Greeks Say ‘Oxi’ to Lemon Socialism

What do Greece, Ireland and the U.S.have in common?

Each experienced what was termed at the time a “new financial era” that produced an enormous expansion of its finance sector. This led to an intoxicating combination of aggressive lending, leverage and recklessness. In each case, the era ended in a financial crisis; perhaps most important, each crisis ended with a bailout of lenders, bondholders and bankers.

This hat trick of bank bailouts hasn’t gone unnoticed in Greece. Yanis Varoufakis, who just resigned as finance minister of Greece, might be a provocateur, but he is apparently no fool. Earlier Monday, in a blog post, he said “the Greek ‘bailouts’ were exercises whose purpose was intentionally to transfer private losses onto the shoulders of the weakest Greeks, before being transferred to other European taxpayers.”

This astute (albeit little known) insight has been echoed by a small number of insightful analysts. My favorite of these is Steve Randy Waldman. His take on the Greek bailouts includes an in-depth discussion of the 2010 assistance program as “largely a bailout of European banks, initiated to prevent a wider banking crisis.”

Alas, bailing out banks as a way to fix a financial crisis is standard operating procedure. What was called the “Mexican bailout of 1982” was, in fact, a bailout of the U.S. banks that made improvident loans to Mexico (as well as to Brazil and Argentina) that had gone bad.

As if to prove all parties were unwilling to learn from their experiences, a repeat of almost the exact same errors with the same players — bankers, Latin American borrowers and the U.S. — unfolded in 1994. The emerging market crises in 1997 weren’t identical, but displayed similar themes of leverage, recklessness and loans gone bad.


Continues here: Greeks Stand Up to ‘Lemon Socialism’




Print Friendly, PDF & Email

What's been said:

Discussions found on the web:
  1. enuff commented on Jul 6

    Agree, but you unnecessarily insulting socialism. This is really extreme capitalism, which is indistinguishable from kleptocracy.

    • QuasiYoda commented on Jul 7

      Bank Bailouts are Socialist activities. In a Capitalist system the Failures are allowed to fail and the smarter businesses buy the assets on the cheap. Creative Destruction is an important foundation of Capitalism. Power transfers from the foolish to the prudent. No central planning needed as Nature takes it’s course. When the US and most of the world governments intervened in the 2007, 8, 9 banking crisis they showed their model was Not a Capitalist one as they trashed the Capitalist foundation of Creative Destruction and embraced the Socialist one of Central Planning. In the current rendition Corporatism or Corporate Socialism would be more accurate as specific corporations that have a special relationship with government were protected and revived, Fed Member Banks. Democrats and Republicans are both pushing this Central Planning agenda.

    • VennData commented on Jul 7

      “…Democrats and Republicans are both pushing this Central Planning agenda…”

      Except Bush bailed out the banks and Obama bankrupted GM and Chrysler.

  2. rd commented on Jul 6

    Here is an interesting take on the Greek issues. One aspect of this thesis is that Greece is actually filled with lots of conservative small businessmen instead of socialists. The conservative small businessmen have been working hard to hide themselves from the tax man, as most taxmen do, so that the government is underfunded. As a result, a big difference between Germany and Greece may have been that the big businesses employing many people in Germany are working with the government to collect the taxes from their employees.

    • Futuredome commented on Jul 6

      Most of the small business was based off tourism, which was not sustainable. They could get away from it for awhile, but then it imploded as you would expect. Small Business has never created THE jobs. They created jobs as the trickle down from industry.

  3. jbegan commented on Jul 6

    Just because Ireland, Greece and the U.S. played footsie with the banks and rewarded the criminals that destroyed our and the world’s financials, doesn’t mean that no country didn’t do the opposite, and did so successfully:

    – Iceland put bankers in jail rather than bailing them out — and it worked – Vox

    – Wall Street Stunned As Iceland Dares To Jail Banker Involved In 2008 Crash | Zero Hedge

    We are a plutocracy, and we are a ‘capitalist socialist’ nation.

  4. Herman Frank commented on Jul 6

    Reading a bit the questionnaires by the newspapers to their readers “should Greece stay, or be allowed to take its leave”? A good 80% of the results call for an end to negotiations, talks and fantasies. “The End”.
    A political union it is not, a tax-union it is not, a European Union it is only in name. There are 18 countries with individual political systems, with their own history and experiences. With the Brussels emperors being seen naked enormous reputation damage has been done to the institution.

    There is a greater chance than ever of the strong Northern countries going it alone – politicians being pushed into that direction by their electorate – creating (at long last-) “the solution to this mess” of a Northern and Southern Euro.

  5. ilsm commented on Jul 7

    Hitler called it “national socialism”, almost ‘capitalist socialist’.

Posted Under