The root of Europe’s riots

No wonder the protesters are back. They are angry at the backdoor rewriting of the social contract.

Greek rioters beat policeman

Rioters beat a policeman during a rally against government austerity measures in Athens. Photograph: John Kolesidis/REUTERS

Throughout the 1980s and 90s, when many developing countries were in crisis and borrowing money from the International Monetary Fund, waves of protests in those countries became known as the “IMF riots”. They were so called because they were sparked by the fund’s structural adjustment programmes, which imposed austerity, privatisation and deregulation.

The IMF complained that calling these riots thus was unfair, as it had not caused the crises and was only prescribing a medicine, but this was largely self-serving. Many of the crises had actually been caused by the asset bubbles built up following IMF-recommended financial deregulation. Moreover, those rioters were not just expressing general discontent but reacting against the austerity measures that directly threatened their livelihoods, such as cuts in subsidies to basic commodities such as food and water, and cuts in already meagre welfare payments.

The IMF programme, in other words, met such resistance because its designers had forgotten that behind the numbers they were crunching were real people. These criticisms, as well as the ineffectiveness of its economic programme, became so damaging that the IMF has made a lot of changes in the past decade or so. It has become more cautious in pushing for financial deregulation and austerity programmes, renamed its structural adjustment programmes as poverty reduction programmes, and has even (marginally) increased the voting shares of the developing countries in its decision-making.

Given these recent changes in the IMF, it is ironic to see the European governments inflicting an old-IMF-style programme on their own populations. It is one thing to tell the citizens of some faraway country to go to hell but it is another to do the same to your own citizens, who are supposedly your ultimate sovereigns. Indeed, the European governments are out-IMF-ing the IMF in its austerity drive so much that now the fund itself frequently issues the warning that Europe is going too far, too fast.

The threat to livelihoods has reached such a dimension that renewed bouts of rioting are now rocking Greece, Spain and even the usually quieter Portugal. In the case of Spain, its national integrity is threatened by the separatist demand made by the Catalan nationalists, who think the austerity policy is unfairly reducing the region’s autonomy.

Even if these and other European countries (for other countries have not been free of protests against austerity programmes, such as Britain’s university fees riot and the protests by Italy’s “recession widows”) survive this social unrest through a mixture of heavy-handed policing and political delaying tactics, recent events raise a very serious question about the nature of European politics.

What has been happening in Europe – and indeed the US in a more muted and dispersed form – is nothing short of a complete rewriting of the implicit social contracts that have existed since the end of the second world war. In these contracts, renewed legitimacy was bestowed on the capitalist system, once totally discredited following the great depression. In return it provided a welfare state that guarantees minimum provision for all those burdens that most citizens have to contend with throughout their lives – childcare, education, health, unemployment, disability and old age.

Of course there is nothing sacrosanct about any of the details of these social contracts. Indeed, the contracts have been modified on the margins all the time. However, the rewriting in many European countries is an unprecedented one. It is not simply that the scope and the speed of the cuts are unusually large. It is more that the rewriting is being done through the back door.

Instead of it being explicitly cast as a rewriting of the social contract, changing people’s entitlements and changing the way the society establishes its legitimacy, the dismembering of the welfare state is presented as a technocratic exercise of “balancing the books”. Democracy is neutered in the process and the protests against the cuts are dismissed. The description of the externally imposed Greek and Italian governments as “technocratic” is the ultimate proof of the attempt to make the radical rewriting of the social contract more acceptable by pretending that it isn’t really a political change.

The danger is not only that these austerity measures are killing the European economies but also that they threaten the very legitimacy of European democracies – not just directly by threatening the livelihoods of so many people and pushing the economy into a downward spiral, but also indirectly by undermining the legitimacy of the political system through this backdoor rewriting of the social contract. Especially if they are going to have to go through long tunnels of economic difficulties in coming years, and in the context of global shifts in economic power balance and of severe environmental challenges, European countries can ill afford to have the legitimacy of their political systems damaged in this way.

The Guardian



Europe’s Austerity Madness

by Paul Krugman

So much for complacency. Just a few days ago, the conventional wisdom was that Europe finally had things under control. The European Central Bank, by promising to buy the bonds of troubled governments if necessary, had soothed markets. All that debtor nations had to do, the story went, was agree to more and deeper austerity — the condition for central bank loans — and all would be well.

But the purveyors of conventional wisdom forgot that people were involved. Suddenly, Spain and Greece are being racked by strikes and huge demonstrations. The public in these countries is, in effect, saying that it has reached its limit: With unemployment at Great Depression levels and with erstwhile middle-class workers reduced to picking through garbage in search of food, austerity has already gone too far. And this means that there may not be a deal after all.

Much commentary suggests that the citizens of Spain and Greece are just delaying the inevitable, protesting against sacrifices that must, in fact, be made. But the truth is that the protesters are right. More austerity serves no useful purpose; the truly irrational players here are the allegedly serious politicians and officials demanding ever more pain.

Consider Spain’s woes. What is the real economic problem? Basically, Spain is suffering the hangover from a huge housing bubble, which caused both an economic boom and a period of inflation that left Spanish industry uncompetitive with the rest of Europe. When the bubble burst, Spain was left with the difficult problem of regaining competitiveness, a painful process that will take years. Unless Spain leaves the euro — a step nobody wants to take — it is condemned to years of high unemployment.

But this arguably inevitable suffering is being greatly magnified by harsh spending cuts; and these spending cuts are a case of inflicting pain for the sake of inflicting pain.

First of all, Spain didn’t get into trouble because its government was profligate. On the contrary, on the eve of the crisis, Spain actually had a budget surplus and low debt. Large deficits emerged when the economy tanked, taking revenues with it, but, even so, Spain doesn’t appear to have all that high a debt burden.

It’s true that Spain is now having trouble borrowing to finance its deficits. That trouble is, however, mainly because of fears about the nation’s broader difficulties — not least the fear of political turmoil in the face of very high unemployment. And shaving a few points off the budget deficit won’t resolve those fears. In fact, research by the International Monetary Fund suggests that spending cuts in deeply depressed economies may actually reduce investor confidence because they accelerate the pace of economic decline.

In other words, the straight economics of the situation suggests that Spain doesn’t need more austerity. It shouldn’t throw a party, and, in fact, it probably has no alternative (short of euro exit) to a protracted period of hard times. But savage cuts to essential public services, to aid to the needy, and so on actually hurt the country’s prospects for successful adjustment.

Why, then, are there demands for ever more pain?

Part of the explanation is that in Europe, as in America, far too many Very Serious People have been taken in by the cult of austerity, by the belief that budget deficits, not mass unemployment, are the clear and present danger, and that deficit reduction will somehow solve a problem brought on by private sector excess.

Beyond that, a significant part of public opinion in Europe’s core — above all, in Germany — is deeply committed to a false view of the situation. Talk to German officials and they will portray the euro crisis as a morality play, a tale of countries that lived high and now face the inevitable reckoning. Never mind the fact that this isn’t at all what happened — and the equally inconvenient fact that German banks played a large role in inflating Spain’s housing bubble. Sin and its consequences is their story, and they’re sticking to it.

Worse yet, this is also what many German voters believe, largely because it’s what politicians have told them. And fear of a backlash from voters who believe, wrongly, that they’re being put on the hook for the consequences of southern European irresponsibility leaves German politicians unwilling to approve essential emergency lending to Spain and other troubled nations unless the borrowers are punished first.

Of course, that’s not the way these demands are portrayed. But that’s what it really comes down to. And it’s long past time to put an end to this cruel nonsense.

If Germany really wants to save the euro, it should let the European Central Bank do what’s necessary to rescue the debtor nations — and it should do so without demanding more pointless pain.


The Opinion Pages, New York Times

Διεθνής ανταλλαγή χρεών: Η λύση στο παγκόσμιο πρόβλημα χρέους.

Στις ημέρες μας οι παγκόσμιοι κυβερνήτες υποτίθεται ότι αντιμετωπίζουν ένα δυσεπίλυτο οικονομικό πρόβλημα: τα υπέρογκα δημόσια χρέη των κρατών.

Το “πρόβλημα” προέκυψε όταν οι αγορές αποφάσισαν να πληρωθούν εδώ και τώρα όλα τα συσσωρευθέντα δημόσια χρέη, που λήγουν σταδιακά.
Ως σήμερα αρκούνταν να εισπράττουν τους τόκους και τα τοκομερίδια και στη λήξη των δανείων τα ανανέωναν χωρίς οποιοδήποτε ενδοιασμό.

Τι άλλαξε?

Aυτό που προκαλεί τον φόβο στις αγορές είναι ότι πλέον τα ομόλογα των κρατών εξετάζονται ως προς την πιστοληπτική ικανότητα των εκδοτών, σύμφωνα με τις προβλέψεις των προτάσεων της Βασιλείας.

Τα κρατικά ομόλογα “σήμερα” εμπεριέχουν κίνδυνο και τον κίνδυνο αυτό τον αξιολογούν τρεις διεφθαρμένοι παγκόσμιοι οίκοι αξιολόγησης πιστοληπτικής ικανότητας σε αγαστή συνεργασία.

Οι οίκοι αυτοί το παράκαναν και το αποτέλεσμα το βλέπουμε σήμερα ως κρίση χρέους και ως μεγάλα spreads – ασφάλιστρα κινδύνου.

Οι κυβερνήσεις όμως δεν τολμούν να πάρουν μέτρα ενάντια στους “ανεξάρτητους” οίκους αξιολόγησης, γιατί η τεχνογνωσία τους είναι καλά κρυμμένη.

Το έργο τους είναι χρήσιμο, αλλά για εφαρμογή σε κινδύνους ιδιωτών και όχι κρατών.
Όταν είσαι ιδιώτης σαν εκδότης χρεωγράφων είσαι επικίνδυνος στους άλλους για διάφορους λόγους.

Ο μεγαλύτερος κίνδυνος σου είναι να μην πληρώσεις, να τεθείς σε χρεοκοπία ή να πεθάνεις.

Τα κράτη όμως?

Tα κράτη είναι ακόμα πιο επικίνδυνα.

Εκτός από τους αντίστοιχους τροποποιημένους βέβαια κινδύνους των ιδιωτών, τα κράτη μπορούν να σε πληρώσουν απλά τυπώνοντας χαρτιά!

Και αυτό πραγματικά κάνουν όλες οι κεντρικές τράπεζες παγκοσμίως συνέχεια ως τώρα.

Το χρήμα-χρέος που εκτυπώνεται δεν αντιστοιχεί σε παραγωγή ή σε κάτι χειροπιαστό.

Το χρήμα ειναι απαραίτητο εφόσον κυκλοφορεί και βελτιώνει την ευημερία των λαών, ωθώντας τους να παράγουν περισσότερο από τις εγγενείς ανάγκες των τοπικών οικονομιών.

Αυτή είναι μία από τις σπουδαιότερες λειτουργίες του χρήματος: H συναλλακτική.
Οι αγορές έχοντας δημιουργήσει μηχανισμούς συγκέντρωσης του χρήματος εστιάζουν σήμερα στην αποταμιευτική λειτουργία του χρήματος.

Όταν εστιάσεις σ’ αυτή την λειτουργία δεν μπορεί παρά να προβληματισθείς από το γεγονός ότι το χρήμα που κυκλοφορεί δεν συνδέεται με την παραγωγή αγαθών, ούτε όμως και θα μπορούσε να συνδεθεί ,γιατί τότε θα ήταν ακριβό και άχρηστο στις συναλλαγές.
Θα οδηγούμαστε τότε σε απλή ανταλλαγή αγαθών.

Το υπόλοιπο χρήμα θα ήταν απολύτως άχρηστο.

Το σχέδιο των αγορών είναι να εκτιμήσουν και να αντιστοιχήσουν σε χρήμα το σύνολο των υλικών και άυλων αγαθών συμπεριλαμβανόμενων των ανθρώπων και των συντελεστών παραγωγής κάθε είδους.

Το χρήμα τότε θα αποκτήσει αξία και ως τίτλος ιδιοκτησίας.

Αυτό μπορεί να γίνει μόνο όμως αν όλα πουληθούν, περιλαμβανόμενης και της κάθε είδους κρατικής ιδιοκτησίας.

Αν επιτύγχαναν το στόχο τους όλα θα γίνονταν ακριβότερα ως παραγωγή (αφού τίποτα δεν θα παρεχόταν δωρεάν κατά την φάση της παραγωγής), αλλά ταυτόχρονα το χρήμα που κυκλοφορεί σήμερα θα μπορούσε να δεσμευθεί.

Όλο το χρέος-χρήμα θα γινόταν δάνειο στο διηνεκές, δηλαδή θα πληρώνονταν μόνο τόκοι και το κεφάλαιο ποτέ δεν θα ξεπληρωνόταν.

Σαν σχέδιο βέβαια έχει ως προυπόθεση την υποδούλωση όλων των ανθρώπων και της φύσης και την κατάργηση κάθε ελευθερίας.

Αυτό δεν βιώνουμε καθημερινά με την υπερφορολόγηση μας και την καταστροφή των εισοδημάτων και της περιουσίας μας?
Σαν σχέδιο πιθανά δεν μπορεί να πραγματοποιηθεί, γιατί θα οδηγήσει αναπόφευκτα σε εξέγερση των πολιτών και σε οικονομικό χάος με αμφισβήτηση και καταστροφή του μεγαλύτερου μέρους του χρέους.

Υπάρχουν όμως κυβερνήτες που το προωθούν και νομίζουν ότι θα τα καταφέρουν.

Η μεθόδευση τους περιλαμβάνει ενέργειες που σήμερα βλέπουμε.

Αρχικά μετατρέπουν το ιδιωτικό χρέος σε κρατικό.

Φροντίζουν όμως το κρατικό χρέος να γίνει συντόμου λήξεως για να χρησιμοποιήσουν την ευκαιρία και να αυξήσουν υπέρμετρα την φορολογία.

Έτσι καταναλώνονται αρχικά οι αποταμιεύσεις και ο λαός οδηγείται μαζικά στην ανεργία και την οικονομική εξαθλίωση.

Τα κράτη υπό το βάρος αυτών των συνεπειών αναγκάζονται σε αναδιάρθρωση χρέους με διαγραφή των κρατικών κεφαλαίων (αποθεματικά ασφαλιστικών ταμείων, ίδια κεφάλαια τραπεζών) και σε ιδιωτικοποιήσεις ευρείας κλίμακας.

Το μέτρο αυτό δεν επαρκεί και τελικά καταλήγουν σε επιμήκυνση του χρέους με συνακόλουθο απότελεσμα να δεσμευθούν σε μία περιοριστική και υφεσιακή πολιτική μακράς διαρκείας που καταβαραθρώνει τις οικονομίες και μειώνει την παραγωγή και την κατανάλωση.

Κατά την διάρκεια αυτών των διαδικασιών οι πουλημένοι πολιτικοί και τραπεζίτες επιμένουν στην ανάγκη επίτευξης χαμηλών επιτοκίων για το χρέος, στην ανάγκη διαρθρωτικών αλλαγών και τελικά διαπιστώνουν ότι το χρέος έχει διογκωθεί και είναι μη βιώσιμο.
Τα προβλήματα χρέους είναι κοινά για τις περισσότερες οικονομίες και σαν καλή ιδέα ακούγεται η αντιμετώπισή τους να γίνει με την έκδοση ενός κοινού ομολόγου με χαμηλό επιτόκιο (ευρωομόλογο).

Η ιδέα απορρίπτεται πανηγυρικά από τις “ισχυρές” οικονομίες που κατευθύνουν τις πολιτικές της Ευρωπαικής ‘Ενωσης.

Οταν όμως σε λίγο καιρό το πρόβλημα χρέους εμφανισθεί δριμύτερο στην Αμερική που τυπώνει συνεχώς δολάρια χωρίς αντίκρυσμα σε συνδυασμό με υπερπληθωρισμό ισοδύναμο με δραστική υποτίμηση της αγοραστικής αξίας του δολαρίου τι νομίζετε ότι θα αναγκασθούν να κάνουν?

Αναγκαστική ανταλλαγή κρατικών χρεών Ευρώπης και Αμερικής μετά από μία δραστική υποτίμηση του δολαρίου Αμερικής.

Έτσι το αμερικανικό δημόσιο χρέος θα πέσει ως αγοραστική αξία, τα επιτόκια ευρώ και δολαρίου Αμερικής θα εξισωθούν, η διάρκεια του χρέους θα μεγαλώσει πέραν των 30 χρόνων και θα οδηγηθούμε στο παγκόσμιο- άυλο νόμισμα που έχουν ως αρχικό και μη ομολογημένο στόχο τους οι αγορές.

Ως προυπόθεση επιτυχίας του σχεδίου απαιτείται ο περιορισμός του ιδιωτικού χρέους και η ισόποση αύξηση του κρατικού χρέους το συντομότερο δυνατό.

Για να γίνει αυτό θα προηγηθεί η κατάρρευση του παγκόσμιου τραπεζικού συστήματος που θα απαιτήσει την οικονομική βοήθεια των καταχρεωμένων κρατών και της Ευρωπαικής Ένωσης.

Το σχέδιο αυτό θα υλοποιηθεί μέσω Ισπανίας, Αμερικής και Γερμανίας.

Θα ξεκινήσει με κατάρρευση του τραπεζικού τομέα της Ισπανίας, θα επεκταθεί στις θυγατρικές ισπανικών τραπεζών στην κεντρική και λατινική Αμερική και θα καταλήξει ως γενικευμένο bank run στην Αμερική.

Από εκεί θα περάσει στη Γερμανία, όταν πραγματοποιηθεί η δραστική υποτίμηση του δολλαρίου ως προς το ευρώ.

Σε μία τέτοια εξέλιξη οι γερμανικές εξαγωγές θα καταρρεύσουν και οι εξελίξεις θα είναι μονόδρομος…

Το αστείο βέβαια είναι ότι όλα αυτά θα μπορούσαν να αποφευχθούν αν εμφανιζόταν σε κάποια μεγάλη χώρα ένας ηγέτης με αρχίδια που θα ενοποιούσε τις κεντρικές τράπεζες όλων των κρατών και θα προέβαινε σήμερα στην ανταλλαγή όλων των παγκόσμιων κρατικών χρεών…

How finance led to debt servitude (or f**k the EU Monster)

A very interesting response by Dimitris Yannopoulos posted on Yannis Varoufakis’ latest blog.


“According to Michael Hudson, stock markets have been a vehicle for banks to create credit for junk bond buyers.

As an academic with a strong grounding in economic history as well as banking and finance, professor Michael Hudson has built his own school of thought – distanced from both Keynesians and neoliberals – with regard to the stark options facing a contemporary Western world drowned in unsustainable debts of governments, with households at the mercy of global bankers and financiers who have no accountability.

Options for the indebted amount to no less than a choice between feudal-like servitude and freedom, because “debts that can’t be paid, won’t be”, Hudson argues in an interview with the Athens News, on the occasion of the publication this year of his book, The Bubble and Beyond: Fictitious Capital, Debt Deflation and Global Crisis.

Distinguished research professor of economics at the University of Missouri, Hudson is also president of the Institute for the Study of Long-Term Economic Trends (ISLET), a former Wall Street financial analyst and a research associate at the Levy Economics Institute of Bard College, New York.

Athens News: How has the financial system evolved into a form of economic servitude which – in your latest book – you call ‘debt peonage’, implying a negation of democracy as well as of free-market capitalism itself?

Michael Hudson: The original hope of banking and finance capitalism in the 19th century was that banks would make productive loans to help finance industry and that they would advance funds to manufacturers and producers as well as to the public sector for infrastructure; this would create an economic surplus out of which to pay the interest and the principal back to the lenders. This was defined as productive lending. But as matters have turned out, instead of aligning itself with industry and manufacturing, banking has allied itself with real estate, mineral extraction, oil, gas and with all sorts of monopolies. So instead of getting a share of the profits, it has taken a share of the rent, which is unearned income.

In fact, in the US, banks don’t make loans for what can be produced in the future. They make loans against collateral. That’s the Anglo-American-Dutch banking system. A banker can look at what can be pledged as collateral on which the bank could foreclose, instead of extending loans for the creation of new factories to employ people, new means of production. This was supposed to be done by the stock market.

When did this process get out of hand?

Since 1980, more than 30 years now, the stock market has been a vehicle for banks to create credit for junk-bond buyers – corporate raiders who would take over companies, load them down with debt and just extract interest by downsizing the labour force, shifting it to non-union labour, breaking up companies, and sell off the parts so that finance becomes destructive instead of productive. And as this sort of banking has gained wealth, it has used this wealth to privatise the government itself. It has bought control of governments to make interest tax-exempt, to favour debt financing instead of equity financing and to deregulate the banking industry so that in America financial fraud by the largest banks has been virtually decriminalised.

Is the so-called financialisation of the economy a product of bank deregulation?

Financialisation is a very good term because it shows that finance is taking over the whole economy. It began by taking over the real estate and insurance sectors, prompting national income economists to lump together what they call the FIRE sectors – finance, insurance and real estate – but it also should include the legal sector, because most of the law these days is corporate law that aids financial fraud. Finance has thus expanded to absorb the entire economic surplus of the economy so that this surplus is not being used either for capital investment to increase output or for increased consumption, because it is being diverted to increase debt service to the banks. Financialisation means the surplus is used for financial speculation purposes and not spent on the real economy, which is driven to a spiral of debt deflation and unemployment.

But this system collapsed in 2008, right?

This is not so. In fact, the collapse of 2008 was the greatest victory of finance capital in centuries. It used a crisis as an opportunity to panic the US Congress into taking all of the losses of the big gambling banks into the public balance sheet, incurring 13 trillion dollars of added debt. Therefore the crisis became an opportunity to turn democracy into a financial oligarchy. The same thing happened in Ireland, when Irish banks were stranded with enormous fraudulent loans or in Greece, when massive public debts were diverted to tax fraud and state corruption backed by EU multinationals. In both cases, the government pledged to pay the fraudsters by shifting the burden to small taxpayers, homeowners, employees and pensioners.

Isn’t the case of Greece peculiar, in the sense that it allowed global creditors to shift their debt burden onto eurozone governments?

Under eurozone rules, Greece cannot have a central bank monetise its public debt and must pay the debts that it has taken on by raising taxes, cutting wages, axing social welfare and privatising the public domain. So the financial sector is using the Greek debt crisis as an opportunity to seize whatever the Greek government and nation owns, its real estate and public buildings, its mineral wealth and its oil rights in the Aegean, all for the benefit of the eurozone banking sector.

What are the options available to the world for resolving the debt crisis and avoiding a global depression?

A shrinking economy can only fall further into arrears in a debt deflation spiral. The question today is whether a new wave of reform will restore and indeed complete the task of classical political economy to distinguish tangible wealth creation from debt overhead and other capital gains. Otherwise, the democratic era of industrial capitalism will be rolled back towards a neofeudal reaction of the financial oligarchy against social reform.

What is at stake is how society will liberate itself from the legacy of debts that can’t be paid. If it lets the financial sector foreclose, governments will be forced to privatise the public domain under blackmail, dismantling public administration and welfare services, ushering in a dark age of poverty/immiseration – most characteristically, one of debt peonage.

The only alternative to this nightmare is for debts to be written down to what can be paid back in a democratic mixed economy, geared to a more equitable distribution of wealth and income.

Returning to the 19th century

Athens News: Why so much emphasis on austerity and internal devaluation?

Michael Hudson: This is because financialisation brings the class war back, in a new way. For the last 100 years the social divide was between employers and employees fighting for workplace rights, higher wages and so on, but once you bring in the financial sector, this adds a new dimension to their struggle. Once creditors take control of governments and unions, they push austerity and unemployment that drives down wages on a macroeconomic “financial” level to a degree that could not occur before. In the US, workers are in debt and afraid to go on strike, afraid even to complain about working conditions, because if they are fired and miss a payment in their electricity or mortgage bills, they are one paycheque away from homelessness. So what’s happening in Greece is happening in America too. We have government-sponsored wage cuts and abolition of labour rights in ways 19th-century industrialists never dreamed of.”


Greece: The Downsizing of a Country

                                    By Panagiotis Sotiris*,  originally written for Greek Left Review 

The current Greek government came to power, after the June 17 election, in the name of “renegotiating” the terms of the “Memoranda of Understanding” with the EU – IMF – ECB Troika. This proved to be one of the most short-lived promises ever to be made.

 During the past two months, two parallel processes have been going on. On the one hand, we have the real policy process, where the representatives of the Troika dictate budget cuts, austerity measures, and profound policy changes. On the other hand, we have the tragicomedy of the political scene, with successive meetings between the heads of the government coalition parties, the constant “drawing of lines not to be crossed”, only to be forgotten the next day, and a whole façade of “trying hard” to avoid even harsher measures, whereas it is more than obvious that most of the measures had been agreed on from the beginning. To add insult to injury, the Greek Prime Minister, made a promise that this would be the “last austerity package”.

The Greek government has put together a set of austerity measures that will lead to an 11.9 billion euros reduction in public spending in the next two years. This package has been presented to the Troika representatives in order to be approved by them so that 31 billion euros of bail-out funds will be released and the Greek state saved from bankruptcy. It includes:

  • Cuts in the funding of Ministries, that will make them almost impossible to function properly.

  • A slashing in social spending, that includes reductions in family benefits, in special unemployment benefits for seasonal workers and other social benefits, including funding for travel expenses for patients receiving dialysis.

  • A new wave of personnel reductions in the public sector, by forcing thousands of civil servants close to retirement age to enter “pre-retirement status” at reduced wages, by not rehiring public sector employees on limited term contracts (e.g. substitute teachers or adjunct faculty), and by reducing the total number of public sector institutions.

  • New cuts in pensions and public sector wages. The cuts in pensions will not simply deteriorate the quality of life for senior citizens. They will deprive families of an income that was instrumental in sustaining forms of intergenerational solidarity.

  • A massive new wave of privatizations.

  • Cuts in health spending, in a period when Greece is very close to a humanitarian crisis. These cuts will jeopardize the ability of many hospitals and clinics to function properly and will lead to a deterioration of the quality of health services and a reduction in total health coverage.

  • The reduction of the total number of Universities, University departments and Higher Education Institutions, through a process of “spatial restructuring” of Higher Education.

  • The freeze in hiring in all levels of education, mass lay-offs of adjunct faculty, new education budget cuts – including the abolition of the gratis provision of university textbooks –, and increased tuition for graduate courses.

  • Reduced funding for culture and the Arts

 Apart from the budget cuts, there is also a new series of “reforms”. A leaked memo sent from the Troika representatives to the Ministry of Labour has been most revealing. Apart from the demand for a new reduction of the minimum wage (which has already been reduced from 751 to 586 euros), the Troika demands a complete dismantling of whatever has been left of labour market regulation:

  • Abolishing the 5-day working week and re-introducing the 6-day working week

  • Reducing the minimum time of rest between shifts to only 11 hours

  • Reduced penalties for labour law violations and limits to the ability of the Labour Inspectorate of the Ministry of Labour to intervene in favour of employees.

  • Reduced employers’ social contributions along with reduced pensions.

 Although this austerity package seems devastating, it is not enough for the Troika representatives. Especially, they have questioned many of the proposed measures, especially those that project a reduction in public spending as a result of restructuring the public sector. Instead they have insisted on more ‘tangible’ cuts demanding mass lay-offs of civil servants and public sector employees, extra cuts in social benefits, wages and pensions, increased taxation by abolishing almost all forms of tax exemption for low incomes, and raising the retirement age to 67. This has led to a new round of negotiations between the Greek government and the Troika and also within the government coalition.

At the same time, as a result of the austerity measures adopted so far and the supervision of the Troika, the Greek social landscape is close to a zone of destruction:

  • Greece is going through the fifth consecutive year of recession, and it is almost certain that 2013 will also be a year of recession. Total GDP reduction since 2008 will reach 22% in the end of 2012.

  • Official unemployment reached 24.4% in June 2012. Youth unemployment is at 55%, but even more worrying is the sharp increase of those in their most productive ages: 21% in the 35-44 age cohort. It is certain than in the next months real unemployment will exceed 30%.

  • The purchasing power of the average wage is back to its 2003 level and that of the minimum wage to that of the late 1970s. According to OECD the total reduction of real wages, as a result of wage cuts and increased taxation, was 25.3%.

  • 25.4% of salaried employees can be characterized as “working poor”.

  • “Internal devaluation” has already reached, in terms of relative labour cost, 23%.

  • There has been an increase in all forms of social problems associated with social insecurity and increased poverty, including a sharp increase in the number of suicides and suicide attempts, directly related to the economic crisis.

  • Greece is witnessing the third mass wave of migration of its modern history, this time mainly in the form of a brain-drain, since the majority of Greeks seeking employment abroad are highly qualified.

 Although the most important shift in the political landscape has been a shift to the Left, a the same this social, political and cultural crisis, along with deep rooted authoritarian, anti-communist, racist and sexist ideological practices (plus the cynical endorsement of anti-immigrant rhetoric by all systemic political parties and the Media), has facilitated the rise of the neo-fascist Golden Dawn. It is also a warning sign that unless the Left is present and active in order to articulate anger and despair into struggle, solidarity and emancipatory projects, the space is open for the far-right to increase its political presence and shift the balance of forces to the right.

 At the same time, despite the restructuring of debt in the spring of 2012, Greece will probably have unsustainable debt levels in the next years. According to estimates by the Center of Planning and Economic Research (an openly pro-business think-tank), in almost all possible scenarios Greece will not reach the Debt/GDP target of 120% by 2020. We have entered a vicious circle where increased debt leads to austerity measures which in turn lead to recession and consequently reduced public revenue in a vicious circle of austerity and debt that seems like a “death spiral” for society.

 Moreover, Spain’s debt crisis and the rise in the cost of Italian debt, have made evident that we are not talking simply about a Greek crisis but about a crisis of the Eurozone itself, a manifestation of the inherent contradictions of the monetary and financial architecture of the Euro as a single currency in an area marked by divergences in productivity and competitiveness. The current attempt by the European Central Bank to answer these problems through increased ECB involvement in the form of massive buying of state debt, may buy some time, but does is unable to tackle to answer the structural contradictions of the Eurozone. Nor is it possible to deal with the current crisis simply through “stability mechanisms” that will impose extreme austerity in exchange for solvency. Moreover, it is obvious that despite all the “reassuring” statements about the willingness to keep Greece within the Eurozone and the desire to avoid a image of acute crisis, especially in the run-up to the American elections, international economic organizations are more prepared than ever to stand the cost of a potential Greek exit, or to even to use such an exit as evidence of the European Union’s willingness to “punish” those that do not accept its norms.

 The dominant discourse treats this process not as social devastation but as part of a broader social structural adjustment process. Especially, the rhetoric of the Troika is almost neo-colonial in its zeal to rebuild a society along aggressively neoliberal lines. However, what is missing from this rhetoric is that we are not simply talking about pro-market reforms in order for the economy the return to new “growth dynamics”, but about a much more profound change in the social and economic paradigm. The sharp deterioration in living standards, the forced changes in consumption practices and the new poverty, lead to what can be described “a society of reduced expectations”. This goes along with the shrinkage of the knowledge base of Greek economy and the forced downgrading of its productive capabilities, through the attacks on Higher Education, the flight of scientists and the shift towards renewable energy, agricultural exports and tourism as the main export sectors at the expense of other sectors based on technology and highly qualified labour. The massive wave of privatizations that the government is planning will not bring a mass influx of investments, nor will it stop processes of de-industrialization. It will only lead to increased cost, worsening of the quality of services, reduced personnel along with the loss of sovereignty over crucial natural resources.

 This process can be described as the “downsizing of a country”. In the end Greece will emerge as a poorer country, with a diminished productive base, with reduced sovereignty, with a political class accustomed to almost neo-colonial forms of supervision and with a Greek bourgeoisie ready to accept a subaltern position in the new emerging European division of labour and to see its erstwhile ambition to play a more important economic and political role in the region curtailed in exchange for a violent change in the balance of forces with labour.

 It is obvious that Greek society is at a crossroads. The forces of capital have opted for a process of extreme historical backwardness, not only economically, but also socially and politically, exemplified in the embracing of aspects of the neo-fascist agenda of the “Golden Dawn” (authoritarianism, “law and order”, anti-immigrant policies).

It is up to the forces of labour and the Left to offer a different road and a true exit strategy from the current impasse. However, this cannot be done in terms of “left governance” within the limits set by the European Union, its embedded neoliberalism and its current authoritarian mutation. A potential failure of a “left government” will only lead to even more reactionary solutions, especially if we take into consideration that the neo-fascist Golden Dawn is currently a rising force within the broader right and centre-right political bloc.

 Contrary to the positions of “Left Europeanism” we must insist that a “Eurozone with a human face” is impossible with the current balance of forces. What is needed is a radial break with the vicious circle of debt, the exit from the Eurozone as a necessary step in reclaiming monetary sovereignty and democratic control over the economy, and a coherent radical alternative narrative of social justice and reconstruction of productive capabilities along socialist lines.

 This cannot be accomplished simply through waiting for the inevitable collapse of the current government. Building a strong movement of struggle and extending all forms of solidarity in a society that is struggling to survive are not simply ways to put pressure on the government. They are the only way to restore confidence in the possibility of radical alternatives and make people realize that they can not only survive social devastation but also collectively build their own future.

On September 26 a General Strike has been called by the trade unions. Let’s hope that it will be only the beginning of a broader social uprising that will stop this cynical attempt at “downsizing” a society.

* Panagiotis Sotiris teaches social theory, social and political philosophy at the Department of Sociology of the University of the Aegean. He is a regular contributor of Greek Left Review

He can be reached at


Ο Οδυσσέας Ελύτης για τα μελλούμενα*

Ο Οδυσσέας Ελύτης για τα μελλούμενα*
“…Ήδη σας το είπα. Είναι η βαρβαρότητα. Τη βλέπω να ‘ρχεται μεταμφιεσμένη, κάτω από άνομες συμμαχίες και προσυμφωνημένες υποδουλώσεις. Δεν θα πρόκειται για τους φούρνους του Χίτλερ ίσως, αλλά για μεθοδευμένη και οιονεί επιστημονική καθυπόταξη του ανθρώπου.
Για τον πλήρη εξευτελισμό του. Για την ατίμωσή του.
Οπότε αναρωτιέται κανείς: Για τι παλεύουμε νύχτα μέρα κλεισμένοι στα εργαστήριά μας; Παλεύουμε για ένα τίποτα, που ωστόσο είναι το παν. Είναι οι δημοκρατικοί θεσμοί, που όλα δείχνουν ότι δεν θ’ αντέξουν για πολύ. Είναι η ποιότητα, που γι’ αυτή δεν δίνει κανείς πεντάρα. Είναι η οντότητα του ατόμου, που βαίνει προς την ολική της έκλειψη. Είναι η ανεξαρτησία των μικρών λαών, που έχει καταντήσει ήδη ένα γράμμα νεκρό. Είναι η αμάθεια και το σκότος.
Ότι οι λεγόμενοι «πρακτικοί άνθρωποι» -κατά πλειονότητα οι σημερινοί αστοί-
μας κοροϊδεύουν, είναι χαρακτηριστικό.
Εκείνοι βλέπουν το τίποτα. Εμείς το πάν. Που βρίσκεται η αλήθεια, θα φανεί μια μέρα, όταν δεν θα μαστε πια εδώ. Θα είναι, όμως, εάν αξίζει, το έργο κάποιου απ’ όλους εμάς.
Και αυτό θα σώσει την τιμή όλων μας και της εποχής μας.”


*Από τη συνέντευξη Τύπου που δόθηκε στις 19 Οκτωβρίου 1979, στο ξενοδοχείο Μεγάλη Βρεταννία με αφορμή την αναγγελία για τη βράβευση του Έλληνα ποιητή με το Νόμπελ Λογοτεχνίας.

Ο Βασιλιάς της Μοναξιάς


“You can cut all the flowers but you cannot keep Spring from coming.”
Pablo Neruda

“The best way to not feel hopeless is to get up and do something. Don’t wait for good things to happen to you. If you go out and make some good things happen, you will fill the world with hope, you will fill yourself with hope.”
Barack Obama

“Walk on with hope in your heart,
and you’ll never walk alone”
Shah Rukh Khan

“There is a crack in everything.
That’s how the light gets in.”
Leonard Cohen, Selected Poems, 1956-1968

“When we love, we always strive to become better than we are. When we strive to become better than we are, everything around us becomes better too.”
Paulo Coelho, The Alchemist

“I am fundamentally an optimist. Whether that comes from nature or nurture, I cannot say. Part of being optimistic is keeping one’s head pointed toward the sun, one’s feet moving forward. There were many dark moments when my faith in humanity was sorely tested, but I would not and could not give myself up to despair. That way lays defeat and death.”
Nelson Mandela, Long Walk to Freedom: Autobiography of Nelson Mandela

“Those who make us believe that anything’s possible and fire our imagination over the long haul, are often the ones who have survived the bleakest of circumstances. The men and women who have every reason to despair, but don’t, may have the most to teach us, not only about how to hold true to our beliefs, but about how such a life can bring about seemingly impossible social change. ”
Paul Rogat Loeb, The Impossible Will Take a Little While: A Citizen’s Guide to Hope in a Time of Fear

“Hey you, don’t tell me there’s no hope at all. Together we stand, divided we fall.”
Pink Floyd

“Desire makes life happen. Makes it matter. Makes everything worth it. Desire is life. Hunger to see the next sunrise or sunset, to touch the one you love, to try again. Hell would be waking up and wanting nothing.”
Karen Marie Moning, Shadowfever