"A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain." Mark Twain
As we look to the economic crisis in Greece, we must first look to the economic crisis in the United States. They are one and the same and the answers and corrective actions recommended are one and the same, as well. Raise taxes, cut services, pay bankers.
Strange, isn't it, that economic troubles on opposite sides of the Earth would have identical cures. Or perhaps all economic crises have the same cure. In September of 2008 the Icelandic government took a 75% ownership stake in Landsbanki bank after the bank faced liquidity problems. Landsbanki had been on the cutting edge of the "new banking" industry, offering high interest, online savings accounts called "Icesave." The lure was irresistible and 300,000 British citizens deposited their savings worth almost five billion dollars.
Many -- most, if not all -- forgot to read the fine print where it said that the deposits were not insured, as regular accounts would be. So, when Landsbanki went in the tank, the British government looked to the Icelandic government and said, "We want our money back!"
The Icelanders answered, "We don't have your money, and besides, the accounts were uninsured." They were covered under a little known provision called "top-up" rules and would have to depend on Icelandic Compensation Scheme. Landsbanki was the second of three Icelandic banks to fail so the ICS was done.
What happened next was a page out of European history from 1914. The British government and the Bank of England began seeking alliances to prevent Iceland from receiving any further international loans until they agreed to pay back the British for their uninsured bank accounts. Iceland's economy was on its back and the British organized an economic blockade that wasn't much different than the German U-boat blockade of 1940.
In October, British officials tried to use anti-terrorism statutes to freeze Icelandic assets in the United Kingdom. Iceland filed a complaint with NATO, and Iceland's Prime Minister answered by hiring a high-profile British law firm to represent Iceland in legal matters. What was going on there was a proxy war; rather than governments mobilizing troops and navies, banking interests were mobilizing governments and lawyers.
The bankers and the UK government came up with a repayment plan for Iceland. Under its terms Iceland would repay with up to 40% of the island's gross domestic product, costing every household in Iceland $61,000. Iceland's President Olafur Grimsson refused to sign the plan, putting it instead to a public referendum. Not since the treaty of Versailles has there been a more punitive treaty to punish the many for the deeds of a few.
The IMF will lend money but always attaches conditions and stipulations that hamper and hamstring the borrowing nation. They become, in effect, a co-equal, unelected government. So Iceland is being financially conquered by an economic war, run not by generals but by bankers.
The problems in Greece have been a long time in coming. In November of 2009 the new Greek government revealed that its debt level was 12.7% of GDP, twice what had been previously announced. The new government's budget was designed to address the budget shortfall, bringing its deficit down to 8.7% of GDP. The new budget promised a 10% cut in Social Security spending, abolished bonuses at state-owned banks and added a 90% tax on all private bank employee bonuses. Greek Prime Minister Papandreou also promised to strenuously fight corruption and tax evasion.