STOCK MARKET WATCH -- Thursday, 2 July 2015

[DemReadingDU]

21. Michael Hudson and Bill Black interview

6/30/15 Greece: On Behalf of Europe …

JESSICA DESVARIEUX, PRODUCER, TRNN: Welcome to The Real News. I’m Jessica Desvarieux in Baltimore.
I’m joined now by Bill Black, as well as Michael Hudson.


DESVARIEUX: So Bill, I’m going to start off with you. Can you just explain to our viewers who’s actually getting bailed out in this deal. Are creditor banks the ones benefiting at the end of the day?

BLACK: Well, the same people are getting bailed out that have been getting bailed out from the beginning of the Greek crisis, and that is foreign banks. So this money just moves in sort of an elaborate circle from the Troika, which is the European Commission, the European Central Bank, and the IMF, through the Greek government, through the Greek banks, and then they pay the foreign creditors. And they pay them just enough that they don’t have to recognize a loss for accounting purposes.

As Michael will explain, of late the big investors tend to be American hedge funds, as opposed to what used to be primarily French banks.

DESVARIEUX: Okay. Michael, I want to ask you about the role of French banks in all of this. Can you just speak to this, give us a sense of how they even got entangled in Greek debt.

HUDSON: Well, today’s problem with the debts really stem back from 2010 and 2011 when Greece obviously couldn’t pay. When Greece joined the Eurozone, it falsified its debt figures. The head of its central bank worked with Goldman Sachs to make it complicated derivatives to hide it all, and that was Lucas Papademos.

Well, in 2010 right after the PASOK party came to power in Greece, they revealed the fact that their figures had been fudged all along, and that the debt was so large that Greece couldn’t pay. So the International Monetary Fund, which hadn’t been making loan–almost had no customers in the world, had its European staff calculate. And the staff unanimously said, Greece can’t pay these debts. These are fraudulent debts that are all, that are way beyond the ability to pay. They’ve got to be written down. And the board of directors agreed.

But Dominique Strauss-Kahn, who was the head of the IMF when he wasn’t going to the sex parties, wanted to run for president of France. And he talked to Sarkozy, and Sarkozy said, wait a minute, French banks are the largest holders of Greek debt. If Greece doesn’t pay and writes them down, the French banks will go under. And German banks are the second. But then at the G8 meetings in 2011, President Obama went over along with Tim Geithner and said, our big campaign contributors are on Wall Street, and they’ve made huge bets that Greece can pay. If Greece doesn’t pay, then all these gamblers and derivative players are going to lose their bets. You’ve got to sacrifice Greece and you’ve got to drive it into poverty, and lend the Greek government the money to pay the bond holders so that our Wall Street banks won’t lose money.

So the European Central Bank told the IMF if you want to be a player, you’ve got to ignore what the stats said, and they did. And the European Central Bank and the IMF paid over 100 billion Euros to the bond holders. So Greece, instead of owing private bond holders, owed the IMF and the European Central Bank.
Now the European Central Bank wants to get paid, but the debts can’t be paid. So the central bank says, okay Greece. Sell us your islands. Sell us your ports. Sell us your lands. Sell us your raw materials. This is foreclosure time. And if you can’t pay, we want everything in the public domain. And you also have to impose austerity. You have–only 20 percent of your population has emigrated. You only have a 60 percent unemployment rate for youth. You’ve got to increase the unemployment rate to 80 percent, double the emigration, in order for us to make the loans to your government that will turn right around and pay us.


much mroe...
http://michael-hudson.com/2015/06/greece-on-behalf-of-europe/