Beleaguered Greece writes down its massive debt 1/3

Beleaguered Greece writes down its massive debt ( Comment Whitehorse Star July 10, 2015 )

Ed. note: this is the first of a two-part commentary.

The status and eventual outcome of the financial crisis are not clear at this point, except for one thing.

Without any doubt, the odious debt is gone after the July 5 referendum.

What is odious debt?

It is the term economists, political and banking people use for debts or parts of a debt that are illegal.

It is no more enforceable than debt from a deal on street drugs or stolen goods could be legally collected.

Its not surprising the Star, as one of fewer than 10 independent and not corporate-controlled dailies in Canada, published some good syndicated coverage.

I am a Gwynne Dyer fan. He summarized well some of the complex stream of events, but a quote from an oil executive in the movie thriller Syriana comes to mind.

“You dig a six-foot hole and you’ll find three bodies. Dig 12 and maybe you’ll find 40.”

Let’s dig a little more and concentrate on the big ones.

Following the successful examples of Iceland and Ecuador from the 2008 financial meltdown, a Truth Committee on Public Debt is currently auditing the Greek debt.

The president of the Hellenic Parliament, Ms. Zoe Konstantopoulou, made the initial decision and set the work in motion April 4, 2015.

Why successful?

Under the participation of citizens and independent international finance experts on June 17, the parliamentary debt audit released its preliminary report with key findings and advice.

Cutting out, writing off the rotten parts of debt combined with democratic economic reforms, including towards public banking, have a good track record.

Not only in Ecuador and Iceland, but also Sweden, in 1992, rebuilt the economy, and restored credit worthiness and investor trust by clearing the air.

This is the exact opposite of the proven debt growing neoliberal restructuring and privatization that is well underway, expropriating Greek islands and gutting out heritage treasures, and to intensify new demands by an EU finance colonialism.

Further, the audit investigates criminal corruption and bribery through years, to the end of selling expensive German weaponry such as superfluous submarines and Leopard tanks to Greece.

Even now, forcing more German weapons deals on Greece, as a condition, is not off the negotiating table. Karlheinz Schreiber is everywhere.

A substantial debt write off within the euro currency poses the problem but also opportunity of novelty to set the right tone in an exercise for preventing events in the future.

The Troika, which is made up of the European Central Bank, the European Commission (essentially EU government), and the IMF, would be in a more credible negotiation position now, had they approached the situation in a more balanced way.

Instead, they had dug in on making an example of destruction of Greek people.

This was not very bright because a heavy-handed approach to make Greece obedient to rules makes no sense when these rules are shifting below people’s feet.

The Troika did one better than example setting, which was mostly left out in the Canadian mainstream media. It really interfered in Greece with a special interest political agenda.

They outright blocked proposals of the latest Greek plan to actually increase and restore tax revenue, which was brought forward before the referendum launch.

Tax evasion in Greece had increased sharply since 1999, a period that saw corporate income tax rate reductions from 40 to 25 per cent.

The drama of it can be understood a little better when adding to that four centuries of Ottoman rule which left behind a strong cultural sediment for social justice.

Poor people paying the taxes and debt the elites owe is much less acceptable in Islamic countries, which also means their banks came out clean in 2008.

Tax evasion is a problem in Greece and a business in Luxembourg, but it is caused and led by elite finance interests, not the ordinary people.

Before the referendum was launched, the EU negotiators had dug themselves into a bad hole when they insisted on their own neoliberal tax ideas even at the expense of some of the creditors they claimed to represent.

The preliminary audit report provides context to such conflicts of interest on page 13.

“The website LuxLeaks provides information on nine Greek firms which benefitted from ‘fiscal agreements’ with Luxemburg (shares with Holland EU tax hide outs as well as austerity speculation interests).

“These are Babcock & Brown, BAWAG, Bluehouse, Coca Cola HBC, Damma Holdings, Eurobank, Macquarie Group, Olayan Investments Company Establishment and Weather Investments.”

Especially the governments of Germany, Luxemburg and Holland, as the hardliners which are  lost most deeply in the austerity rabbit hole, overlook a simple human touch. The only example that counts now is one of integrity.

It’s not just Podemos in Spain and Syriza in Greece who are more than social democratic by name.

As official federal opposition and coalition partner in the government of several states (provinces), Die Linke (the left party) is gaining ground in Germany, and actually seems able to carry a conversation beyond worn-out platitudes, in Europe as well.

If there is an emerging social democratic shift in Greece, as in other European countries, we can understand it better when we look at what motivates and informs it and what doesn’t.

Certainly a comeback of McCarthyism does not intimidate it; other Cold War confusions or even echoes of Stalin’s charisma do not influence it.

The very last of those had already rung out during the Spanish civil war (1936-1939).

Part two, to be published Monday, will offer a glimpse into why public banking rules prevent debt runaway.