Posts Tagged ‘ECB’

Greek crisis is the canary in the mine

March 11, 2017

Last year the Greek economy suffered a further blow, contracting by 1.2% at the end of 2016, according to revised figures released earlier this week. The figures, published by the Greek statistics agency Elstat show it was the worst quarter since the summer of 2015, when the European Central Bank closed the Greek banks.

The medicine imposed by the EU is killing the patient, not that there was ever any intention of helping the patient to recover.

Capitalism is an adaptive system, or was, 50 year long Kondratieff cycles, each new cycle driven by technological innovation. This came to an abrupt end in 2008. We are now post-capitalism.

2008 a banking crisis, morphed into an economic crisis, into a social and political crisis, and now a geo-political crisis.

2009 the German banks were bankrupt, their ‘assets’ worthless dodgy US financial instrument. They were bailed out by the German taxpayer.

2010 the German banks were in trouble again, back with their begging bowls, the Greek state was bankrupt, could not service their debt, technically the German banks were insolvent. The German taxpayer would not stomach a second bail out of the German banks. A clever ploy, biggest ever loan to a bankrupt state, the money flows to Greece straight back out to French and German banks. Classic extend and pretend. And a bonus, control the Greek state, plunder the Greek state, force sell off of state assets at knockdown prices. The result, Greek economy shrank by 25%. To put that in context, Great Depression following the Wall Street Crash economies shrank by 20%.

2015 Syriza won a landslide victory, with a mandate to challenge the EU.

What we saw in Greece, was not ‘conventional Left politics’, this was a radical, progressive moment with popular support. Greeks were saying, enough is enough.

Most intelligent observers recognise, the EU is close to collapse. It is a rigid hierarchical system.  Such systems lack the ability to adapt, they are brittle and cannot survive shocks.

The banking crash of 2008 was one such shock. The election of Syriza was another shock. The example being set by Syriza could not be allowed to spread, the contagion had to be contained.

The mechanism used to destroy  the Greek banks and destroy the Greek government was the ECB.  The role of a Central Bank when banks are in trouble is to help support the banks, ECB did the exact opposite.

But was the closure process legal and within the ECB’s charter and mandate?

ECB President Mario Draghi wasn’t sure; Draghi commissioned an independent legal opinion on this issue.

Fabio De Masi, a German Die Linke MEP, asked for a copy of this legal opinion. He was denied a copy.

When money flowed into Greece, then back out to bail out German and French banks, why were EU citizens not told what was happening?  Instead they were led to believe that hard working Germans were subsidising lazy Greeks.

Greece was bankrupt. The existing debts should have been written off, or at the very least restructured. Instead, more money was loaned to enable the Greeks to continue to service their debts.

ECB is a Central Bank without a government. Countries within the eurozone are countries without a central bank. The eurogroup lacks any legitimacy, legally and a constitutionally it does not exist.

ECB used its powers to interfere directly in the democratic process of a country.

Yanis Varoufakis  and Fabio De Masi MEP have launched a public campaign demanding the immediate release of what they are calling The Greek Papers.

Greece is the canary in the mine, symptomatic of a wider problem within the EU and the eurozone.

As it celebrates the signing of the Rome treaty, EU has proposed changes but it is merely a watered down version of business as usual

EU is not Europe.

We should be planning now for the collapse of the EU to be replaced by a network of cooperating democratic countries.

At local level, as we have seen in Spain, Madrid, Barcelona and A Coruña, ordinary citizens seizing control of their local Town Halls, opening to public participation, then networking with other citizen controlled Town Halls.

We need across Europe a Green New Deal.

At local level, establishment of open coops, support for small businesses, collaborative commons.

We need faircoin and fairpay card as cooperative digital alternatives to the euro, at local level, local currencies.

In Foundation, first book of the Foundation trilogy,  the Galactic Empire is collapsing. A group of citizens establish at opposite ends of the galaxy, two foundations. They do so in the knowledge that the Empire will collapse, but by preserving what is known, they will greatly reduce the period of instability.

That is the situation we now find ourselves in Europe. 2008 could be our 1929, when Europe descended into Fascism and chaos.

We are already seeing the end, the rise in Fascism, the chaos.

We must work now to plan for the future, otherwise our 2008 will be 1929.

Please support Yanis VaroufakisFabio De Masi and DiEM25 in their call for the release of The Greek Papers. Please support their request to release these critical documents by signing the petition calling for the release of #The GreekFiles.

Force ECB to release #TheGreekFiles

February 21, 2017

Those who support the EU, why do they continue to turn a blind eye to Greece?

Greece dared stand up and challenge the EU, for that Greece had to be destroyed.

The main route for destroying Greece was to destroy the Greek banks.

That action may have been illegal.

Deep in a vault in the headquarters of the European Central Bank (ECB) lie #TheGreekFiles, a legal opinion about the ECB’s actions towards Greece in 2015 that could send shockwaves across Europe.

As a European taxpayer, you paid for these documents. But the ECB’s boss, ex-Goldman Sachs head Mario Draghi, says you can’t see them.

Former Greek Finance Minister Yanis Varoufakis and Fabio de Masi MEP, together with a broad alliance of politicians and academics (below), have announced they will file a mass freedom of information request to the ECB to uncover #TheGreekFiles once and for all.

If Mario says no, they’ll take the campaign to the next level, and consider all options – including legal action – to make this vital information public.

Please support their request to release these  critical documents  by signing the petition calling for the release of #The GreekFiles. 

This DiEM25 petition is supported by a coalition of politicians and academics, with divergent views on the future of the EU and the Eurozone.

Here is the most recent list; check back for updates:

  • Benoît Hamon, Socialist Party candidate for the French Presidency, 2017
  • Katja Kipping, Co-Chairperson, Die Linke, Germany
  • Gesine Schwan, President, Viadrina European University and twice the SPD’s candidate for the Presidency of the Federal Republic of Germany
  • Yanis Varoufakis, co-founder of DiEM25 and former Greek finance minister

with the support of university professors including:

  • Klaus Dörre, Friedrich-Schiller-Universität, Jena
  • James K. Galbraith, University of Texas at Austin
  • Rudolf Hickel, Bremen Universität
  • Gustav A. Horn, Hans-Böckler-Stiftung
  • Aidan Regan, University College Dublin
  • Jeffrey Sachs, University of Columbia
  • Joseph Vogl, Humboldt Universität
  • Arthur Gibson, University of Cambridge

In June 2015, the newly-elected Greek government was locked in tense negotiations with its creditors (the ‘Troika’ – the ECB, EC and IMF), doing what it had been voted in to do: renegotiate the country’s public debt, fiscal policy and reform agenda, and save its people from the hardship of the most crushing austerity programme in modern history.

The Troika knew they needed to make a drastic move to force the Greek government to capitulate. And that’s just what they did: through the ECB, they took action to force Greece’s banks to close, ultimately driving the Greek government – against its democratic mandate – to accept the country’s third ‘bailout’, together with new austerity measures and new reductions in national sovereignty.

But in their haste, their zeal to crush the Greek government’s resistance, the ECB feared their actions might be legally dubious. So they commissioned a private law firm to examine whether those decisions were legal. The legal opinion of this law firm is contained in #TheGreekFiles.

In July 2015, the German MEP Fabio De Masi asked Mario Draghi to release the legal opinion. Mario refused, hiding behind ‘attorney-client privilege’. Clearly #TheGreekFiles contain something he doesn’t want us to see.

One of the foremost experts on European Law, Professor Andreas Fischer-Lescano, examined whether the ECB was right to refuse to release #TheGreekFiles. His detailed conclusion leaves no room for doubt: the ECB has no case for withholding from MEPs and the citizens of Europe the legal opinion the ECB secured (and paid for using your money) regarding its own conduct.

But in addition to the legal imperative: in today’s Eurozone, the power of the ECB to close down a member-state’s banks violates every democratic principle. It also violates the ECB’s own aspiration, and charter obligation, to be independent and above political strategising.

We must all throw light on the lawfulness and propriety of ECB decision-making – beginning with this case – to give European democracy a chance, as well as to make the ECB less vulnerable to power politics.

OXI the morning after the night before

July 6, 2015


The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage. — Yanis Varoufakis

I shall wear the creditors’ loathing with pride. — Yanis Varoufakis

Last night, Greeks gave a resounding NO to EU-imposed austerity, joy on the streets, partying in Athens. This morning, the morning after the night before, stark reality. Germany has said no to the Greek no, has refused to negotiate, a view echoed across Europe. ECB has so far refused to turn the cash flow on, denying the Greek banks money to solve the liquidity crisis. Economic terrorism continues.  And just when it could get no worse, modern-day folk hero Greek Finance Minister Yanis Varoufakis has resigned.

The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage.

Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached. It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms.

Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.

I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.

And I shall wear the creditors’ loathing with pride.

We of the Left know how to act collectively with no care for the privileges of office. I shall support fully Prime Minister Tsipras, the new Minister of Finance, and our government.

The superhuman effort to honour the brave people of Greece, and the famous OXI (NO) that they granted to democrats the world over, is just beginning.

An honourable and capable man.

Should it not be those euro zone ministers, who called a private meeting without Greece, our European participants and assorted partners step down instead, as their absence from the meetings would no doubt be extremely helpful in reaching an agreement?

BBC, mouthpiece of the Establishment, carried on the anti-Greece propaganda today on Wato, of almost half an hour devoted to Greece, is was almost entirely filled with anti-Greece, anti-austerity voices, no proper analysis, no mention of the eminently sensible proposals put forward by Yanis Varoufakis in the early hours of this morning. All we heard was the Greeks the bad guys, refusing to negotiate, brinkmanship, and when are they leaving the euro.

The one exception, a breath of fresh air, who said all sides have to compromise, ECB has to to turn back on the cash flow, that unlike Irish and Cypriot banks (he could also have added British banks), the problem for the banks is not one of solvency, but liquidity, they are literally running out of cash. He hit the nail on the head when he said, a strong NO vote in Greece, anti-austerity across Europe, fear of change.

Then in a summing up a voice of reason and balance from Robert Preston, who said IMF has already accepted, at least 30% of the debt must has to be written off, the creditors must negotiate, the alternative default and they lose everything.

On PM the news headlines included the gem divisive Greek Finance Minister Yanis Varoufakis has been removed from office. No evidence to support this statement. Then later on a slight variant controversial Yanis Varoufakis had resigned or been removed, introduced a little under fifteen minute discussion with three so-called experts, waffle and all three  were clueless as to the situation in Greece. Far better that the slot could have been used for a discussion on what has been proposed as a way forward by Yanis Varoufakis.

Throughout the day, BBC peddling the line Greece to be expelled from the euro and trawling to find anyone who would agree with that line.

The exception to the dreadful BBC coverage, was The World Tonight, but then it had Tim Franks reporting from Greece not the useless journo Mark Mardell, and the studio discussion was balanced and far better informed.

The role of a Central Bank in a crisis is lender of last resort. That is the role of the European Central Bank within the euro zone. It is failing in that role towards Greece.

Today ECB tightened the screws by demanding more collateral from the Greek banks, which will push at least one, maybe more into insolvency.

If Greece was an independent country, in control of its own currency, its Central Bank would come to the aid of its banks. Were Greece to leave the euro zone, it could create its own currency. The problem it would face is that it would not hold any reserves as these were all handed over to the ECB.

Greece could even now, create its own currency, a parallel currency to the euro. Only this is not allowed under the euro zone rules. But then the same rules do not allow a country to leave.

What maybe Greece should do is create a number of local currencies, for example Athena drachma with an image of The Acropolis.

Had Greece said yes, EU would be falling over backwards to accommodate a puppet government.

EU exists to create a Europe wide market for Big Business. Austerity is used to transfer wealth into corporate coffers. Greece has dared to offer an alternative vision, one in which the people and the environment are more important. A vision that appeals to ordinary people across Europe, and that is why Greece has to be crushed.

It is not even about debt. Trillions of dollars have been spent bailing out the banks.

The amount of the debt, although is sounds large, is small compared to the economic size of the EU, as the analysis sent to me by a Greek friend last night shows.

  1. To see capital controls imposed on an advanced economy is a great indictment of the IMF and the EU. Exactly what they were to prevent.
  2. Greece is being squeezed by the EU not for a vast sum. But for 0.01% of EU GDP. That is how petty this is.
  3. The EU and ECB are at fault. They could and should solve this fake crisis in a second. That they don’t is pure politics.
  4. To see the EU being broken and betrayed for 0.1% of GDP isn’t just tragic. It’s nonsensical, absurd, beyond reason.
  5. The idea that Greece is “free-riding” is wrong (and stupid). Rich EU countries benefited hugely by having artificially cheap currencies.
  6. By squeezing Greece for 0.1% of EU GDP, the EU isn’t just creating a needless tragedy. It’s destroying its own credibility and legitimacy.
  7. The EU is not rational. If Greece costs it 0.1% of GDP, so what? The currency benefits are far greater. This is being done out of spite.
  8. And that 0.1% of GDP is enough to cause the rich EU to turn on the poor, despite far GREATER benefits, is the true, historic tragedy.
  9. If anything, it’s now rich EU members who are free riding on poor ones. They’ve benefited by more than the trivial amount they demand.
  10. By making an example of Greece, the EU is only betraying itself. If a union can’t even absorb a cost of 0.1% of GDP, it’s not a union.

She ended with

NO wins but let’s watch tomorrow Europe’s reaction.

In 2010, Greece borrowed more money. It was used to pay off the German banks and other private investors. Greece was saddled with more debt. It was unsustainable. IMF has said at least 30% should be written off.

Austerity has destroyed Greece, the economy has shrunk by 25%.

This evening a stupid German CDU politician tonight demanding blood, Greeks should pay more taxes. If you destroy an economy, no tax base.

Tourism is the backbone of the Greek economy. July-August peak holiday season. On one Greek island, hotel occupancy 10%, cancellation rate 99%. It is going to take Greece decades to recover from the economic terrorism of this last week, let alone what austerity has done to the country over the last five years.

EU engineered a coup against Syrizas, they failed. Greek Prime Minister Alexis Tsipras now has the backing not only of the Greek people, but of all the political parties. What is EU now going to do, mount a coup against the Greek people?

EU has a very simple choice. Agree terms that are fair to Greece, that Greece can afford, that allows the Greek economy to recover from economic terrorism, or face a default and watch the EU burn.

European Central Bank at Work

April 29, 2015
ECB at work

ECB at work

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