Banks Should Die for Their Countries, Not Countries for Their Banks
by Eric Margolis: Dodge
City on the Hudson – The Bizarre Dominique Strauss-Kahn Affaire
In 1922, Greek
armies trying to conquer western Anatolia were routed by Turkey's
military leader, Mustafa Kemal Ataturk. Hundreds of thousands of
ethnic Greeks were uprooted from Ionian coastal areas.
debacle, Greek officers took three former prime ministers, a general
and two other politicians who had led the Turkish-Greek War and
shot them. Greeks cheered.
today must be wishing to see similar punishment inflicted on their
politicians and bankers who were responsible for the nation's bankruptcy
and staggering $500 billion debt.
Greece's conservatives and Socialist parties alike bought votes
by dishing out the very cushy, do-nothing government jobs, high
pensions, and benefits that brought Greece to its knees. Call it
state sponsored laziness.
know that if they can put 51% of the population on the government
payroll, their party is assured of permanent power.
In 2010, the
second shoe of the 2008 US financial crisis hit Europe. Greece,
Ireland, Portugal and Spain came under financial attack, showing
the alarming degree to which uncontrolled, run amok banks and money
men had poisoned Europe's economic waters by speculation and outright
debate, Greece's EU partners and the International Monetary Fund
have just staved off Greece's impending default on its maturing
debt by a $165 billion loan. But Athens must soon make more huge
payments. The EU aid package piles more debt onto Greece's already
mountainous debts – just as President Barack Obama is doing in the
government is praying the EU will come up with another $150 billion
euros to keep Greece going for two more years. Germany and the EU's
wealthy northern members are furious at Greece and reluctant to
pay for its profligacy.
But there is
no way Greece can generate enough money by cost-cutting and asset
sales to pay off its debts. Some form of default seems inevitable,
as this column has been saying for over a year. The recent EU rescue
package merely postpones default-day.
Calls for Greece
to ditch the EU, restore the old drachma, and then devalue it, are
wrong-headed. Greece manufacturers and exports little of high value.
Feta, olives and tour packages won't pay off Greece's debts. Leaving
the EU would collapse Greece's banks and end mammoth EU agricultural
Greece is using
the same scare-tactics that the supposedly too-big-to-fail insolvent
US banks employed in 2008: "if I go down, I'll take everyone
In this case,
it's Europe's big banks. Three big French banks, BNP, Crédit Agricole,
Société Général, hold large chunks of Greece's debt. If Greece defaults,
goes the hue and cry, French, German, Swiss, and Belgian banks may
Here we go
again. Politicians have allowed the banking industry not only to
grow larger than manufacturing, notably in the United States where
the top five banks control 40% of all deposits, but to become so
powerful, over-extended, and risky they are a danger to itself and
invested in Greek debt or US subprime mortgages were greedy fools
and should be fired, not rescued.
We hear them
cry: "Lehman Brothers II!"And "we don't know what
murky financial deals link banks."
viable solution is to renege on its debts, go bankrupt like Argentina
did, and start afresh. If the European banking system is such a
house of cards that the collapse of tiny Greece, with only 10 million
people, will bring it crashing down, it should be nationalized,
set right, and refloated as private corporations. The US should
have done the same instead of allowing insolvent banks to continue
as financial zombies.
will no doubt be shaken, but they will survive the jolt, just as
the US banking system survived 2008. Time for Europe's banks to
get these bad debts off their balance sheets. Rescue funds should
be focused on Spain and Italy, if necessary.
It's time for
the bankers to pay for the mess their greed and recklessness created.
Just this week we learned that the US government loaned $15 billion
to Goldman Sachs during the 2008 crisis.
should have been allowed to fail. The world would have been better
off without it. But the outrageously incestuous relationship between
the money-lenders at Goldman and the government saved its bacon
at the expense of the public.
No wonder Greeks
are so angry. They must pay for the sins of their politicians and
the bankers, whose bonus payments have reached an all-time high.
The current EU rescue package for Greece is really about rescuing
the banks, not Greek citizens. Just as the US government rescue
saved and enriched Wall Street while leaving Main Street to pay
our new state religion. The power of the banks must be curbed and
brought under control. How many more crises do we need before this
lesson sinks in?
him mail] is the author of War
at the Top of the World and the new book, American
Raj: Liberation or Domination?: Resolving the Conflict Between the
West and the Muslim World. See his
© 2011 Eric Margolis
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