European Tough Love.
The banks are opposed to a Greek default in order to avoid a cash haemorrhage, which is the same reason that the financial institutions are opposed to regulation and taxation, in one way or another. The natural option is austerity, the rape of the Greece, it only costs the poor who are mostly too disillusioned to participate in politics and the mega-rich are left unscathed whilst near a majority can be persuaded it is all necessary if the fear of deficits is just ramped up. The austerity measures will fail and only succeed to turn Greece into a basket economy. And yet no bank or financial institution has been allowed to fail. With the exception of Lehman Brothers which was losing around $8 million a minute at one point and then Dick Fuld walked away with $500 million from that year alone. Just think of the millions of American homeowners, many of which are black and poor, have lost their homes or have been left desperate to save a mortgaged property. We might think of it as tough love, love for the rich and tough for the poor as Noam Chomsky once noted.
It was clear before the vote that Greece is the point of a showdown between the people and the banks, even if it is still unclear what is going to happen in Greece and Europe as a whole. The general strike in Greece lasted two days and it was accompanied by huge demonstrations in opposition to the vote for €78 billion worth of spending cuts and privatisation stipulated by the European Commission. As the country is about to raped by the banks, the right-wing press ramble on about the "Greek Gravy Train" and the "flaws" in the Greek character which led to the crisis, a suspicious line of thought indeed. It isn't over yet, but the future does not look bright. For around 10 or 15 years there will be little economic growth in Greece, if any at all. The standard of living for the average person will go into steep decline and in the end the country will still have to default. No doubt Portugal, Ireland and Spain will be affected in just the same way. Unsurprisingly, the Eurosceptics are filled with the glee that is particularly devoid of compassion for the people affected.
The destructive consequences of the 1929 Crash laid waste to entire countries. Today there is the potential for serious political turbulence, no one should forget that it was back in 1967 that the Greek state was seized by a military junta which ruled with the support of the US for several years. Nor should we forgot the ways Fascism came to power in the midst of the economic and political crises of the 1920s and 30s. Though I am not saying that as a direct result of these measures we will live to see the resurgence of Fascism. The devastation may not be on the same scale as the Great Depression, which is a result of the bailouts, but the cuts will hit ordinary people hard and the reaction is not easily predicted. The core of democratic institutions are under threat in Greece from Big Finance. The Greek people took to the streets and have been on the streets fighting, but so should the people of Europe take to the streets against the measures that are hitting each economy. As Richard Murphy pointed out, there was no real choice in this instance.
The impact of economic factors on politics should not be underestimated. When we look back in history we find that the opening for democracy in Greece, the first of it's kind in the world, came about as a result of the advent of iron-based equipment which converged with popular struggle. The landowners had sought expansion through debt-bondage, which trapped small farmers into arrangements that would leave them without land or freedom if they could not repay the loan. It was the abundance of iron and the simplicity of the production process increased the availability of iron tools and weapons in Greece. The small farmers were able to form militias, for which peasants could serve as infantry and rowers on warships. All of which enabled popular uprisings which brought down the dictatorship and the aristocracy before going on to defeat the Spartans who took the side of conservatives in the country. Just as bronze had empowered only an aristocracy, iron had the potential to empower the masses and now we find that finance has the potential to empower a new aristocracy.
The different genres of narrative around the 2008 financial crisis typically exclude systemic risk, the contradiction internal to capital accumulation. As David Harvey points out the problem back in the 1970s was the excessive power of organised labour which necessitated the repression of unions through legislation and that in turn led to stagnant wages for many people. All the while the financialisation of the economy picks up speed and really accelerates in the 1980s. It is important to keep in mind that financial innovation is at the heart of the capitalist system, which is the reason for the greater focus on innovation and that focus has the potential to empower financiers at the cost of others. The insufficiency of demand which would result from the stagnation of wages is bypassed through credit, which would explain why the debt per household has exploded over the last 30 years. A huge amount of that debt is within the housing market, with absurd results in the US and ultimately the finance crisis was half-solved at the expense of a sovereign debt crisis.