Monday, April 20, 2015

Debt relief for Greece - Austerity kills!

Painted in Greece by Aafke Steenhuis
Last night my wife and I had dinner at the home of our friends Jesse Bos and Jan Smit (here is another interesting, more personal site of Jan Smit), talking about life and politics including the case of Greece. This morning I sent my friends the following message: 

"Dear friends, our conversation last night turned around in my head this morning and, still in bed, I thought the following: 
1. The solution of the Greek debt problem is as old as the night (older than Methuselah): debt relief and debt cancellation. 
2. The (social) democratic government of the Unidad Popular in Chile in 1970-1973, SYRIZA in Greece in 2015- ? , and the possible government of Podemos in Spain in ? face the same problem: resistance and subversion by the capitalist "order" and capitalist institutions. 
3. There is a global political-economic, social, cultural, psychological and ecological system that requires:
(A) continuous partial and full analysis of problems and challenges
(B) "marginal" troubleshooting
(C) "fundamental" reforms.

4. To speak about Greece as if the only problem is its external debt (commercial, bilateral and multilateral) is too limited.
5. But if you limit yourself to discussing only the Greek debt problem, you must speak in serious terms about a good way to solve that problem. 
6. The correct approach would have been in 2010 to avoid that the Greek debt problem would worsen with "rescue" loans by the EU and the IMF (see what Brazilian ED at the IMF, Paulo Nogueira Batista, said with respect to that, "Remarkable interview on Greek debt with IMF Executive Director Paulo Nogueira Batista". 
7. A good approach now, with the new government of SYRIZA, would be that creditors and Greece agree on relief and cancellation of Greek debt.
8. In the last centuries sensible debt relief and debt cancellation (reduction) measures have been applied, including perpetual bonds, ie, conversion of debt into bonds that are not repaid such as the 19th century "consols" - see pages 393-95 of my article Jan Joost Teunissen, "The International Monetary Crunch: Crisis or Scandal?", Alternatives, July 1987, under the caption "It is not the widows who will cry".
 9. We must also look at the new proposals to alleviate and reduce debt, already many years ago put on the table such as, for example, a mechanism for restructuring sovereign debt (SDRM), that we have frequently discussed with financial authorities in FONDAD conferences - see the links below to FONDAD books I found by googling "fondad sdrm" .
10. The "authorities" are responsible for the unnecessarily dying of people, see for example this article, "Recessions can hurt, but austerity kills". 

The food and your company were marvelous!

  1. Global Crisis Prevention and Liquidity Provision - FONDAD ...
  2. ... Consensus. FONDAD, The Hague, December 2004, ... effort were devoted to discussing the SDRM and collective action clauses (CACs), the ...
  3. 33047-Binnenwerk net - FONDAD Forum on Debt and ... - Vertaal deze pagina
    FONDAD, September 2003, 19. Fostering Financial Stability ... been difficult to find agreement on the SDRM among the IMF member states, the ...
  4. [PDF]7 The Democratic Deficit of International Arrangements

  5. door JA Ocampo - ‎Geciteerd door 2 - ‎Verwante artikelen
    the Sovereign Debt Restructuring Mechanism (SDRM), it does not mention the important issue that ... Fondad, The Hague, November 2005.

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