By Greg Palast

Europe is stunned,
and bankers aghast, that polls show the new party of the Left, Syriza, will win
Greece’s parliamentary elections to be held this coming Sunday, January 25.

The problem is,
austerity run wild is merely a symptom of an illness. The underlying disease is
the euro itself.

For the last five
years, Greeks have been told that, if you cure your disease—that is, if you
dump the euro—the sky will fall. I guess you haven’t noticed, the sky has
fallen already. With unemployment at 25%, with Greek doctors and teachers
eating out of garbage cans, there is no further to fall.

In 2010, when
unemployment was a terrible 10%, a year into the crisis, the “Troika” (the
European Central Bank, European Commission and the International Monetary Fund)
told the Greeks that brutal austerity measures would restore Greece’s
economy by 2012.

Ask yourself, Was
the Troika right?

There is a saying in America: Fool me once, shame on you. Fool me twice,
shame on me.

Can Greece survive
without the euro? Greece is already dead, but the Germans won’t even bother to
bury the corpse. Greeks are told that if they leave the euro and renounce its
debts, the nation will not be able to access world capital markets. The reality
is, Greece can’t access world markets now: no one lends to a corpse.

There’s a way back
across the River Styx. But it’s not by paddling on a euro.

There’s life after euro

Many nations do
quite well without the euro. Sweden, Denmark and India do just fine without the
euro—and so does Turkey, which had the luck to be excluded from the euro-zone.
As long as Turks stick to the lira, even Turkey’s brain-damaged Islamo-fascist President
Tayyip ErdoÄŸan cannot destroy their economy.

Can Greece just dump the euro? They have happy precedents to follow.
Argentina was once pegged to the US dollar much as Greece is tied to the euro
today. In 2000, Argentines, hungry and angry, revolted. Argentina ultimately
overthrew the dollar dictatorship, the IMF diktats and the threats of
creditors, and defaulted on its dollar bonds. Free at last! In
the decade since, the Argentine economy soared. Yes, today, Argentina is under attack by financial vultures, but that is only because the nation became so
temptingly wealthy.

I was in Brazil when its President Luiz Inácio Lula da Silva told the IMF
to go to hell—and rejected privatization of the state banks and the state oil
company, rejected cutting pensions and thumbed his nose at the rest of the
austerity nonsense. Instead, Lula created the bolsa familia, a
massive pay-out to the nation’s poor. The result: Brazil not only survived but
thrived during the 2008-10 world financial crisis. Despite pressure, Brazil
never ceded control of its currency. (It is a sad irony that Brazil is only now
faltering. That’s the fault entirely of Lula’s successor, President Dilma
Rousseff, who is beginning to dance the austerity samba.)

Austerity: Religion, not economics

The euro is simply
the deutschmark with little stars on it. Greece cannot adopt Germany’s currency
without adopting Germany’s finance minister, Wolfgang Schäuble, as its own.

And Schäuble has
determined that Greece must be punished. As my homey Paul Krugman points out,
there is no credible economic theory that says that austerity—that is, cutting
government spending, cutting wages, cutting consumer demand—can in any way help
a nation in recession, in deflation. That’s why, in 2009, Obama ordered up
stimulus, not a sleeping pill.

But austerity has
nothing to do with economics. It is religion: the belief by the stern Lutheran
Germans that Greeks have had too much fun, spent too much money, and spent too
much lazy time in the sun—and now Greeks must pay a price for their sins.

Oddly, I hear this self-flagellating nonsense from Greeks themselves: we
are lazy. We deserve our punishment. Nonsense. The average Greek works more hours in a year than any other worker in the 34 nations of the OECD;
Germans the least.

The euro’s father describes his little bastard

Alexis Tsipras, the leader of Syriza, would like to pretend that austerity
and the euro are two different things, that you can marry the pretty girl but
not invite her ugly sister to the wedding. Apparently, the Syriza chief is
blissfully ignorant of the history of the euro. The horror of austerity is not
the consequence of Greek profligacy: it was designed into the euro’s
plan from the beginning.

This was explained
to me by the father of the euro himself, economist Robert Mundell of Columbia
University. (I studied economics with Mundell’s buddy, Milton Friedman.)
Mundell not only invented the euro, he also fathered the misery-making policies
of Thatcher and Reagan, known as “supply-side economics”—or, as George Bush Sr.
called it, “voodoo economics.” Supply-side voodoo is the long-discredited
belief that if a nation demolishes the power of unions, cuts business taxes,
eliminates government regulation and public ownership of utilities, economic
prosperity will follow.

The euro is simply
the other side of the supply-side coin. As Mundell explained it, the euro is
the way in which congresses and parliaments can be stripped of all power over
monetary and fiscal policy. Bothersome democracy is removed from the economic
system. “Without fiscal policy,” Mundell told me, “the only way nations can
keep jobs is by the competitive reduction of rules on business.”

Greece, to survive
in a euro economy, can only revive employment by reducing wages. Indeed, the
recent tiny reduction in unemployment is the sign that Greeks are slowly
accepting a permanent future of low wages serving piña coladas to Germans on
holiday cruises.

It is argued that
Greece owes Germany, the IMF and the European Central Bank for bail-out-billions.
Nonsense. None of the billions in bail-out funds went into Greek pockets. It
all went to bail out Deutsche Bank and other foreign creditors. The EU
treasuries swallowed 90% of its private bankers’ bonds. Germany bailed out
Germany, not Greece.

Nevertheless,
Greece must pay Germany back, Mr. Tsipras, if you want to continue to use
Germany’s currency, that is.

Greece: Goldman sacked

Greece’s ruin
began with secret, fraudulent currency swaps, designed a decade ago by Goldman
Sachs, to conceal Greek deficits that exceeded the euro zone’s 3%-of-GDP limit.
In 2009, when the truth came out, Greek debt holders realized they had been
cheated. These debt buyers then demanded usurious levels of interest (or, if
you prefer, a high “spread”) to insure themselves against future fraud. The
compounding of this interest premium brought the Greek nation to its knees. In
other words, the crimes committed to join and stay in the euro, not Greek
profligacy, caused the crisis.

The USA, Brazil
and China escaped from depression by controlling their money supply,
government spending and currency exchange rates—crucial tools Greece gave
up in return for the euro.

Worse, once the Trojan hearse of the euro entered Athens, tourism, Greece’s
main industry, drained to Turkey where hotels and souvenirs are priced in
cheap lira. This allowed Dr. Mundell’s remorseless
wage-lowering machine, the euro, to do its work, to force Greece to strip all
its workers of pensions and power.

Greece fell to its
knees, with no choice but to beg Germany for mercy.

But there is no mercy. As Germany’s Schäuble insists, democracy, this
week’s vote, means nothing. “New elections change nothing in the accords struck
with the Greek government,” he says. “[Greeks] have no alternative.”

Ah, but they do,
Mr. Schäuble. They can tell you to take your euro and shove it up your Merkel.

Investigative reporter Greg Palast is the author of the New York Times
bestsellers Billionaires & Ballot
Bandits, Armed Madhouse
and The Best Democracy Money Can Buy and the highly acclaimed Vultures’ Picnic, named Book
of the Year 2012 on BBC Newsnight Review. His website is Greg Palast
Journalism and Film, where this was
originally published.

    

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