The Troika’s Policy in Greece: Rob the Greek people and give the money to private banks, the ECB, the IMF and the dominant States of the Eurozone
On
20 August 2018, the Greek government of Alexis Tsipras, the IMF and
the European leaders celebrated the end of the Third Memorandum.
On
this occasion, the major media and those in power spread the
following message: Greece has regained its freedom, its economy is
improving, unemployment is on the decline, Europe has lent Greece 300
billion and the Greeks will have to start repaying that debt in 2022
or in 2032.
The
main claims are completely unfounded as Greece remains under the
control of its creditors. In compliance with the accords that the
Alexis Tsipras government signed, the country must imperatively
achieve a primary budgetary surplus of 3.5% which will force it to
continue brutal policies of reduction of public spending in the
social sector and in investment. Contrary to the dominant message
that Greece will not begin to repay its debt until some time in the
future, it should be clearly understood that Greece has been repaying
considerable amounts constantly all along to the ECB, the IMF and to
private creditors, and this prevents it from responding to the needs
of its population.
by
Eric Toussaint
Part
2 - International banking panic in 2008, private Greek banks in great
difficulty and the first bank bailout at the expense of the Greek
people
From
September 2008, in the wake of the most recent phase of the
international banking crisis caused by the bankruptcy of the Lehmann
Brothers bank in the United States, private international banks
almost ceased lending one another money. The Greek banks which had
been borrowing massively from about fifteen banks of the Centre found
themselves on the edge of bankruptcy as they had no means of repaying
the foreign banks. Indeed, banks borrow to be able to repay (they are
not the only ones who do that: States also do it to repay public
debt).
From
October 2008, in a climate of banking panic in the United States and
Europe, the Greek banks who wanted to borrow had to agree to pay very
high risk premiums – rates for Greek banks climbed 500 basis points
in 2008 – to private foreign finance companies. (Amongst these were
not only banks, but also Money Market Funds and investment funds.)
Greek banks’ stock prices also collapsed. By the end of 2008 Greek
banks’ stocks had lost 80% compared to their value at the beginning
of 2007. At the end of 2008, the Greek government came to the rescue
of the Greek banks by making €20 billion available in the form of
capital injection or issuance of guarantees.
It
is, then, perfectly clear that the Greek crisis was actually a crisis
of private debt, especially of private banks, and not a crisis of
public debt at all.
The ECB
opened up an exceptional line of credit to the private banks of the
Eurozone having difficulty, largely attenuating the disengagement of
bankers of the main Eurozone countries and the United Kingdom from
the Greek banks, whose survival then became dependent on this line of
credit.
In
October 2009, the ECB let it be understood that it might well put an
end to this exceptional line of credit. This created panic among
Greek bankers and worried their foreign private creditors.
As of
October 2009, the banks of France, Germany, Benelux, the United
Kingdom, Italy and Austria which were still lending to the private
sector in Greece (banks, households and non-financial companies)
further reduced access to credit.
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