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ROSA LUXEMBURG FOUNDATION
Sell your islands,
you bankruptGreeks
20 POPULARFALLACIES
CONCERNING
THE DEBT CRISIS
Headline in German newspaper,BILD, 27.10.2010
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photo:
MARIoSLoLoS/dpA
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What is the crisis? False descriptions of the situation 31. Greecehastoomuchdebts 3
2. ThefnancialmarketsarescaredthatGreecewillgobankrupt 4
How did the crisis come about?
Inaccurate research into the causes 5
3. TheGreeksarelazy 5
4. TheGreeksareconstantlyonholiday 65. WearepayingluxurypensionstotheGreeks9 6
6. TheGreekshavebeeneatheringtheirownnestwell 7
7. TheGreekshavebeenlivingabovetheirmeans 8
8. TheGreekstateisover-inated 9
9. Greeceisnotcompetitive 9
10. TheGreeksarecorrupt 10
The way forward? False solutions 12
11.TheGreeksshouldstartsavingbeorewehelpthemagain 12
12. SellyourislandsyoubankruptGreeks!29 13
13. Thecreditorsshouldootthebill! 14
14. GreeceshouldgetoutotheEurozone 15
15.Greecehastowinbackthetrustothefnancialmarkets 16
The role of the Germans: False friends 17
16. WewanttoberiendswiththeGreeks35 17
17. Youshouldhelpyourriendsbutnotbailthemout 17
18. NoGermantaxeurosorGreece!37 18
19. WearethepaymastersoEurope40 19
One last comment 2020.GreececheateditswayintotheEurozone
Wearenowpayingthepriceorourindulgence 42 20
TABLE OF CONTENTS
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Its that time again! Greece needs more loans and the governmentsin Europe are arguing about whether its really necessary and who
should oot the bill. There is widespread opinion in Germany that
Greece itsel is to blame or the problems it now fnds itsel in. It
frst o all cheated its way into the Eurozone, then the government
spent too much and the governed worked too little, many believe.
Latently nationalistic patters o interpretation o this kind have been
nourished by German politicians and the media, who have no endo proposals or how to solve the crisis. For example, the Greeks
should save more, work more and sell their public property and i
all o these measures do not help, then Greece will just have to leave
the Eurozone or declare itsel bankrupt. The stupid thing is, neither
are the causes o the crisis that have been named actually correct,
nor will the proposed ways out o the crisis achieve their goal.
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1. GREECE HAS TOO MUCH DEBTS
The acts:Becauseothefnancialcrisis,Greecesnationaldebtgrew
between2007andtheendo2010rom115%to143%oeconomic
perormance(GrossDomesticProduct,GDP).Thisso-calleddebtratio
willprobablyclimbabovethe150%markin2011.Bywayocompari-
son:Germanysdebtratioisabout85%.Context:ThehighdebtratioalonedoesnotexplainGreecesproblems.
Thereisnoadequatedebtratio,neitherintheorynorinpractice.1It-
alyhasadebtratioo120%,Japanhasevenreached200%oitsGDP.
Neitherotheseisseentobebroke,whileGreeceis.Why?Because
thefnancialmarketsarespeculatingonGreecebecomingbankrupt.
Thishasdriventheinterestrateornewdebtstosuchhighlevels,that
Athenscannotborrowanynewmoney2
.Bycomparison:Athensmustpay25%interestontwoyeargovernmentbonds,Italyonly3%and
Japanamere0.2%(asperendoMay2011).
Theproblemthereorelieswiththeinterestratethathasbeenorced
upwardsbyfnancemarketspeculations.TheMacroeconomicPolicy
Institute(IMK)hascalculatedthat,itheaveragerateointerestor
Greekstateloanswouldallto3%,thenthecountrysdebtratiowould
allto110%oGDPbytheyear2015.3
However,itheinterestratere-mainsashighasitis,Athenswillnotbeabletoborrowanymoneyon
themarkets.Whetherornotitisthenbrokedependsonthewilling-
nessotheotherEuro-statestohelpitoutbyprovidingloans.There-
ore,thequestionobankruptcyisaquestionopoliticaldecisions
bygovernments.
WHAT IS THE CRISIS?
FALSE DESCRIPTIONS OF THE SITUATION
1 BHF-Bank economic service, 4.6.2011 2 One simplified example to demonstrate how this works: Greece
borrows a loan of 1 million euros at a fixed rate of interest of 5 % p.a. (=50,000 euros). The bond is then traded
on the stock exchange and crashes. Its price falls from 1 million euros to 500,000 euros. The interest rate of
5 % (=50.000 euros) however remains unchanged. Ergo, the bond now has a yield for investment for the lender
of 10 % (50,000 euros from 500,000 euros). If Athens now wants to take out a new loan, the interest rate that
it has to pay is based on the yield for investment of the old loan. If it wants to borrow new money, this means
that Greece must offer the lenders an interest rate of 10 %. 3 IMK: Debt cuts bring more disadvantages than
advantages, May 2010.
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2. THE FINANCIAL MARKETS ARE SCARED
THAT GREECE WILL GO BANKRUPT
The acts:Greekloanscrashedonthefnancialmarkets.Inversely,theyieldortheseloans(seeootnote2)increased.
Context:Thefnancialmarketsarescaredonothing.Theyarenota
humanbeingwitheelingsandears.Andtheyarealsonotanobjec-
tiveentitythatanalysesthefnancialsituationoacountryinaactual
manner.Thefnancialmarketisnothingmorethantheentiretyothe
investorswhotrytoearnasmuchmoneyaspossiblewithfnancialin-
vestments.AnyonewhoisreallyscaredthatGreecewillgobankruptisnotinvestinginGreekgovernmentsecurities.Everyoneelsehopes
thatHellaswillbesavedandtheywillbeabletorakeinhugeinterest
profts.4
4 Berliner Zeitung newspaper 27.4.2010
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3. THE GREEKS ARE LAZY
The acts:TheGreeksworkagreatdeal.Theactualweeklyworking
hoursminuslunchbreaksbeorethecrisiswere44.3hoursaccord-
ingtoEurostat.InGermany,thisfgurewas41hoursandtheEUaver-
agewas41.7hours.5TheFrenchbankNatixisarrivedattotalaverage
workinghoursperannuminGermanyo1,390hours,whiletheGreeksworkanaverageo2,119hoursperannum. 6
Context:Germanyalsohashighdebtsbutwecanpaythemo,
becausewegetupprettyearlyandworkallday.7Apartromtheact
thattheGreeksworkalotandapartromtheactthatleisuretime
isnotnecessarilysomethingbadandworkisnotnecessarilysome-
thinggooditisundamentallywrongtoseekthecausesoacrisis
inacountrybycitingthelackohardworkamongitspopulation.TheGreeksdonothavetheoptionojustworkinglongerhourstoendthe
crisis.Theoppositeistruebecauseothecrisis,manyGreekshave
beenorcedtonotworkat all.Theofcial unemploymentratewas
16.5%inApril2011,andathirdoyoungpeoplewerewithoutapaid
jobattheendo2010.Thenumberocivilservantshasbeenreduced
by83,000inthelastmonths.Andsoitisclear,itisnotlazinessthat
createscrises,butcrisesdestroy jobs.Thismechanismworked theotherwayaroundinGermany:Theupswingreducedtheunemploy-
mentrateto6,0%inApril2011.
HOW DID THE CRISIS COME ABOUT?
INACCURATE RESEARCH INTO THE CAUSES
5 Handelsblatt newspaper, 2.5.2005 6 Natixis, Flash Economie, 30.5.2011 7 BILD newspaper 5.3.2010
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4. THE GREEKS ARE CONSTANTLY ON HOLIDAY
The facts:AccordingtotheEUagencyEuroound,Greekemployees
havearightto23daysholidayleaveonaverageperyear.TheGermansareintheluckypositionobeingabletoenjoy30daysholidayleavea
fgurethatisrightatthetopinEurope.AndtheGermansarestillright
upthereeveniyouincludethenumberopublicholidaystheyhave.8
Context:Wecannothaveonecurrency,whensomehaveagreatdeal
oholidayleaveandothersverylittle,saidGermanChancellorAngela
MerkelinthemiddleoMay2011.Thisisanotherversionothelazi-
nessaccusation.Itisanotherattempttoblamethecrisisontheindi-vidualsupposedlyalseconductotheGreeks.ConverselytheChan-
cellorpraisesherownpeople,statingthat,theactthatweareina
goodeconomicpositionisbecausewearesohard-working.
5. WE ARE PAYING LUXURY PENSIONS
TO THE GREEKS
9
The acts:AccordingtotheOECD,meninGermanyretireonaverage
at61.5yearsoage,whileinGreeceitis61.9.Andwecannotinany
sensetalkaboutluxurypensions:theaveragepensioninGreeceis
about55%otheEurozoneaverage,thatamountedto617eurosin
2007.Two-thirdsoGreekpensionershadtosurviveonlessthan600eurospermonth.
Context:Itisimportantthat,incountrieslikeGreece,SpainandPor-
tugal,people shouldnotbeable toretireearlier than inGermany,
ChancellorMerkelsaidinthemiddleoMay2011.AndyettheBILD
newspaper and the Chancellormustbeaware o the real situation
acingGreekpensioners.However,theyobviouslydonotcareabout
acts.Accordingtotheirwayothinking,everyyearoretirementandeveryeuroorpensionsisapureluxuryinacountrythatisinthemid-
dleoacrisis.
8 Spiegel-Online, 18.5.2011 9 BILD newspaper, 27.4.2010
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6. THE GREEKS HAVE BEEN FEATHERING
THEIR OWN NEST WELL
The acts:ThewagelevelinGreeceisonly73%otheEurozoneaver-age.AccordingtoinormationprovidedbytheGermanInstituteor
Labour,whichiscloselyassociatedwiththetradeunions,aquartero
allGreekemployeesearnlessthan750eurospermonth. 10Teachers,
orexample,ater15yearsinservice,earnabout40%lessthaninGer-
many11andthatwasbeorethecrisis.AccordingtoEurostat,beore
thecrisisafthoallGreekswerethreatenedbypovertyand25%o
Greekslivedinapartmentsthatweretoosmallorthenumberopeo-plelivinginthem(inGermany:7%).
Context:Here,whatweare lookingatisacrisisexplanation that
addstheaccusationogluttonytotheoneolaziness.Aswasthe
casewithallegationsolazinessandluxurypensions,anattempt
is beingmade to apply seemingly plausible common sense to the
economyasawhole.Theimplicationis,wejusthavetoworkhardand
savehardandeverythingwillbefne.Bothsmallandlargecrisescanbeexplainedinthisway.Weshouldhavejustaskedanyhousewie
whohastobudgetherhousehold,Merkeladvised.Shewouldhave
givenussomewordsowisdom:Onecannotliveaboveonesmeans
orever.Thatiswhatliesattheheartotheinternationalcrisis.12And
yetthedierencebetweenplatitudesandtherealityisclearenough.
Workinghardwillnotbringaboutaboom,rathertheconverseis
trueaboombringsaboutnewjobs.Frugalitycanleadtoruin(seeGreece)andnewdebts,bycomparison,canhelponetogetbyindi-
fculttimes(asinGermanyduringthemostrecentcrisis).
10 Frankfurter Rundschau newspaper, 25.7.2010 11 Ifo service 5/2007 12 Focus-online, 1.12.2008
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7. THE GREEKS HAVE BEEN LIVING
ABOVE THEIR MEANS
The acts:Foryears,thegovernmentinAthenshasbeenspendingmorethanithasbeenbringingin.Between2000and2007,itsbudget
defcitlaybetweenourandsevenpercentoGDP.
Context:Almosteverygovernmentlivesaboveitsmeans,thatis,
spendsmorethanitbringsin.Assuch,thebudgetdefcitotheGer-
man government between2000 and 2007was between1.6% and
4.0%oeconomicperormance.TheproblemwithGreecewasnotso
muchthenewdebt,buttheactthatthefnancialmarketsstartedtospeculateagainstAthensatsomepoint,pushingtheinterestratesor
newloanstoanunaordablelevelintheprocess(seeabove).Thiscan
alsohappentoacountrywithoutalargedefcit,whichisshowninthe
exampleoIreland,whichdidnothavedefcitsbutmostlysurplusesin
itsbudgetsothepastdecadeandyetitstillellvictimtothefnancial
marketsandhadtoberescuedbytheEUandtheIMFtothetuneo85
billioneuros.Germanyalsohashighdebts,butweareabletopaythemobe-
causewealwayssavepartoourincomeorarainyday,theBILD
newspaperwrote.13TheBILDismistakeniitwantstoapplythisargu-
menttothelevelothestate.TheGermangovernmenthasalsorun
upanetdebtsituationandhasnotsavedinthepast.Iwelookat
theeconomyasawhole,however,thereissometruthinit:TheGer-
mannationaldebtoaround2,000billioneurosisbalancedbytotalassetsoaround7,400billioneuros.14However,thesearenotour
assets,butaremainlyconcentratedinthehandsoaewrichpeople.
Thiswouldonlybeosomeusetothestate,iithadaccesstothese
undsthatis,iittaxedthem.However,thisisnotgoingtohappen,
aspropertytaxwasabolishedin1997.
13 BILD newspaper, 5.3.2010 14 DIW weekly report, 50/2010
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8. THE GREEK STATE IS OVER-INFLATED
The acts: Greekpublic spending in relation to the gross domestic
product,theso-calledpublicspending-to-GDPratio,was48%in2008,whilethisfgurewasonly44%inGermany.
Context:Beorethecrisis,thesituationwasverydierent.TheGreek
publicspending-to-GDPratiosankbetween2000and2006rom47%
to43%andremainedduringthisperiodbelowthelowGermanrate15.
Thisdidnotchangeuntiltheeconomyslumpedduringthefnancial
crisis.Andso,itwastherecessionthatwastoblameortheover-
inatednatureoGreekpublicspending,andnotHellenicextrava-gance.Andbesidesthis,Swedenhashadapublicspending-to-GDP
ratioobetween51%and55%ortenyearsnowandisnotbankrupt.
9. GREECE IS NOT COMPETITIVE
The acts:ActuallyGreecesexportsroseby200%between1990and
2008.Sothecountrywassuccessulontheworldmarket.Ontheoth-
erhand,Greecehadahightradedefcitoryears,reaching14%o
GDPin2009.ThismeansthatGreeceimportsmorethanitexports.
Themainreasongivenorthiswashighwageincreases,whichiswhy
theGreekwagelevelshouldallnow,inordertorenderthecountry
competitiveagain.Context:Beingcompetitiveisnotaeatureoanationaleconomyits
nothingthatitis.Thistermmerelydescribesaratio.Theunitlabour
costsinGreeceindeeddidincreasebetween2000and2010byalmost
40%16. Thiswasonly aproblem,however,because theunit labour
costsinothercountriesincreasedtoalesserextentandthebusiness-
esinthesecountriesthereorehadacostadvantageontheworldmar-
ket.TheEuropeanexpertatwagesavingswasGermany,wheretheunitlabourcostsonlyroseby5%thankstolowerincreasesachieved
incollectivebargaining.TheresultwashighexportsurplusesorGer-
manyandimportsurplusesorcountrieslikeGreece,Portugal,Ireland
15 Michael Schlecht: The Euro is burning. Position paper 21.5.2010 16 Commerzbank Research Note: Euro
periphery facing a wage revolution? 1.4.2011
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orSpain.TheGermansuccesswasthereoremerelytheinverseimage
otheailureintheEuroperiphery,becauseGermanywouldnothave
gainedsurpluses iithadnotbeenorthedefcitsinGreece,Spain
andPortugal.Andso,Germanysexportoensiveallowedittofllits
coersattheexpenseoitsneighbours.Germanyhashealthycom-panieswhoseproductsare indemandaroundtheglobe,theBILD
newspapertriumphed17.Themouthpieceothemanonthestreet
shouldnotorget,despiteitselation,thatGermanysexportsuccesses
werefnancedbythesacrifcesotheworkers.Aswagessankoronly
increased slightly, private consumptionwithin Germany has hardly
movedaninchinthelasttenyears 18.Andonemorething:TheWorld
EconomicForumdefnedcompetitivenessasacombinationoinsti-tutions,policiesandactorsthatdeterminetheproductivityleveloa
countryTheproductivitylevelalsodeterminesthereturnsoninvest-
ment19.That iswhatallstatesmeasurethemselvesby:Wherecan
thebestreturnsoninvestmentbegained?Thequestionis,however,
whetherthisisanappropriateunitomeasurementorenablingpeo-
pleworldwideagoodlie.
10. THE GREEKS ARE CORRUPT
The acts:Itistruethattaxraudandtaxavoidancearemorepreva-
lentinGreecethaninothercountriesandthatcorruptionisevery-
where20
.Theshadoweconomyisestimatedtobeabout25%otheeconomy(bycomparison:inGermanythisfgureisapprox.15%21)and
totaltaxraudamountsto20billioneurosperyear. 22
Context: Tax raud and corruption really are a great problem or
Greece.Threethingsmustbesaidinthisrespect:taxraudisakindo
redistributionowealthromthestatetotheprivatesector.Thereore,
themoneyisnotgoneassuch.Andso,thisargumentdoesnothelp
ustoexplaintheGreekcrisis.Secondly,theormerPrimeMinisterKostasKaramanliswasresponsibleortheGreekmess.Hewasaclose
allyoChancellorMerkelintheEU.WiththehelpothewillingGreek,
17 BILD newspaper, 5.3.2011 18 See in more detail in: Michael Schlecht: The Euro is burning. Position paper
21.5.2010 19 WEF Competitiveness Report 2010 20 Spiegel-online, 10.3.2010 21 IAW press release,
26.1.2010 22 The Standard, 11.2.2010
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Merkelmanagedonvariousoccasionstopenetrate the rontothe
southernnationsinimportantEUdecisions.Karamanliswasalways
theretomakedeals.Inreturn,theGreekdidnothavetoworryabout
any over-critical questions concerninghis sloppyfnancial policies.
This quote comes rom the ormer Editor-in-Chie o German eco-nomicmagazine, theHandelsblatt.23Thirdly,largeGermancompa-
niesalsoproftedromthebackhandercultureintheGreekeconomy.
Since2008,severallegaldisputeshavedocumentedthattheGerman
companiesSiemens,Ferrostaal-MANandDeutscheBahnAGbought
Greekpoliticiansingreatstyleandfnancedpoliticaldecisionsintheir
avour.Inthisway,theSiemensGroupaloneinvestedalmost15mil-
lioneurosperyearinGreeceoveraperiodotenyearsromthemiddleothe1990sinordertowinoverandinuencepoliticiansromthetwo
importantparties,NeaDimokratiaandPASOK.24Andourthly:Meas-
uredbythecorruption-indexoTransparencyInternationalGreeceis
indeedmuchmorecorruptthatGermany.Butatthesametime,there
ismuchlesscorruptioninGreecethanincountrieslikeIndonesiaor
China,whichareeconomicallyverysuccessul.
23 Michael Schlecht: The Euro is burning. Position paper 21.5.2010 24 Greece, the IMF and EU dictate and
German responsibility, position paper issued by the scientific advisory board of Attac Germany.
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11. THE GREEKS SHOULD START SAVING
BEFORE WE HELP THEM AGAIN
The acts:In2010,Greecesbudgetdefcitwasabout10.5%oeco-
nomic perormance.Athens promised tobring thisdefcit down to
7.5%in2011.Thiswillunlikelysucceed,andtheconsequenceisthat
theinterestrateorloansonthecapitalmarketwillnotsink,Greecewillremaincutoromthecapitalmarketandunabletoborrownew
undsasplannedin2012.Thatiswhynewstatesupportisbeingtaken
intoconsiderationtohelpAthensavoidbeingilliquid.
Context:ItisnotrighttodeducethatGreecedoesnotsave,justbe-
causeothehighdefcitin2011.Greeceisnotonlysaving,butisdoing
soatanextremelevel.Becauseotheausteritymeasures,theGreeks
havelostalmost20%otheirincomeonaveragesincethebeginningo201025.Nootherindustrialnationhasreduceditsstructuraldefcitby
somuchwithinoneyearinthelast25years,ratingagencyFitchhas
evenadmitted26.AndtheBerenbergBankseesAthensprogrammeo
austeritymeasuresasprobablythehardestfscaladjustmenteverto
havebeenmadebyaWesterncountry.27
Theactthatthedefcitwilllikelybehigherthanplannedin2011does
nothavetodowithextravaganceinAthens.Spendingisnottoohighincomeistoolow.This,inturn,hastodowiththeharshausterity
measures.Asthestateissaving,andreducingwagesandpensions,
economicperormanceissuering.Privateconsumption, or exam-
ple,was18%lowerinMarch2011thanoneyearbeoreand,inthe
sameperiod,65,000companieswentbankrupt.Areductioningross
nationalproductoalmost4%isexpectedortheyearasawhole.The
resultothisisthatlesstaxisbeingpaid.BetweenJanuaryandApril2011,revenueromtaxeswas7%belowthepreviousyearsfgureor
thesameperiod.Allinall,theGreektaxauthoritieshavetakenin1.2
billioneuroslessthanexpected.Andso,itisnotexcessivespending
THE WAY FORWARD? FALSE SOLUTIONS
25 FAZ newspaper, 25.5.2011 26 Financial Times Germany, 26.5.2011 27 Berenberg Bank, Macro Views,
20.5.2011
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thatistheprobleminAthens,buttheausteritymeasuresthemselves.
WedoubtthattheGreekeconomycanwithstandanaggressiveand
prolongedfscaladjustment.28
12. SELL YOUR ISLANDS
YOU BANKRUPT GREEKS!29
The acts:TheGreekstateownspropertywithanestimatedvalueo
270to300billioneuros.Thesearemainlyrealestateproperties,also
ontheislands.Context:ThegovernmentinAthensisnotjustsittingonitsortune.It
hasalreadystartedoabroadprogrammeoprivatisation,withtel-
ecommunicationscompanies,electricitysuppliers,portsandalarge
quantityorealestatepropertiesonoer.Bydoingthis,Athensaims
tobringin50billioneurosbytheyear2015.However,therearemany
snagsinthisprogramme.AsGreeceisbeingorcedtosell,itwillonly
receivebadpricesoritsproperty.Thebuyersinternationalcorpora-tionswilltrytoexploittheemergencysituationinGreece.Secondly,
ithestatesellsproftablecompanies,thentheincomeromthesewill
begone.Theresult:TheexperiencegainedbytheInternationalMon-
etaryFund (IMF) in countless stabilisation programmes has shown
that(privatisation)isanextremelyriskystrategyIttakesaverylong
timetomakesurethatsuchproceduresarecarriedoutinanorderly
ashion,andtimeissomethingthatGreecedoesnothaveatpresent.Privatisationsarethereorenotverywellsuitedasemergencymeas-
ures.30
28 Societ Generale, The Economic News, 5.4.2011 29 BILD newspaper, 27.10.2010 30 VP Bank, Investment
News, 1.6.2011
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13. THE CREDITORS SHOULD FOOT THE BILL!
The acts:TheGreekstatehasaround350billioneurosindebt.The
creditorsare:Greekbanks(23%),otherGreekcreditors(20%),gov-ernmentsintheEurozone(12%),theEuropeanCentralBank(18%),
theInternationalMonetaryFund(4%),otheroreigncreditors/banks
(23%).31Themoneylenderscouldwaivesomeotheloansissuedin
ordertosaveGreece.
Context:Thatsoundsair,becauseithishappenedthefnancialinves-
torswouldthenplayaroleinreducingGreecesdebt.Atthesametime,
itinvolvesseriousrisks.Firstoall,itwouldleadtosignifcantlossesorthebanks.Idebtswerecutby50percentinGreece,thiswould
meanaburdeno25billioneurosortheGermanbanksalone(IMK:
debtcutsbringmoredisadvantagesthanadvantages,May2010).Sec-
ondly,thiswouldbetheruinothemaincreditors,theGreekbanks.
Thirdly,itheEurozoneallowsacountrytogobankruptinitsmidst,
otherstateswouldalsolosetheircreditstanding.Theworryabout
Greececouldowovertootherperipherystatesandleadtoasell-outotheirbonds(DZBank,Interestmarkets,9.5.2011).Theproblem
couldthenspreadtostateslikeSpain,anditseconomyismorethan
twicethesizeotheeconomiesoGreece,PortugalandIrelandputto-
gether32.ThiswouldcertainlybetheendotheEurozone,whichisthe
backboneotheGermaneconomy.Aswecansee,aslongasEurope
isdependentonthegoodwillofnancialinvestors,itwillremaindif-
culttomaketheseinvestorspaytogetGreeceoutoitsdebtsituation.Onemorecomment:TheGreeknationaldebtisnotamajorproblem
ortheEurozone.Atatotalo350billioneuros,itisamere3.7%othe
EurozonesGDP.
31 VP Bank, Investment News, 1.6.2011 32 This would mean further risks for the banks. According to the
Bank for International Settlements, Greece, Portugal, Ireland and Spain owed the European banks 1,340 billion
euros at the end of 2010. A quarter of these were German banks (http://bis.org/publ/qtrpdf/r_qa1106.
pdf#page=100)
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14. GREECE SHOULD GET OUT OF THE EUROZONE
The acts:TheEurozonecouldattempttogetridotheGreekproblem
byexcluding/dischargingGreeceromtheEuroregionandsoprotecttheproblemromspreadingtoothercountries.Greece,ontheother
hand,couldre-introducetheDrachmaanddevalueitscurrency.This
wouldmakeGreekexportscheaperandthecountrycouldtrytoexport
itseloutothecrisis.
Context:Thiswouldhavetwoseriousdisadvantages.Firstly,iAth-
ensre-introducestheDrachma,thiswoulddevaluedrasticallyagainst
theEuro.However,thegovernment(aswellastheGreekbanks,com-paniesandprivatehouseholds)wouldcontinuetohavetheirdebtin
euros.Asaresult,thedebtswouldincreaserapidlyinvalueandthe
debtsituationwouldexplode.Thiswouldmeanthefnancialruino
Greeceandthebankingsystemwouldalmostcertainlycollapse.33
Inthiscase,Greecesoreigncreditorsaboveall,GermanandFrench
bankswouldhavetowriteothedebtstheyhaveissued.Second-
ly,excludingGreecewouldmeangivinguptheimplicitguaranteeocontinuanceotheEurozoneandwouldopenuptheoodgatesor
speculation against the Euro. Theplanocreating in the Euro
aworldcurrencythatcancompetewiththeUSDollarwouldthenhave
ailed.34
33 DZ Bank, Interest markets, 9.5.2011 34 Berliner Zeitung 27.4.2010. Concerning the advantages in the
status of a leading world currency, see AK 561, 20.5.2011. http://www.akweb.de/ak_s/ak561/23.htm
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15. GREECE HAS TO WIN BACK THE TRUST
OF THE FINANCIAL MARKETS
The acts:ToregainaccesstoloansandbecomeindependentoEUaid,Athensmustreceivemoneyromthefnancialmarketsataord-
ableinterestrates.Todoso,theinvestorsmustagainbelievethattheir
moneyissaeandproftableinGreece,thatis,thattheycanearngood
moneythere.
Context:Whathasbeenoutlinedaboveisprettymuchthecaseand
clearlydemonstratesthepowerbalancethreeyearsaterthefnancial
crisis.Today,allindustrialnationsareattemptingtoregainthetrustothefnancialmarketsbyimplementingausteritymeasures,wage
reductions,taxincreasesandanincreaseincompetitiveness.This
showsthatthepowerothemarketsisintact.While,atthebeginning
othefnancial crisis, itwassaidthat thefnancialmarketswould
havetoberestrainedorplacedinchains,nowthedemandsmade
bythefnancialinvestorswithrespecttotheproftabilityandstability
ostatesisonceagainthemeasuringstickwhichthecountriesthem-selvesgoby.Themarketsruleandpoliticsbendstomeettheirde-
mands.
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16. WE WANT TO BE FRIENDS WITH THE GREEKS35
Friendshipisaeelingbetweenpeople,notadefningactorinthere-
lationshipbetweenpoliticalapparatuses.Ocourse,oneotenspeaks
fgurativelyoberiendedstates.However,thisreerslesstobonds
oriendshipandhasmoretodowiththesharedinterestspursuedby
somestates.TheinterestthatGreeceandGermanyshareinthiscasecanbeoundprettyast:itisthejointcurrency,theEuro.However,
whileAthenshastopreventitseconomyromcollapsing,theGerman
governmentistryingtogetoutotheGreekproblemasinexpensively
aspossible.Whenitcomestomoney,riendshipgoesoutthewindow.
17. YOU SHOULD HELP YOUR FRIENDS BUT NOT BAIL THEM OUT
The acts:15May2011,Sundayevening,talkshowonGermantelevi-
sionwithAnneWill,thesubject:BillionsorthepoorEurowretches
isthegovernmentriskingourmoney?.Theprogrammestartsoby
questioningpeopleonthestreet.Theollowingquestionsareasked:Wouldyouhelpyourneighboursorriendsitheywereinafnancial
mess?Mostothosequestionedanswered:Yes.Theanswertothe
nextquestionWouldyoualsooerthemcollateraloraloan?how-
everismostlyNo.Thistakestheviewerstotheeveningsmainques-
tion:Shouldpoliticiansbeallowedtodosomethingwewouldnever
doinourprivate lie, thatis, provide large-scalecollateralor loans
takenoutbyothers?From2013,Germanywillprovidealmost168bil-lioneurosinguaranteesandalmost22billionincashinjectionsaspart
othelong-termEuropeanStabilityMechanism(ESM);thesumsareto
bepaidingraduallybetween2013and2017.
THE ROLE OF THE GERMANS: FALSE FRIENDS
35 BILD newspaper, 5.3.2010
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18
Context: We Germans should thereore not give guarantees or
theGreeks.Andyetweareconstantlygivingguarantees,without
anyoneaskingusiwewantto.Forexample,orthedomesticfnan-
cialinstitutions.Thiswasshownbythelastfnancialcrisis:whenthe
creditratingotheGermanbankswasindanger,thepublicauthori-ties jumped inwithaidandguarantees.While theGermanshare in
thefnancialaidtoGreecehasbeenapprox.22.4billioneurostodate,
theaidgiventotheGermanbankswassignifcantlyhigher.According
totheGermanBundesbank,thesupportgiventothefnancialsector
alonein2010increasedthenationaldebtby241billioneuros.36
18. NO GERMAN TAX EUROS FOR GREECE!37
The acts:ThefrstaidpackageorGreeceromtheyear2010con-
tainedaGermanshareoaround22billioneuros.
Context:Dobrindtisright.Itisnotthemuch-quotedtaxpayerwhois
helpingGreece.TheGermangovernmentdoesnottakethemoneyorAthensromthenationalbudgetorromtaxincome,butborrows
thismoneyatinterestrateso1%to3%andlendsiturthertocoun-
triesinastateocrisisincludingpenaltyinterest.Athensmustpay
4.2%or this aid,while Irelandpays5.8%andPortugalbetween
5.5%and6%.This isagoodbusiness proposition or theGerman
taxpayer.Thedierenceininterestmeansthatanestimated500mil-
lioneuroswillowintothecountry38
undertheproviso,however,thatthecrisisstatescanpaybacktheirdebts.Assuch,theBILDnews-
paperisrightwhenitheadlineswithYouGreeksaregettingnothing
romus!39.ItstheotherwayrounditisactuallyGreecewhowilloot
thebillintheend.
36 Bundesbank press release, 13.4.2011 37 Alexander Dobrindt, CSU, in BILD newspaper, 5.3.2010 38 Finan-
cial Times Germany, 20.5.2011 39 BILD newspaper, 5.3.2010
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19
19. WE ARE THE PAYMASTERS OF EUROPE40
The acts:Seeitems17and18
Context:AstheGermangovernmentgrantsGreeceaidintheormoloans,thismoneyhasnotbeengivenaway.Itwillcomeback
againplus interest.However, thedebt crisis acingsomeperiphery
stateshasmoreadvantagesorGermany,becauseGermangovern-
mentbondsareseenassaehavensamong investors. Theresult
isthatallinvestorsareeagertobuyupGermangovernmentbonds.
WhichiswhytheGermangovernmenthasnoproblemfndingfnan-
cialbackers,iitwantstoborrowmoney.TheresultothisisthattheinteresttheGermangovernmenthastopaytoitscreditorsisverylow.
Inearlierphaseswheretherewasaneconomicupswing,theGerman
governmenthadtopayitscreditorssignifcantlyhigherinterest.Now,
however,theEurocrisisismakingGermangovernmentbondsattrac-
tive,whichreducesthe rateointerestandsavestheGermanMin-
isteroFinancemoney.Theestimatedannualsavingsromthisare
3.5billioneuros.41
TheaidorstateslikeGreece,IrelandorPortugal,bytheway,isnotadonationandnotanactoriendship.Inreality,
themoneyisnotowinginordertohelptheGreeks,butinorderto
preventothercountriesromdamage.TheEuroGroupormulatedthis
explicitlyintheresolutionotheESM,theEurospermanentprotec-
tor,inMarch2011:ThememberstatesthathavetheEuroastheir
currencyshallestablishastabilitymechanism,whichwillbeactivated
whenthisisunavoidabletosecurethestabilityotheEurozoneasawhole.Thismeansthattheloansgivenasaidtocountriesinastateo
crisisarenottheretohelptheoverindebtedcountry,buttoprotectthe
restotheEurozoneromtheconsequencesothisoverindebtedness.
Itistheretoprotectthecreditorsromthedebtors.
40 BILD newspaper, 25.2.2011 41 Financial Times Germany, 20.5.2011
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20
ONE LAST COMMENT
20. GREECE CHEATED ITS WAY INTO
THE EUROZONE WE ARE NOW PAYING THE PRICE
FOR OUR INDULGENCE42
The acts:TheGreekdefcithasactuallybeencontinuouslyabovethe
EUupperlimitothreepercentogrossdomesticproductsince1997
evenduringtheyears1997to1999,whichweredecisiveorentrytotheEurozone.
Context:ThecheatingotheGreekswasalreadyknownaboutand
ofcialin2004.However,thecountrywasnotexcludedromthecur-
rencyunionnorwereanytreatyviolationproceedingsorsanctionsun-
dertaken,suchascutsinEUaid.Whynot?Thisissomethingwecan
onlypostulateon.GreecewasgovernedbyKostasKaramanlisrom
2004onwards,andheisacloseallyoGermanChancellorAngelaMerkel(seeitem10TheGreeksarecorrupt).Whatismore,itwas
thegoalothemainpowerswithintheEurozonesuchasGermanyand
France,inprinciple,toacceptasmanycountriesaspossible,inorder
tolendthecurrencyunionmoreeconomiccloutaterall,theEuroisa
competitiveprojectagainstthedollar,behindwhichtherearetheUSA
andaquarterotheworldeconomy. In addition,withGreecesen-
try,theEurozonespreadgeopoliticallytowardstheimportantMiddleEastregion.ThismaybewhytheIMFandtheEUexcludedGreeces
militarybudgettoagreatextentromtheausteritymeasuresin2010.
Despitetheactthatthis(asapercentageotheentirebudget)istwo-
and-a-haltimeshigherthantheGermanandtwiceashighastheEU
average.FrenchandGermanweaponsmanuacturersinparticularas
wellasthegovernmentsinParisandinBonn,orlaterBerlin,havebeen
supportingasystematicarmsbuild-upinTurkeyandGreecesincethe
1980s.43
42 Brse online, 7.1.2010 43 Greece, the IMF and EU dictate and German responsibility, position paper issued
by the scientific advisory board of Attac Germany
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Author
Stephan Kaufmann
IllustrAtIon of front pAge
Lutz Kbelbck
drawn up as a result of the project: Lets talk about alternatives ,
in cooperation with the press epartment of the Rosa-Luxemburg-Founation
ContACt
Rosa-Luxemburg-Stiftung
dr. Sabine Nuss, dr. Lutz Brangsch
Franz-Mehring-latz 1, 10243 Berlin
hone 030 44310-448, www.rosalux.e
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