In a document written by the French economist Michel Husson and available on the page of the “Collectif pour un audit citoyen de la dette publique” (“Collective for a citizen audit of the public debt”), we learn that the Greek public debt went from 2,2 billion euros in 1970 to 317,2 billion euros in 2014, that in constant prices it’s been multiplied by 21 and that it is necessary, for those who want to have a more accurate understanding of the phenomena, to focus on the ratio debt/GDP which gives us a better knowledge of the level of debt of a state. This ratio debt/GDP has passed through variations that can be explained and do explain why Greece was already in bad shape even before the crisis happened.
During the seventies, the ratio debt/GDP remained low. It went from 17,1% to 20,8% (+3,7 points). Between 1980 and 1993, it increased quickly, going from 20,8% to 91,2% (+70,4 points). Between 1993 and 2007, its value stabilised, going from 91,2% to 103,1% (+11,9 points) and then, between 2007 and 2014, during a sudden rise, it went from 103,1% to 175,4% (+72,3 points). On July 2nd, the IMF announced that this ratio will reach 200% if the country is not given a grace period and a series of drop in value of its debt (IMF report).
On the eve of the crisis, Greece debt was the equivalent of 100% of its GDP.
Outrageous interest rates
Applying excessive interest rates is obviously damaging for an economy, moreover when they are higher than the GDP growth rate. In the case of Greece, the interest rates remained below the GDP growth rate during the seventies but they ended up exceeding it, and by far, between 1988 and 2000, “even reaching extremely high levels by comparison with the same indicator for the French debt” (Michel Husson). The document concludes on the subject that “if the interest rates on the Greek debt had not gone out of control between 1988 and 2000, the ratio debt/GDP would have been in 2007, 64,4% instead of103,1%, that is to say a difference of 38,7 points of GDP.” The debt interests, that constitute the return of the lenders who don’t pay or pay too little taxes, are the first reason of the weakening of Greece before the crisis. Almost 40% points of GDP. What a banquet!
Insufficient fiscal revenue.
The second factor that led to the increase of the ratio debt/GDP is the drop of fiscal revenue. The document shows that during the period before the entry of Greece in the Eurozone, the amount of fiscal revenue rocketed, due to the will of the government to apply the Maastricht criteria. But once the admission became a reality, a series of gift tax was made to the oligarchy : reduction of death duties, decrease of tax rates, and a decree of amnesty for tax evaders. The whole decision lead to a lowering of fiscal revenue important enough the put the public finances in jeopardy. Michel Husson concludes that “if the fiscal revenue hadn’t been lowered after 2000, the public debt in Greece woulf have represented 86,2 of GDP instead of 103,1%, which means a difference of 16,9 points of GDP.” Once again, the superrich are involved because they don’t pay enough or don’t pay at all.
Conclusion of Michel Husson
Michel Husson finishes his demonstration as follow : “The Greek debt should have represented only 45,3% of GDP instead of 103,1%, which leans a difference of 57,8 points of GDP that can be split up in an interest effect (40,9 points) and a revenue effect (16,9 points).” Let’s express it another way : if, in a perfect world, we wouldn’t have allowed the international of superrich to demand such outrageous interests and if the local oligarchy had paid taxes commensurate to their profits, then Greece would have spared 60 points of GDP, the investors wouldn’t have been thrown into panic and would have kept on lending money to the country, the Troika wouldn’t have appeared to promote a series of structural reforms bringing the GDP to drop by 25% and the ratio debt/GDP to drop by 33% at the same time. The unemployment wouldn’t have risen, neither the suicide rate, 800.000 employees of the private sector wouldn’t have to wait between 1 and 18 months to get paid for their work (Martalis) and the policemen wouldn’t have had to reintroduce their repressive tradition on Syntagma square during the night between July 15th and 16th.
The audience is not informed
But the mainstream media doesn’t explain all this to the audience. Instead of doing this, instead of doing the job they pretend to be paid for, the corporate journalists maintain that in Greece, there are to many civil servants (they certainly don’t criticize those working in the police force), that the Greeks have celebrated too much during the past years, and that, in spite of the reforms packages (Greek boys, the party’s over!), Greece has remained a bottomless pit. And everybody repeats the litany, everybody’s singing, without knowing that in 2001, the civil servants represented only 7% of the employees (8% in 2014), against 11% in Germany and 23% in France; that, of the 207 billion euros “lent” to Greece between 2010 and 2014, only 14,7 billion went to enrich the state coffers, the remainder went directly into the well-sewn and elastic pockets of the investors. Needless to say that Greece is going to pay interests until 2054 on loans it never received. But everyone keeps on singing that the reforms must go on.
It’s conceivable that the politicians don’t want to hear about those arguments. Because they’re too busy having meetings, dinners, discussions, cocktail parties, roundtables and other secret conversations we know nothing or very little about. Activities that reveal to us the reality of their assignment – the one hiding behind the official version of their job – given that they are only salesmen (and women) working for a caste that the French writer Georges Bernanos once called “the crooks of luxury hotels and sleeping-cars”.
It’s conceivable that embedded journalists refuse to hear anything about the truth just because their biased neurones can only memorize the litanies and recitations of the neoliberal doxa. We’ve seen them, in France, in documentaries such as, Les nouveaux chiens de garde (The New House Dogs) by Gilles Balbastre and Yannick Kergoat or Les ânes ont soif (The idiots are thirsty) by Pierre Carles. We know they don’t care, that they prefer having debates on TV with those of their class and participate in the “dîner du Siècle” (at the “Automobile Club”, Place de la Concorde in Paris) where they go once a month to receive the orders of those who hold their leasch and have shown them how to give the paw without dribbling on the carpet.
But the most incomprehensible is the fact that a man like Schaüble, who unavoidably knows the truth and who desires so much the culprit to pay his debts, doesn’t strangle the bankers and investors who took advantage of outrageous interest rates or the members of the Troïka who threw the country in an abyss of deep economic crisis. Tell me why. Because they’re out of reach? Because they control him? Because he’s part of the business?
Herr Schaüble, when we look at you, what do we see? A honest politician? No. A wise administrator? No. A good German patriot? Neither. We just see the subordinate of a hidden agenda that we partly figure out, we, the suspicious who have learnt that politics is the art of lying and that your masters, the Crassus of nowadays, won’t stop until they suddenly die after gobbling up too much of this world.
And we’re looking forward to seeing this moment impatiently.
References (in French) :
Michel Husson, « Grèce : les vraies causes de la dette publique : Contribution à l’audit de la dette grecque », CAC, 11 Février 2015
Sotiris Martalis, « De l’adoption de l’accord au remaniement gouvernemental », CADTM, 20 juillet 2015
Photography : Bust of Marcus Licinius Crassus, the richest man in Rome (115 BC – 53 BC)