Previously by Ron Holland: The Fiat Dollar & Debt Democracy Experiments Have Failed
Reporting from Greece There is an eerie disconnect involved with analyzing the frightening financial and economic consequences of the ongoing 2011 Sovereign Debt and Equity Market Crash while sailing around the Greek Islands. But taking a look at Greek history clearly shows some parallels and solutions to what the nations of the West are facing today. For the last couple of days weve been in Spetses, the first Greek island to have raised the flag of insurrection and secession from an already crumbling Ottoman Empire on April 3, 1821.
Some economists and political experts believe the only way out of the deepening recession is for Greece to now withdraw from another empire, the European Union, and to repudiate the EU and sovereign debts, primarily to German banks. This would require the restoration of the independent Greek currency, the Drachma, and would likely create another short-term drop in the Greek economy as was previously created by the earlier EU austerity demands.
Looking back, Greece was one of the first European nations in the faltering Ottoman Empire to withdraw from the failing, bureaucratic and bankrupt regime. Although independence was a long and difficult process, this action served Greece well then, just as pulling out of the EU now could create a new long-term positive economic environment for the nation.
Although the German-led and majority German-financed EU is a relatively new political entity or economic union of nations, this dream of powerful German leaders from Bismarck to Hitler is now a reality. However, it was mistakenly modeled within the EU on the now failing US system of debt democracy and is now sinking like the earlier Ottoman Empire. I respectfully suggest Greece should follow their earlier historical parallel with Ottoman rule and seek to get out of the EU sooner rather than later.
The costs of remaining inside the European Union and paying crushing debts owed to German banks is too great when the option of restored national independence and a Greek currency together with limited taxes and free markets tailored to Greek needs is an alternative solution, one that worked before and can work again for the country. Why totally impoverish a nation to support a few banking elites with the euro and sovereign debts when debt repudiation now is the answer?
Yes, establishment experts have argued, in defense of the euro and the EU, that Greece has an economy based only on tourism, with very limited industrial and agricultural assets; therefore the nation has no way to support an independent Greek currency.
I agree with the establishment defenders that the Greek economy is based primarily on tourism and most tourism is island centered. Certain EU economists have also suggested that Greece should sell selected islands, which are the only valuable assets really available to be mortgaged or sold, to guarantee their unpayable sovereign debts to the banks. Rather than ceding this national territory to the German banks to be sold with big profits going to the banks, however, I suggest a course of action to benefit Greece rather than the EU and banking elites.
Greece needs to repudiate the existing sovereign debts and develop a new currency, should it withdraw from the EU. I suggest many of the Greek islands could be leased or pledged to back a new Greek drachma rather than given to the banks to postpone the day of reckoning on the sovereign debt. The banks could go under without the wealth of Greece or ownership of island assets but giving these profits to them would guarantee Greek poverty; using the islands to back a new currency could restore Greek prosperity, jobs and economic growth.
Historical Parallels of a European Union
The goal of European union under Germany has had a long and conflict laden history. Many wars, starting with the French and German late 19th century conflicts and the arms race leading up to the First World War, were instigated by powerful banking dynasties and their favored arms industries for financing and war industry profits. There was little regard as to the severity of any conflicts or the question of winners and losers.
But for the British and French politicians their war goals were somewhat different and designed to ultimately prevent the German economic domination of Europe. They were willing to use even military means if necessary to achieve their political and economic goals.
These wars, shifting alliances and brinkmanship diplomacy continued back and forth until the Second World War. Here, Hitler used military actions similar to the British and French attempting to undo the harsh results of World War One and the infamous Treaty of Versailles. Thankfully, his short-term military success was followed ultimately by defeat.
Now, once again, Germany the economic powerhouse of Europe is attempting to build a European union and succeeding this time using economic and political rather than military means. Few talk about it but the European Union today is predominantly controlled from Berlin and financed by Germany but lead by a Brussels bureaucracy fronting for the German banks.
The EU was established with the full support of London and Washington to serve first as an economic power but with the eventual goal of an all-powerful political union and full ally of Anglo-American interests in Europe. This earlier dream of German leaders now endorsed by Washington and London was mistakenly modeled after the powerful American union born out of Washingtons victory in the American Civil War. Therefore, it deliberately does not have a mechanism for nation withdrawal.
Consequently, both flawed unions seek to maintain monopoly control over formerly sovereign nations in Europe and sovereign states in the US by powerful special interests that often conflict with the will and best interests of member countries and their citizens.
The real problem for Greece and other EU captive nations is that Wall Street, the Federal Reserve and the Bank of England developed a sovereign debt model to fund the EU takeover of independent nations. They supported using political bribes and unsustainable benefits designed to build an EU base of voter support inside each new controlled nation.
This was combined with central bank created fiat currencies to allow future hyperinflation to inflate away these unsustainable debt loads once permanent control was achieved. Of course, no mechanism for national withdrawal was planned to prohibit competition or an easy way out for either nations or peoples. While a voluntary confederation modeled on the Swiss confederation or Canada and even an economic trade agreement might have worked for the benefit of all, the created EU monster only benefits powerful politicians and banking elites.
But now the sovereign debt crisis is here and the German banking system as well as related London and Wall Street banks can only survive if the status quo is maintained. Individual and national wealth in member countries must be drained off and stolen to pay the sovereign debts and keep the EU monetary and banking elites in business.
The Establishment View
I enjoyed an off-the-record private dinner several days ago with an ambassador representing one of Greeces closest allies. His experienced view on the Greek situation today probably parallels the opinion of most governments and the EU establishment, something to the effect that the Greek political leadership will continue to protest but eventually agree to all EU austerity, privatization demands and new revenue generating tax efforts necessary to get more EU money and better terms on Greek debt. The primary debt holders are German and some French banks and they will continue to pretend to accept the Greek promises and guarantees because to question the situation or to make more demands on the hundreds of billions in sovereign debt would likely turn into first a German, then European and finally a global banking crisis.
While the game of European economic chicken continues, both sides believe the real outcome will be the usual scenario nothing will change with Greece. All parties to the negotiations understand that Greek politicians have no plans to live up to their agreements and neither do the German banks or EU have any intention to make them do so because they fear the resulting banking crisis. Maintaining the status quo is the best outcome possible until the sovereign debt crisis passes.
A Free-Market Alternative to Continued EU Domination
Greece and other EU members should accept the fact that top-down rule from unelected Brussels bureaucrats and related sovereign debt financing has failed. Nations which continue to buy time through more debt deferment and increased taxes and austerity measures are only playing a rigged game for the banks. The debt PONZI scheme has played out in both America and the EU and only those nations getting out of the scheme early will have an opportunity to preserve their wealth and sovereignty.
First, national and state movements to repudiate the sovereign debts made by bought-off government leaders, congress and parliaments must be formed. There is no such thing as a free lunch unless you leave before the meal is over and the check is paid.
Second, Greece and other EU member nations should consider withdrawal from the European Union now before it is too late. These nations and ultimately even individual US states should democratically decide their future through referendums and polling.
Educational efforts are needed to show the economic advantages of sovereign debt repudiation now over more debt and ultimately government bankruptcy. Rather than postponing the day of reckoning for the banks and politicians that got us all into this mess, it is time to get out.
I hope one day soon, the people of Greece will begin a similar process to their actions of April 3, 1821 in Spetses. They will become a beacon to the world by showing how individual citizens can rectify the problems created by the politicians and banking elites. I believe the solution will never begin in a capital city, a parliament or in congress but rather by free people away from the seats of power and special interest control.
Greeks, Europeans and the citizens of these united States, now is the time to raise the flags of peaceful insurrection, debt repudiation and democratic withdrawal from a corrupt and broken system of debt financed democracy and supra-national dominance from Brussels, Berlin, London, Wall Street and Washington.
These political and banking elites have destroyed the economy and prosperity of the West. They have burdened our children and future generations with a debt load so great as to insure poverty and depression rather than our preferred birthright of prosperity and opportunity all to enhance their power, control and wealth without regard to the consequences for the rest of us.
Freedom and free markets are the answer, not more top-down political, monetary rules and controls. It is time to restart the world economy through entrepreneurial actions and restore political power to productive citizens through democratic and localized government actions.
A working democracy was first born in Greece back in 508 BC. They began working for independence from the Ottoman Empire around 1821. As I get ready to leave the beautiful Greek islands, I hope these people will once again take the lead now in the 21st century and show the rest of us how to achieve freedom again in a very un-free and economically depressed world.