Thursday, February 23, 2012

The continuing saga of Greece vs. the banksters

An Argentine decides to hand out some advice learned the hard way—don't play with the banksters, stand up to them, and run their collaborators out of your government.  I only have a third of this thing posted here—the rest is clearly worth reading.

Argentine advice for Greece: ‘Default Now!’
Adrian Salbuchi
23 February, 2012

Here in Argentina, when we watch the terrible things that are happening today in Greece, we can only exclaim, “Hey!! That’s exactly what happened in Argentina in 2001 and 2002…!”
A decade ago, Argentina too went through a systemic Sovereign Public Debt collapse resulting in social turmoil, worker hardship, rioting and street fights with the police.

Some months before Argentina exploded, then-President Fernando de la Rúa – forced to resign at the height of the 2001 crisis – had called back as finance minister the notorious pro-banker, Trilateral Commission member and Rockefeller/Soros/Rhodes protégée Domingo Cavallo.
Cavallo was the gruesome architect of Argentina’s political and economic capitulation to the US and UK when he was President Carlos Menem’s foreign minister and economy minister in the ’90s. 
Menem and Cavallo are primarily responsible for Argentina’s signing of a formal Treaty of Capitulation with the UK/US after the 1982 Falklands War, opening up our economy to unrestricted privatization, deregulation and grossly excessive US Dollar-indebtedness, almost tripling our sovereign debt in a few short years (see my February 11, 2012 article British Laughter in the Falklands).

The Plan? Prepare Argentina for planned weakening, bankster take-over and collapse, so that a new weakening-takeover-collapse cycle could begin. In 2001, Cavallo was back to finish his work…

During that very hot summer in December 2001, true to its Latin temperament, Argentina even had four (yes, 4!) presidents in just one week. One of them, Adolfo Rodriguez Sáa, who only lasted three days, at least did one thing right, even if he did it the wrong way: he declared Argentina’s default on its sovereign debt.

All hell broke loose! The international bankers and IMF did everything they could to break Argentina’s back; global media pundits predicted all kinds of impending catastrophes. Debt default meant Argentina would have to weather the pain and agony alone, being cast out by the “international financial community”.

‘You’re not the boss of me!’ 
But no matter how bad it got, it would always be better to do that without the bankers, without the IMF’s, European Central Bank’s, US Fed’s and US Treasury’s “help”. Better to sort out your mess on your own, than to have parasitic banker vultures carving out their pound of flesh from your nation’s decaying social and economic body. And how bad did it get in 2002? A 40 per cent drop in GDP; 30 per cent unemployment; 50 per cent of the population fell below the poverty line; dramatic, almost overnight, devaluation against the US Dollar from 1 peso per dollar to 4 pesos per dollar (then it tapered down to 3 pesos per dollar); if you had a US dollar Bank account, the government forced you to change it into pesos at the rate of 1.40 pesos per dollar. What did Argentina’s government do wrong? In the months leading to collapse it bowed to all the bankers and IMF-mandated measures and “recipes”, which were actually the very cause of collapse: Argentina was loaned far more than it could pay back…. And the banker knew it! This was described in our December 19, 2011 article, Argentina: Tango Lessons.

Successive governments since then have continued to be functional to banker interests by rolling over debt 30 to 40 years, aggregating huge interest and in 2006 paying the full debt to the IMF – almost US$10 billion in full, cash and in US dollars (sole entity given most-favoured creditor status).

Same vultures circling Greece

Today, Greece is confronted with a similarly tough decision. Either it keeps its sovereignty, or it capitulates to the “Vulture Troika” – the European Central Bank, European Commission and International Monetary Fund – who work for the Bankers, not the People.
Not surprisingly, today we find that Greece too has a Trilateral Commission Rockefeller/Rothschild man at the helm: Lucas Papademos who is doing the same things Argentina did in 2001/2.

Argentina not only suffered Cavallo, but President De la Rúa himself was co-founder of the local Global Power Masters lobby, CARI – Argentine International Relations Council – local branch of the New York-based Council on Foreign Relations, networking with the Trilateral Commission / Bilderberg mafia.

Greece today should do what Argentina did a decade ago: better to endure pain and hardship, and sort out the mess made by your politicians in connivance with international bankers on your own, wielding whatever shred of sovereignty you still have than allowing the Banker Vultures sitting in Frankfurt, New York and London decide your future. more
Michael Hudson is fed up with banksters and their rackets too.  Here he described how Greeks in the streets are making sure these crazy "bail-out" packages can be repudiated as odious debt.

This is from Der Spiegel.  Naturally, the Germans are worried that future Greek governments will take Hudson's advice.
A Political Establishment in Freefall
Greece Lurches to Left Amid Radical Austerity
By Julia Amalia Heyer in Athens   02/21/2012

A radical austerity drive has triggered the biggest political upheaval in Athens since the end of the military dictatorship in 1974. So far, it is leftist parties who have benefitted the most from the debt crisis. The deeply divided left, however, would likely be unable to form a stable coalition.

Alexis Tsipras walks up to the lectern like Elvis strutting onstage. But when he begins to speak, all traces of youthfulness and ease vanish from his face. The "foreign loan sharks" have one thing on their minds, he barks into the microphone: "the impoverishment of the Greek people and the sellout of our country!" He slams his fist down and continues his speech, his voice booming. The Europeans, he says, are pursuing only one goal: to bring about the end of the sovereign Greek nation. "We must prevent Greece from becoming a German protectorate once again," Tsipras says, practically shouting by now. "We are not a German colony."

The crowd applauds loudly in the packed gymnasium in Peristeri, a suburb of Athens. The words "The Left's Response in Greece" are written in bold letters on a banner on the wall behind the lectern. Tsipras, 37, wearing a black suit and a purple shirt, is the main speaker this evening.

It is cold and the room is unheated, but the will of the assembled crowd to wage resistance remains unbroken. They should be punished immediately, these European traitors, a man who looks to be about 60 hisses in the direction of the lectern. A female student is sitting next to him, and both are clapping enthusiastically.

Tsipras, the man with the harsh rhetoric, is the head of SYRIZA, or the Coalition of the Radical Left. According to the polls, he is currently the second-most popular Greek politician. Only Fotis Kouvelis, the chairman of the more moderate Democratic Left (DIMAR), is more popular than Tsipras. more
Over at Business Insider, we see an acknowledgment that the Greek bailout has NOTHING to do with rescuing the economy of Greece.  NOTHING!
Leaked Memo Blows The Lid Off Of The Entire Greek Bailout
Joe Weisenthal | Feb. 20, 2012,

At least Europe is no longer in denial about the effects of austerity in Greece, and the ability for the country to improve its economic situation via drastic cuts.

Peter Spiegel at FT has obtained a confidential 10-page memo distributed to senior officials in Europe over the last week, which lays out the truth:

It warned that two of the new bail-out’s main principles might be self-defeating. Forcing austerity on Greece could cause debt levels to rise by severely weakening the economy while its €200bn debt restructuring could prevent Greece from ever returning to the financial markets by scaring off future private investors.

“Prolonged financial support on appropriate terms by the official sector may be necessary,” the report said.

What's more -- and this Spiegel puts in a follow-up blog post -- all the economic assumptions being used are too rosy, further rendering prospects of a successful bailout unlikely.

He also has some excerpts from the note, including reasonable downside expectations if things don't go swimmingly:

Under the tailored scenario described above, the debt ratio would peak at 178 percent of GDP in 2015. Once growth did recover, fiscal policy achieved its target, and privatization picked up, the debt would begin to slowly decline. Debt to GDP would fall to around 160 percent of GDP by 2020, well above the target of about 120 percent of GDP set by European leaders. Financing needs through 2020 would amount to perhaps €245 billion. Under the assumption that stronger growth could follow on the eventual elimination of the competitiveness gap, the debt ratio would slowly converge to that in the baseline, but likely only in the late 2020s. With debt ratios so high in the next decade, smaller shocks would produce unsustainable dynamics, leaving the program highly accident-prone.

Again, basically what it shows is that European leaders can't deny what everyone sees as obvious: That everything undertaken so far is destroying the Greek economy, and that further reforms will only make it worse. more
And then there is Iceland which is proving that the ONLY way to right the economy is to write down a lot of debt.
Icelandic Anger Brings Debt Forgiveness in Best Recovery Story
By Omar R. Valdimarsson - Feb 19, 2012 6:01 PM CT

Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.

“You could safely say that Iceland holds the world record in household debt relief,” said Lars Christensen, chief emerging markets economist at Danske Bank A/S in Copenhagen. “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”

The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.

The island’s households were helped by an agreement between the government and the banks, which are still partly controlled by the state, to forgive debt exceeding 110 percent of home values. On top of that, a Supreme Court ruling in June 2010 found loans indexed to foreign currencies were illegal, meaning households no longer need to cover krona losses.

Crisis Lessons

“The lesson to be learned from Iceland’s crisis is that if other countries think it’s necessary to write down debts, they should look at how successful the 110 percent agreement was here,” said Thorolfur Matthiasson, an economics professor at the University of Iceland in Reykjavik, in an interview. “It’s the broadest agreement that’s been undertaken.” more

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