The economic crisis in Greece

[A Revolutionary Tool]

How exactly did this happen and why? I'm debating a conservative and he says to me "You like welfare states [no]? Look what's happening in Greece because of their overspending on the welfare state." I know that's not why the crisis in Greece is happening but I don't actually have many details on the actual reason of or history of the economic crisis in Greece. So a little help here please.

[Kornilios Sunshine]

Because all of our Prime ministers are smart-asses.They were afraid that they wouldn't go on a vacation and they said "We will exploit the dumbass workers,we will reduce their salaries and make them pay the shit out of their money for their taxes.Workers can go fuck themselves".Then the also got loans and said "Are we stupid to pay them?Lets put the stupid workers to do it.".So after a point the Greeks were paying until their last Euro.Now the capitalists don't have how to get money.This is how they fuckin think.

[Tommy4ever]

Its hard to argue that over the past decades Greek governments did not spend irresponsibly. But if you actually look at Greek debt figures as we entered the crisis around 2008 they weren't that bad in comparison to other Western economies. Several other EU countries (notably Italy) had a greater percentage of GDP in government debt whilst countries you might think of as having more stable finances aren't much better off in terms of their debt to GDP ratios than Greece.

After the credit crunch caused triggered by the sub-prime mortgage crisis credit markets seized up. The Greek government struggled to pay for its debts and credit markets got shit scared - making it more difficult for Greece to borrow money and by extension more difficult to keep paying its existing debts.

A mixture of fear in the credit markets and right wing ideology (that less government = better) convinced creditors that the best solution to the problem for a rebalancing of the budget through a savaging of the Greek public sector (which is very large). Realising that this was not a good thing for them the Greeks themselves have put up staunch resistance to this making it veyr difficult for the government who are stuck between the creditors who are ordering them to do one thing and their people who refuse to allow them to act as the money men would wish. As class struggles has intensified the Greek government has been kept going through support from the EU (the bankruptcy of a eurozone country would be a disaster for the EU and Germany especially).

So, basically. The Greek government did borrow too much money over a long period of time with both high spending and problems collecting taxes contributing. But at the end of the day the crisis in Greece is a direct result of creditors demanding austerity and strangling access to borrowed money until it is delivered in sufficient quantities to leave half of Greece unemployed and the state sector nicely trimed.

EDIT: Traditionally in times of crisis a country's currency will devalue making it easier to rebound out of it (a devaluing of your currency boosts exports and reduces imports, making life harder for citizens but overall boosting the economy), however using the Euro meant Greece could not do this. So this was also a factor.

[Broletariat]

"You like welfare states [no]?

Big flaw here. All sections of the bourgeois are equally reactionary. The dichotomy of Fascism versus welfare state or what have you is simply a good cop bad cop game in essence. That's why there's such opposition to antifa groups. Instead of fighting for socialism you become merely a pawn of the "progressive" bourgeois. You become just another poor soldier in a rich man's war.

[Robespiere]

By Nicolas Mottas. September 24, 2011.

A spectre is haunting Greece these days - the spectre of default. The government, under the strict rulling of the so-called Troika (IMF-EU-ECB), tightens more and more the austerity policies. Additional measures, including huge cut-backs in public sector, suspension of civil servants in partial pay status, rapid increase of taxation and even bigger decrease of monthly pensions, have been announced 1 (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnote1_uagynzg). The Greek working and middle class are now called to sacrifice themselves - the very future of their children - for the sake of paying back the loan sharks of Greek economy.

"The Greeks were wasteful and now they must sacrifice their living standards" say many cynics in Europe. This is a neoliberal nonsense. Let's see some revealing statistics regarding Greeks's "preposterously luxurious" life:



In terms of working hours per week, the Greeks are the "Champions" within the EU. They work on an average of 42 hours. Then come the Spaniards with 39 hours, the Germans with 36 and the Dutch with 31 2 (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnote2_2sa320t).
Approximately 20% of the working class in Greece live under the so-called poverty average 3 (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnote3_d4hbxla). Almost 80% of those Greeks who work in the public and private sector live with a monthly income of under 1,500 euros and 61% of them with less than 1,000 euros per month.
The lowest salaries range at 51% of Eurozone's average, while the pensions at 55% 4 (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnote4_piak5be).
Almost 850,000 Greek pensioners of the Organization for Agricultural Insurance (OGA), live with a monthly pension of 400 euros 5 (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnote5_959t5ei). In the whole country, 3 out of 10 retired citizens take less than 450 euros as monthly pension.
The official number of the unemployed Greeks who are registered at the Manpower Employment Organization (OAED) was 839,000 as of February 2011. From that number only 30% (appr. 280,000) of them receive the 'unemployment benefit' of 454 euros per month. It is estimated that approximately 32% of the young Greeks up to 24 years old are unemployed.

The above facts certify one major thing: Greece's working class had been already affected by the neoliberal policies imposed in the country after the 1992 Maastricht Treaty. Today's crisis is just the "top of the iceberg" in a series of austerity, fiscal tighening, privatization of social institutions and broadening of the gap between poor and rich. In Ireland, Portugal, Spain and Italy the working class felt the "benefits" of the free market economy and of the uncontrolled competition between monopolies. :star2:



Now, the question is the following: Who has benefited from the ongoing crisis, in Greece and the eurozone? You don't need to have memorized the whole Marx's "Das Capital" in order to give an answer - the benefits of the people's "sacrifices" go to the ones who created the crisis. In simple words, the international and domestic Plutocracy (a Greek word, composed by "Plutos" and "Kratos", actually meaning the "rule of wealth").


Some statistical data regarding the recent profits of monopolies, banks and loan sharks are more than revealing about the situation:



By the end of 2009, the assets of the Monetary Financial Institutions (MFI) in Greece was estimated at approximately 614,000,000,000 euros 6 (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnote6_i5pamp4). That means a 232% increase since 2000! On the same time, the public deficit was swelling up to 300,000,000,000 euros.
Since the eruption of the international banking crisis in 2008, the indebted Greek governments donated to the Banks a total of 106,000,000,000 euros to "protect" them from possible collapse. On the very same time, harsh austerity measures were imposed on the middle and working class with the excuse of "saving the country from default".
Greece's annual budget deficit for 2009 was 30,000,000,000 euros. This amount equals with the construction of 777 ships ordered by Greek ship-owners on the same year 7 (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnote7_eomhiuj).
According to the German magazine Der Spiegel, the deposits of a few Greek multi-millionaires in Swiss bank accounts reaches 600,000,000,000 euros - that means the double of Greece's public debt 8 (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnote8_67jlfjw).
The Greek Financial and Economic Crime Unit (SDOE) estimated that ten thousand "off-shore" companies (of Greek interests) based overseas move around 500,000,000,000 euros! 9 (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnote9_al20fzs).
According to the annual budgets of the years 2009 and 2010, almost 20,000,000,000 euros were spent on military expenses.

The above data consist a small example of how the current Capitalist system works. When the masses are sinking into recession and austerity, when young people bury their dreams in unemployment (or in monthly salaries of 400 euros), some elites - the same bourgeoisie that Marx and Engels was refering to in 1848 - are speculating and profiting. :hammersickle:



The default of the people - not of the modern bourgeoise - seems to be the prerequisite for the recovery of the "sick", over-accumulated, Capitalist economy. Apparently, Greece (and, consequently, the whole of Eurozone) became the "guinea pig" of an intra-Capitalist struggle between bankers, stockbrokers, creditors, loan-sharks and neoliberal governments. As Alan Woods points out correctly "after the last crisis there was a black hole in the banks that governments have been attempting to fill by shovelling in billions of taxpayers’ money. The result has been close to zero". As a resulf of that "the banks are not lending, the capitalists are not investing, the economies are stagnant, unemployment is growing, and now they are on the brink of a new slump" 10 (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnote10_a52izgj).



It becomes clear that the deep austerity and the strict monetary policies, proposed by leaders such as German Chancellor Angela Merkel and European Central Bank boss Jean Claude Trichet, aiming in "sacrificing" the living standards of the many for the sake of a few elites. The Greeks are now called to pay not only the undoubted huge mistakes and mismanagements of their governments but also the salvation of Europe's bourgeoise. And the bill will be also passed to the Portuguese, the Irish and the Spanish people.


So, what's next? The Greek government faces difficulty to meet the "targets" set by the IMF-EU-ECB Troika, Brussels start to feel the pressure of a possible Greek default and European governments tighten the belt around people's neck. The European Union not only was completely unprepared for such a crisis but, additionaly, cannot prevent it - simply because it is the very nature of the Capitalist system that generated the crisis. :hammersickle:



Today, most analysts in the media try to explain whether or not Greece will default, how it will happen and if the country will leave the Eurozone. It is indeed a significant issue. But the most important thing is something else: What is the future that Capitalism promises for us, the people? Isn't it the continuous austerity? Isn't it the exploitation of the poor from the rich? Isn't the broaden of the gap between the wealthy classes and the working people? Furthermore, isn't it the ground where the political and financial elites intertwine between each other, always on the back of the masses?
The possible default of Greece and the ongoing crisis in Europe and the United States of America are nothing but another episode in a series of Capitalism's technical recessions - from the 1792 Panic in Wall Street to the 1929 Great Depression and from Argentina's collapse in 2001 to today's Greek drama. Therefore, the overthrow of the current economic system is the only way to solution for the people. That preoccupies not only the immediate stop of the neoliberal monetary policies - not only the socialization of the means of production - but the deletion of the countries's odious debt.



Otherwise, the future of the people in Greece, in Europe, in the Third World but also in the United States is the one of a modern, social, political and economic barbarism. :hammersickle::hammersickle::hammersickle::hammers ickle::hammersickle::hammersickle::hammersickle::h ammersickle::hammersickle::hammersickle::hammersic kle:



1. (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnoteref1_uagynzg) "Greece unveils more austerity measures", Los Angeles Times, 21.9.2011.
2. (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnoteref2_2sa320t) Ta Nea, 16.2.2011. (Greek)
3. (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnoteref3_d4hbxla) http://www.reinform.nl/, 27.8.2011.
4. (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnoteref4_piak5be) Ta Nea, 16.2.2010. (Greek)
5. (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnoteref5_959t5ei) Rizospastis, 6.1.2009. (Greek)
6. (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnoteref6_i5pamp4) Bank of Greece, 2011.
7. (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnoteref7_eomhiuj) Eleftherotypia 18.6.2009. (Greek)
8. (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnoteref8_67jlfjw) Der Spiegel, 6.2.2011.
9. (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnoteref9_al20fzs) Ta Nea, 11.5.2009. (Greek)
10. (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0#footnoteref10_a52izgj) "The Greek Crisis: Europe on the bring of a precipice", In Defence of Marxism, 16.9.2011.

SOURCE: Phantis.com (http://www.phantis.com/blogs/mottas/greek-crisis-apocalypse-now-capitalism-0) & Greek Left Review (http://greekleftreview.wordpress.com/2011/09/25/greek-crisis-the-apocalypse-now-of-capitalism/)

[Oswy]

I saw an interview with Marxist David Harvey on YouTube in which he argued that Greece might as well default sooner rather than later as it will happen eventually.

Greece's default will almost certainly put pressure on the next obvious debt-burdened country, which I think will be Ireland or Spain. This disaster of capitalism is no where near over, and all the time the rich get richer regardless. For too long generations have been sucked in by the lure of capitalism. Pumping out all that credit to fill the gap in actual wages and jobs was always going to turn bad. Where has capitalism got to run to now?

I'd love to see a genuine leftist government take over in Greece, leaving the EU and nationalising everything so that at least everyone gets to eat, have a home, have a job, an education and a life.

[Oswy]

How exactly did this happen and why? I'm debating a conservative and he says to me "You like welfare states [no]? Look what's happening in Greece because of their overspending on the welfare state." I know that's not why the crisis in Greece is happening but I don't actually have many details on the actual reason of or history of the economic crisis in Greece. So a little help here please.

Greece, like pretty much everywhere else in the capitalist system, was encouraged to drink from the poisoned cup of credit, a cup offered because without credit capitalism's failure would be all too obvious. Those countires which are smaller economic entities are suffering most and quickest, but the failure of capitalism will eventually infect even the stronger economies. By all means let's see capitalism now operate without relying on the tool of credit - that will also fail.

[Delenda Carthago]

http://www.iccr.gr/site/en/issue1/the-international-economic-crisis-and-the-position-of-greece-the-theses-of-kke.html

http://www.iccr.gr/site/en/issue1/system-crisis.html

[Jimmie Higgins]

Greece, like pretty much everywhere else in the capitalist system, was encouraged to drink from the poisoned cup of credit, a cup offered because without credit capitalism's failure would be all too obvious. Those countires which are smaller economic entities are suffering most and quickest, but the failure of capitalism will eventually infect even the stronger economies. By all means let's see capitalism now operate without relying on the tool of credit - that will also fail.

In fact, after the international economic crisis broke out, interest rates were lowered for Greece. In the decade before the crisis and even in the months after the crisis began, Western European banks were increasing the easy and amount of loans to Greece. After the credit crunch happened, they still increased loans to Greece by 1/3rd knowing that problems caused by that would be backed up and covered by EU institutions. Of course the crisis is worse and more widespread than they probably imagined, but it's ok for the bankers because even a capitalist managed crash and bankruptcy will manage a soft landing for banking institutions while the people get even more austerity.

[Thirsty Crow]

How exactly did this happen and why? I'm debating a conservative and he says to me "You like welfare states [no]? Look what's happening in Greece because of their overspending on the welfare state." I know that's not why the crisis in Greece is happening but I don't actually have many details on the actual reason of or history of the economic crisis in Greece. So a little help here please.
I'd like to point out the relatively easy to understand article published in The Commune:


The Greek crisis is more similar to that of Italy than Ireland. Greece has had a debt to GDP ratio of over 90% for very many years (http://epp.eurostat.ec.europa.eu/tgm/refreshTableAction.do?tab=table&plugin=0&pcode=tsieb090&language=en). A part of this was due to maintaining a large public sector and a generous welfare state while simultaneously tolerating widespread tax evasion amongst the business class. Norman Strong (http://fistfulofeuros.net/afoe/special-guest-contribution-a-simple-repellent-plan-for-greece/) has argued “Fundamentally, fifteen years ago, Greece faced a choice between being the kind of country that doesn’t collect taxes on the middle and upper class, or the kind of country that pays generous benefits and public sector salaries, and chose both.” A contradiction persisted in Greek society whereby the privileges of the ruling class were maintained, in the form of corruption, cronyism and minimal taxation, along with a substantial welfare state and general tolerance to working class militancy. This is partially because of the class struggles, starting with the Athens Polytechnic Uprising of 1973, which led ultimately to the end of the military junta in 1974 and the restoration of liberal democracy. The class struggles in Greece in the 1970s were intense and when PASOK (http://en.wikipedia.org/wiki/Panhellenic_Socialist_Movement) (The Panhellenic Socialist Movement) was elected to government in 1981 they began constructing a relatively rudimentary welfare state. And they increased public sector wages despite not securing any increased revenue sources. As such, debt rose from 22.9% of GDP in 1980 before they took power to 76.9% in 1990 when they lost power after two inconclusive elections. However, the pro-labour agenda of PASOK was to some degree abandoned in 1985 when PASOK tried to pull back the concessions made to the working class and launched an austerity program. This austerity program was met by strikes in numerous sectors such as amongst teachers, at public utility companies and by bank officials. Since 1985 there have been continuous attempts to reduce working class living conditions in Greece and to balance the budget, but, due to working class resistance on the one hand and a reluctance to go after tax evasion amongst the upper classes, debt continued to climb. By the mid nineties debt had risen to close to 100% of GDP and for the last decade has fluctuated somewhere above that figure. (TPTG: Burdened With Debt (http://www.tapaidiatisgalarias.org/wp-content/uploads/2010/03/burdened.pdf)). Although the structural deficit that has existed in Greece for thirty years needs to be understood in relation to class struggle, we should not infer from that that the working class in Greece has won major victories, or that living standards in Greece are of a high standard. The problem is that the Greek state has been unable to acquire the revenue needed to maintain a functional welfare state and has tried to solve that problem by attacking the working class. Despite claims by Angela Merkel to (http://www.spiegel.de/international/europe/0,1518,763294,00.html) the contrary, workers in Greece are far from being lazy or privileged (http://www.nakedcapitalism.com/2011/06/alex-andreou-democracy-vs-mythology-%E2%80%93-the-battle-in-syntagma-square.html). According to the OECD, Greeks worked on average 2,120 hours a year in comparison to 1,653 in the UK and 1,430 in Germany. In the OECD only South Koreans work more. Paid leave entitlement is 23 days a year while in the UK its 28 and in Germany 30. The average age of exit from the labour force is slightly above the EU average, being respectively 61.7 and 60.9. And the economy was growing impressively in the run up to the crisis; it was in the region of 4% for most of the noughties (http://en.wikipedia.org/wiki/File:GreeceEconomyGDPEnglish.png).
So the crisis in Greece is very different to that in Ireland or Spain. Whereas in Ireland pre-crisis there were balanced budgets, low debt but an out-of-control financial sector, in Greece there was a structural deficit, high debt but a relatively strong economy. So if the notion of Greek workers living it up beyond their means is off, why is there the crisis? What’s wrong with the Greek economy? The answer is that Greece’s problems are because of the government, the international crisis and the euro.


http://thecommune.co.uk/2011/08/04/unhappy-economies-greek-debt-piigs-and-the-eurozone-crisis/

And do note what I emphasized in this part of the article with regard to the conservative talking point of how socialdemocracy, i.e. the welfare state, ruins everything - the problem is not essentially that of the deficit, but of revenues, with widespread practices of tax evasion for the "business class".

[Искра]

Can somebody tell me what were messures which just got voted? I can't find it in media... and I lost article where I had it :(

[GatesofLenin]

Lets imagine a bank, run by the state, that is there primarily to serve it's citizens, not stock holders. What happened is 2008 was the greatest theft ever seen by mankind, the trillions of dollars that disappeared thanks to banking deregulation. The rich were given the golden keys and they went nuts. If all the banks were state owned and controlled, none of this would be allowed to happen as the state would see the fraud happening first hand quickly and act accordingly.