More than 250 people took to the streets of Lower Manhattan on Saturday to support decent working people in Greece against banking interests that wish to shield investors as the underwater global economy dries out.
The Zuccotti Park protest was one of dozens held around the world on International Mobilization Day. The New York crowd was evenly divided between Greek-Americans and members of Occupy Wall Street, but they had a common goal: support Greek wage-earners against austerity measures that punish the 99% for the sins of financial and political elites.
“The Greek economy has fallen apart,” said Stephane Christane, 53, of New York City. “This idea that we’re getting a bailout to prevent a default is ridiculous. The country is already insolvent. With the package they’re talking about it will still be insolvent in 2020. So, you have to wonder who is really being bailed out.”
“I was there at Christmas and I saw things that I have never seen there – homeless people, soup kitchens and people picking through the trash,” he said. “My father said these things haven’t happened in Greece since World War II.”
Christane (left), a Columbia University administrator who was raised in Greece, pulled the collar of his coat closed in the chill wind as a group of Occupiers shouted “Greece got sold out, banks got bailed out.”
Greek leaders are pushing through austerity measures that will hamstring wage-earners in the Hellenic Republic for decades to come in a bid to secure a $171 billion bailout from the European Union that will protect bondholders from a complete default. Similar austerity measures are being pushed around the world to protect bondholders from the worst financial crisis since The Great Depression – a crisis precipitated by the poor regulation of out-of-control banks by corrupt political elites.
The global bond market had an estimated value of $82.2 trillion in 2009.
Greek elected officials paved the path to their nation’s economic collapse by trading political favors for money and power, much as their American counterparts have done, and by allowing treasonous elites to avoid paying their fair share of taxes. They tolerated rampant corruption and used public services as political spoils.
Here in the U.S., control of the two main political machines has fallen into the hands of a similar generation of wealthy trash, which views leadership as a coronation instead of a responsibility. They routinely subordinate the greater good to their own interests and view their regulatory responsibilities as an opportunity to legally extort protection money from predatory industries like cable television, energy, health care, banking and for-profit colleges.
“Greece is getting screwed exactly the way we’ve been getting screwed,” said protester Chris Guerra (right) of Newark, N.J. “And if we wind up in the same shape as Greece the whole world is screwed.”
The European Union hopes to finalize the $171 billion financial rescue plan Monday to avert the region’s first sovereign default. Much of that bailout money will come from taxes paid by the 99% in other European countries. It’s the second bailout in as many years for Greece.
Greece needs the European bailout to make debt repayments due March 20. The deal will still leave Greek’s total debt at about 129% of its economic output in 2020, compared with 160% last year, according to Reuters.
It includes $427 million in additional austerity cuts, which push the total savings package so far to $4.3 billion. That’s $380 per person for a nation whose population of 11.3 million is about the size of Buenos Aires.
The new cuts include 12% reductions in some government pension payouts. They follow public sector layoffs, a reduction in the minimum wage and tax hikes that already have sent Greeks reeling.
Unemployment is at 21% and job loss has forced some people to live on the streets and become panhandlers. The size of the Greek economy has contracted by 16% since 2008.
Angry youths torched and damaged 93 buildings in Athens last week. More than a thousand protesters marched on their own Parliament this weekend.
“We are caught in a vicious circle,” Zoe Rapti, a 43-year-old teacher, told Reuters. “Austerity brings more and more measures. In a few months they’ll be taking more from our pockets.”
Greeks have lost faith in their own elected leaders and are looking to clean house in their April elections. The two political parties that have dominated modern Greece received about 24% support between them in a recent survey. They’re done.
European Union officials are trying to structure the bailout to prevent the next administration from responding to the will of voters by upending it.
That’s made the current Greek leaders even more unpopular people in their own country and led to an escalating war of words with German leaders. Germany has the most powerful national economy in the European Union, which has 27 member nations. Seventeen share a common currency in the Euro.
German Finance Minister Wolfgang Schaeuble has described Greece as a bottomless pit.”
Greek Public Order Minister Christos Papoutsis decried the bailout negotiations Thursday as “sheer blackmail.”
Greece finds itself in a financial corner due partly to one of the innate hazards of the government bond market, which is that borrowing costs escalate as a nation gets into trouble. That leaves less and less to spend on the 99% the borrowing is supposed to be about.
“There are some financial and political elites in Greece and here in the United States who are benefitting from this situation,” said Despina Lalaki, a 39-year-old sociology professor in New York City. “It is not very different than what is happening all over the world and what is happening here in the United States.”
If the bailout is approved, Greece can slow this downward cycle by cutting the face value of the amounts it owes to investors in half. In theory, that reduction should drop the costs of borrowing and the risk of default associated with the rest of its debt.
There has been talk of bondholders accepting a 70% markdown in the value of their holdings as part of the bailout deal. That’s still a long way from the 100% loss they could suffer in a sovereign default.
Bonds are securities that borrowers sell to investors, which are paid from a stream of future revenue, such as taxes, corporate sales or bridge tolls. The investors receive a promise that they will be repaid more than they lend in exchange for the use of their money.
The amount of additional money repaid to bondholders varies with the risk associated with the investment and the availability of investment dollars. A borrower that’s considered a solid risk, such as the United States government or General Electric, pays less to borrow money in the bond market than one that’s comparatively unstable, like North Korea, Syria, Greece or a floundering company like Gannett Company Inc., which laid off 700 employees in 2011 while increasing executive compensation.
The difference between a bond issuer and a normal person looking for a loan is that a bond issuer sets the terms of the transaction and convinces lenders to come to them, whereas a normal person has to approach lenders. When the terms of a bond issuance fails to draw interest from buyers, issuers (aka borrowers) typically sweeten them.
The 250-member crowd at Saturday’s protest was modest by Occupy standards. Occupiers blamed the cold weather, which was in the low 40s, and warned of big things to come in the spring. They said the movement has been using the winter down time to become better organized.
“Right now, it’s just too cold, but we are still together and our numbers have grown,” said Christopher Reider (left), 50, an unemployed construction worker from Long Island. “We need social change and we need to get the money out of politics and somebody has to put the legwork in to make that happen. That’s what Occupy is doing.”
Revolt of the Elites
The worldwide economic slowdown didn’t start out as a grab for wealth from the 99% by elites, but that’s what it’s turning into. The seeds of the crisis were planted when rule-changes allowed banks to play the stock market ponies with huge sums of borrowed money and bond professionals started bribing politicians to generate more commissions via needless government borrowing.
This reckless behavior was fueled by a huge drive to securitize everything from weather patterns to carbon emissions so they could be borrowed against and bet against by the financially literate.
When the game worked, investors in the 1% took a disproportionate share of the benefits. When it didn’t, they sought to shift the burdens to the 99%.
And that’s what’s happening in Greece and around the world in a nutshell.
The very investors which tried to secure huge returns by betting on risky Greek bonds are now seeking to escape the risks associated with those bad bets. In classic 1% fashion, they want the benefits of financial risk without the burdens.
When credit markets ground to a halt in 2009, the price for buying risky government and corporate bonds skyrocketed and some investors saw it as an opportunity to rack up windfall profits. Investors who made bad bets, like former New Jersey Gov. Jon Corzine’s MF Global, were able to walk away from their commitments via bankruptcy. MF Global filed for bankruptcy protection Oct. 31 after investing $6 billion in European sovereign bonds.
National populations enjoy no such protection so long as banking interests can block an outright government default.
The current situation at for-profit colleges here in the U.S. is typical of this nonsense. Students cannot escape their tuition debt by filing for bankruptcy protection, but the schools who profit by duping them out of their student loan money are allowed to do so.
Despina Lalaki, who was raised in Greece, said stopping the exploitation of the 99% by the 1% is the first step toward making the world a more democratic place. That begins with representative democracy and proper bank regulation.
“In Greece, and in a lot of other societies, we forgot the fundamentals of how to be a society,” she said. “This is the start of going back to that.”