Greece’s debt has caused a major crisis. The stability of the euro, indeed of the EU, is being questioned, and other debt-ridden countries such as Spain and Portugal are feeling the repercussions.
Spain’s credit rating, for example, has been driven down a notch. Driven down, it is important to say, by a private firm (S&P).
Meanwhile, France and Germany (and the IMF) are putting together bailout packages for Greece. The packages will have many strings attached, probably including an old neoliberal objective – the reduction of social programs. This can be interpreted as a direct attack on one of Europe’s greatest elements.
Germany, for various reasons, is dragging its feet.
Those reasons are:
1. Angela is facing elections soon and bailing out Greece is not exactly a vote-winner.
2. Germany is primarily an export-driven economy. A weak euro is in its own best interest.
3. Angela is a neoliberal conservative, against the very concept of bailouts (unless it is for a German car company, for example).
Germany will eventually pay. But meanwhile Greece must ask for credit at increasingly expensive rates. The same will happen to the other S. European countries.
What is happening behind the scenes is making me nauseous. Much money is being made by the usual suspects – through debt speculation.
Private firms are driving up credit costs through their own, self-interested actions. Our old friends at Goldman Sachs were behind part of Greece’s original problems (GS helped Greece to fudge its books to maintain its credit rating). S. Europe’s debt crisis was largely generated under right-wing governments – parties that don’t dare to openly take away social gains, but would love to find a way to remove them because of “economic necessity”.
RW govenments, I might add, that have always been eurosceptics to a greater or lesser degree.
This is quite plainly a conspiracy, or a number of conspiracies:
1. To make lots of cash.
2. To begin, and take advantage of, the likely chain of privatizations that will be forced on S. Europe by the likes of the IMF, Sarkozy and Angela.
3. To politically weaken the EU concept.
The pity is that it will be the people of S. Europe that will suffer – a people that already were hit by a net loss in their wealth by the hidden inflation that the euro caused:
- Salaries remained the same as prices increased to EU standards.
- There was a “rounding” effect – a beer that cost 100 pesetas suddenly cost 1€ (1€=166 pesetas).
- The euro removed governments’ capacity to fine-tune their economies through monetary policy (for example, devaluating their currency).
In the end Europe might turn into another US as far as cut-throat laissez faire without a safety net is concerned.
Very troubling indeed.