What caused the Greek crisis?

[Red Jace]

I'm still kind of lost as to what caused the Greek crisis, or if/how capitalism caused it.

So could anyone explain to a recent communist-convert what caused the whole mess?

Or am I asking too broad of a question? Please tell me if I am.

[Prof. Oblivion]

Greece has a very high level of debt with no control over its monetary policy, as that is handled for the entire EU by the ECB.

[cyu]

http://everything2.com/title/austerity

This is the key thing to do when you control the government: borrow as much as you can from the bankers, doesn't really matter what the terms are, as long as it's not so outrageous that your countrymen kick you out.

Then spend that money in whatever way you want, preferably in ways that favor the rich, such as union busting, undermining labor movements around the world, making the world safe for "pro-business" (ie. pro-exploitation) governments, bailing out institutions of the rich.

Finally, now that all the money is spent, get the poor in your country to pay back the money, with a hefty interest, to the rich who control the banks. And if they can't pay? Well, slash all social programs. Say austerity measures are all we can do at this point. Make the unemployed beg to be exploited.

[feeLtheLove]

Money...

[tuwix]

I'm still kind of lost as to what caused the Greek crisis, or if/how capitalism caused it.

So could anyone explain to a recent communist-convert what caused the whole mess?

Or am I asking too broad of a question? Please tell me if I am.


Greece came into so-called the Eurozone that means the zone that the currency is Euro. It was the greatest error they've done. The rest are only ramifications. But I will describe them:

The treaty of the Eurozone enforces a limit of budget deficit on certain level. The reason oft that is avoid an excessive inflation. Until 2010 or 2011 nobody cared about that, but German bourgeoisie using their puppet who is German chancellor Angela Merkel started to care. That caused a harsh austerity measures in Greece, Spain, Portugal.

[Vladimir Innit Lenin]

Money...

This is a sub-forum of the 'Theory' forum. Please keep away from one word answers in the future, they don't really contribute much to the conversation.

[cyu]

Similar crises have also occurred all across Latin America (and elsewhere) previous to the current Eurozone crisis. The IMF in those cases invariably stepped in and demanded austerity measures and pro-exploitation "reforms" in exchange for money to pay wealthy lenders.

I wouldn't say those other crises were too similar to the Eurozone - although you might argue that giving up control of your economy to capitalists (which basically happens almost everywhere that there is a wealthy class) will result in the kind of crisis where the wealthy will use their political power to save their trust funds while pushing everyone else into poverty.

[Workers-Control-Over-Prod]

Greece has a very high level of debt with no control over its monetary policy, as that is handled for the entire EU by the ECB.

High levels of government debt hardly cause crises, look at Japan with 250% of its yearly GDP government debt. As to the reason of this European crisis, I tried to give some insight with this thread (http://www.revleft.com/vb/european-crisis-heart-t174495/index.html).

[Sperm-Doll Setsuna]

High levels of government debt hardly cause crises, look at Japan with 250% of its yearly GDP government debt. As to the reason of this European crisis, I tried to give some insight with this thread (http://www.revleft.com/vb/european-crisis-heart-t174495/index.html).

True, but it will very well be used as an excuse either way. We'll probably see a lot of this coming up with the psychopathic LDP reign to come in Japan. They've promised utter rapaciousness and murderous cuts.

[Workers-Control-Over-Prod]

True, but it will very well be used as an excuse either way. We'll probably see a lot of this coming up with the psychopathic LDP reign to come in Japan. They've promised utter rapaciousness and murderous cuts.

And after that, most likely another World War to spice things up... Japan in my opinion (or rather, what I have heard from comrades in Japan), is crumbling more and more into the grip of the bourgeois-neo-fascists, with class-conscious workers being arrested for spreading pamphlets and the like. If such a development continues, then I don't see much of an option besides People's War and the formation of a guerrilla Red Army. Japan certainly seems like a decent place for such a triste tactic if necessitated.

[TheRedAnarchist23]

You guys forget that the crisis is not just national, it is global. The crisis in Greece did not originate in Greece, the same as the Portugese crisis did not originate in Portugal.

[Delenda Carthago]

You guys forget that the crisis is not just national, it is global. The crisis in Greece did not originate in Greece, the same as the Portugese crisis did not originate in Portugal.
The same for Ireland,Spain, Italy, Iceland, USA etc.

Its called capitalism people! Thats what it does, it has periodical crisis! If you need to know what causes the crisis, lets talk about it, but to even speak on greek, or debt, crisis its already false.

[TheRedAnarchist23]

The same for Ireland,Spain, Italy, Iceland, USA etc.

Its called capitalism people! Thats what it does, it has periodical crisis! If you need to know what causes the crisis, lets talk about it, but to even speak on greek, or debt, crisis its already false.

Delenda, you are the only one who can understand me, we are both from crisis countries.

[Workers-Control-Over-Prod]

The same for Ireland,Spain, Italy, Iceland, USA etc.

Its called capitalism people! Thats what it does, it has periodical crisis! If you need to know what causes the crisis, lets talk about it, but to even speak on greek, or debt, crisis its already false.

Yes comrade, this is indeed a global systemic capitalist crisis. But in the advanced capitalist countries, the crisis is more severe, with more debt and lower rates of profit. Europe has even another problem on the global liberal capitalist financial collapse of 2008. Greece has the more advanced crisis than the rest of Europe, because the Greek working class has been more powerful than in other parts of Europe, where union membership is lower, wages have stagnated and hence inflation is lower, resulting in higher profitability for capital investment; add the liberal capitalist EU Currency Union fixing exchange rates, and it is a disaster antagonizing the national economies of Europe. All these factors together were poised against any capitalist state solution to the crisis, hence the viscious austerity from all center-left to right politicians, ending in tremendous amount of economic contraction and human suffering. Europe is facing a Depression, the rest of the World is merely facing a shitty, unstable economy that can fall at any time due to the financial deregulated speculation world. But Europe could drag down America, and the world.

[Manic Impressive]

The thing which sets Greece apart from Ireland, Portugal and Spain is that Greece have been involved in a mini cold war for the last 39 years. An arms race with their neighbors Turkey at least since the Turkish invasion of Cyprus in 1974. Since that time Greek governments have spent over E216 billion on arms so it can "defend" itself. Guns, tanks and submarines were Greece's drug of choice and one of their main suppliers? Germany. The German government were more than happy to feed the Greek habit and then lend it money to carry on shooting those armaments straight up their veins. Part of the bailout package to Greece contained a clause that stipulated that Greece follow through with obligations to fulfill German arms contracts. To put the Greek habit in perspective from 2002-2006 Greece was the WORLD'S 4th largest importer of conventional weapons. Spending roughly 10% of GDP on arms compared to the average of Europe's 2%.

Something to bare in mind next time you hear a political commentator say that the Greek problem are the result of an unrealistic welfare state.

[Delenda Carthago]

Yes comrade, this is indeed a global systemic capitalist crisis. But in the advanced capitalist countries, the crisis is more severe, with more debt and lower rates of profit. Europe has even another problem on the global liberal capitalist financial collapse of 2008. Greece has the more advanced crisis than the rest of Europe, because the Greek working class has been more powerful than in other parts of Europe, where union membership is lower, wages have stagnated and hence inflation is lower, resulting in higher profitability for capital investment; add the liberal capitalist EU Currency Union fixing exchange rates, and it is a disaster antagonizing the national economies of Europe. All these factors together were poised against any capitalist state solution to the crisis, hence the viscious austerity from all center-left to right politicians, ending in tremendous amount of economic contraction and human suffering. Europe is facing a Depression, the rest of the World is merely facing a shitty, unstable economy that can fall at any time due to the financial deregulated speculation world. But Europe could drag down America, and the world.


The crisis is not in Europe only. As a matter of fact, USA for example has been damaged harder than countries of Europe like Germany. But its only in the begining, it has a long way to go still. We havent seen yet but the intro of the whole show. It is not by accident that even China has seen some of the biggest effects,both economical and on the class war level, in the last decades.

Just give it time...

[cyu]

At a certain level, you might also argue these crises have the Cold War at their root. Because "Western powers" feared the "existential threat" of the Soviet Union, they used that fear as a pretext to justify all sorts of anti-democratic actions. Actions that ultimately undermined all the governments they touched, leading to the pervasive corruption that permeates pro-capitalist countries today.

http://www.huppi.com/kangaroo/CIAtimeline.html

1947
Greece — President Truman requests military aid to Greece to support right-wing forces fighting communist rebels. For the rest of the Cold War, Washington and the CIA will back notorious Greek leaders with deplorable human rights records.

1965
Greece — With the CIA’s backing, the king removes George Papandreous as prime minister. Papandreous has failed to vigorously support U.S. interests in Greece.

1967
Greece — A CIA-backed military coup overthrows the government two days before the elections. The favorite to win was George Papandreous, the liberal candidate. During the next six years, the "reign of the colonels" — backed by the CIA — will usher in the widespread use of torture and murder against political opponents. When a Greek ambassador objects to President Johnson about U.S. plans for Cypress, Johnson tells him: "F**k your parliament and your constitution."

[TheRedAnarchist23]

http://www.huppi.com/kangaroo/CIAtimeline.html

They forgot about the CIA backed coup in Portugal 1974, and support of right-wing government so as to stop communist revolution in Portugal.

[Art Vandelay]

The internal contradictions of capital accumulation.

[thethinveil]

Basically because Greece cannot print money like a nation like the US can - it doesn't have the fail safe of printing money to pay off debts. In the US we could handle our debt by printing money. Greece can't do this because the power to print money was handed over when they joined the Euro. And with a shrinking economy it seems like the debt will never be payed down. So the politicians have started cutting social programs. This has caused riots in Greece. And Germany, who has the power to lessen the burden is demanding loans are paid back immediately, making matters worse. I can't say for sure that these problems were not caused by over accumulation but most point to deregulation of the financial industry as the primary cause for the Financial crisis. Banks took out more than they are worth (because it is presumed the bank makes safe bets) and then invested in risky products that aren't easily evaluated. So they were left with a bunch of paper that represented fractions of a mortgage. Many people invested because housing was going up around the world, higher than many ever predicted. Anyways, that bubble burst, the instruments bankrupted the banks, the banks were bailed out by government and government has taken to cutting social programs to help pay for it all. This is basically what is happening everywhere except China where they passed large stimulus measures.

[LeonJWilliams]

Greece's economy was/is heavily geared towards tourism.

When the US housing bubble collapsed because creditors were lending money to people with bad credit history people/institutions/countries suffered a loss of 'confidence' peoples' incomes went or reduced and no longer afford to go abroad for their holidays.

Tourism geared countries suffered the most (Mediterranean countries in particular) while countries with a more diverse economy didn't suffer as much.

I guess it's true what they say, don't put all your eggs in one basket!

[Vladimir Innit Lenin]

Greece's economy was/is heavily geared towards tourism.

When the US housing bubble collapsed because creditors were lending money to people with bad credit history people/institutions/countries suffered a loss of 'confidence' peoples' incomes went or reduced and no longer afford to go abroad for their holidays.

Tourism geared countries suffered the most (Mediterranean countries in particular) while countries with a more diverse economy didn't suffer as much.



This is a non-sequitor. Firstly, holidays are not the only form of tourism. Secondly, most people don't need to borrow money to go on holiday.

Thirdly, there are a load of countries - Costa Rica, Cuba etc. - who rely on tourism as an important plank in their economies, who have not suffered the fall-out from the international financial crisis.

Rather, countries suffered because they were institutionally dependent on the finance (for servicing debt, for capital spending and for day-to-day government) that has now dried up, meaning that the line of credit that ran to governments of countries such as Greece has now dried up. Of course, when the economy slows, the tax take reduces (significantly if the economy slows significantly), meaning that the government effectively runs out of money from a multitude of sources.

I'm really not sure 'tourism' has the effect you're thinking it has.

[Die Neue Zeit]

It doesn't help that a tax evasion culture is rampant in that country.

[Workers-Control-Over-Prod]

It doesn't help that a tax evasion culture is rampant in that country.

Ah, rubbish. Greece fell into a crisis not because of its tax collecting system, but because Capital did not gain such strengths in the struggle against Labor as northern European Capital, foremost Germany, did.

For more than ten years the EU countries have had independent national wage/inflation politics within the same currency. This has lead to higher profitability-investments-growth in the countries where workers' wages have been suppressed-prices have been kept down, and to higher prices in the mostly southern European economies that consumed a lot-have had higher inflation rates, leading to higher prices-unprofitable investment, falling growth. No growth + global financial crisis / billions in government bailout debt + remaining in the liberal competitive capitalist EU = major crisis. The tax system is hardly to blame.

http://alphanow.thomsonreuters2.netdna-cdn.com/wp-content/gallery/spain-in-charts/chart2.jpg

It's a failure of the liberal capitalist EU system (http://www.revleft.com/vb/european-crisis-heart-t174495/index.html), along with the global financial crisis of 2008 obviously as well as the continuing systemic crisis of profitability in the advanced capitalist countries.

[Nevsky]

Ah, rubbish. Greece fell into a crisis not because of its tax collecting system, but because Capital did not gain such strengths in the struggle against Labor as northern European Capital, foremost Germany, did.

You are absolutely right about the competitive EU system's fault but I wouldn't dismiss Die Neue Zeit's point as "rubbish". I think that tax evasion heavily contributed to the economic failure. And by that I don't mean the "greeks are lazy and don't pay taxes" prejudice from the capitalist populists. The problem are the super-rich elites who don't pay enough to the state, even by european capitalist standards.

Greece is full of luxury mansions, expensive cars and yachts without registered owners. The state simply left the rich parasites alone. Now the EU imposed austerity programs hurt the average population - innocent of the economic disaster - instead of punishing the speculants.

The tax evasion mentality is a serious problem here in Italy, too. Many berlusconian people think that it's a cool "tough guy"-thing to cheat the state. The result is complete social decline...

[Vladimir Innit Lenin]

Of course, what DNZ said was that 'it didn't help', which doesn't necessarily have anything to do with 'causing the crisis'. Rather, DNZ is employing language as usual to obfuscate his real purpose, which is to advance his own institutionalist/post-Keynesian agenda of reforms within the current capitalist framework; for Europe, read 'reform the EU'.

[Workers-Control-Over-Prod]

You are absolutely right about the competitive EU system's fault but I wouldn't dismiss Die Neue Zeit's point as "rubbish". I think that tax evasion heavily contributed to the economic failure. And by that I don't mean the "greeks are lazy and don't pay taxes" prejudice from the capitalist populists. The problem are the super-rich elites who don't pay enough to the state, even by european capitalist standards.

Greece is full of luxury mansions, expensive cars and yachts without registered owners. The state simply left the rich parasites alone. Now the EU imposed austerity programs hurt the average population - innocent of the economic disaster - instead of punishing the speculants.

The tax evasion mentality is a serious problem here in Italy, too. Many berlusconian people think that it's a cool "tough guy"-thing to cheat the state. The result is complete social decline...

It is rubbish within the context that no one here has pointed out the core scientific reason for the crisis within the European Union and the background of global financial crisis. The Greek State did not get into trouble on the international lending markets in 2010 because of a "tax evasion culture", conversely the collapse of national GDP and cutting of wages caused a collapse of the debt-serving tax system which rests on income tax contrary to Capital or corporate tax. The capitalist crisis in Europe and Greece has next to nothing to do with some kind of culture of tax evasion; all capitalist states have their burden of tax collection on workers and not the bourgeoisie. Any capitalist government that has to continually bail out the banking system and debt-ridden capitalist enterprises sees itself forced to 'cut the deficit' to keep lenders happy. Of course, you cannot tax the masses of unemployed more, so what do you do? Cut. Austerity. Even further collapse. Anything but making sure that the bourgeoisie pays its own bills.

Blaming a "culture of Tax Evasion" misses the whole point. It is fact that Italy has the worst tax evasion in Europe, according to a relative of mine who works for the German tax bureau. The difference between the Greek and Italian international market lending positions has been that the national economic crisis developed profoundly worse in Greece than in Italy, a crisis rooted in the system of the Euro, initiated by the global financial crisis and exacerbated by the overall low rates of profits (consequantially, higher Debts) that Greece was the champion of through a decade of the Euro system. Eventually the appearance of Debt- (possibly Euro-) skeptical parties in form of Syriza and KKE made lenders more nervous, fully forcing Greece to ask partner-countries to lend money on the international markets for them; here of course Austerity-on-steroids comes in.

[Vladimir Innit Lenin]

The tax evasion mentality is a serious problem here in Italy, too. Many berlusconian people think that it's a cool "tough guy"-thing to cheat the state. The result is complete social decline...

Implying that without a tax evasion mentality, social decline isn't manifest.

Sorry, this just doesn't hold up.

[cyu]

Greece's economy was/is heavily geared towards tourism.

don't put all your eggs in one basket!

Yep and yep. That's the inherent weakness of banana republics. If other countries ever stop wanting your bananas, then the only thing you got is a s**tload of bananas.

From http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs there will always be a need for the stuff at the bottom. Other stuff will always be sacrificed first in times of economic crisis or other emergencies. So if your economy is primarily involved in the "other stuff", then your economy would be among the first to be sacrificed.

Personally, I would only recommended getting involved in the "other stuff" for 2 reasons:

1. All the lower stuff is already satisfied domestically and you don't really need to develop those sectors of your economy anymore.
2. The lower stuff isn't developed yet, but you're actively using the income from the "other stuff" to develop the "lower stuff".