copyright: Bloomberg 2010

There have been a lot of discussions going on lately, saying that what happens now is the beginning of the end of capitalism. Those who are more optimistic (or pessimistic, depends which side you look at it) are already wondering what the new economic system will be like.

I don’t believe that what Europe is coming through is a crisis of capitalism in general. I think it is a crisis of “toxic” capitalism. Capitalism (either we like it or not) is an economic system and like all systems, it has some basic rules.

Some of them are:
A) to make profit through the exploitation of human labour.
B) the sense of economic risk
C) competition

Maybe there are a few others, which I’m too stupid to understand, but let’s just work with these 3.

These 3 rules combined are the definition of “healthy” capitalism. This term may sound a bit paradoxical to some of you, but let’s just use it for simplicity. What brought us to this crisis is the violation of these 3 rules.

“Toxic” capitalism is looking for easy and fast profit. Which means, to make profit without any human labour involved. Basically it’s gambling: instead of investing some money in a company –looking forward to making profit out of the human labour of the people working for it- I buy stocks of a company today, only to raise the price of the stock and sell tomorrow. This way I make easy money but I’m a problem to the other shareholders, but also to the company itself. This tactic is violating rule A. The same way that common people can invest some money in the stock market, investment banks invest huge amounts of money in countries, buying bonds etc. But what happens when, being an investment bank, I don’t invest in german bonds because the german economy is reliable (“healthy” capitalism), but instead I invest in Greece just because I can gamble and make money easier? Who are the shareholders who lose from my gambling? Simply the country’s citizens. And the company is Greece.

Then, there was this other method, investors putting money on several prospects. It goes like this: I buy some investment products, in US dollars. Then the US dollar is rising towards the Euro, I resell it to some other investor. So, I make some profit by selling it, but also by currency exchanging. This is making money out of thin air, but let’s says that there’s still a bit of risk in such a move. What if an investor puts money on 2 prospects, maybe even contradicted to each other? Among gamblers there is the term known as “house edge”. House edge means that whatever result there is in a game, the house always has a profit, even a small one. Now, back to investments, when I put some millions on one prospect, my move is mistaken as “honest” by the market. So, due to mass psychology, some people will always follow my move. But they can’t see the other few millions I put on the opposite prospect, so usually they end up losing their money. This is violating rule B.

Some of the American investment banks (that have been torturing Greece lately) own rating agencies. Rating agencies are the ones that every now and then give a rate to the investment products of countries (among other stuff).

A note here: American rating agencies have the right to rate EU-countries’ investment products, while European rating agencies are not recognized by the US. It’s as simple as “you need us, we don’t need you”.

So it’s more than obvious that American investment banks have the pie and eat it too, as far as EU economy goes. When a rating agency (which has an investment bank behind it) is downgrading e.g. greek investment products is as if the investment banks were saying they don’t want to lend Greece any money. This makes the rest of the investment market cautious, so no one wants to lend Greece and as a result loan interests rise. This is called “self-fulfilling prophecy”. To give a better picture on how real this is, right after Greece signed the aid agreement with the IMF, rating agencies downgraded greek investment products to "junk" category so the chairman of the European Central Bank (the equal to the Federal Reserve Bank in the US) said that  the ECB will still buy greek bonds, despite the bad ratings. The ECB just confessed that rating agencies play their own game, and since we, as the EU, need to keep the Euro strong, we don’t care about their ratings. This is ridiculous: the same group of countries that have been asking the rating agencies their opinion on their investment products, now say that they just don’t care about their opinion. This is violating rule C. Because eventually, US investment products are not in fair competition to the EU-countries investment products, since the rating of EU-countries investment products are in the hands of their competitor! Some people say that capital doesn’t have nationality. I say, it shouldn’t, but it still does.

The Obama administration lately voted new laws concerning the freedom of banks to do certain moves, but only within the US. They can still do their gambling outside the US. In a sense, they'd better do so, for American economy to get over the recession. Obama only wanted to make sure that there will be no new collapse in the real estate or any other market in the US. These “toxic” tactics that made the Lehman Bros collapse and took with it so many other banks as a domino, also affect the psychology of the real market, unemployment etc. In other words Obama told the banks “do whatever you want, but not in our own yard”.

The conclusion is that this crisis concerns Europe, not just because “that’s life” but mostly because there was a concrete intention behind it all. (Of course there is a crisis of capitalism as a system, but in my opinion it has to do with environmental issues more than with anything else) One would say “but why do the investment banks do this to Greece instead of to Germany?” The answer is that in Greece they found more vulnerable ground. The rating agencies may be gambling with countries but they also need to be considered reliable. If they downgraded the german or the french investment products they would lose some of their reliability. So they are looking for someone who’s on the brink of the abyss anyways and then they start pushing. It’s obvious already: by the next day that Greece signed the aid agreement, the rating agencies have been attacking Portugal and Spain, as the 2 next weakest EU economies. Besides, by hitting the PIGS (Portugal, Italy, Greece, Spain) they are sure that Germany gets the message too.

What really happens now is an attack of the american economy against the EU economy. EU was in deep slumber, it’s decision making system is too slow, it hadn't forethought of means to protect itself against such an attack. What’s worse is that the EU still has some contradicted interests in its body. Maybe they trusted the Americans more than they should have.

The goal for the american economy is to step n the EU economy. Greece is the Trojan horse of the Americans, used by the IMF. It proved that the IMF wasn’t necessary, neither its money, nor its know-how. Greece is getting a 110 billion euros financial aid, of which only 30 billion come from the IMF. But as we’ve already seen in the article Introduction to the IMF, the point is not for the IMF to get its money back – they now this will never happen. The point is the exploitation of soon-to-become ex-public sector businesses, energy, natural resources. Greece will not collapse – as a country, I don’t know about the society – because they don’t want us to collapse. They are just proving us for once more that our collapse is in their hands and they wanted us to beg before they come to save us.

As a country we have been on the brink of the abyss for a while now, but I’m sure we can live with this. What if society is on the brink of the abyss too? That’s something I don’t know if we can live with.

We all have been recognizing it. Me, my friends, relatives, you could hear it been acknowledged by the people at the nearby table at cafes that there would come a day when this whole lie will end. We are not some isolated country, like Australia or something. In the last 20 years we saw all these desperate people, the Iraqis, the Serbs, the Palestinians, the Albanians, the Bulgarians getting through hard times. We couldn’t ever imagine being in their position. We lived with the certainty that “this would have never happened here”. We thought that we’d already passed through all the shit in history, the world war, the civil war, the dictatorship. And that from now on we are on auto pilot and that things can only get better, infinitely. We may have all been saying that this lie will end some day, but we weren’t thinking how it would end. Because we used to think like, ok, we are already the crappiest country in the EU, so things can only gradually get the northern European way. We never thought that there were worse examples to follow. I have a friend in Serbia, and I was telling her about this whole situation. She said: “You worry too much. We had the same problems here and at the same time there was a dictatorship and the NATO bombings.” For a moment I felt lucky.

People are demonstrating, everybody’s mad. What’s worse is that there’s no one to trust. What’s even worse is that from now on, we don’t have the right to decide for ourselves. The prime minister admitted it yesterday in the parliament when the opposition accused him of taking such harsh measures. He said “don’t blame me, blame the IMF”. Basically, we are under economic occupation. As a citizen of this country there’s no way to send any message to the people of the IMF. I can’t vote for them, I can’t vote against them. I can either follow their instructions or leave the country. If chaos prevails, we will probably be under physical occupation too. EU regulations say that if a member country can’t guarantee social peace, then a mixed EU force is liable to put this country under control.

If you ask me, I don’t mind some money taken away from me, but only under the condition that we will set up a really just society. What I can’t stand is to see for the rest of my life all these people who brought us here being free to live among us. People say we should send them to jail, some say kill them on national betrayal. I don’t want them to be put to jail, I’m against the institution of jail. I want the state to confiscate their property and send them to exile. I want them to have to go to another country and earvn their living. If this could happen, I wouldn’t mind working for 10 years in return for just shelter and food.

But right now there’s no self-possesion among the people. Everybody talks about the same stuff all the time, usually they fight. Then they go to the demonstration together and take it all out on the cops. Last Wednesday, 3 people were suffocated to death when a few demonstrators set a bank building on fire. The next day, the cops got unreasonably violent against some peaceful demonstrators. There could have been more people dead, as stun grenades and tear gas canisters were thrown in the middle of the squeezed crowd and people almost got stepped over by others.

Greece looks like a part of land where suddenly 12 million people are trapped in it and they have to find a way to set up a community from scratch. And each one of them has something different in mind, each one gwith their own definition of “victory”. A real-life Survivor reality show.

Let the 3 people who died rest in peace and let’s all of us who go to these continuing demonstrations try to do whatever possible so that no other life gets in danger, at least as long as our own lives are not in danger too.

Copying straight from the english Wikipedia:
"The International Monetary Fund (IMF) is the international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments. It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development.[3] It also offers highly leveraged loans, mainly to poorer countries. Its headquarters are in Washington, D.C., United States.(...) (Member) Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances."
For the full article in Wikipedia click here.

Today almost all countries in the world are members in the IMF, except a few (Cuba, N.Korea, Taiwan the most known).

In a sense, one can say that the IMF is to global economy what the United Nations is to world peace. An asterisk here: in the UN, as you probably know, there is the Security Council, a group of countries that can meet and take decisions away from the rest of the UN members. The Security Council has 15 members, 5 permanent and 10 non-permanent. The 5 permanent members are the USA, the UK, France, Russia and China. Only permanent members have the right to use a veto. On the contrary in the IMF there's only one country with the right to use a veto, the USA.

The foundation of the IMF
The great depression of the '30's, WWI and WWII caused huge problems in the global economy, even for parts of the world that were not directly affected by the actual events. This instability was no good for no one; definitely more harmful to exporting countries. That's why, since the end of  WWII, the british and american governments were looking for ways to ensure -as much as possible- global economic stability.

With the end of WWII, begins an era when governments realize that on an individual basis each one is weak and fragile. In order to have political and economic stability, countries start to form international organizations/alliances. The UN, the NATO, the Warsaw Pact, the IMF and later the EU, the BeNeLux and the Comecon are some of them.

Until that time, the wealth of each country is translated in gold reserves. This method is considered anachronistic for modern economy. With the foundation of the IMF, the US, Britain and another 27 countries as initial members of the IMF put their gold reserves together under IMF administration. These countries now replace their gold reserves with dollars (so dollar becomes a reserve currency). In return, the IMF will support the economy of a member-country. In other words, the US, through the IMF, manage to control all the gold gathered from 29 countries, gaining enormous negotiation force.

Of course, organizations or alliances like the IMF look like alliances between wolves and sheep. Weak countries apply for membership in the IMF, fearing that economic isolation should make them even more vulnerable.

What the IMF does when a member-country asks for support is to give loans with relatively low interest, but under very strict terms and conditions, eventually facilitating american or other countries' strong corporations to buy off any major public enterprise still left at a given place.

For those who don’t have a clear picture of the history of modern Greece, here follows a brief retrospect.
In order to save some of your time, we present some facts quite simplified, though trying not to misquote the actual facts. In the text you will find several links leading to articles of the english Wikipedia, just in case someone would like to know more. Wesuggestthatyoufollowtheselinks. For whatever question or remark you would like to make, please feel free to contact us through the contact form at the bottom of the home page. We’ll be glad to help.

Greece was founded in 1830, winning its independence from the Ottoman empire (with the support of England, France and Russia). Till then this specific territory had been occupied by the Ottoman-Turks since the 15th century. Ever since its foundation and up to WW2 a lot of interesting things happened, but this is not the place to analyze any further. If you want to know more check here.

After the end of WW2, Greece gets in a civil war between rightists (pro-british/american) and communists (pro-soviet). The civil war lasted for 3 years and it cost the country much more casualties than the ones Greece had during WW2. In the end, and with the help of the US Army, the rightists won and as a result, thousands of communist families fled to the eastern block countries to avoid execution or detaining. For more see here.

Any remaining communists/leftists are sent to concentration camps, but they are given the chance to be free, if they will only sign a “statement of regret” for their actions and beliefs. Some do, others don’t, as their comrades consider it humiliating. Even for many years after the end of the civil war, being a relative to a communist was sufficient reason for not being allowed to study in any university; even getting a job was a hard thing to achieve.

Even though it’s now more than 60 years since the civil war ended, a survey published in 2008 in Kathimerini, a major greek newspaper, shows that a big part of greek people are still willing to take sides.
While to the question “Do you believe it was better for Greece that the rightists won?” 43% said Yes and 13% said that they think it would be better if the communists had won, at the same time, when asked "Which side would you have supported had you lived in that era?” only 14% said "the right wing” when 23% said "the left wing".

After the end of the civil war, the Communist Party was pronounced outlaw. But then comes up a new left party, EDA, which gradually gains the people’s support, and in the 1958 election they come second, with 24% of the votes. In order to face the threat of an even stronger left party, a military coup (with the cooperation of the US government) takes place in 1967. The leader of the coup, colonel Papadopoulos, in his first message to the greek people says that "the army took action in order to protect the country from the communists". Leftists are once again being hunted down, detained, tortured. President Clinton expressed his regret for the support that the US gave the military regime, during his visit to Athens in 1999. See also here.

The coup falls apart 7 years later as a result of the Cyprus conflict and the war against Turkey, while a few months earlier there had been a major riot in Athens against the regime.

In 1974, for the first time in 50 years there are truly free elections. The right party (New Democracy) wins. Its leader, Karamanlis is the uncle of the up-to-last-October prime minister of Greece. The country now is run under democratic principles and Karamanlis (who as a prime minister in the mid-1960’s had hunted down the leftists) now behaves according to a new, more liberal constitution. In the 1981 election, a new party comes to power. It is PASOK, a party calling itself “socialist”. Its leader is Papandreou, whose son is the current prime minister of Greece, he too as a leader of the same party. His grandfather was the first prime minister of Greece after the end of the war, in a british-controlled government. Since 1974, these 2 parties have succeeded each other in power. Their failure in finances can be seen in the chart below, showing the national debt as a percentage of the GDP through the years:

1974 22,5% of GDP
1981 31,2% of GDP
1985 Greece has the highest national debt per capita in the world
1987 56,1% of GDP
1990 80,7% of GDP
1993 111,6% of GDP
2004 108,5% of GDP
2008 97,16% of GDP

Source: Bank of Greece

For many years, politicians along with a big part of the people created a scenery of corruption. Candidates for parliament members offer voters jobs in the public sector in exchange for votes. Public servants in 1978 were approx. 300.000. In 1987 they were approx. 640.000. Today the estimates rise up to 800.000. Greece has 7 times more public teachers per student than Finland, which is supposed to be the country with the best educational system worldwide. Corruption is spread on all levels of the state, from the army, to the police, the health system, the tax administration. In a recent survey, 90% of the people asked, say that at least once they took part in a corrupt transaction with a government institution.

Despite all that, in the last 35 years the standard of living of the people has risen significantly, thanks to the constant financing programs of the EU and the tendency of government officials to hire even more public servants and spend this money in non-productive ways.

Today it is proven that greek governments have been constantly giving fake figures for the economy to the European Commission. Greece now has a national debt rising up to 132% of the GDP, i.e. 330 bn euros (430 bn $)

I can see the question coming: Did anyone ever go to jail?
The answer is no. In Greece there’s a law that protects parliament members from being prosecuted. If there’s a suspicion against someone, he is to be judged by a committee of other parliament members. So in all cases, suspects are being backed by their colleagues. Another law says that public servants can’t get fired. What more, Justice couldn’t have been the only institution unaffected by corruption.

Even though in the last 2 years, 2 major scandals have been revealed, up to this day there hasn’t been a single charge against any official or citizen.

Examples:
Siemens scandal 1 2
Vatopedi scandal 1