Jack Rasmus continues the three part series (last week: the ECB’s QE ‘Bomb’), this week focusing on last week’s election of Greece’s Syriza party, which has promised the Euro ‘Troika’ (IMF, ECB, European Commission-SFSF Fund) forgive at least a third of Greece current 317 billion Euro debt. How is it that Greece ended up with 317b of debt? Why is 270b of that (85%) in hands of the public entities, i.e. the Troika, and only 15% held by private investors? How did Germany, Holland, and northern Euro banks benefit the most from creating the debt? And why have they been insisting on continued austerity, and therefore depression, in Greece? Jack explains how the origins of Greece’s debt lie in policies that followed the creation of the Euro currency union in 1999 and how that union specifically benefited the northern Europe economies at the expense of Greece and the rest of the Eurozone periphery. The arrangements, Jack explains, constitute Eurozone’s version of Neoliberalism, a now failing caricature of the USA created global neoliberal policy answer to the crisis of the 1970s. The USA’s ‘twin deficits’ and global money capital circular flow neoliberal solution after 1980 was replicated in Europe on a smaller scale after 1999, but Eurozone neoliberalism began to fail after 2010, as Germany and northern Europe abandoned providing capital to Greece and the Eurozone periphery in favor of focusing on China and emerging markets after 2010. The residue left is unsustainable debt levels in Greece and elsewhere and the prospect of never ending austerity that ensures decades more of a debt driven depression in Greece. The current negotiating positions of the northern Troika and banks vs. Greece’s new Syriza government are explained, and possible scenarios in coming weeks. Meanwhile the ‘fuse’ is lite in Greece for the Euro economy, as a 10 billion euro payment comes due in 90 days. Which side will ‘blink’? How will the standoff be resolved? Listen this week’s show for some possibilities to come. (Next week, part 3: ‘the Dud’)
The Bomb, the Fuse, and the Dud, Part 2
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Dr. Jack Rasmus, Ph.D Political Economy, teaches economics at St. Mary’s College in California. He is the author and producer of the various nonfiction and fictional workers, including the books The Scourge of Neoliberalism: US Economic Policy From Reagan to Bush, Clarity Press, October 2019. Jack is the host of the weekly radio show, Alternative Visions, on the Progressive Radio Network, and a journalist writing on economic, political and labor issues for various magazines, including European Financial Review, World Financial Review, World Review of Political Economy, ‘Z‘ magazine, and others.