By Steve Clark
You wouldn’t know it in America, but the global financial system is teetering on the brink of collapse, just as in September, 2008.
Then, it was the bankruptcy of a Wall Street giant, Lehman Brothers, that threatened to pull down the whole system. This time, it’s Greece.
In moral terms, of course, the two situations are incomparable. It’s only as matters of factual impact that the two compare.
Lehman Brothers was a big bank that had made billions repackaging – with insurance giant AGI – home mortgages as speculative investment “opportunities” for the pension fund and 401(k) managers of middle class savings plans. When the over-heated housing market collapsed, sucking all the big banks to the brink of disaster, Lehman happened to be the most vulnerable and took the hit just before the U.S. Treasury moved in to bail-out the rest.
Greece isn’t a lender; it’s a borrower. Like the homeowners who were enticed by banks into putting meager savings into down payments on mortgages they ultimately could not afford, the Greek government was enticed into borrowing heavily from big banks in Europe to finance government services and jobs for its citizens. That worked okay as long as the global (and Greek) economy was expanding, but when the recession hit, the government couldn’t keep up the payments.
Here in America, strapped homeowners were forced to hand over their homes, but the Greek government’s collateral isn’t so finite and physical. Rather, its collateral is only the ability to collect more taxes from its citizens (or, alternatively, to keep up the present tax rate while providing less service).
A series of austerity packages has further collapsed the Greek economy, and the Greek people are rebelling. Some of that is in the streets; more significant, they are withdrawing their savings from the banks. Meanwhile, the “socialist” government, hanging by a thread, alternately begs and berates its citizens, unwilling to break from its failed policy.
Yesterday, in an open letter to the Greek people, Britain’s Ann Pettifor urged what amounts to revolution in today’s context. The founder of Advocacy International and a leader of the Jubilee 2000, Pettifor called on the Greeks to abandon the Euro and restore the Drachma. Only in this way, she said, could the Greeks dump the harsh demands of the European banks and the European Central Bank.
A voice in the wilderness, perhaps, Pettifor at least offers real and consistent clarity about the world’s financial crisis. Don’t imagine that it’s over. Indeed, coming up on three years running, it is grinding harder and ever more harshly on the world’s people. No progress is evident because the world’s politicians, particularly those leading France, Germany, Britain and the U.S., are committed to saving the banks because they are “too big to fail.”
By directing their government to abandon the Euro, the Greek people can take charge of their own destiny, keeping their taxes in their own country for real investment in the local economy.
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