Straightjacket
Eurozone rules trap 17 dissimilar countries. Greece proved most
vulnerable. It's cratering under imposed austerity.
It's
the epicenter of Europe's deepening economic crisis. Fed up Greeks want
change. May 6 parliamentary elections favored anti-austerity
candidates.
Coalition
talks failed. On June 17, new elections may or may not settle things.
Round one runner-up SYRIZA (the Coalition of the Radical Left)
campaigned on "tear(ing) up the barbaric accord."
"We are being asked to agree to the destruction of Greek society. SYRIZA won't betray the Greek people."
It's
expected to emerge first and gain an automatic extra 50 parliamentary
seats. Polls show it's gaining strength. With or without enough support,
forming an anti-austerity coalition looks problematic.
How
far an eventual government will go remains to be seen. Policies usually
belie campaign rhetoric. Beleaguered Greeks want promises made
fulfilled. Getting relief is another matter entirely.
Across
Europe, "(l)eft-wing parties, socialist parties, labor parties all say
that they’re going to preserve the social contract, and as soon as they
get into power, they sell out to their financial backers, they double
cross labor."
Preserving
Europe and saving banks comes first. People needs don't matter.
Sacrifice demands deep social cuts, unemployment, and poverty. Few have
the political will to refuse. So far, no Eurozone country dared.
Expect hard times to get harder unless public rage forces revolutionary change. That's a bridge not yet crossed.
Greeks
reject austerity. "You can scarcely blame them for throwing out a
corrupt political establishment. It is also indisputable that the
economic prescription written by its international creditors is
astonishingly harsh."
Nonetheless, the FT claims:
"Greece
is sailing between the Scylla of creditor-imposed depression and the
Charybdis of the chaos of unilateral debt repudiation and exit from the
euro."
Breaking
up is hard to do. So is major surgery. Healing and recovery take time.
It's done because the alternative is unacceptable. Greece faced that
choice long ago. It kicked the can down the road and did nothing. It
agreed to impoverish its people to pay bankers.
It
delayed, equivocated, sacked an elected prime minister, and replaced
him with a Goldman Sachs connected unelected one. Temporary government
will serve until elections produce a new one.
Council
of State (the Supreme Administrative Court of Greece) head Panagiotis
Pikramemos serves as interim premier. President Karolos Papoulias
appointed him. Technocrats are in charge until post-election. It's main
task is to prepare for June 17. According to Greece's constitution, it
can't enact new laws.
Earlier
Pikramemos ruled that bailout conditions and IMF mandates don't violate
Greece's constitution. Austerity remains policy. A SYRIZA-led
government may be too weak to change it.
Elections
rarely settle things. Whether public rage shifts the balance isn't
known. It's close to exploding. People don't want new bums replacing old
ones. They won't likely get what they want.
Likely
coalition partners SYRIZA and the Democratic Left (DIMAR), its spinoff,
oppose austerity. They also insist Greece must maintain the euro "at
all costs." Tsipras said leaving would be "disastrous." He'll "do all
(he) can" to prevent it.
To
form a new government, he'll need one or more conservative partners
unless SYRIZA's popularity soars well above its 28% level. DIMAR has
around 5%.
Keeping
the euro requires following Troika (EU, ECB and IMF) diktats. Otherwise
expect Eurozone expulsion. Bailout funds going mostly to bankers end.
SYRIZA faces heavy pressure to yield.
Tsipras
wants bailout terms renegotiated. He pledged to cancel "austerity
measures and (rebuild Greece) from the ruins left behind by the parties
of the cuts."
No
concrete demands were made. Troika leaders won't renegotiate. A
SYRIZA-led government won’t get much choice. In the end, expect business
as usual to continue. At most, Troika rules may be modestly softened.
It'll be too little to matter. What's next is anyone's guess.
Opinions
vary on Greece leaving the euro. Some analysts ask if it's ready to go
it alone? Others say it's inevitable. Will exiting trigger other
departures? Other troubled economies could follow. Ireland, Spain and
Portugal are especially vulnerable.
Falling
euro currency valuations suggest uncertainty. Even before exiting,
Greek banks could collapse. From January 2010 through March 2012, nearly
one-third of deposits were withdrawn. In recent days, nearly another $1
billion sought safety. More does daily to avoid devaluation if the
drachma's restored.
Greek
bankers told President Papoulias they're worried about surviving if
depositors shift funds abroad. According to economist Yannis Loannides,
it's a "very serious problem." The only way to stop a bank run is for
the ECB to guarantee deposits held by regional lenders to guard against
contagion.
In
March, commercial and personal deposits in Greek banks totaled 165.4
billion euros. Greece's government has enough cash for another six
weeks. Without help, bankruptcy and default loom. Restructuring is long
overdue.
In
the 1990s, Argentina swore never to abandon its currency board. In
2001, it yielded under severe pressure. Deep recession and severe pain
ensued. Strong growth followed restructuring. Creditors had no choice.
Greece
can go the same way. Restructuring will leave it debt free. Exiting
euro straightjacket rules means regaining control of its monetary and
fiscal policy. Once crisis conditions pass, growth can follow.
Like
Argentina, Greece has sovereign rights. It's high time it reclaimed
them. Moreover, it'll set a long overdue precedent for other troubled
Eurozone countries to follow.
Creditors
and banksters should eat losses, not ordinary people who had nothing to
do with creating them and current crisis conditions. Having things turn
out that way faces long odds.
An
unwritten contract endows banking giants with an inalienable right to
plunder taxpayers for their own self-interest. Elected officials are
bribed, bullied and pressured to go along.
Tactics
used work. An occasional "flash crash" and mountains of ready campaign
crash gain supporters. Unknown under the table amounts sweeten deals and
seal them with some on the fence.
More
of the same assures harder than ever hard times. Crisis conditions
across Europe build. Greece is the canary in the coal mine. Spain,
Portugal, Ireland, and Italy aren't far behind.
On
May 31, Irish citizens face a choice, or do they? They'll vote in a
national referendum on EU fiscal policy. Many oppose renewing the
current treaty. Others favor it. Some aren't sure either way.
The
governing Labour-Fine Gael coalition and opposition Fianna Fail support
austerity and banker bailouts. Tactics include intimidating voters to
expect economic collapse unless continue.
Finance
Minister Michael Noonan said deeper social cuts will follow a no vote.
Large investors warn they'll shift funds elsewhere. At the same time,
cuts assure deeper ones and greater crisis conditions.
Unemployment
and poverty grow. How much people will take remains to be seen. Parties
on both sides and union bosses offer no fundamental change. Instead of
repudiating a corrupted system, they support it.
In
Ireland and across Europe, ordinary people are alone in the fight for
change. Getting it won't be easy. One referendum up or down barely
scratches the greater problem.
Perhaps
Greece or another country declaring bankruptcy will send a message too
resonant to ignore. Eventually it looms. What can't go on forever,
won't.
A Final Comment
What's
hitting Europe affects America. Data releases show it. Most recent ones
fell below expectations. Household survey employment dropped two
consecutive months.
Labor
force participation plunged to a 30-year low. Minus Q I mild weather,
real GDP stagnated. Nonresidential construction contracted. So did
business spending and durable goods orders.
Production
is softening. The May Philadelphia Fed May manufacturing index plunged.
From April's +8.5, it dropped to -5.8. Economists expected an increase
to 10.0. New orders and hiring expectations also contracted. The March
production diffusion index dropped from 62.8 to 44.6. It's the lowest
level since mid-2009.
The
Conference Board reported its index of leading economic indicators fell
0.1% in April. Economists expected a gain. Real final sales fell at an
annual 1% rate. Real wage-based incomes fell for the past two months as
well as four of the last five.
Households
on food stamps, receiving disability benefits, and having withdrawn
from the labor force are at record highs. Consumer confidence reflects
recession, not growth.
Near-zero
interest rates punish savers and retirees. Approaching retirement for
many reflects uncertain darkness at the end of the tunnel.
A
new University of Michigan study found one-fifth of outstanding
household credit card balances, student loans, medical bills, and other
unsecured debts exceed savings.
The
percent of household with no savings or negative net worth approaches
25%. Things aren't improving. They're worsening. Growth is nowhere in
sight.
Since
2009, Obama's $1.5 trillion fiscal stimulus went largely to corporate
favorites and America's super-rich already with too much. Less than $100
billion targeted infrastructure spending, and much of that hasn't been
spent.
Less
than $50 billion went to beleaguered homeowners and other ways to
resurrect housing. At the same time, trillions were provided for banker
bailouts. Totals are unknown. Official ones top $9 trillion.
Tax
cuts for the rich and bailing out banks at the expense of the economy
assure protracted hard times. Job creation has been largely moribund.
Good ones are are hard to find.
Nothing
done since 2008 turned a sick economy into a healthy one. Severe
problems remain. They fester. Unemployment and poverty are at Depression
levels. Hiring plans are down, not up. Layoffs continue. Government
payrolls declined by nearly half a million.
A
housing crisis continues. Wages for most workers are flat. Adjusted for
inflation, they're down. Over the past decade, they declined over 10%.
In Q IV 2011, federal spending dropped 6.9%. State and local levels fell
2.2%.
They
reflect major protracted economic drags. In Q I 2012, manufacturing
exports slowed. Q II continues to look weak. In an election year when
incumbents need growth to attract votes, a downward trajectory spells
trouble. Expect worse results ahead.
Mainstream
economists expected US growth to stimulate EU recovery and sustain
emerging market strength. Evidence grows Europe is in deep trouble and
BRIC countries are heading for hard, not soft, landings.
Decoupling from the global economy doesn't work. What affects Europe hits America. As they go, so does the world.
Today's
downward trajectory is steepening. Months from now expect worse, and
post-election worst of all when bipartisan agreement to slash another $4
trillion in mostly social spending over the next decade kicks in.
How
long will growing millions put up with what's intolerable? How long
before they explode? Expect it when they're broke, out of luck, on their
own, and know federal, state and local help won't come.
Expect
it when rent payments can't be made and families can't be fed. That's
when push comes to shove. Will it make a difference? Only the fullness
of time will tell.
Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.
His new book is titled "How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War"
Visit
his blog site at sjlendman.blogspot.com and listen to cutting-edge
discussions with distinguished guests on the Progressive Radio News Hour
on the Progressive Radio Network Thursdays at 10AM US Central time and
Saturdays and Sundays at noon. All programs are archived for easy
listening.
Stephen Lendman is a frequent contributor to Global Research. Global Research Articles by Stephen Lendman
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