Pity the people of Greece.
Those folks have been screwed over by everybody. And tomorrow, no matter how they vote in this supposedly critical referendum, they’re gonna get screwed again.
And yet in most of the articles on this debacle that I read, I run into the conventional framing of this story, which still dominates coverage of Greece despite the fact that it’s total bullshit. I’m referring to the wrong-headed notion that the people of Greece somehow brought this on themselves, and that if they had only been more disciplined and responsible, they wouldn’t be in such a desperate fix.
So I wanted to take this opportunity, on the eve of a vote that nobody quite understands, to point out how guiltless the people of Greece are.
The essence of the story of this debt crisis, in fact, is that the Greek people have been fucked over by pretty much everybody.
They were enticed into the eurozone by what turned out to be fantasy promises by an institution whose architecture was pretty much designed to fail. European bureaucrats, Greek politicians, and French and German bankers were well aware that Greece was a risky proposition, but they were willing to look the other way because there was money to be made:
In the run up to Greece’s joining the Euro, everyone who wanted to know knew that Greece’s qualifications to join the Eurozone were, shall we say, ambitious. Mainstream establishment banks “helped” Greece and other Southern European countries with accounting fudges that, while perhaps obscure, were not secret even at the time…
Greek governments — not the current, much maligned Syriza, but decades of its predecessors — treated the state like a teat from which clients and friends of electoral victors might suck. The Greek state has been a shady, opportunistic borrower, no doubt, the kind of character no one would lend money to with any great expectation of seeing it back.
And yet, that’s precisely what bankers in the relatively not-fucked-up Eurozone countries did! These people were not naïfs. They knew the Greek state was sketchy. But precisely because it was sketchy, prior to the financial crisis its debt paid slightly higher interest rates than that of safer Eurozone sovereigns…The European financial system was architected to make lending to Greece — and Spain and Portugal and Italy — a money machine for bankers with little career risk over a medium term.
In other words, Greece’s accession to the Eurozone was a huge money-making opportunity for bankers in northern Europe. These lenders knew that Greece probably wasn’t good for the money in the long term, but they recklessly made the loans anyway, figuring somebody else would deal with the mess. (Note that the people of Greece didn’t ask for these loans, and the oligarchical nature of the Greek state means most of the benefit of these loans flowed to the wealthy elite capitalist class.)
If I went to the bank and asked for a $750 000 mortgage, and they looked at my financial situation, I’d get laughed out of there. There’s no way they’d make an irresponsible loan like that – because I’d probably wind up having to default, and they’d be on the hook for the losses. But in the case of Greece, the bankers felt free to make loans they knew were likely bad, because surely somebody would wind up paying for them.
And the bankers were right! When the trade imbalances that were baked into the Euro-cake eventually caught up to everybody and Greek debt began to tank, the people of Greece got screwed over by the bankers and the Eurocrats and their own politicians a second time. The first round of bailouts to the Greek state were essentially just an exercise in moving all that bad Greek debt from private ledgers to public ones:
In 2010, the EU, ECB, and IMF laundered a bailout of mostly French and German banks through the Greek fisc. Cash flowed into Greece only so it could flow out to rickety banks. Now, suddenly, the banks were absolved. There were very few bad loans left on the books of European lenders, everyone was clean, no bad actors at all. Except one. There were the institutions, the “troika”, clearly the good guys, so “helpful” with their generous offer of funds. And then there was Greece. What had been a mudwrestling match, everybody dirty, was transformed into mass of powdered wigs accusing a single filthy penitent (or, when the people with their savings in just-rescued banks decide to be generous, a petulant misbehaving child).
Basically, the bailout involved funnelling money through the Greek government to the German and French banks, leaving the Greek state more indebted than ever, but this time to the EU, European Central Bank (EBC) and IMF. With this unholy troika now holding the whip and calling all the shots, a hellish five years followed.
In the years since that first bailout, the Greek economy has collapsed spectacularly:
Unemployment is through the roof. There have been periodic shortages of essential medicines. Over two hundred thousand people, mostly young Greeks, have left the country in the last five years alone – this out of a population of only around ten million. Health care spending has been cut so radically that life expectancy has tumbled by three years over the past half decade.
Austerity is literally killing the Greek people – all to pay off bankers who made irresponsible loans from which they saw little if any benefit. Austerity is drowning the Greek economy – which is making it harder every year for them to make their debt payments. To call the situation Sisyphean is to understate the case.
The people of Greece have had literally insane economic policies pushed onto them by institutions like the IMF, which now acknowledges that the punitive austerity it’s marketed as “structural adjustment” for all these decades is counter-productive but which continues to push those policies.
And when carpet-bombing the Greek economy by drastically cutting spending to everything somehow doesn’t magically result in economic growth, but instead creates the largest non-wartime economic contraction in economic history, the bankers who run the EU double down and insist that there must be more austerity – and this time, with the cupboard almost bare, they have nowhere to turn but retirees.
The power of the media is deployed to demonize these pensioners, who, much like the imaginary welfare queens of Ronald Reagan’s America, are apparently living large and flush with cash, while industrious German taxpayers subsidize their largesse through never-ending bailouts of Greece’s irresponsible government.
That this is a total fantasy – that the people of Greece did nothing to deserve the misery being visited upon them – is a point that doesn’t seem to sink in with any of the Eurocrats, no matter how often or how loudly it’s repeated.
None of this is to let the Greek government off the hook, however. Successive prime ministers, both elected and appointed by the so-called Troika, caved into preposterously punitive demands from Greece’s creditors. Their spinelessness allowed the crisis to fester for five long years, unresolved and unresolvable, at least in its current state.
Then Syriza rocketed to power earlier this year promising two mutually incompatible goals – to end austerity and to keep Greece in the eurozone. That this was a fantasy was obvious to many at the time, and should have become quickly apparent to the government after initial negotiations with the troika. Setting aside the injustice of the situation, it became quite clear that the nations of Europe, and especially Germany, were not going to be willing to sign off on a relaxation of austerity under any circumstances.
Yves Smith over at Naked Capitalism has been particularly critical of the Syriza government’s credulity and/or incompetence on this issue. In fact, she’s been harshly critical of Syriza’s whole negotiating strategy for the past several months, despite being openly sympathetic towards their goals. While at times I think she’s a bit hard on them – they are figuring this out as they go, after all – broadly speaking, her critique is on point:
Let us consider the standards by which Tsipras’ and Syriza’s conduct should be judged. Syriza knew that Merkel rejected a request by the the Samaras government to have more time to implement politically toxic (and economically damaging) pension and labor market “reforms”. Merkel saw them as unfinished business of the so-called second bailout of 2012. Syriza came into power as a result of this outtrade, promising to negotiate better treatment after the old government had failed while staying in the Eurozone.
The creditors are known thugs. They have engaged in harsh austerity, putting it in one of the very worst downturn in an economy not in a state of war , used Greece to launder bailouts to French and German banks, not given Greece credit for having implemented numerous “reforms” and broke the last government…
What the did Greek government know as of this weekend that it did not know earlier to justify delaying a referendum so long that it it will probably be moot? As Costas Lapavitsas of Syriza’s central committee pointed out in early March, it was evident that the Troika and Eurogroup were not willing to negotiate a new deal, in both senses of the word, with Greece. Tsipras’ strategy had failed and it was time to change course.
However, Tspiras & Co. kept on trying to get blood from the stone heart of the German state, and kept on failing. Now, literally after time has run out, they’ve decided to call a referendum on a question that nobody quite understands, for reasons nobody can quite fathom:
Given Syriza’s now clearly contradictory campaign promises, the party could have done extensive, rigorous polling or held a referendum to determine what to do. Tsipras was clearly aware of that as an option; he kept bringing it up in talks with creditors, apparently thinking it was a threat…
Similarly, Tsipras should have held a referendum long before he stripped the Greek government of funds to keep paying the creditors, since a default is better managed with some cash on hand.
So the only conceivable excuse for waiting this long is for Tsipras to attempt to save himself. If he were to reject the bailout, the decision is unquestionably his and that of his allies. That it precisely the sort of decision that government leaders are expected to make. Or he could just as well accept the bailout, recognizing that as bad as things are, that the country would be plunged into an even deeper economic sinkhole, putting the survival of even more citizens at risk. It would take forming a new coalition with To Potami and New Democracy, and that would mean that his and Syriza’s position would become far more tenuous and he would be fiercely denounced by many if mot most Syriza MPs.
Thus the referendum ruse looks to be about trying to spare Tsipras and Syriza the worst consequences of his having underestimated the creditors and not preparing for worst-case scenarios, which is another responsibility of leadership that he and his party have neglected.
And the referendum itself is surrounded by all kinds of heated rhetoric, making it seem an epochally important decision. But what exactly is the question on the ballot?
— The Greek Analyst (@GreekAnalyst) June 29, 2015
On June 25, the Greek government was close to agreeing with the troika on a plan for a bailout extension, coupled with reforms to Greece’s pension plan. At the last minute, Tspiras backed out, saying the Greek people should have a say. Since then, on July 1, Greece went into default to the IMF, a default brought on by the lack of a bailout back in late June. In other words, it’s more than a little late for this referendum.
And the outcome is essentially meaningless. It’s neither a vote on the Euro, nor on austerity – it’s a vote on one particular (and possibly obsolete) plan for dealing with one immediately pressing aspect of a sprawling crisis.
At this point, it’s hard not to empathize with the totally fucked people of Greece, who are voting tomorrow on a referendum that nobody really understand, who have been shuffling from ATM to ATM all week hoping to score sixty bucks to get them and their families through another day, who have been so repeatedly pounded with punishment they didn’t deserve and who are facing a terrifying future.
The leaders of Europe’s vampiric creditor states insist that it’s a referendum on continued Greek membership in the Euro, as a way to incite votes for more austerity. It also gives them a handy way to blame Greeks for whatever financial fallout there is from a no vote.
The leaders of Greece claim that it’s a referendum on continued austerity which, they say, is humiliating an entire people. That also is not true. They’re just hoping for an ex post facto justification for their miserable negotiation performance.
In other words, everybody is using the Greek people. No matter who wins they’re getting screwed.
So let’s all push back against statist narratives and projects, and stand in solidarity with the Greek people, who just keep getting fucked over.