May 102017

By CADTM ANYA, 99GetSmart

Resolution of the Continental Assembly of the Committee for the Abolition of Illegitimate Debt - Abya Yala Nuestra América (CADTM AYNA / Latin America and Caribbean) on the situation in Venezuela

Resolution of the Continental Assembly of the Committee for the Abolition of Illegitimate Debt – Abya Yala Nuestra América (CADTM AYNA / Latin America and Caribbean) on the situation in Venezuela

During its 2017 Continental Assembly, held in Bogotá, Colombia from 24 to 27 April the Committee for the Abolition of Illegitimate Debt, in its South American, Latin American and Caribbean expression (CADTM / AYNA), discussed the situation in Venezuela, nationally and in the Latin America–Caribbean and worldwide context. This discussion stressed the themes and the goals which define the areas of activity of the CADTM, including the system of domination by government debt (internal and external), which is just one of the fundamental mechanisms used as an instrument of capitalist domination over the peoples of the world.

In this regard, in order to defend the sovereignty of the Bolivarian Republic of Venezuela and its people and the progress made during the Bolivarian revolution, we hereby express our conviction that to guarantee Venezuela’s sovereignty and to preserve the social, economic and democratic advances made, it is paramount that priority be given to meeting the needs of the people over the repayment of government debt (external and internal) as the path to resolving the current crisis and that the greater part of available resources be allocated to ensuring the country’s recovery and the respect of its independence.

Consequently, we reiterate our proposal to accompany popular initiatives aimed at obtaining the suspension of debt repayments in order to free resources needed elsewhere given the country’s present urgent situation, which threatens its process of emancipation. We are putting at the disposal of Venezuela’s people, of its social and popular movements and its national government, our experience in struggles related to debt and our expertise in conducting public and citizen debt audits in several countries (including Ecuador, Greece, Brazil and municipal audits in Spain), in order to contribute to making such an audit a reality in the Bolivarian Republic of Venezuela. Its purpose will be to detect illegitimate elements of the debt so that the country’s financial resources can be used for the benefit of its people and to guarantee their rights. We view the perspective of this audit as including financial debt but also environmental debt, historical debt and social debt, on the example of the proposal made publicly by Hugo Chávez in 2006 at the World Social Forum in Caracas. We reaffirm the appeal made by CADTM / AYNA (, which offered its support to the people and government of Venezuela for conducting such an audit at the World Assembly of the CADTM network in Tunis in 2016.

The conducting of this audit, which the CADTM network present in Venezuela (Red Venezolana Contra las Deudas or Venezuelan Network Against Debt) has long called for and which is now supported by the Platform for Public and Citizen Auditing (Plataforma por la Auditoría Pública y Ciudadana, is closely linked to the exercise of the right to information in public affairs and the obligation to guarantee that right that is incumbent on civil servants of the State in conformity with the Constitution of the Bolivarian Republic of Venezuela, anti-corruption legislation and the laws empowering the population and providing for citizen oversight. Information and social participation are essential to democracy and popular sovereignty.

In consideration of the foregoing, we propose the creation of an International Commission in support of those who promote a public and citizen audit of debt in Venezuela.

Further, in light of the current economic situation faced by the Venezuelan nation, threatened by interference and intervention by the OAS [Organisation of American States] and the USA, we hereby express our categorical refusal of all forms of interference and interventionism that violate the sovereignty of Venezuela as a people and as a nation. We condemn with equal firmness all the threats and manoeuvres attempted against Venezuela in the service of outside interests and capitalist appetites. It is our hope that the conflicts in Venezuela will be resolved by peaceful, democratic and constitutional means, and not through violence.

Finally, we recommend the opening of a public debate in Venezuela on the question of debt and a public and citizen audit and on the sensitive issue of seeking alternatives to the rentier-extractivist model, an example of which is the Orinoco Mining Arc, |1| a project which is closely linked to the debt system and which raises profound concerns over its environmental and social-cultural impacts as well as its reliance on transnational capital.

It is our hope that the institutions will fully facilitate the democratic process so that all concerns, grievances, warning signals, results of enquiries and liberating alternative proposals can be heard.

Translation: Maud Bailly, Snake Arbusto, Mike Krolikowski



|1| Translator’s note: The Arco Minero del Orinoco […] is a “new strategic national development zone” created by Venezuelan President Nicolás Maduro by presidential order on 24 February 2016. This project sets aside an area covering nearly 112,000 sq. km. (larger than the total land area of Portugal), or 12 % of the national territory, to the exploitation of gold, diamonds, coltan, iron and other minerals by large national and transnational mining companies. The project has generated strong criticism due to its rentier-extractivist nature, since its goal is to obtain currency revenues in the short term at the expense of the environmental destruction of a significant proportion of the national territory rich in biodiversity and water reserves, and of the rights of the Amerindian peoples who live in the region.

Nov 062016

By Eric Toussaint, 99GetSmart


In 1823, the government of the United States adopted the Monroe Doctrine. Named after a Republican president of the USA, James Monroe, it condemns any European intervention in the affairs of “the Americas.” In reality, the Monroe Doctrine served as cover for a policy of more and more aggressive conquests on the part of the USA to the detriment of the new independent Latin American States, beginning with the annexing of a large part of Mexico in 1840s (Texas, New Mexico, Arizona, California, Colorado, Nevada and Utah). North American troops occupied Mexico’s capital city in September 1847. It should also be pointed out that the government of the USA attempted to exterminate all native peoples, the “redskins,” who refused to submit. And those who did submit were still subjected to atrocities, and ended up on reservations.

Territories lost by Mexico in favor of the United States in 1848

Territories lost by Mexico in favor of the United States in 1848

In 1898, as we have seen, the United States declared war on Spain and took control of Cuba and Puerto Rico. 

In 1902, in contradiction of the Monroe Doctrine, Washington did not come to the defence of Venezuela when it was the victim of armed aggression by Germany, Britain, Italy and Holland with the goal of forcing the country to repay debt. Then the United States intervened diplomatically to see to it that Caracas resumed debt repayment. This attitude on the part of Washington gave rise to a major controversy with Latin American governments, and in particular with the Argentine Minister of Foreign Affairs, Luis M. Drago, who declared: “The principle I would like see recognized is that] a public debt cannot give rise to the right of armed intervention, and much less to the occupation of the soil of any American nation by any European power.” This principle was to become known as the Drago doctrine. The debate among governments ended in an international conference at The Hague which led to the adoption of the Drago-Porter Convention (from the name of Horace Porter, a United States soldier and diplomat) in 1907. It called for arbitration to be the first means of solving conflicts: any State signing the Convention must agree to submit to an arbitration procedure and participate in it in good faith, failing which the State demanding repayment of its debt would have the right to use armed force.

In 1903, President Theodore Roosevelt organised the creation of Panama, which was separated from Colombia against the country’s will. This was done to allow the Panama Canal to be built under Washington’s control.

In 1904, the same president announced that the United States considered itself to be the policeman of the Americas. He pronounced what is known as the “Roosevelt Corollary to the Monroe Doctrine”: “Chronic wrongdoing, or an impotence which results in a general loosening of the ties of civilized society, may in America, as elsewhere, ultimately require intervention by some civilized nation, and in the Western Hemisphere the adherence of the United States to the Monroe Doctrine may force the United States, however reluctantly, in flagrant cases of such wrongdoing or impotence, to the exercise of an international police power.” |1|

Theodore Roosevelt (center, left) and the “Rough Riders” in Cuba, 1898

Theodore Roosevelt (center, left) and the “Rough Riders” in Cuba, 1898

In 1915 the United States invaded Haiti under the pretext of recovering debts and occupied the country until 1934. Eduardo Galeano writes: “the United States occupied Haiti for twenty years and, in that black country that had been the scene of the first victorious slave revolt, introduced racial segregation and forced labor, killed 1,500 workers in one of its repressive operations (according to a U.S. Senate investigation in 1922), and when the local government refused to turn the Banco Nacional into a branch of New York’s National City Bank, suspended the salaries of the president and his ministers so that they might think again” |2|.

Other armed interventions by the United States took place during the same period, but an exhaustive list would be too long.

US military interventions in Latin America, 1898 - 1939

US military interventions in Latin America, 1898 – 1939

This brief summary of the intervention and policies of the United States in the Americas in the 19th and early 20th centuries gives us an understanding of Washington’s true motives in the debt repudiations in Cuba in 1898 (see The USA’s repudiation of the debt demanded by Spain from Cuba in 1898: What about Greece, Cyprus, Portugal, etc.?) and Costa Rica in the 1920s (see What other countries can learn from Costa Rica’s debt repudiation).

General Smedley Butler, author of “War is a Racket"

General Smedley Butler, author of “War is a Racket”

In 1935, Major General Smedley D. Butler, who took part in many US expeditions in the Americas, writing during his retirement, describes Washington’s policies as follows: “I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903.” |3|

Translated by Snake Arbusto



|2| Eduardo Galeano, Open Veins of Latin America: Five Centuries of the Pillage of a Continent, Monthly Review Press, 1973, translated by Cedric Belfrage, online editionop. cit., p. 108.

|3| Published in Common Sense, November 1935. See Leo Huberman, Man’s Worldly Goods. The Story of the Wealth of Nations, New York, 1936. Note that an American military base in Okinawa bears the name of Smedley D. Butler. His confession cannot help but remind one of John Perkins’s Confessions of an Economic Hit Man. The shocking story of how America really took over the world, Ebury Press, 2005.

Eric Toussaint

Eric Toussaint

Eric Toussaint is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France. He is the author of Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc. See his bibliography: He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.

May 252016

By Eric Toussaint, CADTM, 99GetSmart


Part Two of the series “Greece and debt: two centuries of interference from creditors”

This series of articles analyses Greece’s major debt crises by placing them in the international economic and political context, an approach that is systematically absent from the dominant narrative and very rarely present in critical analyses. Since 1826, a series of major debt crises have profoundly marked the lives of the Greek people. Each time, European Powers formed a coalition to impose new debts in order to repay the earlier ones. This coalition of Powers dictated policies to Greece that corresponded to their own interests and those of the few big private banks and large fortunes. Each time, those policies were aimed at extracting the tax resources necessary for repayment of the debt and entailed a reduction in social spending as well as decreased public investments. In a variety of ways, Greece and the Greek people were denied the exercise of their own sovereignty. With the complicity of the Greek ruling classes, this kept Greece in a subordinate, peripheral condition.

Recall of Part One, published 12 April 2016 Newly Independent Greece had an Odious Debt round her Neck

Modern Greece was born shackled to debt from bond issues (in 1824, 1825 and 1833) which together amounted to 245% of her GDP. Three major European Powers (Britain, France and Russia) formed a coalition that amounted to the first Troika, imposed a monarchy, putting a Bavarian prince on the throne, and subjugated the country through debt. The Troika systematically defended the interests of the big banks in London and Paris, ensuring that they would extract maximum profit from the odious debt demanded of Greece. The Greek people, who had to foot the bill for a spendthrift, bellicose monarchy, rebelled on several occasions. While they succeeded in ousting the despot in 1862 and instituting a Constitution granting them certain civil and political rights, they were not able to free themselves of the burden of debt. The major Powers kept Greece in a position of subordination, denying the Greek people the exercise of their sovereignty. The monarchy and the local ruling classes systematically attempted to divert popular discontent towards nationalism and hostilities with the Ottoman Empire.

Introduction to Part Two

According to the dominant version of history, whether untruthful or simply mistaken, during the 1880s Greece was re-admitted onto the financial markets thanks to an 1878 agreement with the creditors who held their 1824-1825 |1| debts and to policies of radical public expenditure reduction. Greece then made heavy use of fresh borrowing and significantly increased its public spending. This, the story goes, was the cause of the 1893debt crisis and suspension of payments. Greece’s inability to manage its borrowing seriously is said to have led the big Powers to impose a financial control commission to oversee the Greek budget. This story is false!

The following translated extract from Le Monde dated 16 July 2015 is an example of what is widely said: “But, as today, the country was rife with clientelism and tax avoidance by the notables. Immediately after Greek independence, the King Otto, the first king of Greece, who was imposed by the European Powers, introduced costly major works projects. The civil service took on any warm body, the army was superbly equipped… It was all paid for by generous loans [sic] from western countries. The government lost control: in 1893, almost half of the country’s tax revenues were devoted to paying the interest on the debt”. |2|

Another example can be found in the 20 June 2015 issue of the Swiss financial magazine Bilan: “Thanks to the agreement that was ratified in 1878, Greece could once again, in 1879, borrow on the financial markets. Over the next fourteen years Greece borrowed the equivalent of almost 530 million French francs from Paris, London and Berlin creditors. Less than 25% of the sums were invested in infrastructures to develop the country. The rest went on military expenditure to finance Greece’s confrontations with its neighbours (with mixed military fortunes)”. |3|

The true part of the story is that the bankers again lent money to Greece. It is also true that the Monarchy spent a lot and waged expensive military campaigns against the Ottoman Empire. Most commentators, always ready to side with the creditors (like the Le Monde journalist who did not hesitate to mention ‘generous loans’, a real oxymoron) |4|, also point out that taxes were inefficiently collected.

Now let’s see what really happened: during the 1880s the bankers of the great Powers (British and French but also German, Belgian, Dutch, etc.) were favourable to lending to countries that were normalising their payments situations. They imposed one condition: the old outstanding debt must be restructured and repaid. Most of the countries who had had repayment defaults accepted these conditions that are very favourable to creditors who then opened their purses to lend money so that countries would have the means to repay old debts. Big capital, then experiencing a new phase of expansion in the dominant countries, was attracted to the new investments and lending possibilities offered by massive capital exports to peripheral countries. This was the beginning of the imperialist phase of world capitalism. |5|

Greek Bond - 1880

Greek Bond – 1880

Other debt restructuring of the same period

Debt restructuring that took place during the 1878-1890 period concerned Greece, Costa Rica, Paraguay, Peru and the Ottoman Empire.

The Greek debts from 1878 onwards. In 1878, the outstanding debts from 1824-1825 were restructured. The creditors obtained that Greece repay the equivalent of the amount she had received in 1824-1825. There was therefore no real debt reduction and Greece recommenced the payments of interest and capital. |6| Between 1879 and 1890 Greece entirely repaid the restructured debt. The debt had not been reduced because new debts were taken on in order to pay the old ones, which meant both series of debts were repaid during the 1880s.

The Costa Rican debt restructuring of 1885. In suspension of payment since 1874, Costa Rica agreed, in 1885, to a debt restructuring satisfactory to its creditors: along with £2 million they gained possession of a part of the railways and 568,000 acres of land.

The Paraguayan debt restructuring of 1885. Paraguay, which was also in suspension of payment since 1874, agreed to pay its creditors £800,000 and to concede to them 2.5 million acres of land.

The Peruvian debt restructuring of 1890. The Peruvian debt restructuring of 1890 was the biggest restructuring of debt for a Latin American country. The terms were very unfavourable for Peru: the creditors repossessed two million tons of guano (a natural fertiliser), gained possession of the whole public railway system, a shipping line on Lake Titicaca, the mines of Cerro de Pasco and, to top it all, a new loan was agreed to fund the repayment of the remainder of the debt in suspension of payment. Finally, it was in 1926 that Peru finished paying the restructuring of 1890 after the suspension of payments that started in 1876.

The restructuring of the Ottoman Empire’s debt. Following a payment default by the Ottoman Empire in 1875, the debt was partially restructured in 1881. The creditors demanded maximum repayment. To achieve this, a financial commission of experts appointed by the “great powers” was established. As Louise Abellard wrote: “An institution was created in 1881, by imperial decree, under the name of ‘The Ottoman Public Debt Administration’. This Administration gained absolute and irrevocable control over several Imperial revenues (customs and excise, taxes on alcoholic beverages, stamp duties, fishing rights, tax on silk, tobacco and salt monopolies, etc.). These revenues were to be allocated by the Administration to the payment of compensation to the creditors holding bonds issued before the default. The Administration was piloted by Europeans (British, Dutch, French, Germans and Italians) directly representing their nations’ creditors. Entirely independent of the Ottoman authorities, they were an instrument of absolute guarantee for the creditors who thus had the assurance that the old and the new investments would be reimbursed. Up to a point, the holders of the bonds, through the Administration, acted directly on Ottoman finances, in their own favour, until perceived prejudice was fully compensated (up to the end of the Empire). The Administration’s prerogatives were progressively extended to the role of guarantor for infrastructure contract payments (particularly railways)”. |7|

Debt restructuring permitted the imperialist countries to launch a new cycle of indebtedness and capital expansion

The debt restructuring that was carried out during the 1880-90s was the means by which the creditors embarked on a new phase of spreading the over-abundant capital available in the central countries (UK, France, Belgium Netherlands, Germany, etc.) all around the world. The granting of new loans was aimed at setting the repayment pump back into motion, since the countries in default needed fresh liquidities in order to repay their defaulted debts. Investments and loans were the vehicles used. In several cases, as we saw earlier with Latin American countries, restructuring took the form, partly, of property exchanged against outstanding loans. The principal criteria of the bankers, and other investors, was not at all the well-being of the debtor country and their ability to manage the funds they were loaned, or even to repay them, but the creation of maximum profitability. Their decisions were based on the necessity to invest all the funds at their disposal in making maximum profit as well as maintaining the country in a state of indebtedness and financial dependence. The creditors were assured that in case of non-payment their own country’s governments would intervene, by military means if necessary, to force the debtor country to keep up repayments and if necessary, colonize it.

In Tunisia, the Ottoman Empire and in Greece, international supervisory bodies with far-reaching authority were created by the creditor Powers (amongst whom France and Britain always occupied important or even highly privileged positions). Greece was in this position from the very beginning, as illustrated by the 1832 convention passed with Britain, France, Russia and the Kingdom of Bavaria, which created the Greek Monarchy and gave absolute priority to debt repayment. |8| An International Financial Control Commission was imposed on Tunisia in 1869 before it went under direct French control in 1881. In the Ottoman Empire the creditor Powers installed twenty local offices throughout the territory (from Yemen to Thessalonika), and employed 5,000 civil servants. Greece’s subordination to the creditor Powers – in fact written into its international “birth certificate” – has changed in form over time but still remains today: from the interference by the British, French and Russian ambassadors in the council of ministers in 1843, |9| to the creation of the International Finance Control Commission in 1898 (which functioned up to the Nazi invasion), not to forget the International Financial Enquiry Commission created in 1857 to watch over the repayment of the 1833 debt.

The impact of the international financial and economic crisis of 1890-1891 on Greece

In November 1890, the City of London was in a situation comparable to that which occurred again in the US in 2008 and which triggered off the failure of Lehman Bros., a credit crunch, an international banking crisis and a worldwide economic recession in 2009. On 8 November 1890 the London bankers held an emergency meeting to plan action, should Baring Bros. fail. On 10 November, the bankers met with the government, who established contacts with the other big Powers in order to coordinate reactions to the crisis. Baring Bros. (unlike Lehman Bros.) was saved, but the financial and economic crisis of 1891-1892 was profound. Among those who took part in saving Baring Bros. was the Rothschild bank (present in London, Paris and other European capitals and an important player in Greek debt), JP Morgan (already the biggest US bank) and JS Morgan (established in London and parent to JP Morgan, with whom they later merged). |10|

Nowhere in the articles on the 2015-2016 Greek debt crisis published by the chief organs of the international press are references to the 1893 Greek debt crisis to be found; nor any link to the international financial and economic situation and the suspension of payments decreed by the Greek Parliament at the time. The crisis that had its origins in London caused an economic recession, a fall in international trade, an international credit squeeze… Greece experienced a serious drop in its exportations and so was deprived of the foreign currency essential to funding its debt repayments. Exports of currants, which represented two thirds of Greek exports, fell by 50% between 1891 and 1893. There were two reasons for this sharp drop: 1. The international crisis and the reduction of demand in the richest countries; 2. The decisions taken in the UK, France and Russia to impose import duties on the currants entering their markets. This was in total contradiction of their own dogma professing free trade and the removal of all import-export duties. |11| The fall in revenue and blocked access to loans from British, French and German banks left Greece no option but to suspend payments. Fifty-six percent of Greece’s revenue was devoted to debt repayments. |12| Another contributing factor was a fall in the value of Greek currency against the pound sterling and other strong currencies. With a devalued currency, the real cost of the foreign debt became unsustainable.

The commentators who accuse Greece of being a country that goes easily into payment default should learn that in the 19th century, Spain suspended payment six times, the Austro-Hungarian Empire five times, Portugal three times, Prussia twice and Russia once. |13|

The military conflict against the Ottoman Empire and the restructuring that followed

The Greek monarchy and the local elite launched a disastrous military conflict against the Ottoman Empire in 1897. Evidently, the great Powers manoeuvred the two parties into war |14| in order to take advantage of their mutual weakening and increase their influence over them, particularly by using their debts. The conflict was costly and the great Powers imposed their will on Greece as much as on the Ottoman Empire. The peace treaty was signed in Constantinople (now Istanbul) on 4 December 1897 under the supervision of the UK, France and Russia (the Troika of the time, in place since 1830), the Austro-Hungarian Empire, Germany and Italy. |15| In 1898 another loan was made to Greece (see Box: The 1898 Bond Issue…) The Troika was again the guarantor of the loan. The loan was granted within the framework of the peace treaty and covered a big indemnity paid by Greece to the Ottoman Empire. The great Powers did good business; as they had control of the Ottoman Empire’s finances, they saw to it that the Ottoman Empire’s creditors were paid. Greece and the Ottoman Empire had the same creditors!

The 1898 Bond Issue and the subjection of Greece to International Financial Control

The Law of Control voted by the Hellenic Parliament on 26 February 1898 is identical to the draft bill drawn up by the International Financial Control Commission (IFC). Greece was obliged to accept all the creditors’ conditions. Under this Law, the IFC controlled all state revenue dedicated to servicing:
- the 1833 loan guaranteed by France, Great Britain and Russia;
- foreign loans incurred by the Greek State between 1881 and 1893;
- the new loan that Greece took on to repay the preceding ones and to pay war reparations to the Ottoman Empire.

The 1898 loan was composed of two parts:

1) A loan for war indemnity to Turkey covering 92 million French francs (4 million Turkish pounds) plus 2.3 million francs (100,000 Turkish pounds) that Greece had to pay for damage to private property.

2) A further loan to cover former debts and the deficit of the year 1897 to enable the debt to be repaid. This came to a total of 55 million francs distributed as follows:
- 26 million francs to cover the Greek State’s budget deficit for the year 1897;
- 2.5 million francs for payments owed by the Greek Government in 1898 to holders of the former foreign debt;
- 26.5 million francs to repay the floating debt or to convert it to gold.

The total new loan taken on by Greece thus came to 123.5 million francs (28.5 + 95), plus the 26.5 million francs of debt conversion. To this amount a further 20 million francs were to be added, in the form of loans as and when required, to cover the total deficit of the following years.

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Extract from the report of the International Finance Commission from 1898
Article 4 of the Law of Control drawn up by the IFC and meekly adopted by the Hellenic Parliament on 26 February 1898 stipulated that the Commission’s administrative costs, fixed at a maximum of 150,000 francs and including a sum of 60,000 francs to cover the fees of the six Delegates, should be deducted from the product of the revenues concerned. The six delegates represented Great Britain, France, Russia, the Austro-Hungarian Empire, Germany and Italy.The IFC obliged Greece to repay 39 million drachma per year while the average total income of the State (barring loans) came to approximately 90 million drachma. That meant that 43% of State revenue went directly to debt payments. Note that no part of the new loan was intended to strengthen the country’s economy, develop its infrastructure or improve public education. The new loan was intended exclusively to pay off former debts, indemnify Turkey (which in turn needed the indemnity to repay her creditors, who happened to be the same as Greece’s) and to pay off Greece’s current deficit.

The IFC members emphasized that on average the total budget of the Ministry of Education and Cults barely attained 3.5 million drachma, while the civil list (or emoluments of the sovereign) came to 1.3 million, the budget for the police 1.7 million and the Defence (war) budget 15 million. In the IFC’s reference budget there was no specific post for public health. The railway budget was a ridiculous 84,350 drachma (7.5% of the civil list). Note that the IFC forced an IOU of more than 4 million drachma upon Greece, for the heirs of King Otto who had been overthrown by the people in 1862. The annual charge that repaying this debt incurred came to 200,260 drachma, or 2.5 times the country’s railway budget!

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Extract from the report of the International Finance Commission from 1898 – administrative costs of Greece 1892 – 1896
The Commission made it quite clear that in the future, the Greek State budget would make no provision for major public works such as improvement of sea-ports and new railway lines. The Commission considered that any undertaking likely to significantly aggravate budget charges should be postponed until such time as the country’s finances had reached stable equilibrium. This is an explicit acknowledgement of the creditor Powers’ intention to maintain Greece in a permanent state of economic underdevelopment.In Article 11 of the Law, the IFC lays claim to the following for debt repayments:
- all revenue from stamp duty, about 10 million drachma;
- all revenue from import duties collected by the Piraeus Customs, i.e. about 10.7 million drachma;
- all revenue from duty on tobacco, i.e. about 6.6 million drachma;
- all revenue from duty from the monopolies on salt, oil, matches, playing cards and cigarette paper, to which were added all revenue from the emery mine at Naxos (an island in the Cyclades), i.e. about 12.3 million drachma in total.
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Extract from the report of the International Finance Commission from 1898
Who did the IFC entrust with the task of collecting revenue from the monopolies? The monopolies over salt, oil, matches, playing cards and Naxos emery were administered by a Greek-registered joint-stock company entitled Société de régie des revenus affectés au service de la dette publique hellénique or Company for the Control of Revenues Assigned to the Service of the Hellenic Public Debt (an ancestor of TAIPED |16|). The creditors obliged Greece to place this company under the direct supervision of the International Financial Commission and to make it a sort of instrument or organ of control. Furthermore, a designated member of the international Commission would be authorized to attend sessions of the Board of Administration and the General Assembly and the Commission would be able to veto any measure it judged illegal or damaging to the interests with which it had been entrusted. |17|Article 24 stated that all monies received by the Company designated in Article 14 should be entirely paid into the Régie’s accounts at least once a week. Should the revenues mentioned above prove insufficient, the IFC had the right to deduct revenue from the Customs at Laurium (whose gross product was estimated at 1.5 million drachma), Patras (2.4 million), Volo (1.7 million), and Corfu (1.6 million), in accordance with Article 12 of the Law.

IFC members could go in person to the various offices and establishments of all the services whose revenue was concerned, to check on the full implementation of the legal and regulatory measures. They were entitled to see on demand all books, accounts and accountancy documents (Article 36). Article 38 asserted that the Law of Control itself could only be modified with the agreement of the six Powers.

The conclusions of the International Financial Control Commission’s report provide a fine example of lies and hypocrisy: “In summary, the Commission was inspired in its work by the benevolent attitudes of the Powers where Greece is concerned. In satisfying the legitimate demands of the current creditors, it has taken fully into account the financial difficulties with which the country is faced. At the same time, while it has endeavoured to surround the collection and the use of the revenues set aside for the service of the debt with such guarantees as may afford every security to capitalists, it has been at pains to conserve, to the extent possible, the independence of the Hellene nation and of her Government. The future of Greece now depends on her own wisdom. If she applies herself to being industrious, calm and peacable, to improving her Administration, to developing her agricultural resources, encouraging her nascent industry and extending her trade relations, her financial situation will rapidly recover; her beneficent influence will gradually extend into the sphere of action which is reserved for her and, aided in this noble task by the sympathies of the Powers, she will succeed, through courageous and patient efforts, in conquering in Europe’s East the rank to which the glorious memories of her past entitle her.” |18|

This is typical of the discourse used by the European Commission and the governments of the creditor countries even now, in the 21st Century.

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Extract from the report of the International Finance Commission from 1898 – Conclusions
- the diplomatic document (in French): Arrangement financier avec la Grèce, travaux de la Commission internationale chargée de la préparation du projet / French Ministry of Foreign Affairs – Paris, 1898, 223 pages,… consulted on 1 May 2016;
- the text of the Greek law implementing the dictates of the international Financial Commission, consulted on 1 May 2016.

It is to be noted that from 1870 the German bankers and Germany were increasingly involved in the Balkans and the Ottoman Empire. The Greek defeat of 1897 was partly due to the military reinforcements and advice that the Ottomans had received from German officers (including generals) sent by Berlin. Bankers and diplomats were active in Athens and Constantinople. Among the countries keen to increase their influence in Athens after independence, Germany was omnipresent alongside the Troika. |19| No sooner had the peace treaty been signed and new loans granted to Greece, than the IFC imposed a new set of conditions on Greece. The Commission took up residence in Athens and took control of a large part of the Greek budget, which continued to be devoted to debt repayments. The Greek government had no authority to change the use of the income or modify taxation, without the agreement of the IFC. This bears a close resemblance to the present situation. The Commission remained in place up to the Nazi occupation of Greece in 1942! |20|

On top of the indemnity that Greece had to pay to the Ottoman Empire and that was diverted to the Great Powers, a large part of the new loan was to be used to continue repayments to the Troika countries for the 1833 loans. These repayments went on until the 1930s. According to calculations made by the economists Josefin Meyer, Carmen Reinhart and Christoph Trebesch (who are regularly associated with IMF research projects), only 25% of the sums borrowed by Greece between 1894 and 1914 were spent on regular projects (debt repayments apart) and investments. Forty percent went on debt repayments and banking commissions. The remaining 35% became military expenditure (the principal suppliers of armament were also the principal creditors and this situation persists today). |21| My own estimates show a much smaller portion of the borrowing being used for regular spending – no more than 10-15%.

Conclusions on the debt restructurings that took place in 1878 and 1898

These facts indicate that the debt resulting from the restructurings of 1878 and 1898 must be considered odious debt. The restructuring of 1878 required Greece to resume repayment of the debt contracted in 1824-1825, whereas that debt was illegal given that its terms were so overwhelmingly favourable to the creditors. This restructuring made repayment of the debt just as unsustainable and could only lead to a new crisis, which broke out in 1893. The restructuring of 1898 served to increase by several degrees the level of coercion exercised on the Greek government and its people, notably through the creation of the IFC. It enabled the six major Powers to grab a very large share of the government’s revenues while maintaining Greece in a situation of dependence toward its creditors.

An editorial comment published in the French daily Le Figaro in May 1898, describes the creditors’ strategy fairly clearly: “The maxim of the old policies was: Divide and Conquer. It has been partly replaced by the new rule: Lend them money to keep your foot on their necks. It would be interesting to make a study of it, for poor Greece, as we have had occasion to study it in Egypt, of that subtle invention of modern genius: the lender’s stranglehold on the borrower, substituted for brutal conquest using old-fashioned bayonets; judicial counsel imperceptibly becoming a counsel of wardship, of government, at first gentle and collective, then harsh and personal, for the benefit of the richest, the most tenacious, the most adroit members of the directory. We would like to observe, at its origin, the tying and the tightening of this noose of silver, the imperial instrument our century has made into its most effective weapon for political aggrandisement.” |22|

It is also important to conduct a study to determine what portion of foreign debt (debt issued in foreign currencies on the foreign financial markets, which must be distinguished from Greek loans in the local currency) was purchased by wealthy Greeks, whether residing in Greece or part of the wealthy Greek diaspora living in Istanbul, Alexandria, Smyrna and Paris. |23| It is certain that these powerful Greek elites had invested a significant part of their financial wealth in Greek securities. What that implies is that it was not in their interest to encourage their friends who succeeded one another in the Greek government to take a firm attitude with the creditors (see the Conclusions as well as the end of the inset with excerpts from Constantine Tsoucalas’s work).

Excerpt of a voucher issued by Greece in 1914, part of a loan of 500 million francs to repay previous loans

Excerpt of a voucher issued by Greece in 1914, part of a loan of 500 million francs to repay previous loans

A few keys to understanding the social and political evolution in Greece from just before the start of the First World War

Excerpts from the book by Constantine TsoucalasThe Greek Tragedy. |24| The selected excerpts give an idea of the development of social movements and the reforms won during the late emergence of a peripheral capitalist state.

“The successive tax increases on essential goods put the main burden on the workers and the middle classes, who had by now begun to organize in commercial guilds and unions. In March 1909 thousands of shopkeepers had violently demonstrated, in Athens and Piraeus, against the unequally distributed taxation. On 14 September a huge rally of over 50,000 (out of a population of under 200,000) shook Athens. While declaring their full confidence in the ‘revolution’, the Athenians went beyond the officers’ (that is, the new authorities who had just come to power [note by Eric Toussaint]) intentions. The demands for a system of progressive income taxation, the protection of production, the transformation of the civil service into a body of true public servants by the abolition of the spoils system rampant till then, an improvement in the workers’ standard of living, and a ban on usury as a criminal offence expressed the class antagonism that had been politically silent for so long. At the same time, the organization of the workers had been strengthened by the creation of numerous trade unions, and the discontent among the peasants had been growing since 1898, when the crisis in the currant trade, which had constituted a staple export, had reduced large strata of the agrarian population to misery. Unrest was especially strong in Thessaly, where the demand for agrarian reform of the large ‘estate-system’, inherited from the Turks, led to a series of violent peasant revolts, between 1905 and 1910, which had been bloodily repressed.”


“The elections of 1910 were a triumph for the new Liberal party. Venizelos formed his first cabinet, which consisted almost entirely of new men. A period of intense reconstruction and radical reform thus began.”


“The prerequisite for the reform programme of the Liberals was a constitutional reform. The constitution of 1864 was fully revised, individual liberties guaranteed, and the foundations of a ‘State of Law’ were laid. However, though some of the formal prerogatives of the monarchy were curtailed, the real powers of the King remained ambiguous, a fact which was to have explosive consequences.

On this institutional framework, Venizelos launched an impressive legislative programme. Land reform was the most urgent and difficult problem. A constitutional amendment (1911) was promulgated authorizing expropriation with compensation–though not without bitter opposition from the still powerful landowner class.”


“Low wages were exempted from confiscation in cases of debt (1909), the trade union federations of Athens and Piraeus were recognized (1910), Sunday was made a compulsory rest day (1910), a new and rapid procedure was introduced for the adjudication of disputes between workers and management (1912), joint unions between workers and employers were forbidden (1914), and the newly established unions of workers were permitted to negotiate and sign collective labour contracts. Finally a compulsory general labour insurance scheme was introduced in 1914.”

“The fiscal system was also reorganized on a more equitable basis. Progressive taxation of income was introduced in 1911 and death duties were reorganized and greatly increased in 1914.”

Following the First World War at the end of the Ottoman Empire, Germany and Austria-Hungary were beaten, and the Greek monarchy and ruling classes thought that part of the Great Idea – Greece’s annexation of a part of Turkish Asia Minor – was about to be realised. This led to the disastrous military adventure of 1922, during which the Greek army attacked the Turkish army in its territory in Asia Minor. The result was a human and military disaster.

In 1922, “…the attempt to launch a general offensive against Kemal’s stronghold in Ankara ended in disaster. In August 1922, the Greek Army was smashed and fled in disorder before the Turks, who pursued its remnants into the sea, slaughtered thousands of Greeks, and finally set fire to Smyrna in the midst of indescribable chaos. Hundreds of thousands of Greeks were forced to flee to the neighbouring islands or the Greek mainland.”


“Ten years of war (1912-1922) had resulted in the creation of a country totally different from what it had been before. Greek territory doubled and the population grew even more spectacularly. The 1,500,000 refugees, whose social and economic integration was to constitute the greatest and most urgent problem of the country, changed the population structure completely. The urban population was greatly augmented, especially in the Athens district and the few large towns, where a numerous urban proletariat was created for the first time. Thus while in 1908 only 24 per cent of the population lived in towns of over 5,000 inhabitants, the percentage had risen to 27 per cent in 1920 and to 33 per cent by 1928. Greater Athens grew from 452,919 inhabitants in 1920 to 801,622 in 1928.”


“The urban scene had also changed drastically after the war. The long years of fighting, the influence of the Russian Revolution, and especially the tragic conditions of the urban refugees, led the working class to organize on a more radical basis. The General Confederation of Trade Unions was created in November 1918, and the Greek Socialist Party a week later. In 1922 it adhered to the Comintern, and two years later it became the Communist Party of Greece.”


“The total decay of the Ottoman Empire and the Egyptian Khedivate during the latter half of the nineteenth century enabled the Western powers to impose upon them a quasi-colonial status. It was the Greek merchants and bankers who were the major beneficiaries of this development, and between 1880 and 1910 colossal fortunes were made in the Mediterranean periphery. If the 1922 crisis eradicated the Greek element from Turkey and Bulgaria, their position remained unchallenged in Egypt and to a certain extent in Rumania, where the most influential Greek financiers continued to make their fortunes. Typically, many of the closest advisers of Venizelos in the economic and banking field belonged to this group. This undoubtedly helps to explain Venizelos’s automatic obedience to British and French diplomatic interests. It also provides a deeper understanding of the reluctance of Greek capital to centre its interests upon domestic development.”

Greece - 1832-1947

Greece – 1832-1947

8-5-1042f-1The debts from the 1920s to the Second World War
The defeat of Greece’s military adventure into Turkish territory in 1922 had dramatic effects on the civilian population. Approximately 1.5 million Greeks, the majority of whom had been living in Turkey, were forced to cross the Aegean under catastrophic conditions and return to Greece, which had lost the part of the Ottoman territory she had been granted after the First World War under the Treaty of Sèvres. |25| This massive influx of refugees led the Greek authorities to request aid from the League of Nations (the “ancestor” of the UN), which granted loans to Greece between 1924 and 1928 for a total amount equivalent to 20% of Greece’s GDP at the time. As guarantee, the League required that harsh austerity policies be applied. Both the League of Nations’ representation in Greece and that of the IFC, created in 1898, were dominated by the creditor powers, in particular Britain.

Repayment of the loans granted by the League of Nations was added to a series of other repayment obligations – the continuation of the repayment to Britain and France of the remainder of the debt of 1833 (Russia has received no repayments since the Bolshevik Revolution of 1917), repayment of the debt of 1898, and repayment of the war loans granted during the First World War by Britain, the USA, Canada and France (these war loans amounted it 55% of Greece’s GDP). |26| The total debts owed by Greece were more than 100% of her GDP, and the amount paid each year accounted for more than 30% of the revenues in the Greek budget and approximately 10% of GDP. That gives an idea of the effort imposed on the Greek people and on the country’s economy.


For as long as the international economy was undergoing a phase of growth, as during the period 1898-1913 and the 1920s, Greece was able to post a primary budgetary surplus and cover its debt repayments (that is, under IFC constraints, it managed to generate revenue in excess of expenditures excluding debt service, which meant that it could use the surplus for repayments). Greece also received capital inflows, as during any period of growth of the world economy. The creditors granted Greece new loans so that she could repay the old ones.

Greek Bond - 1925

Greek Bond – 1925

The situation changed radically starting in 1930-1931 when the effects of the new international crisis that broke out on Wall Street in October 1929 began to be felt. Greece’s revenues from exports (mainly tobacco and currants) again collapsed, several Greek banks failed in 1931, and Greece’s currency was devalued by 50% following the British decision to suspend the exchange system based on the gold standard. |27| This devaluation automatically doubled the external debt as expressed in the local currency. The State was forced to double the amount of revenues set aside for repayment of the external debt in foreign currencies. As a result, in 1932, Greece had to partially suspend repayment of the debt.

Once again, if we focus on Greece while isolating her from the international context, we are likely to wrongly interpret what has taken place, just as a great many commentators have done. Yet it needs to be kept in mind that in 1932 the UK, France, Belgium, Italy and other countries also decided to suspend repayment of war debts between themselves and the USA. Germany suspended repayment of its debt to private creditors starting in February 1932 and, in May 1933, announced suspension of payments to all creditors. Hungary, Latvia, Romania and Yugoslavia were also in suspension of payment. Not to mention fourteen Latin American countries. What is systematically ignored by the dominant media is the fact that even after the moratorium decreed by Greece in 1932, she continued to make debt repayments under the tutelage of the IFC.

The International Financial Commission’s effects 

The daily Le Monde, cited earlier, says about the IFC’s actions: “In spite of everything, the result is far from being negative: It assisted a young Greece in taking control over its tax revenues and limiting the misappropriation of foreign capital by the local elite. It also contributed to the establishment of reforms that were indispensable for the country’s modernisation.” How is it possible for someone to write such a thing? The IFC exercised a true, permanent diktat over Greece’s finances for the benefit of the creditors, which prevented Greece from defining a development project and kept the country under the yoke of structural subordination.
According to Meyer, Reinhart and Trebesch, the actual yield obtained by the holders of Greek securities purchased abroad and denominated in foreign currencies and which were in suspension of payment at one time or another is between +1% and +5%. That’s a pretty high yield for the government bonds of a country that has the reputation of being a poor payer! How can this positive yield be explained? The actual interest rates were high, the debt stock was not reduced and, despite the repeated periods of suspension of payment, the country most often continued the repayments. As a matter of fact, even during the Great Depression of the 1930s, Greece, even though officially in partial suspension of payment, devoted a third of her revenues to debt repayment, which corresponds to 9% of Greece’s GDP, while during the same period Romania and Bulgaria were devoting, respectively, 2.3% and 3% of their GDP to debt service.


The analysis conducted in this article is not aimed at exonerating Greece’s governments and dominant class of their responsibilities. Quite to the contrary, the decision made by the successive Greek governments and by the dominant class to cave in to the requirements of the creditors and the major powers had terrible consequences for the Greek people. The Greek capitalist class, who were specialists in the realm of finance and international trade, constituted a bourgeoisie that was largely deterritorialised and never had either a true national project nor the will to promote development based on a real industrial fabric. Due to this very fact, its interests were inextricably linked to the interest of the country’s creditors. At times it even constituted a large percentage of the totality of those creditors, which explains its complicity with the representatives of the creditor powers. This is a constant fact from the 19th century up to today.

During the period we have examined here, Greece has constantly been dominated by foreign European powers. Foreign debt has been a permanent weapon used to exercise that domination. Yet as we see, that debt was clearly illegitimate, odious, illegal and unsustainable.

We’ve also seen that the successive debt crises are very closely linked to the international context and that many other peripheral countries have been subjected to the same treatment. The analysis must therefore be pursued in other areas of the world and justice must be done for all peoples subjected to debt.

Bibliography for Part Two: 
- Beloyannis, Nikos, Foreign Capital in Greece…
- Truth Committee on the Greek Public Debt, Preliminary Report of the Truth Committee on Public Debt, Athens, 2015
- Delorme, Olivier. 2013. La Grèce et les Balkans, du Ve siècle à nos jours, 3 volumes, Gallimard, Paris, 2013
- Driault, Edouard and Lhéritier, Michel. 1926. Histoire diplomatique de la Grèce de 1821 à nos jours, 5 volumes, Presses universitaires de France (PUF), Paris, 1926.
- Levandis, John A. 1944. The Greek Foreign Debt and the Great Powers, 1821-1898, New York: Columbia University Press.
- Luxemburg, Rosa. 1913. The Accumulation of Capital, London, Routledge and Kegan Paul Ltd, 1951
- Mandel, Ernest. 1972. Late Capitalism, New Left Books, London 1975
- Mandel, Ernest. 1978. Long Waves of Capitalist Development, The Marxist Interpreta­tion, Based on the Marshall Lectures given at the University of Cambridge, Cambridge University Press and Editions de la Maison des Sciences de l’Homme, Paris, 141 p.
- Marichal, Carlos. 1989. A Century of Debt Crises in Latin America, Prince­ton, Princeton University Press, 283 p.
- Marx-Engels, La crise, col. 10/18, Union générale d’éditions, 1978, 444 p
- French Ministry of Foreign Affairs. Arrangement financier avec la Grèce : travaux de la Commission internationale chargée de la préparation du projet, Paris, 1898, 223 pages.…
- Pantelakis Nikos, “Crédits et rapports franco-helléniques 1917-1928”, in Actes du colloque tenu en novembre 1989 à Thessalonique, Institut d’histoire des conflits contemporains, Paris 1992
- Reinhardt, Carmen and Rogoff, Kenneth, This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press, 2011.
- Reinhardt, Carmen M., and Sbrancia, M. Belen. 2015 “The Liquidation of Government Debt” Economic Policy, no. 82: 291-333
- Reinhardt, Carmen and Trebesch, Christoph. 2015. The Pitfalls of External Dependence: Greece, 1829-2015
- Sack, Alexander Nahum. 1927. Les effets des transformations des États sur leurs dettes publiques et autres obligations financières, Recueil Sirey, Paris.
- Tsoucalas, Constantine. 1969. The Greek Tragedy, Penguin Books Ltd, Harmondsworth.

Translated by Snake Arbusto, Mike Kolikowski and Vicki Briault Manus

Acknowledgements: The author’s thanks for review and suggestions go to: Thanos Contargyris, Olivier Delorme, Pierre Gottiniaux, Jean-Marie Harribey, Daphne Kioussis, Damien Millet, Nikos Pantelakis, Claude Quémar, Patrick Saurin, Yannis Thanassekos, Eleni Tsekeri.

The author accepts full responsibility for any errors that may occur in this work.


|1| See the first part of this series for an analysis of Greek debts and the 1878 agreements,

|2… (in French)

|3… (in French)

|4| In rhetoric, an oxymoron, from the Greek ὀξύμωρος (oxúmōros – de ὀξύς, “sharp, spiritual, witty” and from μωρός, “silly, stupid”, to signify “clever stupid”) is a stylistic device that brings together two terms (a noun and an adjective) of opposing signification in an apparently contradictory form, such as: a bright obscurity or a murky transparency.

|5| Amongst the classical authors, see on imperialism: Rudolf Hilferding (Finance Capital, 1910), Rosa Luxemburg (The Accumulation of Capital, 1913), Vladimir Lenin (Imperialism, the Highest Stage of Capitalism, 1916), Nicolai Bukharin (Imperialism and World Economy, 1915), Ernest Mandel (Late Capitalism, 1972), Samir Amin (Unequal Development: An Essay on the Social Formations of Peripheral Capitalism) New York: Monthly Review Press.

|6| See Carmen M. Reinhart and Christoph Trebesch: The Pitfalls of External Dependence: Greece, 1829-2015, p. 24. Greece received £1.3 million in 1824-1825; in 1878, she agreed to repay £1.2 million plus interest.

|7| See Louise Abellard, “L’Empire Ottoman face à une ‘Troika’ franco-anglo-allemande : retour sur une relation de dépendance par l’endettement” (The Ottoman Empire and the British-French-German Troika: an enquiry into debt dependency), 17 October 2013, (trans. CADTM) French)

|8| See:

|9| See:

|10| See Marichal, Carlos. 1989. A Century of Debt Crises in Latin America, Princeton, Princeton University Press, 283 p. Chapter 6.

|11| See Carmen M. Reinhart and Christoph Trebesch: The Pitfalls of External Dependence: Greece, 1829-2015, p. 25.

|12| See Edouard Driault and Michel Lhéritier, Histoire diplomatique de la Grèce de 1821 à nos jours (The Diplomatic History of Greece from 1821 to Today) (in French), Presses universitaires de France (PUF), 1926, 5 tomes. The 56% figure is taken from Tome IV, p. 296. The description of the Greek situation is very interesting.

|13| Idem, Tome IV, p. 301.

|14| This thesis is well-argued by Edouard Driault and Michel Lhéritier, in Tome IV, p. 385 and following. The two authors tell a very detailed version of the conflict and its outcome. cf. chapter VII.

|15| See the peace treaty and numerous annexes (all in French):…

|16| TAIPED is the Greek acronym of the Hellenic Republic Asset Development Fund created by the Troika in 2010 to organize privatization. The funds thus garnered are to be used entirely for debt repayment.

|17Arrangement financier avec la Grèce, travaux de la Commission internationale chargée de la préparation du projet / French Ministry of Foreign Affairs – Paris, 1898, p. 33. (in French only).

|18| Translation: CADTM

|19| From the end of the 1890s Germany was Greece’s principal export partner.

|20| See Carmen M. Reinhart and Christoph Trebesch, The Pitfalls of External Dependence: Greece, 1829-2015, p. 15.

|21| See Table 9 from Carmen M. Reinhart and Christoph Trebesch, The Pitfalls of External Dependence: Greece, 1829-2015, p. 14

|22| Eugène-Melchior de Vogüé, “Livres Jaunes” in Le Figaro, 2 May 1898

|23| According to Driault and Lhéritier, whose conclusions are based on other serious work, the Greek securities issued in France were purchased almost exclusively by Greeks residing in France and not by the French. See Edouard Driault and Michel Lhéritier, Histoire diplomatique de la Grèce de 1821 à nos jours, Presses universitaires de France (PUF), 1926, tome IV, p. 304, note 1.

|24| All passages in italics are taken from: Constantine Tsoucalas, The Greek Tragedy, Penguin Books Ltd, Harmondsworth, 1969.

|25| This question of what is known as the “Asia Minor catastrophe” is still the subject of intense debate today, both in the public sphere and among historians who have deconstructed the official narrative.

|26| There is not space enough here for a critical analysis of the debts demanded of Greece by the Allied powers following the First World War, but the author feels that a large share of these debts may be considered illegitimate. For an introduction to the problem, see Nikos Pantelakis, “Crédits et rapports franco-helléniques 1917-1928” in Actes du colloque tenu en novembre 1989 à Thessalonique, Institut d’histoire des conflits contemporains, Paris 1992 (in French).

|27| The Gold Standard is a monetary system in which the unit of account or monetary standard corresponds to a fixed quantity of gold. Advocates of the Gold Standard feel that it improves resistance to the expansion of credit and of debt. Unlike a fiat currency, a currency backed by gold cannot be issued arbitrarily by a government. Beginning in 1929 and the start of the Great Depression, British gold reserves were reduced to the point where the liabilities of the Bank of England were well in excess of its gold reserves. In September 1931, it decided to suspend the external convertibility of the pound and allow it it float freely. Germany, Austria and Norway followed shortly after the decision. The United States withdrew from the system in 1933.


94895e0e28aa2fe25dfe55787b762569Eric Toussaint is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France. He is the author of Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc. See his bibliography: He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.


Apr 202016

By Eric Toussaint, 99GetSmart

Belgian and French bank Dexia was bailed out in 2012

Belgian and French bank Dexia was bailed out in 2012

NINE YEARS after the outbreak of the financial crisis that continues to produce damaging social effects through the austerity policies imposed on victim populations, it’s time to take another look at the commitments that were made at that time by bankers, financiers, politicians and regulatory bodies. Those four players have failed fundamentally in the promises they made in the wake of the crisis–to moralize the banking system, separate commercial banks from investment banks, end exorbitant salaries and bonuses, and finally finance the real economy. We didn’t believe those promises at the time, and for good reason. Instead of a moralizing of the banking system, all we’ve had is a long list of misappropriations that have been brought to light by a series of bank failures, beginning with that of Lehman Brothers on September 15, 2008.

Since 2012 alone, the list of bailouts includes: Dexia in Belgium and in France (2012, the third bailout), Bankia in Spain (2012), Espírito Santo (2014) and Banif (2015) in Portugal, Laiki and Bank of Cyprus in Cyprus (2013), Monte dei PaschiBanca delle MarcheBanca Popolare dell’Etruria e del Lazio and Carife in Italy (2014-2015), NKBM in Slovenia (2012), SNS Reaal in Holland (2013) and Hypo Alpe Adria in Austria (2014-2015), and those are only a few examples. The most intolerable thing is that the public authorities have decided to pay ransom to these banks by having the citizens bear the consequences of the low dealings of their directors and shareholders. A separation or “ring-fencing” between commercial banks and investment banks remains no more than wishful thinking. The so-called banking reform undertaken in France in 2012 by Pierre Moscovici, the French Finance and Economy minister, turned out to be a sham. As for bankers’ remunerations, the ceiling on the variable compensation adopted by the European Parliament on 16 April, 2013, had as its immediate consequence…an increase in the fixed compensation and recourse to an exemption clause provided for in the law.

No measures designed to avoid further crises have been imposed on the private finance system. Governments and the various authorities meant to ensure that the regulations are respected and improved have either shelved or significantly attenuated the paltry measures announced in 2008-2009. The concentration of banks has remained unchanged, as have their high-risk activities. There have been more scandals implicating the 15 to 20 biggest private banks in Europe and the United States–involving toxic loans, fraudulent mortgage credits, manipulation of currency exchange markets, of interest rates (notably, the LIBOR) and of energy markets, massive tax evasion, money-laundering for organized crime, and so on. The scandal of the Panama papers shows how banks are using the tax heavens. The Financial Times reported that the British prime minister, David Cameron, had intervened personally to prevent offshore trusts from being dragged into an EU-wide crackdown on tax avoidance.

The authorities have merely imposed fines, usually negligible when compared to the crimes committed. These crimes have a negative impact not only on public finance but on the living conditions of millions of people all over the world. People in charge of regulatory bodies, such as Martin Wheatley, former director of the Financial Conduct Authority in London, have been sacked for trying to do their job properly and being too critical of the behavior of banks. George Osborne, the Chancellor of the Exchequer, dismissed Martin Wheatley in July 2015, nine months before the end of his five-year contract.

Although obviously to blame, no bank director in the United States or Europe (with the exception of Iceland) has been convicted, while traders, who are mere underlings, are prosecuted and sentenced to between five and 14 years behind bars.

As was the case for the Royal Bank of Scotland in 2015, banks that were nationalized at great public expense to protect the interests of major private shareholders have been sold back to the private sector for a fraction of their value. Salvaging the RBS cost £45 billion of public money, while its reprivatization will probably mean the loss of a further £14 billion.

Lastly, as to whether banks are now financing the real economy, the efforts deployed by the central banks have failed to spark, as yet, even the beginnings of a real recovery of the economy.

Because we feel, in particular in the light of Greece’s experience, that banks are an essential element of any project for social change, we propose that immediate measures be taken to attain the following six goals:

1. Restructure the banking sector

2. Eradicate speculation

3. End banking secrecy

4. Regulate the banking sector

5. Find an alternate means of financing public expenditures

6. Strengthen public banks

In a second part, we will develop our arguments in favor of socializing the banking sector.

– – – – – – – – – – – – – – – –

1. Restructure the banking sector

Radically reduce the size of banks
 in order to eliminate the “too big to fail” risk systemic banks [1] represent.

Separate commercial banks from investment banks
. Commercial banks will be the only financial institutions authorized to take in savers’ deposits and to receive public support (public underwriting of savings deposits and access to cash from the central bank). These commercial banks will be authorized to grant loans only to private individuals and local and national companies and public entities. They will be prohibited from conducting activities on the financial markets. What that means is that they will not be allowed to engage in securitization: loans will not be able to be turned into tradable securities and commercial banks must keep the loans they grant on their books until full repayment is made. The bank that has granted a loan must bear the risk for that loan.

Investment banks must not be entitled to public underwriting; in case of failure of a bank, all losses will be borne by the private sector, beginning with the shareholders (on the totality of their assets; see below).

Prohibit credit relations between commercial banks and investment banks
. Following Frédéric Lordon’s principle of imposing a real “apartheid” between commercial banks and investment banks, under no circumstances will a commercial bank be allowed to be involved in a credit relation with an investment bank. [2]

2. Eradicate speculation

Prohibit speculation
. As Paul Jorion proposes, speculation must be prohibited. “In France speculation was authorized in 1885, and in Belgium in 1867. As a matter of fact speculation was defined very clearly by the law aimed at ‘prohibiting wagering on the upward or downward movement of financial securities.’ With such a prohibition, anyone who practices speculation would be guilty of an infraction; whether they’re in Bank X or Bank Y would make no difference.” [3] That could include sanctions on banks that speculate on their own account or on the behalf of their clients.

Acquisition of tangible property (raw materials, commodities, land, buildings, etc.) or securities (shares, bonds or any other security) by a bank or other financial institution with the intention of speculating on its price will be prohibited.

Prohibit derivatives
. This means that banks and other financial institutions who want to cover themselves against various types of risks (associated with exchange rates, interest rates, payment defaults, etc.) will have to go back to using traditional insurance contracts.

Require banks to request authorization before placing financial products on the market
. Investment banks will have to submit any new financial instrument to the oversight authorities (this does not apply to derivatives since they will have been outlawed) for authorization before they are placed on the market.

Separate consulting activities from market activities
. We are also in agreement with the Belgian economist Eric de Keuleneer, who proposes separating consulting activities from market activities: “It is not right for banks to take on risky debt whilst advising their customers about the quality of these debts, or that they are currently able to speculate on gold, whilst ‘selflessly’ advising their customers to purchase gold. ” For that, he proposes re-creating brokerage activities.

Prohibit high-frequency trading and shadow banking. Strictly limit what can be included in off-balance-sheet entries. [4] Prohibit short sales and naked shorting

3. End banking secrecy

Prohibit over-the-counter financial markets
. All transactions on financial markets must be recorded, traceable, regulated and controlled. Until now, the main financial markets have been over-the-counter–that is, they are subject to no oversight whatsoever. This is true of the FOREX market ($5,300 billion each day), [5] the derivatives market, the markets for raw materials and agricultural products, [6] etc.

End banking secrecy
. Banks must be required to communicate all information regarding their directors, their various entities, their customers, the activities they conduct and the transactions they carry out for their customers and on their own account. Similarly, banks’ accounting must also be legible and comprehensible. Lifting bank secrecy must become a basic democratic imperative for all countries. Concretely, that means that banks must make available to the tax authorities: a list of names of beneficiaries of interest, dividends, capital gains and other financial revenues; information on the opening, modification and closure of bank accounts in order to establish a national directory of bank accounts; all information on movements of capital into and out of the country, including in particular identification of the order giver.

Prohibit transactions with tax havens
. Banks must be prohibited from engaging in any transaction with a tax haven. Failure to comply with the prohibition must be subject to very heavy sanctions (including the possible revocation of the banking license) and heavy fines.

4. Regulate the banking sector

Require banks to radically increase the volume of their own funds (equity) in relation to their total assets
. [7] Whereas equity is generally less than 5 percent of a bank’s assets, we believe that the legal minimum should be raised to 20 percent.

Prohibit socialization of the losses
 of banks and other private financial institutions. This means prohibiting public authorities from guaranteeing private debt with public funds.

Restore unlimited liability of major shareholders in case of bank failure
. The cost of a failure must be recoverable from the total assets of the major shareholders (be they individuals or corporations).

In case of bank failure, the deposits of clients of the commercial bank must continue to be guaranteed by the State, up to the limit of a reasonable amount of savings for an upper-middle household (estimated today at 150,000 euros–and subject to democratic debate).

Tax banks heavily
. Banks’ profits must be strictly subject to legal provisions regarding taxation of companies. In fact, the rate banks currently pay is very significantly below the legal rate, which itself is far too low. Banking transactions involving currency [8] and financial securities must be taxed. Short-term bank debt must be taxed in order to promote long-term financing.

Systematically prosecute bank directors who are guilty
 of financial crimes and misdemeanors and revoke the banking licenses of institutions that do not comply with the prohibitions and are guilty of misappropriation.

Find another way to save banks
. In addition to the measures mentioned above–unlimited liability for major shareholders (covering all their assets), guarantees on deposits up to 150,000 euros and prohibition of guaranteeing private debt against public funds–a mechanism needs to be created for orderly failure of banks, consisting of two structures: A private bad bank (owned by private shareholders and incurring no cost for the public authorities) and a public bank to which deposits, as well as safe assets, are transferred. Certain recent experiments can serve as inspiration–in particular the measures taken in Iceland since 2008. [9]

5. Find other ways of financing public debt

Require private banks to hold a quota of public-debt securities.

The central banks should again grant loans at zero interest to public authorities. Unlike the current practice of the ECB as a result of the European treaties, the central bank would be able to provide zero-interest financing to the State and all public entities (towns, hospitals, social-housing entities, etc.) in order to conduct socially equitable policies in the context of the environmental transition.

6. Strengthen existing public banks
 and re-create them in countries where they have been privatized (they would of course be subject, like all other banks, to the concrete measures discussed above). In France, in 2012 a collective called “Pour un Pôle Public Financier au service des Droits!” (“Toward a public financial institution to protect our rights!” [10]) that supports the creation of a public banking structure. The serious disadvantage of this project is that it fails to get to the root of the problem in that alongside an insignificant public banking sector, private banks and a cooperative sector, which is cooperative in name only, would continue to exist. In Belgium, where the government privatized the last public banks in the 1990s, in 2011 the State bought back the bank “part” of Dexia, of which it is 100 percent owner. Dexia Bank has become Belfius and still has private status. Belfius needs to become a true public bank and the concrete measures formulated above need to be applied. The State paid 4 billion euros–an amount the European Commission itself considered quite unreasonable. What should have been done is this: Belfius should have been created at no cost to the public finances as a public banking institution funded by the deposits of the Dexia Bank’s customers and all the safe assets. The bank should have been placed under citizen control. The working conditions, jobs and income of the personnel should have been guaranteed while the remuneration paid to the directors should have been sharply reduced. The board members and directors should have been barred from holding a position in a private institution. Charges should have been pressed against the directors of Dexia by the ministry for the criminal wrongdoings they committed. Report No. 58 filed by the French Senate on the Société de financement local (SFIL) evaluates the cost of Dexia’s failure at approximately 20 billion euros (13 billion for France, including 6.6 billion earmarked for recapitalization, and the rest to cover part of the early repayment penalties on toxic loans; 6.9 billion euros for Belgium, corresponding to the nationalization of Dexia Bank Belgium and the recapitalization of Dexia) as of the date of the report. On 1 February, 2013, France created a 100 percent public structure (with the State owning 75 percent, the CDC 20 percent and the Banque Postale 5 percent) in order to acquire 100 percent of the Dexia Municipal Agency (a subsidiary of Dexia Crédit Local), which became the Caisse Française de Financement Local (CAFFIL).

– – – – – – – – – – – – – – – –

Putting the concrete measures we have mentioned above into practice would constitute progress in resolving the crisis in the banking sector, but the private sector would continue to occupy a dominant position.

Perennial long-term measures are also needed

If the experience of the last few years demonstrates anything, it’s that banks must not be left in the hands of capitalists. If, through popular mobilization, we can see to it that the measures discussed above
 (which are open to further discussion in order to improve and complement them) are applied, capital will do everything possible to recover part of the ground it will have lost, finding multiple ways of getting around the regulations, using its powerful financial resources to buy the support of lawmakers and government leaders in order to deregulate, once again, and increase profits to the maximum without regard for the interests of the majority of the population.

Socializing the banking sector under citizen control is necessary

Because capitalists have demonstrated just how far they are willing to go, taking risks (risks whose consequences they refuse to be held accountable for) and committing crimes for the sole purpose of increasing their profits, because their activities regularly result in heavy costs borne by society as a whole, because the society we want to build must be guided by the pursuit of the common good, social justice and the reconstitution of balanced relations between human beings and the other components of nature, the banking sector must be socialized. As Frédéric Lordon proposes, a “total deprivatizationof the banking sector” [11] needs to be carried out. Socialization of the banking sector in its entirety is recommended by the labor federation Sud BPCE in France. [12]

Socializing the banking sector means:

expropriation, without compensation (or compensated by one symbolic euro), of large shareholders (small shareholders will be fully compensated);

granting a monopoly of banking activities to the public sector, with one single exception: the existence of a small cooperative banking sector (subject to the same fundamental rules as the public sector).

creating a public service for savings, credit and investment, with a twofold structure: a network of small ‘high street’ branches, on the one hand, and on the other, specialized agencies in charge of funds management and financing of investments not handled by the ministries in charge public health, education, energy, public transport, retirement, the environmental transition, etc. These ministries will be provided with the budgets necessary to assure their investments and efficient functioning. The specialized agencies will intervene in areas and activities that are beyond the competence and spheres of action of the ministries in order to ensure that all needs are covered.

defining, with citizen participation, a charter covering the goals to be attained and the missions to be carried out and which places the public savings, credit and investment entities at the service of the priorities defined by a democratic planning process;

transparency in the financial statements, which must be shown to the public in understandable form.

The word “socialization” is used in preference to “nationalization” or “state ownership” to make clear the essential role of citizen oversight, with decision-making shared between directors, personnel representatives, clients, non-profit associations, local officials and representatives of the national and regional public banking entities. Therefore, how that active citizen oversight will be exercised will need to be defined by democratic means. Similarly, the exercise of oversight over the banks’ activities by workers in the banking sector and their active participation in the organization of the work must be encouraged. Bank directors must issue an annual public report on their stewardship. Preference must be given to local, quality service, breaking with the policies of externalization currently being pursued. The personnel of financial establishments must be encouraged to provide authentic counseling to the clientele and to break with current aggressive sales policies.

Socializing the banking sector and making it a public service will make it possible:

–for citizens and public authorities to escape the influence of the financial markets;

–to finance citizens’ and public authorities’ projects;

–to dedicate the activity of banking to the common good, with among its missions that of facilitating the transition from a capitalist, production intensive economy to a social and environmental economy.

Because savings, credit, security of deposits and the preservation of the integrity of payment systems are matters of general interest, we recommend that a public banking service be created by socializing the totality of the firms in the banking and insurance sectors.

Because banks are today an essential tool of the capitalist system and of a mode of production that is devastating our planet and grabbing its resources, creating wars and impoverishment, eroding, little by little, social rights and attacking democratic institutions and practices, it is essential to take control of them so that they become tools placed at the service of the greater number of people.

Socializing the banking sector cannot be conceived of as a mere slogan or demand, sufficient unto itself and which decision makers would put into practice because they understand why it makes sense. It must be seen as a political goal to be reached through a process driven by a movement of citizens. Not only is it necessary for existing organized social movements (including trade unions) to make it a priority of their agenda and for the different sectors (local governmental bodies, small and medium companies, consumer associations, etc.) to adopt the position, but also–and above all–for bank employees to be brought to an awareness of the role played by their profession and the fact that it would be in their interest for banks to be socialized; and for bank users to be informed at the point of use (for example, through occupations of bank branches everywhere on the same day) so that they can participate directly in defining exactly what a bank should be.

Only large-scale mobilization can guarantee that socialization of the banking sector can actually be achieved in practice, because it is a measure that strikes at the very heart of the capitalist system. If a government of the Left does not take such a measure, its action will not be able to truly bring about the radical change needed to break with the logic of the system and bring about a new process of emancipation.

Socializing the banking and insurance sector must be part of a much broader program of further measures which would trigger the adoption of a transition to a new, post-capitalist and post-productive model. Such a program, which needs to be European-wide but which may first be put into practice in one or several countries, would include abandonment of austerity policies, cancellation of illegitimate debt, implementation of an overall tax reform with heavy taxation of capital, an overall reduction in working hours with compensatory hiring and maintaining of wage levels, socialization of the energy sector, measures for ensuring gender parity, development of public services and social benefits and the implementation of a strongly determined environmental transition policy.

At this point in history, socialization of the entirety of the banking system is an urgent economic, social, political and democratic necessity.

– – – – – – – – – – – – – – – –


Gilbert Achcar, Professor of Development Studies, SOAS, University of London
Alan Freemaneconomist with the Greater London Authority from 2000 to 2011, ‎co-director, Geopolitical Economy Research Group, University of Manitoba, Canada
Giorgos Galanis, Lecturer, Goldsmiths, University of London.
Pete Green, co-convener of the Left Unity Economics Policy Commission.
David Harvey, Distinguished Professor at the Graduate Center of the City University of New York (CUNY)
Michael Hudson, Distinguished Research Professor University of Missouri-Kansas City and Professor, Peking University
Michel Husson, Economist, author of Le capitalisme en 10 leçons, La Découverte, Paris, 2012, France
Andy Kilmister, Senior Lecturer in Economics at Oxford Brookes University, and editor Journal of Contemporary Central and Eastern Europe.
Stathis Kouvelakis, Reader King’s College University of London, member of Popular Unity (Greece)
Costas Lapavitsas, Professor of Economics, SOAS, University of London
Francisco Louçã, Professor of Economics in Lisbon’s Instituto Superior de Economia e Gestão(“Higher Institute of Economics and Management”)
Philippe Marlière, Professor of Politics, University College London
Thomas Marois, Senior Lecturer, Development Studies, SOAS, University of London
Ozlem Onaran, Professor of Economics, director of Greenwich Political Economy Research Centre, University of Greenwich
Sabri Öncü, Economist, SoS Economics, Istanbul, Turkey
Susan Pashkoff, Economist, Left Unity, Economic Policy Commission, UK
Alfredo Saad Filho, Professor of Political Economy, SOAS, University of London
Patrick Saurin, Spokesperson for the bank employees’ labour federation Sud Solidaires de la Banque Populaire–Caisse d’Epargne (BPCE) -France.
Benjamin Selwyn, Senior Lecturer in International Development, University of Sussex, UK
Pritam Singh, Professor of Economics, Faculty of Business, Oxford Brookes University
Stavros Tombazos, Professor of political economy at the University of Cyprus.
Eric Toussaint, Spokesperson of the CADTM, author of Bancocracy, Resistance Books/IIRE/CADTM, 2015
John Weeks, Professor Emeritus, SOAS, University of London

– – – – – – – – – – – – – – – –


1. Philippe Lamberts, the Green MEP, proposes a maximum of $100 billion in assets. “By way of comparison, the total assets* of BNP Paribas and Deutsche Bank, respectively, in 2011 were 2,164 billion euros and 1,965 billion euros.” We feel that the maximum size should be significantly smaller, in particular in smaller countries. 100 billion euros is a multiple of Cyprus’s GDP, and it’s more than a quarter of Belgium’s.
2. (in French)
3. Paul Jorion in Financité, November 2013 (in French).
4. For example, limit off-balance-sheet items to guarantees and signed commitments. Discussion is needed.
5. See Eric Toussaint, “Comment les grandes banques manipulent le marché des devises” (“How the major banks manipulate the currency market”), published on on 13 March 2014 and available in English as Chapter 18 of Bankocracy (available in .pdf form; also available in paper from CADTM)
6. Eric Toussaint, “Banks Speculate on Raw Materials and Food,” 10 February 2014
7. This would mean abandoning the system of weighting assets for risk, which is particularly unreliable since the weighting is left up to the banks themselves. Here’s an explanation of the system of asset weighting based on risk.
8. Eric Toussaint, “Il faut imposer une véritable taxe Tobin au lobby bancaire” (“A real Tobin Tax must be levied on the banking lobby”), an op-ed published by the daily L’Humanité on 25 February 2014 and also at (in French)
9. Interview with Eva Joly by Renaud Vivien, “Iceland refuses its accused bankers ‘Out of Court’ settlements.”
10. See their site (in French). The public banking entity promoted by the collective would include public financial institutions (the Banque de France, the Caisse des Dépôts and its financial subsidiaries, OSEO, the Société des participations de l’État, the Banque Postale, UbiFrance, the Agence française de développement, the Institut d’émission des départements d’Outre-Mer, CNP Assurance) or ones whose activities constitute a public service (the Crédit foncier, Coface). Any bank or insurance firm in which the State acquires a majority share or which may be assigned public-service missions would be part of it. In Belgium, a site created by the PTB is dedicated to promoting the need for a public bank (in French or Flemish).
11. Frédéric Lordon, “L’effarante passivité de la ‘re-régulation financière’” (“The frightening passivity of ‘financial re-regulation'”), in Changer d’économie, les économistes atterrés, Les liens qui libèrent, 2011, p. 242 (in French).
12. See in particular these links (in French):;

Translated by Snake Arbusto and Mike Krolikowski. First published at the web site of the Committee for the Abolition of Third World Debt.

Sep 152015

By Eric Toussaint, CADTM, 99GetSmart

Eric Toussaint, CADTM

Eric Toussaint, CADTM

Another way is possible …

Chapter titles:

  • The Citizen Audit Commission of 2011
  • The position of SYRIZA’s leadership regarding the citizen audit committee of 2011
  • SYRIZA’s program in the legislative elections of May-June 2012
  • Late 2012: SYRIZA’s leadership moderates its positions
  • October 2013: Alexis Tsipras calls for a European conference on public debt
  • SYRIZA becomes the leading party in Greece with the May 2014 European elections
  • The January 2015 victory5.
  • The fatal agreement of 20 February 2015 with the institutional creditors
  • A different policy was desirable and possible
  • The Truth Committee on the Greek Public Debt is launched
  • The Greek government refrains from making use of the audit
  • From the referendum on 5 July to the agreement of 13 July 2015
  • The lessons of the capitulation of 13 July 2015
  • A parallel currency as part of “Plan B”

Subtitles in the video by snakearbusto


Jan 272015

Posted by SnakeArbusto, 99GetSmart

The Troika imposes policies that are destroying social rights in Greece


“An audit committee of the Greek debt could show that 80% of the debt required by the troika is illegal,” said Mr. Toussaint on an interview with Christina Vasilaki, stoKokkino`s correspondent in Brussels.

Éric Toussaint, Senior Lecturer at the University of Liège, is president of CADTM Belgium (Committee for the Abolition of Third-World Debt), and a member of the Scientific Committee of ATTAC France.

“An audit committee of the Greek debt could show that 80% of the debt required by the troika is illegal,” said Mr. Toussaint making reference to Article 7, paragraph 9 of the European Regulation on countries in program adaptation, according to which:

“A Member State subject to a macroeconomic adjustment programme shall carry out a comprehensive audit of its public finances in order, inter alia, to assess the reasons that led to the building up of excessive levels of debt as well as to track any possible irregularity”.

Radio interview transcribed by SnakeArbusto:

CV Which is the EU Regulation that Syriza’s demand for an audit of debt could be based on?

ET In May 2013 the European Parliament and the European Commission adopted a Regulation requiring all countries who sign a Memorandum of Agreement–as in the present case of Greece,  Ireland, Portugal, and Cyprus. Article 7 of this Regulation says that governments will carry out a comprehensive audit of the debt contracted by the country and to identify possible irregularities. So, Paragraph 9 of this Article of the Regulation allows a government headed by SYRIZA to create, immediately, such a commission in implementation of the Regulation.

CV What can be revealed by this audit?

ET For me it’s very clear that the debt contracted by Greece with the Troika, which represents 80% of the Greek debt now, is clearly illegitimate because the Troika has imposed policies on Greece which have destroyed part of the economy of Greece and destroyed the social rights and the economic rights of the population.

CV Do you believe that it’s necessary to write off part of the Greek debt? And what would be the result for access to the international markets in the long term?

ET As you know we have had more than 600 restructurings of debt since 1950. A lot of countries have suspended payment of the debt, and in the case of Greece, if Greece succeeds in imposing a large cancellation of its debt, which is totally possible, I think there is no real problem, after several years, (for Greece) to go back to the market if Greece needs it. But also you could imagine some alternative way of financing Greek development – fiscal reform (), reducing the taxes paid by the poor and increasing the taxes paid by the richest 1% of the population and big private enterprises could allow the government to raise sufficient money to not be obliged to go to the market and contract new debt.

CV Could the extension of the maturity of the loan and the reduction of the interest rates be an alternative solution?

ET Greece needs a real cancellation of a big part of its debt. And for the other part of the debt which will not be cancelled, abolished, a reduction of the interest rates and an extension of the maturity of payment is necessary, I suppose, too. But it’s not an alternative to the cancellation. It’s complementary to cancellation. You need both things.

Radio Interview @

Nov 232014

By Eric Toussaint, 99GetSmart

We don’t owe, we won’t pay

We don’t owe, we won’t pay

This article reviews a number of developments that occurred between 2000 and 2014 related to the debt issue, various aspects of the international crisis |1|, international financial institutions, the scope of attacks against social and economic rights, and CADTM priorities.

Several changes have occurred since the end of the 1990s.

1. Several countries in the South have moved away from neoliberal policies

After over twenty years of neoliberal policies and multiple forms of resistance, towards the end of the 1990s and at the beginning of the new millennium, several Latin American nations disposed of their neoliberal presidents thanks to massive social mobilisations and elected heads of state who implemented policies that meet the people’s interests. The people of those countries wanted to free themselves from measures derived from the ‘Washington consensus,’ as imposed by the IMF and the World Bank (privatisations, cuts in public services, ‘liberalisation’ of trade that deprives small local producers of any protection, enforced commodification, destruction of decent jobs, cancellation of subsidies for food staples and services such as water, electricity, gas, and transport). These policies were implemented on the pretence of repaying their public debts, much of which was illegitimate or illegal, as was the case in Venezuela, Ecuador, Bolivia… |2| Ecuador’s government took a remarkable initiative in 2007-2008 when it carried out a complete audit of its debt with the active participation of representatives from social movements |3|. On the basis of this audit, it then suspended repayment of the part of the external debt identified as illegitimate, and imposed a significant reduction of the debt to its creditors |4|. This made it possible to increase social spending. Unfortunately, this initiative did not snowball as had been hoped, since other countries in the area did not follow suit.

On the upside, let us note that the governments of these three countries also increased taxation on large foreign corporations that exploit these countries’ natural resources. This development significantly boosted their tax revenues, and made it possible to increase social spending.

Moreover, citizens in these three countries democratically adopted new Constitutions, which include a measure on the removing of elected representatives at mid-term.

Finally, it should also be added that Bolivia in 2007, Ecuador in 2009, and Venezuela in 2012 took the wise step of leaving the WB International Centre for Settlement of Investment Disputes (ICSID).

The International Centre for the Settlement of Investment Disputes (ICSID),The ICSID was founded in 1966, with the purpose of providing a means of conciliation and arbitration to settle investment disputes between contracting States and nationals of other contracting States. To put it simply, it is an international arbitration tribunal, which deals with disputes arising between a private investor from a contracting party State and the State where the investment is based. The Centre’s jurisdiction (article 25) extends to disputes of a legal nature, relating directly to an investment, between a contracting State (or a government organisation or body dependent on that State and designated by it to the Centre) and a national from another contracting State.

The Centre is usually designated as competent to deal with disputes arising within the context of bilateral investment agreements. Thus, almost 900 bilateral treaties on the promotion and protection of investments explicitly name the Centre as the instance for settling disputes between the private investor of a contracting party, on the one hand, and the State where the investment concerned is based, on the other. The Centre’s arbitral sentence is mandatory and cannot be appealed (article 53). The ICSID is a member of the World Bank Group, but from an institutional point of view, it is an autonomous international organisation, which completes the Bank’s range of intervention.

There is no obligation to have recourse to the ICSID for conciliation or arbitration. However, once the parties are engaged, neither may withdraw unilaterally from the ICSID’s arbitration. Once the ICSID has made a decision, all the countries that have ratified the convention, even if they are not involved in the dispute, must acknowledge and apply the decision. Since 1978, the ICSID’s area of jurisdiction has been extended. A whole new set of rules allow it to intervene in cases that do not fall within the domain of the convention. Thus, it can now intervene in arbitration procedures even when one of the parties to the dispute is a State or the national of a State that has not ratified the convention. It can also be called on to bear witness on facts in a case.

Until the mid-1980s, the disputes dealt with by the ICSID arose from agreements made under investment contracts. Since then, it has dealt increasingly with disputes arising from agreements made under bilateral treaties.

The World Bank’s spider web 

The World Bank’s subsidiaries (the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for the Settlement of Investment Disputes (ICSID)) have been designed to weave an even tighter web.

Let us take a theoretical example to illustrate the effects of their policies. The World Bank grants a loan to the government of a country if it promises to privatise its water distribution and purification system. In this process, the public company is sold to a private consortium including the IFC, a World Bank subsidiary.

Then the population affected by the privatisation protests against the sudden sharp increase in rates and the fall in the quality of the service provided, and the government turns against the predatory transnational company, the dispute is dealt with by the ICSID, which thus finds itself on both sides of the judge’s bench.

A situation has been reached where the World Bank Group is present at every level: it imposes and finances privatisation via the IBRD and IDA, it invests in the privatised company through the IFC, it provides the company with guarantees covering it against political risk, through the good offices of the MIGA, and it judges any disputes that may arise through the ICSID.

This is exactly what happened in El Alto, Bolivia, between 1997 and 2005.

2. Increases in raw materials prices and currency reserves

In 2003-2004, the prices of raw materials and agricultural products began to rise |5|. This situation enabled the developing countries |6| exporting such products to increase their revenues, especially in strong currencies (dollar, euro, yen, and pound). Certain developing countries used the additional revenues to increase social spending, while most of them accumulated foreign exchange reserves |7| or purchased US Treasury Bonds—thus contributing to financing the leading world power. In other words, they increased their loans to the world’s principal economic power, thus contributing to maintaining its domination by providing it with the means to continue living on credit and maintaining a large trade deficit. An explanation for this is that the US borrows large amounts from countries that are prepared to purchase its debt instruments (US Treasury Bonds).

The table below indicates the volumes of US Treasury Bonds and other treasury bonds held in March 2014 by a number of developing countries. China alone has lent the USA $1,270 billion (from its foreign reserve exchange accumulated through its trade surplus with the USA), and therefore holds more than one fourth of US external public debt.

Developing countries that are creditors of the USA: values of US Treasury Bonds (in $billionsdollars) held in March 2014 |8|


The yield on US Treasury Bonds and other government bonds is from 0 to 2.57% in function of the maturity (one month = 0.01%, while 10 years = 2.57%) |9|. Given the inflation rate in the US, the real yield is very low, or even negative, which enables the US to finance itself at a very low cost.

3. The loss of power of the World Bank and IMF vis-à-vis certain developing countries

The increase in foreign exchange reserves and the decision of some governments in the South to use part of them to increase social spending and infrastructure investments have contributed to decreasing the influence of the IMF, World Bank, and most industrialised countries over some of the developing countries |10|. This loss of influence also comes from the fact that China and the other ‘BRICS’ (Brazil, Russia, India, China, and South Africa), especially Brazil, have greatly increased the number of their loans to certain developing countries.

4. China becomes a powerful creditor

Another factor has reinforced this phenomenon: a rapidly expanding China has become the world’s workshop, and has accumulated huge currency reserves (mostly in dollars). In December 2013, China’s foreign exchange reserves reached $3,821 billion |11|. It has significantly increased its international trade, particularly with developing countries on various continents. It has also increased very significantly its loans to African, Latin-American, and many Asian countries. Its loans are now competing with those of the World Bank and the IMF, other multilateral financial institutions and the governments of the most industrialised countries. That has reduced the ability of these institutions and of countries in the North to exert pressure on some developing countries. However, we should remain vigilant regarding these large debts taken on by developing countries. China is a new capitalist power, which does not give anything away, and its investments are aimed at ensuring its control over the raw materials it needs and over the markets to which it exports its manufactured goods.

5. In 2014, the BRICS (Brazil, Russia, India, China, and South Africa) announced the creation of a multilateral bank that would belong to them |12|

If this bank begins doing business one day (which is not sure), it will not be an entity capable of offering a positive alternative for developing countries, because the governments founding it are seeking to create a bank which will directly serve their interests (ensuring sources of raw materials and outlets for their exportations) and not those of the people.

6. Increases in internal public debt

Over the past 20 years, internal public debt has increased significantly. In a significant number of developing countries, it has become greater than external public debt (see table below on Argentina, Brazil, Colombia, Ecuador, and Mexico). This is true for all of the richest developing countries, particularly for the so-called ‘emerging’ economies.

Comparison of external and internal public debt (in $billions and as a % of total debt) for some Latin American countries (2000-2013) |13|



However, we should not be fooled. The domestic banks that issue loans to the public authorities of their country in the local currency are often in fact subsidiaries of foreign banks, and the loans in local currency, in many cases, are pegged to a strong currency (generally the dollar). This means that if the local currency is devalued or the value of the strong currency increases, the amount to be reimbursed increases considerably |14|. It also means that the major foreign banks are making large profits from the internal public debt. For example, Santander, the principal Spanish bank, makes enormous profits from the loans granted by its subsidiaries in Brazil |15| and other Latin American countries to public authorities by buying government securities from them. The same is true of other banks like Citigroup/CitiBank, which have a strong presence in Mexico, and the Spanish bank BBVA, present in several Latin-American economies, not to forget the British bank HSBC, which is particularly active in Asia.

7. The food and climate crisis

In 2007-2008, the peoples of the developing countries were faced with a sharp increase in the price of foodstuffs. This situation resulted in food riots in 18 countries. The number of people suffering from hunger, which was approximately 900 million before the crisis, increased by nearly 120 million, bringing the total to over one billion in 2009. As we will see farther on, that figure has gradually been reduced, but the fact can only alert us to the incredible vulnerability of hundreds of millions of people. This dramatic situation is directly linked to other factors related to the global crisis and the debt system. One thing is certain: the rising price of food staples and increasing number of human beings suffering from hunger are not the result of a lack of food resources throughout the world. Some of the factors behind this global food crisis, which is keeping one out of eight humans in a permanent state of hunger, are financial speculation on the prices of basic food items (and fuels) on the over-the-counter market in Northern countries, as well as the promotion of agro-fuels in Northern and some Southern countries— including Brazil —, land grabbing, the ‘free-trade’ agreements imposed on Southern countries, the end of subsidies for basic food staples and to local producers in Southern countries, and the priority given to cash crops intended for exportation to the detriment of local market gardening… |16|

In addition, the effects of the ongoing climate crisis are increasingly dramatic in developing countries. Here again, the policies rolled out by the World Bank in particular, and the productivist capitalist system in general, are part of the problem and not part of the solution |17|.

8. Debt is one of the core concerns in Northern countries, where it is considered to be the consequence of the crisis that erupted in 2007-2008

The crisis caused by major private banks in the US and Europe has generated a strong increase in the debt of the countries concerned. Private and public debt have become core concerns in Northern countries, particularly within the European Union and the United States. That is why the CADTM has engaged in more studies and actions targeting the countries of the North, while still not neglecting the South. The lessons drawn from the Third World debt crisis in 1980-1990 are very valuable for understanding the events that followed the crisis of 2007-2008 and taking action in its aftermath |18|. The countries in the North where people have been the most severely affected are Greece, Ireland, Iceland, Portugal, Spain, Cyprus, Romania, Hungary, the Baltic Republics, Bulgaria, and Italy. The policies being applied by creditors in the most industrialised countries in the North today closely resemble those that were imposed on the countries of the South in the 1980s, which caused and exacerbated third world debt.

9. Centre/Periphery relations within the European Union based on domination 
The existence of a common economic, trade, and political zone enables European transnational corporations and the economies of the Centre of the eurozone to profit from the debt crisis in the Periphery countries (Spain, Greece, Portugal, Ireland, Cyprus, and countries in central Europe and the Balkans), as well as in Italy, to make their companies more profitable and make points in terms of competitiveness with respect to their North American and Chinese competitors. At the current stage of the crisis, the aim of countries in the Centre of the eurozone is not to relaunch growth and reduce asymmetries between the strongest and weakest economies in the EU.

In addition, European leaders believe that the collapse of Southern Europe is going to translate into opportunities to privatize corporations and public goods massively at cut-rate prices. The intervention of the Troika and the active complicity of governments in the Periphery are helping them. The dominant classes in the countries in the Periphery are in favour of these policies, because they are counting on getting a part of the cake they have been drooling over for years. The privatisations in Greece and Portugal prefigure what is going to occur in Spain and Italy where the public commodities up for grabs are far more lucrative, given the size of these two economies.

The close ties between government leaders and Big Capital are no longer even concealed. Individuals from the world of high finance, and in particular the investment bank Goldman Sachs, are now at the head of several governments, in key ministerial positions, and President of the ECB |19|.

10. The crisis and the increase in public debt are misleading arguments exploited in the greatest offensive against human rights in Europe since the end of WWII.

Governments and employers use countless deceitful arguments in the greatest offensive in Europe since WWII against the economic and social rights of most people. Increasing unemployment, more and more debt to repay, the constraint of balanced budgets and the competitiveness of the European countries, between themselves, and on the world markets, are all used as postulates to attack and whittle away at social spending and public services.

For the Capitalists the agenda is greater insecurity for the workers, to reduce the worker’s capacity to organise and resist, while imposing lower wages and less benefits, at the same time as maintaining big differences between EU workers in order to increase the competition between them, and to precipitate them into the debt trap.

The report ‘Safeguarding human rights in times of economic crisis’ by Nils Muiznieks, Commissioner for Human Rights at the Council of Europe (4 December 2013) draws an unforgivable picture of the consequences of the austerity measures applied in Europe. The sectors of education, health, employment, justice, housing, water distribution, and subsistence are all damaged by the nefarious effects of these policies. Nils Muiznieks stresses the inefficiency of austerity plans and their counter-productive results, which in the long term will cause necessary increases in public spending |20|.

Here are the opening paragraphs of the introduction to this important report: ‘Europeans are living through the deepest economic recession since World War II. What began as a meltdown in the global financial system in 2008 has been transformed into a new political reality of austerity, which threatens over six decades of social solidarity and expanding human rights protection across Council of Europe member states.

Austerity measures have exacerbated the already severe human consequences of the economic crisis marked by record levels of unemployment. The whole spectrum of human rights has been affected and many vulnerable groups of people have been hit disproportionately. Poverty, including child deprivation, is deepening and is likely to have long-term effects.’

11. This is a worldwide attack on Labour by Big Capital.

What wage earners, pensioners and beneficiaries are going through in Cyprus, Ireland, Greece, Spain, and Portugal, among others, was imposed on the populations in developing countries during the debt crisis in the 1980-1990s. In the 1990s, during and after the Reagan presidency, the workers in North America were attacked, the Thatcher regime in the UK attacked British workers and similar policies were then applied throughout Europe, including in the ex-eastern bloc countries, which were subjected to the harsh policies imposed on them by their governments and by the IMF. According to the International Labour Organisation’s Global Wage Report 2012-13 ‘In Russia, for example, the real value of wages collapsed to less than 40 percent of their value in the 1990s, and it took another decade before wages recovered to their initial level.’ |21|. Then starting in 2003-5, although less harshly than in the Third World countries (the World’s poorest countries and the emerging economies), the attack turned against German workers. The harmful effects are still felt today by many people, even if Germany exports and the explosion of part-time work has limited the number of unemployed and part of the working class has not been directly affected.

This offensive, which started at the beginning of the 1980s, has intensified since 2007. The International Labour Organisation has analysed a shorter period (1999-2011) and made the following interesting remark: ‘Between 1999 and 2011, average labour productivity in developed economies increased more than twice as much as average wages. In the United States, real hourly labour productivity in the non-farm business sector increased by about 85 per cent since 1980, while real hourly compensation increased by only around 35 per cent. In Germany, labour productivity surged by almost a quarter over the past two decades while real monthly wages remained flat.’ |22|. Further on, the ILO indicates: ‘The global trend has resulted in a change in the distribution of national income, with the workers’ share decreasing, while the share of income earned by Big Capital has increased in most countries. Even in China, a country where wages roughly tripled over the last decade, GDP increased at a faster rate than total wages, and hence the share going to labour went down.’ |23|

Evolution of wages as a percent of global GDP (1980-2011) |24|



This significant global trend is the demonstration of the increased added-value extracted from Labour by Capital.

12. Illegitimate personal debts

The CADTM has started focussing on a new field of analysis and intervention in the ‘debt system’. While whole populations are direct victims of the ‘debt system’, so are individuals: Indian farmers are being driven to suicide (more than 270,000 between 1995 and 2011 |25|), hoping to free their family from the burden of debt; millions of families are being dispossessed by the repossession of their homes by the creditor banks, mainly in the US (since 2007, 14 million families, unable to pay their mortgages, have been evicted from their homes by banks). The same is true in Spain, where about half a million families have been evicted |26|, in Ireland, in Iceland, in several central European countries and the Balkans. Women (men too) are victims predatory micro-credit systems in the South. English, Chilean, and North American students are over-indebted and needy or in downright misery, (the total amount of student debt in the United States exceeds $1 trillion, the equivalent of the external public debt of Latin America and Sub-Saharan Africa combined).

In fact, if one goes beyond appearances, it is not a collection of individual victims of injustice. These individuals are part of the classes being exploited and robbed by the capitalist system: the small farmers of the South, urban and rural proletariat of the North and South, educated youth from the working classes … Among the victims, women are the most exposed to class and gender exploitation: patriarchy and Capitalism work hand-in-hand to perpetuate a system of oppression and exploitation.

13. Lower interest rates in the United States and Europe have decreased the cost of debt in the South, creating a dangerous feeling of security

The lower interest rates imposed by the central banks of the most industrialised countries starting in 2007-2008 |27|, in order to help their major private banks and capitalist corporations, resulted in a lower cost to refinance the debt in developing countries. The combined low interest rates and high revenues from the exportation of raw materials have created a dangerous feeling of security for the governments of developing countries. However, the situation may be reversed in the near future: the price of raw materials could drop and interest rates may finally go up again |28|.

We must pay careful attention to this situation, and ask the governments in Southern countries to take advantage of the current economic situation that is relatively favourable to their country, and put in place policies in favour of basic human rights and nature protection. In sum, we must make a radical break with the current model of development.

14. Public and private debt has increased throughout the world, and the BIS itself has spoken of the ‘debt trap’

Private and public debt have skyrocketed in an extremely dangerous way since the beginning of the 2000s. First, there was an enormous increase in private debt (of financial corporations (banks in particular), non-financial corporations, and households), principally in the most industrialised countries. Then public debt literally exploded because of how the crisis was managed in the interest of Big Capital. In the most developed countries, public debt has increased by about 40% since 2007 |29|. Meanwhile, the debt of non-financial corporations has risen 30% throughout the world. Household debt has decreased (in response to attacks on buying power, jobs, and general living conditions, those ‘at the bottom’ have paid off their debts). The debts of financial corporations (major private banks in particular) remain the highest (they are much great than public debt), because their books have not really been cleaned up contrary to the reassuring speeches delivered by government leaders. The Bank for International Settlements (BIS), which is a forum for the principal central banks on the planet, launched an alert in its Annual Report published in June 2014 by speaking of the ‘debt trap’! Obviously, we are not astonished to learn that the BIS recommends we should continue pursuing neoliberal policies |30|, whereas in reality we must make a radical break with them.

15. The debt of developing countries, which represents a tiny portion of world debt, also increased

It is important to highlight that the total debt of all developing countries (internal + external public and private debt combined) represents only about 5% of total world debt. Meanwhile, public and private debt in the most industrialised countries, where only 15% of the world population lives, account for 95% of total world debt. The external public debt of all the developing countries (about $1.8 trillion), where 85 % of the world population lives barely represents 1% of total world debt. These figures clearly show how easy it would be to cancel this debt.

In reality, more than ever before, developing countries are net financial creditors of the most developed economies. These figures do not include the ‘ecological and historic debts’ people in developing nations could demand from the dominant classes of the most developed countries (and from the dominant classes in the developing countries, who have been complicit with those in the North).

Overview of the evolution of public debt

Evolution of the external public debt of developing countries from 1980 to 2012 (in billions of dollars) |31|



* PECOT = central and eastern European countries + Turkey

We observe that external public debt continued to rise from 2000 to 2012, particularly in Latin America, and in the countries of central and eastern Europe + Turkey (PECOT) as well as in south Asia.

Evolution of the external debt of developing countries and of the resources used to pay it back from 1980 to 2012 (in $billions) |32|





We observe a constant increase in the total volume of external debt. In terms of repayments, between 2005 and 2012, it is especially the ones made by private companies that increased. That means that private companies (industrial, commercial, banking, and so on) took on large amounts of external debt, and if there is a crisis, there is a very high risk that these debts will have to be paid back by the government, which has already occurred many times in the recent past.

16. Poor countries issue and sell external debt bonds on international markets

Rwanda and Senegal, two poor and heavily indebted countries, have sold public debt bonds on the financial markets of the North. This has never been seen before in the last 30 years. The Ivory Coast, having emerged from a situation of civil war just a few years ago, has also issued bonds although it is also one of the poor and heavily indebted countries. Kenya and Zambia have also issued debt bonds. This testifies to a highly peculiar international situation: the financial investors of the North hold huge cash assets, and faced with very low interest rates in their region, are on the lookout for higher yields. Senegal, Zambia, and Rwanda promise a yield of 6 to 8% on their bonds. They therefore attract financial companies, which seek to place their cash on a provisional basis even if the risks are high. The governments of these poor countries become euphoric and try to make their people believe that happiness is just around the corner although the situation may take a dramatic turn. These leaders are accumulating debt in a completely irresponsible way, and when the economic situation deteriorates, it will be their people who will have to foot the bill.
Furthermore, the bonds they issue are linked to contracts including clauses that could be real time bombs. We must require public authorities to make the contents of these contracts accessible to the public.

17. The Fed is destabilizing emerging market economies

When the US Federal Reserve System (the Fed) hinted in May 2013 that it would gradually normalize its policy, there was an immediate negative impact on the ‘emerging’ economies. What changes were proposed?

1. Reducing purchases of toxic assets |33| from the US banks, made to relieve them of this burden.
2. Reducing the acquisitions of US Treasury Securities from these banks, which the Fed does in order to give them cash injections |34|.
3. Raising interest rates (0.25% today).

This announcement itself was enough to lead major financial companies in the US and other countries (banks and their satellites in the shadow banking system, mutual funds, etc.) to pack-off some of their liquid investments from the emerging market economies (EMEs). This destabilized those economies: plunge in stock markets and currency depreciation (Indonesia, Turkey, Brazil, India, South Africa …) |35|. In fact, the low interest rates prevailing in the US and Europe, combined with the central banks’ massive cash injections in the economy, have always set financial companies on the trail of maximum profit by investing in the EMEs, which offer better returns than the North. The outflow of financial investment from the EMEs towards the most industrialized economies can be explained by the fact that the financial companies expected attractive returns in the North as soon as the Fed hiked interest rates |36|. These companies thought that other ‘investors’ would withdraw their capital from these countries and it was better to act first. A herd mentality response resulted in a self-fulfilling prophecy.

Finally, the Fed did not raise interest rates and waited till the end of 2013 to reduce purchases of structured securities and treasury bills from banks. The dust has almost settled.

The situation in June 2013 gives some idea of ​​what might happen if the Fed increases interest rates significantly. The Bank for International Settlements (BIS), the central banks’ central bank, says ‘Capital flows could reverse quickly when interest rates in the advanced economies eventually go up or when perceived domestic conditions in the host economies deteriorate. In May and June 2013, the mere possibility that the Federal Reserve would begin tapering its asset purchases led to rapid outflows from funds investing in EME securities’ (BIS, 84th Annual Report, 2014, p. 76,…)

The BIS brings to light a worrying trend: financial companies that invest part of their assets in EMEs do so in the short term. They can swiftly withdraw their funds if they discover other profitable avenues. The BIS says, ‘A higher proportion of investors with short-term horizons in EME debt could amplify shocks when global conditions deteriorate. Highly volatile fund flows to EMEs indicate that some investors view their investments in these markets as short-term positions rather than long-term holdings. This is in line with the gradual shift from traditional open or close-end funds to exchange- traded funds (ETFs), which now account for around a fifth of all net assets of dedicated EME bond and equity funds, up from around 2% 10 years ago… ETFs can be bought and sold on exchanges at a low cost, at least in normal times, and have been used by investors to convert illiquid securities into liquid instruments.’ (BIS, 84th Annual Report, 2014, p. 77,…).

In short, the wellbeing of the EMEs depends a great deal on the policy followed by the most industrialised economies (especially the US, Europe, and Japan). A hike in interest rates in the US may result in a significant outflow of volatile capital invested in EMEs with higher returns in mind.

In addition, roughly 10% of the debt securities maturing from 2020 or later are callable, and an unknown proportion have covenants that allow investors to demand accelerated repayment if the borrower’s conditions deteriorate.’ (BIS, 84th Annual Report, 2014, p. 76.…) This means that financial companies that purchased debt securities maturing in a relatively distant future (2020 or later) can demand accelerated and full repayment from a crisis-hit country. Obviously, this can only aggravate the situation of an indebted country: all inflows will stop simultaneously. This is another reason why the populations of developing nations need to be aware of the serious dangers posed by their country’s public debt. Payment of the illegitimate portion of the debt must be challenged immediately.

The decline in revenues from raw material exports is another factor that might lead to a fresh and acute debt crisis in developing countries, since China – a major consumer of raw materials for its manufacturing industry – has reduced its huge imports. A drop in the price of raw materials can be fatal to the economic health of developing countries, which depend mainly on exports. In this respect, raw materials prices might also drop if the Fed increases interest rates, as this reduces speculation responsible for high prices. The combined effect of a hike in interest rates and a decline in raw material prices could produce a situation similar to what happened in the early 1980s, when the debt crisis exploded in developing countries. It is imperative to learn from that crisis and to act, so that the Southern people do not have to foot the bill again.

18. Vulture funds |37|

Public debt has become the target of the speculative strategies of ‘litigating creditors, known as ‘vulture funds’. These are private investment funds, most of them located in tax havens, which specialise in buying up debt securities from States that are in default or on the verge of default. They then sue these States in the courts of English-speaking countries, demanding that they reimburse their debt at its nominal value, with the addition of interest, penalties for late payment, and court costs. Unlike traditional creditors, they refuse to participate in any negotiation and restructuring operation, preferring judicial solutions, and in case of non-payment, seizure of debtors’ assets (diplomatic properties, revenues from exports, and various assets invested abroad). Since the 2000s, some twenty States that are among the most heavily indebted on the planet have fallen prey to these strategies, in South America (Argentina, Nicaragua, Honduras, and Peru) and Africa (Sierra Leone, the Republic of the Congo, and Uganda), during major judicial-financial battles that are still in progress today. Since 2007, the phenomenon has been directed against countries in Southern Europe (Greece, Spain, and Portugal). In the future, vulture strategies are likely to prosper in the South and North. Newly issued debts continue to be placed under American or British law, which is favourable to creditors, and certain countries are again contracting debt on the international capital markets and show a preference for indebtedness to China, which will encourage future debt repurchases on secondary markets.

Argentina was in the spotlight in 2014, when the US Supreme Court rejected an appeal by the Argentine government, and ruled in favour of the vulture funds NML and Aurelius, forcing Argentina to pay them $1.33 billion. Argentina adopted a law on 10 September 2014 aimed at providing it with a mechanism to defend itself against vulture funds. The CADTM would like to point out, however, that the best defence against them consists in refusing to recognise the competence of foreign courts in settling claims with creditors and inserting a clause in contracts stipulating that the local courts have jurisdiction.

19. Citizen audits

In recent years, movements have developed to work towards conducting a citizen audit to identify illegitimate, odious, and illegal debts. These movements in several countries |38| provide an opportunity for interesting and enriching reflection to clarify which parts of public debt should not be paid. With no claim to being exhaustive, we can propose the following definitions:

a) Illegitimate public debt: debt contracted by government authorities with no concern for the general interest or in such a way as to be detrimental to it.

b) Illegal public debt: debt contracted by the government authorities in flagrant violation of the prevailing legal order.

c) Odious public debt: credits extended to authoritarian regimes or which impose conditions for reimbursement that violate fundamental social rights.

d) Unsustainable public debt: debt whose reimbursement condemns the people of a country to impoverishment and deterioration of health and public education, increased unemployment, or problems of malnutrition. In other words, debt whose reimbursement makes it impossible for government authorities to guarantee fundamental human rights.

A citizen audit of public debt, combined in certain cases with unilateral sovereign suspension of its payment, can enable the illegitimate, unsustainable, and/or illegal part of the debt to be abolished/repudiated and the remaining part to be greatly reduced. It is also a way of discouraging this type of indebtedness in the future.

20. By way of conclusion: the impact of the ‘debt system’ – more topical than ever

The ‘debt system’ exploits public resources to pay creditors, to the detriment of people’s needs and fundamental rights. The relationship between creditors and debtors is therefore terribly unbalanced in favour of the former. One aspect common to the Latin American external debt crisis that erupted in 1982 and the euro crisis since 2010 is that in both cases the first reaction was to deny the evidence and do nothing. Subsequently, the measures taken are set up in favour of the creditors’ interests. In order to try to inverse the public deficit trend and thus be able to pay off the debt, adjustment or austerity policies are applied, whatever the price to be paid by the people, who are victims of the crisis. The creditors, supported by local elites, demand that the debt be reimbursed and that the adjustments be made to prioritise this repayment instead of all social needs, thus negatively affecting people’s most basic rights. The measures put in place also prove to be counter-productive, because they only make the problem worse. Excessive indebtedness becomes a structural problem.

The ‘debt system’ aggravates inequalities. Debt enables a privileged minority to monopolise a series of financial revenues that enable it to increase its wealth permanently. By consequence, the State loses resources necessary to satisfy people’s fundamental needs. The richest minority accumulates wealth, inequalities grow, and the increased power of the few enables them to exert greater pressure on public authorities with regard to policies. The rise in debt, and its concentration in a few hands, leads to a redistribution of income in favour of the richest members of society, which in turn is both the cause and consequence of heavier exploitation of labour and natural resources. In response, the CADTM, together with other organisations, argues that it is essential to audit public debt under citizen control in order to clarify its origins and determine which part should be considered illegitimate and/or illegal and therefore cancelled.

However, the CADTM is denouncing the entire debt system. It is the same mechanisms of domination and exploitation that govern public debts and illegitimate private debts, respectively subjugating people as collective subjects and as lower social class individuals (indebted small-scale farmers, families expelled from their homes by banks, women trapped by the micro-credit system in Southern countries, over-indebted students, etc.)

Of course, cancelling all illegitimate debts needs to be backed by other measures. For example, the socialisation of the banking and insurance sector to transform it into a public service, a radical reform of the tax system in favour of the overwhelming majority of the population, the expropriation of the energy sector and transformation into a public service, a radical reduction of working hours combined with job creation and increases in salary and social benefits, the improvement and extension of public services, the improvement of redistributive retirement pension systems, effective equality between men and women, and radical political reforms including changed constitutional processes. The aim is for these measures to be part of a vast plan for social, ecological, and political transition in order to get out of the devastating capitalist system. The struggle against the ‘debt system’ as a whole, more necessary than ever in both southern and northern countries, is part of the much broader-based struggle for a world freed from all forms of oppression and exploitation.

Translation by Christine, Snake, Mike, Charlie and Adam. Thanks a lot to all of them !


|1| For want of space, some aspects of the crisis, such as the climate crisis, are merely mentioned. The text does not cover every aspect of the international context. N.B. all figures are expressed in US dollars = $, unless specified.

|2| Éric Toussaint, Bank of the South An alternative to the IMF World Bank (CADTM, 2014). Available on line:…. We can also mention the massive and victorious mobilisation of the Argentine people in December 2001 in order to oust Fernando De la Rua’s neoliberal government.

|3| The CADTM participated directly in the presidential commission that led the audit of the Ecuadorian debt. Éric Toussaint, « An III de la révolution citoyenne en Équateur », 22 October 2009,… (not available in English).

|4| Éric Toussaint, « Les leçons de l’Équateur pour l’annulation de la dette illégitime », 29 May 2013,… (not available in English). Recently, however, Ecuador’s government seems to have shifted back to a more traditional (and harmful) approach: loans from China, a first loan from the World Bank (since 2005) in 2014, new issue of Ecuadorian securities on the financial markets led by Citibank and Crédit Suisse. This is worrying.

|5| This was a reversal of the previous trend. Generally speaking, the prices of raw materials dropped sharply as of 1981 and remained low until 2003-2004.

|6| Note on terms used: In the text that follows, the terms ‘developing countries’ (DCs) and ‘developed countries’ are simply the terms already used by the international institutions– because most of the data analysed comes from these institutions. The terms used to designate the countries targeted for World Bank development loans have changed throughout the years. At first, they were known as ‘backward regions’, then ‘under-developed countries’, and finally, ‘developing countries’, some of which are now called ‘emerging countries’. Nonetheless, it is important to recall the ideological and Western-centric connotations of this terminology. Indeed, essentially it takes into account only the economic dimension of development, and implies that there is only one model of development (the Western industrial and ‘extractivist’ capitalist model), and that certain countries are ‘behind’ and must catch up with other countries who are ‘further ahead’. The CADTM vehemently rejects this vision of the world. Likewise, when we make use of the terms such as ‘Southern countries’ and ‘Northern countries’, we are conscious that they are incorrect from a strictly geographic point of view.

|7| Bank for International Settlements (BIS), 84th Annual Report 2014, Basel, June 2014, p. 102, table V.1. Annual changes in foreign exchange reserves.

|8| Calculated by CADTM on the basis of US Treasury Department data, Major foreign holders of treasury securities, March 2014,…

|9| See the yields published by the US Treasury:… (accessed 24 September 2014 ).

|10| The IMF has, however, succeeded in returning to the forefront of the scene in western Europe with the crisis that has severely affected the weakest Eurozone countries (Greece, Ireland, Portugal, Cyprus, Slovenia, and two Baltic Republics, Estonia and Latvia).

|11| Bank for International Settlements (BIS), 84th Annual Report 2014, op.cit.

|12| See Daniel Munevar’s (CADTM economist) critical analysis, ‘BRICS Bank: Is it an alternative for development finance?’, 28 July 2014,…. See also, Benito Pérez/Éric Toussaint, ‘The alternative, would be a Bank of the South, not the BRICS Bank’, interview of Éric Toussaint, Le Courrier, 19 August 2014 (…).

|13| Inter-American Development Bank (IADB), Latin American Macro Watch Data Tool. The data for Argentina’s debt correspond to 2012 instead of 2013.

|14| That is what happened between May and December 2013 for countries such as Turkey, Indonesia, and Brazil.

|15| In the case of Brazil, in 2014, government officials borrowed from private banks at an interest rate of 11%, while inflation was 6.5 %, which means hefty profits for the bankers.

|16| Éric Toussaint, ‘Une fois encore sur les causes de la crise alimentaire,’ (‘More on the causes of the food crisis’), 9 October 2008,… (in French). See also: Damien Millet and Éric Toussaint, ‘Pourquoi une faim galopante au XXIe siècle et comment l’éradiquer ?’ (‘Why is hunger still rampant in the 21st century and how to eliminate it?’), 24 April 2009,… (in French); Éric Toussaint, ‘Banks speculate on raw materials and food’, 10 February 2014,…

|17| Éric De Ruest and Renaud Duterme, La dette cachée de l’économie, Paris: Les Liens qui Libèrent, 2014. See… (in French).

|18| Éric Toussaint, « Du Sud au Nord : crise de la dette et programmes d’ajustement », 4 June 2014,… (not available in English).

|19| Éric Toussaint, ‘Bankocracy: from the Venetian Republic to Mario Draghi and Goldman Sachs’, 11 November 2013,…


|21| ILO Global Wage Report 2012-2013, Executive Summary, Geneva, December 2012.

|22| ILO, ibidem, pp. VI-VII.

|23| ILO, ibidem, p. VII. The same report also underscores the increasing differences between low and high incomes in each country.

|24| UNCTAD, Trade and development report 2013, United Nations, New York and Geneva, 2013, p.15. Available at…

|25| According to Law in India, normally, if the head of a family dies, his debt cannot be transmitted to his family. This is one of the reasons some Indian agricultural smallholders commit suicide hoping to thus free their families from debt. However, this does not always work in practice. Swallowing pesticides is one of the most common methods used to commit suicide. It is also worth nothing that outside India, in Europe, especially in France there is an alarming rate of suicide among small farmers.

|26| Éric Toussaint, ‘Banks and the New “Too Big to Jail” Doctrine’, 9 March 2014,…; ‘Bank abuses in the real estate sector and illegal foreclosures in the United States’, 4 April 2014,…

|27| In November 2014, the key interest rate of the US Federal Reserve stands at 0.25 %, that of the European Central Bank is 0.05 %, the Bank of England 0.5 %. The rate of the Bank of Japan has been 0% since the country entered a crisis in 1990.

|28| For raw materials, the price of a barrel of oil dropped significantly from May to November 2014. As I am writing these lines on 9 November 2014, the price of a barrel of oil was $105 on 1 May, 2014 and reached its lowest level in 13 years on 7 November 2014 ($83 dollars). As for interest rates, since June 2014 the US Federal Reserve has been suggesting they will soon increase. Although the Fed’s key rate is very low today (0.25%), the situation must be monitored closely. To that effect, see point 17 about what happened in 2013 when the economies of certain emerging countries were strongly shaken up.

|29| This is the estimate provide by the Bank of International Settlements (BIS): 84th Annual Report, op.cit., p. 10, Figure I.1. (June 2014)

|30| Bank of International Settlements (BIS), Ibidem, page 17.

|31| World Bank, International Debt Statistics,…

|32| World Bank, op.cit. Debt servicing is the total amount of repayments for interest and capital.

|33| The Fed has bought huge amounts of Mortgage-Backed Securities (MBS) from US banks. Its purchases of such assets between 2008 and early 2014 were worth more than $1.5 trillion. During 2012-2013, it purchased toxic assets worth $40 billion per month from banks and real estate agencies that guarantee mortgages, to reduce their burden. By the end of 2013, it started to make fewer purchases, which went up to $35 billion per month by March 2014. By October 2014, the Fed was holding $1.7 trillion in MBS, or about 21% of the total volume of such assets, an enormous amount. The Fed finally stopped purchasing MBS in November 2014.

|34| By October 2014, the Fed was holding US Treasury Securities worth $2.45 trillion. Please note, contrary to popular belief, the Fed does not buy Treasury Securities directly from the Treasury, it buys them through open market operations from private banks which had acquired them previously. See the US laws on this matter:…

|35| The Bank for International Settlements (BIS) describes this situation as follows: – ‘The first episode was abrupt and generalised in nature, with sharp asset price movements ending a period of fairly stable interest and exchange rates. As the sell-off spilled over from advanced economies, EMEs experienced a sharp reversal of portfolio flows, especially in June 2013. . . EME equities fell by 16% before stabilising in July, and sovereign bond yields jumped more than 100 basis points, driven by rising concerns over sovereign risk… At first, the indiscriminate retrenchment from EMEs affected many currencies simultaneously, leading to correlated depreciations amid high volatility. The currencies of Brazil, India, Indonesia, South Africa and Turkey depreciated by more than 10% against the US dollar during the first episode…. Brazil, India, Indonesia and Russia each lost more than $10 billion in reserves. Countries with rapid credit growth, high inflation or large current account deficits were seen as more vulnerable and experienced sharper depreciations.’ (BIS, 84th Annual Report, 2014, pp. 27-28).…

|36| For an analysis of what happened in 2013, please read Daniel Munevar’s “Inestabilidad en los mercados emergentes: El fin de un ciclo?” available only in Spanish here :… (1st part) and… (2nd part).

|37| I would like to thank Louise Abellard for her contribution to this point.

|38| Brazil, Spain, Portugal, France, Belgium, and others.

Éric Toussaint is a historian with a doctoral degree in political science. He is the spokesperson for CADTM International, and the author of several books translated into English, including Bankocracy (Merlin Press, 2015), The Life and Crimes of an Exemplary Man (CADTM, 2014), A Glance in the Rear View Mirror. Neoliberal Ideology from its Origins to the Present (Haymarket Books, Chicago, 2012), and The World Bank: A Critical Primer (Pluto Press, London, 2008).

Nov 212013

Posted by greydogg, 99GetSmart


In today’s society, plutocracy and political corruption go hand in hand, especially in Washington.

By Margaret Elkis, EconomyInCrisis


Simply put, plutocracy is a government ruled controlled by wealthy individuals. It is no secret that wealth buys power, and that is exactly what we are seeing today. Unfortunately, with wealth and power often comes corruption. Author J.R. Martin stated in chapter nine of his book, Selling U.S. Out, that political scandal and corruption are not new. They have always existed. Indeed, all one has to do is read the news to learn of the corruption and greed taking place between the big players of our government:

  • political parties: Republicans and Democrats
  • lobbyists and overpaid consultants
  • the mainstream media

Over the past forty years, power, money and greed have corrupted our elected government officials at every level. What’s most alarming is that the blatant corruption has been tolerated and accepted by the American people. Unfortunately, members of both parties act as if their jobs are nothing more than a big political game. They’re so focused on insulting the other side and getting their own agendas passed that they forget they’re supposed to be working for the U.S. public.

As J.R. Martin writes:

“Neither party represents the interests of the American people since both are controlled by foreign and domestic corporations and special interest groups that provide the majority of their funding…both parties practice dishonest, divisive politics aimed at dividing and manipulating public opinion instead of seeking to build an honest national consensus on important issues confronting our nation.” […]




By Michael Snyder, TheEconomicCollapse


According to a whistleblower that has recently come forward, Census employees have been faking and manipulating U.S. employment numbers for years.  In fact, it is being alleged that this manipulation was a significant reason for why the official unemployment rate dipped sharply just before the last presidential election.  What you are about to read is incredibly disturbing.  The numbers that the American people depend upon to make important decisions are being faked.  But should we be surprised by this?  After all, Barack Obama has been caught telling dozens of major lies over the past five years.  At this point it is incredible that there are any Americans that still trust anything that comes out of his mouth.  And of course it is not just Obama that has been lying to us.  Corruption and deception are rampant throughout the entire federal government, and this has been the case for years.  Now that some light is being shed on this, hopefully the American people will respond with overwhelming outrage and disgust.

The whistleblower that I mentioned above has been speaking to John Crudele of the New York Post.  In his new article entitled “Census ‘faked’ 2012 election jobs report“, he says that the huge decline in the unemployment rate in September 2012 was “manipulated”…

In the home stretch of the 2012 presidential campaign, from August to September, the unemployment rate fell sharply — raising eyebrows from Wall Street to Washington.

The decline — from 8.1 percent in August to 7.8 percent in September — might not have been all it seemed. The numbers, according to a reliable source, were manipulated. […]




By Eric Toussaint, CADTM


The crisis that started in the United States in 2007-2008, hit the European Union head on in 2008, and has been causing major problems in the eurozone since 2010. |2| Banks from the strongest European countries are responsible for spreading this plague from the United States to Europe, because they had invested massively in structured financial products. It is important to explain why this crisis has struck the European Union and the eurozone harder than the United States.

18 of the 28 countries in the European Union share a common currency, the euro. |3| The population of the EU is about 500 million people, |4| about half the population of China, Africa, or India, 2/3 of Latin America, and 50% more than the USA.

There are major differences between countries in the European Union. Germany, the United Kingdom, France, the Netherlands, Italy, Belgium, and Austria are the most highly industrialised and powerful countries in the EU. 11 countries are from the ex-Eastern European bloc (3 Baltic Republics — Estonia, Lithuania, and Latvia; Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, and Romania, which were part of the Soviet bloc, and Slovenia and Croatia, which were part of Yugoslavia). Finally, come Greece, Portugal, Ireland, Spain, and Cyprus, which have been brutalised by the eurozone crisis.

Large private corporations are taking advantage of wage discrepancies

Wage discrepancies are very significant: the minimum wage in Bulgaria (in 2013, the gross monthly salary is 156 euros) is less than one tenth of what it is in countries like France, Belgium, and the Netherlands. |5| Wage discrepancies within European Union countries can also be very significant. In Germany, 7.5 million employees earn a paltry monthly salary of 400 euros, whereas the normal monthly salary in Germany is more than 1200 euros (there is no national legal minimum wage in Germany).

This discrepancy enables major European corporations, particularly German industrial corporations to be very competitive, because they outsource part of their production to countries like Bulgaria, Romania or to other Central and Eastern European countries, and then transport the parts back to Germany where they are assembled into final products. Finally, they export within the EU or to the global market after having cut the cost of wages to the bone. To top it all off, they pay no import/export taxes within the EU. […]




The recent decision by the Irish government to cut jobseekers’ allowance for under-25s is just the latest in a series of discriminatory policies against young people that have been introduced in Europe in the last few years.

By James Higgins, CafeBabel


It’s not easy to be young in Europe these days, particularly if you are among the 5.5 million young people in the EU that are unemployed. With the scourge of youth unemployment constantly in the headlines, and increasing demands for concerted action, governments are hitting back. But instead of focusing all their energy on the labour market inequalities, financial corruption, greed and cronyism that created and exacerbated the crisis, some are hitting back at the young people themselves.

Like it or lump it

On 16 October the Irish government announced that it would reduce jobseekers’ allowance for new entrants aged under-25 to €100 per week as part of its budget for 2014. People aged 25 will also get a reduced rate of €144, and only those aged 26 and upwards will get the full jobseekers’ rate of €188. In the Dáil (Irish parliament) some of the opposition parties and independents expressed concern at these measures, which smack of discrimination. Thankfully parliamentarians on the government benches explained that they wanted to ‘incentivise’ youth employment, and save young people from lying around watching flat-screen TVs all day. To make such a comment about any another age group would be unthinkable, but it seems that young people are fair game.

The National Youth Council of Ireland have labelled the cuts “disproportionate and unfair” and have warned that they will create further hardship for young jobseekers and accelerate the number of young people emigrating from the country. Shortly after the budget was announced, youth campaigners formed a mock airport queue outside the Irish parliament to compel the government to reverse the decision, but the protests fell on deaf ears. Young people would have to like it or lump it. […]




Source: ScriptoniteDaily


Every  year, tax avoidance costs the continent of Africa lost revenues of $63bn a year.  This is more than Africa receives in overseas development aid – and enough to deliver the UN Millennium Goals of universal primary education, universal healthcare, and upgrade Africa’s entire road network.  Instead, banks are helping to spirit this money into offshore tax havens.  Barclays Bank is the largest retail bank in Africa, and today ActionAid is launching a campaign to tell Barclays to clean up its act on tax havens.

Why is Africa so Poor?

Africa suffers extreme poverty, and by some measures things are getting worse.  Between 1990 and 2011, the number of new born babies dying rose from 1 million to 1.1million a year, and the number of hungry people rose from 175 million to 239 million.

Much of this poverty and destitution is as a result of the myth of development.  Western creditor nations (mostly ex-colonial) extended credit to African nations in the name of ‘development’, after the Second World War.  In reality, it was merely to keep a surplus of petro-dollars making more money from the interest on loan payments, than in savings accounts during a time of high inflations (which would wipe the value).  Later, when the interest rates became unpayable – the creditor nations offered ‘bridging loans’ often to despots, with extraordinary interest rates and conditions attached. These loans were called ‘Structural Adjustment Programmes’ and administered through the IMF.  This became know as the Debt Trap – and once you understand the Debt Trap, you immediately see the concept of ‘development’ as a myth.  The West is not helping to develop Africa, Africa is helping to develop the West.

This comment from Martin Griffiths in International Relations: The Key Concepts summerises the issue perfectly:

“Between 1982 and 1990 $927bn was advanced to debtor states, but $1,345bn were remitted in debt service alone. The debtor states began the 1990’s 60% more in debt than they were in 1982. Sub-Saharan Africa’s debt more than doubled in this period.  When the issue of debt forgiveness is raised, Western banks have argued that it would create what economists call ‘moral hazard’ – failing to honour debts would simply encourage poor states to keep borrowing in the expectation that they would never have to repay their debts.  On the other hand, some commentators argue that moral hazard should cut both ways.  Over borrowing is over lending, and creditors should pay their fair share of the costs of mistakes made in the 70’s.

By 1997 Third World Debt totalled over $2.2trn.  The same year $250bn was repaid in interest and loan principal. The debt trap represents a continuing humanitarian disaster for some 700 million of the world poorest people.  During the last decade, the world’s most heavily indebted continent, Africa, has experienced falling life expectancies, falling incomes, falling investment levels and rising infant and maternal mortality rates” (Griffiths, 2008) […]


Aug 072013

Posted by greydogg, 99GetSmart


By Tyler Durden, zerohedge

[…] Yesterday, Congressman Alan Grayson (who knows how to read legislation … he was a successful lawyer before he was elected to Congress, and has written and co-sponsored numerous bills himself including the bill to audit the Federal Reserve and – most recently – the “Mind Your Own Business Act” to stop NSA spying) announced that he had been allowed to read the text of TPP – and that it is  an anti-American power grab by big corporations:

Last month, 10,000 of us submitted comments to the United States Trade Representative (USTR), in which we objected to new so-called free trade agreements. We asked that the government not sell out our democracy to corporate interests.

Because of this pressure, the USTR  finally let a member of Congress – little ole me, Alan Grayson [anyone who’s seen Grayson in action knows that he is formidable] – actually see the text of the Trans-Pacific Partnership (TPP). The TPP is a large, secret trade agreement that is being negotiated with many countries in East Asia and South America.

The TPP is nicknamed “NAFTA on steroids.”  Now that I’ve read it, I can see why. I can’t tell you what’s in the agreement, because the U.S. Trade Representative calls it classified. But I can tell you two things about it.

1)    There is no national security purpose in keeping this text secret.

2)    This agreement hands the sovereignty of our country over to corporate interests.

3)    What they can’t afford to tell the American public is that [the rest of this sentence is classified].


I will be fighting this agreement with everything I’ve got. And I know you’ll be there every step of the way.



Congressman Alan Grayson

Grayson also noted:

It is ironic in a way that the government thinks it’s alright to have a record of every single call that an American makes, but not alright for an American citizen to know what sovereign powers the government is negotiating away.


Having seen what I’ve seen, I would characterize this as a gross abrogation of American sovereignty. And I would further characterize it as a punch in the face to the middle class of America. I think that’s fair to say from what I’ve seen so far. But I’m not allowed to tell you why!

Remember that one of the best definitions of fascism – the one used by Mussolini – is the “merger of state and corporate power”. Our nation has been moving in that direction for a number of years, where government and giant corporations are becoming more and more intertwined in a malignant, symbiotic relationship.   TPP would be the nail in the coffin for free market economics and democracy.

Note to progressives who support public banking: This is a key battle.

Note to those who oppose to what they call “one world government” or a “new world order”: This is the big fight.

READ / VIDEO @“-hands-sovereignty-our-cou




By Paul Buchheit, CommonDreams

Privatization is fascism repackaged

Privatization is fascism repackaged

Some of America’s leading news analysts are beginning to recognize the fallacy of the “free market.” Said Ted Koppel, “We are privatizing ourselves into one disaster after another.” Fareed Zakaria admitted, “I am a big fan of the free market…But precisely because it is so powerful, in places where it doesn’t work well, it can cause huge distortions.” They’re right. A little analysis reveals that privatization doesn’t seem to work in any of the areas vital to the American public.

Health Care

Our private health care system is by far the most expensive system in the developed world. Forty-two percent of sick Americans skipped doctor’s visits and/or medication purchases in 2011 because of excessive costs. The price of common surgeries is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany. Some of the documented tales: a $15,000 charge for lab tests for which a Medicare patient would have paid a few hundred dollars; an $8,000 special stress test for which Medicare would have paid $554; and a $60,000 gall bladder operation, which was covered for $2,000 under a private policy. […]


A Citigroup economist gushed, “Water as an asset class will, in my view, become eventually the single most important physical-commodity based asset class, dwarfing oil, copper, agricultural commodities and precious metals.”

A 2009 analysis of water and sewer utilities by Food and Water Watch found that private companies charge up to 80 percent more for water and 100 percent more for sewer services. A more recent study confirms that privatization will generally “increase the long-term costs borne by the public.” Privatization is “shortsighted, irresponsible and costly.” […]




By Tyler Durden, zerohedge


Imagine there was a time when bottled water didn’t exist in our catalog of popular commodities. Perhaps the trend started in 1976 when the chic French sparkling water, Perrier made its introduction. There it was seductively bottled in its emerald green glass amongst the era of disco and the spectacle of excesses… who could resist right?! What could be more decadent than to package, sell and consume what most consider (in the western world) a common human right easily supplied through a home faucet! It’s absurd that the cost of designer water is at a “280,000% markup” to your tap water and it’s reaching record heights in consumption.

15 The Beginning of the Insanity

It wasn’t until the 1990s when bottled H2O became an everyday common sight and a symbol of our cultural desire towards fitness and “health-consciousness”. Even today health enthusiasts claim drinking water often helps to “detox and boost the metabolism!”

There have been controversies about chemicals leeching into the water from the soft plastic material of bottles, but the FDA determined the containers “do not pose a health risk to consumers.” IBISWorld reports that the “U.S. is the largest consumer for bottled water in the world, followed by Mexico, China, and Brazil”.

14 The Bottled Water Scheme 

Regular drinking water competes with itself in a bottle, but reviewing the cost difference, you’ve got to wonder why or how? As for the water piped into your home or work place, it costs less than one penny per gallon! Fairfax Water organization, (FCWA) states, “The average price of water in the U.S. is about $1.50 for 1,000 gallons.”

Let’s look at your favorite 20 oz. bottled H2O, it will run you up to $3 per bottle at the corner convenience store and up to $4 at a posh restaurant or nightclub. If you buy bulk at Costo or other markets, the price averages are .31 cents per bottle, but that still remains enormously expensive when compared to tap water. Granted many don’t like tap water quality, but modern technology allows for an array of water filters.

In the mid-1990s, soda companies found that the niche market for bottled water could be huge, why not? The profits were obvious! Pepsi and Coca-Cola jumped into a race with their brands Aquafina and Dasani; they led the way to making bottled water what it is today. […]




By Eric Toussaint, CADTM


Part 9 of the series : Series: Banks versus the People: the Underside of a Rigged Game! and follow up of Banks bluff in a completely legal way, published the 19 June available here.

Neoliberal euphoria and Basel II

The Basel II accords were drafted at a time of neoliberal euphoria when capitalist bankers had obtained the cancellation of the few prudential rules that still remained from the 1930 Great Depression.

Basel II coincided with Alan Greenspan, chairman of the Federal Reserve, the US central bank, |1| speechifying about the ability of financial markets to regulate themselves and recommending the suppression of any constraint that still shackled the said bankers’ ‘creativity’.

The Basel II accords were implemented in 2004-2005, just before the outbreak of the financial crisis in 2007, and are still valid in 2013-2014. The Basel III accords that were drafted in 2010 as the crisis was deepening, and revised in 2011, |2| are still only at the stage of interpretation and negotiation. They are not to be fully implemented until 2018-2019. This is why it is really worth beginning by taking the time to understand the Basel II accords, whereas most commentators focus on the Basel III measures as though they were already effective. Supervising authorities, governments in cahoots with major private banks, and most of the media attempt to convince citizens that constraints have been imposed on the finance industry. This is a lie. As we shall see even the Basel III measures will not really change the slack regulations that allow banks to act as they please. Indeed banks will still be able to cook their books and fiddle their health reports thanks to the system whereby their assets are weighted relative to the degree of risk. They will also be allowed to legally trade off the balance sheet, and thus be prompted to take more risks. These two facts alone are enough to undermine the array of small measures that have been widely and loudly advertised. To show how harsh the Basel III standards are, banks grumble and try to get the authorities to soften the measures or delay their implementation. This is just taking the public for a ride. Leaders and supervisory authorities show how complicit they are with large private banks.

Before we turn to Basel III, let us examine the Basel II accords that are currently effective. […]




By Conor Friedersdorf, The Atlantic

don't cheat full flickr

In my review of Twilight of the Elites, Chris Hayes’s thoughtful critique of American meritocracy, I largely agreed with his contention that the current system is frequently rigged by those at the top.

How should that be fixed? I’d prefer a polity constantly attuned to abuses of power and committed to tweaking the rules of the game in a constant effort to make them as neutral, fair, and equitable as possible. With apologies for the violence a one-sentence summary necessarily does to a subtle, book-length argument, Hayes emphasized the need for affirmative action and redistribution of wealth. Discouraged about the prospects of remedying unfairness, he wanted to address its consequences, causing me to worry that alleviating the symptoms would make the disease easier to ignore.

As I put it at the time:

If rich Americans are gaming the system to illegitimately increase their wealth, if they are pulling up the ladder so that they can never be replaced as elites, if they are too socially distant from the people over whose lives they wield great influence, and if they aren’t even punished like regular people when they break the rules, surely there are urgent policy changes needed that are a lot more targeted to reforming the elite than ‘raise their taxes and spread the wealth.’

Better to eliminate ill-gotten gains than to redistribute them. […]


Aug 032013

Posted by greydogg, 99GetSmart


By Lynn Parramore, AlterNet


Illinois fatcats discuss plan to sabotage state bond ratings in scheme to destroy pensions.

These days, many Americans walk around feeling like no matter how hard they work, how much they manage to save or how carefully they plan for the future, the game is rigged against them. They suspect that behind closed doors, CEOs and Wall Street honchos are eagerly scheming to rip them off.

Their worst fears of corruption and collusion just came true in Illinois, where corporate titans were caught red-handed in the act of Rigging the Game.

Let’s step inside a recent gathering of the corporate-backed Union League Club of Chicago, where former Illinois Attorney General Ty Fahner, who now leads a band of plutocrats known as the “Civic Committee of the Commercial Club of Chicago,” recently launched into an hour-long diatribe on the evils of state pensions.

Fahner, a top GOP fundraiser, can’t abide the notion that teachers, firefighters, nurses and other public workers in the state of Illinois can still expect a decent retirement. Not a luxurious retirement, mind you — the average pension is $32,000 a year, and most state employees will not receive Social Security. But even a modest retirement for hard-working people is too much for today’s fatcats.

Fahner is part of a virulent strain of public raiders and economic crackpots who have become dominant in the Republican Party (and increasingly among the Democrats, too) who are hell-bent on destroying unions and attacking public employees. Ultimately they wish to privatize everything and reduce their tax responsibilities down to nothing.

That’s why Fahner has declared war on pensions and is promoting a pension crisis in order to justify it. He has called for cost of living cuts, raising the retirement age, capping pension earnings and shifting the cost of the pension obligation of teachers to local school districtsmany of which are too poor ever to payHe styles himself as a savior who wants only to protect the public from debt, when in reality he is a brutal plutocrat who will stop at nothing to line his pockets at public expense and reduce his and his friends’ taxes.

Illinois has real problems. However, Fahner desperately hopes the public will not catch on to the fact that states are having difficulty paying out pensions because of the lack of revenue caused by a Wall Street-driven financial crisis and the deep recession it set off, regressive taxes, and the myriad bond scams financiers have already inflicted on states, cities, towns, and municipalities which have triggered funding crises for pensions and other programs. (See “How Wall Street Fraudsters Plunder Public Finances, And 5 Ways to Fight Back.”)

Fahner has tried a number of dirty tricks to attack pensions in his career. But his most recent admission is absolutely breathtaking in its brazenness: He boasted of working to scam the Illinois bond rating.

During Fahner’s talk to the Union League Club, an unidentified person in the audience suggested that pressuring credit agencies to rig the state bond ratings in order to attack pensions might be a jolly good idea. Fahner gleefully replied that he had already thought about that — and his group has tried it.

Audience member: “Maybe sometimes you gotta be irresponsible to be responsible. If a political solution really doesn’t produce a favorable outcome, maybe you really need a market solution. And a market solution, I don’t mean bankruptcy, I mean actually talking down the state rating even further so the state’s bonds essentially become below investment grade. And it drives up the borrowing cost to the state and all of us to a significant level enough that you really feel the public pressure…”

Fahner: “The Civic Committee, not me, but me and some of the people that make up the Civic Committee… did meet with and call – in one case in person – and a couple of calls to Moody’s and Fitch and Standard & Poors, and say, How in the hell can you guys do this?”

Fahner went on to take credit for downgrades to Illinois credit ratings, saying, “If you watch what happened in the last few years, it’s been steadily down.” […]




By Tyler Durden, zerohedge

Chicago Mayor / neoliberal tool, Rahm Emmanuel

Chicago Mayor / neoliberal tool, Rahm Emmanuel

While everyone’s attention is focused on the Detroit bankruptcy, and just what assets the city will sell in lieu of raising a DIP loan, perhaps it is time to refocus attention to the city 300 miles west: Chicago. According to the Chicago Sun Times citing year-end audits, Obama’s former right hand man, Rahm Emanuel, closed the books on 2012 with $33.4 million in unallocated cash on hand — down from $167 million the year before — while adding to the mountain of debt piled on Chicago taxpayers. In addition to a liquidity problem, Chicago may also be quite insolvent as the city’s total long-term debt soared to nearly $29 billion. That’s $10,780 for every one of the city’s nearly 2.69 million residents. More than a decade ago, the debt load was $9.6 billion or $3,338 per resident. Of course, in a world in which debt is “wealth”, this is great news… at least until debt becomes “bankruptcy.”

Ironically last year, now-retiring City Comptroller Amer Ahmad argued that the city’s debt load was not “troubling” because, “We still have a very strong bond rating. Our fiscal position is getting better every year and we are aggressively managing our liabilities and obligations” (very much awhat the ECB’s Mario Draghi tells the world when he gives the periodic monthly update of European capital markets during the central bank’s press conference). It is ironic because last week, Moody’s downgraded Chicago from Aa3 to A3 in an unprecedented three notch cut in the city’s bond rating, citing Chicago’s “very large and growing” pension liabilities, “significant” debt service payments, “unrelenting public safety demands” and historic reluctance to raise local taxes that has continued under Emanuel.

Moody’s noted that the city’s total fund balance at the close of 2012 was $231.3 million and that Chicago has just $625 million in “leased asset reserves.” Had the city fully funded its $1.5 billion “actuarially required contribution” to its four under-funded city employee pension funds in 2012 alone, “these two reserves would have been entirely depleted,” Moody’s said.

The “unassigned” balance is $33.4 million. Experts recommend a cash cushion of at least $200 million for a budget the size of Chicago’s, according to the Civic Federation. The city ended 2009 with an unallocated checkbook balance of just $2.7 million. […]




By Eric Toussaint, CADTM, London Progressive Journal

Translation: “Snake” Arbusto


Since 2007-2008, the major central banks (the ECB, Bank of England, the “Fed” in the USA, and the Swiss National Bank) have been making it their absolute priority to attempt to avoid a collapse of the private banking system. Contrary to what has been said more or less everywhere, the principal risk threatening the banks is not that a government will suspend payment of sovereign debt |1|.

None of the bank failures since 2007 have been caused by that kind of payment default. None of the bank bailouts organized by the various governments has been made necessary by suspension of payment by an over-indebted State. What has threatened the banks since 2007 is the structured private-debt holdings they have gradually built up since the major deregulations, which began in the late 1970s and culminated during the 1990s. The balance sheets of private banks are still packed with bad assets |2] which range from completely toxic assets – veritable time bombs – to non-liquid assets (meaning they cannot be sold or shifted on financial markets), and include assets of which the value is completely over-estimated in the banks’ balance sheets. The sales and depreciations of assets banks have booked until now in order to reduce the weight of these explosive assets have been insufficient. A significant number of them depend on short-term financing (either provided or guaranteed by the Public Authorities with taxpayers’ money) to stay afloat |3] and handle debts that are themselves short-term. That explains why the Franco-Belgian bank Dexia, which in fact amounts to a very large hedge fund, has been on the brink of bankruptcy three times in four years – in October 2008, in October 2011 |4|, and again in October 2012. During the most recent episode, in early November 2012, the French and Belgian governments provided aid amounting to 5.5 billion euros (53% of which was borne by Belgium) to recapitalize Dexia SA, a moribund financial company whose equity has melted away.

According to Le Soir: “The equity of the Dexia parent company dropped from 19.2 billion to 2.7 billion euros between the end of 2010 and the end of 2011. And at group level, total equity has become negative (-2.3 billion euros on 30 June 2012).” At the end of 2011, Dexia SA’s immediately outstanding debts amounted to 413 billion euros, and the amounts due under derivative contracts stood at 461 billion. Added together, those two figures amount to more than 2.5 times Belgium’s GDP! And yet Dexia’s senior executives, Belgian vice-prime minister Didier Reynders, and the dominant media are still claiming that the problem afflicting Dexia SA is largely caused by the sovereign debt crisis in the southern part of the Euro zone. The truth is that Dexia SA’s holdings in Greece did not amount to more than 2 billion euros in October 2011 – 200 times less than the amount of its immediately outstanding debts. In October 2012, Dexia’s shares were worth approximately 0.18 Euros – 100 times less than in September 2008. Despite this, the French and Belgian governments have decided once again to bail out this uncharitable organization at the cost of increasing the public debt in their own countries. In Spain, the near failure of Bankia was also caused by unsound financial packages, and not by a default on the part of any government. Since 2008, the same scenario has been replayed at least thirty times in Europe and the United States. Each time, the public authorities have come to the aid of the private banks (as they systematically do) by financing their bailouts with government debt.

Return to the beginning of the crisis in 2007

The gigantic private-debt house of cards began to collapse when the speculative real-estate bubble in the United States burst (followed by Ireland, the UK, Spain, etc.). The real-estate bubble burst in the United States when the price of homes, of which there was an oversupply, began to fall because more and more homes were without buyers.

The interpretations given by the mainstream media were dominated by partial – or deliberately fallacious – explanations for the crisis that struck the United States in 2007 and had a tremendous contagious effect, mainly on Western Europe. Regularly in 2007 and during the better part of 2008, it was explained to the public that the crisis had started in the United States because low-income people had gone into too much debt to acquire homes they were not able to pay for. Irrational behavior on the part of the poor was pointed to as the cause of the crisis. But beginning in late September 2008, after the failure of Lehmann Brothers, the dominant narrative changed and the finger was pointed at certain black sheep of the world of finance who had perverted the virtuous operation of capitalism. But the lies and partial explanations continued to circulate. Low-income families were no longer responsible for the crisis; it was the rotten apples in the capitalist class – Bernard Madoff, who put together a 50-billion-dollar swindle, or Richard Fuld, the boss of Lehmann Brothers.

The beginnings of the crisis go back to 2006, when the drop in real-estate prices began in the United States, caused by overproduction, itself caused by the speculative bubble that inflated real-estate prices and drove the construction sector to overheat and increase its activity far in excess of solvent demand. The collapse of real-estate prices is what caused the increase in the number of households unable to meet their payments on subprime mortgages. In the United States, households often refinance their mortgages after 2 or 3 years when home prices are trending upward in order to get more favorable terms (especially since, in the subprime-loan sector, the credit rate for the first two or three years was low and fixed, around 3%, before increasing sharply and becoming variable in the third or fourth year). When real-estate prices began to drop in 2006, households who had contracted subprime loans were no longer able to refinance their home loans favorably, and payment defaults began to multiply greatly starting in early 2007, causing the failure of 84 mortgage companies in the USA between January and August 2007.

As is very often the case, whereas the crisis is explained simplistically by the bursting of a speculative bubble, in reality the cause lies both in the production sector and in speculation. Of course, the fact that a bubble was created and eventually burst only multiplies the effects of a crisis that began with production. The entire rickety structure of subprime loans and structured products that had been under construction since the mid-1990s, collapsed, which had terrible repercussions on production in various sectors of the real economy. Austerity policies then amplified the phenomenon further by leading to the extended period of recession-depression in which the economies of the most industrialised countries are now floundering.

The impact of the real-estate crisis in the United States and the banking crisis that followed has had an enormous contagious effect internationally, due to the fact that numerous European banks had invested massively in US structured products and derivatives. Since the 1990s, growth in the United States and in several European economies had been supported by hypertrophy of the private financial sector and by a huge increase in private debt – household debt |5] and debts of financial and non-financial companies. On the other hand, public debt had tended to decrease between the second half of the 1990s and 2007-2008.

Thus there was a hypertrophy of the private financial sector. The volume of assets of European private banks compared to gross domestic product ballooned extraordinarily beginning in the 1990s to reach 3.5 times the GDP of the 27 member countries of the European Union in 2011 |6|. In Ireland in 2011, banks’ assets amounted to eight times the country’s gross domestic product.

The debts of the private banks |7] in the Euro zone also amounted to 3.5 times the Zone’s GDP. Debt in the British financial sector has reached unheard-of heights in proportion to the GDP – it is 11 times greater, whereas public debt represents approximately 80% of GDP.
The gross public debt of the countries of the Euro zone amounted to 86% of the GDP of the 17 member countries in 2011 |8|.

Greek public debt was 162% of Greece’s GDP in 2011, while debts in its financial sector amounted to 311% of GDP – double the amount of public debt. Spain’s public debt was 62% of GDP in 2011, whereas debts in the financial sector were at 203%, or three times the amount of public debt. […]




By Margaret Elkis, EconomyInCrisis


In today’s society, plutocracy and political corruption go hand in hand, especially in Washington.

Simply put, plutocracy is a government ruled controlled by wealthy individuals. It is no secret that wealth buys power, and that is exactly what we are seeing today. Unfortunately, with wealth and power often comes corruption. Author J.R. Martin stated in chapter nine of his book, Selling U.S. Out, that political scandal and corruption are not new. They have always existed. Indeed, all one has to do is read the news to learn of the corruption and greed taking place between the big players of our government:

  • political parties: Republicans and Democrats
  • lobbyists and overpaid consultants
  • the mainstream media

Over the past forty years, power, money and greed have corrupted our elected government officials at every level. What’s most alarming is that the blatant corruption has been tolerated and accepted by the American people. Unfortunately, members of both parties act as if their jobs are nothing more than a big political game. They’re so focused on insulting the other side and getting their own agendas passed that they forget they’re supposed to be working for the U.S. public.

As J.R. Martin writes:

“Neither party represents the interests of the American people since both are controlled by foreign and domestic corporations and special interest groups that provide the majority of their funding…both parties practice dishonest, divisive politics aimed at dividing and manipulating public opinion instead of seeking to build an honest national consensus on important issues confronting our nation.” […]




By Michael Snyder, The Economic Collapse blog


As Obama parades around middle-America, promoting hope-and-change amid a “Better-Bargain for the middle-class,” it seemed only appropriate to lay out a few ‘facts’ before his next pronouncement …

What is America going to look like when the middle class is dead?  Once upon a time, the United States has the largest and most vibrant middle class in the history of the world.  When I was growing up, it seemed like almost everyone was “middle class” and it was very rare to hear of someone that was out of work.  Of course life wasn’t perfect, but most families owned a home, most families had more than one vehicle, and most families could afford nice vacations and save for retirement at the same time.  Sadly, things have dramatically changed in America since that time.

There just aren’t as many “middle class jobs” as there used to be.  In fact, just six years ago there were about six million more full-time jobs in our economy than there are right now.  Those jobs are being replaced by part-time jobs and temp jobs.  The number one employer in America today is Wal-Mart and the number two employer in America today is a temp agency (Kelly Services).  But you can’t support a family on those kinds of jobs.  We live at a time when incomes are going down but the cost of living just keeps going up.

As a result, the middle class in America is being absolutely shredded and the ranks of the poor are steadily growing.  The following are 44 facts about the death of the middle class that every American should know…

1. According to one recent survey, “four out of five U.S. adults struggle with joblessness, near poverty or reliance on welfare for at least parts of their lives”.

2. The growth rate of real disposable personal income is the lowest that it has been in decades.

3. Median household income (adjusted for inflation) has fallen by 7.8 percent since the year 2000.

4. According to the U.S. Census Bureau, the middle class is taking home a smaller share of the overall income pie than has ever been recorded before.

5. The home ownership rate in the United States is the lowest that it has been in 18 years.

6. It is more expensive to rent a home in America than ever before.  In fact, median asking rent for vacant rental units just hit a brand new all-time record high.

7. According to one recent survey, 76 percent of all Americans are living paycheck to paycheck.

8. The U.S. economy actually lost 240,000 full-time jobs last month, and the number of full-time workers in the United States is now about 6 million below the old record that was set back in 2007.

9. The largest employer in the United States right now is Wal-Mart.  The second largest employer in the United States right now is a temp agency (Kelly Services).

10. One out of every ten jobs in the United States is now filled through a temp agency.

11. According to the Social Security Administration, 40 percent of all workers in the United States make less than $20,000 a year. […]