The Greeks Are Being Unfairly Maligned by Global Financiers: The Truth Is Very Different

Beyond the anti-Greek media campaign lies the story of a weary people caught between a corrupt political system and rapacious financiers. Sound familiar?
October 17, 2011  |

Photo Credit: AFP
Yiannis manages a small inn in Crete. The 50-year-old from Heraklion with salt-and-pepper hair and a hefty moustache has a son just graduating from college.

“We tell the young people to leave,” he says quietly. “There’s nothing for them here.” Protests and strikes are sweeping the nation, but Yiannis doesn’t like talking about the economy. I sense a feeling of pride holding him back. But he does offer this insight: “We know that it is the ordinary people, not the rich and the powerful, who pay for this.”

The Lazy Greek Meme

Greece is a land of ancient myth. But more recent myths have made Greeks like Yiannis cringe when foreigners start asking questions.

Greeks are lazy. They don’t work. They’re profligates who are taking down Europe. The caricature has become so common that a recent TV commercial in Slovakia used it to sell beer, drawing a contrast between the virtuous Slovak and the paunchy Greek indulging himself on a beach.

Most foreigners know Greece from holidays spent lolling on its beaches and drifting around its magical ruins. You could easily take it for granted that everybody here is just chilling out. They aren’t. The Greek labor force, comprising 5 million souls, works the second highest number of hours per year on average among countries in the Organization for Economic Development (OECD), right after South Korea. Greeks work 42 hours per week, while the industrious Germans toil just 36.

The average Greek worker earns a bit over $1,000 a month. Private sector employees are the most underpaid in the EU. Even before the harsh austerity measures imposed by the EU and the IMF, the Greeks had already cut the real average wages in the private sector to 1984 levels. This week the Greek parliament is expected to vote on measures that would place 30,000 public sector workers in a “labor reserve” at slashed pay – up to 40 percent.

Greeks retire a bit later than the European average. And the average pension, $990, is less than that of Ireland, Spain, Belgium, and the Netherlands. Thirty percent of the labor force works with zero Social Security or protections, while in the rest of the EU only 5-10 percent of workers are in this precarious situation.

So much for the myth of the overpaid, lazy Greek.

The reality is simple, though rarely admitted – except maybe by Yiannis, who seems to know exactly what’s happening. The “bailout” of Greece is really a bailout of big European banks. A game of smoke and mirrors leads us to think that Greek indolence led to financial ruin. The Greeks have done some things wrong, to be sure. But it was a dangerous mix of stupid economic theories and high-flying finance, fueled by a corrupt government, that exploded the economy. If all this sounds sickeningly familiar, it should. We’re witnessing Round 2 of the Great Global Shakedown by the banks.

Mini-History of the Modern Greek Economy

In modern history, southern economies have typically been weaker than those in the north. They industrialized later and only fitfully; large landowners often dominated them far into the 20th century. Economic growth was painful, marked by big deficits, bloody political conflicts and instability. You can see this in the history of Italy, Spain, and even France to a degree, but especially in Greece. The Greeks got socked in WWII and then creamed again by a brutal civil war (1946–1949), in which American military aid to the Greek governmental army ensured the defeat of the Greek Communist Party.

After WWII, the Truman Doctrine and the Marshall Plan determined relations between the U.S. and Europe. The economic recovery of Germany—designed to benefit American multinationals like IBM, Ford and General Motors – was a high priority. (Watch a fascinating lecture by economist Joseph Haveli here.) Greece mattered to the U.S. as a strategic barrier against the USSR in the Cold War, so it decided to support Greece with economic and military aid, fearing that another communist domino would fall.

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20 Signs That A Horrific Global Food Crisis is Underway

I read this article in ProphecyNewsWatch.com and thought it would be good for my prophecy and news updates.

http://www.prophecynewswatch.com/2011/April22/2292.html

The food situation is very serious and I’ve been reporting for the last several years that it just keeps getting worse. Now we are at a time when the world leaders are hording food in underground warehouses and shelters.

 

There is very adequate evidence that a global food crisis is underway and deepening almost daily. The already poor are being hit the hardest but it is also apparent that even the much wealthier middles classes in Western Cultures are beginning to feel the crunch, due mainly to unemployment and the rising cost of living.

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We’ve Been Warned: The System Is ready to Blow

New-York-stock-exchange

Traders work at the New York Stock Exchange on 9 August. Photograph: Stan Honda/AFP/Getty Images

For the past two centuries and more, life in Britain has been governed by a simple concept: tomorrow will be better than today. Black August has given us a glimpse of a dystopia, one in which the financial markets buckle and the cities burn. Like Scrooge, we have been shown what might be to come unless we change our ways.

There were glimmers of hope amid last week’s despair. Neighbourhoods rallied round in the face of the looting. The Muslim community in Birmingham showed incredible dignity after three young men were mown down by a car and killed during the riots. It was chastening to see consumerism laid bare. We have seen the future and we know it sucks. All of which is cause for cautious optimism – provided the right lessons are drawn.

Lesson number one is that the financial and social causes are linked. Lesson number two is that what links the City banker and the looter is the lack of restraint, the absence of boundaries to bad behaviour. Lesson number three is that we ignore this at our peril.

To understand the mess we are in, it’s important to know how we got here. Today marks the 40th anniversary of Richard Nixon’s announcement that America was suspending the convertibility of thedollar into gold at $35 an ounce. Speculative attacks on the dollar had begun in the late 1960s as concerns mounted over America’s rising trade deficit and the cost of the Vietnam war. Other countries were increasingly reluctant to take dollars in payment and demanded gold instead. Nixon called time on the Bretton Woods system of fixed but adjustable exchange rates, under which countries could use capital controls in order to stimulate their economies without fear of a run on their currency. It was also an era in which protectionist measures were used quite liberally: Nixon announced on 15 August 1971 that he was imposing a 10% tax on all imports into the US.

Four decades on, it is hard not to feel nostalgia for the Bretton Woods system. Imperfect though it was, it acted as an anchor for the global economy for more than a quarter of a century, and allowed individual countries to pursue full employment policies. It was a period devoid of systemic financial crises.

Utter mess

There have been big structural changes in the way the global economy has been managed since 1971, none of them especially beneficial. The fixed exchange rate system has been replaced by a hybrid system in which some currencies are pegged and others float. The currencies in the eurozone, for example, are fixed against each other, but the eurofloats against the dollar, the pound and the Swiss franc. The Hong Kong dollar is tied to the US dollar, while Beijing has operated a system under which the yuan is allowed to appreciate against the greenback but at a rate much slower than economic fundamentals would suggest.

The system is an utter mess, particularly since almost every country in the world is now seeking to manipulate its currency downwards in order to make exports cheaper and imports dearer. This is clearly not possible. Sir Mervyn King noted last week that the solution to the crisis involved China and Germany reflating their economies so that debtor nations like the US and Britain could export more. Progress on that front has been painfully slow, and will remain so while the global currency system remains so dysfunctional. The solution is either a fully floating system under which countries stop manipulating their currencies or an attempt to recreate a new fixed exchange rate system using a basket of world currencies as its anchor.

The break-up of the Bretton Woods system paved the way for the liberalisation of financial markets. This began in the 1970s and picked up speed in the 1980s. Exchange controls were lifted and formal restrictions on credit abandoned. Policymakers were left with only one blunt instrument to control the availability of credit: interest rates.

For a while in the late 1980s, the easy availability of money provided the illusion of wealth but there was a shift from a debt-averse world where financial crises were virtually unknown to a debt-sodden world constantly teetering on the brink of banking armageddon.

Currency markets lost their anchor in 1971 when the US suspended dollar convertibility. Over the years, financial markets have lost their moral anchor, engaging not just in reckless but fraudulent behaviour. According to the US economist James Galbraith, increased complexity was the cover for blatant and widespread wrongdoing.

Looking back at the sub-prime mortgage scandal, in which millions of Americans were mis-sold home loans, Galbraith says there has been a complete breakdown in trust that is impairing the hopes of economic recovery.

“There was a private vocabulary, well-known in the industry, covering these loans and related financial products: liars’ loans, Ninja loans (the borrowers had no income, no job or assets), neutron loans (loans that would explode, destroying the people but leaving the buildings intact), toxic waste (the residue of the securitisation process). I suggest that this tells you that those who sold these products knew or suspected that their line of work was not 100% honest. Think of the restaurant where the staff refers to the food as scum, sludge and sewage.”

Finally, there has been a big change in the way that the spoils of economic success have been divvied up. Back when Nixon was berating the speculators attacking the dollar peg, there was an implicit social contract under which the individual was guaranteed a job and a decent wage that rose as the economy grew. The fruits of growth were shared with employers, and taxes were recycled into schools, health care and pensions. In return, individuals obeyed the law and encouraged their children to do the same. The assumption was that each generation would have a better life than the last.

This implicit social contract has broken down. Growth is less rapid than it was 40 years ago, and the gains have disproportionately gone to companies and the very rich. In the UK, the professional middle classes, particularly in the southeast, are doing fine, but below them in the income scale are people who have become more dependent on debt as their real incomes have stagnated. Next are the people on minimum wage jobs, which have to be topped up by tax credits so they can make ends meet. At the very bottom of the pile are those who are without work, many of them second and third generation unemployed.

Deep trouble

A crisis that has been four decades in the making will not be solved overnight. It will be difficult to recast the global monetary system to ensure that the next few years see gradual recovery rather than depression. Wall Street and the City will resist all attempts at clipping their wings. There is strong ideological resistance to the policies that make decent wages in a full employment economy feasible: capital controls, allowing strong trade unions, wage subsidies, and protectionism.

But this is a fork in the road. History suggests there is no iron law of progress and there have been periods when things have got worse not better. Together, the global imbalances, the manic-depressive behaviour of stock markets, the venality of the financial sector, the growing gulf between rich and poor, the high levels of unemployment, the naked consumerism and the riots are telling us something.

This is a system in deep trouble and it is waiting to blow.

Gerald Celente: The Entire System Is Collapsing

The number of people filing new claims for jobless benefits jumped last week after three straight declines, another sign that the pace of layoffs has not slowed. Gerald Celente says that there is no way governments can just keep pumping money into the economy and it will only get worse, with an eventual crash.

Student Fears in Jobless America

Barack Obama, the US president, sounded a positive note on Friday following the reports of a rise in regional employment opportunities when he spoke to workers at a company in the state of North Carolina.

The president said the US economy still had a long way to go until it fully recovers, and that many people were still suffering the effects of the recession.

Among those facing grim employment prospects are university students. With graduation time approaching, those leaving school are entering a bleak labour market.

Al Jazeera‘s Rob Reynolds visits a group of students to hear their concerns about the future.

 

United States Students Drown in a Sea of Debt

American university students are beginning the new year with a mountain of debt. There is now $850bn owed in outstanding tuition costs and paying back the money is an ongoing challenge.

Two in every three American students graduate with loans outstanding, and the current debt is 11 times the total it was just two decades ago.

The average yearly cost of a bachelor’s degree in the US is between $5 000 and $43 000, compared to just over $5 000 in Canada and $1 300 in much of the European Union.

Experts say a college degree is an important investment, but in a difficult job market it is an investment that could take a lifetime to pay off.

Al Jazeera‘s Tom Ackerman reports.

 

For more about this subject watch this compelling documentary called College  Conspiracy.

College Conspiracy

College Education in the United States and other parts of the world has become the new money machine. The money is made by those delivering the ‘education’ and not the recipients of the system’s worthless degrees.