When the housing bubble burst a few years ago, we were shown how banks took loans, bundled them into securities and then sold the securities as US Federally guaranteed investments. That scheme has cost billions in tax dollars to correct, billions in income losses to millions of Americans (yet alone the rest of the world’s economy)and we are still suffering from the impact of the “Great Recession”. We saw the banks dictating terms to people who had lost their jobs and were then losing their homes. Then turn and ask the US Federal Government to help them.
Today, we see Greece, in debt to banks (the IMF, the EU Central Bank and other smaller banks world wide) and being dictated to on how to raise money and not spend it on themselves. Greece has never been a world economic power. Its history has been in the riches of ideas and art. Even the great conquests of Alexander the Great did not bring great wealth to Greece, but in turn brought Greek thinking and ideas to the the lands he conquered.
What the banks and currency lenders are asking of Greece is to bow to their power, and to destroy the lives of the workers and the retired. When Greece entered the Euro, its economy too a dip, and has never recovered. The price of goods increased, yet wages did not increase proportionally. We saw this in all the Mediterranean countries, Italy, Spain and Portugal all suffered this rise in prices and stagnation of wages. To counter this, the governments of these countries tried to save their people, the most vulnerable being pensioners, from a slow destruction of their financial life. These pensions were given not out of wasteful spending, but out of the necessity to allow those on pensions to survive in dignity.
Every economist, from the most liberal to the most conservative, will tell you that VAT taxes, and sales taxes are regressive taxes that affect the poor and the working classes the most. Yet, these are the places that the banks are asking Greece to raise money.
In the uncertain world of former Soviet Satellite Countries, Greece is and has been vulnerable to the uncertainties of military aggression. When the major economies of Europe are cutting their military spending (putting a larger portion of spending in defending Europe and NATO nations upon the United States) they are asking the same of Greece. The Greek Government is resisting these cuts, as they should.
Do not be surprised, if within the next few months, you see large loans, at better terms, coming to Greece from Russia and China. These loans will enable Greece to survive, but in the long term, the Euro will go away from Greece, NATO will have more to be concerned about, and the defending of Greece will become a Slav issue, taken on by Russia.
The solution is not easy, but a slow transition away from the Euro for Greece and a return of the Drachma would help the working people of Greece, and isn’t that more important than profits for banks and money institutions that are willing to dictate terms no longer just to individuals, but to sovereign nations?