Greece on the brink

We are told by the international media that the Greek government have till Thursday 18 June to concede to German terms (the real force behind the showboat antics of the IMF.) It has come down to ultimata. Greece will cut its pensions and dismantle its labour rights or face withdrawal of EU and IMF funding. Without the funding Greek banks will collapse as Euros are withdrawn and there will be no Euros to pay for any government expenditure. Greece will 'fall out' of the Euro and its government will have to pay its debts in a newly created currency without international backing and without reserves available to prevent rapid, even hyper inflation. 

From any moral or even humanitarian point of view such action by Greece's European masters would be a deliberate act of destruction of millions of people's lives; an act taken in full understanding that it weighed human futures against what they claim to be the logic of the ledger book. And it is only a claim because the people threatening this action know fine well that Greece cannot pay its debts, that only growth and debt reduction that will ever give Greece the chance to get out of mass unemployment, the breakdown of services and the years of recession. So their action is taken for the purpose of a message, a warning, for the benefit of the rest of us. We will bow to the will of international finance (behind which stands the mighty German economic hinterland) or we will starve. They shake their heads, these new masters of the universe. They shake their heads at the folly of the Greeks who choose not to bend their knee. But what is the threat that international finance and the German rulers face that they are apparently prepared to destroy a European country?

German rulers and their narrow band of allies are nervous. Geopolitically Russian power is on the rise in the Balkans. Both China and Russia are more than prepared to invest in Greek infrastructure and loans can come from other sources than the IMF. At the same time the clamour for debt reduction is growing. The case, now made by thousands of the world's economists, that the permanent debt economy simply crushes growth, has overwhelmingly won the argument. And not just in Greece. Its contagion is spreading. In the Eurozone four countries face early elections and the overturn of their pro austerity governments. And finally the lodestone of the EU's economic (if not quite yet it's political) future, Germany, is in a growing mess. 

Two thirds of Germany's exports go to its European neighbours. A third go to (the now rapidly declining import markets of what we used to call the BRIC economies - before they started to decline.) The European two thirds, it turns out, have been bought only through the systematic waiving of the Maastricht regulation on debt to GDP ratio in most European countries that are the main importers of German goods. Systemic low growth in the Eurozone is now coiling back and beginning to choke the arteries of the German powerhouse. Low and still shrinking investment bedevils German manufacture and productivity. In the 1990s investment represented 23% of German economic output. By 2000 it was 20%. And by 2013 it was 17%. This is not just the impact of 2008. The consequences are profound. Germany is now a country with an outdated infrastructure, whose productivity has halved since the end of the 1990's. Germany desperately needs its Euro. Germany needs a shared, overpriced currency to maintain its inflow of capital from the sale of its exports. Germany needs to make an example of what happens to a small European country that begs to differ from the permanent economic cycle that keeps Germany, and the structure of international and European finance, intact.  So; the Greeks have touched a nerve. They could bring the house down! And that is why they are threatened with utter destruction.

This blog has argued before (see 22 Feb; 25 Feb; 10 March etc) that it would be unlikely that the Syriza government would meet its pledges to the Greek people without breaking the current form of the Euro. (Which was never an argument to stop supporting Syriza, or for a particular timing.) At the moment the key question is not how Europeans and socialists world wide should begin a discussion with Syriza about their view on a possible exit from the Euro. That discussion happens daily among the Greek people and the members of Syriza - in a much more sophisticated and practical way than any outside observer might suggest. Our duty is crystal clear. We must help Syriza and the Greek people drive back, in any way possible, it's diehard enemies in the battle that it is now waging. 

A first priority for us all is to attack and denounce and repudiate the financiers' debt, the poisoned well and mainspring of the economic gangrene spreading across our Continent.