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The Jehoshua Novels


Greek Voters Given a Chance to Approve Next Bailout. Politicians and Markets Go Berserk.

Stock markets around the world reacted with horror this week to the news that Greek Prime Minister George Papandreou has ordered that the terms of a proposed EU rescue package worth €130 billion should be voted on by the Greek people in a national referendum. The Nikkei, the German DAX index, the French CAC-40, and the Dow Jones Industrial index all ended the day down 2% or more. The euro took a pummeling on the foreign exchange markets.

Global leaders involved in the Greek rescue talks expressed shock and disappointment that the Greek government would throw into jeopardy the carefully-constructed rescue plans that required approval from all 17 EU governments. The White House press secretary, speaking on behalf of the President, urged Greece to accept the bailout terms as soon as possible. It was US Treasury Secretary Timothy Geithner who first recommended to the EU leadership that it significantly expand its bailout fund from €440 billion to as much as €2 trillion in order to calm global financial markets.

Now let’s step back a minute and consider how ludicrous this all is. The Greek Prime Minister proposes that the Greek people, who have borne the burden of one austerity package after another each time Greece has approached the EU for help, at long last get to have a say in these discussions. Politicians everywhere express dismay and surprise that any politician, especially one on the receiving end of the bailout talks, would even consider allowing the people to at long last have a vote in these decisions. Financial markets plummet on the news. Since when did democracy become the enemy of good governance in democratic countries?


This little episode tells you everything you want to know about the ongoing global credit crisis, and why the Occupy Wall Street movement has spread from one city to another around the world. The fact is that G-20 leaders to a man and woman fear the people. They do not want them to have any say in the multitude of bailout discussions and decisions that have been breaking out since the credit crisis erupted in 2008. And if they don’t want the voters to vote on any of these decisions, you can bet every single dollar or euro or yen left in your bank account that these same leaders are not telling you the truth about what is in these bailout packages and who benefits from them.

Wall Street knows very well who benefits from these bailout programs. The Greek bailout package to traders around the world is an obvious shell game. The €130 billion will be paid to the Greek government, which will promptly remit the money in the form of interest payments to the German, French and other large banks that hold the bulk of the Greek debt in the market. Not one cent of this money is going to be spent on the needs of the Greek people. In fact, the EU is demanding yet more austerity programs be implemented, cutting the wages of workers, destroying pensions, closing schools, and shutting down hospitals. It is true that the EU is forcing the big banks to write down their investments in Greek government debt by 50%. But austerity for the people is not the same as austerity for the banks. There is no money set aside to mitigate the social pain of yet more austerity imposed on the Greek economy, but that special fund used to bail out the banks directly by the EU is going to be increased from €440 billion to €1 trillion. This is not quite Timothy Geithner’s €2 trillion, but it is large enough to ensure no bank suffers any inconvenience from the Greek bailout program.

Traders around the world have understood all along that it is the bankers, and the global financial and corporate elite, who are dictating these bailout terms. Stock markets everywhere have risen to their pre-2008 highs, and some of them have set all-time highs, because the taxpayer money spent on bailouts is devoted entirely to propping up the global financial system. One might suppose that the politicians who have participated in this process are doing so from an altruistic look at the distant future. ”œIf we allow one country or one large bank to go down, all of the financial system goes down as well, causing untold misery for billions of people who will lose their life savings.” ”“ so the thinking goes.

A more sinister interpretation would be that politicians everywhere are dependent on the financial industry for their largest campaign contributions, and they dare not deny the banks what they are demanding.

The Greek people at this stage might very well be saying to themselves, ”œWhat’s the difference? I’ve lost my job, my pension, my medical care, and my public transportation. My savings will soon be gone anyway. How much worse is it going to be for me if the big financial banks disappear? I’ve already got what little money I have left out of the system anyway.”

One thing that already is happening with the Greek people is that they have been so down-trodden by their politicians, and are so distrustful of them, that quite a number of political commentators in Greece have suggested that Papandreou’s proposal is a Trojan horse. People sense a trap, because so much depends on the wording of the referendum, which is not revealed yet. It is very different if the people are asked whether they wish to accept yet another austerity program, versus whether they wish to accept another bailout program. It is even more likely that Papandreou will restrict the referendum to a simple question: ”œDo you wish for Greece to remain in the euro?” The euro is very popular in Greece ”“ it is a palpable connection between Greeks and the rest of Europe. No one wants to leave the euro, and no one wants to be given a choice that implies rejecting a bailout package will automatically require abandonment of the euro.

There are in point of fact some sound economic and policy arguments why Greece should abandon the euro. A reintroduced drachma could be significantly devalued, giving Greece the chance to rebuild its export prowess and attract tourists. This type of program worked well for Argentina ten years ago, and more recently for Iceland. Both countries suffered grievously while going through the initial stages of the devaluation and economic collapse, but the pain it turns out was probably not much worse than what Greece is experiencing already through its ever-increasing austerity diet.

Abandoning the euro, however, would be anathema to politicians in Paris and Berlin who are desperately clinging to this one vestige of a unified Europe. As mentioned, it would also be unpopular with the Greek voters, who like the thought of traveling throughout Europe as equals to everyone else. So a referendum on the euro may be just the ”œtrick” Papandreou needs to square the circle, and obtain political cover for new austerity. It could very well be the trap that some voters fear is being laid for them.

Or ”“ the voters could call the bluff of the politicians. ”œYes, let’s go ahead and abandon the euro. We don’t want any more bailout money. We agree to default on our debt. We understand there are going to be some very hard times ahead for Greece. We will be much poorer, barely able to afford the necessities of life. We’ll have to band together as neighbors and as a nation just to survive. But we’ll make it through this. And at the end, we’ll be free ”“ free of the banks, free of the politicians, free of the corporations. We’ll be able to create our own destiny.”

The trap that is being set ”“ if that is indeed Papandreou’s plan ”“ may in the end ensnare Papandreou himself. This is always a problem with democracy. The people may actually, in their collective wisdom, be able to figure out what is in their best interest, and they may be willing to jettison a system that has shown itself to work against their interest time and time again.

Paris and Berlin, and every financial market around the world, have every right to be worried about letting the people in on what has been happening. If Occupy Wall Street is suggesting anything, it is that large numbers of people ”“ maybe a majority ”“ have figured out that what has been happening politically and financially is inimical to the people’s interest. The Greek referendum may be the first bit of proof that the people have had enough of the banks, politicians, and corporations, and are ready for significant reform in all these areas.

22 comments to Greek Voters Given a Chance to Approve Next Bailout. Politicians and Markets Go Berserk.

  • steeleweed

    “…when did democracy become the enemy of good governance in democratic countries?”

    Democracy has alway been the enemy of the governance we have today.

    The problem is that the governance we have is neither good nor particularly democratic.
    Letting everyone cast a meaningless vote does not constitute Democracy.

    You are right that a good deal depends on how the measure is phrased and presented to the Greek voters. We’ll see if Papandreou is being honest with them or just trying to pass the buck. The question is whether the voters will understand the situation. It could simply be morfe smoke & mirrors so the politicians can make it look like the people agreed to their financial slavery.

    “When you live on cash, you understand the limits of the world around which you navigate each day.
    Credit leads into a desert with invisible boundaries.”
    - Anton Chekhov

  • Scotjen61

    My problem is I am so conflicted about the whole thing. It’s kind of like when a pair of drunk frat boys get into a fight and accidentally burn their frat house down because of faulty wiring which was installed by the University, and which is exempt from any safety inspection. True story by the way. Exactly who do you blame?

    I do have a few takeaways.

    The Obama strategy of Stimulus, rather than austerity, was the correct response. In hindsight, any other response would have doomed the US to no recovery at all. McCain would have taken an austerity route. If you see the charts that compare the United States with Britain, the US GDP is 5% higher than Britain even though the decline in the two countries was identical. Europe’s approach has been singularly the wrong approach. Austerity was a BIG MISTAKE they are paying for today.

    Have you ever been to Greece? It is, bar none, one of the laziest do nothing countries I have ever in my life witnessed. Italy has nothing on Greece. They invented Democracy in 500 BC and have not done a damn thing since. That’s just me, but the idea of these folks walking away scot free grates me.

    The referendum is the achilles heel of the EU. This is not even a question that has to come up in the United States of America because we are the UNITED States. If Mississippi ran up a horrible debt which needed to be bailed out, or renegotiated, or hell, anything. The Federal Government in dealing with the financial problem would simply – yes, by fiat – go in and fix the problem. Perhaps through the Federal Reserve, and not even necessitating Congressional action. Once this were decided, you sure as hell would not let the people of Mississippi have a referendum as to whether to do it or not. Alas the EU is Clusterfuck Nations, with no central bank, no central authority. And worse the EU has managed to attach itself to the PIGS (Portugal, Italy, Greece, Spain) of Europe. What on this planet were they thinking?

    Why was the renegotiation a good deal? Because it prevented contagion, which is now bleeding speedily into Italy – which will also default (and get a referendum?). And if the contagion spreads to Spain, oh my God. There is too big to fail in the United States, but it Europe there is too big to bail out. So little Greece and the PIGS of Europe will accomplish, as SPK pointed out, the end of the EU. Another great failure that can be added to the great ash heap of failures of the dream of a United Europe since the Romans attempted it in 200.

    But Greece, even though they are a do nothing nation, did not deserve the level of austerity that was shoved down their throat by the EU with absolutely no intention of ever writing any of the debts down. Why did they not come forward with a legitimate offer of a 50% write down on day one? It was the rational and credible solution, with the other half coming from, I guess, an austerity light program which would not have so angered everybody. That would have worked. Why indeed? The greedy bastard bankers can take that role. This austerity thing is the product once again of the Goldman Sachs bastards of the world. Not happy screwing private debt, they have now gone off and screwed up Sovereign Debt as well.

    Everyone suffers if the EU comes apart. Greece suffers mightily if they default because there will be zero debt coming in for a generation, and for the first time in a very long time this do nothing country will have to pay its own way. Italy will be next at the bread line, and god help us Spain follows.

    Who holds a lot of this Sovereign debt?? Why Germany and China thank you very much. The United States does not have positions, for obvious reasons. We sit hat in hand same as Greece. But we get to pay back with the same currency we borrow it in. Ka-Ching!!

    In the world as it is, I would not even begin to know how to deal with the EU Clusterfuck. It is a region aging rapidly, no population growth, with a deep hatred of immigration, maximally and regressively taxed, without a single pension that is fully funded, societal promises that cannot conceivably be kept, exhausted of nearly all resources, dependent on RUSSIA for their food and fuel, and buried in debt.

    All I can say is good luck.

    And in the end there is a part of me who greatly appreciates the poke in the eye the Greek prime minister is giving on his way out the door. There is a part of me who believe, I’m sure as Papandreau believes that the banks deserve NOTHING. On that I agree.

  • jo6pac

    and hopefully they vote as Iceland did. This only the beginning I wouldn’t think Ireland is very far behind in having a vote like this.

  • Lex

    I’ve spent a bit of time in Greece, but i don’t share your revulsion towards their “do nothing” style. Thankfully, i was never infected with the Protestant work ethic.

    I didn’t spend enough time in Athens to say one way or the other, but rural Greece (particularly the islands) is a lot like most rural places where the majority live in a peasant economy. They’re doing a lot of things, and enough to survive even if it doesn’t look like much. And did you ever think that democracy and the roll of philosophers might have been midwifed by people who knew how to stop and think instead of just go to get ahead?

    Of course, large parts of the Appalachians, the American south, the urban poor, much of SE Asia, Russia … boy, this is gonna be a long list if i try to finish it … look like they’re in the running for that top spot of do-nothingness you’re giving to Greece.

  • Lex

    I have a little memento from some time spent on Samos, birthplace of Pythagoras and island neighbor to Icaria, where the poor boy washed ashore. As it turns out, Pythagoras had socialist tendencies because he designed a neat little drinking cup. It has a central stem with two little holes at the bottom of the cup; there’s a secondary stem inside the visible one, and that’s got an open top. You can fill the cup up to a demarcated line. Above that, the siphon drains not just the excess but the entire contents.

    May the people of Greece not be trapped by their own politicians or the global elite. May they vote in their own, best, collective interest. And i’ll cheer for them if they decide to drain the bankers’ cup.

  • adrena

    Show the world you’re not afraid of those fearmongering financial elites … just give ‘m a good kick in the butt.

    Viva la Drachma!


    Sexual inequality is “The Mother of all Inequalities”.
    Liberate female sexuality and you will eliminate racism, homophobia, financial greed, and violence.

  • Sean Paul Kelley

    like tEh lazy when you are not from a place. When people have different cultural mores and ideas of time and time keeping from your own can seem very disconcerting. I remember my first trip to Mexico. I thought they were the laziest people on the planet. But a closer look revealed something very different: first, they have a very healthy disrespect for time. They don’t do things on your time, they do things on their time. That doesn’t make them lazy. It’s just different. Same goes for here at Lake Toba. People seem lazy, but they are actually working all day. It isn’t laziness. It’s just different. If you paid attention and dropped your cultural preconceptions you might see it. But asking those kind of scales to fall from ones eyes is damn near impossible.

    Bad decisions make good stories.

  • Celsius 233

    Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them,and these will continue till they are resisted with either words or blows,or with both~FDouglas

  • skipper ian

    Admittedly, I am biased, since I am a Greek-American, and most of my extended family lives in Greece, but that also affords me me perspective. You can no doubt find plenty of Greeks who would agree with Scotjen’s labeling the country “lazy” on the whole. They don’t produce much in terms of industry, and their extensive government bureaucracy has historically been incredibly inefficient. The former is largely a product of history and the small size of the country, but the latter certainly reflects the attitudes of the bureaucratic workers. It also seems like half the country is on strike half the time, even before the current crisis bubbled up.

    That being said, I don’t know that it’s justifiable to impugn the entire population as “do-nothing” and “lazy”, or to suggest that their plummeting condition is somehow karmically deserved. While this sounds a bit like laying the blame for the U.S. mortgage crisis on all those individuals who took out loans they couldn’t repay, the Greek sovereign debt wasn’t taken on by the Greek citizenry. In fact, the debt culture which is prevalent in this country is quite foreign to Greek thinking, at least in my experience. Furthermore, to second Sean-Paul’s comment, as in any settlement, there is plenty of work that needs doing in Greece, be it industry (productive or tourist, in Greece’s case), agriculture, or simple maintenance of the urban environment. All of these require hard work, and any visitor to Greece will not leave with an impression of a decrepit environment, or a lack of resources for tourists. That would be, if anything, a reflection of the pride which people take in doing their work well.

    I would go on to mention that economic comfort in Greece is a very recent phenomenon, what with the country spending most of the last century between occupation, civil war, and a military junta, and so begrudging them for wanting to keep a higher standard of living hardly seems charitable, but I’ll leave that for another time.

  • JT

    Of course, a lot of this would be more clear if we knew who would benefit from derivative payoffs if Greece does default.
    One thing for sure, it won’t be the Greek people, but there are some elite out there who will probably do quite well.

  • Tina

    Goldman Sachs was behind that, playing both ends.

  • Numerian

    I’ve never noticed any pronounced indolence. The government workers manning the museums seem to have easy hours, but the situation at Italian museums can be much worse (open maybe 2 hours a day). To a casual observer not much seems to go on during the daytime, but this in my opinion is not abnormal in the Mediterranean. From Spain to Italy, Greece, Lebanon, Egypt, Libya, Algeria and Morocco, I’ve observed that business slows down or shuts down during the middle of the day. This seems to be traditional, related to avoiding the suummer heat. Even in France, in the hottest month of August, the only people you see about are tourists. Business starts up again around 16:00, and retail shops are usually open until 22:00.

    I suspect there is a geographical imperative involved, where work stops when the temperature gets to 40 – 50 deg. C.

    You might have read that recent story about farmers in Georgia and Alabama having a difficult time bringing in the harvest now that immigrants are being forced out of these states. White people apply for these jobs but leave after one day – they can’t stand the physical pain involved and the heat. If they do stay, they produce 20% of the output of the Mexican immigrants who used to work in these fields. I don’t think I should conclude from that that all Americans are lazy!

  • nihil obstet

    Southerners, blacks, Native Americans, Mexicans, the Greeks. If they’re not doing exactly what the rich are doing (which they can’t do, because they don’t have the same situation), the rich perceive them as lazy. It’s the justification for making sure they remain poor.

  • Tina

    I’m betting the population will not be happy to hear this. When is the next election?

    Greek PM says ready to drop referendum plans
    Posted: 03 November 2011 2308 hrs

    • Greek PM ‘not resigning’
    • G20 summit takes place amid Greece issue
    • Greek finance minister says opposed to euro referendum
    • Europe warns Greece to accept debt deal or quit euro

    ATHENS – Greek Prime Minister George Papandreou on Thursday said he was prepared to drop plans for a referendum opposed by eurozone leaders.

    His comments came after the main opposition party, New Democracy, agreed to support the EU debt deal proposed last week by other eurozone countries.

    “The referendum was never an end in itself,” Papandreou told the Cabinet according to statements released by his office. “We had a dilemma — either true assent or a referendum. I said yesterday, if the assent were there, we would not need a referendum,” Papandreou said.

    “We must hail the fact that New Democracy will vote for the loan deal,” he added.

    Earlier, opposition leader Antonis Samaras, whose party has 85 seats in the 300-member parliament, called for a transition government to keep the debt deal afloat and to call snap elections.

    “I ask for the formation of a temporary transition government with the exclusive responsibility to immediately hold elections, and ratify the loan deal under the present parliament,” Samaras said in a televised address.

    It marked an abrupt about-face by Samaras who has consistently opposed the loan agreements negotiated by the Greek government with its creditors — the EU, IMF and European Central Bank — on the grounds that they stifled growth and worsened recession.

    “This is an issue which we need to discuss with (New Democracy),” Papandreou said, adding that two of his officials would be sent to negotiate with the opposition.

  • Scotjen61

    Greece never should have been allowed in the EU in the first place. They never met the debt requirements for entry, never met the deficit spending rules, or the debt cost measures.

    In 2002 what Greece did was exchanged their debt held in US currency and Yen, for Euros. This exchange was then to swap back in ten years (2012), at an estimated exchange rate that was entirely a fictitious number that resulted in about 40% of the debt vanishing in the swap. The EU was entirely complicit in the exchange, knew everything about it, and accepted the deal to bring Greece debt into line.

    The markets have been revaluing this debt as the swap date nears in 2012, and that is what has caused the debt of Greece to swell, and interest rates to rise. Over the same period Greece has performed even more poorly in tax collection and spending.

    My understanding now is that the original deal is now back on, without referendum. And if any such referendum is brought out it will be asking whether Greeks want to remain in the EU, which the country overwhelmingly does.

    They have every right to have a referendum, but the other Sovereigns of the EU have every right to quit flushing more money down the drain. What I truly don’t understand is how a country that has perhaps more billionaires per capita in the world has no ability to tax or gain access to any of that wealth. The country has been a tax haven for the ubber wealthy for years. It is also the site of the flagging rights for a huge number of the worlds tankers. How is it these pots of gold cannot be tapped in this crisis, and why does that issue never ever even come up within the negotiations anywhere. Worse the country has the absolute worst record of people even paying the average taxes they owe. People in Greece simply don’t even pay their property taxes, almost to a person. Simple compliance with the laws on the books would lower the debt of this country.

    I just don’t get Greece.

  • Numerian

    The EU may not have known about the Goldman-Greek government foreign exchange swaps, done at off-market prices to mask the borrowing involved, but once the information was made known to them, they promptly refused to release anything to the public and refused to discipline Goldman.

    So who else in the EU was playing these games behind the scenes? Pretty much everyone, I would guess.

  • skipper ian

    Every one of these points is spot on. Getting Greece and Italy into the Euro was feel-good, but showed an early lack of realism in not even enforcing their own rules. And the taxation issue is an abomination of government, in which the nation as a whole does indeed share the blame.

  • Tina

    Grassroots refusal to put up with austerity is quickly gaining momentum, as people give up on mainstream politics

    http://www.guardian.co.uk/commentisfree/2011/nov/03/greeks-austerity-grassroots

  • Lex

    It’s clear that you don’t get Greece, because you fail to see how its history is still playing out today. “The top 20% of the income distribution in Greece pay virtually no taxes at all, the product of a corrupt bargain reached during the days of the junta between the military and Greece’s wealthiest plutocrats.”

    Others have explained the situation and given historical context, while you insist on ignoring all that to hammer away at your theme that the Greeks are lazy and financial deadbeats.

    Would you want to pay your taxes if you knew that the richest 20% don’t pay any taxes? And do you understand that those rich people use their wealth to perpetuate their privilege? Or do you feel so comfortable in your glass house that you enjoy throwing stones?

  • Scotjen61

    incompetent and corrupt to describe Greece. Still not a group I’d want to bail out. To me a country systemically incompetent and corrupt in its tax collection to the extent of Greece is likely the core problem of that country.

    They are simply not a group who should have entered the EU.

  • Sean Paul Kelley

    helped the corrupt Greek government cheat, so they are just as corrupt and American.

    Bad decisions make good stories.

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