Shattering of the status quo in Greece, capitalist crisis rumbles on

The Greek socialist organisation, Xekinima, affiliated to the CWI, has produced this statement in response to the Greek election results:


A political earthquake in Greece
Greek voters have sent out a message that has terrified the Troika, their craven political parties and the ruling class in Greece and Europe.


Two out of three Greeks voters said NO to the EU/IMF/ECB Troika’s austerity ‘Memorandum’ ! Compared to the 2009 election, PASOK lost 72.6% of its support – a loss of 2.19 million votes. The right-wing ‘New Democracy’ lost almost half of its support - over 1million votes! SYRIZA (the Coalition of the Radical Left) jumped from 4.6% to 16.8 % earning over 700 thousand new votes (from 315,000 in 2009 to over 1million today)!


The political landscape that existed in Greece for almost 4 decades has been shattered. The mass struggles of the last two years have led to this change in political outlook. In turn, this result can give new impetus to these mass movements.


Forming a "Government" through electoral fraud?
The parties of the Troika and the ruling class will still try to make sure they can form the Government through an electoral system that distorts the will of the people by giving 50 additional seats to the leading party – even though ND had only a small and declining vote ! [ND’s 18.9% translates into 108 seats, SYRIZA’s16.8% gives only 52 seats]. ‘Democracy’ was never, more hollow and hypocritical.


Despite this blatant electoral ‘fraud’, ND and PASOK are still short of the target of 151 MPs needed to form a majority ( they have respectively 108 and 41, totalling 149). So they have started trying to pull together a government of "national unity" with the supposed aim of renegotiating the ‘Memorandum’.


There is only one response that the movement can give to any such Government: strikes, occupations in workplaces, in squares, in schools and colleges - until it falls.

SYRIZA, the big winner
The big winner of the elections was SYRIZA. This is a great victory for all social movements and the Left in general, but more specifically for a series of political positions and proposals put forward by SYRIZA. Apart from their opposition to the Memorandum, the vote for SYRIZA translates into massive popular support for the policy of unity and co-operation across the Left, and clear support to the idea of a Government of the Left.


The danger of fascism returns
But there is also a very serious threat from the election of the neo-Nazi Golden Dawn, who finished in sixth place. The 434,000 who voted for them are not neo-Nazis but people who chose this way to condemn the ND and far-right LAOS MPs in parliament, by sending them "extremists." But Golden Dawn will try to exploit this effect to strengthen its base. This perspective is a huge risk for the entire labour and popular movement, and our democratic rights.


The Left has to wake-up to the danger of fascism, to see the need for a serious joint struggle against the rise of neo-fascism. This is a further reason for joint action and for cooperation of the Left.

The struggle for an alternative society
Today SYRIZA is the "vehicle" which the Greek people has chosen to take into the political arena. In truth, notwithstanding some of the weaknesses in SYRIZA’s policy, this result opens the way to a struggle for an alternative economic and social policy, namely the struggle for an alternative society.


SYRIZA must face-up to its historical responsibilities. The crisis has only one answer: bold socialist policies.

There is now a realistic prospect of forming a Government of the Left in the period ahead – even more so if New Democracy and PASOK fail to form a government of "national unity" and opt to go straight to new elections. If such a Left Government were to be formed, the reaction of capital in Greece and Europe would be ferocious. They will threaten, and very possibly will carry out such a threat, to throw Greece out of the euro. At the same time, they will try to strangle the economy and ultimately to overthrow the government by any means necessary.


In these circumstances there will be two roads, either the overthrow of the power of capital - or compromise and selling out of the movement.


Under the domination of big capital, there are no prospects and no hope. We must not forget that PASOK 31 years ago formed a "left" government. But its refusal to overthrow the power of capital has led to the current Memorandum under a PASOK Government.


The ruling class are panicking and talking about a major political crisis! The Troika can now see the frightening results of their labours! This is what the terror that they have inflicted on Greek people and Greek workers has produced! The Greek labour movement said, “Drive out the Troika”, “Down with their political parties”, “An end to the two-party system”, “for a socialist way out of the crisis”. To achieve these goals means fighting for an alternative socialist society. Anything else would mean an abandonment of the principles and declarations of the Left.

Full text (in Greek) on: http://www.xekinima.org/arthra/view/article/politikos-seismos-mnimonio-telos-o-syriza-oxima-an/

Ireland, reject the treaty reject austerity !

The “Treaty on Stability, Coordination and Governance in the Economic and Monetary Union” is a treaty to institutionalise synchronised austerity across Europe at the expense of basic democratic rights. If implemented, it will mean a further assault on the living standards of working people and will further deepen the economic crisis.
The central reason why this is an Austerity Treaty is the enforcement of the “balanced budget” rule contained in Article 3. This rule imposes a maximum structural deficit of 0.5% for a country with a debt to GDP ratio of greater than 60%, and 1% for other countries. Exceeding that amount will trigger an automatic “correction mechanism” - which means cutbacks and extra taxes.
What is a structural deficit? Essentially, it is a measurement of the deficit in an economy when cyclical movements in the economy and one-off expenditures are taken out of the equation. However, how to determine it is a matter of a lot of debate between economists with the result that different institutions can come up with very different figures. For example the IMF estimates that Ireland ran a structural deficit of 5.4% of GDP in 2006, while the EU Commission estimated a surplus of 2.2%! It also is really something that can only be measured with the benefit of hindsight, with the result that structural deficit estimates differ radically over time.
Countries that are in bailout programmes are shielded from these targets until they exit. Ireland is currently due to exit in 2014. The Department of Finance estimates that in 2015, Ireland will have a strucutral deficit of 3.7%. Bringing that down to 0.5% would mean at least €5.7 billion worth of extra cuts and taxes. It is more likely that the Commission would give Ireland a few years to meet the target. A target of 2017 would simply mean extending that austerity over three years, with around €2 billion of extra austerity per year. Those cuts would further reduce GDP, therefore necessitating yet more cuts!
If it is passed and implemented across Europe, this Treaty will not bring stability and growth, it threatens an absolute disaster. Austerity is already destroying lives and economies across Europe – with the Greek economy in freefall as a direct result, the Portuguese economy continuing to shrink and the Irish economy set to become the first in the EU to have six consecutive years of declining domestic demand.
According to the European Commission, in 2013, 18 countries out of 25 will have a structural deficit greater than their target, with an average deficit of 2.6 per cent. Reducing these deficits to the target levels in 2013 would mean at least €166 billion worth of cuts and extra taxes. That would have a devastating impact on the European economy. If a longer timeframe is given by the Commission, this will simply mean the same savage austerity drawn out over years.
A bondholders' Treaty
Article 4 requires countries with a debt to GDP ratio of over 60% to reduce it by one twentieth of the excess per year. In theory, there are two ways in which this ratio could be reduced. GDP could be increased or the debt itself could be reduced through paying back the principal. In practice, because of the austerity policies already being pursued and the implications of Article 3, the option of significant GDP growth is effectively ruled out.
Therefore, this Article in effect calls for a massive pay back of debt to the bondholders! In the Eurozone as a whole, the debt to GDP ratio is at 85%. Reducing that to 60% without GDP growth would require a reduction of €2.3 trillion of debt. This is a recipe for yet more austerity that will provoke a further contraction across Europe.
Ireland's debt to GDP ratio is likely to be around 120% in 2015. Reducing the debt to GDP ratio by one twentieth of the excess per year will therefore mean paying back €4.5 billion per year in principal to the bondholders on top of the €9 billion a year we will be paying in interest rates. This debt will only be paid back on the basis of yet more savage austerity imposed on working people.
Restrictions of major public investment
Articles three and four together demonstrate how this is an austerity Treaty in the interests of the bondholders and speculators. This is not simply one off austerity, but an attempt to enshrine it “through provisions of binding force and permanent character”. They mean that engaging in expansionary fiscal policy will be effectively made illegal.
While it is the case that often achieving a structural balance would be a worthwhile aim, it also often makes sense for a state to engage in borrowing and deficit spending in order to create employment and develop the economy. The need for massive public investment is particularly evident right now in Ireland. 450,000 people are on the live register and private sector investment has collapsed. Despite an increase in profits for the private sector (the gross operating surplus of non-financial corporations increasing by €2.6 billion in 2010) investment continues to decline (by €30 billion since 2007). On the basis of relying on the private sector, it is simply wishful thinking to suggest that the financial resources will be put together with the available skills and talents of labour to create jobs and wealth in our economy.
That is why massive public sector programmes are needed to get people back to work, as well as improving our infrastructure and developing our economy. If big business is not willing to invest, the key sections of the economy should be taken out of private ownership and into democratic public ownership and a democratic plan developed based on massive public sector investment to redevelop the economy.
Attack on democracy
The Fiscal Treaty is part of a process, with the economic crisis, that has seen significant attacks on democratic rights within the EU. For example, the unelected and unaccountable European Central Bank has become increasingly powerful – sending detailed prescriptions of austerity measures to the Italian governments for them to carry out. The unelected European Commission has played a central role in the removal of elected governments in Italy and Greece and their replacement by bankers' governments. This treaty is a significant attack on the basic democratic right to elect a government to decide on budgetary and economic strategy. It does this in two key ways.
Firstly, with the balanced budget rule it effectively ties future governments to the same economic policies as this one – neo-liberalism and austerity. It rules out governments running structural deficits – which could be used for investment in vital public works, to engage in necessary public spending and so on. It is surely one of the most basic requirements of a democracy that people are free to vote for different economic policies.
This has not come out of the blue – it is part of a process whereby economic policy has been technocratised. There has been a conscious attempt to use the crisis (a crisis of capitalism caused by speculators, bankers, neo-liberalism and deregulation, let us remember) to move economic policy out of the sphere of democratic discussion and to turn it into a purely technical question. So neo-liberalism is not posed as a policy choice, it is simply “responsible” behaviour.
The second key proposal diminishing democracy is the mechanism for countries to be effectively placed in administration. This is contained in Article 5 of the treaty, which says that countries in an “excessive deficit procedure” have to put in place a “budgetary and economic partnership programme including a detailed description of the structural reforms which must be put in place and implemented to ensure an effective and durable correction of their excessive deficits.” These programmes will be endorsed and monitored by the European Commission and Council. In this way there is a surrender of budgetary powers to the Commission and Council; consequently it will not only be countries in receipt of bailout funds like Ireland, Greece and Portugal that will have their budgets effectively written by these powers.
A neo-liberal Europe
With the economic crisis, the illusions that so-called social democrats promoted about a supposedly social Europe have been smashed by the reality of a neo-liberal Europe. This Treaty goes further along that road of diminishing democratic checks and accountability of the leading bodies in Europe, in order to create a Europe where the interests of the bankers and billionaires come first. This Treaty writes economic policy into law in their interests, at the expense of the vast majority who will suffer under austerity. It must be met with a vigorous No campaign in the referendum but also with struggle in the streets and workplaces by workers across Europe against their agenda.



With thanks to Paul Murphy MEP of the socialist party ULA in Ireland for this e xcellent article on the bits I don’t fully understand.

We are not out of the woods yet, not by a long shot

If by some strand of imagination you are under the impression our financial crisis is getting better and we'll be able to get out of it i have bad news for you.

This economic downturn is not a usual economic downturn i think we are on the verge of something big. Very big. The talk now is very much of a double dip recession even leading to a even longer deep depression.

It is no exageration that the rate in which our cost of living and standard of living are rising and falling just as sharply. It is no doubt we are heading backwards from where we have come from i believe.

But is this ia big surprise ? to us marxists no it isnt. Capitalism is full of contradictions and is always just a few steps away from another major international economic crisis.
This is just the ne xt in its long history. Yet still it doesnt learn its lessons if indeed it can. I explain.

In Europe where i think will be where a major shift will occur. We may even see the brak up of the Euro as we know it if a country like Greece, Portugal, Ireland or even Spain which god forbid will send huge shockwaves around the Euro zone as Spain is a big economy. But this is entirely possible.

The Greek economy was one of the fastest growing in the eurozone during the 2000s from 2000 to 2007 it grew at an annual rate of 4.2% as foreign capital flooded the country.] A strong economy and falling bond yields allowed the government of Greece to run large structural deficits. According to an editorial published by the Greek newspaper Kathimerini, large public deficits are one of the features that have marked the Greek social model since the restoration of democracy in 1974. After the removal of the right leaning military junta, the government wanted to bring disenfranchised left leaning portions of the population into the economic mainstream.[15] In order to do so, successive Greek governments have, among other things, run large deficits to finance public sector jobs, pensions, and other social benefits. Since 1993 debt to GDP has remained above 100%.

On 27 April 2010, the Greek debt rating was decreased to the first levels of 'junk' status by Standard & Poor's amidst fears of default by the Greek government.[34] Yields on Greek government two-year bonds rose to 15.3% following the downgrading.] Some analysts question Greece's ability to refinance its debt. Standard & Poor's estimates that in the event of default investors would lose 30–50% of their money.] Stock markets worldwide declined in response to this announcement.[36]

Following downgradings by Fitch, Moody's and S&P,] Greek bond yields rose in 2010, both in absolute terms and relative to German government bonds.[38] Yields have risen, particularly in the wake of successive ratings downgrading. According to The Wall Street Journal, "with only a handful of bonds changing hands, the meaning of the bond move isn't so clear.

On 3 May 2010, the European Central Bank suspended its minimum threshold for Greek debt "until further notice",] meaning the bonds will remain eligible as collateral even with junk status. The decision will guarantee Greek banks' access to cheap central bank funding, and analysts said it should also help increase Greek bonds' attractiveness to investors.[41] Following the introduction of these measures the yield on Greek 10-year bonds fell to 8.5%, 550 basis points above German yields, down from 800 basis points earlier.

On 5 March 2010, the Greek parliament passed the Economy Protection Bill, expected to save €4.8 billion through a number of measures including public sector wage reductions. On 23 April 2010, the Greek government requested that the EU/IMF bailout package be activated.] The IMF had said it was "prepared to move expeditiously on this request".] Greece needed money before 19 May, or it would face a debt roll over of $11.3bn.

Without a bailout agreement, there was a possibility that Greece would have been forced to default on some of its debt. The premiums on Greek debt had risen to a level that reflected a high chance of a default or restructuring. Analysts gave a 25% to 90% chance of a default or restructuring.] A default would most likely have taken the form of a restructuring where Greece would pay creditors only a portion of what they were owed, perhaps 50 or 25 percent.] This would effectively remove Greece from the euro, as it would no longer have collateral with the European Central Bank.


Greece has already had 9 general strikes across the country and there is a great distrust of the government and the EU as a whole there now.

One of the central concerns prior to the bailout was that the crisis could spread beyond Greece. The crisis has reduced confidence in other European economies. Ireland, with a government deficit of 14.3% of GDP, the U.K. with 12.6%, Spain with 11.2%, and Portugal at 9.4% are most at risk.

On the positive side, The Economist acknowledged on 27 May 2010 that while Europe's "profligate economies will struggle ... as austerity kicks in," it also pointed out that "waning confidence will be mitigated by the boost that exports receive from the euro’s plunge."


But this may not be enough to save the tumbling Euro. There is smimply no fat there to absorb this next wave of the crisis. I think we stand on the edge of another banking crisis where several big banks require bailing out again. I do think this can and will happen. I hope it doesnt obviosly but another banking cris that could make 2008 look like a drop in the ocean compared to the next banking crash could effectively end the Euro as we know it today. there is simply nothing to absorb the crash coming up it seems.

As further bailouts will have to happen as the governments of these countries look to prop up their failing battered capitalist system with fear growing across Europe further austerity cuts will be forced on the working class to pay for more and more of this.

I really dont think we have even seen the start of this crisis yet only just the tip of the iceberg there is still plenty time to go and i feel we will get worse before we improve.

Even a labour party who you would think would regain power in 2015 at the next general electionw ill be forced into making cuts by the markets who will be wanting them to carry on with the project of cuts to restore confidence in the financial markets.

So if we think labour will be any better we will be sorely mistaken. This is a global crisisa nd no one government will be able to solve this alone i feel.

Only a changing of the whole system, a over throw of capitalism thrown on to the scrap heap for good with a socialist planned economy will be able to bring the world back to a even keel i feel.

Will any country try going down that route ? i really do hope so.

Only socialism can provide for the many not just the few. It is time to rid ourselves of this blood sucking system that capitalism has forced upon us.