Following Sunday's vote, Greece saw celebrations in the streets while observers wondered if the rejection of concessions to the "troika" institutions -- the European Commission, the European Central Bank and the IMF -- signaled Greece's exit from the Eurozone (or "Grexit").
As Think Progress reported following Sunday's referendum vote,
Greeks overwhelmingly voted against a European deal to extend financing to the country’s banks that would have required more harsh austerity measures on the part of the government. Prime Minister Alexis Tsipras, who came to power in large part on a promise to reject more austerity measures, had called the referendum to get more bargaining power in the dealmaking process. Greeks rejoiced at the news of the vote.
The country’s financial fate is far from certain, and the prospects of Greece coming to an agreement with European creditors may now be dimmer after the no vote. In the meantime, Greek banks remain closed, the economy is suffering from the financial chaos, and any new bailout agreement may now come with a higher price tag.
The historic vote against austerity is a vote against more budget cuts, privatization and high taxes on financially-strapped workers -- the same policies that have been strangling Greece's financial system. Now Prime Minister Tsipras, who supported the vote against more austerity, is scrambling to put together another bailout proposal.
Led by Germany (with its own history of failing to repay its debts), the assault on workers and the poor in Greece is both economic and political. When Greeks dared to elect the anti-austerity Syriza party to power -- after years of savage cuts imposed by bank-installed technocrats -- powerful creditors were determined to punish them.
Economist Paul Krugman explains:
But, as has always been the case, austerity didn't break the cycle of debt -- it only accelerated it (something even the IMF admits). This should be no surprise for an institution with a long history of ensnaring impoverished countries of the Global South under mountains for odious debt, a recipe for privatizing their natural resources and selling them off the highest multinational bidder. In Greece, unemployment stands above 25 percent and more than 50 percent of Greek youths are jobless.
The solution, says Dean Baker, is simple -- stop the austerity:
All of this may seem a little distant to working families on this side of the Atlantic. But what happens in the eurozone will reverberate across the global economy. And it wasn't long ago when austerity was on the lips American lawmakers and business leaders as a "solution" to our economic crisis.
For the corporate class, the fallout from the 2008 financial meltdown in the U.S. was an opportunity to gut the public sector and shift the costs of the crisis onto the backs of working Americans. The government took on massive debts accumulated on Wall Street, which provided the perfect conditions of "disaster capitalism" to cut public spending. We are now living with the consequences of budget cuts at state and local levels nationwide -- targeting everything from workers' pensions to basic services (which have been increasingly privatized).
Events in Europe are a lesson on how deep austerity can cut before hitting a nerve of democratic revolt. We all must stand in solidarity with the popular movement against austerity in Greece.
Led by Germany (with its own history of failing to repay its debts), the assault on workers and the poor in Greece is both economic and political. When Greeks dared to elect the anti-austerity Syriza party to power -- after years of savage cuts imposed by bank-installed technocrats -- powerful creditors were determined to punish them.
Economist Paul Krugman explains:
The campaign of bullying -- the attempt to terrify Greeks by cutting off bank financing and threatening general chaos, all with the almost open goal of pushing the current leftist government out of office -- was a shameful moment in a Europe that claims to believe in democratic principles. It would have set a terrible precedent if that campaign had succeeded, even if the creditors were making sense.
What’s more, they weren’t. 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.It's important to remember the economic crisis began in part with shady financial practices by financial giants like Goldman Sachs that allowed Greece to grow and conceal its debt. Over the years, previous governments in Athens have surrendered to international loan sharks, submitting to intense austerity measures that were supposed to pull Greece back from the brink of default and to a place of economic stability.
But, as has always been the case, austerity didn't break the cycle of debt -- it only accelerated it (something even the IMF admits). This should be no surprise for an institution with a long history of ensnaring impoverished countries of the Global South under mountains for odious debt, a recipe for privatizing their natural resources and selling them off the highest multinational bidder. In Greece, unemployment stands above 25 percent and more than 50 percent of Greek youths are jobless.
The solution, says Dean Baker, is simple -- stop the austerity:
The best solution would be a turn by the eurozone leadership away from austerity. Germany and other countries are not lending money to the Greeks to support their profligate lifestyles, they are lending money to Greece to allow the country to get through the austerity that its creditors have imposed on the country. If Greece's economy was allowed to grow, then it would not be facing a budget deficit.As far as what Greece owes, the solution is simpler: forgive the debt. Just as Germany was allowed to write down its postwar debt, relief for Greece could similarly lead to restored economic growth.
All of this may seem a little distant to working families on this side of the Atlantic. But what happens in the eurozone will reverberate across the global economy. And it wasn't long ago when austerity was on the lips American lawmakers and business leaders as a "solution" to our economic crisis.
For the corporate class, the fallout from the 2008 financial meltdown in the U.S. was an opportunity to gut the public sector and shift the costs of the crisis onto the backs of working Americans. The government took on massive debts accumulated on Wall Street, which provided the perfect conditions of "disaster capitalism" to cut public spending. We are now living with the consequences of budget cuts at state and local levels nationwide -- targeting everything from workers' pensions to basic services (which have been increasingly privatized).
Events in Europe are a lesson on how deep austerity can cut before hitting a nerve of democratic revolt. We all must stand in solidarity with the popular movement against austerity in Greece.
