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AdLib On May - 5 - 2010

There is something sadly symbolic in the birthplace of democracy being destroyed by banks. The domination of corporatism over democracy across the world, using the freedom of democracy against itself, is a sad, terrorist type strategy that has unfortunately succeeded to date.

a. Greece created the roots of democracy.

b. Goldman Sachs helped destroy Greece’s economy.

c. Goldman Sachs has helped to destroy the roots of democracy.

Okay, it may be a bit of a reach but you get the symbolism here.

In a nutshell, what GS did was conspire with the corrupt government in Greece to fraudulently hide debt. Then, being the slime covered weasels that they are, GS turned around and bought into credit default swaps against Greece, meaning, they bet against Greece ever being able to pay off their debts which they helped Greece hide.

An allegory would be like a mechanic helping someone hide that their transmission is about to go out so they can sell their car to an unsuspecting person, then the mechanic announces publicly that he is betting against the car being in good running order.

When banks do these credit default swaps, it is publicly known in the financial world. It can be and was in the case of Greece, a fait d’accompli, causing the failure it’s betting will happen. With the financial world, including those with the most intimate knowledge of Greece’s finances, betting that Greece would fail to pay their debts, they insured that Greece would indeed fail. Naturally, the public knowledge of this chased away money from investing in Greece, preventing Greece from being able to pay towards its debt.

So Greece went bankrupt. And Goldman Sachs made an enormous sum for helping Greece try to hide its debt then made an enormous sum betting against Greece being able to pay all of its debt.

Greece had been operating irresponsibly, deficit spending enormously for many years with no regard for a day of reckoning but Goldman saw them as an easy mark and juiced them dry, coming and going, laughing and bonusing to themselves as Greece collapsed.

There are many differences between Greece’s situation and America’s but what’s happening there should be seen as a warning of what could happen here.

Primarily, since Greece is on the Euro, they couldn’t do what America did to address a lack of money, that is, just print more. Other than that, read this description below about Greece and consider how it may apply to the U.S.:

Greece has been living beyond its means in recent years, and its rising level of debt has placed a huge strain on the country’s economy.

The Greek government borrowed heavily and went on something of a spending spree during the past decade.

Public spending soared and public sector wages practically doubled during that time.

However, as the money flowed out of the government’s coffers, tax income was hit because of widespread tax evasion.

When the global financial downturn hit, Greece was ill-prepared to cope.

http://news.bbc.co.uk/2/hi/business/8508136.stm

Greece, now at the mercy of the banks and the EU and IMF for survival has had to apply severe austerity plans to its nation, as demanded by them. The cuts of services and huge rises in taxes have destabilized their nation and society. As reported today:

3 dead as anti-austerity riots erupt in Athens

AP

By DEREK GATOPOULOS and ELENA BECATOROS, Associated Press Writer Derek Gatopoulos And Elena Becatoros, Associated Press Writer 59 mins ago

ATHENS, Greece – Riots over harsh new austerity measures left three bank workers dead and engulfed the streets of Athens on Wednesday, as angry protesters tried to storm parliament, hurled Molotov cocktails at police and torched buildings. Police responded with barrages of tear gas.

Tens of thousands of people took to the streets in a nationwide strike to protest new taxes and government spending cuts demanded by the International Monetary Fund and other European nations before heavily indebted Greece gets a euro110 billion ($141 billion) loan package to keep it from defaulting.

The three bank workers — a man and two women — died after demonstrators set their bank on fire along the main demonstration route in central Athens.

On the streets of Athens, demonstrators chanted “Thieves, thieves!” as they attempted to break through a riot police cordon guarding Parliament and chased ceremonial guards away from the Tomb of the Unknown Soldier in front of the building.

Tear gas drifted across the city center as rioters hurled paving stones and fire bombs at police. Firefighters extinguished blazes at least two buildings — the bank and a branch of the Finance Ministry — while protesters set up burning barricades and torched cars and a fire truck.

The marches came amid a 24-hour nationwide general strike that grounded all flights to and from Greece, shut down ports, schools and government services, and left hospitals working with emergency medical staff. The Acropolis and all other ancient sites were closed and journalists also walked off the job, suspending television and radio news broadcasts.

Violence also broke out in the northern city of Thessaloniki, where another 20,000 people marched through the city center and some youths smashed store windows.

Some fear the austerity measures insisted upon by the EU and IMF could make prospects for growth even worse.

“These people are losing their rights, they are losing their future,” said Yiannis Panagopoulos, head of GSEE, one of the two largest unions. “The country cannot surrender without a fight.”

Again, Greece is not innocent in this economic disaster, the government did dig a massive financial hole for itself on its own…Goldman Sachs just took a bundle from them to spread a blanket over the hole to hide it then took out accident insurance on Greece before pushing Greece into the hole. Ain’t capitalism grand?

The mercenary, corporate plundering of societies and nations around the world must either be reigned in or the fate of Greece may be the eventual fate of most nations and people. Banks and corporations will dictate how society operates and how people must live if most become financially beholden to them.

It would be ironic if the birthplace of democracy was ground zero for the death of it. In the U.S., democracy can be rescued by releasing it from the choke-hold of banks and corporations. Supporting a strong financial reforms bill and contacting your congresspeople to do the same would be something meaningful that could be done in the short term.

In the long term, corporate control in our political system needs to be broken. Addressing the SCOTUS/Citizens United decision, campaign finance reform and restricting lobbying should all be on the plate.

And enforcing the law against these crime lords running Wall Street wouldn’t exactly hurt either.

Written by AdLib

My motto is, "It is better to have blogged and lost hours of your day, than never to have blogged at all."

23 Responses so far.

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  1. Khirad says:

    Sometimes music captures the essence best (or is a thin pretense to post my favorite Greek group, you decide),

    Daemonia Nymphe -- Daemonos


    In any case, I think this whole situation with Greece internally and GS exacerbating it is one of those things that can’t be remedied by putting Windex on it.

  2. choicelady says:

    Marion -- I’ve read a lot about the Greek public, ummm, employment plans. But much of that comes from a private sector that will not hire. Obviously it’s foolish in the long run, but it’s precisely what Tammany Hall was about -- finding some way to keep people working (sort of) when the nation was crushed by depressions every 3-8 years.

    There are no clean hands here, and Germany is hollering that they are bailing out the idle public employees, but in contemporary corporatocracies -- what ARE people to do if the private sector will not hire its own people?

    Back to the Global Plan of 1975 -- the Trilateral Commission’s hired statement on what nations need to do to compete. If you can find an old, used copy of “Crisis of Democracy” it spells out the systematic erosion of developed nations’ economies to make way for dirt cheap labor. It proposed that private sector jobs all go to the lowest expense and that middle class jobs were expendible. Countries such as Greece were the first to feel the hit.

    No one will lie down and die (thought the RW would like that). People find a means to keep on keepin’ on. In this case it was national in scope -- “Gangs of New York” was how we did it in the 1800s in the US. Crime, graft, grifters, phoney public employement -- whatever it takes. People will NOT lie down and die.

    Suddenly the Euro doesn’t look so hot. Suddenly the EU doesn’t look so hot. Suddenly the global market doesn’t look so hot. This was all predicted in 1973 (before the Trilaterla Bible was written) in Barnett and Mueller’s “Global Reach”. They SAID these things would happen. We did not listen. Well, OK some of us did, but we were not people in power.

    I’m not all in favor of Balkinization, but there are reasons for borders that have to do with history AND with economic self sufficiency. Small IS Beautiful (if you have not read the book, please do) and what is most sustainable is that which is divorced from the global market in terms of sovereignty. We can buy and sell, trade, exchange, whatever -- but we all need a base from which we have surety and stability.

    So Greece made some bad decisions based on need, and they got screwed by GS. If GS had not entered the picture and been dishonest, Greece STILL might have run out of money, but it would have been nowhere this awful.

    I have always wanted to be there -- this cradle of my Western civilization. I hope upon hope that they do NOT go as they did in the 60s with a military junta. I could barely stand “Z” (if you have not seen that film, please do -- and keep a Kleenex handy) and the entire story of triumphant fascism and its terrible costs to Greece. Pray they do NOT have that happen again.

    I WANT the global market to fall. It is horrific. But first, I want Greece to survive. They are marvelous people, marvelous heritage, and it must not fall because of this crisis.

    Do NOT know what to do. But I do know that we have the responsibility to rein in GS and other global predators based in our midst. THAT we can do, and we owe it to civilization to see that happens.

    • pursuitofhappiness says:

      Choicelady, I salute you on your view of the global economy. But, I believe strongly that GS & Obama are arm in arm and that regardless of any “punishment” that is meted out there is a payday in it for GS in the future. Eyes open.

      • AdLib says:

        Welcome to The Planet, Pursuit!

        I don’t know that I’d go quite that far but there are way too many ex-GS people in this admin for one to feel as comfortable.

        Just as Obama deferred to BP’s “expertise” to deal with the mess they made, I don’t find it unlikely that he did the same on the economic crash.

        I don’t agree with that approach, which a DLCer like Rahm is no doubt pushing, but I don’t think that necessarily means that there will be a payback for either BP or GS for what they may be hit with by the government (GS has been indicted for fraud).

      • Kalima says:

        I would love to see some links or valid evidence pertaining to your strong conclusion that President Obama is “arm in arm” with GS.

        Sorry I didn’t mean to sound harsh, just curious.

    • whatsthatsound says:

      Wonderfully put, as always, choicelady, and AdLib for the OP! Your words (both of you) are so true. It has become painfully obvious by now that the current system works backwards. People feed IT, and not vice versa. This is so bizarre; we eliminated most of our natural predators, with only the measliest, i.e. mosquitos and microbes still actually threatening us, so what do we do? Voila! We create our own, very UNnatural, predator. The Jabberwocky, the Heffalump, the Boogie Man. It just swallowed up the Gulf of Mexico, fercryinoutloud! It is insatiable, and we, our human dignity, our cultures, our past, etc. mean exactly NOTHING to it!

    • Khirad says:

      Good call. I hadn’t even thought about a return to the Junta days -- when they wanted to burn the old philosopher’s books for being un-Christian, etc. LAOS would be happy to oblige, as well.

  3. dildenusa says:

    Excellent post. Not only is Greece the birthplace of Democracy, it is the birthplace of everything cultural and scientific that we hold as a hallmark of civilized society. Almost 2,000 years before Copernicus and Galileo they knew the Earth moved around the Sun, they calculated the distance of the Earth to the Sun, and the radius and circumference of the Earth.

    Now, instead of moving forward we have regressed by handing over power to the new Gods of the Pantheon of Banking and Commerce. These Gods have twisted the logic of Adam Smith upside for their own selfish gain, leaving society burning.

    • choicelady says:

      Indeed. And the missing piece of civilization’s history is that after the fall of Rome, when that learning was so terribly threatened, it was the MUSLIMS who kept it intact and whole for later generations. Centuries of protection in Constantinople kept the knowledge from Egypt, Greece, and Rome all safe. Learning grew, slowly to be sure, from the open nature of Constantinople and its scholarly community of Jews, Gentiles, and Muslims. The fall of Constantinople in 1483 (I think that’s the date) set off the Renaissance as all that knowledge got dispersed back to its roots and througout Europe. So the Greeks need to thank the Muslims, and WE need to thank the Muslims for holding precious all that we treasure today.

      Life is very weird. One’s allies are never whom we think. We in the West did not invent EVERYTHING. We need to get used to it.

      We need a new Resnaissance. Problem is -- I have no idea where it would start. I just hope that Greece survives to be a part of it once again.

      • Khirad says:

        Absolutely correct, CL. It also had an affect of diffusing Gnostic thoughts and Neoplatonism along with the sciences across the Muslim world. Heliocentrism, and accurate calendars, algebra, algorithm, alcohol (!), the root of chemistry (alchemy) -- all Arabic words, plus many more. The Byzantines thrived after the Western Roman Empire had imploded, and have left their imprint on us in immeasurable ways.

      • dildenusa says:

        I wasn’t aware of the importance of Constantinople in the medieval world but now when I think about I realize that the corruption of the Roman Catholic Church and it’s control of European politics probably had the opposite effect on the Greek Church. And the sacking of Rome in 410 CE by the Germanic tribes pushed the center of the empire eastward keeping the Roman Church at bay.

        I believe that the feudal age ended and the early beginnings of the renaissance was around 1349 with the first of many outbreaks of the Bubonic Plague in Europe. Also the schism in the Roman Church at this time contributed to the collapse of society. The social order broke down and wasn’t restored until the power of the Roman Chuch was broken after the Hundred Years War and the rise of nation states such as England, France, and Spain. Also the growth of the Protestants contributed to the Renaissance.

    • PepeLepew says:

      I’ve always thought it’s amazing how the Western World didn’t really catch back up to many of the technical and artistic accomplishments of the Greeks until maybe 1500 AD.

  4. Marion says:

    Living in Europe in a country that’s part of the EU, I feel I have to set the record straight about Greece, because certain aspects of the press in the US are misrepresenting this situation.

    Let’s start by reading this article from The Guardian, which is about as Leftie as you can get in the UK:-

    http://www.guardian.co.uk/commentisfree/2010/may/04/greece-dont-believe-fights

    Those scenes of citizen rebellion are very much like the scenes the MSM have shown in the US regarding the Tea Party -- i.e., scenes purporting that tens of thousands of people were out in force, when only there were a few thousand, if that. Of the thousands of civil servants on strike in Greece, the majority spent the day pottering about their houses or in the cafes. A miniscule minority manned the barricades, and of that minority, most of those were the riffraff you’d see fighting on the terraces at soccer games.

    I’m sorry. As much as it pains me to do so, I have to call a spade a spade and dispel any notion that Greece’s problem is down to Goldman Sachs and investment banks. It’s not.

    Greece’s problem is down to Greece and its own political corruption, which is inherent in its culture and that of Mediterranean Europe as a whole.

    To begin with, 1 out of every 3 people in Greece works in the public sector, and most of those jobs are sinecures, meaning you get the money for nothing and the chicks for free. It’s the old “my wife’s brother’s cousin’s mother-in-law’s nephew just finished school and needs a job. There’s an empty desk in the corner, he can sit there.” People were hired in positions that existed on paper only. After a bit, they sussed that you don’t have to show for a job that paid for doing nothing. That didn’t look good, so they came up, in some instances, with the incentive of giving people a bonus for clocking in, hanging about for an hour and leaving.

    That’s no exaggeration. That’s the truth. People retired at 55 with GOOD pensions. The unions in the country ensured that unemployment benefits were the equal of what a person received when working.

    AND THE MAJORITY OF THE COUNTRY PAID NO INCOME TAX. True dat. No matter how hard the government tried to collect … couldn’t pay, wouldn’t pay. And tax, when it was paid, was the lowest in the EU. So with virtually NO revenue coming in, the government, committed to paying high benefits and equally good wages, had to borrow from someplace.

    The shit started hitting the fan when Turkey opened up as a big tourist attraction. Your cold country Euros -- the Germans and the Brits -- like hot, sandy beaches that are cheap. For years, many would flock to Greece. Tourism accounts for 18% of the GDP; but when Turkey developed its tourist industry, it undercut Greece, and that was the beginning of the end.

    Greece is part of the PIIGS problem in Europe -- PIIGS, being Portugal, Italy, Ireland, Greece and Spain: all low-tax-high-maintenance countries which lived high off the hog and had the bottom drop from their individual boats and which now threaten the existence of the Euro and the EU in general.

    If you want to see REAL anger in this, look at Germany. Angela Merkel is taking some big shit from the people who elected her at the prospect that their domestic taxes might be raised in order to bail Greece out. She’s standing firm on not raising taxes, demanding that Greece get its collective act together and start making DEEP cuts in domestic programs -- like sacking a few of those highly-paid sinecures, and making people work until they’re 65 or at least 60. And COLLECTING taxes. Sarko’s walking a tightrope on this one too, for the same reason; because it’s France and Germany who are going to do most of the bailing out.

    So you see, happy-clappy socialist Europe isn’t happy or clappy and the socialism has a tint of “I’m all right, Jack” -- i.e., me and mine are fine, but don’t expect me to help out any other scrounger.

    Everybody’s looking at Spain and Portugal next, where unemployment is around about 20%.

    So when someone quipped that the Greek Prime Minister was in Washington a few months ago asking for money, they weren’t far off wrong. If the IMF gets involved, we’ll be a part of that rescue too. So spare your sympathies for the Greeks -- their politics have always been corrupt. Just ask Whoreanna. That’s why she and her politician Daddy left Greece, with a helluva lot of government money hidden away in a carpetbag, no doubt. I can assure you, no one in Europe is sympathising with them.

    There’s no romance at all in this situation -- just a lot of people living above their means and not wanting to pay for it.

    • dildenusa says:

      The corruption that has plagued countries like Greece, Spain, and Portugal is rampant in all modern nation states. It isn’t limited to Africa, Asia, or Southern Europe. It exists here in the US also. The US got a free ride after World War 2 by positioning itself as the “rescuer.” The truth is much more subtle. If it wasn’t for Franklin Roosevelt, the US in the 1930’s would be having the same problems as Greece is having today.

    • AdLib says:

      Marion, I think we agree that the primary cause of this crisis was the corrupt Greek government. However, that doesn’t negate Goldman Sachs and other banks roles in magnifying and hastening the collapse.

      From the NYT:

      Banks Bet Greece Defaults on Debt They Helped Hide

      By NELSON D. SCHWARTZ and ERIC DASH
      Published: February 24, 2010

      Bets by some of the same banks that helped Greece shroud its mounting debts may actually now be pushing the nation closer to the brink of financial ruin.

      Echoing the kind of trades that nearly toppled the American International Group, the increasingly popular insurance against the risk of a Greek default is making it harder for Athens to raise the money it needs to pay its bills, according to traders and money managers.

      These contracts, known as credit-default swaps, effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire: a default by a company or, in the case of Greece, an entire country. If Greece reneges on its debts, traders who own these swaps stand to profit.

    • Khirad says:

      I once had a fairly exhaustive internet correspondence with a Greek, who wrote at length about Greece on a site like this (“land of gods and demons” he called it). PASOK and ND both have puns on their names for a reason (I can only remember N

      • Marion says:

        Of course, Turkey is seeking membership in the EU, and this is a big bone of contention with lots of people in the member states. Membership in the EU means anyone from one member country can work in any other member country.

        This is part of the LEGAL immigration problem Europeans are encountering since 2004, when the old Eastern bloc countries were admitted. These people were poor, compared to the rest of Europe, and you had hordes of economic migrants moving from Poland, Lithuania, the Czech Republic et al, into Germany, the UK etc, seeking jobs and getting them -- because they were cheaper to employ than the indigenous people.

        This is what is feared about the Turks. In happy-clappy Europe, business is business and businessmen will do anything to make a quick buck -- including sacking people from your own country because you can hire a foreigner who’ll work for a crappy minimum wage.

        Most ordinary Europeans are Euro-skeptics.

        • Khirad says:

          Okay, so I wouldn’t consider myself the UKIP variety, I mean.

          And I do believe that a majority of people in the EU favor their country’s membership, with notable exceptions, like Britain. Naturally, those who favor it the most, are those whom have most to gain and least to lose; i.e. PIIGS.

          Heh, I remember someone ‘over there’ trying to use the argument that the Europeans are tough on border issues, they would never let illegals in. I laughed in their face (figuratively) and told them the part about legal immigration. Of course, they were also confused that Europeans could be racist about other Europeans, so, it wasn’t exactly a fair fight.

          Germany has already struggled a little with the Turkish population, and that’s without EU status. But I don’t mean to sound xenophobic or anti-immigration here. It’s a sticky issue. I think the problem is that those accepting and with progressive attitudes are just duped by policies which have another issue at heart altogether to the fat cats supporting them. It’s not about such happy things as diversity. It’s just cheap labor; anti-union objectives driving them more than multiculturalism.

    • KQ says:

      I have to admit I have not been following the story closely at all. In this case I’m just another ugly American that is ignoring a key international issue.

      I don’t think you and Adlib’s accounts vary that much save for the GS comments. I think corruption by the Greek government is at the heart of the matter from what little I’ve read.

      GS should pay for what they did but I think they are a symbol of all that’s wrong with the Wests corrupt capitalist system.

  5. AuntieChrist says:

    Hey AdLib,

    Goldman Sachs should be gutted like a fish for all of it’s fraudulent behavior, tho’ I agree that Goldman didn’t do this alone.

    Here’s an interesting tidbit regarding the use of satellites to expose the wealth in the neighborhoods in where the tax cheats have built their homes, yet had decided that it was in their best interest to bilk their own country out of the taxes they owe, thus (as they needed to crawl to Goldman Sachs) brought ruin upon the very land that gave them so much:

    http://www.boingboing.net/2010/05/04/satellite-photos-cat.html

    I have no doubt that the same thing is happening here…

    Thus, I hope that the IRS is consulting NASA and getting ready to go medieval on some Tea Bagger’s asses.

    Another interesting read is the testimony of James K Galbraith:

    http://economistsview.typepad.com/economistsview/2010/05/the-role-of-fraud-in-the-financial-crisis.html

    AC

    • kesmarn says:

      Auntie, that Galbraith testimony was a great read. Thanks for posting it. The last paragraph is worth quoting:

      In this situation, let me suggest, the country faces an existential threat. Either the legal system must do its work. Or the market system cannot be restored. There must be a thorough, transparent, effective, radical cleaning of the financial sector and also of those public officials who failed the public trust. The financiers must be made to feel, in their bones, the power of the law. And the public, which lives by the law, must see very clearly and unambiguously that this is the case. Thank you.


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