Wednesday, February 17, 2010

Bankers plan to bankrupt Greece

European governments have joined forces with the likes of Goldman Sachs and a large collection of globalised banks. They are ganging up to bully the Greek government into upping the assault on the country’s working people.

Finance ministers have given the Greeks a month to make up their mind. What they’ll do if the PASOK government doesn’t have the stomach for the brutal measures needed to extract an estimated 12% reduction in living standards hasn’t been spelt out.

You couldn’t ask for a better illustration of the coming out of the transnational capitalist class in all its glory. You might even see it as a second coming.

The first was when governments and central banks banded together in an historically unprecedented mutual burst of co-ordinated action to pour trillions of their respective currencies into the open hands of the banks.

Most of it promptly disappeared into the vaults. The remainder is now being divvied up as profits to shareholders and the infamous bonuses supposedly needed to keep high performing staff loyal.

Some of the cash escaped from captivity and is now appearing in “surprising” price hikes, like the rise in the annual inflation rate to 3.5% January in UK, way beyond targets and forecasts, and despite the worst recession for generations.

At least part of the story of how so many of the world’s governments – not just Greece – got into this mess is fairly well-known: the outpouring of generosity to the highly-respected organisations comprising the global financial system was necessary to prevent financial meltdown and a complete collapse of the economic system.

Some people say it worked, at least to some extent. Just imagine what would have happened if they hadn’t done it. And maybe there’s some truth in it. But now we’re beginning to see the real consequences.

The managers of the hedge funds and the pimps who arrange the credit default swaps like the one that seduced the Greek government are threatening to declare any and every country bankrupt that fails to implement a programme of public sector wage, service and job cuts, matched with savage tax rises.

Iceland and Ireland have already been forced down that route. The former’s government is trying to negotiate its way out of the referendum it called to head off huge opposition from its population to the cost of paying its bankrupt banks’ debts to the UK and the Netherlands.

Ireland’s austerity programme has failed to solve its problems. Its government leapt in early to guarantee the debts held by its financial institutions which have now leapt to a staggering eleven times the country’s annual output. The guarantee must now be worthless, just like the similar promises offered by so many others.

If the transnational financial class has its way, public sector jobs, wages, homes, pensions, health and social care, as well as emergency services like fire and ambulance will have to go. Only those jobs that contribute directly to profit will remain, and only those where wages and condition can be reduced to match the lowest anywhere in the world.

Under these objective conditions defensive trade union action and protest must merge with revolutionary solutions and actions such as those we propose in our draft Manifesto. Workers and those without jobs should join with farmers, people with small businesses and the self-employed in every country to set up new democratic organisations as the basis for revolutionary governments. These will take the power to cancel the debts outstanding to the speculative investors, close down the markets they operate in and redeploy their traders to useful work.

Gerry Gold
Economics editor

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