Greeks sold into debt slavery

“It's no exaggeration to say that today is a historic day for the Greek economy,” said Lucas Papademos, banker and unelected prime minister of Greece. Yes indeed. February 21 was the day he signed his country’s people into debt slavery for the foreseeable future.

He also abandoned his country’s right to self-determination, turning Greece into a department of the Brussels bureaucracy, which will now have a permanent team of officials in Athens to enforce cuts and make pay-outs.

The terms of the second bail-out of Greece’s sovereign debt are so harsh that even officials inside the European Union secretly acknowledge they can’t be met. Even if every Greek worked round the clock for nothing, the country’s debt mountain cannot be made manageable.

A confidential 10-page “debt sustainability analysis” by EU officials says the spending cuts demanded will deepen a five-year old recession, making it extremely difficult – in actual fact, impossible – for Greece to gain from the €170bn bail-out.

“The Greek authorities may not be able to deliver structural reforms and policy adjustments at the pace envisioned in the baseline,” the report cautioned. Here the resistance by Greek workers, which has already produced several general strikes and violent confrontations with the state, is a key factor. The report’s key passage (with translation) says:

“Greater wage flexibility [eurospeak for wage cuts] may in practice be resisted by economic agents [trade unions]; product and service market liberalisation may continue to be plagued by strong opposition from vested interests [workers] ; and business environment reforms [free market competition] may also remain bogged down in bureaucratic delays.”

So the bail-out might have to rise to €245 billion, the report admits, because one thing is certain – Greece won’t be able to borrow on the financial markets this side of the Messiah making an unexpected return. Under the bail-out terms, banks and private investors are being asked to accept a write-down of 53% in what they loaned to Greece (while the European Central Bank keeps 100%). Bankers may yet revolt against these terms and derail the bail-out agreed after 14 hours of negotiations.

There is absolutely nothing in the bail-out but new loans to service existing and upcoming debt. This is a desperate deal to keep the ailing euro afloat at the expense of the entire population of a member state. Already unemployment for the under-25s in Greece is nearly 50%, having risen by more than a third since November 2010. The national suicide rate has doubled from 2.8 per 100,000 people in 2008, to about 6 last year. Hundreds of people are sleeping rough on the streets. Half of the country’s small businesses cannot pay wages and Greeks have withdrawn about a third of the money on deposit at the banks, fearing financial meltdown.

The Greek state is now in turmoil, not trusted by large sections of the population. "The political system is incapable of handling the situation. The people who created the problem are now going to solve the problem: that's the paradox," said broadcaster Stelios Kouloglou.

Between them the two ruling parties, Pasok and New Democracy, now only command a third of the votes in the latest opinion polls. No one knows what the general election scheduled for April will produce. That could derail the bail-out because smaller parties have not signed up to the deal unlike Pasok and New Democracy were made to. A military junta ruled Greece from 1967 until 1974 and with the country beginning to resemble a failed state, a new intervention by the colonels is not to be dismissed.

What the bail-out shows yet again is that the global debt crisis is insoluble within the present profit-driven economic framework. Reduced living standards produce lower tax revenue, more unemployment, higher welfare benefits and more bad loans for banks to deal with. This is not a Greek but a global problem, with countries like the US and Britain amongst the most indebted. The prospect for “economic justice” under these conditions is less than zero. For that to happen we will have to make capitalism history.

Paul Feldman
Communications editor

The fate of Greece a warning to all of us

Greece has “reached the limits of the social and economic system”, according to its public order minister Christos Papoutsis, and its “people cannot take any more”. It’s a message that will reverberate around the whole of Europe this year.

As unemployment soars to new highs in Britain, especially among young people, the system has indeed reached its “limits”. To those charting the course of the rapidly deepening crisis, the Greek drama is just the full-dress rehearsal. A global slump of terrifying proportions is threatening, only held back by central banks making cheap credit available to stricken banks and the printing of money by state agencies.

Papoutsis is a hated figure inside Greece. He is a minister from Pasok, who amazingly still call themselves “socialist”, who joined with others on Sunday to impose yet more savage cuts in spending, reduce pensions and sack thousands of public sector workers. Yesterday, the Greek cabinet under Lucas Papademos, the unelected prime minster and Goldman Sachs advisor, met in the wake of the violent protests that accompanied the vote in parliament.

On Sunday, Papademos bullied the Parliament into agreeing the terms of the latest IMF, European Central Bank (ECB) and European Union bailout. He threatened the country with a much worse result if Greece were forced to leave the eurozone in the wake of a default.

Papademos is well-qualified to act as the voice of capitalist finance. Amongst his many posts, he was senior economist at the Federal Reserve Bank of Boston in the 1980s, and vice-president of the ECB from 2002 to 2010. His assault on democracy forced coalition parties to expel more than 40 MPs for failing to back the bill.

Clearly shaken by the riots and burning buildings in the centre of Athens, Papoutsis was begging for mercy. "The government is making superhuman efforts”, he said. “From now on, Europe has to take the responsibility", washing his hands of any further responsibility.

But his appeal fell on deaf ears. Eurozone finance ministers cancelled today’s meeting with Greece when it became clear that the Athens government had again failed to deliver on the latest round of assaults designed to consign its people back to and beyond the poverty of the 1930s. They want more cuts and an undertaking that whoever wins April’s general elections will implement the EU’s demands. Democracy? Forget it.

The day after the vote in Athens, credit ratings agency Moody’s went fishing for more and bigger victims. They put the UK, France and Austria on negative outlook. By raising the prospect that the three countries would lose their triple A ratings due to exposure to the eurozone debt crisis, Moody’s issued instructions to these governments: the pace of the assault on living standards must be accelerated and its scope broadened out to the rest of Europe’s population.

Every day, further evidence emerges of the unstoppable catastrophic implosion of the capitalist economy. In the last quarter of 2011, Greece’s GDP dropped by 7% compared with the same period last year, a steeper decline than the 5% recorded in the third quarter, according to preliminary data published by Elstat, the national statistics body. Greece’s economy has now shrunk in every quarter but one since mid-2008.

It’s not only Greece that has reached the limits of the social and economic system. It is now time to make a leap to something new. As with the Telaithrion Project in Greece, in every country people are experimenting with different ways of living and producing the necessities of life and a great deal can be learned from them. The Transition Initiative has gone global since its launch in 2007.

But the challenge is to go beyond alternatives. Whilst the current profit-seeking capitalist system exists it is obliged to drive up the rate of exploitation of what corporations see as theirs to take – human labour and the natural resources of the planet. The system must be dismantled and its components used to build anew. Let’s compost capitalism.

Gerry Gold
Economics editor

Democracy bad news - for financial markets

There argument about whether democracy is good for capitalism was settled yesterday – by the financial markets. Any notion that people should have a choice about whether they should shoulder the burden of the global crisis was put to rest.

Markets recoiled in shock after Greek Prime Minister Papandreou’s unexpected announcement that he would call a referendum on the eurozone bail-out package which piles hardship upon hardship on the country’s people.

The suggestion of a democratic interference induced a cardiac arrest. Concern that Greece was now heading for default sent bank shares in particular plummeting. France’s Société Générale recorded its biggest one-day fall since it was privatised in 1987. The bank holds lost of pretty worthless Greek government debt.

Markets in government issue bonds – historically the safe-haven fall-back for investors – look as though they’ll also need resuscitation. The price Italy has to pay to borrow against its debt soared to over 4.5% above what Germany pays, despite heavy intervention by the European Central Bank.

This gap – or “spread” – is similar to one that that forced the Greek, Irish and Portuguese governments to seek mercy from the rest of the world, subordinating the fate of their people to the grim-faced come-what-may survival of the capitalist system.

Gary Jenkins, head of fixed income at Evolution Securities said “We may have reached the tipping point.” With a name like that, they should know, but what the outcome might be is beyond their, or anyone else’s ability to predict.

Last week, the 17 eurozone leaders thought they had a deal to avert a Greek default and

and prevent a European and global collapse into the unknown. The only certainty associated with the terms of the deal is that it must mean a further huge assault on the Greek people.

To receive new loans, the Greek government must impose still further cuts in public sector wages and scrap many bonuses, suspend 30,000 public sector workers for a year, cutting their wages cut to 60%, suspend wage bargaining, cut some pensions by 20%, increase taxes and implement a range of other measures.

So recourse to a popular referendum in the home of democracy is unlikely to meet with a majority in favour.

With his surprise move Papandreou, leader of the ‘Socialist’ PASOK, has thrown his party into turmoil. With only a tiny majority in Parliament, two members of his government have threatened to vote as independents, and a third is calling for a government of national unity. But he managed to win the support of his cabinet.

Then he was promptly summonsed to Nice to meet the leaders of Germany and France, who expressed total surprise at the referendum call.

It is more than 2,500 years since “the power of the people” was adopted as the basis for democracy in Athens. In the intervening period the forms of government in which, supposedly, all the people have an equal say in the decisions that affect their lives have changed many times over.

The advent and rapid development of capitalist society spread the parliamentary form as the means of resolving conflict in nation-states between the old feudal landowners, the new owners of accumulating capital, and latterly in Britain at least, keeping a lid on the aspiration of workers.

But, in the latter part of the 20th century, the credit-financed spread of global corporations overwhelmed and changed the role of parliamentary governments, who must now either submit to the rule of capital or leave the stage to someone who will.

In the occupation of towns and cities across the world, a new form of democracy is stretching its limbs, discovering its identity, assembling its forces in assemblies and occupations. They can easily establish relationships with employee-owned trusts like Publix in the US and John Lewis in the UK and co-operatives in manufacturing, distribution and finance, like Mondragon in Spain.

Then people’s assemblies could start to challenge the failed political system and open up a period of real democracy throughout the world. There’s no doubt it’s needed if we want to stop the rule of the financial markets.

Gerry Gold
Economics editor

Rating agencies tighten the screw

Moody’s has joined other credit rating agencies in downgrading its assessments for France and Spain when it comes to repaying loans. What logic is unfolding here?

The full name of the credit rating agency – Moody’s Investors Service – says it all. The analysis these agencies make and the actions they take are intended to assist those with money to magnify the value of their investments.

Over the last few months, as the crisis has deepened, the significance of Moody’s and the small number of other similar agencies has grown and grown.

In many ways they provide the information needed to allow the operation of the free market, advising investors on the credit-worthiness of borrowers, and helping borrowers to improve their attractiveness to lenders.

Informed investors profit from crisis, as they speculate against future market prices for shares and bonds.

Moody’s cut in Spain’s rating and its warning to France measures the deterioration in conditions in those countries as the recession exposes the weakness of the banks.

The downgraded ratings don’t just measure, however. They have a dual role. They are intended as a direct intimidation to those countries’ governments (and to all the others who are next in firing line).

Unless you take action to ensure that you overcome your difficulties in making these payments, the increased cost of borrowing more will make life impossibly difficult. It’s the classic money lenders’ threat.

The objective conditions that provide evidence for the downgrade are slowing growth, and accelerating recession leading to falling tax revenues which, in turn, make it more and more difficult for governments to make the interest payments due on the money they’ve borrowed.

So the rating cut also translates into a more severe assault on the lives of the people who live in the countries affected. The news about Spain and France came just as trades unions in Greece prepared for a 48 hour strike supported by the burgeoning network of new organisations that have formed to fight the impact of the mounting attacks on living standards.

For governments subservient to the capitalist economy, like the ‘socialist’ Pasok in Greece, cuts are not optional.

For the millions of people whose wages and pensions are melting away, whose jobs are being destroyed, health, education and social support systems being swept from under their feet, fighting the cuts is not optional either.

What resolution can there be to these opposite interests?

Strikes, protests, demonstrations, occupations are all now everyday events. Last Saturday’s occupation of towns and cities throughout the world is an important part of the answer to Moody’s symbolic measure of the power of capital.

But only a part. The regulation of finance demanded by many protestors is not an option for capital either.

This is an epochal moment providing both the necessity and opportunity to replace the rule of capital.

Those who claim to the know, like Mervyn King, governor of the Bank of England, are warning that “time is running out” for the global capitalist economy and that even dealing with Greece and the eurozone crisis will not provide the “solution”.

He is right there. The capitalist system has plunged into an irreversible crisis in which the only answer for the ruling classes is to punish the overwhelming majority through an unprecedented assault on living standards, services, job and right.

In all the temporary and permanent occupations of towns and cities, the question to be raised is not how to better manage capitalist society but how to achieve the democratic ownership and control of the banks, the factories, the mines and the supermarkets.

Gerry Gold

Economics editor

A dictatorship of capital in the home of democracy

The global “psychological operation”, aka psyops, that helped to secure last night’s vote of confidence in the Greek parliament for the hastily reorganised Pasok cabinet is a clear expression in its historical birthplace of the negation of democracy.

Massive demonstrations in Syntagma Square in front of Parliament, accompanied by general and other strikes have delivered that message. Yet all of the notions of the will of the people, all citizens having a say, equal participation, self-determination have melted into the air.

On the eve of the confidence vote “inspectors” from the International Monetary Fund (IMF) and the European Central Bank (ECB) arrived in Athens to reinforce the hurricane of warnings of the terrible consequences for Greece should it fail to adopt the prescribed measures.

These are designed to ensure that the monstrously, impossibly, unsustainably indebted country meet its obligations to other governments, banks and financial institutions.

These two unelected agencies represent the interests of the participants in the global financial system – the banks, hedge funds, bond dealers, speculators and gamblers in derivatives that stand to lose unimaginable sums of unearned, mostly imagined title to wealth.

And the pressure is certain to mount in the days running up to July 3, when the “socialist” government must vote – if the “international community” has its way – to make a new, even more severe assault on its own people who clearly can’t and won’t take any more.

Let’s not suggest for one moment that there’s a global conspiracy, that the psyops operators are acting according to an agreed plan, (although who knows what was discussed earlier this month at the annual Bilderberg meeting).

No conscious conspiracy is needed to excite the credit ratings agencies Moody’s and Standard & Poor, who’ve simply continued to do their job – putting a set of letters (CCC, the lowest) to the likelihood that Greece will be able to pay the interest on its debts - simultaneously ensuring that soaring interest rates put it into the realm of the impossible.

Nobody needs to tell the banks and investors who’ve lent to Greece that the only way to defer the looming global breakdown is to close down any drain on profitability, to eliminate public sector spending, to transfer whatever is left to the for-profit corporations.

But why is Greece’s debt so important that it has become the focus of world attention? Compared to the amount the US owes – its national debt is approaching $14 trillion – it hardly seems worth bothering about.

There are plenty of people talking of a new Lehman moment, a reference to its collapse in 2008 which triggered the present financial crisis. They are only too aware of the interconnected web of debt dependency that ties countries, corporations and populations.

German, French and British-based banks have massive holdings of Greek debt that would be worthless if a default takes place. And banks have so far only written off around half the vast overhang of fantasy finance created in the globalisation period from the 1980s onwards.

Where does Greece fit into all of this? It is the home for the world’s largest fleet of merchant ships. Close to 4,000 vessels, approximately one fifth of the world’s total, carry oil and many other commodities around the world in tankers and containers making a huge contribution to world trade.

With trade certain to collapse as it did in 2008 – when it plummeted by 90% – and tourism, Greece’s second largest source of income certain to fall as living standards in the rest of Europe decline, Greece hasn’t a hope of sustaining its repayments.

In 508BC, following a popular uprising, the government of Athens was reorganised around an assembly of all of the citizens. It was an early model of democracy. In the ferment of political discussion on the squares of cities, towns and villages of Greece, Cairo, and Madrid a new richer concept of democracy is emerging.

Its needs to embrace the ending of the dictatorship of capital over people’s lives and the principles of self-determination expressed, for the first time, through demos and kratos – people and power.

Gerry Gold

Economics editor

Greece edges closer to the brink

Greece is closer than ever before to social breakdown as the Pasok “socialist” government struggles to force through yet more austerity measures demanded by lenders, including the European Central Bank (ECB) and the International Monetary Fund.

The credit rating agencies which assess each country’s health have now driven their assessment of Greece to the lowest in the world, because its now crumbling government has, as yet, been unable to impose a sufficiently brutal assault on its people.

Some Pasok MPs are refusing to vote for a new round of cuts, while the right-wing parties are opposing them for their own reasons. Another 24-hour general strike today brought the country to a halt while thousands of activists and unionists converged on Athens' central Syntagma Square on the parliament's front steps to try to prevent deputies from debating the measures.

"Thieves, traitors!" many chanted. "Where did the money go?" "I feel rage and disgust," said 45-year old public sector worker Maria Georgila, a mother of two. "These are very tough measures and they won't get us out of the crisis. I can't believe they have no alternative."

Daily mass protests have drawn hundreds of thousands of people on to the streets in every town throughout the country. They have rejected pleas from prime minister George Papandreou that it is his patriotic duty to make the cuts. Demands raised include a call for Greece to default on its massive foreign loans, to leave the euro and return to the drachma and for the replacement of the current political system with direct democracy.

New cuts would increase the size of unemployment, which is already at a record 16% and deepen a recession now into its third year. The Greek economy shrank by a further 5.5% in the year to March 2011, household consumption contracted 7.8%, while investment was down 19%.

The Greek protests are directed at the government, but behind it stands something much more threatening. Yesterday the finance ministers of the eurozone under pressure from the ECB failed to agree on a proposal to force private investors to share the cost of a further bailout by extending the period of their loans to the bankrupt country.

The ECB fears the wrath of “the markets”, the private investors who lend on the expectation of a fat return for their money. Also concerned are major European banks who stand to suffer if Greece defaults on its loans. The banks have Greek debt on the asset side of their balance sheets and a write-off would be catastrophic.

Across the Middle East, North Africa and Europe, the rapidly developing global capitalist crisis has driven millions of people, young and old into action against a system of governments – both autocratic and parliamentary – which became established during the post-1945 rebuilding of capitalist production.

In Britain, public sector unions, including teachers and civil servants, are set for the largest day of strike action for a generation at the end of the month over pensions and job losses. It’s a welcome start, but as the experiene of Greece shows, strikes by themselves cannot push back the waves of the deepening crisis.

During half a century, the inexorable logic of capitalist growth demanded international agreements which enabled the emergence of increasingly powerful global manufacturing, trading, property-owning and financial corporations. Their “rights” are established in contracts backed by international treaties more powerful than the laws of any country.

Ending their power over people’s lives is the key to finding a solution. To respond to Maria Georgila, “they” actually do not have an alternative. “We”, however, can proceed to build people’s assemblies and establish a new global economy and politics based on social ownership, democratic control and not-for profit sustainable production for need.

Gerry Gold

Economics editor

In thrall to the markets

Governments across the world are engaged in a beauty contest judged by the ratings agencies which pronounce on their credit-worthiness, and the hedge funds which decide whether a country’s debt – its bond issues - are worth buying.

The closer a country like Greece, or Portugal, or Spain or the UK gets to defaulting on its debts, the more it applies the make-up to hide its decay. Greek prime minister George Papandreou is engaged in a two-pronged shadow play. It is designed to stop the bankrupt country’s ancient monuments – essential to the tourist industry from which the country derives much of it income – from falling into the hands of its creditors.

In act one of the country’s financial tragedy, Papandreou is implementing the first tranche of a broad austerity programme of savage cuts and tax increases. Act two is a world tour to gather support for a campaign to regulate the use of credit default swaps and other derivatives by speculators gambling on the likelihood of a default.

But Papandreou is himself gambling. His campaign is a populist move intended to deflect the anger of the still-powerful Greek trade unions that once supported his party PASOK. But the Greek workers are having none of it.

In protest against the planned austerity measures, Greek tax and rubbish collectors walked off their jobs for a second day on Monday. The country's two main unions have urged more than a million civil servants and private sector workers to strike today. This second general strike in as many weeks is set to paralyse much of the country.

Meanwhile, in Portugal, similar plans sparked a strike by civil servants which shut schools, courts and hospitals on March 4 in actions supported by 80% of the membership. In its historic referendum, the population of Iceland has resoundingly rejected the terms for repaying the debt guarantees for Icesave depositors held by the British and Dutch governments.

Public and private sector employers across the world are responding to the recession by driving up productivity and cutting labour costs. As a two-day strike by 270,000 UK public sector workers over cuts in redundancy pay came to an end on Tuesday, the threat was growing of action over the Easter holiday by British Airways cabin crews over pay cuts, and rail maintenance workers and signallers over job reductions and changes to working conditions.

In the United States, the economic shakeout is driving the rate of exploitation to record levels. Official figures show that in 2009, productivity rose 3.8% from 2008, while unit labour costs fell 1.7%, a record pace of contraction. There are surely limits to what American workers can stand. Trouble is brewing already at American Airlines.

Everyday brings new shocks that surprise and disappoint those who search for signs of recovery. The UK’s declining exports and widening trade deficit despite a 25% decline in the relative value of the pound, are just the latest in a long line of figures that lead it inexorably to join the sovereign debt crisis on the way to full-blown state bankruptcy. No wonder Gordon Brown today admitted that there were “substantial risks ahead” for the economy.

The financial markets are relying on New Labour and/or the Tories to deal with the public spending deficit at the expense of ordinary people. Brown’s denials on this subject should be taken with a pinch of salt. Capitalism is cornered in country after country and is fighting back the only way it knows how. The increasing resistance by workers around the world has to point towards the strengthening of international alliances on the road to putting capital out of business once and for all.

Gerry Gold
Economics editor

Resistance grows as crisis deepens

Suddenly, as if from nowhere, a wave of opposition is engulfing Europe. Workers are joining a wave of action which threatens to bring the continent to a standstill as they try to resist being made to bear the costs of the deepening global crisis.

Today in Greece more than three million public and private sector workers embark on a 24-hour walkout in response to the latest austerity measures announced by the PASOK government. Employees in government ministries, municipal offices, hospitals, schools, universities, banks, courts and factory workers are among those set to strike. Rail, road, sea and air transport across the country will be affected. With journalists expected to join the strike, a virtual news blackout is expected.

Yesterday, Spain’s debt-laden Socialist government faced the first mass protests by unions in its six years in power as anger over a plan to raise the retirement age spilled into the streets. The country's two largest unions, the UGT and the CCOO, called demonstrations in several major cities, including Madrid, Barcelona and Valencia. Further protests are planned in the rest of the country up until March 6 against the plan announced last month by the government of Prime Minister Jose Luis Rodriguez Zapatero to raise the legal retirement age from 65 to 67.

Greeks and Spaniards are joining action by airline staff from Air-France-KLM, Lufthansa, and British Airways, French refinery workers and air-traffic controllers, pilots in the Welsh oil port of Milford Haven, IT staff contracted to the BBC, and gallery attendants at the National Gallery in London to name just a few.

After years of declining membership, the question for trades unionists is this: what can they hope to achieve using the methods available to them? Certainly they remain strong and effective in some key industries, but how can they expect to resist the inevitable dive into recession?

The global economy is entering a period of capital destruction. The effects of the financial stimulus packages, unprecedented outside of war, are fading and all hopes of recovery are slipping away.

The private sector assault on jobs, wages and pensions is accelerating. The deepening global crisis is co-ordinating the actions of the hedge fund managers, currency speculators, and market traders. Together with the International Monetary Fund, the Bank for International Settlements and other global agencies they are launching an assault on capitalist governments, forcing them to introduce austerity programs which will see public services dismantled and benefits eliminated in the attempt to avoid payment defaults on mounting debt leading to state bankruptcy.

The capitalist system of production is in a mortal crisis. The measures needed for its survival, to enable it to continue extracting value from the workers employed by for-profit corporations, are driving the transnational capitalist class into open confrontation.

Workers in trade unions must work together with those who are yet to be organised. They must forge and strengthen international connections. Preparations must be made to strengthen defensive strategies comprising strikes, demonstrations and occupations.

These alone will, however, be insufficient to protect living conditions in the months ahead as employers and governments turn to the forces of the state to protect the interests of private property, capital accumulation and the law-governed right and necessity to turn a profit.

This sudden burst of strikes and protests marks a qualitative change presaging revolutionary confrontations. In our draft Manifesto of Revolutionary Solutions we offer a vision of an alternative, democratically-run, not-for profit society, and an outline of the kind of organisation needed to bring it about.

Gerry Gold
Economics editor

Greek debt crisis: a warning from history

Greece has moved centre stage as the global debt contagion engulfs Europe. But Italy, Portugal and Spain are not far behind, whilst France and even Germany, whose banks have many billions invested in the other countries, are waiting in the wings. No wonder EU leaders are holding a crisis meeting tomorrow.

Greek public sector workers are taking to the streets today in protest against the government’s austerity programme. This is designed to appease the hedge fund managers who are raising the cost of borrowing, and the foreign exchange dealers who have launched an unprecedented assault on the euro.

The Panhellenic Socialist Movement (PASOK) was elected in October and pledged to rescue Greek capitalism after the break-up of the previous right-wing government. But PASOK has struggled to get to grips with the worsening economic and social crisis.

Today’s strike by unions PASOK could once count on against pay and pension cuts is accompanied by a continuing blockade of main roads by farmers, including the border with Bulgaria. They are demanding financial support the government can’t afford to give.

The immediate threats to the country’s political stability arise from the payments due on its mountainous debts, now proving impossible to service as its economy – largely dependent on tourism and shipping – has taken a big hit from the global recession.

But the Greek government is not alone. It just happens to be the weakest of the pack of highly indebted countries which includes Portugal, Italy, Ireland, Spain, France, the UK and the US, not forgetting Dubai.

Greece’s public spending deficit exceeds 13% of the value of annual output of goods and services, Spain’s 11.4% and Portugal’s 9.3%. All these are far in excess of the 3% safe limit determined by rules set by the EU for countries using the euro currency.

These deficits are funded by borrowing – selling bonds to investors, speculators on the private markets whose only interest is “interest” or “yield”, the amount they can charge. As the problems of repayment mount, so does the cost of borrowing. The principle is the same whether we’re talking about global investors or doorstep, pay-day lenders. Fail to make a payment and the interest due is added to the principal - and then the rate rises. Defaulters are treated very severely. Brutally.

Some consider the UK safer from the effects of debt contagion, because it is outside the euro zone. But its deficit is way up there at more than 12%, and the pound is also under pressure from the foreign exchange traders.

Bankers and hedge fund managers now call the shots, demanding public sector wage and benefit cuts, tax rises, pension reductions and the ending of vital services. Respected figures like George Magnus, senior economic advisor to UBS Investment Bank, talk in hushed tones about the need for governments to balance the risks of a breakdown in “social cohesion” arising from the prescribed “structural reforms” needed to attract investors like him.

The system of elected government that Europeans have got used to during the thirty years of corporate-led globalisation cannot survive the scale of the devastation needed to sustain the capitalist system. Greece was ruled by a military Junta between 1967 and 1974; Spain’s fascist dictatorship lasted from 1939 until Franco died in 1975. The Salazar government in Portugal lasted from 1933 until his death in 1970. The Nazis came to power in 1933 as the effects of the Great Depression were felt throughout the world.

That Depression only came to an end when fascism and the Second World War eliminated the surplus productive capacity produced by the speculative growth of the 1920s. Today’s globalised financial, economic and political crisis exceeds by far the conditions of the 1930s. The costs of resolving it within the capitalist framework cannot be countenanced.

We invite you to join the discussion of alternative, revolutionary solutions put forward in our draft Manifesto.

Gerry Gold
Economics editor

Greece in revolt

The sustained revolt by Greek students and young workers in major cities throughout the country may have been triggered by the shooting of a 15-year-old by police but is actually a confrontation that was waiting to happen. And it reveals that in the country that first conceived of democracy, there is no future for the ideal within the confines of the existing Greek state.

Greece has suffered a long period of corrupt rule, both by the existing New Democracy, right-wing government and before them the social democrats of Pasok. As a result, many Greeks have long lost any semblance of respect for the state in terms of abiding by laws and regulations. Tax evasion, for example, is widespread, an indication that the country has become ungovernable. A World Bank study on Greece found that one in every nine euros of company revenues is not recorded and therefore not taxed. The 11% level of tax evasion is exceeded by an underground economy which is reckoned to amount to nearly 30% of gross domestic product.

As the state has floundered, the divisions between rich and poor have grown sharply. In a country of 11 million, one in five lives below the poverty line and there is mounting anger at the government’s attempt to cut budgets in line with the requirements set down by the European Union in order stay part of the eurozone. A series of corruption scandals have hit the inner circle of Costas Karamanlis, the prime minster. Unemployment is already at 8% on average and much higher among 20 to 25 year olds. All the signs point to a sharp rise in joblessness over the next few months as the global crisis takes its toll on the country.

Today, schools are shut and thousands will attend the funeral of 15-year-old Alexandros Grigoropoulos, killed by police at the weekend. Tomorrow, the trade unions which have been battling the government’s privatisation policies, have called for strike action in protest against his death. "A lot of teenagers identify with Grigoropoulos," said Christos Mazanitis, an Athenian journalist. "There's a whole generation out there who see their parents in debt and feel they have nothing to look forward to in the future. Fear and despair are what these riots are about."

The impotence of the state is even recognised by the right-wing, whose commentators are suggesting that Greece "will now be out of control" after the protests. Nikos Konstandaras, writing in the centre-right newspaper Kathimerini, said: "It is tragic that the loss of one life should highlight so many impasses in our society and our politics. Instead of seeing that our refusal to resolve problems makes them intractable, I fear the way that we will use this death will simply make our problems worse."

There is no certainly no answer to the despair of young people through another Pasok government. The party’s leaders are angling to return to power – to carry on where Karamanlis leaves off. "It is as if the state [machinery], the government, has collapsed," said Ioannis Rougissis, a spokesman for the opposition Pasok party. Clearly, Pasok sees its role as one of restoring the authority of the corrupt and ineffectual Greek capitalist state just at the moment when its grip on power is self-evidently draining away.

A reconstruction of the Greek state from top to bottom is the only practical way forward. This process, which will require organisation and a revolutionary strategy, would aim at a transfer of economic and political power to the majority as a basis for the equitable development of Greek society. Then, and only then, would the term democracy have any substantial meaning in modern Greece.


Paul Feldman
AWTW communications editor