Germany after Capitalism

“Could Greece’s next rescue payout go straight into the pockets of London hedge funds?” asked the International Herald Tribune (IHT) on it’s front page on 11th January 2012. And, in Germany, sentiment over further bail-outs and rescue missions for the financial sector are gaining ground not only among “Occupy” activists but the ordinary citizen, the ‘real’ 99%.

Just when Greece is expecting to be handed the next life-line of 30 billion Euros from the European Union and International Monetary Fund investment banks and hedge fund are betting on a major payout into their pockets.

“With stakes so high, investors are betting that Europe will go the extra mile to keep debt stained Greece afloat, and if the price to do that means that taxpayer funds end up bolstering the returns of a few hardy speculators – then, as far as they are concerned, the better”, the IHT writes.

But, all this is depending on Greece’s ability and willingness to accept harsh austerity criteria and barbaric social cuts.

In the meantime, the New York Times reported that hedge funds threaten to sue the Greek government at the European Court for Human Rights in Strasbourg should a deliberate state bankruptcy force hedge funds to write off parts or all of their demands.

Greek’s Prime Minister Loukas Papademos suggested that the government in Athens could as well force creditors to a debt cut by a simple law referred to as ‘collective action clauses’ and refinance all of it’s debts in this manner.

German SPIEGEL Magazine on 19th January 2012 asserted that the likelihood that the funds that are awash with virtual money are going to sue Greece is rising with every delay of the release of the rescue funds to the Greek government.

In South America, hedge funds and big private speculators had in the past won such cases against governments, but so far nobody ever had claimed speculation and profit maximisation to be guaranteed a ‘human’ right.

Amnesty International would probably find it hard to list such a case as a violation of fundamental rights although it is clear that in this regard Hungary, for instance, probably would have a clean bill of health.

And, as one speaks about engaging in humanitarian wars against Syria and Iran, one may wonder when Abs€Urdistan will be bombed by some hedge funds that aren’t being paid back by Greece, Portugal, Spain, Ireland and Italy.

Technically, what our democratically elected leaders were up to amounts to the same tricks the ‘masters of the universe’, the investment bankers, hedge fund junkies and private equity sharks applied: a tool is being used to package a risk and make from a quite limited amount of cash a multiple of it. By once more defrauding the taxpayers only a few weeks of time have been bought during which more and more risks are transferred from the banks to the public hand, ultimately the citizen who will find hospitals, schools, libraries, universities, theatres and concert halls be closed.

But, as the end is nearing with France being the next economy to fall bankrupt even these lubricous trillion-fold umbrellas sooner than expected again reached their limits. The plan- and senseless activities by the EU’s governments increasingly became a threat to the European idea, the solidarity among member states and the wellbeing of the citizens of Europe. Only way out would have been to liberate public finances from the dictate of the private capital markets. This means that EU member states ought to refinance themselves at a public European bank at low interest rates.

By circumventing the private banks who themselves refinance at the ECB at a very low interest rate but give away that money for exorbitant rates to governments a lot of unnecessary costs will be saved. At the same time it is of utmost importance to take away the ‘casino-tokens’ from the rich upper class by banning all investment banking, the introduction of a Europe-wide wealth tax for ultra rich and last but not least a significant hair cut of at least 60-75% of those debts.

One knew two years ago, in spring 2010, that Greece will never be able to pay back it’s debt that had been accumulated by recklessly importing top shelf products and arms from Germany while ‘investment’ banks such as Goldman Sachs and Deutsche Bank speculated with Greek sovereign debts, but nobody cared. The EU Commission, all groups in the European Parliament as well as the European Central Bank could have known as even we journalists had written about the dangers and asked the democratically elected leaders questions about the very issue, but either the questions were avoided or simply not being addressed. Persons who have persistently avoided answering my questions were exactly those who now seem to be the most worried leaders who are still in charge. EU Commission President José Manuel Barroso always referred to his ‘Economic and Monetary Affairs’ Commissioners, Joaquin Almunia (at least he by education is an economist and could have been able to tackle an issue) or his successor Olli Rehn.

Truth is that 187 days before August 11, 2007, when the first credit crunch made the crisis visible, at that time Economic Affairs Commissioner Almunia once more avoided a specific question I put to him regarding the piling up of Southern and Eastern European debts. And, in January 2011, when being asked why the “Six Pack” of ‘Economic Governance’ didn’t contain anything about a suffering by private banks, Mr Barroso referred my question to Mr Rehn who then said that “it was not in the interest of the EU Commission to let banks suffer”. At the same time the two conspired together with EU finance ministers already over new ‘rescue’ packages for the PIGS (Brussels terminology for Portugal, Ireland, Greece and Spain) that again only benefited the banks and lead to Greece being indebted by 20 billion Euros than at the beginning of the crisis.

The question arises how much longer one should stay at the sidelines and pretend that one trusts the democratic functioning of our leaders when it becomes more and more evident every day that not only a few warning signals were misread but that deliberately European law is being broken by those leaders who also seem to ignore any morals and the founding principles of the European Community that had always inspired any developments since the Treaty of Rome in 1957. Now that we are confronted with the rest of the Euro-zone being up for a haircut while everything else will stay as it is, the problem will not only persist but grow even bigger as he next countries, Portugal and Italy, eventually also France and last but not least Germany, won’t have any chances any longer to refinance their obligations. Germany’s exit strategy in introducing it’s Neue Deutsche Mark will lead to hyperinflation across the former Euro-zone and also in Germany as the German export-strategy will no longer work leaving huge over-capacities behind while domestic demand in Germany won’t be able to bridge the gap due to smashed purchasing power and low wages that are on the levels of the early 1980ies.

That’s why, in order to rescue the EURO, we would have had to go much further and put into motion a completely different system of refinancing state-debts allowing for tapping governments the funds at the ESFS (European ‘IMF’) or at the ECB. Critics are quick to cite inflationary risks but there won’t be more money being printed than it is right now as we would save the enormous amount of interests we are currently handing over to private banks that are still the mediators or brokers and nothing else in this stupid game.