Who is more worried about Greece defaulting on its debts – Tsipras or the creditors?

Alexis Tsipras.

Alexis Tsipras.

If the Greek government is holding further talks with its creditors, it is because the IMF and the Eurozone are afraid – not Alexis Tsipras.

The IMF, the European Central Bank and the European Union have a lot riding on their attempt to get Greece to give in and submit meekly to further austerity measures that are designed to keep that country in a debt-servicing economy rather than help get it back in the black.

The idea – as This Blog has reported before – was to create a debt trap, similar to that created for the so-called Developing Nations – and keep Greece in it.

Greece could continue receiving financial support if it sold off nationally-owned assets, privatised services and increased taxes – thereby insuring that it could never actually repay the loans; the profit-making facilities would all have been sold off and the tax burden on citizens would be so great that they could never pay their way out.

But Tsipras came into government on a promise to end austerity measures like this. His sticking-point, it seems, is that this may mean defaulting on the nation’s debts and dropping out of the Euro – returning to a currency unique to Greece – and the electorate doesn’t seem to want that.

Defaulting on loans isn’t as bad for a nation as it may seem. It means all those involved have to agree that the loan won’t be repaid under current conditions and new conditions must be negotiated. The Troika opposes this because its debt trap relies on presenting an illusion that the loans can be honoured. It is only an illusion; Tsipras knows that.

It seems to This Writer that he would be better-off taking a leaf out of Germany’s (history) book. When Gustav Streseman became the new Chancellor of the Republic in the 1920s, debt repayments had crippled that country. Inflation was out of control and industry had ground to a halt due to strike action.

Streseman abandoned Germany’s old currency and introduced a brand new version which was given a very high, stable starting value through the backing of US gold. Similar options are open to Greece, if it abandons the Euro.

Streseman negotiated a new, more realistic arrangement with his country’s creditors, cutting the reparations to be paid by Germany for World War I down from a wildly-punitive £2 billion to the more reasonable £50 million. He also ended the strike and ordered a full- scale return to work, making it possible to pay off this amount. This also is possible for Greece, if it refuses the austerity being proposed by the Troika.

Greece’s creditors will do everything they can to stop this from happening. They want Greece to join the Developing World countries who – as recently as 2011 – were paying back nearly $5 for every $1 lent to them by the western banks. They don’t want Greece to become another Germany; that would profit Greece – not them.

Here in the UK, it is in our interest to hope that Tsipras doesn’t blow it. He could find himself leading the way out of the neoliberal debt trap – not just for Greece, but for many other nations as well.

All that is required is the political will.

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  1. First Night Design June 30, 2015 at 3:15 pm - Reply

    Thank you, Mike. You’ve put into words what I’ve been hoping, especially as we now live in Crete!

  2. hayfords June 30, 2015 at 3:41 pm - Reply

    Tsipras is afraid because he knows the polls are showing a yes vote on Sunday. Then he will be finished (a good thing).

    • Mike Sivier June 30, 2015 at 6:53 pm - Reply

      We shall see.
      I reckon the Greek people know he’s working for them, whereas the IMF etc aren’t.

    • Daniel July 1, 2015 at 7:49 am - Reply

      A good thing? You believe that democracy should not be allowed, that the Greek people should not have a government that represents them rather than the banks and big business? I assume that you also believe that 25% unemployment (60% youth unemployment) is a “price worth paying” for ensuring the banking elite retain their power and wealth?

  3. thelovelywibblywobblyoldlady June 30, 2015 at 4:06 pm - Reply

    The Greek people want an end to austerity and they also want to remain in the Euro. Tsipras has said he can’t do both and has asked the Greek people to give him instructions by voting. This is exactly what politicians SHOULD do … that is what democracy is. Good luck to Tsipras and the Greek people.

  4. hayfords June 30, 2015 at 4:51 pm - Reply

    This is what the BBC is saying

    The Greek government has requested a new bailout deal from the eurozone, just hours before it must repay €1.6bn (£1.1bn) to the International Monetary Fund (IMF).

    Greece is asking for a new two-year €29.1bn aid deal from a bailout mechanism for eurozone countries.

    • Mike Sivier June 30, 2015 at 6:54 pm - Reply

      That’s right: Greece is asking for a renegotiated deal – as Germany did in the 1920s.

  5. concernedkev June 30, 2015 at 7:56 pm - Reply

    Let us try and look at this from an ancient premise. It is a law against Gods wisdom that those who lend charge interest especially if it is exorbitant to the point where it cripples the borrower. The IMF and all Central Banks no matter what nation are committing a major crime in the eyes of the Almighty. This law applies to all the major Abrahamic beliefs. You may not agree with this analysis but it is based on Satanic followers like the Masons and other likewise groups. “You cannot serve two masters”. You either serve God or Mammon(Money”. When the people of the world realise this and turn back to God “All will be well”. If everybody prayed from the heart for a fair and equitable World and that caring becomes OUR main aim in life ie loving each other as we would want to be loved ourselves then life on this planet would be transformed. USUARY is a great SIN against all humanity. What you have you should share if you have more than you need.

  6. Mr.Angry July 1, 2015 at 6:39 am - Reply

    Great article Mike whole heartedly agree with you, I know it is a major decision for the Greek population, but with that said it’s just not working and they are being held to ransom.

    If they go it alone I think Spain will be next in line that will shake up the IMF etc.

  7. Sasson Hann July 1, 2015 at 8:51 am - Reply

    Yep. This is what I’ve been saying all along about Germany. And what about the UK? Well we had debt to GDP in the mid 200’s %, but with help we still managed to grow and get the country back on its feet, therefore why can’t a similar deal be struck for Greece?

    It’s typical of what’s happening in many countries: selling of assets that affect the current account; out sourcing (that costs more); slashing benefits etc. All this will do is stunt growth: ANYONE can see this; you don’t need a degree in economics to understand.

    Really then, like austerity here, it’s more ideological than practical/helpful; it’s like fining council tax payers when they haven’t the income to pay it, or the stupid laws the LAs try to bring in to fine rough sleepers £1000 when they haven’t the money in the first place.

    I read a blog today where people are crowd-funding Greece:


    I couldn’t find the exact element on the funding site (they’re supposed to have raised £2000,000 in 2 days), but there are many different things in Greece that you can help with, so I’m going to give it a go.

  8. hayfords July 1, 2015 at 10:05 am - Reply

    It is being reported on CNN that the Greek PM is backing down and accepting the deal he was offered. There have been mass demos in favour of Yes in the referendum. I think he fears being on the wrong side of history. A Yes in the referendum would have meant his going. He may think that this way he can cling on to power. Funny how power seduces people from their published intentions.

    • Mike Sivier July 1, 2015 at 6:45 pm - Reply

      You should have read the article. Merkel had said there would be no further negotiations before the referendum, so Tsipras offered another deal. Now she has a choice between sticking to her word, letting him appear to be the reasonable one and facing a “no” vote at the referendum, or going back to the table, proving that there is no “final offer” beyond which the Troika will not go, and facing a “no” vote at the referendum from Greek people who want a better deal.
      There have been demonstrations in favour of “yes”, with people bullied into attending by their bosses. Do you think they’re going to vote “yes” when that will encourage their bosses into similar behaviour in the future? I don’t.
      Tsipras is sticking to his intentions, which is to get the best deal for Greece and to bring back good government.
      What do you mean by “the wrong side of history”? The neoliberal Troika is on the wrong side – they don’t give a damn about people – only money.

      • hayfords July 1, 2015 at 7:28 pm - Reply

        Merkel says no deal before the referendum as she and most commentators believe there will be a Yes result then the Greek government will be history.

        • Mike Sivier July 1, 2015 at 7:29 pm - Reply

          Yep. She’s probably wishing she could eat her words.

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