Trojan hearse: The Greek Elections and the Euro Leper Colony

By Greg Palast  Morning Star

Europe is stunned, and bankers aghast, that polls show the new party of the left, Syriza, will win Greece’s parliamentary elections to be held tomorrow.

Syriza promises that, if elected, it will cure Greece of leprosy.

Oddly, Syriza also promises that it will remain in the leper colony. That is, Syriza wants to rid Greece of the cruelty of austerity imposed by the European Central Bank but insists on staying in the eurozone.

The problem is that austerity run wild is merely a symptom of an illness. The underlying disease is the euro itself.

For the last five years, Greeks have been told that, if you cure your disease — that is, if you dump the euro — the sky will fall.

I guess you haven’t noticed, the sky has fallen already. With unemployment at 25 per cent, with Greek doctors and teachers eating out of bins, there is no further to fall.

In 2010, when unemployment was a terrible 10 per cent, a year into the crisis, the “troika” — the European Central Bank, European Commission and the International Monetary Fund — told the Greeks that brutal austerity measures would restore Greece’s economy by 2012.

Ask yourself — was the troika right?

There is a saying in the US: “Fool me once, shame on you. Fool me twice, shame on me.”

Can Greece survive without the euro? Greece is already dead, but the Germans won’t even bother to bury the corpse.



Greeks are told that if they leave the euro and renounce its debts, the nation will not be able to access world capital markets. The reality is, Greece can’t access world markets now — no-one lends to a corpse.

There’s a way back across the River Styx. But it’s not by paddling on a euro.

Many nations do quite well without the euro. Sweden, Denmark and India do just fine without the euro — and so does Turkey, which had the luck to be excluded from the eurozone.

As long as Turks stick to the lira, even President Tayyip Recep Erdogan cannot destroy their economy.

Can Greece just dump the euro? It has happy precedents to follow.

Argentina was once pegged to the US dollar much as Greece is tied to the euro today.

In 2000, Argentinians, hungry and angry, revolted. Argentina ultimately overthrew the dollar dictatorship, the IMF diktats and the threats of creditors and defaulted on its dollar bonds. Free at last!

In the decade since, the Argentinian economy soared. Yes, today, Argentina is under attack by financial vultures, but that is only because the nation became so temptingly wealthy.

I was in Brazil when its president Luiz Inacio Lula da Silva told the IMF to go to hell and rejected privatisation of the state banks and the state oil company, rejected cutting pensions and thumbed his nose at the rest of the austerity nonsense.

Instead, Lula created the bolsa familia, a massive payout to the nation’s poor. The result — Brazil not only survived but thrived during the 2008-10 world financial crisis.

Despite pressure, Brazil never ceded control of its currency. (It is a sad irony that Brazil is only now faltering. That’s the fault entirely of Lula’s successor President Dilma Rousseff, who is beginning to dance the austerity samba.)

The euro is simply the deutschmark with little stars on it. Greece cannot adopt Germany’s currency without adopting Germany’s Finance Minister Wolfgang Schaeuble as its own.

And Schaeuble has determined that Greece must be punished. As my homie Paul Krugman points out, there is no credible economic theory that says that austerity — that is, cutting government spending, cutting wages, cutting consumer demand — can in any way help a nation in recession, in deflation.

That’s why, in 2009, Barack Obama ordered up stimulus, not a sleeping pill.

But austerity has nothing to do with economics. It is religion — the belief by the stern Lutheran Germans that Greeks have had too much fun, spent too much money and spent too much lazy time in the sun — and now Greeks must pay a price for their sins.

Oddly, I hear this self-flagellating nonsense from Greeks themselves — we are lazy, we deserve our punishment. Nonsense.


The average Greek works more hours in a year than any other worker in the 34 nations of the OECD; Germans the least.

Alexis Tsipras, the leader of Syriza, would like to pretend that austerity and the euro are two different things.

Apparently, the Syriza chief is blissfully ignorant of the history of the euro. The horror of austerity is not the consequence of Greek profligacy — it was designed into the euro’s plan from the beginning.

This was explained to me by the father of the euro himself, economist Robert Mundell of Columbia University.

Mundell not only invented the euro, he also fathered the misery-making policies of Margaret Thatcher and Ronald Reagan, known as “supply-side economics” — or, as George Bush Sr called it, “voodoo economics.”

Supply-side voodoo is the long-discredited belief that if a nation demolishes the power of unions, cuts business taxes, eliminates government regulation and public ownership of utilities, economic prosperity will follow.

The euro is simply the other side of the supply-side coin. As Mundell explained it, the euro is the way in which congresses and parliaments can be stripped of all power over monetary and fiscal policy.

Bothersome democracy is removed from the economic system.

“Without fiscal policy,” Mundell told me, “the only way nations can keep jobs is by the competitive reduction of rules on business.”
Greece, to survive in a euro economy, can only revive employment by reducing wages.

Indeed, the recent tiny reduction in unemployment is the sign that Greeks are slowly accepting a permanent future of low wages serving pina coladas to Germans on holiday cruises.

It is argued that Greece owes Germany, the IMF and the European Central Bank for bailout billions. Nonsense.

None of the billions in bailout funds went into Greek pockets. It all went to bail out Deutsche Bank and other foreign creditors.

The EU treasuries swallowed 90 per cent of its private bankers’ bonds. Germany bailed out Germany, not Greece.

Nevertheless, Greece must pay Germany back, Mr Tsipras, if you want to continue to use Germany’s currency, that is.

Greece’s ruin began with secret, fraudulent currency swaps, designed a decade ago by Goldman Sachs, to conceal Greek deficits that exceeded the eurozone’s 3 per cent-of-GDP limit.

In 2009, when the truth came out, Greek debt holders realised they had been cheated.

These debt buyers then demanded usurious levels of interest — or, if you prefer, a high “spread” — to insure themselves against future fraud.

The compounding of this interest premium brought the Greek nation to its knees.

In other words, the crimes committed to join and stay in the euro, not Greek profligacy, caused the crisis.

The US, Brazil and China escaped from depression by controlling their money supply, government spending and currency exchange rates — crucial tools Greece gave up in return for the euro.

Worse, once the Trojan hearse of the euro entered Athens, tourism, Greece’s main industry, drained to Turkey where hotels and souvenirs are priced in cheap lira.

This allowed Mundell’s remorseless wage-lowering machine, the euro, to do its work, to force Greece to strip all its workers of pensions and power.

Greece fell to its knees, with no choice but to beg Germany for mercy.

But there is no mercy. As Germany’s Schaeuble insists, democracy, tomorrow’s vote, means nothing.

“New elections change nothing in the accords struck with the Greek government,” he says. “(Greeks) have no alternative.”

Ah, but they do, Mr Schaeuble. They can tell you to take your euro and shove it up your Merkel.

Greg Palast is also the author of several New York Times bestsellers including The Best Democracy Money Can Buy and Billionaires & Ballot Bandits. You can read more of his writing at

Leave a Comment

Your email address will not be published. Required fields are marked *


This site uses Akismet to reduce spam. Learn how your comment data is processed.