Greece stands at a fork in the road

February 5, 2015 10:35 AM

Indeed, during the 10-year run-up to the crisis, loans to private households and businesses soared by five times. But in standard Keynesian fashion, the booming investment and consumption spending financed by this debt eruption was not real or sustainable; rather, it just temporarily flattered the GDP figures, making Greece’s actual public debt burden even more onerous than the reported figures—especially after Goldman and other bankers bearing illicit accounting schemes and predatory derivative deals had perfumed the fiscal pig.

The resulting untoward impact of this entire phony EU financial regime could not be more starkly evident than in the two graphs below. They contrast what was happening to Greece’s true, permanent public debt burden—-with the ability of its profligate politicians to access international debt markets at super-cheap rates.

In fact, Greece had been on a steady path toward bankruptcy for 25 years, but as the EU monetary boom accelerated after the turn of the century and the false yields on its euro denominated debt continued to fall, the nation’s public debt to GDP ratio was soon in terminal territory. The jig was up on its mad-cap leap into phony euro prosperity.

But when the crisis came, it was all about saving the rotten regime that had enabled imprudent risk-taking and gross missing pricing of sovereign debt throughout the European financial system. EU apparatchiks never cared a wit about the plight of the Greek people. Their desperate machinations were only for the purpose of appeasing the financial market speculators who would have otherwise caused debt service to soar throughout the EU, thereby generating an existential crisis that would have brought down the failing machinery of the euro and the EU’s superstate rulers in Brussels.

So five years of false history needs to be aired and purged

The baleful truth is that widows and children, among others, are starving in Athens today in order that financial speculators would not have a hissy fit and that the apparatchiks of the EU could hang on to their power, privileges and cushy sinecures.  

Varoufakis himself recently made this crystal clear:

 “Europe in its infinite wisdom decided to deal with this bankruptcy by loading the largest loan in human history on the weakest of shoulders, the Greek taxpayer. What we’ve been having ever since is a kind of fiscal waterboarding that has turned this nation into a debt colony.”

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About the Author

David Stockman began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.  Stockman was born in Ft.