Sunday, July 05, 2015

Greek Bailouts for Creditors, not Economic Recovery

Greek Bailouts for Creditors, not Economic Recovery

by Stephen Lendman

Troika bandits are running a giant Ponzi scheme - wealth transfer looting of Greece's economy and population to benefit banksters violating the EU constitution prohibiting bail-outs. They violate Maastricht and Lisbon Treaty provisions.

State financing through ECB purchases of government bonds is prohibited. Article 125.1 of the Treaty on the Functioning of the European Union forbids one member state from bailing out another, stating:

"The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project." 

"A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project."

Greece is in a financial death spiral caused by economic mismanagement and multiple bailouts imposing a crushing burden too great to bear. The more assumed, the worse things get.

Banksters profit at the expense of economies they loot and populations they punish. Taxpayers are on the hook for most unserviceable debt. 

Greece is Exhibit A for what's planned across Europe, in America and elsewhere - mass thirdworldizing to create ruler-serf societies worldwide benefitting monied interests through grand theft and crushing debt peonage.

Bailouts are based on the fiction of financial aid to stabilize economies and help restore growth. Ponzi schemes require new money to pay investors. Without it, things collapse.

Public Ponzi schemes are more flexible than private ones. Financing can let debt grow exponentially with no theoretical finite limit - at least until taxpayers rebel and stop irresponsible practices or economies collapse under their own weight. What can't go on forever, won't.

Greece is a stark example of how Troika bandits operate. Around 90% of what's loaned goes to pay European financial institutions. The rest lets the country continue operating by paying bureaucrats and other public employees, etc. 

Nothing goes to stimulate recovery and economic growth. The more money borrowed, the greater the death spiral at the expense of crushing burdens on ordinary people and looted Greek wealth, assets and enterprises.

Greek debt is odious - illegitimately incurred to benefit powerful monied interests at the expense of its economy and people. The obvious solution is default - walking away, refusing to pay, wiping the slate clean and starting over to restore economic health, freed from Troika-imposed debt peonage.

Doing the right thing works. In December 2001, Argentina halted all debt payments to domestic and foreign creditors. Months earlier, an IMF loan didn't help. 

Nearly $100 billion in debt was restructured, completed in 2005 on a take it or leave it basis. Stiff haircuts were imposed on bondholders agreeing to terms of around 65%, deciding something was better than nothing. 

Most holdouts out capitulated in 2010 on similar terms. 
Sustained economic growth followed from 2003 through 2007, helped by debt restructuring and a devalued currency. 

Greece and other troubled Eurozone countries can resolve their financial burdens the same way - by rejecting odious debt bondage, reclaiming their sovereignty, controlling their own monetary and fiscal policies, reinstituting their pre-euro currencies, and beginning the path back to economic growth.

Icelanders suffered hugely when economic crisis conditions hit in 2008. Many lost everything. A fourth of its homeowners faced mortgage default.

Today Iceland is a modern-day success story. It rejected austerity and bank bailouts, imprisoned crooked bankers, devalued its currency to stimulate exports, maintained vital social services throughout troubled times and restored economic growth.

President Olafur Ragnar Grimsson enjoys strong public support - reelected for a fifth term in 2012.

In 2013, he asked "(w)hy are the banks considered to be the holy churches of the modern economy? Why are private banks not like airlines and telecommunication companies and allowed to go bankrupt if they have been run in an irresponsible way?" 

"The theory that you have to bail out banks is a theory that you allow bankers enjoy for their own profit, their success, and then let ordinary people bear their failure through taxes and austerity," he added. 

"People in enlightened democracies are not going to accept that in the long run." Western leaders aren't like Grimsson. Instead of governing responsibly for all their people, they serve monied interests exclusively at the expense of their own people.

A Final Comment

Greeks are voting up or down as this is written on whether to accept most harsh austerity terms or all of them - in return for bailout help for banksters, not them or their economy.

The obvious choice not offered is rejecting austerity entirely and following the Argentine or Icelandic models. Irresponsible SYRIZA governance denies them the only way back from the financial abyss not taken.

Stephen Lendman lives in Chicago. He can be reached at lendmanstephen@sbcglobal.net. 

His new book as editor and contributor is titled "Flashpoint in Ukraine: US Drive for Hegemony Risks WW III."

http://www.claritypress.com/LendmanIII.html

Visit his blog site at sjlendman.blogspot.com. 

Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network.


It airs three times weekly: live on Sundays at 1PM Central time plus two prerecorded archived programs.