ATHENS – After imposing mandatory losses of up to 74 percent on its own banks, Greece is ready to give it all back through a plan to recapitalize them with $64.4 billion, a bailout paid for by the taxpayers. Greeks who’ve seen their pay cut up to 30 percent or more, taxes hiked, pensions slashed and are going to be fired by the scores of thousands will get nothing, and instead are being pressed to pay back all their loans in full.
Here’s a better idea: when you can’t pay because you’ve had your pay cut, are out of work and have seen your unemployment benefit cut to $500 a month – before taxes – or are one of the 500,000 people in Greece with no income at all, make the bank an offer they can’t refuse. It works like this: tell them you want the same deal the government first forced on them, cut what you owe by three-fourths, get a 3.8 percent interest rate on the rest, and 30 years to repay it.
If that doesn’t work, tell them you want the government – through the bank which is getting all its money back anyway – to recapitalize you so that you can go out and spend again and try to reverse the recession of 21.8 percent unemployment and keep businesses open and thriving. It’s too late for the 111,000 that have already closed because of the austerity measures imposed by the government in return for $325 billion in two bailouts from the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) Troika.
The government is in a panic and doesn’t want to nationalize the banks – which would happen unless they are recapitalized. Greece’s four biggest banks, including the National Bank of Greece, Alpha Bank, Piraeus Bank and the sharks of Eurobank, a bank that operates the same way as Tony Soprano but not as ethical, posted fourth-quarter losses of $31.5 billion last year. That’s about $344 million a day, worsened by an outflow of $500 million a month in deposits because many Greeks have no money to deposit and were afraid the crisis would force Greece to leave the eurozone and return to the drachma. That would be a catastrophe-in-waiting that would enrich the usual suspects of hedge fund traders, speculators and Greece’s wealthy, who hide their money in secret bank accounts in other countries without declaring them for tax purposes.
The banks already got $23.6 billion from Greece’s special bailout fund, although there isn’t one for workers. The first infusion of taxpayer money – that’s taxpayer money so none comes from tax evaders – was just enough for banks to meet the regulatory minimum set by the eurozone and EU, but not the requirement set by Greece’s central bank. That means the state has to pay (translation: you have to pay the banks who then will turn around and ask you to pay again by paying your loans although you already paid the government to pay them). What’s worse is that there is no requirement for the banks to then take all that money they’re getting and loan it back out to businesses to save them.
Most of this mess was caused by PASOK Anti-Socialist leader Evangelos Venizelos when he was Finance Minister, doubling income and property taxes, taxing the poor and stiffing investors, refusing to pay them all that Greece owed, ensuring the country would remain on public welfare and locking it out of the public markets until the next Millennium. Shameless as he is, Venizelos is actually using that as a platform to run for Prime Minister, and 15 percent of Greeks – his party’s lemmings faithful only – have bought this line of folderol, hook, line and sinker.
Interim Prime Minister Lucas Papademos, who’s overseeing the rocky hybrid government of PASOK ministers feuding with their New Democracy Capitalists and running for office in the May 6 elections instead of governing, said Greece has already received $32.2 billion in recapitalization funds. That’s from the second bailout of $173 billion he engineered to go along with a first for $152 billion that did nothing to stop the economy from sliding into technical default. Greece also has to set up a special escrow account to ensure all tax revenues needed to meet bank repayments are set aside, so unless there’s an economic miracle the taxpayer’s money will go only to international investors and Greek banks. What do you expect? Papademos was a Vice-President at the ECB and, like all bankers in all countries, the only language he speaks is currency, although with a Greek accent.
“A decisive precondition in the efforts to finance growth is the successful completion of the procedure for recapitalizing the banks,” Papademos told an industry conference recently, although he made exactly no requirement on the banks to lend it back, which is the only way to finance growth. But what do I know, I’m not one of the Nobel Prize-winning economists who’ve never had to balance a checkbook but rather, advising the government what to do with what used to be your money.
You really don’t want the government meddling with the banks, of course. Greece privatized banks 20 years ago after widespread mismanagement and outright theft through shady lending practices, which led to huge losses and another bailout. Banks being what they are, they are too big to fail no matter how small they are, and no one goes to jail for using them like a private ATM when they are in a position to do so. That’s a practice still going on in Greece, along with Eurobank’s novel idea of making you pay your loan twice if you don’t ask for a letter of discharge after you paid it the first time.
The Troika, which is kind of like an absentee landlord of a rat-infested government, has insisted that banks remain private and has given the government up to five years to get rid of its shares. That’s plenty of time for banks to write off 10 and 20 and 30 million dollar loans that big shots can’t pay but insist you pay back that $2,000 you owe or they’ll go bust. Wait, they can’t go under because you’ll just have to pay them again. Maybe we should just let Eurobank run the country. But if it did, I’d recommend another tactic that Greece used. Just default.