So the very country that invented democracy, is now denied the benefit of it. The banks of France and Germany have successfully stopped the referendum on Greece to allow austerity to proceed. Troika will
layoff 30.000 employees in the public sector this year and 120.000 more until 2014, 20% cut for the pensions that are more than 1.200 euros per month and 40% for the pensioners that are under the age of 55(mostly women) and a new series of taxes which affect even people that live in the official level of poverty and earn about 350 euros per month.
Every Greek is obliged to pay forever a new poll tax- a new property tax according to the region that their house, apartment or shop belongs and a new tax on revenue taxes already paid...
The collective agreements are de facto abolished in most sectors and the workers are forced to sign a private agreement, with the minimum basic salary of 751 euros-20% lower for the young people under the age of 25.Hundreds of employees are working overtime without being paid while others work for 5 or 6 hours with wages of 200-300 euros. --CADTM
And to what end? They predict a lost decade of high unemployment and recession. I think that is utopian thinking. It is likely to be much worse and last longer than the prediction.
The unemployment is officially up to 16% and the IMF foresees a further increase to 18, 5% in 2012 with negative growth -2%(-5% this year). The number of homeless has increased at about 20-25% during the past two years. In the private sector hundreds of businesses are closing, the salaries are continuously decreasing, while many companies delay the salary payments for many months.
And despite all these hard austerity measures, the public debt will achieve in 2012, 189% of GDP, according the latest IMF’s report, from 172% that the international organization foresaw in June.--CADTM
All of this to prevent Greece from default. But what would happen if Greece had been allowed to democratically choose default? Would they be kicked out of the Eurozone. Yes. Back to the Drachma. Probably. Then what.
Ask Argentina. They did just that in 2002.
Lessons from Argentina
In the 70's and 80's Argentina was plagued by a serious of dictatorships interspersed with brief and ineffective democracies. Neoliberals descended on the country pumping money into useless huge projects for the benefit of foreign investors. By 1983 unemployment was at 18%. Democracy was back in vogue and with the new president came a new currency—the Austral. But the government had severe debt from the previous corrupt governments and, in 1989, Argentina could not repay the debt. Inflation rose to 5000% making the currency essentially useless. The president fled the country and Carlos Menem took office. He eventually restored the peso and fixed its value to the US dollar, guaranteeing that the peso could be exchanged for the dollar at any bank. He did this by keeping a reserve of US dollars in the Central Bank. This stabilized the currency allowing Argentina to recover.
But Argentina still had this enormous debt and Menem kept borrowing more. Stabilizing the currency lowered inflation and encouraged imports into the country. Dollars in turn left the country with purchase of goods. Menem had to keep getting loans to keep a supply of US dollars in banks. Additionally, as wages stabilized, industry slowly leached out of the country seeking greener low wage pastures in other countries. Factories began to close and unemployment rose.
Menem's government was famous for corruption, tax evasion by the rich and money laundering. Public debt rose precipitously under his watch. Yet, perhaps because he was friends with the Bushes, the IMF did not flinch, they continued to loan Argentina money.
By the end of Menem's rule in 1999, the dollar's value had dropped, Argentina's trade problems had spread to Mexico and Brazil, and state industries that had been privatized were being abandoned. Unemployment was back to critical levels and the economy stagnated. Yet the IMF insisted on maintaining the PEG to the US dollar and demanded austerity.
In a statement released this week, a group of unions opposed to Menem issued a statement noting that during his 10 years in office beginning in 1989, the IMF “looked the other way when waste, corruption and the introduction of mafias into the state constituted the aims of this administration, which left the country in 1999 with a fiscal deficit of more than $11 billion, with its industrial base and agriculture destroyed, with the greatest unemployment in its history, poverty reaching levels never before seen and a currency fictitiously attached to the dollar.” The statement likewise recalled that Menem maintained “carnal relations” with the US—a phrase coined by his foreign minister—and later cemented both a personal friendship and business ties with the Bush family.
Meanwhile, IMF officials have reportedly insisted that the Argentine Congress issue a public declaration promising not to pass legislation extending the moratorium on mortgage foreclosures and not to amend a newly enacted bankruptcy law. This politically humiliating demand is a measure of the agency’s lack of confidence that any government will be able to enforce the conditions it is imposing in Argentina.--WSWS
By 2002 unemployment was at 20%, rioting had broken out and people were quite literally dieing of starvation.
Argentina’s gross domestic product has fallen 20 percent compared to four years ago. Salaries have remained frozen while the cost of living has climbed 60 percent. Unemployment has soared to an official rate of 20 percent, and fully half of the country’s households have fallen below the official poverty line, unable to afford minimum food, shelter and clothing.
In recent weeks Argentina, once among South America’s most prosperous nations and a food exporter to the world, has been rocked by reports that up to half a million children are in danger of starving. The country’s newspapers have carried stories of children eating dirt together with pictures reminiscent of Biafra. In the impoverished northern province of Tucumán, four children starved to death in the space of two weeks.--WSWS
While the IMF insisted that austerity was necessary to fix Argentina's financial woes, Argeninians lost faith in political leaders seen as taking the well being of foreign industry and bankers over the well being of the nation's people. The call came for a change in government.
Among the most persistent demands being made by the IMF in recent weeks are political guarantees that the Argentine government will comply with any agreement that is signed. Duhalde has seen his popular approval ratings fall to single digits. He was appointed by the Legislative Assembly at the beginning of this year to fill out the remainder of the term of Radical party president Fernando de la Rua, who was forced out by a popular uprising.
Duhalde pledged to call early elections in March and turn over power to a newly elected government in May. While the IMF had pushed for the early vote, it has said little about the issue in recent months, while sections of the Argentine ruling elite are pressing for a return to the scheduled date next October.
No candidate has emerged within any of the traditional parties enjoying any degree of support. “Que se vayan todos,” or kick them all out, the slogan of the mass demonstrations of last December, remains the popular sentiment towards the country’s politicians. Former Peronist President Carlos Menem, whose corruption, sweeping privatizations and close ties to the US are blamed by most Argentines for the country’s current crisis, has indicated that he will be a candidate. --WSWS
In October of 2002, Argentina could take no more. Owing $16 billion over a 14 month period, she defaulted on her first billion dollar loan. The president attempted to restructure the loan with the IMF but the Fund insisted on further austerity and reversal of any meager measures Argentina had taken to help its people.
In particular, the IMF has objected to Duhalde’s announcement of a reduction in the Argentine sales tax from 21 to 19 percent. It has also demanded that the government raise public utility rates and move ahead aggressively in foreclosing on a quarter of a million mortgages that are now in default. Driving tens of thousands of families from their homes is seen by the agency as a necessary measure to restore investor confidence. --WSWS
Sound sort of familiar so far?
Unwilling to continue the same methods to “restore investor confidence” that the IMF had insisted on for years, the Argentine government announced its intent to stop payment.
"We're not saying the blame for what's wrong should be pinned on the fund (IMF)," Mr Atanasof said.
"We assume the responsibility as a country... but what we are saying is the bureaucracy at the Fund has promoted the policies that put us in this situation." --BBC
The immediate aftermath was severe. The remaining foreign investors fled the country shutting down almost all industry. Argentina was isolated from the rest of world financially. For six months the country suffered with essentially no national currency. Fortunately for the people of Argentina, years of currency instability created a multitude of local currencies which survived the collapse.
Then a minor economic miracle occurred. The people took charge.
During the economic collapse, many business owners and foreign investors drew all of their money out of the Argentine economy and sent it overseas. As a result, many small and medium enterprises closed due to lack of capital, thereby exacerbating unemployment. Many workers at these enterprises, faced with a sudden loss of employment and no source of income, decided to reopen businesses on their own, without the presence of the owners and their capital, as self-managed cooperatives.
Worker managed cooperative businesses range from ceramics factory Zanon (FaSinPat), to the four-star Hotel Bauen, to suit factory Brukman, to printing press Chilavert, and many others. In some cases, former owners sent police to remove workers out of these workplaces; this was sometimes successful but in other cases workers defended occupied workplaces against the state, the police, and the bosses.
A survey by an Argentina newspaper in the capital found that around 1/3 of the population had participated in general assemblies. The assemblies used to take place in street corners and public spaces, and generally gathered to discuss ways of helping each other in the face of eviction, or organizing around issues like health care, collective food buying, or conducting free food distribution programs. Some assemblies started to create new structures of health care and schooling, to replace the old ones that were not working. Neighborhood assemblies met once a week in a large assembly to discuss issues affecting the larger community. In 2004, Avi Lewis and Naomi Klein (author of No Logo) released the documentary The Take, about these events.
Some businesses have now been legally purchased by the workers for nominal fees, others remain 'occupied' by workers who have no legal standing with the state (and in some cases reject negotiation with the state on the grounds that working productively is its own justification). The Argentine government is considering a Law of Expropriation that would transfer some occupied businesses to their worker-managers.--Wiki
The result was pure economic magic:
Argentina has managed to return to growth with surprising strength; the GDP jumped 8.8% in 2003, 9.0% in 2004, 9.2% in 2005, 8.5% in 2006 and 8.7% in 2007. Though average wages have increased 17% annually since 2002 (jumping 25% in the year to May 2008), consumer prices have partly accompanied this surge; though not comparable to the levels of former crises, the inflation rate was 12.5% in 2005, 10% in 2006 and is believed by private economists to have approached 15% in 2007 and to exceed 20% during 2008(even if the Ministry of Economy refuses to acknowledge inflation greater than 10%). This has prompted the government to increase tariffs for exporters and to pressure retailers into one price truce after another in a bid to stabilize prices, so far with little effect.
While unemployment has been considerably reduced (it has been hovering around 8.5% since 2006), Argentina has so far failed to reach an equitable distribution of income (the wealthiest 10% of the population receives 31 times more income than the poorest 10%). This disparity, nevertheless, compares quite favorably to levels seen in most of Latin America.--Wiki
Poverty in Argentina
|2nd sem 2003||20.5%||47.8%|
|1st sem 2004||17.0%||44.3%|
|2nd sem 2004||15.0%||40.2%|
|1st sem 2005||13.6%||38.5%|
|2nd sem 2005||12.2%||33.8%|
|1st sem 2006||11.2%||31.4%|
|2nd sem 2006||8.7%||26.4%|
|2nd sem 2007||5.9%||20.6%|
|1st sem 2008||5.1%||17.8%|
|2nd sem 2008||4.4%||15.3%|
But what about the debt?
The Argentine government kept a firm stance, and finally got a deal in 2005 by which 76% of the defaulted bonds were exchanged by others, of a much lower nominal value (25–35% of the original) and at longer terms. In 2008, President Cristina Fernández de Kirchner announced she was studying a reopening of the 2005 swap to gain adhesion from the remaining 24% of the so-called "holdouts", and thereby fully exit the default with private investors.
In 2005, as a large and consistently growing fiscal surplus made it possible, Argentina shifted to a policy of "disindebtment" towards the IMF: paying the IMF in schedule, with no negotiation whenever possible, with the intention of gaining independence from it. On December 15, 2005, following a similar action by Brazil, President Kirchner suddenly announced that Argentina would pay the whole debt to the IMF. The debt payments, totaling 9.810 billion USD, were previously scheduled as installments until 2008. Argentina paid it with the central bank's foreign currency reserves.--Wiki
That's right---Argentina defaulted and said it wouldn't pay a dime of the debt until the terms were rewritten. They stood firm. Not only did they survive, but they flourished, and the banks caved. The debt was made reasonable and payable and Argentina got out of debt making its government and its economy its own again.
Got that Greece? How about you Italy? England? Oh and what do ya say, USA?