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Where Do We Go From Here?

Greece Rejects the Troika

by MICHAEL HUDSON

Just after 7 PM Greek time on Sunday, I was told that the “No” vote (Gk. Oxi) was winning approximately 60/40. The “opinion polls” showing a dead heat evidently were wrong. Bookies across Europe are reported to be losing their shirts for betting that the financial right wing could fool most Greeks into voting against their self-interest. The margin of victory shows that Greek voters were immune to the mainstream media’s misrepresentation during the week-long run-up as to whether to accept the troika’s demand for austerity to be conducted on anti-labor lines. (James Galbraith summarizes the misrepresentation in “9 Myths About the Greek Crisis,” Politico.)

It should not have been so great a surprise. Voting age for the referendum was lowered to 18 years, and included army members. Faced with an unemployment rate of over 50 percent, Greek youth understandably wanted no more of euro-austerity.

The Troika’s demand was for austerity to be deepened solely by taxing labor and reducing pensions. Its policy makers had vetoed Syriza’s proposed taxes the wealthy, vetoed steps to stop their tax avoidance, and that the IMF had vetoed cutbacks in Greek military spending (far above the 2% of GDP demanded by NATO), despite even the European Central Bank (ECB) and German Chancellor Merkel agreeing to this. Instead, Jean-Claude Juncker, President of the European Commission, threatened that the EU would expel Greece from Europe – despite there being no law permitting this to occur. And instead of doing what a central bank is supposed to do – provide liquidity (and paper currency) to banks, ECB head Mario “Whatever it takes” Draghi forced them to shut down even their ATM machines for lack of cash. Evidently this was intended to frighten Greek voters to think that this would be their country’s future if they voted No.

It is an old strategy. Andrew Jackson expressed his vindictiveness toward the Second Bank of the United States by shutting it down when it refused to appoint his selected corrupt cronies. He deposited the U.S. Treasury’s money in his “pet banks.” Draghi thus has shown the ECB not to be “technocratic,” but a cabal of right-wing political operatives working to bring down the left-wing Syriza government, even at the possible cost of empowering the far-right Golden Dawn party. The eurozone’s class war in support of finance against labor is now open and in earnest.

The media have not explained that the ECB has set out to wreck Greece’s banking system by refusing to do what central banks are supposed to do: provide liquidity as lenders of last resort. The banks are running out of cash, because Greece’s central bank is not run by the Greek government, but by the ECB following a...

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