The prognosis here for the Greeks is not so nice as PCR supposed. If they are to escape the worst (which is now looking unlikely), then they must adopt some of Ellen Brown's options. Though Americans don't know it, the same must be done in the US, because when the big-name banks collapse, as they must, they will "bail in", i.e., dip into your savings accounts.

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“Guerrilla Warfare Against a Hegemonic Power”: The Challenge and Promise of Greece

Posted on July 9, 2015 by Ellen Brown                                                               Original here

Banks create money when they make loans. Greece could restore the liquidity desperately needed by its banks and its economy by nationalizing the banks and issuing digital loans backed by government guarantees to its ailing businesses. Greece could provide an inspiring model of sustainable prosperity for the world. But it is being strangled by a hegemonic power in a financial war that is being waged against us all.  

On July 4, 2015, one day before the national vote on the austerity demands of Greece’s creditors, it was rumored in the Financial Times that Greek banks were preparing to “bail in” (or confiscate) depositor funds to replace the liquidity choked off by the European Central Bank.

The response of the Syriza government, to its credit, was “no way.” As reported in Zerohedge, the government was prepared to pursue three “nuclear options” to protect the deposits of the Greek people:

• nationalize the banks,
• launch a parallel currency in the form of electronic California-style IOUs, and
• use the Greek central bank’s printing press to issue euros.

Ambrose Evans-Pritchard wrote in the UK Telegraph:

Syriza sources say the Greek ministry of finance is examining options to take direct control of the banking system if need be rather than accept a draconian seizure of depositor savings – reportedly a ‘bail-in’ above a threshhold of €8,000 – and to prevent any banks being shut down on the orders of the ECB.
Government officials recognize that this would lead to an unprecedented rift with the EU authorities. But Syriza’s attitude at this stage is that their only defense against a hegemonic power is to fight guerrilla warfare.

The Hegemonic Power of the ECB

The Greek crisis is a banking crisis, and it was precipitated largely by the Mafia-like tactics of the European Central Bank and the international banks it serves (notably Goldman Sachs). As Jeffrey Sachs observed in the Financial Times in 2012:

The Greek economy is collapsing not mainly from fiscal austerity or the lack of external competitiveness but from the chronic lack of working capital. Greece’s small and medium-sized enterprises can no longer obtain funding. . . . The shutdown of Greece’s banking sector brings to mind the dramatic shrinkage of bank lending during 1929-33 in the Great Depression.

Economist James Galbraith explains the critical role of the ECB in this shutdown:

A central bank is supposed to protect the financial stability of solvent banks. But from early February, the ECB cut off direct financing of Greek banks, instead drip-feeding them expensive liquidity on special “emergency” terms. This promoted a slow run on the banks and paralyzed economic activity. When the negotiations broke down, the ECB capped the assistance, prompting a fast bank run and giving them an excuse to impose capital controls and effectively shut them down.

In December 2014, when the Greek Parliament was threatening to reject the pro-austerity presidential candidate, Goldman Sachs warned in a memo:

In the event of a severe Greek government clash with international lenders, interruption of liquidity provision to Greek banks by the ECB could potentially even lead to a Cyprus-style prolonged “bank holiday”.

And that is exactly what happened after the anti-austerity Syriza Party was elected in January. Why would the ECB have to “interrupt liquidity provision” just because of a “clash with international lenders”? As noted by Mark Weisbrot, the move was completely unnecessary.

The crisis to which it has led was described by Evans-Pritchard on July 7th:

Events are now spinning out of control. The banks remain shut. The ECB has maintained its liquidity freeze, and through its inaction is asphyxiating the banking system.

Factories are shutting down across the country as stocks of raw materials run out and containers full of vitally-needed imports clog up Greek ports. Companies cannot pay their suppliers because external transfers are blocked. Private scrip currencies are starting to appear as firms retreat to semi-barter outside the banking system.

The Tourniquet of the Central Bank

It is not just Greek banks but all banks that are dependent on central bank liquidity, because they are all technically insolvent. They all lend money they don’t have. As the Bank of England recently acknowledged, banks do not actually lend their deposits. Rather, they create deposits when they make loans. They do this simply with accounting entries. There is no real limit to how much money they can create, so long as they can find creditworthy customers willing to borrow it.

The catch is that the bank still has to balance its books at the end of the day. If it comes up short, it can borrow from the banks into which its deposits (whether “real” or newly created) have migrated. Banks can borrow from each other at very low rates (in the US, the Fed funds rate is 0.25%). They keep the difference in rates as their profit.

The central bank, which has the power to print money, is the ultimate backstop in this money-creating scheme. If there is leakage in the system from cash withdrawals or transfers to foreign banks, the central bank supplies the liquidity, again at very low bankers’ rates.

That is the way the system should work. But in the Eurozone, the national central banks of member countries have relinquished their critical credit power to the European Central Bank. And the ECB, like the US Federal Reserve, marches to the drums of large international banks. The central bank can flick the credit switch on or off at its whim. Any country that resists going along with the creditors’ austerity program may find that its banks have been cut off from this critical liquidity, being branded no longer “good credit risks.” That damning judgment becomes a self-fulfilling prophecy, as is now happening in Greece.

Turning the Credit Spigots Back On

The problem now for Greece is how to restore bank liquidity without the help of the ECB. One way would be to leave the Eurozone and return to its own national currency, as many pundits have urged. Its central bank could then issue all the drachmas needed to fund the government and provide cash for the banks.

But that alternative comes with other major downsides, including that the drachma would probably plummet against the euro. Greek leaders have therefore sought to stay in the Eurozone, but that means dealing with the bank runs that are bleeding the banks of euros. It also means bowing to ECB regulation, something the ECB is attempting to impose on all Eurozone banks.

Assuming, however, that Greece stays in the EU, might there be a way that the government could restore the liquidity necessary to keep its banks and the economy afloat, without the help of the ECB and while continuing to use the euro?

Consider again the Bank of England’s bombshell 2014 report called “Money Creation in the Modern Economy.” According to the BOE, 97% of the money supply is now created by banks when they make loans. British banks create digital pounds. US banks create digital dollars. And Greek banks create digital euros.

How it all works is explained by Kumhof and Jakab in an IMF paper called “Banks Are Not Intermediaries of Loanable Funds — And Why This Matters.” They note that the chief practical limit to the digital creation of money is simply the willingness of banks to make loans. The central bank can create massive “excess reserves” (as the Fed did with “quantitative easing”), but bank lending to local businesses will not increase if the banks do not see a profit in it. The problem is called “pushing on a string”: there is no mechanism for forcing banks to make loans.

That is true in a private commercial system, but in a nationalized system, the government can “pull” on the string. It can manage the lending of its state-owned banks, as China and Japan have done for decades. Loans to local businesses can be guaranteed with government letters of credit in lieu of capital; and if some loans turn out to be “non-performing,” they can be written off or just carried on the books, as China has also done for decades. The money was created as accounting entries and can be carried on the books as accounting entries.

The Greek government could follow China’s lead and nationalize its private banks, all of which are insolvent. It could then use their digital money machines to pump liquidity back into the economy, by making loans to all those once-viable businesses now starved of funds. Restoring their credit lines would allow them to pay for workers and materials, generating purchasing power and sales, increasing employment and the tax base, and generally reversing the economic death spiral induced by insufficient money in the system to keep the wheels of production turning.

In an All-digital System, the Books Are Always Balanced.

Balancing the books can easily be achieved in a closed, nationalized, digital banking system, so long as liquidity can be kept from leaking out in the form of physical cash withdrawals or transfers to foreign banks. Money transferred digitally within the system can always be found somewhere and borrowed back by the bank from which it was transferred, balancing its books.

The remaining question is, how to deal with leakage in the form of cash withdrawals or transfers to foreign banks? One radical possibility would be to go all digital: cash would no longer be official legal tender after some designated date. President Roosevelt did something similar when he took the dollar off the gold standard and ordered people to cash in their gold for paper dollars in 1933.

That approach, however, is highly controversial. Ideally, it could be avoided by simply paying an attractive digital bonus for depositing physical cash in the banks, and paying an attractive interest rate to keep it there. A sizable fee could also be charged for cash withdrawals or transfers outside Greek banks. This would not actually be a “haircut,” since the digital euros would be available for use at full value so long as they were transferred by bankcard or check within the digital banking system. The transfer penalty could be phased out over time as cash deposits were built up. In effect, the money would just be on loan at interest to the banks for several years.

Another alternative would be to run the euro printing press at the Bank of Greece, something that is apparently being done quietly already. As precedent, Ireland’s central bank quietly printed €51 billion in 2011.

Another much-discussed alternative would be for Greece to leave the EU and simply issue drachmas. But as of this writing, it looks as if the creditors have strong-armed Greek leaders into accepting their harsh austerity measures in order to stay in the EU.

Greece blazed the trail globally for political democracy, but modeling a sustainable economic democracy may have to wait for another day.
____________
Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at EllenBrown.com.

What is going on now in Greece and what the people should do next to restart their country. Costas Lapavistsas lays it out.

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Syriza MP: It's Time to Take Over the Banks (2/2)

Paul Jay discusses the results of the Greek referendum with Costas Lapavitsas and asks whether Syriza was prepared for this moment -   July 6, 2015

Original Here

https://youtu.be/A-x-IlOW19M?list=PLhvPB4lyc4dRGni9nReqS0cmq8pufU_E4

https://youtu.be/7LoTv2OG7-Y?list=PLhvPB4lyc4dRGni9nReqS0cmq8pufU_E4

Bio .

Costas Lapavitsas is a professor in economics at the University of London School of Oriental and African Studies. He teaches the political economy of finance, and he's a regular columnist for The Guardian.

Five or six years ago, Paul Krugman was my idle, but gradually his being an op ed reporter on the New York Times forced him away from things he likely would have posted but for restrictions on what the "mainstream media" can say about the government's activites. But I find his column today an appropriate one vis-a-vis the new situation in Greece.

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July 5, 2015                                                                                                                                     Original Here

Europe dodged a bullet on Sunday. Confounding many predictions, Greek voters strongly supported their government’s rejection of creditor demands. And even the most ardent supporters of European union should be breathing a sigh of relief.

Of course, that’s not the way the creditors would have you see it. Their story, echoed by many in the business press, is that the failure of their attempt to bully Greece into acquiescence was a triumph of irrationality and irresponsibility over sound technocratic advice.

But the campaign of bullying — the attempt to terrify Greeks by cutting off bank financing and threatening general chaos, all with the almost open goal of pushing the current leftist government out of office — was a shameful moment in a Europe that claims to believe in democratic principles. It would have set a terrible precedent if that campaign had succeeded, even if the creditors were making sense.

What’s more, they weren’t. The truth is that Europe’s self-styled technocrats are like medieval doctors who insisted on bleeding their patients — and when their treatment made the patients sicker, demanded even more bleeding. A “yes” vote in Greece would have condemned the country to years more of suffering under policies that haven’t worked and in fact, given the arithmetic, can’t work: austerity probably shrinks the economy faster than it reduces debt, so that all the suffering serves no purpose. The landslide victory of the “no” side offers at least a chance for an escape from this trap.

But how can such an escape be managed? Is there any way for Greece to remain in the euro? And is this desirable in any case?

The most immediate question involves Greek banks. In advance of the referendum, the European Central Bank cut off their access to additional funds, helping to precipitate panic and force the government to impose a bank holiday and capital controls. The central bank now faces an awkward choice: if it resumes normal financing it will as much as admit that the previous freeze was political, but if it doesn’t it will effectively force Greece into introducing a new currency.

Specifically, if the money doesn’t start flowing from Frankfurt (the headquarters of the central bank), Greece will have no choice but to start paying wages and pensions with i.o.u.s, which will de facto be a parallel currency — and which might soon turn into the new drachma.

Suppose, on the other hand, that the central bank does resume normal lending, and the banking crisis eases. That still leaves the question of how to restore economic growth.

In the failed negotiations that led up to Sunday’s referendum, the central sticking point was Greece’s demand for permanent debt relief, to remove the cloud hanging over its economy. The troika — the institutions representing creditor interests — refused, even though we now know that one member of the troika, the International Monetary Fund, had concluded independently that Greece’s debt cannot be paid. But will they reconsider now that the attempt to drive the governing leftist coalition from office has failed?

I have no idea — and in any case there is now a strong argument that Greek exit from the euro is the best of bad options.

Imagine, for a moment, that Greece had never adopted the euro, that it had merely fixed the value of the drachma in terms of euros. What would basic economic analysis say it should do now? The answer, overwhelmingly, would be that it should devalue — let the drachma’s value drop, both to encourage exports and to break out of the cycle of deflation.

Of course, Greece no longer has its own currency, and many analysts used to claim that adopting the euro was an irreversible move — after all, any hint of euro exit would set off devastating bank runs and a financial crisis. But at this point that financial crisis has already happened, so that the biggest costs of euro exit have been paid. Why, then, not go for the benefits?

Would Greek exit from the euro work as well as Iceland’s highly successful devaluation in 2008-09, or Argentina’s abandonment of its one-peso-one-dollar policy in 2001-02? Maybe not — but consider the alternatives. Unless Greece receives really major debt relief, and possibly even then, leaving the euro offers the only plausible escape route from its endless economic nightmare.

And let’s be clear: if Greece ends up leaving the euro, it won’t mean that the Greeks are bad Europeans. Greece’s debt problem reflected irresponsible lending as well as irresponsible borrowing, and in any case the Greeks have paid for their government’s sins many times over. If they can’t make a go of Europe’s common currency, it’s because that common currency offers no respite for countries in trouble. The important thing now is to do whatever it takes to end the bleeding.

Capitalism Has Become Socially Dysfunctional. Paul Craig Roberts' prologue: "If you have not read John Perkins’ book, Confessions Of An Economic Hit Man, you should. The book is easy to read and explains clearly from the inside how US corporations deceive foreign governments into debts that they cannot service or repay and then use the IMF and World Bank as looting mechanisms and reduce the indebted countries to penury. Capitalism has become a socially dysfunctional system focused on pillage and not on the growth of consumer income that sustains and grows markets for goods and services. Once the last prospect is looted, there is nothing left to sustain capitalism. In this interview John Perkins describes the looting process in Greece. Tomorrow the Greek people face the same decision that the people in Iceland and Ireland faced. In Iceland the people rejected the debts and refused to pay them. Now Iceland is recovering. Somehow the feisty Irish were brainwashed into accepting austerity programs so that the looting of Ireland could continue, and Ireland continues to suffer. Sunday will tell us if Greeks have learned from the examples."

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How Greece Has Fallen Victim To "Economic Hit Men"

Zero Hedge

July 4, 2015

“Greece is being ‘hit’, there’s no doubt about it,” exclaims John Perkins, author of Confessions of an Economic Hit Man, noting that “[Indebted countries] become servants to what I call the corporatocracy … today we have a global empire, and it’s not an American empire. It’s not a national empire… It’s a corporate empire, and the big corporations rule.”

Via Truth-Out.org,
John Perkins, author of Confessions of an Economic Hit Man, discusses how Greece and other eurozone countries have become the new victims of “economic hit men.”

John Perkins is no stranger to making confessions. His well-known book, Confessions of an Economic Hit Man, revealed how international organizations such as the International Monetary Fund (IMF) and the World Bank, while publicly professing to “save” suffering countries and economies, instead pull a bait-and-switch on their governments: promising startling growth, gleaming new infrastructure projects and a future of economic prosperity – all of which would occur if those countries borrow huge loans from those organizations. Far from achieving runaway economic growth and success, however, these countries instead fall victim to a crippling and unsustainable debt burden.

That’s where the “economic hit men” come in: seemingly ordinary men, with ordinary backgrounds, who travel to these countries and impose the harsh austerity policies prescribed by the IMF and World Bank as “solutions” to the economic hardship they are now experiencing. Men like Perkins were trained to squeeze every last drop of wealth and resources from these sputtering economies, and continue to do so to this day. In this interview, which aired on Dialogos Radio, Perkins talks about how Greece and the eurozone have become the new victims of such “economic hit men.”

Michael Nevradakis: In your book, you write about how you were, for many years, a so-called “economic hit man.” Who are these economic hit men, and what do they do?

John Perkins: Essentially, my job was to identify countries that had resources that our corporations want, and that could be things like oil – or it could be markets – it could be transportation systems. There’re so many different things. Once we identified these countries, we arranged huge loans to them, but the money would never actually go to the countries; instead it would go to our own corporations to build infrastructure projects in those countries, things like power plants and highways that benefitted a few wealthy people as well as our own corporations, but not the majority of people who couldn’t afford to buy into these things, and yet they were left holding a huge debt, very much like what Greece has today, a phenomenal debt.

And once [they were] bound by that debt, we would go back, usually in the form of the IMF – and in the case of Greece today, it’s the IMF and the EU [European Union] – and make tremendous demands on the country: increase taxes, cut back on spending, sell public sector utilities to private companies, things like power companies and water systems, transportation systems, privatize those, and basically become a slave to us, to the corporations, to the IMF, in your case to the EU, and basically, organizations like the World Bank, the IMF, the EU, are tools of the big corporations, what I call the “corporatocracy.”

And before turning specifically to the case of Greece, let’s talk a little bit more about the manner in which these economic hit men and these organizations like the IMF operate. You mentioned, of course, how they go in and they work to get these countries into massive debt, that money goes in and then goes straight back out. You also mentioned in your book these overly optimistic growth forecasts that are sold to the politicians of these countries but which really have no resemblance to reality.

Exactly, we’d show that if these investments were made in things like electric energy systems that the economy would grow at phenomenally high rates. The fact of the matter is, when you invest in these big infrastructure projects, you do see economic growth, however, most of that growth reflects the wealthy getting wealthier and wealthier; it doesn’t reflect the majority of the people, and we’re seeing that in the United States today.

For example, where we can show economic growth, growth in the GDP, but at the same time unemployment may be going up or staying level, and foreclosures on houses may be going up or staying stable. These numbers tend to reflect the very wealthy, since they have a huge percentage of the economy, statistically speaking. Nevertheless, we would show that when you invest in these infrastructure projects, your economy does grow, and yet, we would even show it growing much faster than it ever conceivably would, and that was only used to justify these horrendous, incredibly debilitating loans.

Is there a common theme with respect to the countries typically targeted? Are they, for instance, rich in resources or do they typically possess some other strategic importance to the powers that be?

Yes, all of those. Resources can take many different forms: One is the material resources like minerals or oil; another resource is strategic location; another resource is a big marketplace or cheap labor. So, different countries make different requirements. I think what we’re seeing in Europe today isn’t any different, and that includes Greece.

What happens once these countries that are targeted are indebted? How do these major powers, these economic hit men, these international organizations come back and get their “pound of flesh,” if you will, from the countries that are heavily in debt?

By insisting that the countries adopt policies that will sell their publicly owned utility companies, water and sewage systems, maybe schools, transportation systems, even jails, to the big corporations. Privatize, privatize. Allow us to build military bases on their soil. Many things can be done, but basically, they become servants to what I call the corporatocracy. You have to remember that today we have a global empire, and it’s not an American empire. It’s not a national empire. It doesn’t help the American people very much. It’s a corporate empire, and the big corporations rule. They control the politics of the United States, and to a large degree they control a great deal of the policies of countries like China, around the world.

John, looking specifically now at the case of Greece, of course you mentioned your belief that the country has become the victim of economic hit men and these international organizations . . . what was your reaction when you first heard about the crisis in Greece and the measures that were to be implemented in the country?

I’ve been following Greece for a long time. I was on Greek television. A Greek film company did a documentary called “Apology of an Economic Hit Man,” and I also spent a lot of time in Iceland and in Ireland. I was invited to Iceland to help encourage the people there to vote on a referendum not to repay their debts, and I did that and encouraged them not to, and they did vote no, and as a result, Iceland is doing quite well now economically compared to the rest of Europe. Ireland, on the other hand: I tried to do the same thing there, but the Irish people apparently voted against the referendum, though there’s been many reports that there was a lot of corruption.

In the case of Greece, my reaction was that “Greece is being hit.” There’s no question about it. Sure, Greece made mistakes, your leaders made some mistakes, but the people didn’t really make the mistakes, and now the people are being asked to pay for the mistakes made by their leaders, often in cahoots with the big banks. So, people make tremendous amounts of money off of these so-called “mistakes,” and now, the people who didn’t make the mistakes are being asked to pay the price. That’s consistent around the world: We’ve seen it in Latin America. We’ve seen it in Asia. We’ve seen it in so many places around the world.

This leads directly to the next question I had: From my observation, at least in Greece, the crisis has been accompanied by an increase in self-blame or self-loathing; there’s this sentiment in Greece that many people have that the country failed, that the people failed . . . there’s hardly even protest in Greece anymore, and of course there’s a huge “brain drain” – there’s a lot of people that are leaving the country. Does this all seem familiar to you when comparing to other countries in which you’ve had personal experience?

Sure, that’s part of the game: convince people that they’re wrong, that they’re inferior. The corporatocracy is incredibly good at that, whether it is back during the Vietnam War, convincing the world that the North Vietnamese were evil; today it’s the Muslims. It’s a policy of them versus us: We are good. We are right. We do everything right. You’re wrong. And in this case, all of this energy has been directed at the Greek people to say “you’re lazy; you didn’t do the right thing; you didn’t follow the right policies,” when in actuality, an awful lot of the blame needs to be laid on the financial community that encouraged Greece to go down this route. And I would say that we have something very similar going on in the United States, where people here are being led to believe that because their house is being foreclosed that they were stupid, that they bought the wrong houses; they overspent themselves.

The fact of the matter is their bankers told them to do this, and around the world, we’ve come to trust bankers – or we used to. In the United States, we never believed that a banker would tell us to buy a $500,000 house if in fact we could really only afford a $300,000 house. We thought it was in the bank’s interest not to foreclose. But that changed a few years ago, and bankers told people who they knew could only afford a $300,000 house to buy a $500,000 house.

“Tighten your belt, in a few years that house will be worth a million dollars; you’ll make a lot of money” . . . in fact, the value of the house went down; the market dropped out; the banks foreclosed on these houses, repackaged them, and sold them again. Double whammy. The people were told, “you were stupid; you were greedy; why did you buy such an expensive house?” But in actuality, the bankers told them to do this, and we’ve grown up to believe that we can trust our bankers. Something very similar on a larger scale happened in so many countries around the world, including Greece.

In Greece, the traditional major political parties are, of course, overwhelmingly in favor of the harsh austerity measures that have been imposed, but also we see that the major business and media interests are also overwhelmingly in support. Does this surprise you in the slightest?

No, it doesn’t surprise me and yet it’s ridiculous because austerity does not work. We’ve proven that time and time again, and perhaps the greatest proof was the opposite, in the United States during the Great Depression, when President Roosevelt initiated all these policies to put people back to work, to pump money into the economy. That’s what works. We know that austerity does not work in these situations.

We also have to understand that, in the United States for example, over the past 40 years, the middle class has been on the decline on a real dollar basis, while the economy has been increasing. In fact, that’s pretty much happened around the world. Globally, the middle class has been in decline. Big business needs to recognize – it hasn’t yet, but it needs to recognize – that that serves nobody’s long-term interest, that the middle class is the market. And if the middle class continues to be in decline, whether it’s in Greece or the United States or globally, ultimately businesses will pay the price; they won’t have customers. Henry Ford once said: “I want to pay all my workers enough money so they can go out and buy Ford cars.” That’s a very good policy. That’s wise. This austerity program moves in the opposite direction and it’s a foolish policy.

In your book, which was written in 2004, you expressed hope that the euro would serve as a counterweight to American global hegemony, to the hegemony of the US dollar. Did you ever expect that we would see in the European Union what we are seeing today, with austerity that is not just in Greece but also in Spain, Portugal, Ireland, Italy, and also several other countries as well?

What I didn’t realize during any of this period was how much corporatocracy does not want a united Europe. We need to understand this. They may be happy enough with the euro, with one currency – they are happy to a certain degree by having it united enough that markets are open – but they do not want standardized rules and regulations. Let’s face it, big corporations, the corporatocracy, take advantage of the fact that some countries in Europe have much more lenient tax laws, some have much more lenient environmental and social laws, and they can pit them against each other.

What would it be like for big corporations if they didn’t have their tax havens in places like Malta or other places? I think we need to recognize that what the corporatocracy saw at first, the solid euro, a European union seemed like a very good thing, but as it moved forward, they could see that what was going to happen was that social and environmental laws and regulations were going to be standardized. They didn’t want that, so to a certain degree what’s been going on in Europe has been because the corporatocracy wants Europe to fail, at least on a certain level.

You wrote about the examples of Ecuador and other countries, which after the collapse of oil prices in the late ’80s found themselves with huge debts and this, of course, led to massive austerity measures . . . sounds all very similar to what we are now seeing in Greece. How did the people of Ecuador and other countries that found themselves in similar situations eventually resist?

Ecuador elected a pretty remarkable president, Rafael Correa, who has a PhD in economics from a United States university. He understands the system, and he understood that Ecuador took on these debts back when I was an economic hit man and the country was ruled by a military junta that was under the control of the CIA and the US. That junta took on these huge debts, put Ecuador in deep debt; the people didn’t agree to that. When Rafael Correa was democratically elected, he immediately said, “We’re not paying these debts; the people did not take on these debts; maybe the IMF should pay the debts and maybe the junta, which of course was long gone – moved to Miami or someplace – should pay the debts, maybe John Perkins and the other economic hit men should pay the debts, but the people shouldn’t.”

And since then, he’s been renegotiating and bringing the debts way down and saying, “We might be willing to pay some of them.” That was a very smart move; it reflected similar things that had been done at different times in places like Brazil and Argentina, and more recently, following that model, Iceland, with great success. I have to say that Correa has had some real setbacks since then . . . he, like so many presidents, has to be aware that if you stand up too strongly against the system, if the economic hit men are not happy, if they don’t get their way, then the jackals will come in and assassinate you or overthrow you in a coup. There was an attempted coup against him; there was a successful coup in a country not too far away from him, Honduras, because these presidents stood up.

We have to realize that these presidents are in very, very vulnerable positions, and ultimately we the people have to stand up, because leaders can only do a certain amount. Today, in many places, leaders are not just vulnerable; it doesn’t take a bullet to bring down a leader anymore. A scandal – a sex scandal, a drug scandal – can bring down a leader. We saw that happen to Bill Clinton, to Strauss-Kahn of the IMF; we’ve seen it happen a number of times. These leaders are very aware that they are in very vulnerable positions: If they stand up or go against the status quo too strongly, they’re going to be taken out, one way or another. They’re aware of that, and it behooves we the people to really stand up for our own rights.

You mentioned the recent example of Iceland . . . other than the referendum that was held, what other measures did the country adopt to get out of this spiral of austerity and to return to growth and to a much more positive outlook for the country?

It’s been investing money in programs that put people back to work and it’s also been putting on trial some of the bankers that caused the problems, which has been a big uplift in terms of morale for the people. So Iceland has launched some programs that say “No, we’re not going to go into austerity; we’re not going to pay back these loans; we’re going to put the money into putting people back to work,” and ultimately that’s what drives an economy, people working. If you’ve got high unemployment, like you do in Greece today, extremely high unemployment, the country’s always going to be in trouble. You’ve got to bring down that unemployment, you’ve got to hire people. It’s so important to put people back to work. Your unemployment is about 28 percent; it’s staggering, and disposable income has dropped 40 percent and it’s going to continue to drop if you have high unemployment. So, the important thing for an economy is to get the employment up and get disposable income back up, so that people will invest in their country and in goods and services.

In closing, what message would you like to share with the people of Greece, as they continue to experience and to live through the very harsh results of the austerity policies that have been implemented in the country for the past three years?

I want to draw upon Greece’s history. You’re a proud, strong country, a country of warriors. The mythology of the warrior to some degree comes out of Greece, and so does democracy! And to realize that the marketplace is a democracy today, and how we spend our money is casting our ballot. Most political democracies are corrupt, including that of the United States. Democracy is not really working on a governmental basis because the corporations are in charge. But it is working on a market basis. I would encourage the people of Greece to stand up: Don’t pay off those debts; have your own referendums; refuse to pay them off; go to the streets and strike.

And so, I would encourage the Greek people to continue to do this. Don’t accept this criticism that it’s your fault, you’re to blame, you’ve got to suffer austerity, austerity, austerity. That only works for the rich people; it does not work for the average person or the middle class. Build up that middle class; bring employment back; bring disposable income back to the average citizen of Greece. Fight for that; make it happen; stand up for your rights; respect your history as fighters and leaders in democracy, and show the world!

Reprinted from Zero Hedge.

"Washington is brewing armageddon. But Greece can save us. All the Greek people need to do is to support their government and insist that their government, the first in awhile to represent the interests of the Greek people, give the finger to the corrupt EU, default on the debt, and turn to Russia." -- Paul Craig Roberts

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Greece Again Can Save The West — Paul Craig Roberts

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July 1, 2015 | Original Here                                            Go here to sign up to receive email notice of this news letter

Paul Craig Roberts

Like Marathon, Thermopylae, Plateau and Mycale roughly 2,500 years ago, Western freedom again depends on Greece. Today Washington and its empire of European vassal states are playing the part of the Persian Empire, and belatedly the Greeks have formed a government, Syriza, that refuses to submit to the Washington Empire.

Few people understand that the fate of Western liberty, what remains of it, is at stake in the conflict, and, indeed, the fate of life on earth. Certainly the German government does not understand. Sigmar Gabriel, a German vice-chancellor, has declared the Greek government to be a threat to the European order. What he means by the “European order” is the right of the stronger countries to loot the weaker ones.

The “Greek crisis” is not about debt. Debt is the propaganda that the Empire is using to subdue sovereignty throughout the Western world.

The Greek government asked the collection of nations that comprise the “democratic” European Union for one week’s extension on the debt in order for the Greek people to give their approval or disapproval of the harsh terms being imposed on Greece by the EU commission, the EU Central Bank, and the IMF with Washington’s insistence.

The answer from Europe and the IMF and Washington was “NO.”

The Greek government was told that democracy doesn’t apply when creditors are determined to make Greek citizens pay for the creditors’ mistakes with reduced pensions, reduced health care, reduced education, reduced employment, and reduced social services. The position of the Empire is that the Greek people are responsible for the mistakes of their foreign creditors, and the Greek people must pay for their creditors’ mistakes, especially those mistakes enabled by Goldman Sachs.

As has been proven conclusively, the Empire’s claim is false. The austerity measures that have been imposed on Greece have driven down the economy by 27%, thus increasing the ratio of debt to GDP and worsening the financial situation of Greece. All austerity has accomplished is to drive the Greek people further into the ground, thus making debt repayment impossible.

The Empire rejected Greece’s democratic referendum next Sunday, because the Empire doesn’t believe in democracy. The Empire, like all empires, believes in subservience. Greece is not being subservient. Therefore, Greece must be punished. The Persians Darius and Xerxes had the same view as Washington and the EU. The Greek government is supposed to do what previous Greek governments have done, accept a pay-off and allow Greece to be looted.

Looting is the only way left for the Western financial system to make money. In pursuit of short-term profits, western corporations, encouraged and coerced by the financial sector, have moved offshore western industry, manufacturing, and professional skills such as information technology and software engineering. All that remains for the West are highly leveraged derivative bets and looting. Apple is an American corporation, but not a single Apple computer is made in the US.

The German, French, and Dutch governments together with Washington and the western financial system have come down in favor of looting. For a country to be looted, its people’s voice must be silenced. This is why the Germans and the EU object to the Greek government handing the ability to decide the future of Greece to the Greek people.

In other words, in the West today, the sovereignty of peoples and accountability of governments are inconsistent with the financial interests of the One Percent who control the financial and political order.

To conclude: If democracy can be destroyed in Greece, it can be destroyed throughout Europe.

The Greek people not only hold in their hands the fate of democracy in the West, but also the fate of life on earth. Washington’s mechanism for creating conflict with Russia is the EU and NATO. By violating agreements made by previous US governments, Washington has brought NATO to Russia’s borders and is currently deploying more troops, armaments, and missiles on Russia’s borders, all the while speaking aggressively toward Russia.

Russia has no alternative but to target these insensible military deployments. As military deployments rise and the irresponsible and totally inaccurate Western propaganda against Russia and Russia’s government escalate, war can launch itself.

Clearly Washington and its vassal states have eschewed diplomacy and instead use demonization and attempted coercion to force Russia to accede to the Empire’s will.

This reckless policy continues despite the many warnings from the Russian government to the West not to deliver ultimatums to Russia. As empires are characterized by arrogance and hubris, the Empire doesn’t hear the warnings.

Recently we have had from Washington’s stooge prime minister in London British threats against Russia, despite the fact that the UK can deliver no force against Russia and can be destroyed in a few minutes by Russia. This kind of insanity is what leads to war. The crazed British prime minister thinks he can call out Russia.

Washington is brewing armageddon. But Greece can save us. All the Greek people need to do is to support their government and insist that their government, the first in awhile to represent the interests of the Greek people, give the finger to the corrupt EU, default on the debt, and turn to Russia.

This would begin the unravelling of the EU and NATO and save the world from armageddon. Most likely, Italy and Spain would follow Greece out of the EU and NATO, as these countries also are targeted for merciless looting. The EU and NATO, Washington’s mechanism for creating conflict with Russia, would unravel. The world would be saved and would owe its salvation to the ability of the Greeks to realize what really is at stake. Just as they did at Marathon, Thermopylae, Plateau and Mycale

It is difficult to imagine another scenario that would save us from World War III. Pray that the Greeks understand the responsibility that is in their hands not merely for liberty but also for life on earth.

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Normally I pick my blog posts from other bloggers or news sources providing insights not generally found elsewhere. But this time I’m reposting an article by an investment advisor. And based on evidence that I’ve found elsewhere, his main theme is correct, namely that is that the U.S. is broke, and that all hell will break loose if and when our economy falls into deflation. (I have added the “if” because runaway inflation is the other possibility and would be just as devastating but for different reasons.) Read this investment advisor’s description of runaway deflation and prepare yourselves. One thing is for sure, when the criminal big banks crash this time the government can no longer bail them out. So they will do what happened in Cyprus a couple years ago, that is, do “bail IN”s, which is a cute euphemism for stealing the money of their depositors. So if, dear reader, you have a savings account in any of the big banks, take you money out NOW and put it in a credit union -- or even under you mattress – before it is too late.

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Deflation picking up even more momentum ...

by Larry Edelson

Dear Subscriber,

Some analysts seem to think inflation is making a big comeback. Their reasoning: Interest rates have started to move higher, hence, inflation is lurking out there.

But they're clueless. They are confusing declining bond prices (rising interest rates) with normal times — and the world is about as far away from normal times as I am of becoming the next Pope.

Yes, interest rates all over the globe are starting to rise, and bond prices are sliding — most notably in Europe.

But that doesn't mean inflation is coming back. It's not. In a minute I'll show you the evidence as to why.

Interest rates are rising and bond prices are falling because the SOVEREIGN DEBT CRISIS is rapidly approaching.

That final point in time — the final reckoning — where the majority of investors begin to realize that Europe, Japan and the biggest debtor of them all, the U.S., are patently bankrupt … will never make good on their debts …

And instead, will do everything they can to chase, track, tax and seize your wealth to help them keep their heads above water.

Government spying: They'll do everything
they can to chase, track, tax and seize your
wealth to help them keep their heads above water.

Which is precisely why the Western socialist governments of this world — Europe, Japan and the U.S. — are all acting like caged animals ...

 Raising taxes, throughout Europe ... a new proposed second hike in the sales tax in Japan ... Obamacare here and behind the curtain in Washington, even more income tax hikes coming.

 Spying on citizens — yes, it's still going on. To track your money, to tax it more, and not too far in the future, to nationalize and confiscate it.

 Enacting extensive capital controls throughout Europe, where in France, for instance, you can no longer conduct any business in cash, and where you cannot take out of the bank more than 1,000 euros at a time. Similar controls exist now in Greece, Cyprus, Italy and even Spain.

 Where economists like Harvard University's Ken Rogoff and Citibank's Willem Buiter are traipsing the globe telling governments it's time to abolish cash and replace it with electronic currency.

 And where governments are now so wrought with troubles that financial repression of their people is not enough and instead, they are moving to distract them by playing games with other countries.  Hence, the rising tide of wars around the world, from terrorism to outright international conflict. Where just recently Ukraine's President Petro Poroshenko warned his country to "prepare for a full-scale Russian invasion." 

Where China is ready to duke it out with Japan and other countries, including the United States, in the South China Sea.

Where the number of separatist, anarchist and neo-Nazi groups in Europe are at an all-time high.

This is NOT the stuff of solid economic growth and certainly not a formula for inflation.

To the contrary, it is the stuff of dying empires ...

Of deflationary contractions. Of hoarding and burying wealth.

So much so that stock and commodity market trading volumes are less than half what they were in 2007 and 2008.

Yes, all these things will eventually positively impact gold. But not because of inflation. But because empires of the West are dying.

If you don't believe the picture I paint for you above, as to the evidence that there's no inflation, all you have to do then is simply look at the facts on the ground ...

 The year-over-year change in U.S. retail sales peaked way back in July 2011, and has been declining ever since. 

 U.S. consumer confidence, measured by the widely respected polls of the University of Michigan, remains well below its peak in 1999.

 Quarterly U.S. GDP has been in declining mode since 1999 and this year's first quarter GDP declined a whopping 0.7 percent.

 U.S. industrial production has declined since June 2010, with factory orders plummeting for eight straight months including a 0.4 percent decline in April.

Those are just the gross economic figures that support the fact that there is no inflation on the horizon. Now turn to the markets, and the most inflation-sensitive of them all... commodities.

 Gold has now broken support at the $1,180 level. Its next move, perhaps after a bounce or two: below $1,100.

 Silver too is cracking, now dangerously positioned to fall below $14.50, then even lower.

 Copper is starting to slide once again, falling to the $2.70 level, with lower prices ahead.

 Platinum and palladium, both weak at the knees.

 Oil, unable to get back above $65 a barrel, and now poised to move lower again. Natural gas, barely above multi-year lows.

 The grain markets, all weak. Soybeans, sliding. Corn and wheat, ready to slide again from multi-month and multi-year highs. 

 Coffee, cocoa, sugar, all looking very weak.

 And more.

The U.S. dollar, near multi-year highs and about to take off like a rocket again. In itself, a major deflationary warning.

Prepare for inflation, as these blind analysts would have you do, and you will be on the wrong side of the markets.

Prepare for more deflation with inverse commodity ETFs and the like, and by staying invested in mostly U.S. dollars where they will buy you more and more over the next several months ...

And you will protect and grow your wealth.

And last, but certainly not least, when the time is right — not too far off in the future ...

You will be able to buy gold and silver on the cheap, when everyone else is dumping them ...

Not recognizing that the real crisis is in government, which is when gold and silver truly shine.

I rest my case.

Best wishes and stay safe …

Larry

If enough NATO nations decide to reject Washington's push for a war with Russia, there may be no war!

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The Choice Before Europe — Paul Craig Roberts

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May 5, 2015 | Original Here                                            Go here to sign up to receive email notice of this news letter

The Choice Before Europe

Paul Craig Roberts

Washington continues to drive Europe toward one or the other of the two most likely outcomes of the orchestrated conflict with Russia. Either Europe or some European Union member government will break from Washington over the issue of Russian sanctions, thereby forcing the EU off of the path of conflict with Russia, or Europe will be pushed into military conflict with Russia.

In June the Russian sanctions expire unless each member government of the EU votes to continue the sanctions. Several governments have spoken against a continuation. For example, the governments of the Czech Republic and Greece have expressed dissatisfaction with the sanctions.

US Secretary of State John Kerry acknowledged growing opposition to the sanctions among some European governments. Employing the three tools of US foreign policy–threats, bribery, and coercion–he warned Europe to renew the sanctions or there would be retribution. We will see in June if Washington’s threat has quelled the rebellion.

Europe has to consider the strength of Washington’s threat of retribution against the cost of a continuing and worsening conflict with Russia. This conflict is not in Europe’s economic or political interest, and the conflict has the risk of breaking out into war that would destroy Europe.

Since the end of World War II Europeans have been accustomed to following Washington’s lead. For awhile France went her own way, and there were some political parties in Germany and Italy that considered Washington to be as much of a threat to European independence as the Soviet Union. Over time, using money and false flag operations, such as Operation Gladio, Washington marginalized politicians and political parties that did not follow Washington’s lead.

The specter of a military conflict with Russia that Washington is creating could erode Washington’s hold over Europe. By hyping a “Russian threat,” Washington is hoping to keep Europe under Washington’s protective wing. However, the “threat” is being over-hyped to the point that some Europeans have understood that Europe is being driven down a path toward war.

Belligerent talk from the Chairman of the Joint Chiefs of Staff, from John McCain, from the neoconservatives, and from NATO commander Philip Breedlove is unnerving Europeans. In a recent love-fest between Breedlove and the Senate Armed Services Committee, chaired by John McCain, Breedlove supported arming the Ukrainian military, the backbone of which appears to be the Nazi militias, with heavy US weapons in order to change “the decision calculus on the ground” and bring an end to the break-away republics that oppose Washington’s puppet government in Kiev.

Breedlove told the Senate committee that his forces were insufficient to withstand Russian aggression and that he needed more forces on Russia’s borders in order to “reassure allies.”

Europeans have to decide whether the threat is Russia or Washington. The European press, which Udo Ulfkotte reports in his book, Bought Journalists, consists of CIA assets, has been working hard to convince Europeans that there is a “revanchist Russia” on the prowl that seeks to recover the Soviet Empire. Washington’s coup in Ukraine has disappeared. In its place Washington has substituted a “Russian invasion,” hyped as Putin’s first step in restoring the Soviet empire.

Just as there is no evidence of the Russian military in Ukraine, there is no evidence of Russian forces threatening Europe or any discussion or advocacy of restoring the Soviet empire among Russian political and military leaders.

In contrast Washington has the Wolfowitz Doctrine, which is explicitly directed at Russia, and now the Council on Foreign Relations has added China as a target of the Wolfowitz doctrine. http://carnegieendowment.org/files/Tellis_Blackwill.pdf

The CFR report says that China is a rising power and thereby a threat to US world hegemony. China’s rise must be contained so that Washington can remain the boss in the Asian Pacific. What it comes down to is this: China is a threat because China will not prevent its own rise. This makes China a threat to “the International Order.” “The International Order,” of course, is the order determined by Washington. In other words, just as there must be no Russian sphere of influence, there must be no Chinese sphere of influence. The CFR report calls this keeping the world “free of hegemonic control” except by the US.

Just as General Breedlove demands more military spending in order to counter “the Russian threat,” the CFR wants more military spending in order to counter “the Chinese threat.” The report concludes: “Congress should remove sequestration caps and substantially increase the U.S. defense budget.”

Clearly, Washington has no intention of moderating its position as the sole imperial power. In defense of this power, Washington will take the world to nuclear war. Europe can prevent this war by asserting its independence and departing the empire.

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Few Americans understand the reasons for European Sovereign Debt Crisis. The "Troika" consisting of the European Commission, the European Central Bank, and the International Monitary Fund (IMF) decide to make loans to economically failing EU member countries in the full knowledge that countries like Greece, Italy, Spain, and Portugal cannot possibly pay them off. Why would they do that? Well you have to know how it works. The IMF immediately takes the promised loans and uses them to pay off the creditors. Then the IMF requires that the people of those countries pay the IMF back every red cent by taking additional cuts in their salaries and pensions and requiring their government to sell off services such as water and electricity to foreigners who will raise the prices. How to escape starvation? Why resign from the European Union and default on all current loans! Of course, they would still need loans. But they would need to be long term so that those loans can be paid back after they are first used to improve their economies. Who would grant them such loans? Why Russia, China, and the BRICS!

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Paul Craig Roberts – As Greece Pivots, Putin Unleashing Ultimate Move To Crush The EU And NATO

With people around the world worried about the escalating crisis in Greece and conflicts in the Middle East and Ukraine, today former U.S. Treasury official, Dr. Paul Craig Roberts, warned King World News that as Greece pivots, Putin is unleashing the ultimate move to crush the EU and NATO.

Eric King:  “Dr. Roberts, I find the foresight you have is fascinating.  You were the only person in the world who talked (on KWN in January) about Greece and the new Greek government getting close to (Putin and) the Russians.  And here we are in the month of April and we’ve got the Greek government officials meeting with Vladimir Putin.  How did you know that it would end up in this place?  What possibly made you dream up this scenario that’s (now) unfolding?”

Dr. Paul Craig Roberts:  “The former (Greek) governments were all interested in being accepted in the West, (being) paid off, taken care of, having comfortable bank balances in Switzerland or wherever, and so they went along with this notion that we will drive the Greek people into starvation in order to pay the people who have speculated on Greek debt (the banksters)….

“This current (Greek) government isn’t willing to do that, or at least so far has not been willing to do that.  And they understand that the debt cannot be repaid.  The Greeks can’t pay the bailout and so the president of Russia, Vladimir Putin, who has been accepting indignity after indignity from the EU and Washington, lie after lie, sanction after sanction, he saw an opportunity.  He said, ‘Look, come do business with us Greece.'

So the possibility is there now that the Greeks will simply default on the entire debt.  If I was the Greek government that is exactly what I would do.  I would tell the West: 

"You’re trying to drive us into the ground — to force starvation on the Greek people.  You go to hell, we’re not paying you one nickel.  In fact, we’re not having anything else to do with you.  We’re out of NATO, we’re out of the EU, we’ve got our own currency back, and if we need any financing, our Russian friends are going to finance us."

That Would Set Off A Chain Reaction In The West

Now this would begin the breakup of NATO, which is necessary if there is to be peace in the world.  There can be no peace as long as NATO exists because NATO is a mercenary force for Washington’s aggressions.  And without NATO, Washington doesn’t have any cover.

Well, if they lose the cover of Europe, Washington is standing there alone in its aggression.  So the minute NATO were to breakup, the threat of war with Russia and China would be over because Washington alone wouldn’t be able to pursue this type of enterprise.

 

Greek And Russian Alliance Spells The End Of NATO

So Greece and Russia (together) is the beginning of the possibility of the breakup of NATO because if the Greeks were to default on the debt, that would leave Greece debt free.  It would have zero debt to GDP, and if they needed financing for some reason, the Russians could finance them.

Italy And Spain Would Be Next After Greece

Now, if this happens with Greece, it’s bound to happen with Italy and Spain because Italy and Spain are in the same situation — they’ve got more debt than they can service.  And the United States has been very active to make sure that the governments of Italy and Spain are governments that Washington controls — who will ruin their own people and their own country in order to pay off Washington and the New York hedge funds, Germany, Netherlands, and the European big banks (banksters).

Spain And Italy May Also Look To The Russians, Chinese Or The BRICs

But if Greece were to leave, then that shows the politicians in Spain and Italy that they can do the same thing — they could default and have a debt free balance sheet.  And if they needed to have any kind of financing, they can turn to Russia, or Russia and China, or the BRICS bank (AIIB), which is now funded with $100 billion.

Greedy Banksters May Cause The Fall Of The Empire

So what we see possibly happening here is that the greed of the West and the Western financial interests (banksters), the hedge funds, the EU, Washington, this greed to loot countries, even their own members like Greece, could end up breaking up the empire.

I think we need to be very hopeful that this does occur because the United States has kept the world at war and there have been millions of people killed, displaced, maimed, and wounded.  And now that they (the U.S.) are running out of easy enemies, they are seizing on Russia.  Well, Russia is not an easy enemy and the Russians keep telling Washington: 

"We’re not Gaddafi.  We’re not Saddam Hussein.  If you mess with us, it’s the end of the world.  What are you doing?  Don’t you have any sense?  Do you really want war with nuclear powers?  Why can’t you be intelligent and why don’t we work out these things diplomatically?"

But Washington doesn’t hear.  Washington just goes on about its business.  These people are committed to a war with Russia, but that’s not a war that anybody can win.

So I think that the Greeks are fortunate to have gotten a new government.  I think the Greeks were silly not to have given the new government a massive majority.  I think if they had given the new government a massive majority then the Europeans would have made an adjustment in their demands.

But since the Europeans are still determined to loot Greece for their own gain, the Greeks may turn away from Europe.  And if they do, it will be the beginning of the unraveling of the EU, the euro, and, thank goodness, of NATO.” KWN has now released the incredible audio interview with Dr. Paul Craig Roberts, where he discusses one of the greatest periods of crisis that the world has ever seen as well as the dangerous events taking place around the globe and you can listen to it by CLICKING HERE

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