THE GREEK CRISIS

Are we witnessing the South Americanization of Southern Europe?

Or more in more prosaic terms: What is the point of the austerity program fostered on the Greek people? OK in the most optimistic scenario those people who seemingly foolishly lent money, get some of it back but what of the social costs and other consequences?

The BBC reports:

Thousands protested in Athens, where there were widespread clashes and buildings were set on fire. Violent protests were reported in cities across the country.

On Tuesday, an official report showed that the decline of the Greek economy accelerated in the final three months of 2011.

The estimate showed that, compared with a year earlier, Greek GDP contracted by 7% in the fourth quarter of 2011.

That is an acceleration from the 5% contraction in the third quarter.

The report also shows that the Greek economy shrank 6% last year, an increase on earlier estimates and the fifth year of recession.

Al Jazeera reports:

European finance ministers have cancelled a meeting to discuss Greece’s second bailout, creating further uncertainty over Greece’s commitment to austerity reforms demanded by its creditors.

Jean-Claude Juncker, the prime minister of Luxembourg who heads the Eurogroup of eurozone finance ministers, said Wednesday’s meeting had been replaced by a conference call because Greece had failed to meet all the conditions needed in order to receive its next rescue loan.

Juncker said the group had not yet received assurances from Greek political leaders over their commitment to cuts, despite the measures being passed by the country’s parliament. He said Greece had also still to detail how it planned to cover a budget gap of $428m.

Jan Kees de Jager, the Netherlands finance minister, said: “We should have everything clear on paper. We don’t give an inch. We want everything, a complete package…”

Greece needs access to the 130bn-euro loan ($170bn) in order to avoid defaulting on its debts next month, when it is due to pay out 14.5bn euros ($19bn) in redeemed government bonds.

Paul Jay talks to Costas Panayotakis who suggests that Greece should default and leave the Eurozone:

Paul Craig Roberts at Counterpunch observes:

Recent events in Greece and Italy have created more skepticism of the West’s claim to be democratic. Two elected European prime ministers, George Papandreou of Greece and Silvio Berlusconi of Italy, were forced to resign over the sovereign debt issue. Not even Berlusconi, a billionaire who continues to lead the largest Italian political party, could stand up to the pressure brought by private bankers and unelected European Union officials.

Papandreou lasted only 10 days after announcing on October 31, 2011, that he would let the Greek voters decide in a referendum whether or not to accept the austerity being imposed on the Greek people from the outside. Austerity is the price charged by the EU for lending the Greek government the money to pay to the banks. In other words, the question was austerity or default. However, the question was decided without the participation of the Greek people.

Consequently, Greeks have taken to the streets. The conditions accompanying the latest tranche of the bailout have again brought large numbers of Greeks into the streets of Athens and other cities. Citizens are protesting a 20 per cent cut both in the minimum wage and in pensions larger than 12,000 euros ($15,800) annually and more cuts in public sector jobs. Greek taxes were raised 2.3 billion euros last year and are scheduled to rise another 3.4 billion euros in 2013. The austerity is being imposed despite Greece’s unemployment rate of 21 per cent overall and 48 per cent for those under the age of 25.

One interpretation is that the banks, which were careless in their loans to governments, are forcing the people to save the banks from the consequences of their bad decisions.

Another interpretation is that the European Union is using the sovereign debt crisis to extend its power and control over the individual member states of the EU.

Some say that the EU is using the banks for the EU’s agenda, and others say the banks are using the EU for the banks’ agenda.

Indeed, they may be using each other. Regardless, democracy is not part of the process.

Argentina seems to have repudiated the international bankers and prospered, but then simultaneously it was transitioning from dictatorship to democracy, where as for Greece dictatorship is a nightmare of the admittedly recent past.