Class bankruptcy PCP

"Class bankruptcy"

19th March 2012

Translated "Avante!" article by Jorge Cadima, member of the PCP International Department

During months, one was told a debt renegotiation was not to be mentioned and any deviation from the Troika’s programme fulfillment would, inexorably, lead to bankruptcy and catastrophe. And when, last week, Greece settled its inability of paying - on what the Financial Times (12.03.09) described as “ the greatest sovereign inability ever”. This is the consequence of the Troika’two year policies, which destroyed the Greek economy, leading an important part of the population unto poverty and to the explosion of its public debt - making it impossible to accomplish the respective obligations. The Greek default formalising took the form of an agreement with the majority of private creditors.

Trusting the newspapers headlines, this Greek debt restructuring involves important losses concerning the private creditors - the so-called hair-cut. Instead of mentioning a catastrophe, the EU great capital leaders praised the agreement. Sarkozy states: “ I am very happy a solution was found concerning the Greek crisis”. […] Currently, the problem is resolved” (in the Daily Telegraph, 12.03.10). Schaubel, the German Minister of Finance, declared it had been “ a historical opportunity” for Greece (in Daily Telegraph, 12.03..09). But the Financial Times has a different opinion: “ in spite of the optimism, the markets are currently betting Greece will again be in default, in the future” (12.03.09).

As usually, to understand these apparent disagreements, a class point of view, is demanded. Nouriel Roubini - a system economist - reveals part of the mystery, in a Financial Times article (12.03.07): “ The truth is that the private creditors achieved a soft agreement, at the same time the majority of the current and future damages were transferred to the official creditors [ public - NT]. And why?

The 110 thousand million Euro in private bonds supported by an increase of 130 thousand million Euro of the Greek debt, regarding official creditors. A significant amount of this increase of Greece’s official debt is intended to [bail out] the private creditors[…]. Loans of at least 25 thousand million Euro coming from the European Financial Stability Fund unto the Greek government are intended to recapitalize the banks, under a scheme in which they remain in private hands and allow their shareholders to buy any of the public capital injections with the guarantee of sweet prices.[…]

With three quarters of the Greek debt held by official creditors in 2014, the Greek public debt ought to have been almost socialized. The official creditors will have to face most of the huge further damages which carry on to be probable in the future, given the yet unsustainable levels of Greece’s debt”. In other words, Roubini says : “ The reality is that during the good times, the majority of the profits […] were privatized, whilst the majority of damages are currently socialized. Greece’s official creditors will be paid off by the tax payers, and not the private shareholders, which will end up by paying the majority of the damages”.

Roubini has the merit of talking in clear terms.. But there is more to it. The major victim of all this, are the workers and the people of Greece, which, in a short period of two years, watched their salary levels being cut, in many cases, in half, for the sake of “Europe with us”, work posts evaporate and the social and labour rights destroyed by the “social and economic cohesion”.

Hundreds of thousand Greek small retailers and industrialists , already bankrupt or about to yield to shady class transactions of “ our European partners”. On what concerns the “private creditors” - the great international finance, which had a central role within the crisis explosion - also profits with the limited credit lines at 1% tax, for many months, the ECB has conferred, leaving behind, as “guarantees,” Greek debt bonds of the Greek debt which value was currently cut off.
The great patronage seeing the return of work from sunrise to sunset and the new XXI century day’s work journey markets, profits.

Its class instrument - that imperialist EU which, with new Treaties has been transformed into a command centre of colonial nature for the distant peripheral “provinces”, inhabited by the PIGS,profits.

Our country is the next great victim ( in Evans - Pritchard, 12.03.08). But if they accomplish to bend the peripheral workers, they will soon attempt to extend it unto the European great powers workers back to the XIX century, in the name of this decrepit capitalism’s “modernity”. The answer is urgent.

Within Portugal, the next great battle is the 22nd March general strike.