The New Colonialism: Greece and Ukraine.

The New Colonialism: Greece and Ukraine. By Jack Rasmus in CounterPunch.
   
Can you hear that financial vacuum cleaner gearing up to empty the personal wallets and national wealth of Ukrainians? 

In comparison to this experienced, efficient and well-connected international machine, Ukraine's former President Yanunovich was a mere amateur in corruption and wealth extraction.
   
"A new form of colonialism is emerging in Europe.  Not colonialism imposed by military conquest and occupation, as in the 19th century. Not even the more efficient form of economic colonialism pioneered by the U.S. in the post-1945 period, where the costs of direct administration and military occupation were replaced with compliant local elites allowed to share in the wealth extracted in exchange for being allowed to rule on behalf of the colonizers.
...
In the 21st century, it is “colonialism by means of financial asset transfer.” It is colony wealth extraction by colonizing country managers, assigned to directly administer the processes in the colony by which financial assets are to be transferred. This new form of colonialism by direct management plus financial wealth transfer is now emerging in Greece and Ukraine.
...
The new colonialism as financial asset transfer takes several practical forms: as wealth transfer in the form of interest payments on ever rising debt, in firesales of government assets sold directly to the colonizer’s investors and bankers, and in the de facto takeover the colony’s banking system and bank assets in order to transfer wealth to shareholders of the colonizing country’s private bankers and investors.
...
In Ukraine’s case, only once U.S. and Euro bankers were installed as Ministers of Finance and Economics last December 2014, were more loans promised to Ukraine. The U.S. and EU put in another $4 billion in January, and the IMF quickly announced the new $40 billion deal in February. After the $40 billion, Ukraine’s debt rose from $12 billion in 2007 to $100 billion in 2015. The new $100 billion debt will mean a massive increase in financial wealth extraction in the form of interest payments on that $100 billion.
...
Another form of transfer will occur in the accelerating of privatizations. No fewer than 342 former government enterprise companies are slated for sale in 2015, including power plants, mines, 13 ports, and even farms.  The sales will likely occur at firesale prices, benefiting U.S. and European “friends” of the new US and European ministers.  So too will the sale of Ukraine private companies approved by the new Ministers. One of every five are technically bankrupt and unable to refinance $10 billion in corporate junk bond debt. Many will default, the best scooped up by U.S. and EU shadow bankers and multinational corporations."

http://www.counterpunch.org/2015/09/03/the-new-colonialism-greece-and-ukraine/

Public debt, Greeks bearing gifts and Trojan horses from your international "friends"

Here are Greg Krasovsky's comments on

"The IMF Has Made €2.5 Billion Profit Out of Greece Loans."

See http://www.globalresearch.ca/the-imf-has-made-e2-5-billion-profit-out-of-greece-loans/5460608

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

See https://en.wikipedia.org/wiki/Confessions_of_an_Economic_Hit_Man

 

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?

You can leave your comments on Facebook at https://www.facebook.com/URA.Observer/posts/1143842275629910