The Hoi Polloi vs. Goldman Sachs


February 15

Greece is turning into a battle royal between the global financial elites and the average worker in the industrial West. This started out as a more limited struggle, pitting the finance ministers and central banks of the European Union against the Greek unions, but the fight has unexpectedly broadened with news of the surreptitious involvement of Goldman Sachs in helping Greece avoid borrowing constraints.

The picture painted in the Western financial press makes the unions the villain in this play. The unions are described as greedy, lazy, too quick to strike, and insensitive to the burdens they were imposing on the Greek economy. To cope with union threats and extortion, various Greek governments had no choice but to borrow excessively, and well beyond the European Union target range that allowed domestic budget deficits to be no higher than 3% of GDP. As of last year, Greece’s budget deficit was 12.7% of GDP.

The sheer level of these deficits – the highest in the European community – has spooked international investors and the ratings agencies like Moody’s, which have dropped the Greek sovereign credit rating and threatened further demotions if nothing is done. This, along with the prospect of default on their government debt, has thrown Greece into a crisis and into the hands of the EU commissioners and finance officials who are contemplating a bailout.

Another way to look at this is to ask yourself who knows how much has really been borrowed by various governments around the world?

The EU is demanding that the Greek government commit to shock therapy, beginning this year, as a way of earning any bailout money from their neighbors. The therapy agreed to so far by the Greek government includes worker layoffs, salary freezes, service cutbacks, higher taxes, and a campaign against tax cheating. The prime minister has pledged to reduce the deficit to 8.7% of GDP by the end of this year, but this isn’t good enough for some EU commissioners, who expect the deficit to be within the 3% limit by next year at the latest.

The “villains” are not accepting either this situation or the blame. They have instituted widespread strikes of public services. The public is being seriously discommoded by these strikes but has so far not taken to blaming the unions for Greece’s crisis. There is widespread disdain in Greece, as in many other countries, with the global financial elites responsible for the international credit crisis.

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