Lessons from a Greek Tragedy

[JackRiddler]

At the beginning of the Papandreou government in 2009, it was discovered that the outgoing conservative government had colluded in secret with Goldman Sachs and JPM Chase to hide the size of the Greek national debt using elaborate, high-interest credit swaps that were costly for Greece but profitable for Wall Street. In the wake of this revelation, total Greek debt jumped overnight. This triggered the Greek financial crisis.

The only reasonable and moral course for the government was to default immediately at least on that part of the debt that had been concealed from the public, and to start indicting every public and private official involved in the collusion - including Lucas Papademas, the chief of the Greek national bank who had engineered the collusion with Goldman and JPM. Papademas is today the bankster-appointed unelected prime minister who has replaced Papandreou at the head of an unelected cabinet of "technocrats."

Let this be a lesson to left and center-left governments, including in the United States: Make it your priority to punish elite criminals, or live to watch them return to power. When they do return, they will feel rewarded by their past behavior, resentful of their brief exile from power, and emboldened to exceed their past misdeeds.

The conservatives, Papademas and the Wall Street banks had cooked the books, and to make the Greeks pay for this was insupportable. For a brief moment, the Papendreou government's moral and practical strength was greatest to default and to justify a default before the world, to establish the uncontested sovereignty of the Greek democracy in Greece, and to defend justice and the rule of law against lies and elite sociopathy.

Tragically, there was never a chance of this; like any other politician in the "responsible," neoliberal mode, Papandreou bowed directly to the will of the capital markets and creditors, and moved to impose the crushing austerity they demanded. This amounted to justifying the big lies about how the Greek people were at fault because of their childishness, laziness and moral degeneracy. Papandreou turned the people against him, they rendered the country ungovernable and the ultimate result was that he was effectively deposed by a government of fake technocrats with pedigrees as bankers and (in a couple of cases) fascists; the latter in nicer suits than back in their days when they were beating leftist protesters on the street. The next election is likely to bring the conservatives back to power, and they support an even more crushing austerity. Tomorrow or in a year, Greece will default anyway, as has always been unavoidable, but the consequences will be worse than would have been the case three years ago.

Establishment leftists seem never to understand that principle is the truest and most reliable guide, and that it should not be surrendered out of a perceived pragmatism. Nor have they learned the most important Machiavellian insight: the time to act boldly is when you first come to power!

[xchrom]

1. i think the lesson i'm learning is that left and center left governments can

be in on these scams every bit as much as right wing governments can.

[JackRiddler]

2. Indubitably.

[JackRiddler]

3. & shameless kick for readers

[bongbong]

6. Not quite

Don't think of them as "left & center left". They are corporatist, and beholden to the right wing in some fashion.

[spin]

4. We can regulate the hell out of the banking industry but unless...

some of those responsible for the mess end up in prison, nothing will ever change.

[JackRiddler]

9. Yes.

[malaise]

5. 100% correct

There are more of those who created this mess now running countries around this planet than I care to count

[Yo_Mama]

7. I don't think so

I found this blog quite some time ago, and it has made interesting reading -that is, what I can read of it. It is written by a Greek in both Greek and English.

The blogger took up the question of odious debt (improper debt). I think you should at least consider his take on it:
http://lolgreece.blogspot.com/2011/10/about-that-odious-debt-further-critique.html
http://lolgreece.blogspot.com/2011/04/debtocracy-much-better-than-review.html

...the journos have already decided that the debt is odious and would rather use the Audit as a kangaroo court that MUST find it to be such: a sovereign get-out-of-jail card. In fact, they show very few signs of understanding that even if some of our debt is indeed ‘odious’ it’s unlikely that all of it is, as between half and two thirds of all government spending during the last fifteen years has gone directly to the Greek people via social welfare and public sector wages, as per the graph below (blue line is the pay of civil servants, red is social welfare spending and green is their sum, all expressed as a share of Greek public expenditures. Source).

There is no question that the Greeks will default, because no country can pay back debts as large as a percent of GDP that were incurred in the run of the normal. Non-structurally induced debts can be more tolerable and payable, although that occurs very seldom once they have reached the level of Greek public debt.

It's more likely that the collusion and coverups and incentives all happened in trying to cover up debt. The idea that the Greeks are victims instead of culprits doesn't hold water.

[bhikkhu]

8. A big part of the story is missing from that...

in that while Goldman Sachs colluded with the Greek government of the time to hide existing debts (as you say), this was primarily for Greece to be accepted into the Eurozone. Once accepted, they went on a Euro-financed borrowing binge (which has nothing to do with GS as far as I know), which - combined with the revelation of the prior debt, triggered the debt crisis. There certainly should be some prosecution and soul-searching and new regulation over there, which is all in process, but its hardly a simple story.

I think the people involved in stewarding and managing the Eurozone are competent and well intentioned, and will find reasonable way through. I certainly don't think I know more about it than they do, or that there is some obvious and reasonable "fix" that they are missing.