Nobody puts troika in the corner
by digby
I wrote a little bit about austerity this morning for Salon:
The nation of Greece may be the cradle of democracy but these days it’s getting a harsh lesson in its limitations. Right now, streets are filled with protesters but there are no lines at ATMs because the banks are all closed. Everyone is waiting to see what’s going to happen when the people vote this week-end on a referendum that will decide, essentially, if the country is going to remain in the Euro and accept the ongoing edicts of “the troika” or if it’s going to “Grexit. (The troika is the European Commission, the European Central Bank, and the International Monetary Fund which has been lending the the country money for the past five years on the condition that it engage in the metaphorical human sacrifice of its citizens.)
As you undoubtedly know by now, aside from being chosen to suffer for the sins of all the high flyers who caused the financial crisis, the Greeks also had the temerity to elect a leftist government with the express purpose of ending the austerity plan that has ruined their economy and thrown them into even deeper debt than they were in before. That, as Poppy Bush used to say, will not stand. Nobody puts Troika in the corner. The Greeks must pay and pay, not only for their economic folly but also for thinking they could get out of their proper punishment through democratic politics. Sure, those elections are nice and all but lets not forget who’s really in charge.
Paul Krugman’s column on Monday explained that all the hand-wringing over Greece’s “irresponsibility” is balderdash:
[Y]ou need to realize that most — not all, but most — of what you’ve heard about Greek profligacy and irresponsibility is false. Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes. Government employment has fallen more than 25 percent, and pensions (which were indeed much too generous) have been cut sharply. If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus.So why didn’t this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it.
As Krugman has also been observing ever since the financial crisis hit, austerity for these people isn’t really about finance at all. It’s about morality, specifically the alleged “moral hazard” involved in allowing average people to “get away with” running up debt it cannot pay back. Interestingly, this moral hazard never applies to the wealthy businessmen who often make bets that don’t pay off. Bankruptcy, fresh starts, debt forgiveness are things best reserved for people who know how to use them.
These big money boyz just can’t quit austerity. makes ’em feel good about themselves. And it’s also an excellent con:
nd as Dave Johnson pointed out in this piece at Campaign for America’s Future, the Greek crisis is right out of the book “Confessions of an Economic Hitman”:
We are an elite group of men and women who utilize international financial organizations to foment conditions that make other nations subservient to the corporatocracy running our biggest corporations, our government, and our banks. Like our counterparts in the Mafia, EHMs provide favors. These take the form of loans to develop infrastructure – electric generating plants, highways, ports, airports, or industrial parks.… Despite the fact that the money is returned almost immediately to corporations that are members of the corporatocracy (the creditor), the recipient country is required to pay it all back, principal plus interest. If an EHM is completely successful, the loans are so large that the debtor is forced to default on its payments after a few years. When this happens, then like the Mafia we demand our pound of flesh.
We’ll see this week-end if the people of Greece are going to submit to any more of this. I hope they don’t. It’s now just a ritual torture for the entertainment of spectators.
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