Here are Greg Krasovsky's comments on
"The IMF Has Made €2.5 Billion Profit Out of Greece Loans."
Tim Jones, economist at the Jubilee Debt Campaign, said:
“The IMF’s loans to Greece have not only bailed out
banks which lent recklessly in the first place, they have actively taken even
more money out of the country. This usurious interest adds to the unjust debt
forced on the people of Greece.”
This story isn’t just about Greece
and its creditors, but very relevant today for pre-default Ukraine and debt laden United States ($18
trillion dollars of federal debt).
There is a good reason why charging of interest on loans -
usury - was prohibited in the Old Testament (The Hebrew Bible, The Torah) and the
Koran.
Making money on other people's misery and temporary weakness
-- by charging interest on loans made to
people, companies and governments who are in financial trouble (temporary or
permanent) -- is just wrong, especially
when perpetrated by an international financial institution that's supposed to
help countries not for the profit motive, The International Monetary Fund
As a former investment banker, I believe that Greece
accumulated its large debt thanks in part to
1. Greedy investment bankers who were more interested in
getting bonuses for making loans and underwriting Greek government bonds than
in the country's future ability to repay -- bankers, unlike destitute debtors,
don't pay back their bonuses -- and the consequences for the country's
population, including its financially vulnerable segments.
2. Greedy and corrupt politicians (and so called civil
"servants") who irresponsibly organized, received and distributed
loans.
Although I am a staunch believer in the principle of
innocent until proven guilty, I don't deny the occasional accuracy of
"where's smoke, there's fire."
So when it comes to bankers, politicians, civil servants and
public debt finance, especially in the developing world, one always need to be
on the lookout for
a. Bankers who ply politicians with favors (i.e. bribes) to
accept financing, sometimes on unfavorable or non-competitive terms.
b. Politicians and civil servants who take bribes from
bankers to burden their government and electorate with loans.
As you probably know, these bribes range from cash in
envelopes, anonymous bank accounts, subsidized real estate, written-off loans,
jobs (for the politician and/or his family in the present or future),
subsidized stock offerings and generous (often through anonymous and illegal)
campaign contributions.
c. Politicians and civil servants who then spend borrowed
money on pet projects and affiliated government contractors, where overspending
and non-competitive bids can be the norm to the detriment of the constituents.
This is where we see overpriced public works projects,
excessive military spending (always justified by a hyped-up military threat)
and no meaningful measures to curb government spending so that you could have
budget proficits (instead of permanent deficits) to start paying down massive
debt.
Even if the electorate is astute enough to be on the
lookout, bankers and financial institutions love lending money to governments
-- after all, there's no better collateral than public wealth as well as, if
necessary, the ability to raise taxes and reduce social spending &
benefits.
Moreover, there's no better negotiating partner when it
comes accepting and repaying loans than a politician or a civil servant. These
folks bear no personal responsibility and can be influenced to do the bankers'
bidding through all sorts of corrupt incentive schemes.
All of this results in towns, cities, counties, states
and/or countries owing a lot of money with relatively steep interest rates and
very little, if any, ability to repay both the principal and the interest out
often declining or permanently depressed tax revenues.
Now, I'm not saying that any or all of this took place in Greece, but I'm
inclined to suspect that probably a lot of what I've listed above happened.
So when a country like Greece can no longer afford to pay
what you could call sophisticated and fully legalized loan-sharks -- because
paying means cutting pensions, unemployment benefits, public medical care and
education sometimes by more that 20% to people who can barely survive on what
they're receiving now -- I'm not going to be rooting for the wealthy banks and
financial institutions.
The prudent way out of this public debt quagmire -- and not
just for Greece, but for any
country laden with unsustainable levels of public debt, including the United States
-- is for
A. The financial hit to be taken by the party that can
handle it the most, the institutional creditors.
After all, even if these creditors wrote off 50% of the debt
and had to accept a 10-20 year repayment plan on the rest after a several year
moratorium on debt payments, I'm sure no one (on their Boards of Directors or
among their wealthy shareholders) is going to be putting up for sale their
summer homes in Southern France, yachts, private jets or golf/country club
memberships.
But if these creditors and the politicians & political
regimes that advocate and defend their interests, have their way, then poor
Greeks may have to forfeit souvlaki and feta cheese for cheap pasta and
potatoes for a while, not to mention health care, education and acceptable
levels of public services.
This way, in the future, creditors will not be inclined to
offer additional financing at immoral rates or irresponsible terms, knowing
that they can lose not just their expected profits (interest) but principal as
well.
B. Prosecution, firing and kicking out of office corrupt and
reckless politicians and civil servants who created this mess, including
confiscation of all ill-gotten gains.
C. Enactment of laws, creation of independent, competent
government agencies with broad regulatory powers and permanent public oversight
of public finance and public spending to prevent the future accumulation of
public debt on bad terms or at irresponsible levels.
But the first step is the toughest -- an ultimatum for debt
restructuring (that's made, if necessary, by default in payments) through a
public refusal to abide by the draconian terms imposed by the international
public finance vampires and their government cronies.
If you think that I'm sounding too socialist and
anti-capitalist/globalist, then please read John Perkins' "Confessions of
an Economic Hit Man" for comparison
The second step, is as tough on the population as a heroin
addict's withdrawal symptoms the first week -- having to live within a government
budget that may not be augmented by additional public finance for a while.
Yes, it's hard to have an economic recovery without extra
government spending fueled by additional government debt, but sometimes there
is no other choice.
But you’re always better off suffering through painful withdrawal
than agreeing to the drug dealer’s terms for another dose at the expense of selling
your children and homestead.
You just have to make sure that the drug dealer is put in
his place and doesn’t take your home while you’re on your knees in withdrawal.
So here we need to put another spin on “Beware of Greeks
bearing gifts” – Greece, Ukraine and anyone else, beware of the IMF, The World
Bank, other international organizations and bank & creditor cartels/consortia
that bring you a “Trojan” horse – in the form of emergency loans (“bailout” packages)
– to “rescue” you from debt that they helped you accumulate in the first place.
Are there any other options?
