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OpEdNews Op Eds    H1'ed 7/8/15

The New York Times Urges the Troika to "Make an Example of Greece"

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The Greek government's second demand is a reduction in Greece's unsustainable debt. Greece is unique in the eurozone. It has unsustainable debt (in part because it gave up its sovereign currency and joined the euro). The centrist answer to unsustainable debt is to do a TDR, as the most conservative businesspeople routinely do thousands of times every day in the commercial sphere. This is not in dispute. A TDR was also done for Germany, and doing so was essential to its recovery. Did Germany set a "bad example?" No, it set a superb example that it ought to follow in the case of Greece.

Note that the NYT author does not even attempt to explain why it is desirable to try to force a nation (or for that matter an individual or corporate debtor) to repay an unsustainable debt. It cannot work. It is guaranteed to cause immense misery and a perpetual crisis that ruins growth prospects. The "fresh start" concept at the heart of bankruptcy is simply one of many recognitions of this fact.

Note that the author quickly retreats to the "rules" (the oxymoronic "strictures of the European Union") that I explained above are the greatest threat to the eurozone's "stability and growth." But the author has conceded that economists have long warned that those rules constitute economic malpractice in the context of a recession. So, it would be wonderful, not "bad" if Greece led the EU to end its economic malpractice that caused such senseless human suffering. The author might also note that the two nations (France and Germany) that crafted those economically illiterate rules promptly violated them (which, of course, caused zero harm to their economy or the eurozone's economy). France remains in violation of those rules -- which has reduced economic damage to France's economy and the eurozone.

So, on the two key matters at issue between Greece and the troika, Syriza is the sole non-extremist in the negotiations. Syriza is correct on the substance of both key issues and its position is supported by the center of economic thinking.

The author fails to recognize the reality that "Portugal, Spain, and Italy" have already "elect[ed] extremist parties." Indeed, the troika also orchestrated a coup in Italy to ensure the unelected appointment Mario Monti as prime minister. Monti was chosen because he was an economically extremist patron of austerity from Goldman Sachs (which engineered the debt scam years ago with Greece's then far-right government to hide Greece's true debt levels). Because the result was getting rid of the personally odious Silvio Berlusconi this coup created little push back. The deeply corrupt, pro-austerity, and anti-worker policies that dominate each of these three nations are ultra-extremist and dedicated to economic malpractice precisely because it enriches the politicians' wealthy party patrons at the expense of the workers. The party in Spain espousing centrist anti-austerity policies from the perspective of economists is Podemos (modeled in part on Syriza).

Note the author's tone. When a new government is elected in Greece because the Greek people have been senselessly forced to suffer great harm that includes being forced into worse-than-Great Depression levels of unemployment and the leaders explain (correctly) why austerity is self-destructive, they are simply "intransigent" "extremist[s]" "fuss[ing] at the poor troika to get a "sweeter deal." I'm tired to the bone of NYT reporters covering the eurozone crisis dismissing the suffering of human beings in this cavalier tone. Roughly 100 million Europeans are suffering and sometimes dying unnecessarily because of the economic malpractice we are discussing. The job of government officials is to fight, and sacrifice their public careers if necessary (as Yanis Varoufakis has just done), against the people who (as the NYT author concedes) for purely "political" reasons are trying to make their elite corporate sponsors wealthy by harming the public. There is nothing "sweet" about "deals" the troika has inflicted on the Greek people. The troika has insisted on deals that have crushed the Greek economy and cause great suffering to the Greek people.

"Intransigent" gets the issue exactly reversed. As the troika has witnessed its policies causing a catastrophe in Greece it has relentlessly doubled-down and demanded ever increased austerity. In the most recent negotiations the troika stated that it did not care how Greece raised revenue and cut spending -- it only cared about the bottom line number. Greece responded with a plan to cut military spending and increase tax collection from the wealthy (who typically engage in tax evasion). The troika responded by rejecting the plan because it opposed the tax collection from the wealthy and cuts in military spending.

The troika's neoliberal agenda will continue to grow insatiably if its power is not checked. The CEOs of the elite German corporations and banks that determine the troika's policies define the concepts "extremist" and "intransigent." They believe they should rule Europe in accordance with von Hayek's anti-democratic and anti-worker vision of a legislature ruled by elite business leaders who are middle-aged or beyond.

The last sentence of the above quotation is deliberate propaganda. "It would send the signal that a country can borrow all it likes, walk away from those debts and make the rest of Europe pay the bill, as long as it is intransigent enough. No one is talking about Greece being released from all its debts, as the author knows full well. (The German TDR was far more generous than what Greece is seeking, but there I go being non-"diplomatic" again.) The request is that the debts be reduced to the level that would make them sustainable and leave Greece in perpetual economic chaos. Honoring that request would help the people of the eurozone as well as the Greek people. That is why U.S. bankruptcy laws offer a "fresh start." It is good not simply for the debtor, but for society. (I don't expect NYT reporters who cover the EU -- and religiously avoid reading Krugman and other economists -- to understand debt and sovereign currencies or how the ECB could be transformed into an institution that would end even this propaganda scenario, but the troika's economists know it can be done.)

I end by discussing the missing aspect characteristic of the NYT's coverage of the troika -- ethics and humanity. To pick a mob "hit man" theme ("make an example of Greece) should have immediately alerted the author to the central moral issue. How did an organization supposedly devoted to "ever closer union" get perverted into a device of extortion that according to the author is likely to destroy not only Greece's economy but also its democracy? Note that the suffering of the Greek people is simply ignored in the article. And how did that extortion become devoted to making the wealthiest and most politically powerful German corporate and banking elites even wealthier and more powerful at the direct expense of eurozone workers?

Oh, and the NYT reporters might consult their paper's coverage of the copious frauds that characterize those elite German corporations and banks. Yes, wealthy Greeks are famous for tax evasion and corruption, but they are pikers compared to German elites when it comes to corruption, tax evasion, and leading "control frauds." German elites tend to bribe government officials in other countries such as Greece (think Siemens) and help criminals and terrorists in other nations breach international sanctions to the tune of billions of dollars (think Siemens, Commerzbank, and DeutscheBank -- a bank that committed so many massive frauds and crimes that there is not enough space in a parenthetical to list the multiple links).

As a final aside, if readers ever wondered what white-collar criminologists think of Transparency International's "Corruption Perceptions Index" that purports to reflect how corrupt each nation is, there is a four-word answer: "German is No. 12." TI claims that German is the twelfth least corrupt nation in the world -- and the least corrupt of any major economy.

Transparency International (TI) was created by Germans in Berlin. The leader was a World Bank official. The World Bank is controlled by "first world" leaders and is very corrupt, but the TI founder had worked in East Africa and he focused TI on "third world" corruption. The TI "index" uses a methodology that everyone consider farcical. It reliably produces results such as showing Germany as the least corrupt major economy. Germany's corruption rating is considered hilarious by people who actually study and struggle against corruption. Of course, Wall Street and the City of London remain the most corrupt and corrupting sites in the world. Germany's largest banks are spectacularly recidivist in their massive crimes, but Frankfurt is not close as a financial center to the magnitude of Wall Street and the City of London.

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William K Black , J.D., Ph.D. is Associate Professor of Law and Economics at the University of Missouri-Kansas City. Bill Black has testified before the Senate Agricultural Committee on the regulation of financial derivatives and House (more...)
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