O novo Estado Social
The greatest achievement of the Bailouts was to buy the financial sector two long years during which to unload their Greek bonds onto the official sector. Henceforth it is the official sector, alongside the crushed Greek people, that will bear the costs of a forthcoming Default 2.0. Of course, given what has been going on on both sides of the Atlantic since the Fall of 2008, it is not unknown for taxpayers (for this is who ‘hide’ behind the so-called official sector) to bear the brunt of a financial disaster. Indeed, Europe’s taxpayers have been shouldering the costs of the Crisis since even before it erupted (toward the end of 2007, that is). We are (wrongly) almost conditioned to accept that the costs of finance’s folly will be born by voiceless taxpayers. Be that as it may, there is another real issue, one that concerns the efficiency, or otherwise, of the way public monies were used to prop up the financial sector.
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Europe’s banks have managed to unload their Greek bonds over a period of two years while, at the same time, receiving mountains of cash from the ECB to mop up any remaining losses. Greece’s bankers are to receive €25 billion (and counting) of EFSF-sourced capital without having to forfeit an iota of voting power to the official sector (for at least three years). Even hedge funds have not suffered, indeed some will end up with significant gains: the new bonds issued by the Greek state, despite being stressed, will compensate them for the low, low prices they bought the old bonds at and, in addition, will be able to claim CDS proceeds plus several cases of full payment of the old bonds (as a result of skilful strategic holdouts).
In the cold light of the Morning After, Europe looks sad, rueful, dejected. The citizens of the surplus countries feel shortchanged, their deficit country brethren crushed under the weight of hopeless austerity, the winds of recession blowing a cold chill across the continent. Meanwhile the financial sector can enjoy its new delivery of fools’ gold. Why fools’? Because every smart parasite ought to know that, if it overdoes it, its own demise will follow the death of an overcompliant host.
Yanis Varoufakis, What was it all for? The latest Greek Bailout-PSI in the Morning After’s cold light
