The mainstream press – having been slow over the last 10 years to report the full horror of the Greek economic tragedy brought about by the Euro and the EU – is now reporting a Greek economic “recovery”. The Fitch credit rating agency has upgraded Greece and long term borrowing costs have come down from 30% at the height of the crisis to 4%. This is a rating of Greek finances. There is no rating for human suffering and the permanent loss of human capital.
Greece forgave German post war debt in 1953. Despite the horrendous economic collapse of Greece in the last 10 years Berlin has refused to write off a single Euro of Greece’s debt – even though a lot of that debt was taken on to repay German banks and businesses and to save the Euro from collapse. It was also necessary to fill the huge gap due to capital flight from Greece taking advantage of EU laws on free movement of capital!
It was at the London Conference of 1953, as part of the the US Marshall plan for Europe that Greece joined other US allies in writing off more than 50% of German debt. Greece was hardly in a position to be so generous having emerged from the second world war only to suffer a disastrous civil war from 1946 to 1949 and, being on the fringes of Europe, hardly in a position to benefit as much as Germany from the post war recovery.
But now that it is Greece which is in need of massive debt write offs – understood by most EU countries and by the IMF – it is Germany which has vetoed any write off of any Greek debt.
RAPE OF GREECE
The economy returned to growth in 2017 (although there was a fall in the final quarter) and predictions of 2% growth in 2018 and 2.3% in 2019 may look like a “triumph” for euro-fanatics but they look more like wishful thinking and a “dead cat bounce” to many!
Costs and wages having been mercilessly driven down by a vicious 8 year recession, tourism was up 17% in 2017 – although any tourism profit will go towards 24% VAT and higher taxes. Shares are up but from a very low level and there was a budget surplus in 2017 of 0.8% of gdp. Slashing wages and pensions by up to half has been a useful contributor!
GERMAN PROFIT, GREEK COLLAPSE
Since the crisis began the Greek stock exchange index fell from 5200 to 819 – while the German index rose from 4000 to 12,900.
German balance of payments surplus is a grotesque 8% of GDP – far above what EU agreements stipulate should attract measures to reduce it. Greece has a balance of payments deficit of 1% of GDP – having been as low as 10% of GDP in 2012. The “recovery” is almost entirely due to the collapse in domestic demand as wages, social security and pensions have been savagely reduced to satisfy EU creditors.
More unplayable loans to Greece and the European Central Bank’s money printing have rescued German banks from their bad loans to Greece and German companies in defence equipment and transport have obtained lucrative Greek contracts. German business has been prominent in the take over (at recession induced low prices) of Greek companies and infrastructure – the latest being the port of Thessaloniki. Piraeus port of Athens had already been sold to the Chinese. Greece is (as we know from the catastrophic immigrations to the EU through Greece) a major entry point for trade with the rest of Europe so the Greek Government rightly said:
“the development of the Port of Thessaloniki, which follows that of Piraeus, creates a growth axis that traverses vertically all of Greece, and further enhances its role as a European entry gate for multinationals in trade and cruise ship tourism.”
But now of course, because the Euro destroyed the Greek economy and the EU forced Greece to sell off its major assets to pay its debts it is foreign capital that will benefit from such trade. Like the mass emigration of young Greeks this will permanently establish a poorer Greece for generations to come.
No wonder that GDP per head in Germany is $33,000 while in Greece it is at $17,000. Greek State debt stands at 180% of GDP and it is estimated it will take until 2060 to get down to a still crippling 140% of GDP (the UK debt stands at 88% today).
Greeks’ average pay is down from Euro18,500 to Euro12,000, severe deprivation has doubled, the health system has collapsed and between 2008 and 2016 427,000 Greeks of working age left the country to find employment – mainly in those Eurozone countries who repeatedly voted against giving Greece any debt relief!
So disastrous has the human cost of this evil been that the Greek government has recently stopped publishing monthly statistics of births and deaths. No wonder.
DEATH RATE UP BIRTH RATE DOWN
The Greek death rate before 2008 was about 60,000 per annum. The change since then has been horrendous:
2013 – 70,830
2016 – 118,623
2017 – 123,700
These figures have been greatly affected by suicides and illness due to the stress of trying to survive this economic holocaust. Equally the birth rate has fallen as the Greek young emigrated or could not afford to marry and have children.
When Germany was granted debt relief in the early 1950s (by among others Greece) its remaining debt repayments were linked to economic prosperity – something which Berlin is denying to Greece today!
While pensions were generous in Greece, Greek families have traditionally provided their own self help welfare – thus sparing the State social payments. So the ruthless and sudden slashing of Greek pensions has had a catastrophic effect. An example from the Wall Street Journal:
“Two years ago, Lumbi Nychas, 33, moved back into his childhood bedroom after sales at his jewelry store shrank drastically. A few months later his sister followed, along with her husband and daughter. Today they all depend largely on the state pension of the siblings’ retired 67-year-old father”
The collapse in pensions and earnings have meant hundreds of thousands of Greeks could not meet their mortgage costs – for no fault of their own. Naturally the Greek Government did not wish to ruthlessly pursue these poor families but the EU does not give a damn and has demanded that mortgage default properties must be sold faster!
This will of course drive families out onto the street and drive down the prices of housing in general – thus putting more mortgage holders into default.
Once the single currency is in place there is no possibility for a country to devalue in order to adjust to its true economic condition. Therefore the “devaluation” comes in the form of lowering internal costs – in particular the costs of labour. A downward spiral ensues: of poverty, higher debt, default, lower taxes then lower welfare, then more property defaults etc etc etc
GERMANY DENIES RESPONSIBILITY
In any normal country operating under one currency (and German Europe calls itself “the country called Europe”) Government transfers in the form of local authority grants, welfare payments, unemployment benefits and health service provision are distributed according to need across the whole country.
Equally there is one finance ministry which taxes equally but ensuring lower taxes for the poor. There is also one banking system with national regulation and a compensation scheme and bail out mechanisms by the Central Bank. A country has only one national debt – the Eurozone does not. There is no “debt sharing”.
While Germany has imposed the Euro on 18 countries of the EU it provided none of the above. Nor will it – even though Germany has benefited enormously from the profit promoting aspects of the EU:
free movement of labour
no internal customs
a low Euro compared to the Deutschmark
free movement of capital
no German responsibility for member states’ debt
But all the above have been disastrous to Greece since the economic crisis hit in 2008/09. Youth could easily emigrate, Germany could easily sell at low Euro prices to Greece, German capital could flow into Greece for a few profitable investments and Greek capital could freely flow out to escape the Euro imposed disaster!
The new German finance minister Olaf Scholz – a “Social Democrat” (!!) has said that Germany “cannot pay for everyone”. Asked if he was going to be as ruthless as his Conservative predecessor Wolfgang Schäuble – the scourge of Greece – Scholz replied
“A German Minister of Finance is a German Minister of Finance”
And the rest of Europe must of course dance to Germany’s tune! No wonder the British people wisely decided not to dance any more!