Greece: What is the Syriza Plan?

tsipras

There has been talk recently that Syriza is selling out to the Eurogroup and their demands for continued austerity in Greece. Is there any substance to this, or are these simply more scaremongering attacks from the media and EU elites who claimed before the Greek elections that Syriza would drag Greece out of the Eurozone and cause a Europe-wide economic disaster?

Greece, euro zone agree four-month loan extension, avert crunch:

But it also forced radical young Prime Minister Alexis Tsipras into a major climbdown since he had vowed to scrap the bailout, end cooperation with the “troika” of international lenders and roll back austerity.

“Being in government is a date with reality, and reality is often not as nice as a dream,” German Finance Minister Wolfgang Schaeuble told reporters, stressing Athens would get no aid payments until its bailout program was properly completed. “The Greeks certainly will have a difficult time to explain the deal to their voters,” the conservative veteran said.

Greek Finance Minister Yanis Varoufakis said the talks had shown elections could bring change to Europe. He insisted he had averted “recessionary measures” and said the government still hoped to raise the minimum wage and rehire some public sector workers. “Nobody is going to ask us to impose upon our economy and society measures that we don’t agree with,” Varoufakis said.

http://www.reuters.com/article/2015/02/20/us-eurozone-greece-idUSKBN0LO0O620150220

Syriza MP Asks $330 Billion Dollar Question – How Will A Four Month Extension Improve Our Negotiating Position?:

http://www.globalresearch.ca/syriza-mp-asks-330-billion-dollar-question-how-will-a-four-month-extension-improve-our-negotiating-position/5433274

Could it be that Greece is simply stalling for time?

Paul Krugman – Europe Needs To Stop The Clock:

http://krugman.blogs.nytimes.com/2015/02/20/europe-needs-to-stop-the-clock/?_r=0

Again from Reuters:

The accord requires Greece to submit by Monday a letter to the Eurogroup listing all the policy measures it plans to take during the remainder of the bailout period.

“Ultraleft critics of Greece’s Syriza govt., Tsipras, Varoufakis are reminded that FDR’s Hundred Days took more than 3 months!” – Webster Tarpley

http://tarpley.net/german-parliament-forced-to-swallow-large-parts-of-syriza-anti-austerity-program/


Here is the letter to the Eurogroup (presented here in full). Read it and decide for yourself if Syriza is really selling out and/or backing off their anti-austerity promises.

Greek finance minister’s letter to the Eurogroup, from Reuters:

I. Fiscal structural policies Tax policiesGreece commits to: 

Reform VAT policy, administration and enforcement.

Robust efforts will be made to improve collection and fight evasion making full use of electronic means and other technological innovations.

VAT policy will be rationalised in relation to rates that will be streamlined in a manner that maximises actual revenues without a negative impact on social justice, and with a view to limiting exemptions while eliminating unreasonable discounts.

Modify the taxation of collective investment and income tax expenditures which will be integrated in the income tax code. 

Broaden definition of tax fraud and evasion while disbanding tax immunity. 

Modernising the income tax code and eliminating from it tax code exemptions and replacing them, when necessary, with social justice enhancing measures. 

Resolutely enforce and improve legislation on transfer pricing. 

Work toward creating a new culture of tax compliance to ensure that all sections of society, and especially the well-off, contribute fairly to the financing of public policies.

In this context, establish with the assistance of European and international partners, a wealth database that assists the tax authorities in gauging the veracity of previous income tax returns.

Public Finance Management – Greece will: 

Adopt amendments to the Organic Budget Law and take steps to improve public finance management.

Budget implementation will be improved and clarified as will control and reporting responsibilities.

Payment procedures will be modernised and accelerated while providing a higher degree of financial and budgetary flexibility and accountability for independent and/or regulatory entities. 

Devise and implement a strategy on the clearance of arrears, tax refunds and pension claims. 

Turn the already established (though hitherto dormant) Fiscal Council into a fully operational entity.

Revenue administration – Greece will modernise the tax and custom administrations benefiting from available technical assistance. To this end Greece will: 

Enhance the openness, transparency and international reach of the process by which the General Secretary of the General Secretariat of Public Revenues is appointed, monitored in terms of performance, and replaced. 

Strengthen the independence of the General Secretariat of Public Revenues (GSPR), if necessary through further legislation, from all sorts of interference (political or otherwise) while guaranteeing full accountability and transparency of its operations.

To this end, the government and the GSPR will make full use of available technical assistance. 

Staff adequately, both quantitatively and qualitatively, the GSPR and in particular the high wealth and large debtors units of the revenue administration and ensure that it has strong investigative/prosecution powers, and resources building on SDOE’s capacities, so as to target effectively tax fraud by, and tax arrears of, high income social groups.

Consider the merits of integrating SDOE into GSPR. 

Augment inspections, risk-based audits, and collection capacities while seeking to integrate the functions of revenue and social security collection across the general government.

Public spending – The Greek authorities will: 

Review and control spending in every area of government spending (e.g. education, defence, transport, local government, social benefits) 

Work toward drastically improving the efficiency of central and local government administered departments and units by targeting budgetary processes, management restructuring, and reallocation of poorly deployed resources. 

Identify cost saving measures through a thorough spending review of every Ministry and rationalisation of non-salary and non-pension expenditures which, at present, account for an astounding 56% of total public expenditure. 

Implement legislation (currently in draft form at the General Accounts Office – GAO) to review non-wage benefits expenditure across the public sector. 

Validate benefits through cross checks within the relevant authorities and registries (e.g. Tax Number Registry, AMKA registry) that will help identify non-eligible beneficiaries. 

Control health expenditure and improve the provision and quality of medical services, while granting universal access. In this context, the government intends to table specific proposals in collaboration with European and international institutions, including the OECD.

Social security reform – Greece is committed to continue modernising the pension system. The authorities will: 

Continue to work on administrative measures to unify and streamline pension policies and eliminate loopholes and incentives that give rise to an excessive rate of early retirements throughout the economy and, more specifically, in the banking and public sectors. 

Consolidate pension funds to achieve savings. 

Phase out charges on behalf of ‘third parties’ (nuisance charges) in a fiscally neutral manner. 

Establish a closer link between pension contributions and income, streamline benefits, strengthen incentives to declare paid work, and provide targeted assistance to employees between 50 and 65, including through a Guaranteed Basic Income scheme, so as to eliminate the social and political pressure for early retirement which over-burdens the pension funds.

Public administration & corruption – Greece wants a modern public administration. It will: 

Turn the fight against corruption into a national priority and operationalize fully the National Plan Against Corruption. 

Target fuel and tobacco products’ smuggling, monitor prices of imported goods (to prevent revenue losses during the importation process), and tackle money laundering.

The government intends immediately to set itself ambitious revenue targets, in these areas, to be pursued under the coordination of the newly established position of Minister of State. 

Reduce (a) the number of Ministries (from 16 to 10), (b) the number of ‘special advisors’ in general government; and (c) fringe benefits of ministers, Members of Parliament and top officials (e.g. cars, travel expenses, allowances) 

Tighten the legislation concerning the funding of political parties and include maximum levels of borrowing from financial and other institutions. 

Activate immediately the current (though dormant) legislation that regulates the revenues of media (press and electronic), ensuring (through appropriately designed auctions) that they pay the state market prices for frequencies used, and prohibits the continued operation of permanently loss-making media outlets (without a transparent process of recapitalisation). 

Establish a transparent, electronic, real time institutional framework for public tenders/procurement – re-establishing DIAVGEIA (a side-lined online public registry of activities relating to public procurement). 

Reform the public sector wage grid with a view to decompressing the wage distribution through productivity gains and appropriate recruitment policies without reducing the current wage floors but safeguarding that the public sector’s wage bill will not increase.

Rationalise non-wage benefits, to reduce overall expenditure, without imperilling the functioning of the public sector and in accordance with EU good practices. 

Promote measures to: improve recruitment mechanisms, encourage merit-based managerial appointments, base staff appraisals on genuine evaluation, and establish fair processes for maximising mobility of human and other resources within the public sector.

II. Financial stability Instalment schemes – Greece commits to: 

Improve swiftly, in agreement with the institutions, the legislation for repayments of tax and social security arrears. 

Calibrate instalment schemes in a manner that helps discriminate efficiently between: (a) strategic default/non-payment and (b) inability to pay; targeting case (a) individuals/firms by means of civil and criminal procedures (especially amongst high income groups) while offering case (b) individuals/firms repayment terms in a manner that enables potentially solvent enterprises to survive, averts free-riding, annuls moral hazard, and reinforces social responsibility as well as a proper re-payment culture. 

De-criminalise lower income debtors with small liabilities. 

Step up enforcement methods and procedures, including the legal framework for collecting unpaid taxes and effectively implement collection tools Banking and Non-Performing loans.

Greece is committed to:  Banks that are run on sound commercial/banking principles. 

Utilise fully the Hellenic Financial Stability Fund and ensure, in collaboration with the SSM, the ECB and the European Commission, that it plays well its key role of securing the banking sector’s stability and its lending on commercial basis while complying with EU competition rules. 

Dealing with non-performing loans in a manner that considers fully the banks’ capitalisation (taking into account the adopted Code of Conduct for Banks), the functioning of the judiciary system, the state of the real estate market, social justice issues, and any adverse impact on the government’s fiscal position. 

Collaborating with the banks’ management and the institutions to avoid, in the forthcoming period, auctions of the main residence of households below a certain income threshold, while punishing strategic defaulters, with a view to: (a) maintaining society’s support for the government’s broad reform program, (b) preventing a further fall in real estate asset prices (that would have an adverse effect on the banks’ own portfolio), (c) minimising the fiscal impact of greater homelessness, and (d) promoting a strong payment culture. Measures will be taken to support the most vulnerable households who are unable to service their loans. 

Align the out-of-court workout law with the instalment schemes after their amendment, to limit risks to public finances and the payment culture, while facilitating private debt restructuring. 

Modernise bankruptcy law and address the backlog of cases.

III. Policies to promote growth Privatisation and public asset management – To attract investment in key sectors and utilise the state’s assets efficiently, the Greek authorities will: 

Commit not to roll back privatisations that have been completed.

Where the tender process has been launched the government will respect the process, according to the law. 

Safeguard the provision of basic public goods and services by privatised firms/industries in line with national policy goals and in compliance with EU legislation. 

Review privatisations that have not yet been launched, with a view to improving the terms so as to maximise the state’s long term benefits, generate revenues, enhance competition in the local economies, promote national economic recovery, and stimulate long term growth prospects. 

Adopt, henceforth, an approach whereby each new case will be examined separately and on its merits, with an emphasis on long leases, joint ventures (private-public collaboration) and contracts that maximise not only government revenues but also prospective levels of private investment. 

Unify (HRDAF) with various public asset management agencies (which are currently scattered across the public sector) with a view to developing state assets and enhancing their value through microeconomic and property rights’ reforms.

Labor market reforms – Greece commits to: 

Achieve EU best practice across the range of labour market legislation through a process of consultation with the social partners while benefitting from the expertise and existing input of the ILO, the OECD and the available technical assistance.

Expand and develop the existing scheme that provides temporary employment for the unemployed, in agreement with partners and when fiscal space permits and improve the active labour market policy programmes with the aim to updating the skills of the long term unemployed. 

Phasing in a new ‘smart’ approach to collective wage bargaining that balances the needs for flexibility with fairness.

This includes the ambition to streamline and over time raise minimum wages in a manner that safeguards competiveness and employment prospects.

The scope and timing of changes to the minimum wage will be made in consultation with social partners and the European and international institutions, including the ILO, and take full account of advice from a new independent body on whether changes in wages are in line with productivity developments and competitiveness.

Product market reforms and a better business environment – As part of a new reform agenda, Greece remains committed to: 

Removing barriers to competition based on input from the OECD. 

Strengthen the Hellenic Competition Commission. 

Introduce actions to reduce the burdens of administrative burden of bureaucracy in line with the OECD’s input, including legislation that bans public sector units from requesting (from citizens and business) documents certifying information that the state already possesses (within the same or some other unit). 

Better land use management, including policies related to spatial planning, land use, and the finalisation of a proper Land Registry. 

Pursue efforts to lift disproportionate and unjustified restrictions in regulated professions as part of the overall strategy to tackle vested interests. 

Align gas and electricity market regulation with EU good practices and legislation Reform of the judicial system – The Greek government will: 

Improve the organisation of courts through greater specialisation and, in this context, adopt a new Code of Civil Procedure. 

Promote the digitisation of legal codes and the electronic submission system, and governance, of the judicial system.

Statistics – The Greek government reaffirms its readiness to: 

Honour fully the Commitment on Confidence in Statistics, and in particular the institutional independence of ELSTAT, ensuring that ELSTAT has the necessary resources to implement its work programme. 

Guarantee the transparency and propriety of the process of appointment of the ELSTAT President in September 2015, in cooperation with EUROSTAT.

IV. Humanitarian Crisis – The Greek government affirms its plan to: 

Address needs arising from the recent rise in absolute poverty (inadequate access to nourishment, shelter, health services and basic energy provision) by means of highly targeted non-pecuniary measures (e.g. food stamps). 

Do so in a manner that is helpful to the reforming of public administration and the fight against bureaucracy/corruption (e.g. the issuance of a Citizen Smart Card that can be used as an ID card, in the Health System, as well as for gaining access to the food stamp program etc.). 

Evaluate the pilot Minimum Guaranteed Income scheme with a view to extending it nationwide. 

Ensure that its fight against the humanitarian crisis has no negative fiscal effect.

http://www.reuters.com/article/2015/02/24/eurozone-greece-text-idUSL5N0VY1Y920150224


Ironman Varoufakis’s Revolutionary Plan for Europe:

If you haven’t been following developments in the Greek-EU standoff, you’re really missing out. This might be the best story of the year. And what makes it so riveting, is that no one thought that little Greece could face off with the powerful leaders of the EU and make them blink. But that’s exactly what’s happened. On Monday, members of the Eurogroup met with Greece’s finance minister, Yanis Varoufakis, to decide whether they would accept Greece’s terms for an extension of the current loan agreement. There were no real changes to the agreement. The only difference was semantics, that is, the loan would not be seen as a bailout but as “a transitional stage to a new contract for growth for Greece”. In other words, a bridge to a different program altogether. In retrospect, Varoufakis’s strategy was pure genius, mainly because it knocked the EU finance ministers off balance and threw the process into turmoil. After all, how could they vote “thumbs down” on loan package that they had previously approved just because the language was slightly different? But if they voted “thumbs up”, then what? Well, then they would be acknowledging (and, tacitly, approving) Greece’s determination to make the program less punitive in the future. That means they’d be paving the way for an end to austerity and a rethink on loan repayment. They’d also be conceding that Greece’s democratically-elected government had the right to alter the policies of the Eurogroup. How could they let that happen?

http://www.globalresearch.ca/ironman-varoufakiss-revolutionary-plan-for-europe/5432230

The New York Times fell on its face when it attempted to caricature the new anti-austerity Greek government as “dangerously naive” by suggesting that its finance minister, Yanis Varoufakis, did not understand the basic debt dynamics of his country…

http://www.truthdig.com/eartotheground/item/nyt_tries_to_criticize_syriza_finance_minister_gets_it_wrong_20150214

Greek Finance Minister Varoufakis Wants Austerity… for the Rich:

http://www.truthdig.com/avbooth/item/greek_finance_minister_varoufakis_wants_austerity_for_the_rich_20150225

Rejecting Austerity, Greece Squares Off With Its Creditors and Risks Future in Eurozone:

YANIS VAROUFAKIS: We were offering to refrain from effectively implementing our own program, the program that we were elected to implement, for a period of six months. And all we were getting back was a nebulous promise of some flexibility that was never specified. Under those circumstances, ladies and gentlemen, it proved impossible for the Greek government, despite our infinite goodwill, to sign the offered communiqué. And so the discussions continue.

DIMITRIS STRATOULIS: [translated] The government remains unyielding to its position. They won’t accept an extension of the bailout. The Greek people have rejected this with their vote and with their presence in the streets, as have the people of Europe, who have openly and steadily expressed their solidarity to our own people.

PAUL MASON: Austerity in Greece means something like a 50 percent measurable increase in male suicides. It means real wages fell by 25 percent in five years. It means that the economy lost a quarter of its capacity: It has shrunk by 25 percent. And on the—if you sit at a coffee table, sit in a café in Athens, talk to the person who’s serving you, they’ll be a graduate, they’ll be living probably more than one person to a room, and their income will be on—the average income is about 500 to 600 euros a month, so think the same in dollars. But you talk to people, they’ll be earning 400 a month, so a hundred euros a week. And that’s for graduates. That is austerity. And then you’ve got the 300,000 families who can’t afford electricity. And something like—you know, something like sort of 15 percent of people now are on the edge of or have lost their healthcare. And Greece has a healthcare system based on insurance. When you lose it, you join the queue with the undocumented migrants at the Red Cross.

http://www.truth-out.org/news/item/29196-rejecting-austerity-greece-squares-off-with-its-creditors-and-risks-future-in-eurozone


The Tax Wall Street Party: America’s Answer To Syriza:

Even before the election, it was obvious that Syriza was going to cause shockwaves throughout global politics. Syriza’s victory identified austerity as a failure of a policy route and signalled the beginning of world rebellion against Wall Street rule. This caused a spiralling showing of fear from the likes of British PM David Cameron, who suggested Syriza’s victory would “increase economic uncertainty”; meaning it would increase uncertainty for the ruling Anglo-American, oligarchic financial class. This fear mongering continued as British Chancellor, George Osborne, suggested Syriza could cause more damage in the world than growing Middle Eastern conflicts.

So what does all of that tell us? It suggests the message Syriza is pushing is immensely dangerous for the ruling elite who have been solely responsible for the financial catastrophe we are currently living through. Of particular danger to the ruling Anglo-American financiers are Syriza’s proposals to adopt a tax on financial transactions, prohibit the use of speculative financial derivatives, combat banking secrecy, suspend debt payments until economic growth and employment have returned, demand the European Central Bank funds programs of public investment, nationalize previously public companies and failing banks, leave NATO and much, much more.

http://21stcenturywire.com/2015/02/23/the-tax-wall-street-party-americas-answer-to-syriza/

My party has lost its soul – Bill Clinton, Barack Obama and the victory of Wall Street Democrats:

A former Clinton aide on how Democrats lost their way chasing Wall Street cash, and new populism the party needs.

http://www.salon.com/2014/07/27/my_party_has_lost_its_soul_bill_clinton_barack_obama_and_the_victory_of_wall_street_democrats/

Tsipras and Varoufakis Successfully End Failed Austerity Program Dictated by Troika, Launch Class-Based Campaign Against Wealthy Tax Evaders, Oligarchs, and Grafters:

http://tarpley.net/tsipras-and-varoufakis-successfully-end-failed-austerity-program-dictated-by-troika/

Webster Tarpley – Syriza government in Greece:


Have you heard the pundits say that Syriza is selling out Greece to the EU? Here are some very instructive comments to this article from 21st Century Wire:

http://21stcenturywire.com/2015/02/23/the-tax-wall-street-party-americas-answer-to-syriza/

freewheelinfranklin543: Syriza just sold Greece out you ninny…

DShelton: Sold out? This is a politically ignorant thing to assert. What reasoning is there behind your statement. Please keep in mind the following: The EU elite have, from the moment in which Syriza received a democratic mandate, followed the typical authoritarian course of all imperial rulers. It has demanded from Syriza – (1) unconditional surrender – (2) the continuation of the structures, policies and practices of the previous vassal coalition party-regimes (PASOK-New Democracy) – (3) that Syriza shelve all social reforms, (raising the minimum wage, increasing pension, health, education and unemployment spending -(4) that SYRIZA follow the strict economic directives and oversight formulated by the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) – (5) that SYRIZA retain the current primary budget surplus target of 4.5 percent of economic output in 2015-2017. To enforce its strategy of strangulating the new government, Brussels threatened to abruptly cut off all present and future credit facilities, call in all debt payments, end access to emergency funds and refuse to back Greek bank bonds – that provide financial loans to local businesses. Brussels presents Syriza with the fateful “choice”, of committing political suicide by accepting its dictates and alienating its electoral supporters. What Syriza is doing is the “Step back- Step forward approach” in order to remain political viable to the authoritarians and to later recoup what they may concede. If you read the news you’ll find that they aren’t giving up much and want to fight flight capital instead.

Jason A: That is the best that could be attained in the REAL WORLD and anybody who criticizes that from this Ultra Left point of view is an INFANTILE ultra left. These Ultra Lefts are suffering from an INFANTILE disorder of “All or nothing”. This is simply infantile. What Tsipras and Varoufakis have achieved is a triumph of negotiation because they have kept the door open; they have neutralized Merkel and Shopbela and they are now going to go and do a class based economic reform which will shift the burden of Austerity from the backs of working people to the oligarchs and the super rich and that will be composed of a fight against tax evasion (a huge issue in Greece this is billions of euros); A fight against smuggling (a violation of the Greek laws). As soon as you talk about tax evasion you are also talking about flight capital so they are also going to have to move against flight capital. The other one is just oligarchical privilege the famous example is the television broadcasting licences should be SOLD but have been given as perks for campaign contributions. What does the Tax Wall Street Party fight for? They say, who should pay for the depression? Not working people but the bankers and finance oligarchs that have created the depression. That is what Syriza is fighting for. Now, Syriza doesn’t get everything. I urge you to read this TEXT at Reuters. It is the whole text of what Syriza submitted last night (SEE REUTERS ARTICLE ABOVE) We know that the Chinese want to take over Greece and I don’t think the Greeks want the Chinese to take them over. I don’t think anybody wants a Chinese yoke because that is rough. For anybody who complains about US world domination, wait until you try Chinese world domination, you are going to like that a whole lot less. However in terms of them not delivering, the promise to keep the electricity on is maintained, the Food Stamps for the 300,000 families is maintained, the medical and prescriptions are maintained (that is really important that ALL Greeks will be able to take part in the new public health program), the unemployment insurance will be maintained. In other words there is a whole series of really key points, the most urgent humanitarian ones that will be maintained. Of course with some points Syriza is finessing it but what can they do, THEY ARE ISOLATED! They are isolated because naturally the Ultra Left idiots are backing a Soros/ Ford Foundation/ man in Spain. If Syriza had some real allies they could probably do more. They don’t! And where are the American Left Liberals???? They didn’t do a G-ddamn thing to help Syriza! And now they are criticising? JERKS. The Tax Wall Street Party was fighting to put Syriza on the scoreboard for the last three years! The TWSP was fighting and continueS to fight. The TWSP doesn’t stab people in the back and they don’t criticize them because they have to MANEUVER. What Syriza is doing now is a TACTICAL MANEUVER. Because they say “If we go head to head with Shopbela that is going to be a disaster.” You also have to remember that a lot of people criticizing Syriza are in bad faith. Why are they in bad faith: because a lot of the Ultra Left are British Agents and they want the Euro destroyed in favor of the Dollar and the Pound, not in favor of working people anywhere but in favor of the Dollar and the Pound so they are always looking for ways to say, we want this to turn into the collapse of the Euro because our masters want to go and loot it. So anybody who is coming out and saying “Ah, Tsipras, you gave up! You are a traitor, you betrayed the workers”. Ask, “Are you a British Agent or are you from the CIA?” Because that is who really wants to destroy the Euro. Then this brings up the other question: YOU DO NOT WANT TO LEAVE THE EURO. There is no reason to leave the Euro there is every reason to stay. The way you can stay in the long run is to build a European wide Anti-Shopela, Anti-Merkel front and that is what Syriza are trying to do. So dear friends, instead of attacking Tsipras why aren’t you attacking Iglesias. You want a traitor? Iglesias is one. Iglesias is not even trying to cut the debt. Iglesias says it, “A couple little reforms is really all we can do” (in so many words).

In case my message below wasn’t clear enough, let’s go through what would happen: If I am in Greece and the Drachma is driven into the center of the earth…What happens to my standard of living? You can’t afford to buy anything and it is Greece after all and much is imported. Everything that is imported would become out of reach. Your living standard would crash. Now tell me is it smart for Tsipras to let this happen to his people and go down as an historical failure?

Suppose Greece exits the Euro and reinstates to the Drachma, what is going to happen to the Drachma? It is going to be driven down by Goldman Sachs with credit default swaps. Remember the Drachma has never coexisted in a world with derivatives the way we have now. If they are driven down what would happen to the German Mark? IT WOULD ROCKET INTO INTERGALACTIC SPACE GOD PEOPLE DON’T UNDERSTAND ECONOMICS. Go TWSP!!!

Kyle McCarthy: What you are talking about is NOT what has happened.They are pushing ahead with most of the main reforms. So this is simply NOT HAPPENING. Why don’t you listen to Michael Chiotinis (who I think is a TWSP Local in Athens?) Chiotins has been getting the situation right every week when he reports.


simulator8: There are about $1.2 quadrillion in outstanding derivatives. Total turnover could be as high as $4 quadrillion a year as these derivatives are traded over and over again. Compare this to the total world GDP of $75 trillion per year. These derivatives are purely speculative in nature and do not serve to fund “Main Street” businesses. They violate insurance laws since no reserves are held do cover payouts, like insurance companies must maintain reserves to cover potential payouts. They also violate gambling laws, since they are purely speculative in nature. The turnover on these instruments is completely untaxed. We have sales taxes, income taxes, and property taxes on private individuals, so why are these instruments untaxed? A 1% turnover tax on certainly $2 quadrillion, and quite likely $4 quadrillion, in annual derivatives turnover would yield $20 trillion to $40 trillion dollars. This money could be used to close the federal deficit (and local and state deficits with revenue sharing) and fund on-budget (operating budget) considerations like defense, social safety net, government operations, etc. Zero-percent interest, 100-year bonds from the Federal Reserve could be used to fund the rebuilding of America’s (off-budget since federal lending and not federal spending, or capital budget) infrastructure to create full employment at middle-class wages. This tax would of course gradually reduce financial speculation as the derivatives volumes would go down, but the increased real-world economic activity would create full employment, rebuild the infrastructure, and close the budget and trade deficits.


No, Syriza has not surrendered
Tom Walker looks at what Greece’s government has agreed – and argues that buying time is not the same thing as breaking promises.
Surrender! Capitulation! Betrayal! Syriza hasn’t even been in office for a month, but already the obituaries are being written.
Some on the left, of course, had written them long before January’s election. Syriza, you see, has failed to declare the revolution. So far, so familiar. But over the last few days some more sensible forces seem – as with the coalition deal in the early days of the Syriza government – to have got a little carried away in their horror at this week’s debt deal, believing the German government’s crowing rhetoric that Syriza has suffered total humiliation.This is a deal that has been described in quite the opposite terms by Greek prime minister Alexis Tspiras: he called it ‘a decisive step, leaving austerity, the bailouts and the troika’. Unless he has quite suddenly and unexpectedly taken leave of planet Earth, there is more going on here than meets the eye.

To discover the truth we need to not only look at the deal, or even the media spin around the deal, but examine what the text they have signed up to will mean in practice.

No agreement to austerity

Much of the reporting of the deal led on the claim that Syriza has ‘signed up to austerity’ – and that would be a massive U-turn if it were true. But this rests on some mischief with the terminology.

What the Greek government has signed up to is to continue running a budget surplus, as opposed to a deficit. That is not, in itself, austerity. Austerity is the practice of balancing budgets through cuts in public spending.

Yet the agreement, as Tsipras has said, cancels the previous Greek government’s planned cuts to pensions, as well as scrapping VAT rises on food and medicine. The reforms Syriza will submit as part of its end of the deal look set to include a massive crackdown on tax evasion and corruption – meaning a shift away from spending cuts towards raising the revenue through taxation.

The Eurogroup statement also includes some flexibility for surpluses to be ‘appropriate’ given economic conditions. In other words, until the Greek economy returns to growth, the punishing targets of the previous government can be eased back – meaning there wouldn’t be as much money to raise as previously. This should free up some cash to tackle Greece’s humanitarian crisis, through Syriza’s promised measures such as free electricity and meal subsidies for the poorest.

And Greek finance minister Yanis Varoufakis has added a very important and under-reported rider: ‘Nobody is going to ask us to impose upon our economy and society measures that we don’t agree with… If the list of reforms is not agreed, this agreement is dead.’

Breathing space

Of course, this is hardly anyone’s ideal programme for government. While it is not true that the hated ‘Troika’ has returned, Greece must still deal with ‘the institutions’ (the European Central Bank, European Commission and IMF) – the distinction being that it now has the potential to negotiate with the different institutions one by one. Greek democracy remains partially suspended, at least for the four-month duration of the deal, subject to negotiation and oversight.

But look at the situation Syriza were in before you condemn. Multiple credible sources claim that, if they had not agreed to the deal, Greece’s banks would have collapsed within days – and Syriza would have got the blame for taking the country into a new crisis. As Varoufakis said, ‘Greeks were being told that if we were elected and we stayed in power for more than just a few days the ATMs will cease functioning… Today’s decision puts an end to this fear.’

Defaulting on the debts and leaving the euro might be preferable in the long term – though support for that course of action among Greece’s people remains very low – but it would mean huge short-term chaos and pain that Syriza’s negotiation has managed to avoid.

In any case, the deal is not signed in blood. It can be ended if it goes as badly as some commentators are saying. The option of ‘Grexit’ and default hasn’t gone away. It is clear, though, that it is not currently part of Syriza’s mandate, and those who put forward that alternative in the election received only a fraction of Syriza’s votes. Default was always going to be a last resort, not an opening gambit: it will only be politically possible if no alternative remains.

Give Greece a chance

Insofar as the Syriza government is having to compromise – and clearly it is making compromises short of surrender – that represents not so much their failure as our own. Syriza has always been clear that we cannot expect Greece to defeat austerity alone.

The various European ministers on the other end of the continuing negotiation with the Greek government need to be feeling the pressure. We need a huge movement across Europe in solidarity with Greece, and we need to be throwing ourselves into building that movement, not reclining in our armchairs ready to say ‘I told you so’.

We must put everything we can muster into shifting the political balance of forces across Europe. We now have four months of space in which to do so: we need to make them count.

There is clearly a division among the elite now over the issue of austerity, with the US government, the Adam Smith Institute and various prominent economists not usually associated with the left backing Greece’s proposals. That crack is waiting to be forced open.

This battle is a very long way from over. There are more key moments this week, and no doubt there are many weeks and months of crunch points still to come. The last thing we should be doing is abandoning Syriza because it hasn’t fulfilled all our hopes in the first few weeks after its election. And it’s also no use flipping backwards and forwards between enthusiasm and dejection based on each day’s round of negotiations.

The future of austerity across Europe now rests on what happens in Greece. If we give up on them, we are giving up on our own struggle too.

‘Give Greece a chance’ has been one of the slogans aimed at the European Central Bank et al. It applies just as much to us on the left.


Background to the Crisis in Greece – The Idea Dinner: Monness, Crespi, Hardt & Co.

Read up on “The Idea Dinner” before talking about lazy, greedy Greeks!

Hedge fund ‘ideas’ party sponsored by Monness, Crespi, Hardt & Co sparks big controversy over euro:

A February 8 dinner is sparking controversy because one of the nearly two dozen topics discussed during the program was how hedge funds could profit from a decline in the euro, one of the world’s most heavily traded currencies.

http://www.nydailynews.com/news/money/hedge-fund-ideas-party-sponsored-monness-crespi-hardt-sparks-big-controversy-euro-article-1.174595

Financial Warfare Exposed: Soros, Goldman Sachs, Hedge Funds Attack Greece to Smash Euro:

http://tarpley.net/2010/03/04/financial-warfare-exposed-soros-goldman-sachs-hedge-funds-attack-greece-to-smash-euro/

Pack Mentality Grips Hedge Funds:

http://www.wsj.com/articles/SB10001424052748704361504575552462233274960

 

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