Monday, June 18, 2012

The globalisation crisis – looking at Greece

Greece’s elections are now over with the winners vowing to stay in the Eurozone and thus stabilizing global financial markets in the short term.  No one believes the crisis is over in Europe, however. 

Greece’s four biggest banks have recently received an 18 billion-euro injection of funds “but may need a lot more” [1].

In Greece, as it is around the globe today, private banks possess superior status and receive preference over ordinary private companies. A moral hazard of always being saved by governments has set in for the larger financial entities.  Governments then present the bank bailout bill to their taxpaying citizens.  The obvious question is why are they not allowed to simply fail?  Why aren’t these private institutions being nationalized? But these questions seem never to be explored in current mainstream media coverage. 

Isn’t it clear that the problem in Greece is that of globalization itself?  Financial institutions operating in individual nations are now a part of a much larger global network.  Therefore any process of nationalization and any measures to limit the mobility of capital (to avoid dangerous and unpredictable capital flight) go completely counter to the interests of the world’s financial actors – not just those of Europe and Greece.

We can see now that the predictable and catastrophic results of passing on these enormous bailout costs to the general public are playing out. Business is simply not managing in Greece. With 400 - 425 million Euros a day disappearing from Greece’s banks (during the last 2 weeks) even healthy business units in Greece cannot guarantee their working capital.  Any goods being brought into Greece have to be prepaid for.

Solutions are being proposed such as implementing ‘the right tax policy’ and even further deregulation for business and the general reduction of ‘bureaucracy’. [2] Solutions that don’t address the actual cause of the crisis are very unlikely to work.

Greece is also left vulnerable because it is no longer a ‘production-based economy’.  48% of Greece’s food comes from elsewhere for instance.  Who will guarantee continued supply if Greece’s financial credentials are destroyed?

It’s been a long time of not thinking about the wrongness of abandoning many local methods of resilience and productivity.  As Thomas Paine noted in the late 18th Century  [3] the longer the social habit of not thinking about a wrong “gives it a superficial appearance of being right.”  Time, rather than reason, has made many of us converts to the ideology of globalization.  Formerly prosperous middle class families in Greece go hungry tonight while they finally have more time to ponder on the validity of ancient strategies for basic survival. 

[1]  Bailout of Greek banks is good, but not enough
With an 18 billion-euro bailout, Greek banks are now staying afloat. But losses and political instability could easily sink the ship.
By Andy Dabilis for Southeast European Times in Athens -- 02/06/12

[2]  Lateline, ABC TV.  Monday 18th June 2012. 11:25pm

[3]  Thomas Paine, Common Sense (1776)

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