Dimitris Kazakis speach at Cass Business School 11/4/2013


Greetings to everyone,

Right from the beginning we need to clarify that the crisis which Greece is currently facing and has led the country to its 5th official bankruptcy does not originate from the actions of a prodigal government or from the effects of a fiscal problem which could be solved through the implementation of measures of re-adjustment and reductions in government expenditure. Greece has bankrupt due to its national debt as a result of the bankruptcy of its own economy which for the past decades has been suffering from the implementation of a model based on which an economy should grow through concentrating on being extrovert and as it follows that economy should obey to the decisions made by the international financial/capital markets.

In terms of the previous decades in Greece, it should be stated that as long as the international dogma of free markets and deregulation was applied, the Greek economy was becoming a parasitic economy which concentrated on providing cheap services. As a result Greece depended even more on the fluctuations of international financial markets and kept losing ground in terms of its international competitiveness. This result was expected as the Greek economy was formed around the basic principle that it should be serving the most illegal and extraordinary appetites for high returns and profitability as demanded from both external and internal investors.

A very characteristic statistic related to the previous statements is that the percentage of the private returns in terms of the total added value within the local economy during these years of the recession reached 59% in 2009. This is a record figure within the European Union as it is almost double in comparison to the weighted average figure which corresponds to the rest of the E.U. members. For decades, all the governing parties in Greece and their so-called protectors from abroad such as the OECD, the IMF and the E.U. did everything that could be done under their power in order to convert into a primary competitive advantage of the Greek economy the prospect of maximization of the private sector’s profits beyond any logical and reasonable limit which could be set by the economy itself due its capabilities in terms of productivity.

Due to all of the above the country’s productivity started to sink and that element of parasitism would be transmitted to all business sectors while at the same time the quackery of the issue and selling of financial derivatives was advocated as a solution.  A characteristic statistic indicating this is the fact that in 1992 for every 100 dollars of foreign private capital which was invested in the local economy, a 59% was associated with investments in the real economy, 31% was associated with real estate and just 10% was associated with financial investments. In 1995 the figures were 33% towards the real economy, 7 % towards real estate and 60% towards financial assets. Just before the outbreak of the crisis the figures were 10% for the real economy, 1% towards real estate investments and 89% towards financial investments. The result was that figure corresponding to 63% of the total private profit generated from the economy during the last 10 years, was interest.

All of the above led to the creation of an economy similar to an existent El Dorado for anyone who wanted to sell derivatives and speculate both from Greece and from abroad. On the other hand, the government would either act as if none of this existed or even worse, would itself participate in this game which had as its ultimate goal to squander public wealth in favor of a specific financial and political oligarchy which with the support from speculators from the USA and Europe did all that it could be done under its power in order to attack the Greek societies’ ethics and instruct the Greek people that it is normal to borrow money, request subsidies and depend on special political favors in order to survive.

The result was that the national debt faced an incredible increase as the state had to undertake debts in order to be transformed into a pawn. Its political leaders were corrupted as they sold themselves to powerful financial centers and in return they had to promote the plundering of the country’s wealth by any means available and leave the country unprotected and exposed to any extreme practice of private speculation. At the same time, as soon as the production deficit of the Greek economy increased so did private and public borrowing.

This situation attracted the interest of officials from the Eurozone and especially from Germany. Greece did not join the Eurozone by mistake nor is it truth that Greece was not ready to join the euro. This was exactly the situation which was the prerequisite for Greece to join the Eurozone. Greece had to have deficits and debts which would allow the existence of the potential for further opportunities for profiting for the European banks and the countries which had exporting economies and primarily Germany. The later, transformed Greece into a garbage can to which Germany through dumping exported goods requesting in return the provision of new loans (from Germany to Greece).

Greece ended up to be totally depended on the provision of new loans which acquired from the Eurozone’s own capital market. On December 31st 2001, the Greek debt was 146 billion euros. On January 1st 2002, Greece has joined the euro and up until the 31st of December 2009 its national debt increased by 152 billion euros. In other words, within seven years Greece’s national debt had more than doubled. This situation is unprecedented as in 2009 the state’s income was roughly 45 billion euros and its imports were 15 billion euros while the income generated from services was almost 27 billion euros and the interest and coupons which had to be repaid were 109 billion euros!

Under these conditions Greece was facing a de facto bankruptcy irrespectively of whether the country could secure any new loans or not. Financial markets were closed for Greece since January 2009 and due to this situation the Eurozone had to intervene in fear of any implications to the currency itself due to Greece’s inability to repay its debt.  In direct collaboration with both PASOK and New Democracy, E.U. officials manipulated the political transition in Greece in order to promote the formation of a new government with sufficient parliamentary majority which would be in apposition to guarantee that Greece would undergo severe liquidation in favor of its creditors just like a business, or a company which has declared bankruptcy.

The politicians in Greece along with the oligarchy which rules the country for decades, in order to escape the wrath of the Greek people, agreed to the general disposal of the country under a colonialist regime in exchange for a small share of the spoils which the Europeans lenders would reap. So, they agreed to put Greece and the Greek people under colonial guardianship and essentially under occupation having as their main goal the general disposal of the whole country.

Thanks to a sequence of memoranda and loan agreements, Greece is practically ruled by foreign commissioners. It is certified that all the laws passed and the policies implemented in the country are not even drafted by officials in ministries, but instead are drafted by European Commissioners. Ministers sign them without any objection and then address them to the Parliament for approval. The Greek state has been completely nullified. The government is a mere storefront of foreign powers and conquerors.

The results of the policies based on the memoranda were from the beginning disastrous for the country. From 298 billion euros in debt in 2009, or 127% of GDP, the debt increased to 328 billion euros in 2010, or 143% in terms of GDP, while in 2011 the debt reached an amount of nearly 369 billion euros, 71 billion euros more debt in two years, or at 178% of GDP. At the same time, the recession of the Greek economy escalated to unprecedented levels and unemployment along with mass poverty continued to increase while incomes were reduced by 15% as expressed at constant prices.

After the first disastrous invasion of the troika in Greece it was decided, during the second half of 2011, that without a restructuring of the debt through a “haircut” of around 56% it would not be feasible to deal with the continuous and rapid increase of the debt. The debt restructuring took place in March 2012, but the benefits promised to the bankers involved were such that instead of reducing the debt, the debt was eventually increased by 3-5 billion. So while the restructuring through the “haircut” reduced the nominal value of the debt by 106 billion euros, Greece was forced to borrow again another 109 billion in order to be in a position to carry out the PSI. This resulted in an increase in debt instead of a decrease.  Additionally, the debt restructuring caused the bankruptcy of the insurance funds and the funds of stakeholders in the so called ‘wider public sector’ which includes institutions such as chambers of commerce, scientific associations, universities, hospitals, organizations, and many more. At the same it should be mentioned that common people who had invested their savings in bonds issued by the Greek government were seriously affected as well.

In order not to become apparent to the Greek people the fraud of the PSI, the Eurogroup decided to proceed to a Greek Bond buyback from the secondary market in November 2012. The buyback had as its goal to reduce the Greek debt by 30 billion with a cost of 11.7 billion which would have been paid by the EFSF. The Greek government is required to pay 11.7 billion within the next two months, an amount which it does not have. It is easy for one to picture Greece’s collapse if all this is combined with the continuous collapse of the financial aspect of the government due to the fact that the Greek population fails to meet its tax obligations, the recession which is more than 7% per year, the official unemployment which exceeds 27%, the investments which have fallen below 14% of GDP, the fact that this is the first time in the postwar history of Greece that the disposable income of the population continues to collapse and is far below the minimum level which is required so that a person can survive and the fact that the private debt continues on its increasing trend.

This collapse is fraudulent and deliberate and aims to sell out the country at rock bottom prices. The country is set to be sold out not only in terms of its publically owned property through privatization and concessions but in terms of the private property of the Greek society as well which today is mortgaged not only to banks but also to the state itself due to outstanding financial obligations of the vast majority of the people due to their failure to meet their tax obligations.

The tragedy is that the troika is applying more and more pressure insisting on this disastrous downhill and the leaders of this country have surrended in advance and without a fight. For the euro’s and the Eurozone’s sake we are in danger of destroying an entire country and eradicating an entire nation.

For us, the dilemma is crystal clear: One either compromises with the status quo and simply vindicates ways in order to manage the current situation in the most effective way or attempts to overthrow this financial regime. In such cases there is no middle way. If our country insists on waiting for a deus ex machina to save us though some sort of a miracle we will experience an absolute disaster. A realistic proposal is the one which does not expose the people and the country in any threats and does not allow anyone to sink in despair and hopelessness. If this nation makes the decision to overthrow this financial regime, the recovery will be very fast and the working classes will sense the difference from the first day. What should be done though?

First: We need to stop to depend on loans given to our country from the Eurozone which have as their main clause the destruction and selling off of the country. We must deny the repayment of the debt and this should be accompanied by a repudiation of the debt which should be characterized as illegal and abusive under the rules of international law.

Second: We need to declare the withdrawal of Greece from both the euro and the Eurozone in order to introduce a national currency to our economy and regain the ability and the freedom to restructure our economy based on our own criteria and the interests of the Greek people disregarding the European banking oligarchy. After that, we will need 6-8 months in order to introduce the new national currency. Within this period of time some direct measures should be implemented:

  1. The nationalization of the Bank of Greece and the major private banks which have attracted most liquidity from the Eurosystem. Why is that? In order to let the banking system go bankrupt while at the same time we are in a position to guarantee for the people’s deposits. The default will enable the banks to be rebuilt from scratch without any obligations to external investors while at the same time the banks could proceed to the deletion of debts associated with households and small businesses.
  2. The recovery of losses in income from which employees and the retired population suffered right from the begging of the implementation of the memoranda. Salaries and pensions should be brought back to the levels on which they were prior to May 5th, 2010. This would be achieved through the use of electronic scriptural money provided by the banks which are under public control while these banks would provide small businesses with operating loans.
  3. The imposition of capital control. In this way we will stop the bleeding which tyrannizes the Greek economy and deprives it from huge funds from within. Through the use of nationalized banks the so called ‘black money’ market for which the Greek banking system is famous internationally will come to an end. Controlling the movement of capital is easy once one assumes control on the banking system and in our case this capital control will be associated with selective taxation of capital which moving from the economy abroad or comes to the economy  from abroad. Untaxed profits, dividends, interest payments and investments in securities abroad will come to an end as well. Also on funds from abroad which are destined to speculate in real estate and financial assets will be imposed dissuasive high taxation, while those funds which are directed towards investments in the real economy must be treated favorably given that they satisfy the government in terms of the provision of new vacancies for employment which will be relatively secure, they will be wage inelastic, investing in new technology, and value-adding production.
  4. Explicit abolition of layoffs and abolition of the use of bankruptcy in the private sector. In the case where we are dealing with a small business, a freelancer, or an individual producer, the state will guarantee that they do not bankrupt through the provision of direct support or subsidized loans. In the case of large corporations and especially multinational companies workers will be given the opportunity to manage the businesses with state support. At the same time inelastic labor rights will be imposed in order to deal with unemployment and especially unemployment associated with young people.
  5. Direct intervention in the country’s external balance of goods and services. Until the Greek economy is normalized and its production capabilities are set to be taken advantage of, imported goods would be substituted by domestically produced goods and the state will ensure to significantly reduce those imported goods which are not absolutely necessary for the prosperity of the domestic economy and the needs of its society. The government will also have to impose a selective protectionism based on which products will not be before domestically produced are exhausted and in the case that they are the products imported should be at least of the same quality and production value with the corresponding domestically produced products. Only under such conditions a less powerful economy may compete on equal terms.
  6. Our main concern during this period would be to maintain the circulation of paper money within the Greek economy, which according to current data amounts to 26 billion euros. For this we will implement capital control which would prohibit the export of paper money and would impose a very high tax to capital which is about to be exported and invested in equities and bonds abroad. At the same time, we would also allow the influx of paper money from abroad which will be checked in terms of where it is placed within the Greek economy in order to prevent any form of speculation. Deposits in domestic banks will not be restricted in any way but the introduction of the national currency no one would be able to withdraw physical money (paper money). All transactions within the economy would be made through the use of deposit accounts to which access will be gained through the use of debit cards (like ATM cards) and this is how the use of physical money would be substituted. This measure is necessary as the government would need to withdraw all euro banknotes (which are estimated to be around 10 billion euro) so that they could be used as a reserve currency of the nationalized Bank of Greece. Through the use of this reserve we would be able to cover up the current external deficit of goods and services.

We should also keep in mind that banks will have neither the character nor the current form. They will be under public control and have undergone liquidation so that we can discover where did the hundreds of billions of assets go, who benefited from them and who should be trialed for infidelity and predatory behavior. In this way we will be able to rebuild the banking system under public and social control, with absolute transparency of transactions, from scratch according to the real needs of this country and for the benefit of the vast majority of its people. This will give us the opportunity to deal for once and for all with the private debts, first and foremost erasing the debts of the households and small businesses which are unable to repay them, but also it will help us to prepare for a smooth transition to the national currency. This transition will take place under the same conditions which applied during ​​the transition from the drachma to the euro.

Of course the key to all of this is the quick restart of Greek economy in terms of its productivity and investments in the real economy. This may be achieved through the provision of open credit available to those who want to invest in production related businesses and have as their main the addition of value to the process and the provision of secure employment, and an extensive program of public investment in infrastructure free from corruption. All the above will give a sharp upward momentum in the economy, such that when the currency is finally introduced its exchange rate will be stabilized with little turbulence.

Of course, all of this cannot be done if the Greek people does not manage to bring back democracy to its country and if they do not get rid of the completely corrupt political system which brought this nation to this misery and delivered him as a prisoner to financial markets. The Greek people should bring back this kind of democracy which has as its main prerequisite, national independence and sovereignty of the people who should be ruling their own countries and not become slaves to their lenders and their corrupt politicians.

Dimitris Kazakis,

General Secretary of E.PA.M.


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