Greece and Its Occupation by the IMF and the Euro

by on March 2, 2012 · 1 comment

in Economy, World News

When the International Monetary Fund(IMF) is involved, one can expert the worst, and it usually–always–happens. In the case of Greece, it is the typical «cure» demanded by the IMF that is to be applied. The aim is always to reduce or even demolish the power of the state to take action to aid and protect its citizens. One of the primary demands of the IMF is to privatize state companies like electricity and water and whatever else it can think of. Another one is to attack the civil service and lower wages for or fire numerous civil servants.

Hospitals and schools are supposed to reduce the number of employees, thus services to citizens is reduced: longer waits for medical care and a larger number of students in classes. Even the police and the fire departments can be affected.

In France, the rightwing government has reduced the number of police by 16,000 and teachers and other educational workers by 30,000. This was done by a government whose main campaign theme was more security for the population.

The degradation of working conditions has led to fewer graduates to envisage teaching as a career. In many subjects, such as math, geography, literature, music, etc., there are fewer candidates than posts to be filled. The government has removed practical experience with experienced teachers from the courses.  Successful candidates are thrown into the classroom with little preparation, thrown to the lions you might say. At the beginning of their careers, they are usually assigned to the most difficult schools which current teachers don’t want. It is no wonder that many leave after a year or two.

A recent report on French television focused on the effects of IMF and European demands on a middle-class Greek family. The husband is a professor and the wife is employed by the state as an archeologist. Before the recent austerity plans, they earned over 2,000 euros per month. Now each receives around 3 or 4 hundred euros per month, less than the rent they must pay, even though the owner reduced it by 20%. Their savings have been reduced to almost zero. They are now among the working poor.

This is a family that lived quite well by Greek standards. The minimum wage is to be reduced by 22%, 32% for those under 25. You can imagine how it must be for people lower down on the scale and why in the recent occupation demonstrations many turned to violence. The rate of unemployment is 9.4% in France– about double for the young. In Greece and Spain it is over 20%, which may explain why the movement is less important in France.

Greece should never have been accepted into the Euro Zone. At the time, everyone in the know knew that its accounts were falsified to meet Euro requirements. Largely responsible for this falsification was the bank Goldman-Sachs. As I mentioned before, Greece is now run by ex-Goldman-Sachs employees. If you do a search on «Greece and Goldman Sachs» you will find many articles that explain it in detail.

From Der Spiegal, «Now, though, it looks like the Greek figure jugglers have been even more brazen than was previously thought. ”

Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future,” one insider recalled, adding that Mediterranean countries had snapped up such products.

Greece’s debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period — to be exchanged back into the original currencies at a later date.

Such transactions are part of normal government refinancing. Europe’s governments obtain funds from investors around the world by issuing bonds in yen, dollar or Swiss francs. But they need euros to pay their daily bills. Years later the bonds are repaid in the original foreign denominations.

But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.

This credit disguised as a swap didn’t show up in the Greek debt statistics. Eurostat’s reporting rules don’t comprehensively record transactions involving financial derivatives.

“The Maastricht rules can be circumvented quite legally through swaps,” says a German derivatives dealer. …At some point Greece will have to pay up for its swap transactions, and that will impact its deficit. The bond maturities range between 10 and 15 years. Goldman Sachs charged a hefty commission for the deal and sold the swaps on to a Greek bank in 2005.»

Other sites that explain how Goldman Sachs helped mask Greece’s debt , here and here.

{ 1 comment… read it below or add one }

JEC March 4, 2012 at 9:32 am

Months ago, during the first riots in Greece, I heard a Greek protester make a point; Greece and Greeks are being asked to work harder, lower their standard of living and accept a hopeless future for their children all to sustain a financial system that does not now nor ever will help us or our children. It is the system of the 1% – and it is an albatrose around our necks. In the end the best move might be to let if fall.


Leave a Comment

Older Article:

Newer Article: