G20 Breakdown

Articles and links on the Greek crisis.

[*latest updated - June 29th, 2010]

Developments in Greece, such as the bailout, the forced austerity program, the protests and strikes, are being followed closely by the G20 as they try to mold the economic recovery. Greece is not in the G20, so they are unlikely to have much say in any G20 plans of their recovery.

This list will continue to be updated, so bookmark it and check back.

Broad background of crisis

Understanding the Greek debt crisis [audio]
Bankruptcy, massive protests and accusations of corruption have dominated the media’s coverage of the Greek economic crisis. Belt-tightening is the proposed solution. Costas Panayotakis disagrees.

Greece: Driven into Crisis
Highly informative background on the factors that led to the crisis in Greece. It looks at what is expected of Greece in order to receive the bailout orchestrated by the IMF and G20

Cutting Public Debt: Economic Science or Class War?
This is an excellent background on the ideological underpinnings of pushing for deficit reduction at all costs. It asks the fundamental question: “Is cutting the public debt really an objective economic necessity, or is it actually a deeply political stance, reflecting the interests of the business and financial élites?”

Greeks, Germans and Bankers: The Return of the Ancien Régime
The German press is saturated with reports intended to verify the myth of the slovenly, lazy and corrupt Southern European countries which virtuous and hard-working northern European countries mistakenly admitted to the European Union. The role of the most felonious corporation on the planet today is trivialized since the harmless fraud investigations in the US against the “mother of all racketeers“ (along with JP Morgan) are never reported in connection with their advisory and trading “services“ in Greece or throughout Europe. Yet there are numerous strands to the fabric of confusion being woven in the Greek dilemma. The criminals are at large and their business continues.

The protests

Clashes Break Out Once Again as Greeks Protest ‘Austerity’ Push – June 29th, 2010

Clashes have broken out between demonstrators and police at a protest against government spending cuts in Athens, the Greek capital.

Riot police fired tear gas at activists chanting “burn parliament” on Tuesday, just hours before politicians were to begin debating a pension reform to tackle the nation’s debt crisis.

The Greeks Get it
A wonderful article from Chris Hedges at Truthdig.com who argues that the Greek protesters  are doing exactly what the rest of us need to be doing – fighting back against austerity cuts. They are being put in place everywhere as the means to deal with the economic crisis (that we didn’t create), and the G20 agenda has these cutbacks at the top of the list:

“Here’s to the Greeks. They know what to do when corporations pillage and loot their country. They know what to do when Goldman Sachs and international bankers collude with their power elite to falsify economic data and then make billions betting that the Greek economy will collapse. They know what to do when they are told their pensions, benefits and jobs have to be cut to pay corporate banks, which screwed them in the first place. Call a general strike. Riot. Shut down the city centers. Toss the bastards out. Do not be afraid of the language of class warfare—the rich versus the poor, the oligarchs versus the citizens, the capitalists versus the proletariat. The Greeks, unlike most of us, get it.”

The international significance of the Greek general strike
[It is] a sign of coming class struggles in Europe and around the world…As speculation rises against Portugal, Spain, and other European countries, it is increasingly clear that workers around the world face a common enemy: a parasitic ruling class that has enriched itself through the bailout of the financial system and wants to enforce huge cuts in jobs, pay, and benefits everywhere.

Senior Greek Official: “We may have an uprising in the making”
“You write that – angry, angry, angry, angry,” said [Stella Stamou, a civil servant] after participating in one of the biggest ever rallies to rock the capital since the return of democracy in 1974. “Angry with our own politicians, angry with the IMF, angry with the EU, angry that we have lost income, angry that we have never been told the truth.”

Protests in Greece in Response to Severe Austerity Measures in EU, IMF Bailout [VIDEO]
Wonderful video background dispelling myths, discussing rise of right wing populism, scapegoating, and the protests blanketing the country.
“as is usually the case with the International Monetary Fund, it’s…an attempt to indirectly bailout the German banks, French banks, and European banks that hold most of the Greek debt. So it is a very brutal, unprecedented program.”

The Guardian and Independent weigh in: “Economic crisis sparks violent Greek rallies”
and “May Day clashes in Athens as belt-tightening policies are set to reverse rights won by workers over 30 years”

Understanding the economics in Greece

The Eurozone Crisis: Macroeconomics And Class Struggle
History of the crisis and the sequence of events since October 2009 that led to it. Also looks at the underlying macroeconomic causes.  A bit of work for the those not inclined to economics, but it’s a good place to get a detailed understanding of the numbers and worth the effort.

Greece’s debt must be restructured
The Greek government is being asked to implement austerity measures that will cause a major decline in incomes and employment not just now but in the foreseeable future, and which will not correct the existing imbalances but actually worsen them.
The heavily-indebted poor countries (HIPCs) of Africa could tell the Greeks a thing or two about this process.

Canadian response – Carney, Harper worried by Greek debt crisis
Wider emergency would delay rebound of fragile economies, increase global borrowing costs, central bank warns.
The G20 is nervous about the Greek crisis and they are trying to find ways to stem it in their interests.

No Wonder the Eurozone is Imploding

Greek debt crisis: Germany would make money from bailout
The bailout proposed (now reality) for the Greek debt crisis would actually earn money for Germany and other EU lenders.

The Inevitability of Greek Default

The government subprime bomb continues smoldering

Greece: The European Union’s Dangerous Game
The EU’s plan for Greece guts Greek society, but sets up the same crisis to happen again.
The problem is one of irrational economic policy. “The projections show that if their program “works,” the country’s debt will rise from 115 percent of GDP today to 149 percent in 2013. This means that in less than three years, and most likely sooner, Greece will be facing the same crisis that it faces today.”

“Thumbs Down” on EU Bailout: Why Rescue Bankers?
No country large or small has managed to close a fiscal gap as large as 10.9 per cent  of GDP (which is what Greece is being asked to do.) It’s cruel, especially in an environment where deflation is gradually tightening its grip. Greece needs counter-cyclical fiscal stimulus to get out of the hole its in and to grow its way out of recession.

The austerity plan

Greece: List of new austerity measures
A full compendium of all of the measures – it’s severe to say the least.

No analysis of ‘Greeks bearing debts’ story
It’s all about supporting European bondholders over the people of Greece. “In an unprecedented move, the ECB has agreed to guarantee the value of debt issued by euro-zone members, and to intervene in bond markets as necessary. The EU has mobilized loans and credit facilities of nearly 1 trillion euros to support the European bond market.”

Greece’s George Papandreou announces €140bn bailout deal

A Baltic future for Greece?
Latvia and Estonia show us what Greece may look forward to if it follows the advice it gets from the IMF and European Union

*The Heresy Of The Greeks Offers Hope
Another fine challenge to the orthodoxy that Greece is a ‘junk country’ with a ‘bloated public sector’ that must be taught a lesson through deep cuts.  He dismisses the idea that ordinary people paying the debts of crooks is “fiscally responsible” and compares the demands on Greece to the UK’s neoliberal austerity program of the past 30 years.

Alternatives?

Anti-Authoritarian Economy in Greece
A look at some of the alternatives being proposed by anti-austerity organizers

1. A report from the G8 Halifax protest
Includes pointed criticism of the G8 and Harper’s narrowly focused approach to maternal health. “Where are the G8 leaders when women, many of them mothers, are raped, tortured, and/or killed at work, whether they’re working in Maquiladoras in Mexico or doing sex work in Vancouver’s Downtown Eastside?”

2. G8 development ministers are leaving Halifax without making any specific financial commitments for child and maternal health. The Harper government also hasn’t been very clear about what it plans or initiatives on that front. Non-funding of abortion is the only area where they have made their plans fully known.

3. Various questions and concerns have come up about the G20 pronouncement last week of recovery and growth:
G20 growth forecasts don’t add up

G20 wary of overconfidence; Greece cast long shadow

4. Excellent technical report by Andrew Jackson on prospects for the G20 in Toronto, found on the Progressive Economics website. He says that in a number of ways, panic has turned to complacency regarding global capitalism’s prospects.

There is currently a shift away from the Tobin tax on bank transactions, with many calling it dead since the U.S. and Canada won’t back it. The hope for consensus at the G20 now lies with a straight bank levy proposed by Germany and likely to be supported by the International Monetary Fund (IMF) at its meeting next month.

This is a big step backward as the transaction tax, long called for by progressive observers, seemed like a distinct possibility in the wake of the economic crisis. It would have put a 1% tax on the types of speculative transactions, such as derivatives, that became toxic and caused the crash. It would have caused investment banks to think twice about performing these transactions.

Instead, after having transferred their risk onto the government through the bailout money, they are able to carry on as before, while governments move towards insolvency. Where did all that momentum for systemic change go?

Like the Tobin tax would have been, the levy is to be used to create a bailout fund, though a German observer noted that it would be nowhere near enough to pay for future bailouts:

The country’s biggest lender, Deutsche Bank, would have to pay a contribution of 2.2 billion euros, equivalent to a third of its expected pretax profit this year, Merck Finck analyst Konrad Becker calculated in a research note, assuming a charge of 0.15 percent of total assets.

No. 2 lender Commerzbank would pay around 1.2 billion euros, Becker said.

The levy, based on total assets less deposits, would need to run for years to raise the vast sums needed for bank bailouts.

“That’s a joke,” Becker said of the 9 billion euro figure.

The U.S. and China are in a big battle right now over exchange rates – with serious global repercussions. Some are calling for this issue to be resolved through the G-20.

China relies heavily on selling cheap exports to the U.S., while the U.S. relies as much on China buying it’s treasury bonds in order to service the U.S. debt. This relationship has created a kind of an equilibrium where neither side wants to tread too strongly on the other.

However, the U.S. is accusing China of falsely depreciating it’s currency (the renminbi) so that China can increase its exports to the U.S. (and other countries) based on the low cost of buying their products. The U.S. is losing export opportunities due to it high exchange rate relative to the renminbi.

And there are calls for action against China, despite fears of retaliation. Even the U.S. Chamber of Commerce, which has done everything over the years to back China’s entrance into the world economy (at the behest of multinational corporations), is calling for the U.S. to name China as a ‘currency manipulator’ and possibly place tariffs on China.

It is also interesting to see the U.S. crying foul about a market (theirs) being artificially flooded by cheap goods (China’s). The U.S. agricultural industry has been doing this for years with cheap subsidies of corn and other products to Latin America, especially Mexico. This has wiped out much of Mexico’s domestic corn industry, knocked farmers off their land, and been a key factor in Mexican economic migration to the U.S. The U.S. has traditionally been fine with artificial markets, as long as they are not hurt themselves.

This all points to a key problem facing global capitalism in the wake of the financial crisis – lack of demand and overproduction. In the wake of low depressed wages worldwide and high unemployment, there is a scramble to get at whatever consumer demand they can round up. Thus the focus on countries like China that still have global demand for their products, and the concern that they are doing it artificially. The countries with strong trade surpluses like China are seen to be “taking more than their fair share of world demand and are under pressure to boost their domestic markets”.

Many are seeing this as a key issue for the G-20 to take up, especially as it moves to become the prime location for creating global policies for economic growth and financial reform.

It will be very interesting to watch in the weeks leading up to the G-20 meetings, as the game of cat and mouse continues between the U.S. and China.

In case you thought that the pro-globalization chattering classes are still cowering from the fallout of the economic crisis, John Micklethwait, the editor-in-chief of the economist sets this straight with some bullish talk about the free-market economy.  He was in Montreal this week, where he talked up free markets with a Globe and Mail business writer.

Despite the turmoil markets have been in and the challenge to neo-liberalism that has come from the crisis, Micklethwait won’t let go of orthodoxy: “what I see is this process [globalization] which has brought gigantic wealth and, indeed, happiness to most people around the world.”

Happiness to most?  How does one account for the 16.4% decline of real wages in the U.S. (wages adjusted for inflation) that occurred between 1973 and 2004?  I’m sure those people aren’t dancing for joy.  Sure, there was a brief uptick just before the crisis hit in 2008, but that has since been completely wiped out.  Canada has had similar, though less drastic, results, with stagnant median real wages.

And around the world, wage inequality between the rich and poor has grown enormously.  Neoliberal policies have unquestionably created massive wealth for some, but the vast majority have been left behind.

Even if you believe corporate globalization is all that, can you really say most are happy from it?

There were even more nuggets in this short interview:

He admits globalization is “savage, sometimes cruel”, but that “globalization is about the way the ideas, people, goods, services cross borders…and anything that gets in the way of that “tends to be bad in general”.  Moving goods, people, etc… across borders can be a good thing, but not when most people actually can’t move across borders at leisure (save for the global elite) and when the game is rigged for corporations to use their enormous power to get what they want.

Micklethwait also brings up the G8/G20 meetings this year and how Obama needs to ‘resell’ global capitalism to the 12 emerging economies that make up the G8/G20 difference.  He suggests Obama will have failed if he doesn’t bring China, India, Brazil, etc…into a broadly Western framework of running the world”  If that happens, he feels is no problem merging the G8 into the G20, because these countries will be playing the right role in the global economy.

It is clear that the neo-liberals are back on the offensive, having learned nothing from the present crisis.