Spain and some in Ireland, growing elsewhere, France. But it’s a very dangerous situation, could lead to a right-wing response, very right-wing. The alternative to Syriza might be Golden Dawn, neo-Nazi party.
Tabacco: The PROBLEM is NOW that the Greek Prime Minister & Government have apparently taken the MATTER out of the hands of the People –
$WEETENING THE POT!
I guess if American Blacks are willing to accept the removal of the Confederate Flag as COMPENSATION for the Deaths of 9 Black Churchgoers, then $weetening the Deal for Greek Aristocrat$ is enough to BYPA$$ the Voters – even in Greece! The Greek President send$ his Apologie$ to the Greek Voters – but BUSINE$$ IS BUSINE$$!
ECB to raise emergency funding to Greek banks
The European Central Bank (ECB) has hiked its emergency lending to Greek banks, President Mario Draghi revealed on Thursday.
He confirmed that the bank would up its funding to lenders in Greece by 900 million Euros ($978 million) over one week, after opting to keep interest rates unchanged at record lows.
It comes after the Greek parliament voted in favor of an austerity reform for aid package in the early hours of Thursday morning,
The euro zone’s central bank, still aiming to counter deflation, maintained its asset purchase program at 60 billion Euros-a-month ($66 billion). The focus will now be firmly fixed on the ECB’s emergency lending to Greek banks, with reports now suggesting the funding will not be increased before Friday.
Draghi will host the usual press conference at the ECB headquarters in Frankfurt at 1:30 p.m London time, which follows the Governing Council’s monthly announcement on interest rates.
“Greece seems bound to dominate Draghi’s press conference when the latest ECB monetary policy meeting concludes this afternoon,” head of economic research at Daiwa Capital Markets Europe, Chris Scicluna said.
The ECB has helped out the Greek banking industry through Emergency Liquidity Assistance (ELA): a series of loans given to Greek lenders to help with their solvency. The ECB dishes out these loans, but they actually come from the central banks of each individual euro zone country.
The ECB has been maintaining its ELA cap to Greece at 89 billion Euros. However, last week it decided to increase the amount of collateral that Greece needed for these loans — a move seen by some as deeply political at a time when Greece was still deciding on whether to accept creditors’ tough austerity terms.
Draghi will no doubt have to justify this move in front of the cameras, as well address any planned increases in cash to Greece, after the debt-stricken country voted in the new bailout terms.
The euro slipped to a six-week low against the dollar on Thursday ahead of the ECB’s decision after the Greek parliament approved its bailout plan, falling 0.5 percent to trade around $1.088. The dollar rallied after hawkish comments from the Federal Reserve on Wednesday put a September interest-rate rise back on the table.
European equities also traded sharply higher after Prime Minister Alexis Tsipras’ reform plan was pushed through.
In the early hours of Thursday morning, the austerity bill that will pave the way for financial aid worth 86 billion Euros ($94 billion) was approved with 229 votes in the 300-seat chamber. There were 64 votes against it and six abstentions.
“Last night’s parliamentary vote might well persuade the Governing Council to increase its ELA to the Greek banks”, Scicluna said.
“While Draghi will take some satisfaction from the measured response of euro area financial markets to the Greek crisis and recent economic data and surveys, which remain consistent with steady economic recovery and improved credit conditions in most member states, we would expect him to maintain a dovish tone, and emphasize the importance that the ECB complete its asset purchase program in full, at least through to September 2016″, he added.
– CNBC’s Matt Clinch contributed to this report
Greek Prime Minister Alexis Tsipras has submitted a bailout proposal, which includes harsh austerity measures, just days after the Greek people overwhelmingly rejected such measures in a historic referendum. The proposal submitted to Greece’s creditors reportedly includes tax increases, pension cuts, a reduction in military spending, and the privatization of public assets. It comes after Tsipras himself had urged the Greek people to reject creditors’ demands for further austerity. In exchange for the reforms, Greece would receive a three-year, $59 billion bailout package. Germany, meanwhile, appears to be yielding to demands to provide at least some measure of debt relief to Greece. European officials have expressed approval for the Greek offer ahead of a key meeting of European finance ministers on Saturday. The Greek Parliament is expected to vote on the bailout proposal today, just five days after an overwhelming 61 percent of Greek voters rejected similar terms. We speak to Mark Weisbrot, co-director of the Center for Economic and Policy Research. He is the author of forthcoming book, “Failed: What the Experts Got Wrong About the Global Economy.”
This is a rush transcript. Copy may not be in its final form.
JUAN GONZÁLEZ: Greek Prime Minister Alexis Tsipras has submitted a bailout proposal, which includes harsh austerity measures, just days after the Greek people overwhelmingly rejected such measures in an historic referendum. The proposal submitted to Greece’s creditors reportedly includes tax increases, pension cuts, a reduction in military spending, and the privatization of public assets. It comes after Tsipras himself had urged the Greek people to reject creditors’ demands for further austerity. In exchange for the reforms, Greece would receive a three-year, $59 billion bailout package.
Germany, meanwhile, appears to be yielding to demands to provide at least some measure of debt relief to Greece. European officials have expressed approval for the Greek offer ahead of a key meeting of European finance ministers on Saturday. The Greek Parliament is expected to vote on the bailout proposal today, just five days after an overwhelming 61 percent of Greek voters rejected similar terms.
AMY GOODMAN: In Greece, Dimos Koubouris of the Private Sector Pensioners Federation criticized the proposal for new austerity measures.
DIMOS KOUBOURIS: [translated] We demand that the government open the banks now and give us our pensions. This is money we have already paid in. It’s a lifetime’s work, and we want to be able to buy medicine and food for our families, and get our lives back.
AMY GOODMAN: Joining us to discuss the outlook for Greece and the new proposal under consideration is economist Mark Weisbrot, co-director of the Center for Economic and Policy Research. He’s the author of the forthcoming book, Failed: What the Experts Got Wrong About the Global Economy.
Mark Weisbrot, are you surprised by this deal that is being crafted right now? What exactly has the Greek prime minister put forward?
MARK WEISBROT: Well, the proposal is similar to what they had rejected previously. And, you know, you have to take into account that this is kind of a hostage situation. You know, they’ve had many—a number of deadlines before and threats and what the prime minister called blackmail, but a week before last Sunday’s referendum, they—you know, they really started bombing. That is, it wasn’t threats anymore. I think that’s why the former finance minister, Yanis Varoufakis, called it terrorism.
I mean, it is—they closed down the banking system, as you know, and with all the consequences that that entails. And that’s very important because a lot of people don’t know that. You know, they think the government closed down the banking system, but it really was the European Central Bank doing something that probably no central bank has ever done before, which is to create a financial crisis in a country that’s under their jurisdiction. So I think that was the pressure.
Now, we don’t really know what the deal looks like yet, because we don’t have the debt relief that the government is expecting. I would expect they will get debt relief. And if they don’t, I don’t see how it would pass the Parliament.
JUAN GONZÁLEZ: Now, Mark Weisbrot, a lot of the accounts today in the commercial press talk about Greece capitulating and basically giving in. But this issue of debt relief, could you clarify what that means? Because there is basically—as Greece has been saying, it’s not sustainable for the government to be able to put a country to pay back this debt, so they want the creditors to accept a certain loss in their principal on this debt to make it possible for Greece to repay at least some of it.
MARK WEISBROT: Yes. Well, it wouldn’t necessarily be a loss in principal, which is usually called a haircut. It could be a restructuring, so that, you know, interest payments are postponed into the future.
And I think the most important thing is whether the economy is allowed to recover soon, because they’ve had six years of depression, which has really been deepened and prolonged by the European Union—or the European authorities’ policies, and especially the Central Bank, which, as I said, has now really closed down the banking system. So, they need to be able to recover. And that’s not clear from this agreement yet whether they will be able to do that.
I mean, this agreement—or the proposal from the Greek government, which is matching the proposal from the European authorities on this issue, calls for a primary budget surplus of 1 percent this year, then 2 percent, 3 and three-and-a-half. And it’s hard—unless they get serious debt relief, it’s hard to see how they could recover with that kind of fiscal tightening, and certainly not a recovery that would bring down the massive unemployment in the near future. So this really isn’t over yet. I don’t think it’s over at all. This is—
AMY GOODMAN: The Greek Prime Minister, Alexis Tsipras, addressed the European Parliament Wednesday, saying Greeks are tired of being a laboratory for testing austerity.
PRIME MINISTER ALEXIS TSIPRAS: [translated] We want a sustainable program, because we want to be in a position to repay the loans that we’ve accepted. And when we ask to reduce the debt, we are asking for that because we want to be able to pay this back. We don’t want to be forced time and time again to accept new loans to pay off the old ones.
Tabacco: Guess what, folks, RESIDUALS is how Corporations get Rich! Brand Loyalty, Desperation, Habit all go into creating ‘Too Big To Fails’ and World BILLIONAIRES!
The Greeks are being painted into a corner so that RESIDUAL LOANS are UNAVOIDABLE! That’s why the European Banks/American Bank/World Bank/Whatever Bank require Borrowers to do exactly the OPPOSITE of what the USA does in Bad Economic Times! Instead of getting out of Trouble with AUSTERITY, Greece and the Like get DEEPER & DEEPER & DEEPER & DEEPER IN DEBT!
AMY GOODMAN: That’s the Greek prime minister. Mark Weisbrot, does the deal that he is putting forward now perhaps explain why Yanis Varoufakis—he wanted him out, and Varoufakis complied, the finance minister who just quit?
MARK WEISBROT: Well, I don’t know why—I mean, I don’t know why the finance minister quit. Obviously, you know, the European—the other finance ministers and European authorities wanted him out, and they said it was his negotiating style and things like that. I don’t know that that makes much difference.
You know, the main thing, again, is whether they can get a deal that allows for an economic recovery. You know, this is the ironic thing about it, is that the European authorities have made this mess. The reason they need all this debt relief is because the economy has shrunk by more than 25 percent and greatly reduced their ability to pay. And now, the IMF is already saying—or the IMF has already acknowledged that the debt is unsustainable.
And some of that is U.S. influence. You know, you have a difference between the U.S. and the European Union, or the European authorities, I should say, because the U.S. is only concerned with keeping Greece in the euro, whereas the others have this project. They want to transform Europe into a place that has a smaller social safety net, a reduced state, cuts in pensions and healthcare. This isn’t just Greece. Greece is the obstacle in their way of transforming Europe. So they have these whole set of other interests that they’re fighting for, and that’s why they’re being so brutal and stubborn about this.
So, again, you know, we don’t really know what’s going to happen yet. We don’t know whether they’re going to grant sufficient debt relief to allow for an economic recovery. So I think this fight is going to go on for a while.
JUAN GONZÁLEZ: Mark, I wanted to ask you about the parallels between what’s happening in Greece and in potentially America’s own Greece—the debt crisis in Puerto Rico and the role of hedge funds. I have a column in today’s Daily News talking about a big fundraiser that’s being held by hedge fund billionaires this weekend at an East Hampton mansion for Governor Cuomo. And many of the—there’s a new report that’s being released today by the group Hedge Clippers, that really lays out what are the role of hedge funds in the Puerto Rico debt crisis.
And that report names a bunch of hedge funds: Andrew Feldstein’s BlueMountain Capital, Paul Tudor Jones’s Stone Line Capital, the billionaire John Paulson and others, all of whom are huge donors to Governor Cuomo, who are also heavily invested in Puerto Rico debt. Fortune magazine estimates up to 50 percent of the $73 billion in Puerto Rico debt is being held by these hedge funds that bought up the debt at discount prices, are hoping to press austerity in Puerto Rico, force the raising of taxes, so then they can make a killing. Puerto Rico’s government, for instance, just on July 1st, raised the sales tax from 7 percent to 11-and-a-half percent last week on the Puerto Rican people. But many of these hedge funds also had been invested in Argentina, had been invested in Greece. The role of hedge funds in some of these financial debt crises?
MARK WEISBROT: Well, there’s no question they played a huge role in Argentina. I mean, it was them who got the court decision that actually prevented Argentina from paying the interest payments on its debt to all the creditors, the over 90 percent of creditors, who accepted a restructuring. So I think the main role, the main negative role, that the hedge funds—the vulture funds, as they’re accurately called—the main role they play is to make it more difficult to have a restructuring when there is one. So that’s a very serious problem, and it’s caused enormous problems for Argentina.
In Greece right now, of course, the main problem is still the European authorities. They’re the ones that are—you know, they’re not really fighting over the money in Greece. It’s really about forcing Greece to make these changes. And also they’re worried about what’s going to happen in the rest of Europe, because, for instance, if Greece were to win this battle, you would be much more likely to see Podemos, a left party that didn’t even exist about a year and a half ago and is now leading in the polls—
AMY GOODMAN: In Spain.
MARK WEISBROT: —they could win the election in November. So, that’s another thing they’re looking at. This really is a political project. And it’s really driven more by this politics than the actual payments on the debt, which they could have settled in Greece a long time ago for a lot more—a lot less than what they’re going to lose going forward.
AMY GOODMAN: Well, we’ll leave it there on Greece. And, Juan, on Puerto Rico, the piece that you did, “Hedge Fund Moguls Who Played Role in Puerto Rico’s Money Woes Will Be Greeted by Protesters at Swanky Fundraiser for Governor Cuomo”, this is an East Hampton $5,000-a-plate fundraiser?
JUAN GONZÁLEZ: Yeah, on Saturday night, yes.
AMY GOODMAN: And there will be protests outside?
JUAN GONZÁLEZ: There’s supposed to be protests outside, yes.
AMY GOODMAN: Well, we’ll link to that piece, as well. And, Mark Weisbrot, thanks for joining us, economist and co-director of the Center for Economic and Policy Research, author of the forthcoming book, Failed: What the Experts Got Wrong About the Global Economy.
Recent Relevant Post:
STRUCTURAL ADJUSTMENT PROGRAMS (SAPs): “consist of loans provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises”. Greeks Vote 61% To 39% To Reject Creditors’ Austerity Demands – A EUROPE OF EQUALS! The Downside Is Both Orgs Are Controlled By USA-EUROPE, Which Require Loan Recipients To Do Exact Opposite Of What We Americans Do In Economically Troubled Times*. Greece Facing Loan Default & Austerity Measures: Budget Cuts & Tax Hikes! A Troubled America Pursues Opposite Strategy: Increased Spending, Lower Interest Rates, Tax Cuts & Money Pumped Into Economy! If We Do The Opposite To Succeed, Why Do We Force Others To Pursue Strategy To Fail? Then We Call Ourselves Their Benefactors! Mason Verger In Film ‘Hannibal’, “When The Fox Hears The Rabbit Scream, He Comes A-Running…But Not To Help”.
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Tabacco is not a blogger, who thinks; I am a Thinker, who blogs. Speaking Truth to Power!
In 1981′s ‘Body Heat’, Kathleen Turner said, “Knowledge is power”.
T.A.B.A.C.C.O. (Truth About Business And Congressional Crimes Organization) – Think Tank For Other 95% Of World: WTP = We The People