Greek Myths and Real Solutions
Michael Burke dismantles some Greek myths repeated by keen representatives of the City, like Boris Johnson in a recent piece on the Guardian’s Comment is Free:
Those about Greek workers….
“Although German tabloids such as Bild daily spew out nonsense about the work-shy Greeks, the opposite is the case. Greek workers have the greatest work pressures of all European countries, with the second-longest weekly hours and the greatest level of weekend working. Who says? The EU.”
Those about additional Greek bailouts being needed because of a reluctance to ‘reform’
The myth has evolved that the reason another bailout is needed is the failure of the Greeks to carry out the necessary cuts and tax increases. This is untrue. Spending was actually more than €700m lower in the year to May than had been allowed by the EU/IMF impositions. Falling taxation revenues are the problem, as the cuts themselves have sent the economy into a tailspin. Government revenues are more than €1.9bn lower than projected as a result. The total deficit for that period was €9bn, just €1.2bn worse than expected.
Those about how the bailout was for Greece…
“…the money was provided not to Greece, but to its creditors. These are European - including British - banks, who have been paid to exit the Greek debt markets. All the solvent banks took their money and ran while only the needy or the greedy remain.”
And finally, those about how leaving the Euro and a Greek disorderly default would be a good thing for Greece.
“Barclays Capital estimates that British banks now have very little direct exposure to Greek debt. It is even possible that some have taken positions that will benefit from a Greek default. In both British and US banking circles, the idea that a Greek debt default is “inevitable” is now widespread.
The willingness to advocate exiting the euro and a disorderly default arises from these institutions who mistakenly think they will escape the consequences - or even benefit from them.”
Michael says a disorderly default would be catastrophe for the whole of Europe, and those who are calling for it, like the London mayor Boris Johnson, have the interest of only a few select European banks at heart.
Michael has a more detailed analysis of the situation that the EU is putting Greece in over on Socialist Economic Bulletin today, where he points out that the first Greek bailout was
….one for private creditors - primarily European (including British) and US banks. This was both predicted and predictable, with the FT’s chief economics commentator Martin Wolf noting at the time that the impositions on Greece were worse even than those on Argentina, because the private creditors were being paid to exit the market.
And provides an details on a viable solution, should politicians in Greece and the EU choose to use it…
Therefore, rather than another bailout for private creditors there should be a first bailout for the Greek economy, so that it can be invested productively and growth restored. This should be financed by the core economies, at no greater cost than their intended further bank bailout. Other countries might be willing to participate if there were reasonable investment returns on infrastructure, housing or other investment, perhaps including China.
On the domestic front, there are large resources available in the Greek economy, if only the government chose to access them.
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