Greek People Will Return To Drachma, Sovereignty.

by Jerry Alatalo

DrachmaWhile Greece is known around the world as the birthplace of democracy, the nation also has philosophers like Aristotle and Socrates lighting up its history. A variation on a line written by an English playwright by the name of Shakespeare seems to fit like a glove for what the Greek people are experiencing today: “To Drachma, or not to Drachma – that is the question”. Because 61% of Greeks voted on July 5 against further austerity measures, overcoming the fears created by European “partners” cutting off physical euros along with warnings of doom coming from corporate media, one could reasonably predict the answer to Mr. Shakespeare’s question from the people of Greece will become “drachma”.

The Syriza government has attempted through good will since voted into power on January 25 to deal with their counterparts from the European Commission, European Central Bank (ECB) and International Monetary Fund, but either through naivete, severe underestimation of EU partners’ stonewalling or God knows what reasons, Syriza quite simply got steamrolled. What is going to occur, driven particularly by resentment from Greeks and other Eurozone nations after clear economic terrorism – cutting off of physical euros – was inflicted by the ECB, is that Greeks will soon start developing what has become now widely known as “Plan B”.

People living in Spain, Italy, Portugal, France, Germany and the other Euro zone nations have probably begun seriously thinking about a “Plan B” of their own, so one increasingly likely scenario for Europe finds first Greece bringing about a “rupture” from the euro, then Spain, then Italy, Portugal next, and so on. Europe’s power/financial elite will have only themselves to blame for the world-changing events coming up. How did they come to think that blackmail, fear-mongering and brutal, compassion-less actions directed at a good, proud people would not be met with a proportionate response? Did they think that nobody was watching? If so, then they were 100% wrong. The whole world is watching.

Ph.D. in philosophy, Professor Panagiotis Sotiris recently sat down for an interview with The Real News Network, where he shares his views on the future for Greece. Expect many more people in the Euro zone coming to see the wisdom in adopting his way of looking at the situation. As perceptions that the Greek crisis has somehow been “settled” became widely held after the latest bailout deal, those seeing the issue as settled might want to think twice.

News reports of events in Greece are far from over.

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(Thank you to TheRealNews at YouTube)

Richard Wolff’s July Update Most Revelatory To Date.

by Jerry Alatalo

“Settle the economics question and you settle all other questions. It is the Aaron’s rod which swallows up the rest.”

– WILLIAM MORRIS (1834-1896) English writer, artist

mountain1Retired economics Professor Richard Wolff’s monthly meetings in a church in New York City have become attended by larger numbers of men and women since their start, as well as increasing numbers of people around the Earth over the internet as the talks are found at “RichardDWolff” on YouTube. His July meeting has received over 5,200 YouTube views in a little over a day after posting. Besides the increasing popularity of these monthly “Economic Update” productions, Mr. Wolff is a popular guest on radio and television talk/news programs and hosts a weekly radio program “Economic Update” on the Progressive Radio Network.

The men and women who attend his monthly meetings to hear him in person pay $10 each, and at the beginning of the July meeting he asks the thousands of  people from around the world who will watch for free on YouTube to consider donating $10 at his website:

democracyatwork.info

What stood out for this writer while listening to Mr. Wolff’s July update/meeting was his description of the 1976 military coup in Argentina, how government officials after the end of the military dictatorship (1983) said “no” to repayment of debts incurred by the military dictatorship from 1976-1983, and particularly how it lined up with and confirmed the corruption and dangerous nature of geopolitical financial machinations described by John Perkins in Perkins’ bestselling book “Confessions of an Economic Hit Man”. Here we are talking about war by means other than with the use of military force, but financial force through bringing about the impossible-to-repay indebtedness of entire nations.

The most recent example of what economist Michael Hudson calls “war by finance” is Greece, where the government of Alexis Tsipras became forced – after unfortunately thinking that negotiations with the Eurogroup would be successful, mutually reasonable and lead to better conditions for the Greek people – to capitulate and accept further austerity measures, after financial terrorism in the form of euro/cash cutoff threatened economic destruction of the nation. Richard Wolff, after decades of economics study and university teaching, gives a brilliant lecture that paints historic and current economics events in a manner few teachers of economics are able to match.

His analysis of the economic conditions facing Americans is brutally honest, suggesting in the strongest terms the necessity for bringing about massive, effective change. That Richard Wolff’s talks are generating increasing interest not only from Americans but listeners and viewers around the Earth reinforces the validity and commonality of experience of what he shares.

The only slight disappointment in the talk is not incorporating the public banking solution into what is otherwise a stunning and revealing exposition of the fundamental realities of economics in the world. Richard Wolff deserves high praise and much appreciation for his truthful and passionate efforts at passing along his clearly immense knowledge of the subject. His teaching style has evolved to the point where what listeners likely have thought a very abstract, almost mystical field of study  – “only understood by scholars” – becomes easily grasped because of Mr. Wolff’s decades-of-study and expertise on economics. This talk is extremely informative, relevant, and highly recommended. One can add to that assessment the word important. Very impressive… Rating: five stars.

(Thank you to RichardDWolff at YouTube)

Greece: Why No ‘Plan B’, Mr. Varoufakis?

by Jerry Alatalo

aaa-8Does anyone else wonder how it is that Greece and Syriza seem to have no “Plan B”: leaving the euro, Grexit, and returning to the drachma? Like millions of men and women around the world, interest in the situation in Greece leading up to the historic “Oxi” vote on Sunday July 5 has led to reading a good number of articles and listening to reports. Recently resigned Greece Finance Minister Yanis Varoufakis posted a short radio interview on his personal blog days before the July 5 vote, on July 2:

http://yanisvaroufakis.eu/2015/07/02/why-a-no-vote-in-the-referendum-is-a-yes-for-a-proud-greece-in-a-decent-europe-talking-with-phillip-adams-on-lnl-abc-radio-national/

What stood out and astonished during the radio interview was Mr. Varoufakis’ talking about how European nations, upon agreeing to use the euro, were required to destroy/get rid of their drachma, lira, peso, franc, etc. printing presses. The first question which came to mind after hearing him say that was “How can he be saying that Greece hasn’t made certain to obtain printing presses to produce drachmas?” While thinking it was naive and perhaps ridiculous to make the following suggestion in a comment at Mr. Varoufakis’ blog on the printing press issue, but, since the interview didn’t reveal possible solutions, the following comment was entered:

(Note: Copy/paste from the actual post – Interesting that “Your comment is awaiting moderation.”… the comment apparently wasn’t ok’d/published)

Jerry “Peacemaker” on July 3, 2015 at 02:42 said:Your comment is awaiting moderation.

“Extremely interesting to hear that upon joining the eurozone, member states were required to dispose of their printing presses. That made certain eurozone states would find it difficult to return to their traditional sovereign currency – as enchained, captive “customers” and borrowers.
 Before joining the eurozone Greece printed and used the drachma, and the men and women who were employed in the printing of the Greek national currency obviously have the experience and knowledge of how to resurrect drachma-printing and Greece’s return to sovereign money.The people of Greece, of any nation, can choose control over their monetary affairs instead of persisting in giving that immense power away to a small group of private profit-seeking interests – who reside far away from Greece. Consult the men and women who understand drachma-printing from actually having done it, find the printing presses, and return to pre-euro sovereign money status.”

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So, where are you going with this, Jerry? First, it is almost beyond comprehension to explain, if true, that Syriza with Yanis Varoufakis as Finance Minister made no arrangements, all arrangements, for a potential Grexit and return to the drachma as Greece’s currency. After learning of the no-drachma-printing presses issue, left a comment at the popular blog for economists: “Real-World Economics Review” – with a link to the radio interview and the question “Does anyone know where there are some good, reliable drachma printing presses?” (comment ok’d and posted):

https://rwer.wordpress.com/2015/07/02/why-we-recommend-a-no-in-the-referendum-in-6-short-bullet-points/

In sharing that comment, the intent was to convey the absolutely inexplicable, mind-blowing fact that Greece officials evidently did not have the physical equipment, supplies, personnel, etc. to print drachmas – a real and possibly imminent, urgent eventuality, and one that seemed completely overlooked?!

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Why the comment at Yanis Varoufakis’ blog wasn’t posted/made public on July 3, what effect economists at RWER who clicked the link and listened to the interview had in eventually concentrating focus/raising the printing press issue (Mr. Varoufakis resigned after Sunday’s “Oxi” vote, to the surprise of most observers), and why Mr. Varoufakis didn’t order – immediately upon becoming Finance Minister – purchase of necessary equipment for printing drachmas…. are questions which will become answered in time.

The thought that Mr. Varoufakis may have intentionally avoided preparations and planning for a possible scenario where the printing of drachmas was necessary never came to mind, until listening to journalist/author William Engdahl in the following interview – which occurred after Mr. Varoufakis resigned. Mr. Engdahl and host Ian R. Crane suggest that Mr. Varoufakis, by failing to make certain the Greece government had a workable “Plan B” should negotiations sour to the point of exiting the eurozone, is perhaps guilty of high treason.

Mr. Engdahl points out that Yanis Varoufakis was, in his view, a “Trojan Horse” who made sure there was no “Plan B”, and gave him credit for “doing his job of pretending to be a liberal”, giving Europeans and Greeks an impression of Greek government incompetence.

It’s hard to argue with William Engdahl’s analysis. Upon listening to the radio interview where Yanis Varoufakis talked about having no drachma printing presses, most listeners were probably shocked and perplexed that such an obvious potentiality hadn’t been accounted for.

Greeks’ return to the drachma would most likely lead to a domino-effect of nations in the eurozone – and around the Earth – emulating Greece and taking sovereign control of their monetary systems.

That means truly enormous, unprecedented, historic global change.

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William Engdahl article:

http://journal-neo.org/2015/07/03/what-stinks-about-varoufakis-and-the-whole-greek-mess/

(Thank you to Ian R Crane at YouTube)

Greek Report On ‘Odious Debt’ Generates World Debate.

by Jerry Alatalo

DrachmaSome people are aware of the concept “odious debt”, but most people around the world are not – until now.

In 1927, Russian legal theorist Alexander Nahum Sack gave his definition of odious debt:

When a despotic regime contracts a debt, not for the needs or in the interests of the state, but rather to strengthen itself, to suppress a popular insurrection, etc, this debt is odious for the people of the entire state. This debt does not bind the nation; it is a debt of the regime, a personal debt contracted by the ruler, and consequently it falls with the demise of the regime. The reason why these odious debts cannot attach to the territory of the state is that they do not fulfil one of the conditions determining the lawfulness of State debts, namely that State debts must be incurred, and the proceeds used, for the needs and in the interests of the State. Odious debts, contracted and utilised for purposes which, to the lenders’ knowledge, are contrary to the needs and the interests of the nation, are not binding on the nation – when it succeeds in overthrowing the government that contracted them – unless the debt is within the limits of real advantages that these debts might have afforded. The lenders have committed a hostile act against the people, they cannot expect a nation which has freed itself of a despotic regime to assume these odious debts, which are the personal debts of the ruler.

In Greece, the Truth Committee on Public Debt has since April 2015 conducted an audit of government debt contracts to determine whether odious debts were present, and to what extent. What follows is a short summary video (in Greek) then the committee’s preliminary findings.

Odious debt is not something of which the Greek people are unaware. Following the preliminary report, the 2011 documentary “Debtocracy” allows for further study of the odious debt concept – deals exclusively on the issue, including the United States’ repudiation of Iraq’s debt as “odious” (then buried the fact, to prevent other nations from doing the same) in 2002-3 when the Bush II administration began the Iraq War, plus examples/study of Argentina, Ecuador and Greece. The film shows how difficult it was for Ecuadorians to conduct a debt audit – in sharp contrast to today’s Greeks who were not prevented from doing the work.

Syriza won the election in Greece in late January 2015, and in eight weeks since the debt audit started by the Truth Committee on Public Debt the results are in. Using a metaphor, the Greek report on illegal, illegitimate, odious debt is much, much more than a “shot across the bow” to private central banks. Once the report makes its way around the planet, which is certain, international banking will start facing calls for reform of historic proportions. Many other nations around the Earth will soon emulate Greece, form audit committees, and conduct their own national debt audits to find out if odious and illegitimate debts have become incurred. Get used to seeing and hearing the sound of “odious debt” – the term will soon be found in headlines and news rooms everywhere.

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Report cross-posted from Global Research.

Hellenic Parliament’s Debt Truth Committee Preliminary Findings – Executive Summary of the report:

In June 2015 Greece stands at a crossroad of choosing between furthering the failed macroeconomic adjustment programmes imposed by the creditors or making a real change to break the chains of debt. Five years since the economic adjustment programmes began, the country remains deeply cemented in an economic, social, democratic and ecological crisis. The black box of debt has remained closed, and until now no authority, Greek or international, has sought to bring to light the truth about how and why Greece was subjected to the Troika regime. The debt, in whose name nothing has been spared, remains the rule through which neoliberal adjustment is imposed, and the deepest and longest recession experienced in Europe during peacetime.

There is an immediate need and social responsibility to address a range of legal, social and economic issues that demand proper consideration. In response, the Hellenic Parliament established the Truth Committee on Public Debt in April 2015, mandating the investigation into the creation and growth of public debt, the way and reasons for which debt was contracted, and the impact that the conditionalities attached to the loans have had on the economy and the population. The Truth Committee has a mandate to raise awareness of issues pertaining to the Greek debt, both domestically and internationally, and to formulate arguments and options concerning the cancellation of the debt.

The research of the Committee presented in this preliminary report sheds light on the fact that the entire adjustment programme, to which Greece has been subjugated, was and remains a politically orientated programme. The technical exercise surrounding macroeconomic variables and debt projections, figures directly relating to people’s lives and livelihoods, has enabled discussions around the debt to remain at a technical level mainly revolving around the argument that the policies imposed on Greece will improve its capacity to pay the debt back. The facts presented in this report challenge this argument.

All the evidence we present in this report shows that Greece not only does not have the ability to pay this debt, but also should not pay this debt first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious.

It has also come to the understanding of the Committee that the unsustainability of the Greek public debt was evident from the outset to the international creditors, the Greek authorities, and the corporate media. Yet, the Greek authorities, together with some other governments in the EU, conspired against the restructuring of public debt in 2010 in order to protect financial institutions. The corporate media hid the truth from the public by depicting a situation in which the bailout was argued to benefit Greece, whilst spinning a narrative intended to portray the population as deservers of their own wrongdoings.

Bailout funds provided in both programmes of 2010 and 2012 have been externally managed through complicated schemes, preventing any fiscal autonomy. The use of the bailout money is strictly dictated by the creditors, and so, it is revealing that less than 10% of these funds have been destined to the government’s current expenditure.

This preliminary report presents a primary mapping out of the key problems and issues associated with the public debt, and notes key legal violations associated with the contracting of the debt; it also traces out the legal foundations, on which unilateral suspension of the debt payments can be based. The findings are presented in nine chapters structured as follows:

Chapter 1, Debt before the Troika, analyses the growth of the Greek public debt since the 1980s. It concludes that the increase in debt was not due to excessive public spending, which in fact remained lower than the public spending of other Eurozone countries, but rather due to the payment of extremely high rates of interest to creditors, excessive and unjustified military spending, loss of tax revenues due to illicit capital outflows, state recapitalization of private banks, and the international imbalances created via the flaws in the design of the Monetary Union itself.

Adopting the euro led to a drastic increase of private debt in Greece to which major European private banks as well as the Greek banks were exposed. A growing banking crisis contributed to the Greek sovereign debt crisis. George Papandreou’s government helped to present the elements of a banking crisis as a sovereign debt crisis in 2009 by emphasizing and boosting the public deficit and debt.

Chapter 2, Evolution of Greek public debt during 2010-2015, concludes that the first loan agreement of 2010, aimed primarily to rescue the Greek and other European private banks, and to allow the banks to reduce their exposure to Greek government bonds.

Chapter 3, Greek public debt by creditor in 2015, presents the contentious nature of Greece’s current debt, delineating the loans’ key characteristics, which are further analysed in Chapter 8.

Chapter 4, Debt System Mechanism in Greece reveals the mechanisms devised by the agreements that were implemented since May 2010. They created a substantial amount of new debt to bilateral creditors and the European Financial Stability Fund (EFSF), whilst generating abusive costs thus deepening the crisis further. The mechanisms disclose how the majority of borrowed funds were transferred directly to financial institutions. Rather than benefitting Greece, they have accelerated the privatization process, through the use of financial instruments.

Chapter 5, Conditionalities against sustainability, presents how the creditors imposed intrusive conditionalities attached to the loan agreements, which led directly to the economic unviability and unsustainability of debt. These conditionalities, on which the creditors still insist, have not only contributed to lower GDP as well as higher public borrowing, hence a higher public debt/GDP making Greece’s debt more unsustainable, but also engineered dramatic changes in the society, and caused a humanitarian crisis. The Greek public debt can be considered as totally unsustainable at present.

Chapter 6, Impact of the “bailout programmes” on human rights, concludes that the measures implemented under the “bailout programmes” have directly affected living conditions of the people and violated human rights, which Greece and its partners are obliged to respect, protect and promote under domestic, regional and international law. The drastic adjustments, imposed on the Greek economy and society as a whole, have brought about a rapid deterioration of living standards, and remain incompatible with social justice, social cohesion, democracy and human rights.

Chapter 7, Legal issues surrounding the MOU and Loan Agreements, argues there has been a breach of human rights obligations on the part of Greece itself and the lenders, that is the Euro Area (Lender) Member States, the European Commission, the European Central Bank, and theInternational Monetary Fund, who imposed these measures on Greece. All these actors failed to assess the human rights violations as an outcome of the policies they obliged Greece to pursue, and also directly violated the Greek constitution by effectively stripping Greece of most of its sovereign rights. The agreements contain abusive clauses, effectively coercing Greece to surrender significant aspects of its sovereignty. This is imprinted in the choice of the English law as governing law for those agreements, which facilitated the circumvention of the Greek Constitution and international human rights obligations. Conflicts with human rights and customary obligations, several indications of contracting parties acting in bad faith, which together with the unconscionable character of the agreements, render these agreements invalid.

Chapter 8, Assessment of the Debts as regards illegtimacy, odiousness, illegality, and unsustainability, provides an assessment of the Greek public debt according to the definitions regarding illegitimate, odious, illegal, and unsustainable debt adopted by the Committee.

Chapter 8 concludes that the Greek public debt as of June 2015 is unsustainable, since Greece is currently unable to service its debt without seriously impairing its capacity to fulfill its basic human rights obligations. Furthermore, for each creditor, the report provides evidence of indicative cases of illegal, illegitimate and odious debts.

Debt to the IMF should be considered illegal since its concession breached the IMF’s own statutes, and its conditions breached the Greek Constitution, international customary law, and treaties to which Greece is a party. It is also illegitimate, since conditions included policy prescriptions that infringed human rights obligations. Finally, it is odious since the IMF knew that the imposed measures were undemocratic, ineffective, and would lead to serious violations of socio-economic rights.

Debts to the ECB should be considered illegal since the ECB over-stepped its mandate by imposing the application of macroeconomic adjustment programs (e.g. labour market deregulation) via its participation in the Troïka. Debts to the ECB are also illegitimate and odious, since the principal raison d’etre of the Securities Market Programme (SMP) was to serve the interests of the financial institutions, allowing the major European and Greek private banks to dispose of their Greek bonds.

The EFSF engages in cash-less loans which should be considered illegal because Article 122(2) of the Treaty on the Functioning of the European Union (TFEU) was violated, and further they breach several socio-economic rights and civil liberties. Moreover, the EFSF Framework Agreement 2010 and the Master Financial Assistance Agreement of 2012 contain several abusive clauses revealing clear misconduct on the part of the lender. The EFSF also acts against democratic principles, rendering these particular debts illegitimate and odious.

The bilateral loans should be considered illegal since they violate the procedure provided by the Greek constitution. The loans involved clear misconduct by the lenders, and had conditions that contravened law or public policy. Both EU law and international law were breached in order to sideline human rights in the design of the macroeconomic programmes. The bilateral loans are furthermore illegitimate, since they were not used for the benefit of the population, but merely enabled the private creditors of Greece to be bailed out. Finally, the bilateral loans are odious since the lender states and the European Commission knew of potential violations, but in 2010 and 2012 avoided to assess the human rights impacts of the macroeconomic adjustment and fiscal consolidation that were the conditions for the loans.

The debt to private creditors should be considered illegal because private banks conducted themselves irresponsibly before the Troika came into being, failing to observe due diligence, while some private creditors such as hedge funds also acted in bad faith. Parts of the debts to private banks and hedge funds are illegitimate for the same reasons that they are illegal; furthermore, Greek banks were illegitimately recapitalized by tax-payers. Debts to private banks and hedge funds are odious, since major private creditors were aware that these debts were not incurred in the best interests of the population but rather for their own benefit.

The report comes to a close with some practical considerations. Chapter 9, Legal foundations for repudiation and suspension of the Greek sovereign debt, presents the options concerning the cancellation of debt, and especially the conditions under which a sovereign state can exercise the right to unilateral act of repudiation or suspension of the payment of debt under international law.

Several legal arguments permit a State to unilaterally repudiate its illegal, odious, and illegitimate debt. In the Greek case, such a unilateral act may be based on the following arguments: the bad faith of the creditors that pushed Greece to violate national law and international obligations related to human rights; preeminence of human rights over agreements such as those signed by previous governments with creditors or the Troika; coercion; unfair terms flagrantly violating Greek sovereignty and violating the Constitution; and finally, the right recognized in international law for a State to take countermeasures against illegal acts by its creditors , which purposefully damage its fiscal sovereignty, oblige it to assume odious, illegal and illegitimate debt, violate economic self-determination and fundamental human rights. As far as unsustainable debt is concerned, every state is legally entitled to invoke necessity in exceptional situations in order to safeguard those essential interests threatened by a grave and imminent peril. In such a situation, the State may be dispensed from the fulfilment of those international obligations that augment the peril, as is the case with outstanding loan contracts. Finally, states have the right to declare themselves unilaterally insolvent where the servicing of their debt is unsustainable, in which case they commit no wrongful act and hence bear no liability.

People’s dignity is worth more than illegal, illegitimate, odious and unsustainable debt

Having concluded a preliminary investigation, the Committee considers that Greece has been and still is the victim of an attack premeditated and organized by the International Monetary Fund, the European Central Bank, and the European Commission. This violent, illegal, and immoral mission aimed exclusively at shifting private debt onto the public sector.

Making this preliminary report available to the Greek authorities and the Greek people, the Committee considers to have fulfilled the first part of its mission as defined in the decision of the President of Parliament of 4 April 2015. The Committee hopes that the report will be a useful tool for those who want to exit the destructive logic of austerity and stand up for what is endangered today: human rights, democracy, peoples’ dignity, and the future of generations to come.

In response to those who impose unjust measures, the Greek people might invoke what Thucydides mentioned about the constitution of the Athenian people: “As for the name, it is called a democracy, for the administration is run with a view to the interests of the many, not of the few” (Pericles’ Funeral Oration, in the speech from Thucydides’ History of the Peloponnesian War).

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“Debtocracy” | 2011 documentary about Greece, Argentina, Equador and those nations’ odious debt.