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HEY, did you hear the news? My friend Yanis Varoufakis (okay, okay, he’s not my friend, but I’ve been getting his emails and blogs for so long it feels like it) has been named Greece’s finance minister.
I can’t wait to see what he does in this position to tackle the ‘Greek crisis’, which is really a European crisis. I am pretty sure it will be unexpected and pragmatic – people-pragmatic, that is, not business-as-usual-pragmatic.
I’d been rethinking the history of recent times already, because the other day I found Michael Lewis’ book Boomerang in a box of books for R20 each. If you never saw it, the financial writer covers the economic crisis (up till the publication date in late 2011).
He does it in such a fascinating way, looking at the people involved in the crisis - the Icelandic fishermen who abandoned fishing to turn their country into a hedge fund, the Greek monks whose actions exposed some of the troubling culture and practices behind the Greek disaster, the glorious Irish activist in his seventies who cultivated two rotten eggs to take with him and throw at the head honcho during a shareholders’ meeting (his grandchildren gathered the news clippings in an album they entitled 'Granddad’s Eggcellent Adventure’)… and the German bankers who behaved so strangely.
“In a moment of temptation,” Lewis writes, “Germany became something like a mirror image to Iceland and Ireland and Greece - and the United States. Other countries used foreign money to fuel various forms of insanity. The Germans, through their bankers, used their own money to enable foreigners to behave insanely.”
And lost billions of dollars as a result. “Indeed, one view of the European debt crisis – the Greek street view – is that it is an elaborate attempt by the German government on behalf of its banks to get their money back without calling attention to what they are up to,” he says later.
Lewis’ comments have in some cases been overtaken by rapid-fire events in succeeding years and frankly, I don’t think we will have a decent, comprehensive history of the disaster that continues to rumble around the world in a never-ending round of shocks and after-shocks until at least 50 years have passed.
But he clearly illustrates one thing that has worried away at me ever since the first fallout was felt in Europe: the governments, bankers and stockbrokers create the trouble. When the stinky stuff hits the fan, do they get thrown in jail? No. It’s the poor, the working class, the pensioners, the vulnerable who pay the price of the deals they did, the stupidity they evinced.
Yes, even in the USA. Did you think (as I’ll admit I did) that the sub-prime business was all about poor people dumb enough to take out mortgages they couldn’t afford?
“Irresponsible lending might have been one of the many causes of the financial crisis—but not just irresponsible lending to poor people," according to a new study.
"The large majority of mortgage dollars originated between 2002 and 2006 are obtained by middle- and high-income borrowers (not the poor)," the authors write. "In addition, borrowers in the middle and top of the distribution are the ones that contributed most significantly to the increase in mortgages in default after 2007."
The Washington Post commented on January 27 2015: "Rich people tend to take out larger mortgages, of course, but the fact is that the amount of money poor borrowers failed to pay back was just never that significant.”
In Greece, austerity hit the vulnerable so hard that the suicide rate jumped enormously, especially among men in their fifties, the unemployed and those in financial difficulties.
Poor bear the brunt, the rich get away unscathed
“Working-class people felt they were being punished for the mistakes of the rich and that the rich were largely unscathed,” wrote Alex Andreou in the Guardian (January 26 2015), explaining why he’d voted for Syriza. So it’s understandable that Syriza’s anti-austerity platform proved popular.
It really bugs me that austerity – which causes such hardship to ordinary people – became THE prescription for the crisis... when it doesn’t work! “Two years after the Greek program began,” Paul Krugman wrote in the New York Times (January 26 2015), “the IMF looked for historical examples where Greek-type programs, attempts to pay down debt through austerity without major debt relief or inflation, had been successful. It didn’t find any.”
Indeed, just days ago the Bank of England governor, Mark Carnery, attacked austerity, saying the Eurozone should ease budget cuts.
What will Greece do now? Says Varoufakis: “My view is that we are partners, we should stop moralising, we should stop pointing fingers at each other. Biblical economics, ‘an eye for an eye, a tooth for a tooth’, leave everybody blind and toothless. We should simply sit down [and] ask the very simple question: ‘How can we render the Greek social economy sustainable again so that the costs to the average German, to the average Austrian, to the average European, of the Greek crisis are minimised'?”
For the average person - please note, not the banker - the wealthy one-percenter, the politico; for the human in the street. If Greece can take steps towards making that happen, in the teeth of the huge opposition the new government faces, it will be doing something new and worth taking note of.
*Mandi Smallhorne is a versatile journalist and editor. Views expressed are her own. Follow her on twitter.
I can’t wait to see what he does in this position to tackle the ‘Greek crisis’, which is really a European crisis. I am pretty sure it will be unexpected and pragmatic – people-pragmatic, that is, not business-as-usual-pragmatic.
I’d been rethinking the history of recent times already, because the other day I found Michael Lewis’ book Boomerang in a box of books for R20 each. If you never saw it, the financial writer covers the economic crisis (up till the publication date in late 2011).
He does it in such a fascinating way, looking at the people involved in the crisis - the Icelandic fishermen who abandoned fishing to turn their country into a hedge fund, the Greek monks whose actions exposed some of the troubling culture and practices behind the Greek disaster, the glorious Irish activist in his seventies who cultivated two rotten eggs to take with him and throw at the head honcho during a shareholders’ meeting (his grandchildren gathered the news clippings in an album they entitled 'Granddad’s Eggcellent Adventure’)… and the German bankers who behaved so strangely.
“In a moment of temptation,” Lewis writes, “Germany became something like a mirror image to Iceland and Ireland and Greece - and the United States. Other countries used foreign money to fuel various forms of insanity. The Germans, through their bankers, used their own money to enable foreigners to behave insanely.”
And lost billions of dollars as a result. “Indeed, one view of the European debt crisis – the Greek street view – is that it is an elaborate attempt by the German government on behalf of its banks to get their money back without calling attention to what they are up to,” he says later.
Lewis’ comments have in some cases been overtaken by rapid-fire events in succeeding years and frankly, I don’t think we will have a decent, comprehensive history of the disaster that continues to rumble around the world in a never-ending round of shocks and after-shocks until at least 50 years have passed.
But he clearly illustrates one thing that has worried away at me ever since the first fallout was felt in Europe: the governments, bankers and stockbrokers create the trouble. When the stinky stuff hits the fan, do they get thrown in jail? No. It’s the poor, the working class, the pensioners, the vulnerable who pay the price of the deals they did, the stupidity they evinced.
Yes, even in the USA. Did you think (as I’ll admit I did) that the sub-prime business was all about poor people dumb enough to take out mortgages they couldn’t afford?
“Irresponsible lending might have been one of the many causes of the financial crisis—but not just irresponsible lending to poor people," according to a new study.
"The large majority of mortgage dollars originated between 2002 and 2006 are obtained by middle- and high-income borrowers (not the poor)," the authors write. "In addition, borrowers in the middle and top of the distribution are the ones that contributed most significantly to the increase in mortgages in default after 2007."
The Washington Post commented on January 27 2015: "Rich people tend to take out larger mortgages, of course, but the fact is that the amount of money poor borrowers failed to pay back was just never that significant.”
In Greece, austerity hit the vulnerable so hard that the suicide rate jumped enormously, especially among men in their fifties, the unemployed and those in financial difficulties.
Poor bear the brunt, the rich get away unscathed
“Working-class people felt they were being punished for the mistakes of the rich and that the rich were largely unscathed,” wrote Alex Andreou in the Guardian (January 26 2015), explaining why he’d voted for Syriza. So it’s understandable that Syriza’s anti-austerity platform proved popular.
It really bugs me that austerity – which causes such hardship to ordinary people – became THE prescription for the crisis... when it doesn’t work! “Two years after the Greek program began,” Paul Krugman wrote in the New York Times (January 26 2015), “the IMF looked for historical examples where Greek-type programs, attempts to pay down debt through austerity without major debt relief or inflation, had been successful. It didn’t find any.”
Indeed, just days ago the Bank of England governor, Mark Carnery, attacked austerity, saying the Eurozone should ease budget cuts.
What will Greece do now? Says Varoufakis: “My view is that we are partners, we should stop moralising, we should stop pointing fingers at each other. Biblical economics, ‘an eye for an eye, a tooth for a tooth’, leave everybody blind and toothless. We should simply sit down [and] ask the very simple question: ‘How can we render the Greek social economy sustainable again so that the costs to the average German, to the average Austrian, to the average European, of the Greek crisis are minimised'?”
For the average person - please note, not the banker - the wealthy one-percenter, the politico; for the human in the street. If Greece can take steps towards making that happen, in the teeth of the huge opposition the new government faces, it will be doing something new and worth taking note of.
*Mandi Smallhorne is a versatile journalist and editor. Views expressed are her own. Follow her on twitter.
