Tag: Greece

By NY Brit Expat

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only (Charles Dickens, 1859, A Tale of Two Cities, Book I, Chapter 1).”

All that is left for Greece is to eat worms and it still would not satisfy Kaiser Merkel. #ThisIsACoup

A list of draconian new austerity demands handed to the Greek government in Brussels Sunday ignited a global backlash against Germany, German Prime Minister Angela Merkel and finance minister, Wolfgang Schaeuble.

#ThisIsACoup became the top trending hashtag on Twitter worldwide – and is #1 in Germany and Greece.

The tag was attached to tens of thousands of angry comments denouncing Germany’s aggressive demands that the Greek parliament pass new severe austerity laws within days to raise taxes, privatize public assets and cut back on pensions. [..]

Here are the EU proposals that outraged many around the globe:

1. Streamlining the VAT

2. Broadening the tax base

3. Sustainability of pension system

4. Adopt a code of civil procedure

5. Safeguarding of legal independence of ELSAT – the statistic office

6. Full implementation of spending cuts

7. Meet bank recovery and resolution directive

8. Privatize electricity transmission grid

9. Take decisive action on non-performing loans

10. Ensure independence of privatization body TAIPED

11. De-Politicize the Greek administration

12. Return of the Troika t0 Athens (the paper calls them the institutions)

Those are the demands that must be approved by Wednesday. The only thing they forgot to ask for is resignation of the prime minister, his cabinet and the Greek parliament.

From Ian Welsh

Basically the Greeks offered the EU everything they had asked for before and then some, but the EU won’t take it, they want their pound of flesh for being embarrassed by the referendum.

I get that Syriza and some Greeks don’t want Grexit, and will do virtually anything to avoid it, but I’m hoping (probably vainly) that there might be some depths to which they will not sink, some abasement they will not endure, some calamity they will not inflict upon the weakest and poorest in their own society.

Probably not. Not quite sure why I still have faith in humanity to ever do the right thing when any other option exists.

“OK, now that you’re crawling, down on your belly!”

Worms.

On Sunday Greek voters went to the polls to vote on a simple referendum on a bail out deal proposed by the country’s international creditors, which demanded new austerity measures in return for emergency funds. A simple yes or no. The voters gave a resounding NO to the deal.

The win for the “no” camp constituted a major victory for Greek Prime Minister Alexis Tspiras, who had campaigned heavily against the deal put forward by the European Central Bank, the International Monetary Fund and the European Commission. But it also raised uncertainty about the country’s financial future and its place in the eurozone.

“Even in the most difficult circumstances, democracy can’t be blackmailed — it is a dominant value and the way forward,” Tsipras tweeted on Sunday night, adding that Greece intends to restart negotiations with Europe next week.

A final tally of votes indicated that 61.31 percent of voters decided against the bailout deal. More than 60 percent of Greeks participated in the vote, well over the 40 percent turnout needed for the referendum to be valid.

Needless to say the responses to the vote and PM Tspiras’ decision to attempt to negotiate better terms cams fast and furious. First, Greece’s radical and outspoken Finance Minister Yanis Varoufakis resigned, stating that he had been made aware that his “style” was considered disruptive:

Mr. Varoufakis, an academic with no political experience before he joined the leftist Tsipras government, had consistently argued that Greece desperately needed debt relief more than anything else. While that view was shared by many economists, he quickly became a lightning rod among Greece’s creditors for his aggressive negotiating style and heated language. Before the referendum vote, he had publicly accused the creditors of “terrorism” against his country.

With Mr. Varoufakis gone, Greece’s eurozone creditors may be more willing to continue negotiations on a further aid package. His departure, apparently at the urging of Mr. Tsipras, could be seen as a concession to the sensibilities of other eurozone leaders. But the next few days could determine whether the gulf between Greece and its creditors is now too wide to bridge.

You can read his resignation statement here. He has been replaced by Euclid Tsakalotos, another academic economist, but not as vocal as Mr. Varoufakis and, apparently, more acceptable to Eurogroup participants.

Next came the markets’ reactions, not drastic but not good, either:

Global stock markets mostly dropped on Monday but did not plunge, as investors reacted with muted dismay to the results of the Greek referendum and showed nervousness about steep declines in China’s stock market over the past three weeks. [..]

At midday in New York, stocks were just below break-even. The Dow Jones industrial average was down 0.2 percent, while the Standard & Poor’s 500-stock index was off 0.3 percent.

The euro ticked down 0.4 percent to $1.1033.

Oil prices also fell on Monday, as traders placed bets that recent events could lead to slower global economic activity and weaker demand. [..]

In Asia on Monday, the Shanghai market jumped sharply in early trading as the Chinese government poured money into brokerage firms to help them and their customers buy shares. The market leapt 7.8 percent at the start, but it surrendered half of those gains in the first 10 minutes of trading and closed 2.4 percent higher. The smaller Shenzhen stock market also started strongly but fell 2.7 percent by the end of trading.

And the vote has only served to harden German Chancellor Angela Merkel’s stand:

The German government signaled a tough line towards Greece on Monday, saying it saw no basis for new bailout negotiations and insisting it was up to Athens to move swiftly if it wanted to preserve its place in the euro zone.

With opinion towards Greece hardening in Germany’s ruling coalition following the landslide rejection of European bailout terms in a Sunday referendum, the government indirectly raised the prospect of a Greek exit from the currency bloc.

Chancellor Angela Merkel’s spokesman said it was up to Athens to act so that it could remain in the currency bloc, and Vice Chancellor Sigmar Gabriel went further by saying the Greek government needed to improve on its previous proposals. [..]

Pressed on what concessions Berlin might be willing to make to Tsipras, a finance ministry spokesman dismissed the idea of a debt restructuring sought by Athens and favored by the International Monetary Fund (IMF).

Economic and political pundits responded as well:

Thomas Piketty: Germany Shouldn’t Be Telling Greece To Repay Debt

Thomas Piketty isn’t mincing words when it comes to the Greek debt crisis.

In an interview with German newspaper Die Ziet last month (and translated recently by business analyst Gavin Schalliol), the leading French economist pummeled Germany for its hypocrisy in demanding debt repayment from Greece. [..]

Greece on Sunday voted a resounding “no” on a bailout plan proposed by its creditors, making its continued membership in the eurozone more tenuous. German Chancellor Angela Merkel and French President Francois Hollande will hold an emergency summit on Tuesday to discuss the crisis.

But Piketty, who penned the blockbuster 2013 book on income inequality Capital in the Twenty-First Century, slammed conservatives who favor the economic austerity measures Germany and France are demanding of Greece, saying they demonstrate a “shocking ignorance” of European history.

“Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted,” Piketty said. “The first lesson that we can take from the history of government debt is that we are not facing a brand new problem.”

Germany, Piketty continued, has “no standing” to lecture other nations about debt repayment, having never paid back its own debts after both World Wars (pdf).

Nobel Prize winning economist and New York Times columnist, Paul Krugman, also “cheered” the vote:

The truth is that Europe’s self-styled technocrats are like medieval doctors who insisted on bleeding their patients – and when their treatment made the patients sicker, demanded even more bleeding. A “yes” vote in Greece would have condemned the country to years more of suffering under policies that haven’t worked and in fact, given the arithmetic, can’t work: austerity probably shrinks the economy faster than it reduces debt, so that all the suffering serves no purpose. The landslide victory of the “no” side offers at least a chance for an escape from this trap.

Renowned dissident Noam Chomsky spoke with [Democracy Now! ]’s Amy Goodman back in March aboutGreece and Spain the “savage response” to taking on austerity calling it a “class war.”

The “what next” is still very unknown. From Yves Smith at naked capitalism

After the momentous “No” vote in support of the Greek ruling coalition Greece’s lenders and most important, the Eurozone leaders of the countries that have made 60% of Greece’s outstanding loans, are officially still figuring out what to do. Merkel is going to Paris to confer with Hollande today. The Eurogroup has set a meeting for tomorrow at 1:00 PM

However, despite the responses of media outlets and many pundits that the Eurocrats will have to beeat a retreat and offer Greece concessions, it’s not clear that this event strengthens the Greek government’s hand with its counterparties. Remember, Tsipras enjoyed popularity ratings of as high as 80% and has always retained majority support in polls. And it’s all too easy to forget that “the creditors” are not Merkel, Hollande, Lagarde and Draghi. The biggest group of “creditors” are taxpayers of the 18 other countries of the Eurozone. The ugly design of the Eurozone means that the sort of relief that Greece wants most, a reduction in the face amount of its debt (as opposed to the sort of reduction they’ve gotten, which is in economic value, via reductions in interest rates and extensions of maturities) puts the interest of those voters directly at odds with those in Greece. Our understanding is that a reduction in principal amount, under the perverse budgetary and accounting rules of the Eurozone, would result in those losses showing up as losses for budget purposes, now. They would need to be funded by increased taxes. Thus a reduction in austerity for Greece, via a debt writeoff, simply transfers austerity from Greece to other countries. It’s not hard to see why they won’t go for that. And Eurozone rules require unanimous decisions.

Even though the ruling coalition had said it wanted to restart negotiations immediately upon getting a “no” vote, the lenders have asked Greece to send a new proposal, apparently deeming the one it submitted on June 30 to be out of date. It’s doubtful anything will happen before the Eurogroup meeting tomorrow.

The Greeks have said enough! Hope has defeated fear and SYRIZA has won the election and have beaten New Democracy and the fear-mongers, as expected.  This is a major victory for anti-austerity forces which could change the economic and political landscapes.

However, they did not win an outright majority (they were short 2 seats) and were forced into coalition with a right-wing, nationalist (pro-Greek Orthodox) anti-austerity party, the Independent Greeks (referred to as ANEL from now on).  

Irrespective of this, we do have quite a lot to celebrate! The election of SYRIZA is a shot directly across the bow of neoliberalism and its flagship of ideas, aka as the austerity project. The European ruling class (which includes mainstream political leaders) are a wee bit shaken especially Germany.  Whether or not the Troika is forced to negotiate the debt successfully, this is a victory and it is forcing the ruling class in Europe to take stock over whether austerity (and destroying the working class) is more important than the EU project. The stakes are literally that high!  

I was thinking of writing about the Charlie Hebdo massacre which culminated in an anti-Semitic attack in a Kosher Supermarket leading to the deaths of Jewish shoppers.  I was considering addressing the issue of why we should have solidarity with the victims even though I found their articles racist and the errors of secular extremism adopted by the French left, done so well here; really, does anyone really think that deserves execution? I was going to talk about my deep fears and worries for French Muslims and the inevitable security measures that will be introduced that will affect the freedoms of French citizens and how those would be used against ethnic and religious minorities and possibly against French political dissidents. I also was considering discussing my anger at Hollande’s keeping Netanyahu updated on the situation in the supermarket.

This is the same Netanyahu whom is urging French Jews to emigrate to Israel and who was part of those leading a “national unity” march today in Paris and that Netanyahu represents no one but those that voted for him, much less the Jews living outside of Israel that he is encouraging to move to Israel which is engaged in a constant state of war. What is this saying to French Jews, and for that matter, all Jews living outside of Israel?

Are they actually implying that Netanyahu in some way represents all Jews?!  Sorry, this man does not and will never speak for me … putting my anger at this aside for the moment, we actually have something positive to discuss!

I decided to go for a story that actually could shift Europe in a positive direction and that is the upcoming Greek elections on January 25th.  Following the failure to elect a President in Greece, Samaras was forced into snap elections (http://www.theguardian.com/world/2014/dec/29/greece-crisis-president-snap-election).

According to all polls (and these, alas, are notoriously unreliable in Greece as they are often commissioned by the political parties themselves) it looks as though SYRIZA will come in first.

This means that they will be granted 50 seats to help them make a government.  However, the issue does not appear to be whether they will win, but whether they will win with 151 seats to ensure a majority in Parliament. If they do not win that majority, things are up in the air as an understatement.  

Former Greek Prime Minister of Greece George Papandreou inherited a failing economy when he was sworn in on October 9, 2009. He resigned two years later during failed talks of a bailout with the “troika” of the International Monetary Fund (IMF), the European Central Bank and the European Union. Mr. Papamdreou discussed the cost of austerity with Chris Hayes, the host of “All In,” economics journalist Chrystia Freeland, managing director and editor of Consumer News at Thomson Reuters, and  economics professor Radhika Balakrishnan,  executive director of the Center for Women’s Global Leadership at Rutgers University.

In the news today, Greek Finance Minister Yannis Stournara announced that Greece had reached an agreement on economic measures for the release of €2.8bn in the coming weeks, followed by a further €6bn in May. The cost to bail out the banks: some 15,000 employees would be fired by 2015 with 4,000 redundancies by the end of the year.

Meanwhile Greek unemployment has reached a record high:

Greece’s unemployment rate reached a new record of 27.2 percent in January, new data has showed, reflecting the depth of the country’s recession after years of austerity imposed under its international bailout. [..]

The jobless rate has almost tripled since the country’s debt crisis emerged in 2009, and was more than twice the eurozone’s average unemployment reading of 12 percent. [..]

Unemployment among youth aged between 15 and 24 stood at 59.3 percent in January, up from 51 percent in the same month in 2012.

Despite the “happy talk” from Prime Minister Antonis Samaras about this deal showing that the six years of austerity was paying off, the people of Greece are not very optimistic and are still suffering under the weight of EU demands for more austerity.

It may be my masochism, but I actually watched the Presidential debates. I also regularly watch the news over here in the UK. Cameron and his cronies constantly spout this argument that governments cannot create economic growth. During the Presidential debates, Mitt Romney even went a step further; he argued that governments cannot create employment. The Tory argument is a bit more sophisticated, but both arguments have their roots in the fantasies of neoliberal economics of which both the Tories and the Republicans have adopted in its most fundamental form; their arguments also tie into the perspective of reduction of the central government budgets along the lines demanded by the IMF and the introduction of austerity measures to ensure these results. Except, and this is a big exception, neither of these governments have been forced to do so by the IMF.

Given that these statements are not only historically inaccurate, but bordering on the patently absurd, it never ceases to amaze me that challenge from the mainstream media is not forthcoming. Even more so, during the debate, President Obama did not respond to the absurd statement by Romney; in fact, he also raised budget deficit reduction which essentially means cutting state employment and social services. The Labour Party does not disagree with the Tories; they only say that austerity must be done more slowly and Ed Balls (the shadow Chancellor of the Exchequer) has said at the Labour Party conference that, if elected, they had no intension of reversing the austerity measures forced upon the British populace by the Con-Dem government.  Essentially, all of the mainstream parties are singing the same tune; honestly, different tonalities of the same argument do not change the fact that the underlying tune is the same.



To someone that is living in the real world, in other words, someone that actually heard about the New Deal, that knows the role of government in ensuring economic growth during the post-war period in Europe, who knows damn well that state (or public) sector workers exist and that the government’s purchase of goods and services from the private sector and investment in the private sector help to ensure economic growth it makes me wonder if they think that we are extremely stupid.  

Spain has announced its budget that imposes more austerity that emphasizes spending cuts over revenue:

Government ministries saw their budgets slashed by 8.9 percent for next year, as Prime Minister Mariano Rajoy’s battle to reduce one of the euro zone’s biggest deficits was made harder by weak tax revenues in a prolonged recession. [..]

“This is a crisis budget aimed at emerging from the crisis … In this budget there is a larger adjustment of spending than revenue,” Deputy Prime Minister Soraya Saenz de Santamaria told a news conference after a marathon six-hour cabinet meeting.

Spain, the euro zone’s fourth largest economy, is at the centre of the crisis. Investors fear that Madrid cannot control its finances and that Rajoy does not have the political will to take all the necessary but unpopular measures.

Madrid is talking to Brussels about the terms of a possible European aid package that would trigger a European Central Bank bond-buying program and ease Madrid’s unsustainable borrowing costs. [..]

The measures continue to heap pressure on the crisis-weary population and are likely to fuel further street protests, which have become increasingly violent as tensions rise and police are given the green light to use force to disperse crowds.

A quarter of all Spanish workers are unemployed and tens of thousands have been evicted from their homes after a burst housing bubble in 2008 and plummeting consumer and business sentiment tipped the country into a four-year economic slump.

Analysis of the budget from Trevor Greetham at The Guardian‘s Live Blog compares Spain to the US and the UK:

I’ve always opposed austerity as the solution to the global debt crisis and the strictures of the common currency make it particularly ill-suited to the euro periphery. Efforts to deflate Spain into competitiveness raise the prospect of many years of wage cuts and property price falls that will necessitate ever larger fiscal transfers from the stronger countries, either directly or via pan-euro institutions like the central bank.

Five years into the worst financial crisis in generations we are starting to see how effective various policies have been. Spain, the UK and the US offer three interesting test cases, each dealing with the after effects of a real estate bust in different ways:

· Spain = austerity with tight money (austerity, no devaluation, no quantitative easing, market interest rates too high)

· UK = austerity but with loose money (austerity, currency devaluation, quantitative easing)

· US = no austerity with loose money (no austerity, stable currency, quantitative easing)

Activity in both the UK and Spain remains well below its pre-crisis level – suggesting the benefits of the UK printing its own currency may not be as great as might be supposed. It appears to be the lack of austerity in the US that is the distinguishing aspect of a successful policy mix.

With overall unemployment at 25% and the rising cost of food through increases in value added taxes (VAT), the many of the Spanish poor and unemployed have resorted to scavenging for food shocking many of their fellow citizens:

MADRID – On a recent evening, a hip-looking young woman was sorting through a stack of crates outside a fruit and vegetable store here in the working-class neighborhood of Vallecas as it shut down for the night.

At first glance, she looked as if she might be a store employee. But no. The young woman was looking through the day’s trash for her next meal. Already, she had found a dozen aging potatoes she deemed edible and loaded them onto a luggage cart parked nearby. [..]

Such survival tactics are becoming increasingly commonplace here, with an unemployment rate over 50 percent among young people and more and more households having adults without jobs. So pervasive is the problem of scavenging that one Spanish city has resorted to installing locks on supermarket trash bins as a public health precaution.

A report this year by a Catholic charity, Caritas, said that it had fed nearly one million hungry Spaniards in 2010, more than twice as many as in 2007. That number rose again in 2011 by 65,000. [..]

The Caritas report also found that 22 percent of Spanish households were living in poverty and that about 600,000 had no income whatsoever. All these numbers are expected to continue to get worse in the coming months.

About a third of those seeking help, the Caritas report said, had never used a food pantry or a soup kitchen before the economic crisis hit. For many of them, the need to ask for help is deeply embarrassing. In some cases, families go to food pantries in neighboring towns so their friends and acquaintances will not see them.

Expect to see more demonstrations like these as hunger increases:

 

European Central Bank president Mario Draghi won the approval of the German court to implement his [plan to buy up the bonds of ailing Eurozone members and the Netherlands rejected ant-euro candidates in Parliamentary elections www.nytimes.com/2012/09/14/world/europe/european-union-celebrates-german-and-dutch-decisions.html?_r=1&ref=europe]:

PARIS – There was a general sigh of relief in the European Union this week. The cause was not better performance in the troubled and highly indebted southern countries of the euro zone, but crucial decisions made in the rich northern nations with perfect credit ratings, where skepticism about the common currency is running high.

On Wednesday, the German Constitutional Court found a way to declare that the permanent bailout fund, the European Stability Mechanism, is legal, clearing the way to use it in time to recapitalize troubled banks as well as governments. And the Dutch voted for mainstream parties in a parliamentary election, choosing not to be enticed by parties wanting to leave the euro.

Combined with the European Central Bank’s decision to restart its bond-buying program in return for more budget discipline, immediately lowering interest rates on Italian and Spanish bonds, European leaders could begin to feel that perhaps the worst is over in the euro crisis, at least for now.

The markets also “cheered” Federal Reserve president Ben Bernake’s open ended third round of quantitative easing (QE-3, not a criuse ship)

The Fed on Thursday said it would buy $40 billion of mortgage-backed securities every month until the labor market improves. The rate-setting Federal Open Market Committee, or FOMC, also said it plans to keep its federal funds rate near zero though at least mid-2015.

“While we will hear a lot of criticism on the FOMC’s aggressive moves, we shouldn’t forget that for markets, it usually doesn’t pay to fight the Fed,” wrote strategists at KBC Bank in Brussels.

The S&P 500 SPX on Thursday ended 23.43 points higher at 1,459.99, a 1.6% rise, and its highest finish since 2007. The Dow DJIA jumped 206.51 points to close at 13,539.86. The Nasdaq Composite Index COMP rose 41.52 points to 3,155.83.

From a technical standpoint, the Fed-inspired rally drove the S&P 500 above key resistance in the 1,440 to 1,445 range, said analysts at Credit Suisse. They now see room for the index to rise toward the 1,480 level or possibly 1,500 during the next one to six months.

Greece may get some wiggle room to find its way out of it financial crisis:

The Fed on Thursday said it would buy $40 billion of mortgage-backed securities every month until the labor market improves. The rate-setting Federal Open Market Committee, or FOMC, also said it plans to keep its federal funds rate near zero though at least mid-2015.

“While we will hear a lot of criticism on the FOMC’s aggressive moves, we shouldn’t forget that for markets, it usually doesn’t pay to fight the Fed,” wrote strategists at KBC Bank in Brussels.

The S&P 500 SPX on Thursday ended 23.43 points higher at 1,459.99, a 1.6% rise, and its highest finish since 2007. The Dow DJIA jumped 206.51 points to close at 13,539.86. The Nasdaq Composite Index COMP rose 41.52 points to 3,155.83.

From a technical standpoint, the Fed-inspired rally drove the S&P 500 above key resistance in the 1,440 to 1,445 range, said analysts at Credit Suisse. They now see room for the index to rise toward the 1,480 level or possibly 1,500 during the next one to six months.

These latest actions may have aided Spain’s economy, as well, but not to the extent that they won’t have to ask the ECB for help:

The turnaround has been so dramatic that it’s allowed Spain, one of the most badly affected countries, to suggest that it may not need aid after all.

“I don’t know if Spain needs to ask for it,” Spain’s Prime Minister Mariano Rajoy told parliament on Wednesday, referring to external aid.

But according to Nicholas Spiro, managing director of Spiro Sovereign Strategy, even though the ECB bond plan is “working wonders,” it won’t prevent Spain from eventually seeking a bailout.

Insanity: doing the same thing over and over again and expecting different results.

~Albert Einstein~

Europe losing battle against debt crisis

Europe is fighting losing battles on two fronts. The debt crisis which began in Greece almost three years ago has spread to other countries. The recovery from the global financial crisis is ending, and the region will be in recession during the rest of the year. To combat the debt crisis, Greece, Ireland and Portugal have received bailout funds from the EU, European Central Bank and the International Monetary Fund (the “troika”), but are required to reduce borrowing through cuts in spending and higher taxes. To offset the recessionary impact of the fiscal tightening, the ECB has repeatedly eased monetary policy to encourage lending to the private sector.

Neither measure has worked as intended. The eurozone’s latest unemployment figure of 11.1 per cent in May is the highest in the euro era. Spain, the country recording the region’s highest unemployment rate of 24.6 per cent, announced a €65bn fiscal tightening programme this month. The new austerity measures will result in a deeper recession and even higher unemployment.

On the monetary front, the ECB implemented two repurchase agreements totalling €1tn with the region’s banks. While the aim was to ease the liquidity crisis that the banks experienced in November, the ECB move had the perverse impact of making those banks the principal purchasers of their own governments’ debt as foreign investors exited. This raises the risk for banks in case their governments default on their debt, or restructure payments. After a cut in the deposit rate the ECB pays the banks to zero on July 5, the central bank expected the banks to increase loans. Instead, they appear to be sitting on the funds.

The austerity measures that Germany has insisted on imposing on financially strapped countries as a requirement for bailing out the banks that caused it all, is coming back to bite the hand that fed it.

Germany Under Cloud From Euro Zone Woes

FRANKFURT – Germany’s stellar credit rating has been thrown into doubt because of the cost of holding together the euro zone, potentially making it more difficult for Chancellor Angela Merkel to muster political support to aid Greece and Spain.

Moody’s Investors Service said late Monday that it was changing the outlook on Germany, as well as on the Netherlands and Luxembourg, to “negative,” citing what it said was an increased risk that those countries will have to bear the cost of propping up Spain and Italy.

That helped push up borrowing costs Tuesday for both Germany and Spain ahead of talks late in the day between the finance ministers of both countries in Berlin.

While Germany’s bond yields remain near record lows, Spain’s have reached levels that are considered unsustainable for long, raising fears that it will have to ask for aid that its European partners cannot afford.

Austerity’s Big Winners Prove To Be Wall Street And The Wealthy

Governments in Europe, most notably the United Kingdom, have also pursued tax cuts for the rich while imposing austerity measures on the working classes. And the European financier class has benefited even more directly than their American counterparts from these budgets.

Every time the European Union has reached a crisis point on the debt carried by Greece or Spain, EU leaders, especially German Chancellor Angela Merkel, have come to the rescue with bailout funds. That money goes to the banks that own Greek and Spanish debt, whose holdings would take a hit if either country were unable to repay. But the bailout comes with harsh austerity requirements intended to encourage budgetary discipline, so it’s ordinary citizens who end up taking the hit. The most vulnerable populations are harmed by the bailouts, while the well-paid financial professionals who made the deals to finance Greek and Spanish deficits in the first place continue profiting handsomely.

“Imposing pain on Greeks is … a blood price for the ever-repeated bailouts whose actual beneficiaries are said to be Greeks, but are in fact French and German bankers,” said (James) Galbraith.

Eventually it will all come to an end. Then what?