(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)
To understand why the Greek people first voted the Troika proposal on continued financing of Greek debt, and then made a full capitulation, we need to look more closely at how the economic imbalance between rich and poor countries in the Eurozone is handled by the Troika with Germany in the driver's seat . We must look at the so-called "Target 2" loans (T2) that the Troika and Germany have provided "in secret" to Greece and other weak economies. T2 is a settlement system used through the backbone – outside of democratic processes – in order to maintain the export imbalance between rich and poor countries in the eurozone. Let's take a closer look at how it is going:
Loan. German BMW sells a car to a Greek through a Greek car dealer. The Greek finances the car at his local bank, which pays BMW in Germany for the car. However, due to capital flight from Greek to foreign banks, the Greek local bank does not have money. Therefore, it must first borrow money from the Greek central bank. The Greek central bank also has no money, and borrows money from the "Eurosystem", ie national central banks – in this case the Bundesbank.
In other words, it is the German taxpayers who finance the Greek car purchase, so that the German export industry and German growth in the economy are maintained.
This is the explanation why Merkel & co do not want a Grexit – especially considering the possible ripple effects a Grexit can have for other weak countries in the eurozone.
When Greece does not have liquidity to pay for imports due to capital flight, these funds are loaned to the Greek central bank from the Bundesbank. This is how credit is created with Greece as a debtor and Germany as a creditor. The settlement system T2 is used to issue credit on the road and in violation of the regulations, and is tried to be kept hidden from the EU and the taxpayers.
Fascism is the stage that comes after communism turned out to be an illusion. – Friedrich Hayek, Nobel laureate in economics in 1974
Risk spreading. The problem for Merkel and the EU is that this export imbalance applies to large parts of the eurozone. Through the Target 2 system, Germany, Luxembourg and Finland have lent 650 billion euros. Outstanding amounts are higher – a total of approximately 709 billion euros. It is important to understand that Greece in isolation is not a problem. Greece's official debt to Germany is 90 billion euros. Germany can live with the write-off of this amount – but it is not certain that the other creditors can handle this. Through the German Bundesbank, Germany has in effect assumed responsibility for large parts of the increasing financing and debt exposure to Greece and other weak economies. This is when the Target 2 loans have to be written off, it becomes painful and embarrassing. This is because the troika – especially Merkel – has an explanatory problem to the German people, who through increased taxes and fees must cover the loss of non-performing claims a large majority of Germans did not know they had.
Germany's gross domestic product is approximately 2,9 trillion euros. 46 per cent of this amount represents the export industry, of which about 63 per cent (840 billion euros) is exported to the eurozone. Germany's share of the Target 2 commitments is in reality approximately 531 billion euros, which corresponds to just over 60 per cent of Germany's export industry. If Greece falls, Germany risks spreading to Spain, Italy and the other recipients of the Target 2 loans. Then the German export industry is pulverized, and with it, the dream of the eurozone and a federal Europe ruled by Germany and the strongest nations through the "politburo" in Brussels. It may seem that the reluctance to forgive debt to Greece is the result of an overriding goal of depriving weak countries of sovereignty and consolidating all power in Brussels.
Europe's dirty secret. The background for the Target 2 loans is the unfortunate or skewed effect of Economic Monetary Union (EMU), because a common currency, the euro, makes it impossible to export goods and services at a correct and unmanipulated price. Each country has different productivity but is tied to the same currency. Simply put, a common currency favors the strong economies, and punishes the weak. Based on the western movie The good, the bad and the ugly The following has taken place in Europe: "The not so good" represents the past. Rescue packages in 2010 and 2012 saved the Greek and international banking system, but plunged Greece into even deeper debt. The European Central Bank (ECB) and Merkel & co used EU taxpayers, including Greek ones, to save the banks, the EU, the euro and their own political life.
"The bad" represents the present. A new 50 billion euros in loans will keep alive an already bankrupt and impoverished Greece, all to protect the strong countries, and especially Germany's export industry. In other words, the exercise from 2010 and 2012 is being repeated. Banks and financial institutions, including large foreign "hedge funds" that have invested large sums in Greek government bonds, are being rescued at the expense of the Greek people and European taxpayers.
"The ugly" represents the future. The euro has created large imbalances between the rich and poor countries in the eurozone, and huge sums have been moved from north to south to stem an ever-worsening competitiveness in the poor countries. In order to maintain the mismatch in competitiveness and protect their own exports, the strong economies – Germany in particular – are borrowing more and more money through the target 2 system to Greece, Spain, Portugal. The Target 2 loans essentially replace the capital flight from these countries, so that the banks do not go bankrupt. This is how the weak countries are first indebted, while the bill is eventually passed on to Europe's – especially German – taxpayers. As a result, there is rising unemployment, especially among young people, a shortage of food and vital medicines and health care for an increasing proportion of Europe's population.
The problem of common currency. In a previous article in Ny Tid about uncontrollable debt (Ny Tid no. 24, July 2015) I write that almost all industrialized countries have unmanageable debt levels, and that this is due to the insane Fractional Reserve Lending system: Central banks are increasingly printing paper money, which is the same as debt, to keep the world economy going as with artificial respiration. Simple mathematics shows that welfare built with taxes, fees and debts is not sustainable, and that it is heading for an economic collapse.
The fundamental problem with a common currency is that countries must have the same productivity, ie the same competitiveness, for it to work. For example, Greece and Germany have the same currency, but productivity is 70 percent higher in Germany than in Greece. Greece can try to offset this by an internal devaluation, albeit cost cuts that lead to higher productivity, but which are very painful. Greece can also not carry out an external devaluation as long as the country has the euro as its currency. What is happening in Greece represents only the symptoms of a global debt problem, as well as the weaknesses of a single monetary union, EMU. The root of the evil in the eurozone is the euro itself.
Fatal peace project? The idea of kings behind the EU and EMU has from the beginning been described as a peace project. By integrating all the nations of Europe more closely together politically, socially and economically, the idea is that we can avoid a new great war originating in Europe. What is happening in Greece, and which is taking place throughout the eurozone, is in reality a dismantling of free, independent nations. As we are witnessing in Greece, this is done by controlling budget, fiscal and monetary policy from the central government in Brussels. The simple and cunning way to achieve this goal is to lend money to poor countries to build welfare through a public and private consumption they can not afford – and thus indebt populations and countries so that they must eventually relinquish their sovereignty and submit central power in the EU.
The Troika has been issuing cheap credit for years. The debt is mediated through the banking system and financial institutions, such as Goldman Sachs, and when the default is a reality, the debt ends up with the ECB – which eases the entire bill onto current and future generations of Europe's population. In this way, banks and private financial institutions can invest and earn large sums risk-free, knowing that the political power elite in Europe saves them by passing the default on to current and future generations of European taxpayers.
When the EU, the ECB and the International Monetary Fund (IMF) do not agree to reduce debt to Greece, it is because the troika wants to establish two important conditions: A private bank's lending to a state is no longer the bank's risk, but the ECB's risk. The proof of this is that it was the private banks and financial institutions – American and European "hedge funds" – that were rescued in 2010 and 2012, not the Greek population. The very goal is to indebt a country's population so much that its existence becomes dependent on its creditors.
The responsibility of politicians. However, what a private creditor as a hedge fund can demand from a debtor country is limited. With the participation of politicians, they are content to make a gross profit on the trades. The ECB, on the other hand, can do something private banks and financial institutions cannot, namely force the guilty state to implement all the social, economic and political reforms the ECB, together with the power elite in Brussels, finds it too good to demand. It is at least suggested by what happened in Greece, which for all practical purposes is no longer an independent nation.
The whole intention behind this is that privately owned financial companies in interaction with the power elite in Europe can plunder one independent nation after another until they have emptied the coffers, abolished democracy and self-government and introduced a United Federation of Europe based in Brussels.
If that is not enough, politicians have the guts to blame the "free market" when they want to avoid responsibility for their own work. The truth is that in a more or less free banking market, a bank's expansive lending will immediately lead to an accumulation of debt with competing banks, which would immediately lead to demands for repayment of debt from the competing banks. This built-in self-justice would, if it had been allowed to work, effectively and at all times weed out banks with too much risk-taking. When the political power elite in Europe in reality removes the necessity of this self-justice, it becomes meaningless to blame "greedy banks and financial corporations". It is the politicians who are responsible for the "financial crisis" and the economic quagmire throughout Europe.
The American economist Murray Rothbard warned in 1993 that a European monetary union could lead to the liquidation of independent nations and lead to a new war in Europe. When enough countries are plundered in the same way as Greece, and large sections of the European population are impoverished, poor, unemployed and without food and vital medicines and health services, then history repeats itself: When oppression is "big enough" and enough people suffer and realizing that they are being oppressed by a political elite, they rebel.
The root of the evil in the eurozone is the euro itself.
What is happening in Greece and the rest of EMU is the new fascism. There is one important thing to learn from this: We humans have a short memory and rarely learn from history. At regular intervals through the ages, we make the same mistakes over and over again, and the recipe is always the same. We become fat and lazy and leave too much power in the hands of a small elite – be it an emperor in Rome, a kingdom in Europe or elected representatives and bureaucrats in today's union. Thomas Jefferson summed it up so correctly 225 years ago:
"The issue today is the same as it has been throughout all of history: Whether man should be allowed to govern himself, or be ruled by a small elite."
The question today's young people must ask themselves, especially all the millions of unemployed young people who despair over the situation in their home countries, is whether we should find ourselves in the situation where today's politicians continue to issue "blank checks" that future generations will never be able to pay for.
When things will go wrong anyway, why wait and watch while irresponsible politicians hurt worse?
