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#CancelGreekDebt: UK campaigners condemn ECB’s ‘act of financial war’ against Athens

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Green Party MP Caroline Lucas will join hundreds of activists in central London on Monday to stand in solidarity with the Greeks. They warn the ECB’s threat to cut off funding to Greece is “an act of financial war” by “unelected technocrats.”

The solidarity protest has been organized by social justice groups the Jubilee Debt Justice Campaign, Global Justice Now, Greece Solidarity Campaign and War on Want. Each group has campaigned heavily on the Greek debt crisis, following six years of austerity peddled by international creditors and Europe’s technocratic elite.

Campaigners will gather in Trafalgar Square at 18.00 BST, as leftist Greek government Syriza’s debt stand-off with the Troika (EU/IMF/ECB) intensifies.


Elected in early 2015, Greece’s anti-austerity government has stoked the ire of EU leaders and international creditors. But campaigners attending Monday’s protest argue Syriza’s only crime has been to prioritize human rights over business and financial interests driving European policy.
‘Inhumane austerity diktats’

Speaking ahead of Monday’s protest, Global Justice Now’s Nick Dearden said thousands of Europeans are demanding a debt write down for Greece.

“Across Europe tens of thousands of people are calling for there to be a cancellation of Greece’s debt in the same way that Germany’s debt was cancelled in 1953,” he told RT.

As tensions between Athens and Brussels mount, Dearden warned the EU’s “hardline and inhumane” diktats could spark an international crisis.

“The EU and the IMF seem to be hell-bent on ruthlessly punishing Greece for daring to stand up against grossly unfair debt conditions that are causing enormous amounts of suffering,” he said.

“This violent imposition of austerity in Greece will leave yet more blood on the hands of the EU’s financial class.”
The Greek electorate has set up a special commission to examine the fairness and legitimacy of Greece’s debt burden. However, the Troika has blocked democratic participation in challenging its bailout terms.

As the threat of a bank run looms over Athens, the Greek government has called a referendum on the Troika’s latest round of economic demands.

Following the Troika’s refusal to unlock further emergency funding for Greece, Greek Prime Minister Alexis Tsipras has resolved to let the people of Greece decide on a path forward.

The referendum is scheduled for Sunday.

Speaking on Greek television on Sunday night, Tsipras accused EU ministers and the ECB of attempting to blackmail the people of Greece and hinder Sunday’s vote. He said they would ultimately fail in both objectives.
Humanitarian crisis

Green Party MP Caroline Lucas, who will attend Monday’s solidarity rally, called upon Britons to consider the “terrible human impacts”of Greece’s crisis.

Writing in a blog for Global Justice Now, she said Greece is facing a humanitarian crisis.

“Over 40 percent of children are living in poverty, a quarter of the workforce is unemployed, youth unemployment is at almost 50 percent and the healthcare system is close to collapse,” she said.

“Beyond the hackneyed headlines of a ‘Greek tragedy’ are people living on the brink, struggling to feed and clothe their families.”

Lucas said the Troika’s austerity agenda has been a failure in human and economic terms. She stressed less than 10 percent of Athens’ bailout funds have reached those who need it most.

“Greece’s government debt has grown from 133 percent of GDP in 2010 to 174 percent today,” Lucas said.

“Since 2010, the Troika has lent €252 billion to the Greek government. Of this, the vast majority of the money was used to bail out banks, pay off the private sector … and repay old debts and interest from reckless lending.

EU: Negative interest rates – the ECB’s new ‘big bazooka’

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Be prepare and be aware soon the Banks will charge you for parking your money at the bank instead of giving you interest. (Emphasis mine)

0,,15744183_303,00Two ghosts are haunting the eurozone: low inflation and a strong euro. The European Central Bank (ECB) has taken aim at both by punishing banks that park money with the ECB.

“We’re very aware of the fact that an extensive period of low inflation carries risks,” ECB president Mario Draghi told international central bankers at a meeting in Portugal last week. He is referring to the risk of deflation, the vicious circle of declining prices, yielding company profits, reduced investment, higher unemployment and ultimately an intensified recession. Once caught in this vicious circle it is hard to find the exit – the example of Japan serves as a warning to all.

Draghi does not see any risk of broad-scale deflation for the time being – an assessment backed by the improving economies in crisis-ridden southern Europe. But the strong euro is threatening to neutralize the enhanced competitiveness gained by the wage cuts in these quarters. Experts say the common currency is overvalued by about ten percent. This is mainly due to “the significant capital inflows that want to profit from an end of the crisis,” says Martin Huefner, Chief Economist at Assenagon in his weekly commentary.

Interest rate reduction already priced in

It was an open secret that the interest rates are set to fall,” says Jens-Oliver Niklasch, Chief Economist with Baden-Wuerttemberg’s state bank LBBW. Rates were cut for the eurozone from 0.25 percent to 0.15 or 0.10 percent. As a rule such interest rate cuts trigger a devaluation of the currency. In this case the effect will probably be limited. What difference does 0.1 percent make after all? And secondly: “An interest rate reduction is already priced in,” Niklasch told Deutsche Welle.

But the ECB has done more. The European monetary watchdogs are going to try out a new tool: the negative interest rate. This means that a commercial bank is obliged to pay a penalty rate if they park money with the ECB. The ECB is hoping to achieve two targets with this measure, says LBBW analyst Niklasch: “The first is rather simple: that the euro is weakened on currency markets; the second is that the vast liquidity offered by the ECB finally reaches the private sector.”

More loans for businesses

In other words: The banks should finally dish out more loans to companies. This would generate more investment, more growth and ultimately higher inflation rates. If the euro softens at the same time, the ECB have killed two birds with one stone. Experts are skeptical as to whether this plan will work. “The granting of loans by commercial banks actually hinges more on demand than supply,” says Jens-Oliver Niklasch.

This means: The debt crisis and recession dampened demand for loans, especially in southern Europe. The ECB can not force banks to provide loans to the private sector. Banks will probably look for alternatives to avoid the penalty rates, such as government bonds of debtor countries in the eurozone. These still have good returns and are guaranteed by the ECB. However, this means more money will go to southern Europe and it defeats the object of devaluing the euro.

Sowing the seed for the next crisis?

So what needs to be done? Nothing, says Roland Vaubel, economist at the University of Mannheim: “The recession is practically over. We have positive growth for the entire eurozone. We have solid monetary growth.” So he sees no need to soften monetary policy.

But what about low inflation? Is he not worried at all about that? No, says Vaubel: “Because this is the result of the monetary policy dating back two to three years. This is a lagging indicator. The ECB is making a mistake if they’re looking at the current inflation rate.”

They should keep their eyes on monetary growth and demand, both of which were positive thanks to the improving business climate. He says further relaxation of the monetary policy does not make sense and would prepare the ground for the next crisis: “We’re running the risk that we fail to drop this hyper-expansive monetary policy fast enough when the economy makes a significant leap and inflation rates soar. I fear that this so-called exit won’t work then.”

Source: DW.DE