European debt crisis escalates
By Doug Lorimer
Massive privatisation program
On April 15, the Greek government announced that it would sell off €50 billion in publicly owned assets over the next four years, including Hellenic Post, Hellenic Railways, the Public Power Corporation, the Public Gas Corporation, the Pireaus port authority, Athens International Airport, and the Thessaloniki water utility. These assets are to be sold off at “fire sale” prices to help cover repayment to European, principally French and German, banks that provided most of the EU bail-out money.
The Greek bailout was recommended by European capitalist politicians as a model for the Irish government debt bailout. Last December, the outgoing Irish government was forced to accept an EU-IMF package of €85bn to cover government borrowing resulting from
At the end of March, the Irish government announced that the Irish banks would require another €24 billion in government funds in order to put them back on their feet. The total of €70 billion was equivalent to over 45% of
As with the Greek government debt bail out, the Irish banking bail out is to be paid for by Ireland’s working people, through huge cuts in public services, higher taxes across the board, 30,000 job losses in the public sector and more from the private sector, forcing thousands to emigrate out of the country. Meanwhile, the bank executives and capitalist politicians responsible for
On April 23, the Irish Independent daily reported: “The monster pensions are on top of multi-million euro termination payments, tax-free lump sums and golden handshakes for the 10 men at the centre of the banking collapse. Pensions experts last night calculated that the cost of providing the generous pensions that the likes of former Taoiseach [i.e., PM] Bertie Ahern, [former finance department] mandarin David Doyle and top bank bosses such as Brian Goggin will receive will top €60m over the course of their retirement.
“The revelations come just days after it emerged that former
“However, ordinary workers are either directly paying for the massive pensions of the boom-and-bust bosses or are rescuing the banks paying out the generous retirement packages. An ordinary worker would need to put aside €35,000 a month to fund the type of lavish pension that is to be paid out to the likes of former regulator Patrick Neary and ex-Taoiseach Brian Cowen, a special investigation by the Irish Independent shows.”
The AP report added: “The revised deficit figures are another setback to
Undoubtedly, the Portuguese bailout, like the Greek and Irish bailouts before it, will be used as a bludgeon to force the working people of
Those who lent money to these governments got paid handsomely for it ― the returns of bond investment over the last 25 years have been even better than investing in the stock market. But those profits are supposed to be payment for taking risks. But as soon as things went wrong, the banks still want to be paid in full. The argument is that if the debts of the Greek, Irish and Portuguese governments and their banks are not honoured, then other European banks will go bust. But this argument is bogus. It is based on the premise that banking should continue on the basis of making huge speculative profits out of investing in bonds to capitalist governments and other banks, rather than as a service to the public by providing credit to small businesses and householders. It is also based on the premise that the capitalist economy ― production for profit ― must survive at all costs.