Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page:

From The Socialist newspaper, 22 June 2011

Greece's debt crisis threatens worldwide banking system

Workers resist Pasok's savage cuts and privatisation programme

Xekinhma, Greek section of CWI, on massive general strike in Greece on 15 June 2011, photo Stephan Kimmerle

Xekinhma, Greek section of CWI, on massive general strike in Greece on 15 June 2011, photo Stephan Kimmerle

Greece's deepening sovereign debt crisis is threatening to destroy the eurozone and trigger a worldwide banking collapse, according to the International Monetary Fund.
But as the political representatives of capitalism attempt to make the Greek working class pay for the crisis though another savage austerity programme the workers are fighting back, as Niall Mulholland reports.

The inspiring Greek general strike and 250,000-strong demonstration outside the parliament buildings on 15 June showed the fierce opposition of millions of workers to yet more savage austerity cuts.

The terms of a second bailout include a 10% cut in public spending and a huge 33% reduction in public sector wages. It will mean the sacking of one-fifth of Greece's public sector workforce and "the biggest, fastest privatisation programme, relative to national output, ever mounted", according to Will Hutton (Observer 19 July).

Greece will have to pay at least 100 billion of debt over three years - a staggering 40% of GDP.

No wonder there is popular fury against Greek politicians and the 'troika' of the European Union (EU), the European Central Bank (ECB) and the International Monetary Fund (IMF). "Only dictators would take the measures this government want to pass," commented a lawyer in Athens last week to the Guardian newspaper.

Photo Stephan Kimmerle

Photo Stephan Kimmerle

Greek workers were already hit hard by tax rises, pay and pension cuts and wide-ranging public sector cutbacks, in return for a 95 billion bailout agreed last year by the Pasok government and EU, ECB and IMF.

The brutal austerity policies only depressed the economy further, with unemployment ballooning. 50,000 businesses went bankrupt last year. Industrial production fell by 20% and is due to decline by another 12%.

These sorts of figures are normally associated with the 1930s Great Depression or the catastrophic consequences of capitalist restoration in the former Soviet Union. Greece is clearly unable to repay its debts. Yet prime minister Papandreou's response is yet more cuts and huge privatisations of electricity, water, railways, and the docks.

Even if a second bailout is achieved, which could be as large as the original, many economists believe it will merely delay an inevitable default.

With so much Greek debt held by European financial institutions, this could lead to Europe's 'Lehman Brothers' moment', a reference to the spectacular collapse of the debt-laden investment bank in 2008, which triggered the first financial crisis.

A default would place enormous losses on the lending banks in Europe, hitting French and German banks in particular, as well as financial institutions in Asia and the Middle East. A default by Greece - bankruptcy by any other name - would trigger a new banking crisis, likely as deep as 2008. It could lead to the breakup of the eurozone, with the emergence of two or more currency 'divisions' or even complete collapse. Even if the currency manages to stagger on for the moment, similar debt problems in Ireland, Portugal or Spain can yet trigger a new euro crisis.

Although outside the eurozone, Britain would not escape the consequences of country defaults and euro collapse. Three of the four "riskiest banks out of Europe's top 20" are British or ones with a substantial British involvement.

The British banking system has outstanding loans of more than four times its GDP, at 6.5 trillion. More than 1 trillion is lent in euros to European banks, governments and companies.

Quitting the euro?

Massive general strike in Greece on 15 June 2011, photo Stephan Kimmerle

Massive general strike in Greece on 15 June 2011, photo Stephan Kimmerle

The economist Nouriel Roubini argues Greece has no choice but to default on its debts and to break from the euro single currency. This is echoed by Greek nationalists, who say Greece should quit the euro and devalue its currency, allowing exports to become cheaper and increasing the country's 'competitiveness'.

But leaving the euro on a capitalist basis is no solution for working people. It would lead to a hike in inflation and a further decline in living standards.

Socialists oppose the EU bosses' club but reject the false idea of 'national solutions'. As governments all over Europe impose brutal social cuts, all-European united working class resistance needs to be organised with independent class policies.

On its own, refusal to pay the debt will not solve the problems of the Greek working class. Therefore repudiating the debt must be linked to the call for the democratic, public ownership and control of the banks and the major planks of the economy, planned and managed by working people.

A socialist economy and a socialist Europe would see living standards of working people and their families transformed.

Since the outbreak of the European debt crisis, the capitalist establishment has not provided a viable solution in Greece, Ireland, Portugal and Spain or indeed across the continent. The depth and scale of the crisis - not an 'episodic downturn' but a deep, protracted crisis of world capitalism - is reflected in the increasingly bitter splits opening up in heart of the EU.

Chancellor Merkel is under domestic pressure in Germany, where the proposal to give more "taxpayers' money" for another Greek bailout is "deeply unpopular". She called for banks and financial institutions that lent heavily to Greece to share some of the pain by accepting "write downs" on their loans.

But Merkel backed down in the face of strong French and ECB opposition. They argued that Germany's demands, raising questions about who will bear what losses, would stop banks lending to one another in the global markets, triggering another Lehmans-style financial disaster.

Last weekend, eurozone finance ministers postponed their decision on a new 12 billion loan until Pasok introduces more austerity measures.

Political crisis

Realising that resistance to his planned new austerity cuts will not go away, prime minister George Papandreou offered to stand down on the day of the general strike and to form a 'coalition' government with the opposition, right wing New Democracy (ND). But the ND refused Pasok's toxic offer, confident they can win the next elections (they are now 4% ahead in the polls).

Papandreou then announced a cabinet reshuffle followed by a confidence vote in the parliament, hoping to contain Greece's explosive situation.

But no matter how much the cabinet is reshuffled or how many coalitions from the establishment parties are established or if new elections bring the ND back to government, all these political forces will continue with more anti-working class policies.

In the teeth of such a profound crisis of capitalism, the Greek and European workers' movement needs a bold alternative. The huge demonstrations in Athens of the 'Engraged' youth and workers - inspired by the revolutions in north Africa and the Middle East and the Spanish 'Indignados' - revealed that big sections of the population are alienated from all politicians and the ruling establishment.

Many are sceptical and even hostile towards the leaders of the unions and Left organisations, who have no real alternative to the policy of bailouts and austerity measures.

Workers anger

While the one-day strike on 15 June was a magnificent display of the power of the organised working class, it is clear that more militant mass action is needed to stop the cuts.

On 20 June, workers at the state-owned electricity company began a series of 48-hour strikes against privatisation plans and against the new 'intermediate memorandum' made between the Greek government and the troika, as part of the process of moving towards a new bailout and austerity cuts.

The explosive social situation and the developing tendency for a merger of the Engraged protesters with striking workers put pressure on the Greek TUC to call a 48-hour general strike in the run-up to a parliament vote on the new memorandum (expected in late June).

This is a very important development, as it is nearly 20 years since the Greek TUC last called a 48-hour general strike.

But faced with such huge attacks, even this is not enough. The workers' movement needs to organise a rolling programme of 48-hour general strikes and longer, if necessary, with rank and file democratic control, linking up with the movement of youth on the streets, on a local, regional and national level.

This can halt the plans of Pasok and the troika and also provide the basis for a new government based on the interests of workers, the unemployed, poor and youth.

Why not click here to join the Socialist Party, or click here to donate to the Socialist Party.

In The Socialist 22 June 2011:

Socialist Party feature

As the cuts bite, millions ask: 'Does it have to be like this?'

Building for 30th June

Con-Dems' pension attack - brutal class warfare must be fought

POA to hold protest meetings

Busting the public sector pensions myths!

Staffordshire NSSN builds support for 30 June action

Hillingdon workers back the pensions strike

Socialist Party workplace news

Strike action to defend Royal Mail jobs

Leeds Unison urges members to reject council's final offer

Coleg Morgannwg: Victory over victimisation

Barnsley lecturers fight job cuts

Unison conferences discuss action on pensions

Workplace news in brief

Socialist Party news and analysis

Housing crisis

Con-Dems still plan to destroy NHS - Save our health service!

News in brief

International socialist news and analysis

Greece's debt crisis threatens worldwide banking system

Socialist Party reports and campaigns

Finsbury Park - No to A4e cheap labour schemes

Southern Cross bosses demand huge cuts in pay and conditions

Reviews and comments

Sri Lanka's killing fields

Readers' comment: apprentice sexists

Fighting the cuts

Southampton: strikes set to continue

200 workers challenge Labour council cuts

Labour MP fails to answer questions on cuts


Comprehensive education under attack

Keep Tidemill in public hands

Spreading to primaries?


Home   |   The Socialist 22 June 2011   |   Join the Socialist Party

Subscribe   |   Donate  

Related links:


triangleBrexit deal no solution to Tory rifts

triangleSolidarity with Athens bus cleaners!

triangleFight for a socialist Brexit

triangleHigh Court bombshell on Brexit decision

triangleThe Corbyn insurgency 2.0: Now let's finish the job


triangleA world in crisis, ripe for revolution

triangleRetail sector crunch: nationalise to save jobs

triangleAmber warning lights flash on British economy

triangleMarch for free education! We demand a future!


triangleBradford campaign to save children's services launched

triangleSouth London health bosses' cover-up

triangleTotnes MP uses coffin controversy to distract from brutal NHS cuts


triangleSave our NHS

triangleSchool staff strike against privatisation


triangleSyriza victory shows austerity elite can be beaten


triangleLocal government pay: fight for the 5% claim, fully funded

Working class:

triangleLabour 'purge' furore really just democracy


triangleEU-Canada trade deal battle points to Corbyn's Brexit opportunity


triangleTrump's incendiary Jerusalem statement reignites Israeli-Palestinian conflict


triangleRBS to sack 1,000: nationalise the banks


triangleBristol North Socialist Party: Populism in Eastern Europe


triangle110 years ago: massacre at Santa Maria school in Chile - commemorate 21 December 1907


triangleCorbyn's Labour can defeat Tories with socialist programme





Trump's incendiary Jerusalem statement reignites Israeli-Palestinian conflict



A world in crisis, ripe for revolution



Trump's tax plan: Robin Hood in reverse



Irish capitalist state: rotten to the core



Fighting sexism, violence and capitalism - an international struggle



Trump's tax attacks



Australia: massive yes vote for marriage equality



Zimbabwe: Mugabe gone - but his regime remains in power



USA: Historic vote for Ginger Jentzen campaign in Minneapolis



US: Historic vote for Ginger Jentzen campaign in Minneapolis



Sweden: 'Revolution2017' success



Spain: Madrid rally celebrates October revolution



US: Minneapolis Socialist chimes with voters



Ireland: rail workers demand share of 'recovery'



Ireland: dangerous ideas for the ruling class

triangleMore International articles...

Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party

triangle14 Dec Stop the rotten redevelopment plan, demand residents

triangle13 Dec Six months on - still no justice for Grenfell

triangle13 Dec Movement growing against fracking giant Ineos

triangle13 Dec Totnes MP uses coffin controversy to distract from brutal NHS cuts

triangle13 Dec Trump's incendiary Jerusalem statement reignites Israeli-Palestinian...

triangle13 Dec Labour 'purge' furore really just democracy

EU parliament, Strasbourg

triangle13 Dec Brexit deal no solution to Tory rifts

More ...

triangle18 Dec Leeds Socialist Party: Religion and Socialism

triangle19 Dec Bristol North Socialist Party: Christmas social

triangle21 Dec Wakefield Socialist Party: Socialists and the National Question

triangle6 Jan Socialist Party national women's meeting

More ...

Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube



December 2017

November 2017

October 2017

September 2017

August 2017

July 2017

June 2017

May 2017

April 2017

March 2017

February 2017

January 2017





















Platform setting: = No platform choice