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MACROECONOMICS

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

Guerrilla Warfare, Against, Hegemonic Power, Challenge, Promise of Greece, Macroeconomics, fx trader, forex

17 Jul 2015

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:

‚óŹ nationalize the banks,

‚óŹ launch a parallel currency in the form of electronic California-style IOUs, and

‚óŹ 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 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.”

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