The only way-out: return to national currency
by Dimitris Kazakis
Newspaper “To Xoni” (The Funnel), 20 May 2012
Within the euro, the Greek economy has no chance of recovery, let alone improvement
Did you get the message? We either consent to the selling out and dissolution of the country, for the benefit of the euro, the lenders and the oligarchy that ravaged this country for decades, or they will return us to the drachma. The message is so cynical, that is directed to the two major parties and the reserve forces around them. Unable to answer back, the leaders of Syriza and Independent Greeks, pulled the tail under the legs.
However, the dilemma is real in every sense. Within the euro, the Greek economy has no chance of recovery, let alone improvement. Today, this is becoming obvious, even to the most clueless. The country does not have the capacity to deal with her sovereign debt, in the same terms, as any other country: she is bound hand and foot, condemned into the euro grind.
Will Merkel get angry?
The PSI may have left the country more indebted and with a new bail-out deal to pay for the banks’ losses, but this should not bother us… Because if Merkel gets angry, she might kick us out of the euro! Of course, the ones who gained the most from this deal, are the government’s consulting firms about the debt re-structuring, the most humiliating debt-restructuring deal, ever done against a country of dozens of millions. One of these consulting firms is Cleary Gottlieb Steen & Hamilton, who is present in the big finance institutions of the US, Europe, Asia and Latin America. This particular company had an important role in Uruguay’s voluntary debt restructuring in 2003.
These scenarios have less value than the paper they were written on. They are clichés and scenarios, in order to promote a particular firm and the local or foreign business interests, associated with it. The reasoning is explained by one of the leading experts in voluntary debt restructuring, Lee C. Buchheit, consultant in this particular company in NY. Buchheit, famous by his successful involvement in Uruguay’s debt restructuring, recently answered a question about the possibility of Greek debt restructuring: “Place Greece in the South Continent, give her a currency other than the euro and readjust the base of her creditors, in order to reduce the extremely dangerous exposition of European banks. Then there is no doubt that a radical debt restructuring would be possible. But the possibility of debt restructuring is excluded in advance, if Greece is within the euro, spends in euros and owes in euros. Why? The obvious answer lies on this indicative word ‘euro’. While being true, it is also partly right. A debt restructuring can allow a worm of doubt to slide into the minds of other European bonds’ buyers and not only from Mediterranean governments. This worm will inevitably consume base units from future bonds’ coupons, but how many units and for how long, no one can predict”.
Eurocrats and local leaders are well aware of this dead end, but the need to continue, not just on any sacrifice, but on sacrificing the people and the country, becomes very pressing, so that the interests of the financial oligarchy and its currency, the euro, are secured. Converting Greece into a disintegrated country under a debt slavery regime, ensures –not the survival of the Greek people- but the support of the euro. So, anyone in his right mind, would pose the whole euro question right from the start.
Searching economic stability within the field of currency adjustment is a very old neurosis of capitalism. It originates in John Law’s currency experiments in the 16th century, which lead to the first financial bubbles with detrimental results. This first experimental experience was so appalling that the most enlightened representatives of politics and economics, refused, for almost two centuries, to believe that the domination of money, credit and monetary markets consisted the future of “market economy”, while economists of that era struggled to persuade that economic stability does not depend on the monetary-financial sphere, but primarily on the widened production of material wealth. Actually, Adam Smith had already warned, since the end of the 18th century, that the need for a national currency, issued by a national central bank, does not concern big states so much, but the smaller states, so that they have the minimum conditions to control their economies and their trade does not become the victim of strong currencies. Did he know something that many ignore today?
Whenever international speculator capital greed reached a crescendo, whenever fierce economic and political competition for market domination climaxed, at those times monetary theories would emerge, suggesting a powerful global currency to be absolutely necessary. Such were the 17th century’s mercandilists’ currency theories, which wished to justify the big empires’ thirst for gold. Similar neurosis were seen in the followers of the ‘golden rule’ , who imagined that converting gold into a global general equivalent for all currencies would ensure stability. This tragic delusion was shattered forever, along with the other wreckages, after the big crash of 1929.
Currency attachment (the meaning of ‘global money’) is a convenient tool for powerful countries to promote their own interests at the expense of weaker countries. This was the basis for creating the Latin Currency Union during the second half of the 19th century, based on the golden French franc, in order to promote French monetary usurious interests. Greece was included in this. It was a disastrous experience for our country, even though leaders of that time, exalted the pegging of the drachma with the ‘powerful franc’ as solidifying of ‘stability’ and ‘ growth potential’ of the Greek economy. In reality, the Latin Union contributed significantly to the catastrophic over-debiting of the country. The only ones who benefitted were the French bankers and all those local speculators were connected to the French financial profits, like for example the big trader Vlastos, one of those, who, behind the scenes, was one of the architects to set up the war in 1897, only to benefit himself and his associates from Greece’s default and the imposing of International Economic Control.
In Greece, this theory was introduced with the International Economic Control. The reason was simple: lenders, with the help of IEC, had seized the main income sources of the Greek state and wished toy be paid in a strong currency, not the inflationary drachma. So they started talking about a atrong golden drachma and how good it would be for Greece. The outcome was to lead the country to its fourth official default in 1932, after having been exhausted by austerity, like today’s, by the fiscal commission of the Society of Nations.
In essence, Greece obtained a national currency, which she alone defined and issued, only after the war, when, by the end of the forties, the first offset printing machine (left behind by the occupation forces) was tried. Essentially, it was only after the currency regulation by Markezinis (1953) that we have a smooth circulation of national currency, issued directly in Greece. The adoption of the euro was the endpoint of a series of devaluations, not only of the drachma, but of the real economy, so that Greece would violently be converted to an “open economy,” open to the speculation of European and global markets.