Bill Black: Greece Proves Again Why Democracy is the Criminal Classes’ Great Fear

[marmar]

Greece Proves Again Why Democracy is the Criminal Classes’ Great Fear

By William K. Black
Quito: July 5, 2015


The people of Greece have just shown great courage, and even greater common sense, in voting “No” in overwhelming numbers against the troika’s war on the Greek people and labor throughout the EU. In recent days we have seen the spectacle of the major media shamelessly lying globally about the referendum and the Greek government – cheered on by the troika. The troika openly sought to depose a second Greek head of state for the high crime of favoring a democratic vote on the troika’s economic malpractice and effort to extort the Greek people by threatening to destroy their economy. The tone and content of the propaganda were extraordinary – and reversed reality.

If you read the media very closely, you can see how hard it would have been to craft this propaganda if it was supposed to have any basis in reality. First, the IMF now admits that its long suppressed studies show that it has known for years that the Greek debt is unsustainable. That confirmed the position of the Greek government (and what every financial specialist has known since 2009). The logical answer in the commercial sphere is (routinely) to write-down part of the debt in what is known as a troubled debt restructuring (TDR). TDRs are treated as having no moral content – they’re just smart business. In Greece’s case, however, the media is suffused with fake morality and is enraged that Greece is seeking a TDR. TDRs are less common for nation states, but they have been done hundreds of times in the modern era – including for Germany after World War II. Germany’s TDR was essential to its economic recovery. Note that there was a vastly stronger moral argument against Germany’s TDR than Greece’s request, but the major media overwhelmingly avoided these facts.

Second, austerity as a response to a Great Recession is economic malpractice akin to the medical malpractice practiced for centuries of bleeding patients. (I am delighted to note that Paul Krugman has just adopted this metaphor for malpractice that I have been promoting for years in a column celebrating the Greek “No” vote.) Economists have understood this for at least 75 years. The troika’s insistence on self-destructive austerity has gratuitously forced Spain, Italy, and Greece into worse than Great Depression levels of unemployment that persist seven years after the acute phase of the global financial crisis. The IMF – the mother of austerity demands – has admitted that fiscal stimulus policies not only proved (as theory and experience have long shown) far more effective than austerity – but that economists had greatly understated the predicted effects of fiscal stimulus.

So, the new Greek government was right on both of its key policies – as even the troika’s historic “deficit hawk” (the IMF) now admits it has known for years. That means that the troika has knowingly insisted on economically illiterate and self-destructive policies and caused immense human misery for no (desirable) reason. What is going on? The answer is the troika’s oxymoronic definition of “reforms.” When the troika uses the word the “reforms” it means three anti-reforms – reduced wages and rights for workers, destroying the safety net, and selling public assets to private buyers. The troika is deliberately, with the aid of the major media, generating a “race to the bottom” throughout the EU. The New York Times provided a reprehensible example of how the media aids and abets this assault on workers and those who need the safety net in a June 29, 2015 article entitled “Greece’s Troubles Attract Little Sympathy From Poorer Neighbors.”

“We are much poorer than the Greeks, but we have performed reforms,” Rosen Plevneliev, the president of Bulgaria, a northern neighbor of Greece, said in an interview.

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http://neweconomicperspectives.org/2015/07/greece-proves-again-why-democracy-is-the-criminal-classes-great-fear.html

[PoliticAverse]

1. I'm pretty sure it also was "Democracy" that got them into this mess. They did democratically elect

politicians that wouldn't enforce tax laws and just borrowed money instead, and that
faked their way into the euro.

They should also hold a referendum on any new debt relief proposal before the current government
agrees to it so there isn't any doubt as to what the people want.

In addition they should ask the people to vote if they want to remain in the Euro or return to their own currency.

[Nitram]

2. If democracy caused the housing loan crash in the U.S. then you're right.

I suspect it is institutional and governmental financial entities with a poor understanding of economics. The balance between regulation and incentives for innovation is a delicate one, as is the balance between stimulus and the need to control expenditures.

[pberq]

3. Great article

William Black once again gives us a clear explanation of what is happening.

[geek tragedy]

4. that's the problem when you have economic but not political integration. nt