For those who don't know what the "Greece" problem in Europe is about - here's the explanation [View all]

[Sarah Ibarruri]

This is an article by an Australian professor of social policy at the University of Sydney in Australia.

http://inequality.org/greek-debt-crisis/

Here are some excerpts:

What’s going on in Europe is: not much, really. Greece makes up less than 2% of the European Union’s combined national income. The German economy could eat 10 Greeces for breakfast and still have room left over to eat Finland for lunch. The problems of the Greek economy are only a big deal because a few politically powerful European banks made investments that they now regret. Not just banks, but hedge funds. So-called “vulture” funds have bought up troubled Greek bonds at a big discount. These hedge funds are now using their powerful political connections to lobby for full payment of Greece’s debt. In other words, these vulture hedge funds have bought Greek bonds at 25 cents on the dollar but are pushing for full payment. They’re not going to get full payment. It was reported in June that the French (it’s always the French, isn’t it?) floated the idea of just having the ECB buy back the bonds on the open market — that is, at 25 cents on the dollar — but the banks and hedge funds would have none of that. The French proposal was quickly shouted down. Full payment is the demand; wring your hands, talk a lot, and pay 50 cents is the current agreement on what will actually happen. And the banks and hedge funds are still pushing for at least a few more pennies.

The Greek government is being forced to raise sales taxes on the goods that ordinary people buy, but has been warned not to raise income or investment taxes on the rich. Government employees are having their salaries and pensions cut. People are being forced to work longer and retire later. And the government has been ordered to sell off state-owned companies.

A pro-worker solution to the Greek debt crisis would come in two parts. First, force those who have long evaded their taxes to start paying them. Millionaire shipowners, corporate executives, and highly-paid professionals should be the target. Second, let Greece reimburse bondholders the amounts they actually paid for their bonds. Then Greece could retire its debt in dignity instead of through begging from the ECB.