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8/6/2019 Greece: 20 popular fallacies concerning the debt crisis
1/24
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. Greecehastoomanydebts 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. Greeceisnotcapableocompeting 9
10. TheGreeksarecorrupt 10
The way forward? False solutions 12
11.TheGreeksshouldstartsavingbeorewehelpthemagain 12
12. SellyourislandsyoubankruptGreeks!29 13
13. Thecreditorsshouldootthebill! 13
14. GreeceshouldgetoutotheEurozone 15
15.Greecehastowinbackthetrustothefnancialmarkets 15
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 MANY DEBTS
The acts:Becauseothefnancialcrisis,Greecesnationaldebtgrew
between2007andtheendo2010rom115%to143%oeconomic
perormance.Thisso-calleddebtratiowillprobablyclimbabovethe
150%markin2011.Bywayocomparison:Germanysdebtratiois
about85%.The way things are portrayed:Thehighdebtratioalonedoesnotex-
plainGreecesproblems.Thedebtratiodoesnotreectthecorrect
valueeitherintheoryorinpractice.1Italyhasadebtratioo120%,
Japanhasevenreached200%oitseconomicperormance.Neither
otheseisseentobebroke,whileGreeceis.Why?Becausethe
fnancialmarketsarespeculatingonGreecebecomingbankrupt.This
hasdriventheinterestrateornewdebtstosuchhighlevels,thatAth-enscannotborrowanynewmoney2.Bycomparison:Athensmustpay
25%interestontwo-yearstateloans,Italyonly3%andJapanamere
0.2%(asperendoMay2011).
Theproblemthereorelieswiththeinterestratethathasbeenorced
upwardsbyfnancemarketspeculations.TheMacroeconomicPolicy
Institute(IMK)hascalculatedthat,itheaveragerateointerestor
Greekstateloanswouldallto3%,thenthecountrysdebtratiowouldallto110%oeconomicperormancebytheyear2015.3However,
itheinterestrateremainsashighasitis,Athenswillnotbeableto
borrowanymoneyonthemarkets.Whetherornotitisthenbroke
dependsonthewillingnessotheotherEuro-statestohelpitoutby
providingloans.Thereore,thequestionobankruptcyisaquestion
opoliticaldecisionsbystates.
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 loan 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 loan now has a return on 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 return on 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,thereturnsoninvestmentortheseloans(seeootnote2)increased.
The way things are portrayed:Thefnancialmarketsarescaredo
nothing.Theyarenotahumanbeingwitheelingsandears.Andthey
arealsonotanobjectiveentitythatanalysesthefnancialsituationo
acountryinaactualmanner.Thefnancialmarketisnothingmore
thantheentiretyotheinvestorswhotrytoearnasmuchmoneyas
possiblewithfnancialinvestments.AnyonewhoisreallyscaredthatGreecewillgobankruptisnotinvestinginGreekgovernmentsecuri-
ties.EveryoneelsehopesthatHellaswillbesavedandtheywillbeable
torakeinhugeinterestprofts. 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
The way things are portrayed:Germanyalsohashighdebtsbutwe
canpaythemo,becausewegetupprettyearlyandworkallday.7
ApartromtheactthattheGreeksworkalotandapartromtheact
that leisure time isnot necessarilysomethingbad andwork isnot
necessarilysomethinggooditisundamentallywrongtoseekthe
causesoacrisisinacountrybycitingthelackohardworkamongitspopulation.TheGreeksdonothavetheoptionojustworkinglonger
hourstoendthecrisis.Theoppositeistruebecauseothecrisis,
manyGreekshavebeenorcedtonotworkatall.Theofcialunem-
ploymentratewas16.5%inApril2011,andathirdoyoungpeople
werewithoutapaidjobattheendo2010.Thenumberocivilserv-
antshasbeenreducedby83,000inthelastmonths.Andsoitisclear,
itisnotlazinessthatcreatescrises,butcrisesdestroyjobs.Thesitu-ationwasverydierentinGermany,wheretheupswingreducedthe
unemploymentrateto6.0%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.AndtheGermansarealsoright
uptherewhenitcomestothenumberopublicholidaystheyhave.8
The way things are portrayed:Wecannothaveonecurrency,when
somehaveagreatdealoholidayleaveandothersverylittle,said
Federal ChancellorAngelaMerkel in themiddle oMay2011.This
isanotherversionothelazinessaccusation.Itisanotherattempttoblamethecrisisontheindividualsupposedlyalseconductothe
Greeks. Conversely the Chancellor praises her own people, stating
that,theactthatweareinagoodeconomicpositionisbecause
wearesohard-working.
5. WE ARE PAYING LUXURY PENSIONSTO THE GREEKS9
The acts:AccordingtotheOECD,meninGermanyretireonaverage
at61.8yearsoage,whileinGreeceitis61.9.Andwecannotinany
sensetalkaboutluxurypensions:theaveragepensioninGreeceis
about55%otheEurozoneaverage,whichamountedto617eurosin2007.Two-thirdsoGreekpensionershadtosurviveonlessthan600
eurospermonth.
The way things are portrayed:Itisimportantthat,incountrieslike
Greece,SpainandPortugal,peopleshouldnotbeabletoretireearlier
thaninGermany,ChancellorMerkelsaidinthemiddleoMay2011.
AndyettheBILDnewspaperandtheChancellormustbeawareothe
realsituationacingGreekpensioners.However,theyobviouslydonotcareaboutacts.Accordingtotheirwayothinking,everyyearore-
tirementandeveryeuroorpensionsisaluxuryinacountrythatisin
themiddleoacrisis.
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%).
The way things are portrayed:Here,whatwearelookingatisacrisis
explanationthataddstheaccusationogluttonytotheoneolazi-
ness.Aswasthecasewithallegationsolazinessandluxurypen-
sions,anattemptisbeingmadetoapplyseeminglyplausiblecom-
monsensetotheeconomyasawhole.Theimplicationis,wejusthave
toworkhardandsavehardandeverythingwillbefne.Bothsmallandlargecrisescanbeexplainedinthisway.Weshouldhavejust
askedanyhousewiewhohastobudgetherhousehold,Merkelad-
vised.Shewouldhavegivenussomewordsowisdom:Onecannot
liveaboveonesmeansorever.Thatiswhatliesattheheartothein-
ternationalcrisis.12Andyetthedierencebetweenplatitudesandthe
realityisclearenough.Workinghardwillnotbringaboutaboom,
rathertheconverseistrueaboombringsaboutnewjobs.Frugalitycanleadtoruin(seeGreece)andnewdebts,bycomparison,canhelp
onetogetbyindifculttimes(asinGermanyduringthemostrecent
crisis).
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
defcitlaybetweenourandsevenpercentoeconomicperormance.
The way things are portrayed:Almosteverygovernmentlivesabove
itsmeans,thatis,spendsmorethanitbringsin.Assuch,thebudget
defcitotheGermangovernmentbetween2000and2007wasbe-
tween1.6%and4.0%oeconomicperormance.Theproblemwith
Greecewasnotsomuchthenewdebt,buttheactthatthefnancialmarketsstartedtospeculateagainstAthensatsomepoint,pushing
theinterestratesornewloanstoanunaordablelevelintheprocess
(seeabove).Thiscanalsohappentoacountrywithoutalargedefcit,
whichisshownintheexampleoIreland,whichdidnothavedefcits
butmostlysurplusesinitsbudgetsothepastdecadeandyetitstill
ellvictimtothefnancialmarketsandhadtoberescuedbytheEUand
theIMFtothetuneo85billioneuros.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.
The way things are portrayed:Beorethecrisis,thesituationwasvery
dierent.TheGreekpublicspending-to-GDPratiosankbetween2000
and2006rom47%to43%andremainedduringthisperiodbelow
thelowGermanrate15.Thisdidnotchangeuntiltheeconomyslumped
duringthefnancialcrisis.Andso,itwastherecessionthatwasto
blame or the over-inatednature oGreekpublic spending, andnotHellenicextravagance.Andbesidesthis,Swedenhashadapublic
spending-to-GDPratioobetween51%and55%ortenyearsnow
andisnotbankrupt.
9. GREECE IS NOT CAPABLE OF COMPETING
The acts:Thismaybetrueiwelookatexports,whereGreecehas
hadahighdefcitoryears,reaching14%oeconomicperormancein
2009.ThismeansthatGreeceimportsmorethanitexports.Themain
reasongivenorthiswashighwageincreases,whichiswhytheGreek
wagelevelshouldallnow,inordertorenderthecountrycompetitive
again.The way things are portrayed: Being capable o competing has
nothingtodowithcapability.Thistermmerelydescribesaratio.As
aact,theunitlabourcostsinGreecedidincreasebetween2000and
2010byalmost40%16.Thiswasonlyaproblem,however,because
theunitlabourcostsinothercountries increasedtoa lesserextent
andthebusinessesinthesecountriesthereorehadacostadvantage
ontheworldmarket.TheEuropeanexpertatwagesavingswasGer-many,wheretheunitlabourcostsonlyroseby5%thankstolower
increasesachievedincollectivebargaining.Theresultwashighexport
surplusesorGermanyandimportsurplusesorcountrieslikeGreece,
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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Portugal,IrelandorSpain.TheGermansuccesswasthereoremerely
theinverseimageotheailureintheEuroperiphery,becauseGer-
manywouldnothavegainedsurplusesiithadnotbeenorthedef-
citsinGreece,SpainandPortugal.Andso,Germanysexportoensive
allowedittofllitscoersattheexpenseoitsneighbours.Germanyhashealthycompanieswhoseproductsareindemandaroundthe
globe,theBILDnewspapertriumphed17.Themouthpieceotheman
onthestreetshouldnotorget,despiteitselation,thatGermanysex-
portsuccesseswerefnancedbythepovertyotheworkers.Aswages
sankoronlyincreasedslightly,privateconsumptionwithinGermany
hashardlymovedaninchinthelasttenyears 18.Andonemorething:
TheWorldEconomicForumdefnedbeingcapabletocompeteasacombination o institutions,policiesand actors that determine the
productivityleveloacountryTheproductivitylevelalsodetermines
thereturnsoninvestment19.Thatiswhatallstatesmeasurethem-
selvesby:Wherecanthebestreturnsoninvestmentbegained?The
questionis,however,whetherthisisanappropriateunitomeasure-
mentorenablingpeopleworldwideagoodlie.
10. THE GREEKS ARE CORRUPT
The acts:Itistruethattaxraudandtaxavoidancearemorepreva-
lentinGreecethaninothercountriesandthatcorruptionisevery-
where20
.Theshadoweconomyisestimatedtobeabout25%otheeconomy(bycomparison:inGermanythisfgureisapprox.15%21)and
totaltaxraudamountsto20billioneurosperyear. 22
The way things are portrayed:Taxraudandcorruptionreallyarea
greatproblemorGreece.Threethingsmustbesaidinthisrespect:
tax raud is akind o redistributionowealth rom thestate to the
privatesector.Thereore,themoneyisnotgoneassuch.Andso,
thisargumentdoesnothelpustoexplaintheGreekcrisis.Secondly,theormerPrimeMinisterKostasKaramanliswasresponsibleorthe
Greekmess.HewasacloseallyoChancellorMerkelintheEU.With
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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thehelpothewillingGreek,Merkelmanagedonvariousoccasionsto
penetratetherontothesouthernnationsinimportantEUdecisions.
Karamanliswasalwaystheretomakedeals.Inreturn,theGreekdidnot
havetoworryaboutanyover-criticalquestionsconcerninghissloppy
fnancialpolicies.ThisquotecomesromtheormerEditor-in-ChieoGermaneconomicmagazine,theHandelsblatt.23Thirdly,largeGer-
mancompaniesalsoproftedromthebackhandercultureintheGreek
economy.Since2008,severallegaldisputeshavedocumentedthat
theGermancompaniesSiemens,Ferrostaal-MANandDeutscheBahn
AGboughtGreekpoliticiansingreatstyleandfnancedpoliticaldeci-
sionsintheiravour.Inthisway,theSiemensGroupaloneinvested
almost15millioneurosperyearinGreeceoveraperiodotenyearsromthemiddleothe1990sinordertowinoverandinuencepoliti-
ciansromthetwoimportantparties,NeaDimokratiaandPASOK. 24
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
intoconsiderationtohelpAthensavoidbeingunabletopay.
The way things are portrayed:ItisnotrighttodeducethatGreece
doesnotsave,justbecauseothehighdefcitin2011.Greeceisnot
onlysaving,butisdoingsoatanextremelevel.Becauseotheausterity
measures,theGreekshavelostalmost20%otheirincomeonaveragesincethebeginningo201025.Nootherindustrialnationhasreduced
itsstructuraldefcitbysomuchwithinoneyearinthelast25years,
ratingagencyFitchhasevenadmitted26.AndtheBerenbergBanksees
Athensprogrammeoausteritymeasuresasprobablythehardestfs-
caladjustmentevertohavebeenmadebyaWesterncountry.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
billioneuroslessthanestimated.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.The way things are portrayed:ThegovernmentinAthensisnotjust
sittingonitsortune.Ithasalreadystartedoabroadprogrammeo
privatisation,withtelecommunicationscompanies,electricitysuppli-
ers,portsanda largequantityorealestatepropertiesonoer.By
doingthis,Athensaimstobringin50billioneurosbytheyear2015.
However,therearemanysnagsinthisprogramme.AsGreeceisbe-
ingorcedtosell,itwillonlyreceivebadpricesoritsproperty.Thebuyersinternationalcorporationswilltrytoexploittheemergency
situationinGreece.Secondly,ithestatesellsproftablecompanies,
thentheincomeromthesewillbegone.Theresult:Theexperience
gainedbytheInternationalMonetaryFund(IMF)incountlessstabilisa-
tionprogrammeshasshownthat(privatisation)isanextremelyrisky
strategyIttakesaverylongtimetomakesurethatsuchprocedures
arecarriedoutinanorderlyashion,andtimeissomethingthatGreecedoesnothaveatpresent.Privatisationsarethereorenotverywellsuit-
edasemergencymeasures.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.
The way things are portrayed:Thatsoundsair,becauseithishap-
pened the fnancial investors would then play a role in reducing
Greecesdebt.Atthesametime,itinvolvesseriousrisks.Firstoall,itwouldleadtosignifcantlossesorthebanks.Idebtswerecutby50
percentinGreece,thiswouldmeanaburdeno25billioneurosorthe
Germanbanksalone(IMK:debtcutsbringmoredisadvantagesthan
advantages,May2010).Secondly,thiswouldbetheruinothemain
creditors,theGreekbanks.Thirdly,itheEurozoneallowsacountry
togobankruptinitsmidst,otherstateswouldalsolosetheircredit
standing.TheworryaboutGreececouldowovertootherperipherystatesandleadtoasell-outotheirbonds(DZBank,Interestmarkets,
9.5.2011).TheproblemcouldthenspreadtostateslikeSpain,andits
economyismorethantwicethesizeotheeconomiesoGreece,Por-
tugalandIrelandputtogether32.Thiswouldcertainlybetheendothe
Eurozone,whichisthebackboneotheGermaneconomy.Aswecan
see,aslongasEuropeisdependentonthegoodwillofnancialinves-
tors,itwillremaindifculttomaketheseinvestorspaytogetGreeceoutoitsdebtsituation.Onemorecomment:TheGreeknationaldebt
isnotamajorproblemortheEurozone.Atatotalo350billioneuros,
itisamere3.7%otheEurozoneseconomicstrength.
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.
The way things are portrayed:Thiswouldhavetwoseriousdisadvan-
tages.Firstly,iAthensre-introducestheDrachma,thiswoulddevalue
drasticallyagainsttheEuro.However,thegovernment(aswellastheGreekbanks,companiesandprivatehouseholds)wouldcontinueto
havetheirdebtineuros.Asaresult,thedebtswouldincreaserapidly
invalueandthedebtsituationwouldexplode.Thiswouldmeanthef-
nancialruinoGreeceandthebankingsystemwouldalmostcertainly
collapse.33Inthiscase,Greecesoreigncreditorsaboveall,German
andFrenchbankswouldhavetowriteothedebtstheyhaveissued.
Secondly,excludingGreecewouldmeangivinguptheimplicitguaran-teeocontinuanceotheEurozoneandwouldopenuptheoodgates
orspeculationagainsttheEuro.TheplanocreatingintheEuro
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.
The way things are portrayed:Whathasbeenoutlinedaboveispretty
muchthecaseandclearlydemonstratesthepowerbalancethree
yearsaterthefnancialcrisis.Today,allindustrialnationsareattempt-ing to regain the trust o the fnancial markets by implementing
austeritymeasures,wagereductions,taxincreasesandanincrease
incompetitiveness.Thisshowsthatthepowerothemarketsisin-
tact.While,atthebeginningothefnancialcrisis,itwassaidthatthe
fnancialmarketswouldhavetoberestrainedorplacedinchains,
nowthedemandsmadebythefnancialinvestorswithrespecttothe
proftabilityandstabilityostatesisonceagainthemeasuringstickwhichthecountriesthemselvesgoby.Themarketsruleandpolitics
bendstomeettheirdemands.
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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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The way things are portrayed:WeGermansshouldthereorenot
giveguaranteesortheGreeks.Andyetweareconstantlygiving
guarantees,withoutanyoneasking us iwewant to. For example,
orthedomesticcrediteconomy.Thiswasshownbythelastfnan-
cialcrisis:whenthecreditratingotheGermanbankswasindanger,thepublicauthoritiesjumpedinwithaidandguarantees.Whilethe
GermanshareinthefnancialaidtoGreecehasbeenapprox.24bil-
lioneurostodate,theaidgiventotheGermanbankswassignifcantly
higher.AccordingtotheGermanBundesbank,thesupportgivento
thefnancialsectoralonein2010increasedthenationaldebtby241
billioneuros.36
18. NO GERMAN TAX EUROS FOR GREECE!37
The acts:ThefrstaidpackageorGreeceromtheyear2010con-
tainedaGermanshareoaround22billioneuros.
The way things are portrayed:Dobrindtisright.Itisnotthemuch-quotedtaxpayerwhoishelpingGreece.TheGermangovernment
doesnottakethemoneyorAthensromthenationalbudgetorrom
taxincome,butborrowsthismoneyatinterestrateso2%to3%and
lendsiturthertocountriesinastateocrisisincludingpenaltyinter-
est.Athensmustpay4.2%orthisaid,whileIrelandpays5.8%and
Portugalbetween5.5%and6%.Thisisagoodbusinessproposition
ortheGermantaxpayer.Thedierenceininterestmeansthatanestimated500millioneuroswillowintothecountry 38underthe
proviso,however,thatthecrisisstatescanpaybacktheirdebts.As
such,theBILDnewspaperisrightwhenitheadlineswithYouGreeks
aregettingnothingromus!39.Itstheotherwayrounditisactually
Greecewhowillootthebillintheend.
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
The way things are portrayed: As theGerman governmentgrantsGreeceaidintheormoloans,thismoneyhasnotbeengivenaway.
Itwillcomebackagainplusinterest.However,thedebtcrisisacing
someperiphery states hasmore advantages orGermany, because
Germangovernmentbondsareseenassaeamonginvestors.The
result is thatall investors areeagertobuyupGermangovernment
bonds.WhichiswhytheGermangovernmenthasnoproblemfnding
fnancialbackers,iitwantstoborrowmoney.TheresultothisisthattheinteresttheGermangovernmenthastopaytoitscreditorsisvery
low.Inearlierphaseswheretherewasaneconomicupswing,theGer-
mangovernmenthadtopayitscreditorssignifcantlyhigherinterest.
Now,however,theEurocrisisismakingGermangovernmentbonds
attractive,whichreducestherateointerestandsavestheGerman
MinisteroFinancemoney.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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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.
The way things are portrayed:ThecheatingotheGreekswasal-
readyknownaboutandofcialin2004.However,thecountrywasnot
excludedromthecurrencyunionnorwereanytreatyviolationpro-
ceedingsorsanctionsundertaken,suchascutsinEUaid.Whynot?
Thisissomethingwecanonlypostulateon.Greecewasgovernedby
KostasKaramanlisrom2004onwards,andheisacloseallyoGer-manChancellorAngelaMerkel(seeitem10TheGreeksarecorrupt).
Whatismore,itwasthegoalothemainpowerswithintheEurozone
suchasGermanyandFrance,inprinciple,toacceptasmanycoun-
triesaspossible,inordertolendthecurrencyunionmoreeconomic
cloutaterall,theEuroisacompetitiveprojectagainstthedollar,
behindwhichtherearetheUSAandaquarterotheworldeconomy.
Inaddition,withGreecesentry,theEurozonespreadgeopoliticallyto-wardstheimportantMiddleEastregion.ThismaybewhytheIMFand
theEUexcludedGreecesweaponsbudgettoagreatextentromthe
austeritymeasuresin2010.Despitetheactthatthis(asapercentage
otheentirebudget)istwo-and-a-haltimeshigherthantheGerman
andtwiceashighastheEUaverage.FrenchandGermanweapons
manuacturersinparticularaswellasthegovernmentsinParisandin
Bonn,orlaterBerlin,havebeensupportingasystematicarmsbuild-up
inTurkeyandGreecesincethe1980s.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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