Tuesday, July 14, 2015

Corzine Skips &  Bankers Jubilant  (Greece's Dire Economic Straits Not Only a Tragedy, But a Lie)  Greece Greased by Greedy?  (Guerrillas Gone)



Wall Street (Corzine and buddies) up, Greased Street down?

There seem to be lots of plans that the voters don't get to know.

Until the next election perhaps? (If then.) Don't miss the commenters, many of whom live in Greece and are seeing this attack on the ground (and yes you'll need more than one drink). From Zero Hedge, Penny for your Thoughts, and Coyote-Prime:

WaLL STReeT KiNG PiN EL CHaPo CoRZiNe ESCaPeS EVeRY TiMe!

Tsipras & Bankers, Esp. the IMF, Enslaved the Greek People. It Was Not Germany

"Bankers Get Away With It Again"

_ _ _ _ _ _ _

The Greek "Choice":  Hand Over Sovereignty Or Take Five Year Euro "Time Out"

Tyler Durden on 07/12/2015
For those who missed today's festivities in Brussels, here is the 30,000 foot summary -  Europe has given Greece a "choice":  hand over sovereignty to Germany Europe or undergo a 5 year Grexit "time out", which is a polite euphemism for get the hell out.

As noted earlier, here are the 12 conditions laid out as a result of the latest Eurogroup meeting, which are far more draconian than anything presented to Greece yet and which effectively require that Greece cede sovereignty to Europe, this time even without the implementation of a technocratic government.

  1. Streamlining VAT
  2. Broadening the tax base
  3. Sustainability of pension system
  4. Adopt a code of civil procedure
  5. Safeguarding of legal independence for Greece ELSTAT - the statistics office
  6. Full implementation of autmatic spending cuts
  7. Meet bank recovery and resolution directive
  8. Privatize electricity transmission grid
  9. Take decisive action on non-performing loans
  10. Ensure independence of privatization body TAIPED
  11. De-Politicize the Greek administration
  12. Return of the Troika to Athens (the paper calls them the institutions... for now)
One alternative, generously presented to Greece, is for the country to put some €50 billion of assets - the best ones - in escrow to creditors. A more polite was of putting would be a Greek secured loan. This is how the Luxembourg FinMin Pierre Gramegna laid it out:

"A few new ideas were added to the table, especially one which is very important for some member states, which is that Greece would put a portion of its assets into a company that would be more independent from Greece."
"More independent" from Greece and "more dependent" to Berlin.

Greece would place about €50 billion of state assets into an independent company. Those assets could serve as collateral against aid loans, Gramegna says. "It would act as a kind of guarantee. There is great hesitation from the Greek side and now the heads of state and government have to choose."

"It would be a company structure based in Luxembourg, which would be managed from Greece with supervision by the European Commission and by the European Investment Bank. It would remain in Greek hands but it would create more assurances if it was known that a lot of assets were in this company."

"If one knows that the third bailout package would cost more than EU80B, one understands that countries are urging for some guarantees from Greece."

In other words, Greece is told to set aside a quarter of its GDP for Europe to do as it sees fit, and which can be "seized" if Greece is seen as veering away from its third bailout promises again.

And since Greece has no option but to promise everything and the moon, it will surely comply hoping that it is once again allowed to promptly forget all the promises as soon as it pockets some of that €86 billion in new bailout funds just to unlock the €120 billion in deposits held hostage in Greek banks by the ECB, even if the resulting debt will push Greek debt/GDP well above 200%.

Why?

Because the alternative is, and we quote...

"In case no agreement could be reached, Greece should be offered swift negotiations on a time-out from the euro area, with possibly debt restructuring."
... from the Eurogroup document:



No wonder Tsipras looks like this at the moment:



Somehow we think that if the only "alternative" is ceding sovereignty to Merkel and the rest of the northern European state, the vast majority of the population - which now clearly understands there is little further upside from remaining in Europe - may just opt for the aptly named "time out" from the most destructive experiment in Greek history. And even beg to make it permanent.

Comments:
Sun, 07/12/2015 | 6302820 AlaricBalth

AlaricBalth's picture

The right of self determination among a culturally autonomous people to determine their own destiny within the international community must be inalienable.

My friends in Greece, George Orwell said, "If you want a vision of the future, imagine a boot stomping on a human face...forever". That boot is the Troika. If you don't shed the shackles of debt slavery now, the opportunity may never arise again.

No one knows what the future may hold, but be assured, history will remember when Greece stood up to its oppressors and rekindled the fire of democracy once more.

European Union Morphs Into The ‘3rd Reich’ Using Germany As The Enforcer

Sun, 07/12/2015 - 14:57 | 6303048 tlnzz

tlnzz's picture

Greece would be better treated if they belonged to the Mafia. At least there, they put you out of your misery when they would be done with you.

Sun, 07/12/2015 - 15:11 | 6303093

strannick


strannick's picture

Eurocrats better be careful, Dump a little debt, import some cheap Russian gas, and Greece might. go all Iceland on their asses... Now what kind of example would that be for the rest of the Euro debt slaves??

Sun, 07/12/2015 - 17:51 | 6303661 TruthInSunshine

TruthInSunshine's picture

Snap elections in Greece according to RanSquawk reports?
Anyways, Greece is setting up like the European Union equivalent of the Lehman failure circa-2009, especially if reports in financial press as of an hour ago are true (there's no way Greece will be able to stay in EU no matter what it agrees to at this late juncture, and Portugal is on deck, as northern EU block has done the math and decided neither can pay even 30% of existing debt back, let all e new credit extended, under any scenario - watch for Spain to be interrogated next).
But that's not the biggest global worry from a macroeconomic viewpoint - China's meltdown (which the Chinese Central Planners can't arrest, even halting 50% of stock market liquidity) is, coupled with sickness in Italy, Spain, France, and the Asian "Tigers" plus Brazil and India.
All accumulated debts of past 6 years in sovereigns plus record debt on books of publicly traded corporations (issued to buy back stock and fuel acquisitions), plus record private/household debt is now rearing its ugly, monstrous debt at the most inopportune time.

Sun, 07/12/2015 - 23:35 | 6304685 Save_America1st

Save_America1st's picture

It's not just a Greek thing...handing over sovereignty to the elitist, sociopaths of the NWO scum is their demand against the entire world.

Fight back.  And don't ever forget it.

Sun, 07/12/2015 - 15:24 | 6303162 Oh regional Indian

Oh regional Indian's picture

I read recently, with some trepedition, how Germany/Berlin were once again becoming a center of power.
The game is quite clear.
The US gets crushed, CaAmexico is one giant war material producer (material and living), EU will take on Russ-Asia, Israel will attempt to wolf down arab territory while the ME burns, Pacific and South China area keep bubbling with NOK/Tiwan/Senkaku/Reef island shit....
Iran is the pivot...
The 4th Reich is on, but it looks nothing like what one expected..

Sun, 07/12/2015 - 15:56 | 6303248 Skateboarder

Skateboarder's picture

It's going to be a nauseating next few years seeing the words "democracy", "freedom", "human rights", etc. bandied around as the drivers of the upcoming sovereign nation M&A as people are further impoverished and enslaved. Secession is a neat concept, but the motherfuckers would sooner genocide everyone than let a group of people live free from centralized opression on this rock.

Sun, 07/12/2015 - 16:09 | 6303294 Oh regional Indian

Oh regional Indian's picture

Yep....
Very Dune-ish scenarios playing out is how I see it at some point (perhaps getting "seriously weird" in 2019ish), once India and China have had their ridiculous booms to be followed by general, all around busting.
Only increasingly tangential solutions can untangle this mess...

Sun, 07/12/2015 - 19:08 | 6303985 Skateboarder

Skateboarder's picture

At some point, people have to say fuck you to odious debt. What are they gonna do, send in the guns, and turn the people into prisoners?
There is no way to stop this clusterfuck of exponentiation and growing indedebtedness of the people through the government to private banks owned by private individuals. If enough people band togther and say fuck you to the banks and banking altogether, we might make some progress.
For fuck's sake, there is absolutely no reason why a man should go hungry on this planet. So much food is simply thrown away, it's disgusting. Changes start from the heart, on how you treat people. There were indeed societies (India had some) in which basic necessities like foods were made free for everyone as a basic principle of living and working together. We can do it again, but it requires disconnecting from the rat race. Regardless, the one thing that binds all transactions is money, and that is the $IMFS (Dollar-based International Monetary-Financial System) as FOFOA calls it. Barter of physical goods, or exchange of labor is the only other option, because as you know, making your own money is "UHH-LLEEE-GULL."
A planet full of programmed to be "me-me-me" apes indebted to a bunch of dark lord motherfuckers via the channels known as "bank" and "government". God, what have we gotten ourselves into?
I think I need a beer.

Sun, 07/12/2015 - 14:57 | 6303049 weburke

weburke's picture
the elites are buying up greece then italy and spain on the cheap. evict the rabble.


Sun, 07/12/2015 - 15:33 | 6303189 layman_please

layman_please's picture

 "Privatize electricity transmission grid"

that's what it's all about. blatant asset stripping. at least from the financial point of view.

the best thing about the state companies is that they are monopolies. with that move they are buying an entire industry (or market).

Sun, 07/12/2015 - 16:22 | 6303327 Spitzer

Spitzer's picture

Just imagine being Greek and getting your electicty bill from Blackstone in a couple years.

Sun, 07/12/2015 - 16:43 | 6303399 Dapper Dan

Dapper Dan's picture

I wonder who will get Greece’s merchant fleet...

Greek Merchant Fleet Tops World Tonnage Ranking

http://greece.greekreporter.com/2014/05/06/greek-merchant-fleet-tops-world-tonnage-ranking/

Sun, 07/12/2015 - 18:10 | 6303731 SHRAGS


SHRAGS's picture

Simple, the EU Investment bank will tax sunshine, just like the attempt to outlaw the collection of "private" water that fell from the sky in Bolivia


(2000 Cochabamba protests https://en.wikipedia.org/wiki/2000_Cochabamba_protests)

Of course, that comes in the next phase when when once again, *ANOTHER* loan is required.  The best part is they will wait until the Greeks have installed the panels - the EU bankers don't even have the CAPEX, cash from the sun!  Imagine the ROI.


Sun, 07/12/2015 - 21:58 | 6304501 Ouagadoudou

Ouagadoudou's picture

Look who's already biggest private shareholder of Greece telecom and electricity......


Sun, 07/12/2015 - 13:50 | 6302765 somecallmetimmah

Sun, 07/12/2015 - 14:07 | 6302822 Lea

Lea's picture

"Can’t it produce a dozen, a handful, or at least ONE PERSON who can be called “The Great”?"

I'm European. We have plenty of great guys, great thinkers, experts of all kinds and good, sensible, smart blokes galore.

They are not in power anymore than they are in the USA, where you also have your good guys. Who are NOT in power because they are not corruptible.

Trouble with the good people being you can't buy them.

Sun, 07/12/2015 - 19:06 | 6303980 Elliott Eldrich


Elliott Eldrich's picture

"What happened to Europe? Can’t it produce a dozen, a handful, or at least ONE PERSON who can be called “The Great”?"
Be very careful about what you wish for.
"Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men." - Lord Acton

Sun, 07/12/2015 - 21:40 | 6304451 Augustus

Augustus's picture

What happened to Europe? 

Can’t it produce a dozen, a handful, or at least ONE PERSON who can be called “The Great”?

Perhaps Europe can again produce a great leader.

But it sure won't be Tzipass.

He appears to have that look of a child who just found out that there is not really a Santa Claus.  He sure seems quite old to have just found that out.

Sun, 07/12/2015 - 17:19 | 6303548 QQQBall

QQQBall's picture

. . . They are turning off the liquidity and showing Grease the stick. At this point, any "payment," asset collateral or sale, etc., is throwing good money after bad euros. Greece cannot pay the loans back - depending on the covenants, Grease has no choice than to default in whatever garbled name it is called...
I suppose EU can stop accepting Euros printed in Grease to blow them up, but EU banks likely hold hem. This is "Sky Fall" w/o the James Bond savior. Instead of a criminal syndicate, it is a corptocractic-facist financial coup.

Suggested Reading:

Make sure to read our "How To [Read/Tip Off] Zero Hedge Without Attracting The Interest Of [Human Resources/The Treasury/Black Helicopters]" Guide

The Problem of Greece Is Not Only a Tragedy. It Is a Lie

By John Pilger

Global Research, July 13, 2015
greece

An historic betrayal has consumed Greece. Having set aside the mandate of the Greek electorate, the Syriza government has willfully ignored last week’s landslide “No” vote and secretly agreed a raft of repressive, impoverishing measures in return for a “bailout” that means sinister foreign control and a warning to the world.

Prime Minister Alexis Tsipras has pushed through parliament a proposal to cut at least 13 billion euros from the public purse – 4 billion euros more than the “austerity” figure rejected overwhelmingly by the majority of the Greek population in a referendum on 5 July.

These reportedly include a 50 per cent increase in the cost of healthcare for pensioners, almost 40 per cent of whom live in poverty; deep cuts in public sector wages; the complete privatization of public facilities such as airports and ports; a rise in value added tax to 23 per cent, now applied to the Greek islands where people struggle to eke out a living. There is more to come.

“Anti-austerity party sweeps to stunning victory”, declared a "Guardian" headline on January 25. “Radical leftists” the paper called Tsipras and his impressively-educated comrades.  They wore open neck shirts, and the finance minister rode a motorbike and was described as a “rock star of economics”. It was a façade. They were not radical in any sense of that cliched label, neither were they “anti austerity”.

For six months Tsipras and the recently discarded finance minister, Yanis Varoufakis, shuttled between Athens and Brussels, Berlin and the other centres of European money power. Instead of social justice for Greece, they achieved a new indebtedness, a deeper impoverishment that would merely replace a systemic rottenness based on the theft of tax revenue by the Greek super-wealthy – in accordance with European “neo-liberal” values — and cheap, highly profitable loans from those now seeking Greece’s scalp.

Greece’s debt, reports an audit by the Greek parliament, “is illegal, illegitimate and odious”. Proportionally, it is less than 30 per cent that of the debit of Germany, its major creditor. It is less than the debt of European banks whose “bailout” in 2007-8 was barely controversial and unpunished.

For a small country such as Greece, the euro is a colonial currency: a tether to a capitalist ideology so extreme that even the Pope pronounces it “intolerable” and “the dung of the devil”. The euro is to Greece what the US dollar is to remote territories in the Pacific, whose poverty and servility is guaranteed by their dependency.

In their travels to the court of the mighty in Brussels and Berlin, Tsipras and Varoufakis presented themselves neither as radicals nor “leftists” nor even honest social democrats, but as two slightly upstart supplicants in their pleas and demands. Without underestimating the hostility they faced, it is fair to say they displayed no political courage. More than once, the Greek people found out about their “secret austerity plans” in leaks to the media: such as a 30 June letter published in the Financial Times, in which Tsipras promised the heads of the EU, the European Central Bank and the IMF to accept their basic, most vicious demands – which he has now accepted.

When the Greek electorate voted “no” on 5 July to this very kind of rotten deal, Tsipras said,

“Come Monday and the Greek government will be at the negotiating table after the referendum with better terms for the Greek people”. Greeks had not voted for “better terms”. They had voted for justice and for sovereignty, as they had done on January 25.
The day after the January election a truly democratic and, yes, radical government would have stopped every euro leaving the country, repudiated the “illegal and odious” debt – as Argentina did successfully — and expedited a plan to leave the crippling Eurozone. But there was no plan. There was only a willingness to be “at the table” seeking “better terms”.


The true nature of Syriza has been seldom examined and explained. To the foreign media it is no more than “leftist” or “far left” or “hardline” – the usual misleading spray. Some of Syriza’s international supporters have reached, at times, levels of cheer leading reminiscent of the rise of Barack Obama. Few have asked: Who are these “radicals”? What do they believe in?

In 2013, Yanis Varoufakis wrote:

“Should we welcome this crisis of European capitalism as an opportunity to replace it with a better system? Or should we be so worried about it as to embark upon a campaign for stabilising capitalism? To me, the answer is clear. Europe’s crisis is far less likely to give birth to a better alternative to capitalism …
“I bow to the criticism that I have campaigned on an agenda founded on the assumption that the left was, and remains, squarely defeated …. Yes, I would love to put forward [a] radical agenda. But, no, I am not prepared to commit the [error of the British Labour Party following Thatcher’s victory].
“What good did we achieve in Britain in the early 1980s by promoting an agenda of socialist change that British society scorned while falling headlong into Thatcher’s neoliberal trip? Precisely none. What good will it do today to call for a dismantling of the Eurozone, of the European Union itself  …?”
Varoufakis omits all mention of the Social Democratic Party that split the Labour vote and led to Blairism. In suggesting people in Britain “scorned socialist change” – when they were given no real opportunity to bring about that change – he echoes Blair.

The leaders of Syriza are revolutionaries of a kind – but their revolution is the perverse, familiar appropriation of social democratic and parliamentary movements by liberals groomed to comply with neo-liberal drivel and a social engineering whose authentic face is that of Wolfgang Schauble, Germany’s finance minister, an imperial thug. Like the Labour Party in Britain and its equivalents among those former social democratic parties still describing themselves as “liberal” or even “left”,  Syriza is the product of an affluent, highly privileged, educated middle class, “schooled in postmodernism”, as Alex Lantier wrote.

For them, class is the unmentionable, let alone an enduring struggle, regardless of the reality of the lives of most human beings. Syriza’s luminaries are well-groomed; they lead not the resistance that ordinary people crave, as the Greek electorate has so bravely demonstrated, but “better terms” of a venal status quo that corrals and punishes the poor. When merged with “identity politics” and its insidious distractions, the consequence is not resistance, but subservience. “Mainstream” political life in Britain exemplifies this.

This is not inevitable, a done deal, if we wake up from the long, postmodern coma and reject the myths and deceptions of those who claim to represent us, and fight.

From the Absurd to the Tragic

Those who lead Greece and its Left to surrender should be opposed.


by
Greece Prime Minister Alexis Tsipras with European Commission President Jean-Claude Juncker and French President François Hollande during a European Union leaders summit in April. François Lenoir / Reuters
Greece Prime Minister Alexis Tsipras with European Commission President Jean-Claude Juncker and French President François Hollande during a European Union leaders summit in April. François Lenoir / Reuters
Anyone living through, or even just following, developments in Greece knows all too well the meaning of expressions such as “critical moments,” “climate of tension,” “dramatic overturn,” and “pressing on the limits.” With developments since Monday, some new vocabulary will have to be added to the list: the “absurd.”
The word may seem strange, or an overstatement. But how else could one characterize the total reversal of the meaning of an event as amazing as the July 5 referendum, only hours after its conclusion, by those that called for a “no” vote to begin with?
How could one explain that New Democracy’s Vangelis Meimarakis and To Potami leader Stavros Theodorakis — heads of the camp so crushingly defeated on Sunday — should have become the official spokespersons for the line being followed by the Greek government? How is it possible for a devastating “no” to memorandum austerity policies to be interpreted as a green light for a new memorandum? And to put it in commonsense terms: if they were disposed to sign something even worse and even more binding than European Commission President Jean-Claude Juncker’s proposals, what was the point of the referendum and the struggle to achieve victory in it?
The sense of the absurd is not just a product of this unexpected reversal. It stems above all from the fact that all of this is unfolding before our eyes as if nothing has happened, as if the referendum were something like a collective hallucination that suddenly ends, leaving us to continue freely what we were doing before. But because we have not all become lotus-eaters, let us at least give a brief résumé of what has taken place over the past few days.
Last Sunday, the Greek people staggered Europe and the world, responding en masse to the government’s call and, in conditions unprecedented by the postwar standards of any European country, overwhelmingly voted “no” to the extortionate and humiliating proposals of the lenders. Both the extent of the “no” vote and its qualitative composition, with its enormous lead among workers and youth, testify to the depth of the transformations that have been occurring, or rather that have crystallized in such a short time, in Greek society.
Friday’s mass mobilizations, the climate “from below” that has prevailed over the last week, not to mention the enthusiastic wave of international solidarity, testify to the huge potential that is opened by the choice of popular political conflict rather than retreat.
But from Monday morning, before the victory cries in the country’s public squares had even fully died away, the theater of the absurd began. Under the aegis of the actively pro-Yes Greek president of the republic, Prokopis Pavlopoulos, the government summon the heads of the defeated parties to elaborate a framework for negotiation positing the euro as an unpassable outer limit of the Greek position and declaring specifically that it has no mandate to leave the monetary union.
The public, still in the joyful haze of Sunday, watches as the representative of the 62 percent subordinated to the 38 percent in the immediate aftermath of a resounding victory for democracy and popular sovereignty.
On Tuesday, the government, with no new “proposal” to make, transfers its operations to Brussels for the extraordinary Eurogroup meeting and, as is absolutely logical, finds itself confronted with a new and even harsher ultimatum. The next day Euclid Tsakalotos inaugurates his duties as finance minister (in the interests of brevity we pass over the factor of Yanis Varoufakis’ resignation, simply noting that it was a demand of the lenders) by sending to the European Stability Mechanism (ESM), the organization that manages the greater part of the Greek debt, a letter requesting a new loan of €50 billion, which will be accompanied of course by a third memorandum. It is envisaged, indeed, that the parliament will begin on Monday to vote on the relevant enabling legislation.
The Tsakalotos letter continues with references to Greece undertaking “to honor its financial obligations to all of its creditors in a full and timely manner.” It is obvious that despite the assurances that were heard after the proclamation of the referendum for “restarting discussions from scratch” the “negotiations” are continuing exactly from where they left off, with the Greeks lowering the bar for their opponents every step of the way.
The same day, pending the new Greek “proposals,” which were to be “reliable” and detailed,” Prime Minister Alexis Tsipras addresses the European Parliament and declares that “if my aim had been to take Greece out of the euro, I would not immediately after the closing of the polls have gone to make the statements I made and interpret the result of the referendum not as a mandate for a break with Europe but as a mandate for reinforcing our negotiating efforts so as to arrive at a better agreement.”
This amounts to more or less open acknowledgement that the result of the referendum was being interpreted with a specific end in mind, that of negotiation at all costs and avoidance of a rift.
In the same speech, the prime minister outlines quite succinctly the philosophy that for many weeks has been informing the whole stance of the Greek side and to which the parenthesis of the referendum has not brought the slightest change:

In these proposals we have evidently undertaken a powerful commitment to achieve the fiscal goals that are required on the basis of the rules, because we recognize, and respect, the fact that the eurozone has rules. But we reserve the right of choice, the right of being able, as a sovereign government, to choose where we shall place, and add to, the burden of taxation, so as to be in a position to attain the required fiscal objectives.
So the framework is given: it is that of the restrictive measures which secure fiscal surpluses and aim at the repayment of debt. It is incontestably the framework of the memoranda. The disagreement is over the “distribution of the burden.” It involves a (supposedly) “socially more just” variant of austerity, which will be presented as “redistribution” at the same time as it perpetuates the recession (every reference to commitment to non-recessionary measures has been effaced) and impoverishment of the majority.
In the meantime, and while these soothing reassurances are being put forward that demolish what has remained of Syriza’s programmatic commitments, there is a ramping up of the state of siege that the country is enduring, with the European Central Bank holding closed the spigot of liquidity and trimming even further the value of bank bonds, leading unavoidably to collapse.
And yet, despite the gravity of the situation and despite the fact that through the imposition of capital controls part of the road has already been covered, nobody, apart from Costas Lapavitsas and some cadres of the Left Platform, is speaking of the self-evident and basic measures of self-protection that are necessitated by circumstances of this kind, starting from public control and nationalization of the banking system.
The explanation for this is of course very simple: anything of this kind would place Greece with one foot outside the euro, which the government is completely unwilling to do, despite the fact that even mainstream economists like Paul Krugman assert that “the greater part of the cost has already been paid” and that it is time for Greece “to reap the benefits.”
A simple conclusion emerges from all this: with the moves it has made in the last week, the government has achieved nothing other than a full return to previous entrapment, from a much more unfavorable position, under the pressure of even more relentless economic asphyxiation. It has managed to squander the powerful injection of political capital from the referendum in record time, following at all points the line of those who had opposed it and who have every reason to feel vindicated, despite being trounced at the ballot box.
But the referendum happened. It wasn’t a hallucination from which everyone has now recovered. On the contrary, the hallucination is the attempt to downgrade it to a temporary “letting off of steam,” prior to resuming the downhill course towards a third memorandum.
And it seems that the government is precisely going down that suicidal road. Yesterday, late in the evening, it sent to all members of parliament (MPs) a hastily written, twelve-page text, written in English by experts sent by the French government and based on Tsakalotos’ request for a €50 billion loan to the ESM.

This is nothing but a new austerity package — actually, a “copy and paste” of the Juncker plan rejected by the electorate a few days ago. Its core is all too familiar: primary surpluses, cuts in pensions, increase in the VAT and other taxes, and a handful of measures to give it a slight flavor of “social justice” (e.g., an increase in the corporate tax rate by two points). The document was approved by all the major ministers except Panos Kammenos, head of the Independent Greeks party (ANEL), and Panagiotis Lafazanis, the leader of the Left Platform.
The parliament has been called to vote on this text today, under the same emergency procedures that were previously forcefully denounced by Syriza. In many aspects this process can be considered a “parliamentary coup” since the parliament is asked to vote on a text that is neither a bill, nor an international agreement, giving a kind of carte blanche to the government to sign off any loan agreement. But this parliamentary approval has been explicitly set as a condition for any further negotiation by the German finance minister, Wolfgang Schäuble.
As was predictable, and probably even planned, this proposed agreement has triggered an uproar inside Syriza. For the moment, most of the strong reactions are come from the Left Platform and other currents of Syriza’s left wing such as KOE, the Maoist organization that has four MPs. In today’s dramatic meeting of Syriza’s parliamentary group, Lafazanis, minister of energy and leader of the Left Platform, said the agreement is “incompatible with Syriza’s program” and “doesn’t offer a positive perspective to the country.” The Left Platform ministers are expected to resign today.

Thanassis Petrakos, one of the three speakers of Syriza’s parliamentary group and a prominent member of the Left Platform, declared:

The “no” of the referendum was a radical and a class “no.” Some high-ranked comrades insist on the “there is no other way” logic. We should prepare exiting the eurozone and say that clearly to the people. The Left has a future when it opens its wings to the unknown, not to nothingness. Those who insist on the choice of staying in the euro whatever the cost might know that it is a disaster. We need a prepared exit to open up a new path. The first steps are the public control of the banks and of the Greek central bank and a crackdown on oligarchy.
Varoufakis is also said to have opposed the agreement, as well as some MPs from the group of the “fifty-three” (the left wing of the majority), although in an internal meeting held yesterday a significant gap appeared between the rank-and-file and middle-range cadres, strongly opposed to the agreement, and the MPs, much more inclined to support it. The vote that will take place late in the evening will certainly be of crucial importance for the future developments, but also for the future of Syriza.

Whatever happens in the next few hours and days, one thing should be clear: any attempt to cancel the popular will for the overturn of austerity and the memoranda amounts to hubris in the ancient Greek sense of the term. Whoever dares to lead the country, and the Left, to surrender and to dishonor should be ready to face the corresponding Nemesis.

Translated by Wayne Hall.
Stathis Kouvelakis teaches political theory at King’s College London and serves on the central committee of Syriza.

“Guerrilla Warfare Against a Hegemonic Power”:  The Challenge and Promise of Greece

Posted on by Ellen Brown

Banks create money when they make loans. Greece could restore the liquidity desperately needed by its banks and its economy by nationalizing the banks and issuing digital loans backed by government guarantees to its ailing businesses. Greece could provide an inspiring model of sustainable prosperity for the world. But it is being strangled by a hegemonic power in a financial war that is being waged against us all.
On July 4, 2015, one day before the national vote on the austerity demands of Greece’s creditors, it was rumored in the "Financial Times" that Greek banks were preparing to “bail in” (or confiscate) depositor funds to replace the liquidity choked off by the European Central Bank.
The response of the Syriza government, to its credit, was “no way.” As reported in Zerohedge, the government was prepared to pursue three “nuclear options” to protect the deposits of the Greek people:
  • nationalize the banks,
  • launch a parallel currency in the form of electronic California-style IOUs, and
  • use the Greek central bank’s printing press to issue euros.
Ambrose Evans-Pritchard wrote in the UK Telegraph:

Syriza sources say the Greek ministry of finance is examining options to take direct control of the banking system if need be rather than accept a draconian seizure of depositor savings – reportedly a ‘bail-in’ above a threshhold of €8,000 – and to prevent any banks being shut down on the orders of the ECB.
Government officials recognize that this would lead to an unprecedented rift with the EU authorities. But Syriza’s attitude at this stage is that their only defense against a hegemonic power is to fight guerrilla warfare.
The Hegemonic Power of the ECB
The Greek crisis is a banking crisis, and it was precipitated largely by the Mafia-like tactics of the European Central Bank and the international banks it serves (notably Goldman Sachs). As Jeffrey Sachs observed in the "Financial Times" in 2012:

The Greek economy is collapsing not mainly from fiscal austerity or the lack of external competitiveness but from the chronic lack of working capital. Greece’s small and medium-sized enterprises can no longer obtain funding. . . . The shutdown of Greece’s banking sector brings to mind the dramatic shrinkage of bank lending during 1929-33 in the Great Depression.
Economist James Galbraith explains the critical role of the ECB in this shutdown:

A central bank is supposed to protect the financial stability of solvent banks. But from early February, the ECB cut off direct financing of Greek banks, instead drip-feeding them expensive liquidity on special “emergency” terms. This promoted a slow run on the banks and paralyzed economic activity. When the negotiations broke down, the ECB capped the assistance, prompting a fast bank run and giving them an excuse to impose capital controls and effectively shut them down.
In December 2014, when the Greek Parliament was threatening to reject the pro-austerity presidential candidate, Goldman Sachs warned in a memo:

In the event of a severe Greek government clash with international lenders, interruption of liquidity provision to Greek banks by the ECB could potentially even lead to a Cyprus-style prolonged “bank holiday”.
And that is exactly what happened after the anti-austerity Syriza Party was elected in January. Why would the ECB have to “interrupt liquidity provision” just because of a “clash with international lenders”? As noted by Mark Weisbrot, the move was completely unnecessary.
The crisis to which it has led was described by Evans-Pritchard on July 7th:

Events are now spinning out of control. The banks remain shut. The ECB has maintained its liquidity freeze, and through its inaction is asphyxiating the banking system.
Factories are shutting down across the country as stocks of raw materials run out and containers full of vitally-needed imports clog up Greek ports. Companies cannot pay their suppliers because external transfers are blocked. Private scrip currencies are starting to appear as firms retreat to semi-barter outside the banking system.
The Tourniquet of the Central Bank
It is not just Greek banks but all banks that are dependent on central bank liquidity, because they are all technically insolvent. They all lend money they don’t have. As the Bank of England recently acknowledged, banks do not actually lend their deposits. Rather, they create deposits when they make loans. They do this simply with accounting entries. There is no real limit to how much money they can create, so long as they can find creditworthy customers willing to borrow it.
The catch is that the bank still has to balance its books at the end of the day. If it comes up short, it can borrow from the banks into which its deposits (whether “real” or newly created) have migrated. Banks can borrow from each other at very low rates (in the US, the Fed funds rate is 0.25%). They keep the difference in rates as their profit.
The central bank, which has the power to print money, is the ultimate backstop in this money-creating scheme. If there is leakage in the system from cash withdrawals or transfers to foreign banks, the central bank supplies the liquidity, again at very low bankers’ rates.
That is the way the system should work. But in the Eurozone, the national central banks of member countries have relinquished their critical credit power to the European Central Bank. And the ECB, like the US Federal Reserve, marches to the drums of large international banks. The central bank can flick the credit switch on or off at its whim. Any country that resists going along with the creditors’ austerity program may find that its banks have been cut off from this critical liquidity, being branded no longer “good credit risks.” That damning judgment becomes a self-fulfilling prophecy, as is now happening in Greece.
Turning the Credit Spigots Back On
The problem now for Greece is how to restore bank liquidity without the help of the ECB. One way would be to leave the Eurozone and return to its own national currency, as many pundits have urged. Its central bank could then issue all the drachmas needed to fund the government and provide cash for the banks.
But that alternative comes with other major downsides, including that the drachma would probably plummet against the euro. Greek leaders have therefore sought to stay in the Eurozone, but that means dealing with the bank runs that are bleeding the banks of euros. It also means bowing to ECB regulation, something the ECB is attempting to impose on all Eurozone banks.
Assuming, however, that Greece stays in the EU, might there be a way that the government could restore the liquidity necessary to keep its banks and the economy afloat, without the help of the ECB and while continuing to use the euro?
Consider again the Bank of England’s bombshell 2014 report called “Money Creation in the Modern Economy.” According to the BOE, 97% of the money supply is now created by banks when they make loans. British banks create digital pounds. US banks create digital dollars. And Greek banks create digital euros.
How it all works is explained by Kumhof and Jakab in an IMF paper called “Banks Are Not Intermediaries of Loanable Funds — And Why This Matters.” They note that the chief practical limit to the digital creation of money is simply the willingness of banks to make loans. The central bank can create massive “excess reserves” (as the Fed did with “quantitative easing”), but bank lending to local businesses will not increase if the banks do not see a profit in it. The problem is called “pushing on a string”: there is no mechanism for forcing banks to make loans.
That is true in a private commercial system, but in a nationalized system, the government can “pull” on the string. It can manage the lending of its state-owned banks, as China and Japan have done for decades. Loans to local businesses can be guaranteed with government letters of credit in lieu of capital; and if some loans turn out to be “non-performing,” they can be written off or just carried on the books, as China has also done for decades. The money was created as accounting entries and can be carried on the books as accounting entries.
The Greek government could follow China’s lead and nationalize its private banks, all of which are insolvent. It could then use their digital money machines to pump liquidity back into the economy, by making loans to all those once-viable businesses now starved of funds. Restoring their credit lines would allow them to pay for workers and materials, generating purchasing power and sales, increasing employment and the tax base, and generally reversing the economic death spiral induced by insufficient money in the system to keep the wheels of production turning.
In an All-digital System, the Books Are Always Balanced.
Balancing the books can easily be achieved in a closed, nationalized, digital banking system, so long as liquidity can be kept from leaking out in the form of physical cash withdrawals or transfers to foreign banks. Money transferred digitally within the system can always be found somewhere and borrowed back by the bank from which it was transferred, balancing its books.
The remaining question is, how to deal with leakage in the form of cash withdrawals or transfers to foreign banks? One radical possibility would be to go all digital: cash would no longer be official legal tender after some designated date. President Roosevelt did something similar when he took the dollar off the gold standard and ordered people to cash in their gold for paper dollars in 1933.
That approach, however, is highly controversial. Ideally, it could be avoided by simply paying an attractive digital bonus for depositing physical cash in the banks, and paying an attractive interest rate to keep it there. A sizable fee could also be charged for cash withdrawals or transfers outside Greek banks. This would not actually be a “haircut,” since the digital euros would be available for use at full value so long as they were transferred by bankcard or check within the digital banking system. The transfer penalty could be phased out over time as cash deposits were built up. In effect, the money would just be on loan at interest to the banks for several years.
Another alternative would be to run the euro printing press at the Bank of Greece, something that is apparently being done quietly already. As precedent, Ireland’s central bank quietly printed €51 billion in 2011.
Another much-discussed alternative would be for Greece to leave the EU and simply issue drachmas. But as of this writing, it looks as if the creditors have strong-armed Greek leaders into accepting their harsh austerity measures in order to stay in the EU.
Greece blazed the trail globally for political democracy, but modeling a sustainable economic democracy may have to wait for another day.
____________
Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at EllenBrown.com.

Remember when the infamous Goldman Sachs delivered a thinly-veiled threat to the Greek Parliament in December, warning them to elect a pro-austerity prime minister or risk having central bank liquidity cut off to their banks? (See January 6th post here.) It seems the European Central Bank (headed by Mario Draghi,…">The ECB’s Noose Around Greece:  How Central Banks Harness Governments

Greece and the troika (the International Monetary Fund, the EU, and the European Central Bank) are in a dangerous game of chicken. The Greeks have been threatened with a "Cyprus-Style prolonged bank holiday" if they "vote wrong." But they have been bullied for too long and are saying “no more.”…">EU Showdown: Greece Takes on the Vampire Squid

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Responses



  1. Faz, on July 9, 2015 at 7:05 pm said:

    Brilliant idea, to use the evil of loaning electronic Euros into existence as a way around the lack of the original printing plates.




  2. tcarb, on July 9, 2015 at 7:18 pm said:

    Reblogged this on Scarabocchi and commented:
    If Greece were to issue a digital currency to replace the Euro; a temporary measure with many precedents – including Roosevelt in 1933.






  3. ernesthuber, on July 9, 2015 at 7:31 pm said:

    Greeks:
    1. Immediately reissue your debt-free drachmas as cyber currency to fund your federal operations, then issue paper currency.
    2. Disavow any national “debt” to any bank, since you received nothing of value — currency has no actual value, only representational value in commerce. You were scammed.
    3. Ban private banking, and the charging and receiving of interest.
    4. Create state-run, non-profit, interest-free lending utilities for all personal, business, and infrastructure loans.
    5. Prosecute the owners and executives of the EU banking crime syndicates for racketeering, and ensure they forfeit their assets to your people.
    6. Severely punish those in your government who are syndicate accomplices.
    7. For international trade, avoid reserve currencies and use barter and exchange.
    8. Create your money supply by spending it into existence on your people, and basing it on productivity, instead of borrowing it into existence from the syndicates.
    9. Ignore economists — most of them aid and abet the banking crime syndicates.
    10. Do 1-9 and your nation will be the most prosperous in the world within 5 years.
    Of course, steps 1-10 apply to all nations. Perhaps the Greeks will follow these steps, lead by example, and save the rest of the world. Please share this post with the Greeks, and others.


    • ErnieM, on July 10, 2015 at 2:50 am said:
      Excellent post, Ernest! There is plenty of historical evidence in Ellen Brown’s The Public Bank Solution that confirms the soundness of your advice. Greece should know that being under the yoke of the ECB, the IMF, and Goldman Sachs is the road to continued ruin. It would do much better to align itself with China and Russia.



      • ernesthuber, on July 10, 2015 at 12:54 pm said:

        Thank you, Ernie. The banking criminals are terrified that if Greece liberates itself from them, then that will start an international avalance that will stop their massive crimes against humanity. So they want Greece to get more “debt relief,” commonly called refinancing for more debt. The Greeks and the world don’t need debt relief, because there is no debt for the banking criminals’ worthless cyber currency. We need banker relief by enforcing our criminal laws against them and their government accomplices for racketeering. Only the very stupid would turn their monetary systems over to banking crime syndicates like the Federal Reserve, then negotiate for more crimes to be committed against them through “debt relief.” This is a matter for intense law enforcement. We enforce our laws, or we remain slaves.
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