3/14/2023 0 Comments Mou meaningTo undo this damage, depositors are now being told that all Greek bank deposits will be covered by insurance. In violation of its charter, which is to promote financial stability, the ECB responded by prompting a run on Greek banks, in anticipation of confiscation of deposits. The second risk arose from the actions of the ECB since January, when the new Greek government came in. As the economy gets worse, of course the liquidations will increase. The memorandum does nothing about these loans, except to establish a creditor-controlled “liquidator” for Greek businesses and homeowners. The first is the state of the Greek economy, in which some two-fifths of bank loans are non-performing. Meanwhile farmers and dairies and small professionals such as pharmacists will be swept away by north European agribusiness and chain stores.Īs for risks to financial stability, there are two. The Memorandum sharply increases taxes on the poor, reduces them in several respects on the rich, and cuts pensions at the very bottom of the scale. “Reduce inequalities.” The cynicism is to weep. Under their guidance, Greek unemployment has reached 29 percent overall and around 60 percent for the young, with no sign of improvement so far. “Create jobs.” Here the record of the previous memorandums, in force since 2010 and highly similar to the present one, is not reassuring. Growth in the entire period before 2010 was built on unsustainable debt, followed since then by deep and ongoing decline. “ Restore sustainable growth.” In reality Greece has not enjoyed sustainable growth under the euro, which is to say, not since 1999 at least. The reality is that the Greek prime minister, Alexis Tsipras, was bludgeoned into accepting the terms that follow in this long and depressing document, under threat that the banking system of his country, entirely controlled by the European Central Bank, would otherwise be demolished, and that he would be forced to manage a disorderly exit from the euro, for which his government did not feel-and for which in fact it wasn’t-decently prepared.įor what purpose, this supposed support? The document continues: “to restore sustainable growth, create jobs, reduce inequalities, and to address the risks to its own financial stability and to that of the euro area.” Let us take these up in turn. “Greece has requested support from its European partners.” Thus begins the “Memorandum of Understanding for a three-year ESM programme” (MoU), which sets the conditions with which Greece must comply in order to avoid being ruled in default on its debts. James Galbraith and Daniel Munevar ▪ August 24, 2015Ī European Central Bank meeting, July 2015 (ECB / Flickr) ![]() To read the new Greek memorandum is to lose those illusions. Progressives outside of Europe have long seen the EU as a constructive force in the world and its creature the euro as a symbol of the European social model.
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