Chris Newcombe
The fall out form the budget crisis in Greece is not restricted to that country, explains Chris Newcombe
Last December, the Greek ‘socialist’ Pasok government, which had been elected on promises to protect the poorest from the effects of the crisis, passed a budget that aims to save the bosses’ system at the expense of workers, pensioners, and youth.
They aim to cut the massive budget deficit from 13% to 9% in 2010, which means freezing public sector pay, slashing recruitment to the civil service, cutting bonuses, raising the retirement age, plus tax increases on essentials. More cuts would come in 2011 and 2012.
But this plan was not enough to calm the markets, mainly because the cuts necessary are so savage the markets are not convinced the Greek government can deliver. The European Commission (EC) has now ordered Greece to stick to the plan and be ready to impose further austerity – showing who is really in charge, and in whose interests they act.
The EC even brought in the European Central Bank (ECB), to add to the pressure and show markets – where the euro had received a battering – they are determined to force Greek workers to pay for the capitalists’ crisis. ECB President Jean-Claude Trichet says he will join in monitoring Greece’s budget cuts — and planning new ones if necessary.
Why is the situation so serious? Firstly, Greek national debt now exceeds its total annual production, and some expect the debt to reach 125% of GDP this year. As fears rise that Greece may default on payments – threatening the profits of financial institutions who lend to them – Greek debt is ‘downgraded’, meaning that interest rates rise to reflect the risk. This means an even bigger slice of government revenue – taxed from workers – goes to pay this interest.
Is this just a matter of Greece being the “sick person of Europe”? Well, no. We now hear daily about the so-called PIIGS – Portugal, Ireland, Italy, Greece, Spain – all of whom face budgetary crises. The demeaning acronym implies that this is the fault of these particular countries – of the ordinary people – who are ‘living beyond the means’ of their ‘weak’ economies.
But the problem is much more general – it is a feature of all developed economies in the EU, including the UK, and even the mighty USA. In the words of Financial Times correspondent Niall Ferguson :
“It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis… will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem… It is a fiscal crisis of the western world.”
Ferguson calls this the “fractal geometry of debt” – it’s the same everywhere; it’s only the scale of the problem that differs.
The IMF estimates the fiscal adjustments developed economies need to restore ‘stability’ over the decade ahead. Worst is Japan and the UK (a fiscal tightening of 13% of GDP). Then comes Ireland, Spain and Greece (9%). And in sixth place? The USA – which would need to tighten fiscal policy by 8.8% of GDP to satisfy the IMF.
The question facing every worker is this: do I pay for this crisis of the system, or do I join with fellow workers to fight back, and make the bosses pay for their own crisis?
Lets give the last word to a retired merchant seaman, 57-year-old Greek Alexandros Potamitis: “It wasn’t the workers who took all the money, it was the plutocracy. It’s them who should give it back.”
We know the ruling class never gives anything back – now it’s up to Greek, European, and workers all over our planet to take it back!