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Picture: Zoe Konstantopoulou of Syriza. Wednesday 20th May 2015. Athens.
Picture: EuroZone breakup? New Drachma notes. Old Deutsche Mark notes.
Picture: Greece: Until 2015, an unholy alliance between oligarchs & politicians?
Blue for you: Athens and the power of weakness
Has Syriza just become the most powerful political entity in the Western world?
Greece's vast debts to international institutions and zombiebanks mean that the Syriza government in Athens is now more powerful than the IMF, the ECB & the G7 banking cartel put together.
Debt or credit which cannot be paid back is never an asset; it is always a liability. And when much of that debt has been fraudulently imposed, debt forgiveness is the logical and only remedy.
The Nazi-continuum money laundries at the ECB and the US Fed, and the puppet-politicians they control, all know that one false move on their part, in dealing with the Syriza leaders, will bring the whole Western fiat finance system down like a sharpster's house of cards.
The house of cards is currently kept standing by covert rigging of the Western financial markets into a counterintuitive bull mode. Any major, unmanageable, surprise shock to do with sovereign debt or default, given the transparent oxygen of publicity, will turn bull into bear. The bond bubble will burst. It's all about the bonds. When that bubble bursts, the old world ends.
One of the reasons Germany is so nervous about Greece is that Frankfurt's Deutsche Bank is staring down the last abyss. Insiders say it has a massive overhang of out-of-the-money, cross-collateralised derivatives hiding on its books, off-ledger. Any sharp word from Athens about non-payment of a strategically positioned visible debt might bring the bank down. The UK financial community knows the risk. Deutsche Bank was kicked out of the London Gold Fix syndicate in May 2014.
Notwithstanding 2008 and all that, several US & EU banks are still quietly using mortgage-backed securities as collateral in derivatives trades.
In the G7 fiat finance system, about $100 trillion of bonds are in play. Most of these are also pledged as collateral for derivatives. So, at a conservative estimate, because of the leveraging involved, the downside risk attached to the G7's bonds is about $555 trillion. This is ten times greater than the downside risk in the CDS market in 2008. And, according to the story told, a single bank failure brought that lot down very quickly.
The G7 bankers' worst nightmare is on the cusp of manifesting. How many Western banks hold Greek sovereign bonds as collateral for out-of-the-money, cross-collateralised derivatives? Quite a few, it would appear. Why else has the G7 banking cartel been so eager to hedge their books with stolen pension funds used as collateral?
In Greece, Syriza knows all this. The Syriza economics people may be useless at, and impatient with, vested-interest oligarch politics, but in terms of pure pragmatic economics they are brighter, brainier and freer than the frightened people across the table from them in Europe. And they have nothing to lose. Anything of value which Greece once had has already been lost to externally-imposed, everlasting austerity.
Syriza has also been talking to Vladimir Putin. He has told them how the world works. They have learned that it is a game of chess. And in a game of chess, sometimes it's the waiting move which kills. Slow the clock down and threaten stalemate.
On a chessboard, sometimes you win, not by piling energy into a dynamic situation faster than your opponent can think, but by withdrawing energy to the point of excruciating boredom. Your apparent inactivity obliges your opponent to kick the can down the road yet again. The clock ticks. Stuff happens. Jam tomorrow.
On other occasions, however, a gambit may gain a telling advantage. Several quite big gambits are prepared in Athens.
The White Spiritual Boy issue, concerning the fraudulent start-up funding of the Euro currency from off-ledger, black screen accounts in the late 1990s, has been referenced elsewhere on this blog. It has to do with putative titles to Asian gold and the Nazi-continuum Committee of 300's Black Book of banking codes. This is a powerful piece on the board. It is only a pawn, still. But it is on the seventh rank and is well-defended. More here.
On Thursday 7th May 2015, the Russian President, Vladimir Putin, had a telephone conversation with Alexis Tsipras, the Prime Minister of Greece. Putin said that Moscow was willing to provide financing to Greek companies involved in constructing the GreekStream link to the TurkStream gas pipeline. This will carry Russian gas into Europe.
On Friday 8th May 2015, an American DC corporation apparatchik called Amos J. Hochstein (US State Department) arrived in Athens to talk to Panagiotis Lafazanis, the Greek Energy Minister. But he was a day late. The board had changed. More here and here.
Also in play on the same board is a knight, enthusiastic about German World War II reparations due to Greece. The idea here is simple: the total amount of reasonably audited war reparations as yet unpaid by Germany to Greece is several tens of billions of Euros more than Greece's total national debt. Athens can therefore quite reasonably say to its creditors: "OK, we'll pay off all our debts to you, but not until Germany has paid off all its war reparations to us. Deal?"
Until recently, this potential move was being reported as a baseless fantasy by the Western mainstream media. But then two things happened. First, Russia got on the phone again. Moscow could help Greece in its investigation into possible Second World War reparations from Germany by providing access to previously unused archives. A list of the relevant Russian records, including documents, photographs and documentary footage was duly passed to Athens. More here.
Second, something much more public happened within the Greek capital itself. Large screens all across the Athens metro, usually reserved for weather forecasts, began to loop video footage of the Nazi occupation of Greece in World War Two. It was a government-backed video demanding German war reparations. More here.
A day or two later, on Sunday 10th May 2015, the German Chancellor, Angela Merkel, was in Russia to lay a wreath at the Grave of the Unknown Soldier in Moscow, and to talk with Vladimir Putin. She wasn't a happy bunny. She wasn't supposed to be. Look at the official Kremlin-circulated picture of the meeting. A man's got to do what a man's got to do. And these days, in Northern Hemisphere geopolitics outside China, most of the real men are in Moscow, Tehran and Athens.
On Thursday 14th May 2015, in Athens, the place to be was the Athenaeum InterContinental Hotel. The Greek Finance Minister, Yanis Varoufakis, was speaking at an Economist Conference called the 19th Roundtable with the Government of Greece. Varoufakis was straightforward and honest: “I wish we (still) had the Drachma; I wish we had never entered this (European) monetary union. And I think that deep down all member states with the EuroZone would agree with that now. Because it was very badly constructed. But once you are in, you don’t get out without a catastrophe.”
During his address, Varoufakis referred to the idea that the ECB’s SMP-program Greek government (pre-2012) bonds (face value €27B) could be repaid through the ESM, with a parallel swap between new Greek government bonds and the ESM. But he warned that such a bond swap, designed to ease Athens’ cash-crunch, was likely to be rejected, because it struck "fear into the soul" of the European Central Bank president, Mario Draghi. However, Varoufakis stressed that whatever other stratagem might be proposed by Europe and the IMF, the Greek government would not sign up to any bailout plan that would send Greece into a “death spiral”. More here and here.
As if on cue, later that afternoon, Moscow reported a pertinent development in the Russian media. On the previous Monday, the 11th May 2015, Greece's ruling party, Syriza, had published a statement saying that Russia had invited Greece to become the sixth member of the BRICS New Development Bank, joining Brazil, Russia, India, China and South Africa in that initiative.
The invitation was made by the Russian Deputy Finance Minister, Sergei Storchak, during a telephone conversation with the Greek Prime Minister, Alexis Tsipras. According to the Syriza statement, Tsipras received the proposal with interest and promised to consider it thoroughly. Subsequently, an unnamed Greek government source told Sputnik News (Moscow) that Tsipras would have an opportunity to discuss potential Greek accession to the bank with the leaders of the BRICS group in Saint Petersburg next month, where he is scheduled to participate in a high-level Economic Forum on the 18th to 20th June.
"It was a pleasant surprise," the Greek source said, noting that Greece’s foreign policy is very diversified. "We are members of the European Union and of the EuroZone, but at the same time we acknowledge that there are also other powers in the world, and we will make our decisions taking into account our own interests, while fulfilling the commitments we have in other international organisations we are part of." More here.
On the World War II reparations issue, a further development was articulated inside Germany. On Saturday 16th May 2015, in a piece in Der Spiegel magazine, Dieter Deiseroth, a senior judge at Germany’s Supreme Administrative Court, offered a legal perspective.
He said that Greece’s demand that Germany pays back a loan the country was forced to give under Nazi occupation during WW2, is just. The loan in question is now worth €11 billion. Greece should appeal to the International Court of Justice at The Hague, if it wants to claim the loan. This would require the agreement of Berlin or, alternatively, the agreement of the OSCE’s Court of Conciliation and Arbitration.
Deiseroth went on to say that the request for individual war compensation for Greek victims could also be granted. There cannot be a limitation period for Greece's claims as a result of the Two Plus Four Agreement. 2+4 is a classic example of an agreement against a third party.
“Greece has not waived its demands.” Just because the claim(s) have never been expressed in writing, does not negate Greece's case. "There’s no waver through silence.” More here and here.
In Athens, one of the Syriza MPs is Zoe Konstantopoulou. She is the speaker of the Greek parliament. Konstantopoulou, a Sorbonne-educated human rights lawyer, has set up a Debt Truth committee in her office.
In addition to overseeing Greece's WWII reparation claims, she is taking on Germany in another way. There is a slew of élite corruption cases focussing on dodgy Greek public sector contracts with German firms. Some of these, it now appears, may have been signed under unlawful duress earlier in the EuroZone crisis.
Konstantopoulou's committee has also identified other apparently fraudulent papers. These concern coercive loans pressed on, and accepted by, other Greek administrations since 2008. One particular tranche of Greek debt has been described as 'unconstitutional'.
Konstantopoulou comments: “There is strong evidence of the illegitimacy, odiousness and unsustainability of a large part of what is purported to be the Greek public debt.” She has been warning Greece's creditors that the Greek people have the right to demand the writing-off of the part which is not owed.
“Pending the audit, it is unethical on the part of creditors to demand further payments, while refusing disbursements and, at the same time, exercising extortionate pressure for the implementation of policies contrary to the public mandate. More here.
With regard to The Doctrine of Odious Debts, and the developing debate about Transnational Debt Forgiveness, we have summarised the core principles on another blog page here. Until Greece, and now Ukraine, came along, these issues were thought in the West to be tribal salon discussions confined to Africa and South America. As such, they could be easily managed by a handful of accurately-deployed bribes and a few unexplained car crashes. Whether these tried and tested remedies will work in Syriza's Athens in 2015 appears to be in doubt.
Joint statement: Jean-Claude Juncker (EC) and Alexis Tsipras (Greece)
Wednesday 6th May 2015
President Juncker and Prime Minister Tsipras spoke on the phone this morning. They took stock of progress made in the talks between Greece and its partners over the last days on a comprehensive set of reforms to achieve a successful completion of the review.
They notably discussed the importance of reforms to modernise the pension system so that it is fair, fiscally sustainable and effective in averting old age poverty.
They also discussed the need for wage developments and labour market institutions to be supportive of job creation, competitiveness and social cohesion.
In this context, they concurred on the role of a modern and effective collective bargaining system, which should be developed through broad consultation and meet the highest European standards.
Constructive talks should continue within the Brussels Group.
Original text here (06.05.15).
A Blueprint for Greece’s Recovery - Yanis Varoufakis
Wednesday 6th May 2015
Months of negotiations between our government and the International Monetary Fund, the European Union, and the European Central Bank have produced little progress.
One reason is that all sides are focusing too much on the strings to be attached to the next liquidity injection and not enough on a vision of how Greece can recover and develop sustainably. If we are to break the current impasse, we must envisage a healthy Greek economy.
Sustainable recovery requires synergistic reforms that unleash the country’s considerable potential by removing bottlenecks in several areas: productive investment, credit provision, innovation, competition, social security, public administration, the judiciary, the labor market, cultural production, and, last but not least, democratic governance.
Seven years of debt deflation, reinforced by the expectation of everlasting austerity, have decimated private and public investment and forced anxious, fragile banks to stop lending.
With the government lacking fiscal room, and Greek banks burdened by non-performing loans, it is important to mobilize the state’s remaining assets and unclog the flow of bank credit to healthy parts of the private sector.
To restore investment and credit to levels consistent with economic escape velocity, a recovering Greece will require two new public institutions that work side by side with the private sector and with European institutions: A development bank that harnesses public assets and a “bad bank” that enables the banking system to get out from under their non-performing assets and restore the flow of credit to profitable, export-oriented firms.
Imagine a development bank levering up collateral that comprises post-privatization equity retained by the state and other assets (for example, real estate) that could easily be made more valuable (and collateralized) by reforming their property rights.
Imagine that it links the European Investment Bank and the European Commission President Jean-Claude Juncker’s €315 billion ($350 billion) investment plan with Greece’s private sector. Instead of being viewed as a fire sale to fill fiscal holes, privatization would be part of a grand public-private partnership for development.
Imagine further that the “bad bank” helps the financial sector, which was recapitalized generously by strained Greek taxpayers in the midst of the crisis, to shed their legacy of non-performing loans and unclog their financial plumbing. In concert with the development bank’s virtuous impact, credit and investment flows would flood the Greek economy’s hitherto arid realms, eventually helping the bad bank turn a profit and become “good.”
Finally, imagine the effect of all of this on Greece’s financial, fiscal, and social-security ecosystem: With bank shares skyrocketing, our state’s losses from their recapitalisation would be extinguished as its equity in them appreciates.
Meanwhile, the development bank’s dividends would be channeled into the long-suffering pension funds, which were abruptly de-capitalized in 2012 (owing to the “haircut” on their holdings of Greek government bonds).
In this scenario, the task of bolstering social security would be completed with the unification of pension funds; the surge of contributions following the pickup in employment; and the return to formal employment of workers banished into informality by the brutal deregulation of the labour market during the dark years of the recent past.
One can easily imagine Greece recovering strongly as a result of this strategy.
In a world of ultra-low returns, Greece would be seen as a splendid opportunity, sustaining a steady stream of inward foreign direct investment. But why would this be different from the pre-2008 capital inflows that fueled debt-financed growth? Could another macroeconomic Ponzi scheme really be avoided?
During the era of Ponzi-style growth, capital flows were channeled by commercial banks into a frenzy of consumption, and by the state into an orgy of suspect procurement and outright profligacy. To ensure that this time is different, Greece will need to reform its social economy and political system. Creating new bubbles is not our government’s idea of development.
This time, by contrast, the new development bank would take the lead in channeling scarce homegrown resources into selected productive investment. These include startups, IT companies that use local talent, organic-agro small and medium-size enterprises, export-oriented pharmaceutical companies, efforts to attract the international film industry to Greek locations, and educational programs that take advantage of Greek intellectual output and unrivaled historic sites.
In the meantime, Greece’s regulatory authorities would be keeping a watchful eye over commercial lending practices, while a debt brake would prevent our government from indulging in old, bad habits, ensuring that our state never again slips into primary deficits.
Cartels, anti-competitive invoicing practices, senselessly closed professions, and a bureaucracy that has traditionally turned the state into a public menace would soon discover that our government is their worst foe.
The barriers to growth in the past were an unholy alliance among oligarchic interests and political parties, scandalous procurement, clientelism, the permanently broken media, overly accommodating banks, weak tax authorities, and a weighed-down, fearful judiciary.
Only the bright light of democratic transparency can remove such impediments; our government is determined to help it shine through.
Original text here (06.05.15). #
Picture: Has Greece got a lot more hidden money than it thinks?
Picture: #BrettonWoodsOver. AIIB. Xi (China). Putin (Russia). Obama (US).
Picture: Democratic deficit in DC. How did the US become an oligarchs' playground?
Ellen Brown writes:
According to a new study from Princeton University, American democracy no longer exists.
Using data from over 1,800 policy initiatives from 1981 to 2002, researchers Martin Gilens and Benjamin Page concluded that rich, well-connected individuals on the political scene now steer the direction of the country, regardless of - or even against the will of - the majority of voters.
America’s political system has transformed from a democracy into an oligarchy, where power is wielded by wealthy élites.
“Making the world safe for democracy” was President Woodrow Wilson’s rationale for World War I, and it has been used to justify American military intervention ever since. Can we justify sending troops into other countries to spread a political system we cannot maintain at home?
The Magna Carta, considered the first Bill of Rights in the Western world, established the rights of nobles as against the king. But the doctrine that “all men are created equal” - that all people have “certain inalienable rights,” including “life, liberty and the pursuit of happiness” - is an American original. And those rights, supposedly insured by the Bill of Rights, have the right to vote at their core. We have the right to vote but the voters’ collective will no longer prevails.
In Greece, the left-wing populist Syriza Party came out of nowhere to take the presidential election by storm; and in Spain, the populist Podemos Party appears poised to do the same. But for over a century, no third-party candidate has had any chance of winning a US presidential election.
The US has a two-party winner-takes-all system, in which our choice is between two candidates, both of whom necessarily cater to big money. It takes big money just to put on the mass media campaigns required to win an election involving 240 million people of voting age.
In state and local elections, third party candidates have sometimes won. In a modest-sized city, candidates can actually influence the vote by going door to door, passing out flyers and bumper stickers, giving local presentations, and getting on local radio and TV. But in a national election, those efforts are easily trumped by the mass media. And local governments too are beholden to big money.
When governments of any size need to borrow money, the megabanks in a position to supply it can generally dictate the terms.
Even in Greece, where the populist Syriza Party managed to prevail in January, the anti-austerity platform of the new government is being throttled by the moneylenders who have the government in a chokehold.
How did Americans lose their democracy? Were the Founding Fathers remiss in leaving something out of the Constitution? Or have we simply gotten too big to be governed by majority vote?
Democracy’s Rise and Fall in the USA (aka 'US')
The stages of the capture of democracy by big money are traced in a paper called “The Collapse of Democratic Nation States” by theologian and environmentalist Dr. John Cobb. Going back several centuries, he points to the rise of private banking, which usurped the power to create money from governments: The influence of money was greatly enhanced by the emergence of private banking. The banks are able to create money and so to lend amounts far in excess of their actual wealth. This control of money-creation .... has given banks overwhelming control over human affairs. In the United States, Wall Street makes most of the truly important decisions that are directly attributed to Washington.
Today the vast majority of the money supply in Western countries is created by private bankers. That tradition goes back to the 17th century, when the privately-owned Bank of England, the mother of all central banks, negotiated the right to print England’s money after Parliament stripped that power from the Crown. When King William needed money to fight a war, he had to borrow. The government as borrower then became servant of the lender.
In America, however, the colonists defied the Bank of England and issued their own paper scrip; and they thrived. When King George forbade that practice, the colonists rebelled.
They won the Revolution but lost the power to create their own money supply, when they opted for gold rather than paper money as their official means of exchange.
Gold was in limited supply and was controlled by the bankers, who surreptitiously expanded the money supply by issuing multiple banknotes against a limited supply of gold.
This was the system euphemistically called “fractional reserve” banking, meaning that only a fraction of the gold necessary to back the banks’ privately-issued notes was actually held in their vaults.
These notes were lent at interest, putting citizens and the government in debt to bankers who created the notes with a printing press. It was something the government could have done itself debt-free, and the American colonies had done with great success until England went to war to stop them.
President Abraham Lincoln revived the colonists’ paper money system when he issued the Treasury notes called “Greenbacks” that helped the Union win the Civil War. But Lincoln was assassinated, and the Greenback issues were discontinued.
In every American presidential election between 1872 and 1896, there was a third national party running on a platform of financial reform. Typically organized under the auspices of labor or farmer organizations, these were parties of the people rather than the banks. They included the Populist Party, the Greenback and Greenback Labor Parties, the Labor Reform Party, the Antimonopolist Party, and the Union Labor Party. They advocated expanding the national currency to meet the needs of trade, reform of the banking system, and democratic control of the financial system.
The Populist movement of the 1890s represented the last serious challenge to the bankers’ monopoly over the right to create the nation’s money. According to monetary historian Murray Rothbard, politics after the turn of the century became a struggle between two competing banking giants, the Morgans and the Rockefellers. The parties sometimes changed hands, but the puppeteers pulling the strings were always one of these two big-money players.
In All the Presidents’ Bankers, Nomi Prins names six banking giants and associated banking families that have dominated politics for over a century. No popular third party candidates have a real chance of prevailing, because they have to compete with two entrenched parties funded by these massively powerful Wall Street banks.
American democracy succumbs to globalisation
In an earlier era, notes Dr. Cobb, wealthy landowners were able to control democracies by restricting government participation to the propertied class. When those restrictions were removed, big money controlled elections by other means.
First, running for office became expensive, so that those who seek office require wealthy sponsors to whom they are then beholden. Second, the great majority of voters have little independent knowledge of those for whom they vote or of the issues to be dealt with. Their judgments are, accordingly, dependent on what they learn from the mass media. These media, in turn, are controlled by moneyed interests.
Control of the media and financial leverage over elected officials then enabled those other curbs on democracy we know today, including high barriers to ballot placement for third parties and their elimination from presidential debates, vote suppression, registration restrictions, identification laws, voter roll purges, gerrymandering, computer voting, and secrecy in government.
The final blow to democracy, says Dr. Cobb, was “globalization” - an expanding global market that overrides national interests: Today’s global economy is fully transnational. The money power is not much interested in boundaries between states and generally works to reduce their influence on markets and investments .... Thus transnational corporations inherently work to undermine nation states, whether they are democratic or not.
The most glaring example today is the secret twelve-country trade agreement called the Trans-Pacific Partnership. If it goes through, the TPP will dramatically expand the power of multinational corporations to use closed-door tribunals to challenge and supersede domestic laws, including environmental, labor, health and other protections.
What democratic alternatives are there for America?
Some critics ask whether our system of making decisions by a mass popular vote easily manipulated by the paid-for media is the most effective way of governing on behalf of the people. In an interesting Ted Talk, political scientist Eric Li makes a compelling case for the system of “meritocracy” that has been quite successful in China.
In America Beyond Capitalism, Prof. Gar Alperovitz argues that the US is simply too big to operate as a democracy at the national level.
Excluding Canada and Australia, which have large empty landmasses, the United States is larger geographically than all the other advanced industrial countries of the OECD (Organization for Economic Cooperation and Development) combined.
Alperovitz proposes what he calls “The Pluralist Commonwealth”: a system anchored in the reconstruction of communities and the democratization of wealth. It involves plural forms of cooperative and common ownership beginning with decentralization and moving to higher levels of regional and national coordination when necessary.
Alperovitz is co-chair along with James Gustav Speth of an initiative called The Next System Project, which seeks to help open a far-ranging discussion of how to move beyond the failing traditional political-economic systems of both Left and Right.
Prof. Donald Livingston asked in 2002: What value is there in continuing to prop up a union of this monstrous size? .... There are ample resources in the American federal tradition to justify states’ and local communities’ recalling, out of their own sovereignty, powers they have allowed the central government to usurp.
Taking back our sovereign power
If governments are recalling their sovereign powers, they might start with the power to create money, which was usurped by private interests while the people were asleep at the wheel. State and local governments are not allowed to print their own currencies; but they can own banks, and all depository banks create money when they make loans, as the Bank of England recently acknowledged.
The federal government could take back the power to create the national money supply by issuing its own Treasury notes as Abraham Lincoln did. Alternatively, it could issue some very large denomination coins as authorized in the Constitution; or it could nationalize the central bank and use quantitative easing to fund infrastructure, education, job creation, and social services, thus responding to the needs of the people rather than to the needs of the banks.
The freedom to vote carries little weight without economic freedom: the freedom to work and to have food, shelter, education, medical care and a decent retirement.
President Franklin Roosevelt maintained that Americans need an Economic Bill of Rights. If our elected representatives were not beholden to the moneylenders, they might be able both to pass such a bill and to come up with the money to fund it.
Ellen Brown's full text (plus supporting links) is on her Web of Debt blog here (06.04.15). #
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