Greece Debt Crisis and German Hypocrisy

by Charlie_East_West on February 17, 2015

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As statemate continues between EU powerbrokers and Greece, it appears that Greece adheres to a set of economically rigid and crippling debt repayments/forced austerity or face the risk of running out of financial liquidity.

The leaders of the new Syriza Government in Greece have repeated a cry for help from their European partners (in particular, Germany) to write off some of the €317bn (£240bn) it still owes, so that the Greek economy – and more importantly, its people & society – can begin the healing process of recovery from seemingly endless austerity.

The pressure group Jubilee Debt Campaign has previously stated that Greece is right to demand a more generous approach from its creditors, because although it has received €252bn in EU financed bailouts since 2010, only 10% of that has found its way into public spending. The remaining 90% has poured straight back out of the country in debt repayments and interest to its creditors, many of them banks and hedge fund schemes largely owned and leveraged by Germany and France. This is a total and utter false economy.

The people of Greece continue to pay the price for the mistakes of others. Money continues to drain out of Greece, rather than inwardly supporting those who need it most – the citizens of Greece. Meanwhile, the reckless banks and lenders that poured speculative cash into Greece in the runup to the crisis have escaped largely unscathed.

Ultimately, the only road to redemption for Greece is to take a similar path to Iceland – which forced foreign banks to take heavy losses and has since seen the success of these measures as the Icelandic economy has bounce back strongly since 2009.

But, the paymaster elites within the Eurozone are playing hardball. They will work by all means necessary to prevent another Iceland. They are worried that if Greece ends up like Iceland, their influence to control the debt leverage mechanisms within the flawed Eurozone runs the risk of ending up like a house of cards.

Conversely, Greece has clawed its way back to a primary surplus. But, any chance of a sustainable recovery is totally restricted due to the endless payments of interest on its debt. Greece is now only living beyond its means because of interest repayments to the Eurozone. The Eurozone and the cabal of politicians, banks and hedge funds have become the problem not the solution for Greece. No wonder Syriza and the Greek people want to be free from it all.

The problem is escalated because of forced austerity to meet the debt repayments. Unemployment is around 25%. GDP has collapsed by more than 30%. This is a decline comparable to America during the 1930’s Great Depression.

The Eurozone agreement is killing Greece, and there has to be a better way. Unfortunately, the Eurozone elite don’t want it any other way, and as such, the people of Greece are trapped in a cycle of austerity through no fault of their own.

With a bit more fiscal compromise from the EU, and in particular, Germany, Syriza argue it could increase salaries in the public sector, slow unemployment and raise pensions – helping to boost consumer demand and reboot the economy. It would also like to raise more in taxes from wealthier Greeks.

Syriza have, quite correctly, called for an international creditors’ conference for Greece, along the lines of the meetings that drew up the London Agreement in 1953 that gave generous debt relief to West Germany after World War II.

Support for the idea of a debt conference has also come from some surprising sources within Germany. Hans-Werner Sinn, president of the Ifo institute in Munich, one of the country’s key economic thinktanks, has called for a summit to agree a debt write-off, from the pragmatic starting point of Germany being unlikely to get its money back anyway.

The hypocrisy of Germany in all of this is astonishing. As well as plundering the Greek banks in World War II (a multi £billion debt that Syriza argue should be repayed back from Germany to Greece), German banks and politicans should also remember why the ‘German Miracle’ occurred after World War II. This was made possible by a deal struck in London in 1953 to completely write off half of the German debts to the rest of the world. Also, the U.S. Marshall aid plan was another vital component that allowed Germany to rebuilt its economy after the war. The world supported Germany in its hour of need. Germany should remember that.

Since the global financial crisis of 2008, Germany has been one of the strongest voices advocating programmes of unflinching debt repayments, austerity for Greece and the other bailed-out European economies. So while Germany continue to bully Greece into an economic vice-like grip, perhaps a glance over the relatively recent German history books would teach them a spot of humility and remove the current industrial levels of hypocrisy. Despite the atrocities committed by Germany in World War II, the rest of the world moved on and supported Germany to rebuild its economy after the war.

Germany’s behaviour towards Greece is a lesson not taken from their own history books, but a lesson in economic hypocrisy.

Germany: Pot kettle. Kettle pot.

{ 2 comments… read them below or add one }

Eddie Kaye February 17, 2015 at 12:59 pm

Different times Charlie.

The ‘German Miracle’ (well, ‘West…’) as aided by the Marshall plan and London Agreement was put in place to give the West a buffer against the Stalinist block. A strong West German economy, left a lesser chance of a revolution. There is not the same need on behalf of the Eurozone to create a strong economy for the Greek people.

I hope I am proved wrong – like you say there is little chance of the Germans getting their money back anyway, and the Greek people have spoken. I just can’t see them just being allowed to walk away however.

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John Stone February 17, 2015 at 9:03 pm

It’s less Germany than the International Technocracy really though isn’t it. Part of me so wants to see the hedgies on the wrong side of this.

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