Nowhere is the antagonism between global billionaires and the rest of us more intense today than in Greece. Bankers want the Greek government to pass new austerity legislation, which calls for deep cuts to government spending, to ensure that loans they made to the Greek government are paid back in full. Greek workers, on the other hand, heeded a call for a general strike on Wednesday demanding that the government reject the austerity measures that will curb collective bargaining, cut public sector workers’ pay, privatize government assets, reduce pensions, and increase unemployment.
The Greek Parliament will cast a final vote on the austerity measures today. Yesterday, the measures passed a preliminary vote by a narrow margin.
The proposed austerity measures will mean that Greek workers, already poor compared to their Western European counterparts, will become even poorer.
This Greek tragedy began to unfold in 2010 when it came to light that investment bankers like Goldman Sachs had for years been selling debt derivatives to the Greek government. These transactions, which included upfront cash payments to the government and a ballooning interest rate, helped the government hide its heavy debt load.
The news of the deceit caused bond traders to panic. They feared that the Greek government would default on the bonds that traders were holding. The panic caused interest rates to rise, which caused more panic.
The European Central Bank arranged loans to stabilize the situation, but demanded austerity measures in return, which led to pay cuts and layoffs in the public and private sectors. Because people had less money to spend, business activity slowed down, which in turn reduced government revenue, which made it difficult for the government to meet its debt obligations, which caused another panic, and demands from bankers for more austerity.
Today’s tragedy has its roots in the 1930s, said Greek economist Yanis Varoufakis in a 2010 interview with Doug Henwood on his Behind the News radio program. A 20-year anti-fascist civil war that started in the 1930s led to a mass exodus of Greek workers, which stunted the growth of the country’s nascent manufacturing sector, which if allowed to develop could have provided jobs with decent wages that could have spurred economic growth.
The lost manufacturing jobs were replaced with low-paying service jobs, which kept Greece mired in poverty. This trend began to reverse itself in the 1970s, but in the 1980s when the leveraged buyout frenzy began many of these manufacturing firms were bought by foreign investors, primarily from Germany, who sold off the firms’ assets and converted their remaining space into warehouses to store foreign goods for sale on the Greek market.
Booms financed by debt bubbles spurred some growth in the 1990s and 2000s, but when the largest bubble burst in 2008, private companies went under and the government could no longer finance its debt, which led to the first panic in 2010.
Today the weight of all the bad decisions made by foreign and domestic investors and by governments headed by both conservatives and socialists is being borne by Greek workers. Public sector workers, who took 20 percent pay cuts in 2010 are now being told they must accept more pay cuts, ranging from 20 percent to 50 percent.
Public services are also taking big cuts. A Greek teacher recently told the BBC that her school already lacks supplies and computers and if the austerity measures pass, she isn’t sure if the school will be able to heat its classrooms this winter.
Yesterday’s general strike was joined by public sector and private sector workers, many of whom massed on the streets of Athens near the Parliament building. Today, the strikers will return to the Parliament to confront lawmakers as they prepare for the final vote on the austerity measures.
At a rally on Wednesday, a leader of PAME, one of the unions that called the general strike, Giorgos Perros, urged the crowd to continue the fight against the austerity measures. “There is no pro-people PASOK,” said Perros, referring to the socialist party now leading the government. “There is no pro-people government no matter if it is called ‘center-left’, or ‘left,’, if it does not come into conflict with the monopolies, if its program does not include the overthrow of the monopolies or in other words their socialization. Either with the people or with the monopolies. Workers’- people’s power or monopolies’ power. There is no other way! Don’t waste any moment. Counterattack all together! Tomorrow, on Thursday everyone must come to the encirclement of the Parliament by PAME from all sides and streets.”