Thursday, June 30, 2011

Defaulting to the Plutocrats

Things are not well in the birthplace of democracy. To be honest, Greece has been on shaky ground for a while; it's only recently, however, that threats of Greece defaulting on its debt, and potentially throwing the "recovery" - such as it is - into jeopardy, have been making headlines. Yesterday, the Hellenic Parliament passed its second austerity vote, necessary to secure a €28 billion bailout from the European Union, despite fierce opposition from the thousands of people on the streets of Athens.

This is, predictably enough, being framed in the media as Greeks being unwilling to lose their state-funded entitlements and wanting to continue to live in the lap of luxury while German and French taxpayers foot the bill. Like many frames the media hangs on the wall, it's a bit crooked. Remember that this isn't the first round of austerity measures that the Greek government has just barely managed to squeeze by - and it's the Greeks that are going to be squeezed as a result.

I picked up this 100-drachma note in 2000, only a couple of years before the euro came into force and all the old currencies of Europe were swept away. Back then, with sovereign control of its own currency, Greece wouldn't be in nearly this bad of a situation. Such is progress!

Nor is it just that. Part of the deal with the bailout is that the Greek government is selling many of its assets - such as its lottery, its 55% stake in Athens International Airport, some of its real estate, and so on. Now, one might think that this perfectly normal; particularly Athens' interest to lessen its stake in the national railway system, which as of May lost €1 billion a year and had a debt of €10 billion. But look it at it realistically - the government isn't going to want to sell something that isn't profitable, or which they think can't be made profitable before the sale. If that was the case, who'd want to buy it?

What I suspect here, what I see here, is another triumph of neoliberal ideology - the same ideology that gave us the wonderful philosophy "privatize the profits, socialize the losses" - such as when a bank makes cash hand over fist it's laissez les bon temps roulez for the bosses and investors, but when it loses a wad on a stupid risk, suddenly it's the taxpayers who have to have to shovel the green back into the money bins.

It's something that's never actually said outright, but is hinted at this way and that by the actions of governments, usually conservative - "the government has no business making money." Witness the 1999 Ontario provincial election, where the government of Mike Harris sold Highway 407 for $4.1 billion, under a ninety-nine year lease, to a group of private investors less than two years after the highway had opened. It could have been a consistent money source for the government, but... there was an opportunity there to balance the budget by getting rid of state assets at fire-sale prices! Other examples aren't hard to find; look at the sale of Chicago's parking meters, for instance, or the noises Rob Ford was making about selling the city's stake in Toronto Hydro during the election.

If Greece was really expected to pay down its debt, it wouldn't be selling - or, perhaps more appropriately, forced to be selling - profitable assets. Without those, the government will have less money to work with in general, and thus be less able to pay back the debt. But this isn't about debt, I don't believe. Greece's debt as a percentage of GDP was 142.8% in 2010 - put bluntly, even if Greece put every single euro it had into paying down its debt this year, it would not be able to. Greece's debt problems have got so bad since joining the Eurozone that I don't think a default of some kind is avoidable anymore.

I doubt I'm the only one who suspects that. Thus, then, I can't see what's going in Greece as an honest attempt to stabilize the country - rather, I see it as an opportunity being taken advantage of by the unfettered psychopaths who have come to dominate the global economy, who care about little except the acquisition of greater and greater wealth. After all, Greece wants money, don't it? So it's a perfect time to pick up great formerly-government assets at bargain basement prices, and tap them ruthlessly for profit! Remember the railway? Don't forget how Reuters reported that "the government will try to sweeten the sale by closing loss-making routes and making other cost cuts."

Who does that sound like it's serving? The Greek people, those who the Greek government exists to serve - or the capitalists?


  1. Have you read Naomi Klein's The Shock Doctrine? Because what's going on in Greece right now is a classic example of the thesis Klein puts forward: crisis capitalism justified to shove more money and assets from the public into the private sector.

  2. The usual blahblah about "plutocracy". Greece was a 3rd World country until a dozen years ago. Their economy (still today) is the size of a minor region of Italy or France.
    Their government "cheated" about their country's compliance to the Euro required standards to have the opportunity to get into the Euro-zone and so they lived on borrowed money for all these recent years. But it comes a day when borrowed money has to be repaid. This is the day and they "suddenly discovered" to be poor.
    So, as it often happens to all those who have debts, they put all the blame on their creditors (namely Germany).